~~UNITED STATES~~

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended: ~~September~~June 30, ~~2021~~2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 001-35850

MICT, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware		27-0016420
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

28 West Grand Avenue, Suite 3, Montvale, NJ		07645
(Address of principal executive offices)		(Zip Code)

	(201) 225-0190
	(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.001 per share		MICT		Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~November 12, 2021,~~August 22, 2022, there were ~~122,435,576~~129,566,207 issued and outstanding shares of the registrant’s Common Stock, $0.001 par value per share.

TABLE OF CONTENTS

	PART I - FINANCIAL INFORMATION

Item 1.	Unaudited Condensed Consolidated Financial Statements.	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	3438

Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	51
	48

Item 4.	Controls and Procedures.	51
	48

	PART II - OTHER INFORMATION

Item 1A.	Risk Factors.	5152

~~Item 3.~~	~~Defaults Upon Senior Securities~~

Item 6.	Exhibits.	52

~~SIGNATURES~~		53

SIGNATURES		54

EXHIBIT INDEX		53

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

MICT, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(USD In Thousands, Except Share and Par Value Data)

September 30,
2021 December 31,
2020
ASSETS
Current assets:
Cash $ 105,289 $ 29,049
Trade accounts receivable, net 20,644 523
Inventories - 2,002
Other current assets 10,214 1,756
Related parties 2,167 -
Held for sales assets - 350
Total current assets 138,314 33,680

Property and equipment, net 631 417
Intangible assets, net 18,808 17,159
Goodwill 19,788 22,405
Investment and loan to Magpie (formerly: Huapei) - 3,038
Right-of-use assets 2,657 291
Long-term deposit and prepaid expenses 188 266
Micronet Ltd. equity method investment 1,764 -
Restricted cash escrow - 477
Total long-term assets 43,836 44,053

Total assets $ 182,150 $ 77,733

	June 30, 2022		December 31, 2021
ASSETS
Current assets:
Cash	$	76,053	$	94,930
Trade accounts receivable, net		12,025		17,879
Related parties		7,358		5,134
Other current assets		8,096		9,554
Total current assets		103,532		127,497

Property and equipment, net		666		677
Intangible assets, net		19,848		21,442
Goodwill		19,788		19,788
Right of use assets		1,583		1,921
Long-term deposit and prepaid expenses		618		824
Deferred tax assets		2,531		1,764
Restricted cash escrow		2,299		2,417
Micronet Ltd. equity method investment		1,110		1,481
Total long-term assets		48,443		50,314

Total assets	$	151,975	$	177,811

MICT, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(USD In Thousands, Except Share and Par Value Data)

	June 30, 2022			December 31, 2021
LIABILITIES AND EQUITY

Short-term loan	$	922		$	1,657
Trade accounts payable		8,328			14,416
Deposit held on behalf of clients		1,479			3,101
Related party		256			4
Lease liabilities – current portion		1,026			1,298
Other current liabilities		6,606			4,914
Total current liabilities		18,617			25,390

Lease liabilities		699			691
Deferred tax liabilities		3,544			3,952
Accrued severance pay		50			56
Total long-term liabilities		4,293			4,699
Total liabilities		22,910			30,089

Stockholders’ Equity:
Common stock; $0.001 par value, 250,000,000 shares authorized, 129,566,207 and 122,435,576 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively		129			122
Additional paid in capital		224,838			220,786
Accumulated other comprehensive income (loss)		124			(414	)
Accumulated deficit		(99,417	)		(76,394	)
MICT, Inc. stockholders’ equity		125,674			144,100

Non-controlling interests		3,391			3,622

Total equity		129,065			147,722

Total liabilities and equity	$	151,975		$	177,811

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements

MICT, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED ~~BALANCE SHEETS~~STATEMENTS OF OPERATIONS

(USD In Thousands, Except Share and ~~Par Value~~Earnings Per Share Data)

September 30,
2021 December 31,
2020
LIABILITIES AND EQUITY

Current maturity of long term bank loans $ - $ 884
Trade accounts payable 18,520 838
Related party - 163
Lease liabilities- current portion 1,573
Other current liabilities 5,241 5,102
Total current liabilities 25,334 6,987

Long term escrow - 477
Lease liabilities 1,132 164
Deferred tax liabilities 3,323 4,256
Accrued severance pay 54 153
Total long-term liabilities 4,509 5,050
Total liabilities 29,843 12,037

Stockholders’ Equity:
Common stock; $0.001 par value, 250,000,000 shares authorized, 122,435,576 and 68,757,450 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively 122 68
Additional paid in capital 220,660 102,333
Capital reserve related to transaction with the minority shareholder - (174 )
Accumulated other comprehensive loss (323 ) (196 )
Accumulated deficit (68,151 ) (39,966 )
MICT, Inc. stockholders’ equity 152,308 62,065

Non-controlling interests (1 ) 3,631

Total equity 152,307 65,696

Total liabilities and equity $ 182,150 $ 77,733

	Six months ended June 30,						Three months ended June 30,
	2022			2021			2022			2021

Revenues	$	21,521		$	21,276		$	11,958		$	12,341
Cost of revenues		18,183			18,667			9,885			11,675
Gross profit		3,338			2,609			2,073			666

Operating expenses:
Research and development		941			619			346			388
Selling and marketing		3,552			2,352			1,035			1,351
General and administrative		20,991			19,421			13,665			14,853
Amortization of intangible assets		1,594			1,569			797			643
Total operating expenses		27,078			23,961			15,843			17,235

Loss from operations		(23,740	)		(21,352	)		(13,770	)		(16,569	)
Loss from equity investment		(371	)		(163	)		(187	)		(163	)
Other income (loss), net		838			83			683			(4	)
Financial income (expenses), net		(1,089	)		(275	)		(1,167	)		291
Loss from loss of control in Micronet Ltd		-			(1,934	)		-			(1,934	)
Loss before provision for income taxes		(24,362	)		(23,641	)		(14,441	)		(18,379	)
Taxes on income (tax benefit)		(1,081	)		(339	)		(5	)		17

Net loss		(23,281	)		(23,302	)		(14,436	)		(18,396	)
Net loss attributable to non-controlling interests		(258	)		(445	)		(99	)		-

Net loss attributable to MICT, Inc.	$	(23,023	)	$	(22,857	)	$	(14,337	)	$	(18,396	)

Loss per share attributable to MICT, Inc.
Basic and diluted loss per share	$	(0.18	)	$	(0.22	)	$	(0.11	)	$	(0.16	)

Weighted average common shares outstanding:
Basic and diluted		124,455,921			102,992,830			126,431,864			117,634,776

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements

MICT, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~COMPREHENSIVE LOSS

(USD In ~~Thousands, Except Share and Earnings Per Share Data)~~Thousands)

Nine months ended
September 30, Three months ended
September 30,
2021 2020 2021 2020

Net revenues $ 39,791 $ 349 $ 18,515 $ 349
Cost of revenues 34,436 347 15,769 347
Gross profit 5,355 2 2,746 2

Operating expenses:
Research and development 1,015 230 396 230
Selling and marketing 3,874 69 1,521 69
General and administrative 26,039 6,337 6,618 4,899
Amortization of intangible assets 2,301 820 732 820
Total operating expenses 33,229 7,456 9,267 6,018

Loss from operations (27,874 ) (7,454 ) (6,521 ) (6,016 )
Gain (loss) from equity investment 636 (786 ) 799 -
Other income (expenses), net 70 138 (13 ) 138
Financial income (expenses), net 61 (8,803 ) 336 (8,960 )
Gain (loss) of control in equity investment held in Micronet (1,934 ) 665 - -
Income (loss) before provision for income taxes (29,041 ) (16,240 ) (5,399 ) (14,838 )
Tax benefit (410 ) (219 ) (70 ) (225 )

Net loss (28,631 ) (16,021 ) (5,329 ) (14,613 )
Net loss attributable to non-controlling interests (446 ) (462 ) (1 ) (462 )

Net loss attributable to MICT, Inc. $ (28,185 ) $ (15,559 ) $ (5,328 ) $ (14,151 )

Loss per share attributable to MICT, Inc.
Basic $ (0.26 ) $ (1.03 ) $ (0.05 ) $ (0.61 )
Diluted $ (0.26 ) $ (1.03 ) $ (0.05 ) $ (0.61 )

Weighted average common shares outstanding:
Basic 109,222,674 15,048,644 121,419,308 22,832,683
Diluted 109,222,674 15,048,644 121,419,308 22,832,683

	Six months ended June 30,						Three months ended June 30,
	2022			2021			2022			2021

Net loss	$	(23,281	)	$	(23,302	)	$	(14,436	)	$	(18,396	)
Other comprehensive income (loss), net of tax:
Currency translation adjustment		538			285			567			(321	)
Total comprehensive loss		(22,743	)		(23,017	)		(13,869	)		(18,717	)
Comprehensive loss attributable to non-controlling stockholders		(231	)		(642	)		(18	)		(3	)
Comprehensive loss attributable to MICT, Inc.	$	(22,512	)	$	(22,375	)	$	(13,851	)	$	(18,714	)

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements

MICT, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF ~~COMPREHENSIVE LOSS~~

~~(USD In Thousands)~~

Nine months ended
September 30, Three months ended
September 30,
2021 2020 2021 2020

Net loss $ (28,631 ) $ (16,021 ) $ (5,329 ) $ (14,613 )
Other comprehensive income (loss), net of tax:
Currency translation adjustment (127 ) (58 ) (412 ) (152 )
Total comprehensive loss (28,758 ) (16,079 ) (5,741 ) (14,765 )
Comprehensive loss attributable to non-controlling interests (643 ) (172 ) (1 ) (172 )
Comprehensive loss attributable to MICT, Inc. $ (28,115 ) $ (15,907 ) $ (5,740 ) $ (14,593 )
~~The accompanying notes are an integral part of the unaudited condensed consolidated financial statements~~

~~MICT, INC.~~

~~UNAUDITED STATEMENTS OF~~ CHANGES IN EQUITY

(USD In Thousands, Except Numbers of Shares)

	Common Stock				(A) Additional Paid-in		Accumulated			Accumulated Other Comprehensive			Capital reserve related to transaction with the minority			Non- controlling			Total Stockholders’
	Amount		Shares		Capital		Deficit			Income (Loss)			stockholders			Interest			Equity
Balance, December 31, 2020		68		68,757,450		102,333		(39,966	)		(196	)		(174	)		3,631			65,696
Shares issued to service providers and employees		6		6,100,000		8,369		-			-			-			-			8,375
Stock based compensation		-		-		458		-			-			-			-			458
Exercising options for employees and consultants				20,000		28		-			-			-			-			28
Net loss		-		-		-		(22,857	)		-			-			(445	)		(23,302	)
Other Comprehensive loss		-		-		-		-			285			174			(197	)		262
Loss of control of subsidiary		-		-		-		-			-			-			(2,989	)		(2,989	)
Issuance of shares upon November 2020 Securities Purchase Agreement		3		2,400,000		2,673		-			-			-			-			2,676
Issuance of shares upon February 2021 Purchase Agreement		23		22,471,904		53,977		-			-			-			-			54,000
Issuance of shares upon March 2021 Securities Purchase Agreement		19		19,285,715		48,671		-			-			-			-			48,690
Exercising warrants		2		1,665,926		1,864		-			-			-			-			1,866
Balance, June 30, 2021		121		120,700,995		218,373		(62,823	)		89			-			-			155,760

Series B
Convertible
Preferred Stock Series A
Convertible
Preferred Stock Common
Stock Additional
Paid-in
Capital –
Series B
Convertible
Preferred Additional
Paid-in Capital –
Series A
Convertible
Preferred
Additional
Paid-in
Capital –
Common
Accumulated Accumulated
Other
Comprehensive Non-
controlling Total
Stockholders’
Amount Shares Amount Shares Amount Shares Stock Stock Stock
Deficit
Income (loss) Interest Equity

Balance, December 31, 2019 - - 2 2,386,363 11 11,089,532 - 6,028 14,107 (16,974 ) 70 - 3,244
Shares issued to service providers and employees - - - - 1 840,909 - - 2,490 - - - 2,491
Exercising options for employees and consultants - - - - 1 1,198,000 - - 2,365 - - - 2,366
Stock based compensation 186 186
Comprehensive loss - - - - - - - - - (15,559 ) (347 ) - (15,906 )
Entering the control of a subsidiary - - - - - - - - - - - 2,000 2,000
Convertible note - - - - 14 13,636,364 - - 22,400 - - - 22,414
GFH transaction - - - - 23 22,727,273 - - 32,026 - - - 32,049
YA Exercising warrants - - - - 1 584,920 - - 0 - - - 1
Hardon Exercising warrants - - - - 1 1,596,362 - - 1,611 - - - 1,612
Issuance of shares, net- Series A Convertible Preferred Stock - - 1 795,455 - - - 409 - - - - 410
Issuance of shares, net- Series B+A Convertible Preferred Stock (2 ) (1,818,182 ) (3 ) (3,181,818 ) 8 8,181,818 (1,914 ) (6,299 ) 8,209 - - - (2 )
Issuance of shares, net- Series B Convertible Preferred Stock 2 1,818,182 - - - - 1,914 - - - - - 1,916
Balance, September 30, 2020 - - - - 60 59,855,178 - 138 83,393 (32,533 ) (277 ) 2,000 52,781

Series B
Convertible
Preferred Stock Series A
Convertible
Preferred Stock Common
Stock Additional
Paid-in
Capital -
Series B
Convertible
Preferred Additional
Paid-in
Capital -
Series A
Convertible
Preferred Additional
Paid-in
Capital –
Common
Accumulated
Accumulated
Other
Comprehensive Non-
controlling Total
Stockholders’
Amount Shares Amount Shares Amount Shares
Deficit
Stock Stock
Deficit
Income (loss) Interest Equity

Balance, June 30, 2020 2 1,818,182 3 3,181,818 11 11,107,714 1,914 6,437 14,198 (18,382 ) 164 2,172 6,519
Shares issued to service providers and employees - - - - 1 822,727 - - 2,468 - - - 2,469
Exercising options for employees and consultants - - - - 1 1,198,000 - - 2,365 - - - 2,366
Stock based compensation - - - - - - - - 117 - - - 117
Comprehensive loss - - - - - - - - - (14,151 ) (441 ) - (14,592 )
Entering the control of a subsidiary - - - - - - - - - - - (172 ) (172 )
Convertible note - - - - 14 13,636,364 - - 22,400 - - - 22,414
GFH transaction - - - - 23 22,727,273 - - 32,026 - - - 32,049
YA Exercising warrants - - - - 1 584,920 - - 0 - - - 1
Hardon Exercising warrants - - - - 1 1,596,362 - - 1,611 - - - 1,612
Issuance of shares, net- Series B+A Convertible Preferred Stock (2 ) (1,818,182 ) (3 ) (3,181,818 ) 8 8,181,818 (1,914 ) (6,299 ) 8,209 - - - (2 )
Balance, September 30, 2020 - - - - 60 59,855,178 - 138 83,393 (32,533 ) (277 ) 2,000 52,781

Common Stock (A)
Additional
Paid-in Accumulated Accumulated
Other
Comprehensive Capital
reserve
related to
transaction
with the
Minority Non- controlling Total
Stockholders’
Amount Shares Capital
Deficit
Loss stockholders Interest Equity
Balance, December 31, 2020 68 68,757,450 102,333 (39,966 ) (196 ) (174 ) 3,631 65,696
Shares issued to service providers and employees 7 7.010,020 9,869 - - - - 9,876
Stock based compensation - - 585 - - - - 585
Exercising options for employees and consultants 60,000 80 - - - - 80
Net loss - - - (28,185 ) - - (446 ) (28,631 )
Other Comprehensive loss - - - - (127 ) 174 (197 ) (150 )
Loss of control of subsidiary - - - - - - (2,989 ) (2,989 )
Issuance of shares upon November 2020 Securities Purchase Agreement 3 2,400,000 2,673 - - - - 2,676
Issuance of shares upon February 2021 Purchase Agreement 23 22,471,904 53,977 - - - - 54,000
Issuance of shares upon March 2021 Securities Purchase Agreement 19 19,285,715 48,671 - - - - 48,690
Exercising warrants 2 2,450,487 2,472 - - - - 2,474
Balance, September 30, 2021 122 122,435,576 220,660 (68,151 ) (323 ) - (1 ) 152,307

(A)

Upon the conversion of Series A and B convertible preferred stock, all preferred stock and common stock additional paid-in capital was combined into one account.

Common Stock (B)
Additional
Paid-in Accumulated Accumulated
Other
Comprehensive Capital
reserve
related to
transaction
with the
minority Non- controlling Total
Stockholders’
Amount Shares Capital
Deficit
Income stockholders Interest Equity
Balance, June 30, 2021 121 120,700,995 218,373 (62,823 ) 89 - - 155,760
Shares issued to service providers and employees 1 910,020 1,500 - - - - 1,501
Stock based compensation - - 127 - - - - 127
Exercising options for employees and consultants 40,000 52 52
Net loss - - - (5,328 ) - - (1 ) (5,329 )
Other Comprehensive loss - - - - (412 ) - - (412 )
Exercising warrants - 784,561 608 - - - - 608
Balance, September 30, 2021 122 122,435,576 220,660 (68,151 ) (323 ) - (1 ) 152,307

	Common Stock				(B) Additional Paid-in		Accumulated			Accumulated Other Comprehensive			Capital reserve related to transaction with the minority			Non- controlling			Total Stockholders’
	Amount		Shares		Capital		Deficit			Income			stockholders			Interest			Equity
Balance, March 31, 2021		114		114,177,951		208,566		(44,427	)		410			(174	)		2,992			167,481
Shares issued to service providers and employees		6		6,030,894		8,669		-			-			-			-			8,675
Stock based compensation		-		-		458		-			-			-			-			458
Net loss		-		-		-		(18,396	)		-			-			-			(18,396	)
Other Comprehensive loss		-		-		-		-			(321	)		174			(3	)		(150	)
Loss of control of subsidiary		-		-		-		-			-			-			(2,989	)		(2,989	)
Exercising warrants		1		492,150		680		-			-			-			-			681
Balance, June 30, 2021		121		120,700,995		218,373		(62,823	)		89			-			-			155,760

(B)	Upon the conversion of Series A and B convertible preferred stock, all preferred stock and common stock additional paid-in capital was combined into one account.

	Common Stock				Additional Paid-in		Accumulated			Accumulated Other Comprehensive			Non- controlling			Total Stockholders’
	Amount		Shares		Capital		Deficit			Income (Loss)			Interest			Equity
Balance, December 31, 2021		122		122,435,576		220,786		(76,394	)		(414	)		3,622			147,722
Shares issued to service providers and employees		7		7,130,631		3,817		-			-			-			3,824
Stock based compensation				-		235		-			-			-			235
Net loss		-		-		-		(23,023	)		-			(258	)		(23,281	)
Other Comprehensive loss		-		-		-		-			538			27			565
Balance, June 30, 2022		129		129,566,207		224,838		(99,417	)		124			3,391			129,065

	Common Stock				Additional Paid-in		Accumulated			Accumulated Other Comprehensive			Non- controlling			Total Stockholders’
	Amount		Shares		Capital		Deficit			Income (Loss)			Interest			Equity
Balance, March 31, 2022		122		122,435,576		220,911		(85,080	)		(443	)		3,409			138,919
Shares issued to service providers and employees		7		7,130,631		3,817		-			-			-			3,824
Stock based compensation				-		110		-			-			-			110
Net loss		-		-		-		(14,337	)		-			(99	)		(14,436	)
Other Comprehensive loss		-		-		-		-			567			81			648
Balance, June 30, 2022		129		129,566,207		224,838		(99,417	)		124			3,391			129,065

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements

MICT, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(USD In Thousands)

Nine months ended
September 30,
2021 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (28,631 ) $ (16,021 )

Adjustments to reconcile net loss to net cash used in operating activities:
Gain on previously held equity interest in Micronet Ltd. - (665 )
(Gain) loss from equity investment (636 ) 786
Impairment of equity method investment in Micronet Ltd. - (187 )
Depreciation and amortization 2,416 890
Stock-based compensation for employees and consultants 585 2,675
Loss from loss of control in Micronet Ltd. 1,934 -
Impairment of loan to Micronet Ltd. - (76 )
Interest and exchange rate differences on loans - 3
Interest and exchange rate differences on loans from others - 13
Changes in assets and liabilities
Change in deferred taxes, net (736 ) (205 )
Change in long-term deposit and prepaid expenses 224 -
Change in right of use assets (250 ) -
Change in lease liabilities 165 -
Due to related party (113 ) -
Increase in trade accounts receivable, net (19,556 ) 207
Decrease in inventories - 83
Decrease in accrued severance pay, net - (5 )
Increase in other accounts receivable (5,537 ) (907 )
Increase in trade accounts payable 17,949 (412 )
Increase (decrease) in other current liabilities (2,895 ) 1,620
Net cash used in operating activities (35,081 ) (12,201 )

	Six months ended June 30,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(23,281	)	$	(23,302	)

Adjustments to reconcile net loss to net cash used in operating activities:
Loss from loss of control in Micronet Ltd.		-			1,934
Loss from equity investment		371			163
Depreciation and amortization		1,709			1,648
Provision for doubtful accounts		80			-
Issuance of shares for employees and consultants		3,824			8,375
Stock-based compensation for employees and consultants		235			458
Changes in assets and liabilities:
Change in deferred taxes, net		(1,174	)		(545	)
Change in long-term deposit and prepaid expenses		369			240
Change in right of use assets		338			(2,464	)
Change in lease liabilities		(264	)		2,402
Due to related party		494			167
Decrease (increase) in trade accounts receivable, net		5,774			(15,447	)
Decrease (increase) in other current assets		1,458			(892	)
(Decrease) increase in trade accounts payable		(6,137	)		11,881
Decrease in deposit held on behalf of client		(1,622	)		-
Increase (decrease)in other current liabilities		1,692			(692	)
Net cash used in operating activities		(16,134	)		(16,074	)

MICT, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(USD In Thousands)

Nine months ended
September 30,
2021 2020
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment $ (546 ) $ (4 )
Proceeds from sale of property and equipment 63
Cash acquired through business combination - Magpie (Appendix B) 1,834 -
Payment on business acquired - Beijing Fucheng (Appendix A) (4,891 ) -
Additional investment of Micronet Ltd. - (515 )
Cash acquired through consolidation of Micronet Ltd. (Appendix D) - 268
Net cash acquired on an variable interest entity acquired – All Weather (Appendix E) 755 -
Loan to related party (857 ) (125 )
Loan to related party – Shareholders of All weather (776 ) -
Long Term Deposit - 25
Net cash acquired on an variable interest entity acquired - Guangxi Zhongtong (Appendix F) 460 -
Deconsolidation of Micronet Ltd. (Appendix C) (2,466 ) -
Net cash used in investing activities (6,487 ) (288 )

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of current maturity of long term bank loans (195 ) (184 )
Receipt of short term bank loans - 121
Payment received by convertible notes purchasers - 14,797
Exercise of options - 2,366
Repayment on account of redemption - (15,900 )
Payments on account of shares - 15,900
Proceeds from issuance of shares and warrants 115,242 -
Finance cost related to the convertible notes conversion - 8,877
Proceeds from exercise of warrants 2,554 1,612
Issuance of convertible preferred shares net - 409
Net cash provided by financing activities 117,601 27,998

NET INCREASE IN CASH AND RESTRICTED CASH 76,033 15,509

Cash and restricted cash at beginning of the period 29,049 3,199

TRANSLATION ADJUSTMENT ON CASH AND RESTRICTED CASH 207 (85 )
Cash and restricted cash at end of the period $ 105,289 $ 18,623

Supplemental disclosure of cash flow information:
Amount paid during the period for:

Interest $ 27 $ 25
Taxes $ 195 $ 22

Supplemental non-cash financing information:
Conversion of convertible loan to shares $ - $ 2,000

	Six months ended June 30,
	2022			2021
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(104	)		(294	)
Cash acquired through business combination - Magpie (Appendix B)		-			1,834
Payment on business acquired - Beijing Fucheng (Appendix A)		-			(4,891	)
Loan to related party		-			(500	)
Net cash acquired on an variable interest entity acquired - Guangxi Zhongtong		-			460
Receipt of loan from related party (Micronet)		534			-
Loan to Tingo pursuant to the merger agreement		(3,000	)		-
Deconsolidation of Micronet Ltd. (Appendix C)		-			(2,466	)
*Net cash used in investing activities*		(2,570	)		(5,857	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of bank loans		-			(195	)
Repayment of short-term loan		(736	)		-
Proceeds from issuance of shares and warrants					105,366
Proceeds from exercise of warrants		-			1,894
*Net cash (used in) provided by financing activities*		(736	)		107,065

TRANSLATION ADJUSTMENT ON CASH AND RESTRICTED CASH		445			-

NET INCREASE (DECREASE) IN CASH AND RESTRICTED CASH		(18,995	)		85,134

Cash and restricted cash at beginning of the period		97,347			29,526

Cash and restricted cash at end of the period	$	78,352		$	114,660

Supplemental disclosure of cash flow information:
Amount paid during the period for:

Interest	$	5		$	27
Taxes	$	254		$	63

The following ~~tables~~table provides a reconciliation of cash and restricted cash reported within the statement of financial position that sum to the total of the same amounts shown in the statement of cash flows:

Cash at end of the period $ 105,289 $ 18,146
Restricted cash at end of the period - 477
Cash and restricted cash at end of the period $ 105,289 $ 18,623

Cash at end of the period	$	76,053	$	114,183
Restricted cash at end of the period		2,299		477
Cash and restricted cash at end of the period	$	78,352	$	114,660

Supplemental non-cash investing and financing activities

Appendix A: Beijing Fucheng

	February 10, 2021
Net working capital	$	106
Property and equipment		26
Current liabilities		(55	)
Intangible assets		4,814
Cash	$	4,891

Appendix B: Magpie Securities Limited

	February 26, 2021
Net working capital	$	206
Investment and loan to Magpie		(2,947	)
Property and equipment		24
Current liabilities		(19	)
Intangible assets		902
Cash	$	(1,834	)

Appendix C: Deconsolidation of Micronet Ltd.

	May 9, 2021
Working capital other than cash	$	(3,849	)
Finance lease		33
Accrued severance pay, net		96
Translation reserve		134
Micronet Ltd.investment in fair value		1,128
Non-controlling interests		2,990
Net loss from loss of control		1,934
Cash	$	2,466

~~Appendix D :Acquisition of Micronet Ltd., net of cash acquired:~~

June 23,
2020
Net working capital (borrowing excluded) $ (351 )
Property and equipment 661
Intangible assets 2,475
Goodwill 2,618
Right of use assets 310
Other assets 26
Borrowings (1,676 )
Micronet Ltd. investment in fair value (1,573 )
Non-current liabilities (558 )
Accumulated other comprehensive income (28 )
Minority interest (2,172 )
Net cash provided by acquisition $ (268 )

~~Appendix E: All Weather Insurance Agency~~

July 1,
2021
Net working capital $ (908 )
Property and equipment 153
Cash $ (755 )

~~Appendix F : Guangxi Zhongtong Insurance Agency Co., Ltd:~~

June 23,
2020
Net working capital $ (473 )
Property and equipment 13
Net cash provided by acquisition $ (460 )

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements

MICT, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except Share and Par Value data)

NOTE 1 — DESCRIPTION OF BUSINESS

Overview

MICT, ~~Inc~~Inc. (“MICT”, the “Company”, “We”, “us”, “our”) was formed as a Delaware corporation on January 31, 2002. On March 14, 2013, we changed our corporate name from Lapis Technologies, Inc. to Micronet Enertec Technologies, Inc. On July 13, 2018, following the sale of our former subsidiary Enertec Systems Ltd., we changed our name from Micronet Enertec Technologies, Inc. to MICT. Our shares have been listed for trading on The Nasdaq Capital Market under the symbol “MICT” since April 29, 2013.

MICT Telematics Ltd (“MICT Telematics”) is a wholly-owned holding company, established in Israel on December 31, 1991. On October 22, 1993, MICT Telematics established a wholly-owned holding company headquartered in Israel, MICT Management Ltd.

On February 1, 2019, BI Intermediate (Hong Kong) Limited (“BI Intermediate”) was incorporated in Hong Kong as a wholly-owned holding company of GFH Intermediate Holdings Ltd. (“GFHI” or “Intermediate”).

On December 11, 2019, Bokefa Petroleum and Gas Co., Ltd (“Bokefa Petroleum” ) was incorporated in Hong Kong as a holding company, and is the wholly-owned subsidiary of BI Intermediate. On October 22, 2020 and March 8, 2021, Bokefa Petroleum established two additional holding companies, Shanghai Zheng Zhong Energy Technologies Co., Ltd (“Shanghai Zheng Zhong”) and ~~Tianin~~Tianjin Bokefa Technology Co., Ltd. (“Bokefa”).

On June 10, 2020, MICT Telematics purchased 5,999,996 ordinary shares of Micronet Ltd. (“Micronet”) for aggregate proceeds of New Israeli Shekel (“NIS”) ~~1.8 Million~~1,800 (or ~~$515,000)~~$515) through tender offer issued by MICT Telematics. As a result, increased our ownership interest in Micronet to 45.53% of Micronet’s issued and outstanding ordinary shares.

Subsequently, on June 23, 2020 we purchased, through a public offering consummated by Micronet on the Tel Aviv Stock Exchange (the “TASE”), 10,334,000 of Micronet’s ordinary shares for total consideration of NIS ~~3,100,200~~3,100 (or ~~$887,000)~~$887). As a result, we increased our ownership interest in Micronet to 53.39% of Micronet’s outstanding ordinary shares. MICT applied purchase accounting and began to consolidate Micronet’s operating results into our financial statements once the offering was consummated. MICT recognized a ~~$665,000,~~$665 gain on previously held equity in Micronet.

On October 11, 2020, Micronet consummated a public equity offering on the ~~Tel Aviv Stock Exchange (the “TASE”),~~TASE, in which the Company purchased 520,600 of Micronet’s ordinary shares and 416,480 of Micronet’s stock options convertible into 416,480 Micronet ordinary shares (at a conversion price of NIS 3.5 per share), for total consideration of NIS ~~4,961,202~~4,961 (or ~~$1,417,486)~~$1,417). Following Micronet’s offering, including the purchase of Micronet shares, the exercise of our stock options and the additional purchase of 115,851 Micronet shares from an individual seller, our ownership interest in Micronet was diluted from 53.39% to 50.31% of Micronet’s outstanding share capital. On May 9, 2021, following the exercise of options by minority stockholders, the Company’s ownership interest was further diluted to 49.88% and, as a result we no longer consolidate Micronet’s operating results in our financial statements. As of May 9, 2021, the Company accounted for the investment in Micronet using the equity method of accounting.

MICT, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except Share and Par Value data)

Prior to July 1, 2020, MICT operated primarily through its Israel-based majority-owned subsidiary, Micronet. Since July 1, 2020, after MICT completed its acquisition ~~(the “Acquisition”)~~ of GFHI pursuant to that certain ~~Agreement~~agreement and ~~Plan~~plan of ~~Merger~~merger entered into on November 7, 2019 by and between MICT, GFHI, Global Fintech Holding Ltd. (“GFH”), a British Virgin Islands company and the sole shareholder of GFHI, and MICT Merger Subsidiary Inc., a British Virgin Islands company and a wholly owned subsidiary of MICT, ~~(“Merger Sub”),~~ as amended and restated on April 15, 2020 (the “Restated Merger Agreement” or “Merger”)~~, we have been operating in the~~. MICT is a holding company conducting financial technology ~~sector. GFHI is a financial technology company~~business through its subsidiaries and entities controlled through various VIEs arrangements with a marketplace in China, , as well as other areas of the world, and is currently in the process of building various platforms for business opportunities in different insurance platform segments (formerly: verticals and technology ~~segments~~segments) in order to capitalize on such technology and business. GFHI plans to increase its capabilities and its technological platforms through acquisition and licensing technologies to support its growth efforts in the different market segments. After the ~~Merger,~~merger, MICT includes the business of Intermediate, its wholly-owned subsidiary, operating through its operating subsidiaries, as described herein.

On October 2, 2020, BI Intermediate entered into a strategic agreement (the “Strategic Agreement”) to acquire the entire share capital of Magpie Securities Limited (“Magpie”), a Hong Kong based securities and investments firm for a total purchase price of approximately ~~$3.0 million~~$3,000 (the “Purchase Price”). Magpie is licensed to trade securities on leading exchanges in Hong Kong, the U.S. and China, including China A-Shares, all of which are the primary target markets for Company’s global fintech business. The Strategic Agreement provided that the acquisition would be consummated in two phases, an initial purchase whereby 9% of the share capital of Magpie was acquired and thereafter, the remaining 91% of Magpie would be purchased by BI Intermediate upon, and subject to, the approval of the Hong Kong Securities and Futures Commission ~~(SFC)~~(the “SFC”), the principal regulator of Hong Kong’s securities and futures markets. On November 11, 2020, BI Intermediate closed on its acquisition of the first 9% and paid 9% of the Purchase Price. Additionally, pursuant to the Strategic Agreement upon the initial closing, BI Intermediate loaned Magpie an amount equivalent to the remaining 91% of the Purchase Price. Upon closing on the remaining 91%, which remained subject to SFC approval, the loan will be cancelled, and BI Intermediate will acquire the remaining 91% of Magpie. The loan was secured against the pledge of 91% of the share capital of Magpie purchased at such time by BI Intermediate. The obligations of Magpie ~~the seller of the interests of Magpie under the loan agreement,~~ have been guaranteed by ~~the~~its majority ~~shareholder of Magpie.~~shareholder. On February 26, 2021 we finalized the acquisition of Magpie. The acquisition was consummated following the receipt of approval from the SFC effecting the change in the majority shareholder of Magpie. In consideration for the entire share capital of Magpie, we paid a total Purchase Price of ~~$2.947 million~~$2,947 (reflecting the net asset value of Magpie estimated at ~~$2.034 million~~$2,034 recorded as a working capital, and a premium $902 ~~thousands~~ that was recorded as a license in the intangible assets). The Company, through and together with the Company’s wholly owned subsidiaries, Beijing Magpie Securities Consulting Services Co., Ltd (“Beijing Magpie”) and Shenzhen Magpie Information Consulting Technology Co., Ltd (“Shenzhen Magpie”), are in the process of integrating its mobile app ~~supporting~~ platform with Magpie’s licensed trading assets.

Upon completion of the acquisition of 100% of the equity interest in Magpie, we were able to obtain the licenses and permits needed for operating our online platform. After we complete the appropriate system testing to ensure scale and reliability, we will be in a position to notify the Hong Kong regulator of our intended launch date. Our initial plan is to launch the online stock trading platform in Hong Kong.

On January 1, 2021, we entered into a transaction through our wholly-owned subsidiary, Bokefa, with the shareholders of Guangxi Zhongtong Insurance Agency Co., Ltd (“Guangxi Zhongtong”), a local Chinese entity with business and operations in the insurance brokerage business. Pursuant to the transaction, we loaned the Guangxi Zhongtong shareholders through a frame work loan (the “GZ Frame Work Loan”) the amount of up to RMB ~~40 million~~40,000 (approximately ~~$6,125,000)~~$6,125) (“GZ Frame Work Loan Amount”) which is designated, if exercised, to be used as a working capital loan for Guangxi Zhongtong. As of ~~September~~June 30, ~~2021,~~2022, only RMB ~~8,010,000~~8,010 (approximately ~~$1,243,000)~~$1,243) was drawn down from the GZ Frame Work Loan for working capital and approximately ~~$857,000~~$919 was drawn down for loans to shareholders of Guangxi Zhongtong (as stipulated in the agreement). In consideration for the GZ Frame Work Loan, the parties entered into various additional agreements which include: (i) a pledge agreement pursuant to which the shareholders have pledged their shares for the benefit of Bokefa in order to secure the GZ Frame work Loan Amount (ii) an exclusive option agreement pursuant to which Bokefa has an exclusive option to purchase the entire issued and outstanding common shares of Guangxi Zhongtong from the shareholders (“Option Agreement”) under such terms set forth therein (which include an exercise price not less than the maximum GZ Frame Work Loan Amount and the right to convert the GZ Frame Work Loan Amount into the purchased shares) (iii) an entrustment agreement and power of attorney agreement pursuant to which the shareholders irrevocably entrusted and appointed Tianjin Bokefa as their proxy and trustee to exercise on their behalf any and all rights under applicable law and the articles of association of Guangxi Zhongtong in the shareholder’s equity interest in Guangxi Zhongtong (iv) a business cooperation agreement and a master exclusive service agreement which grants Bokefa rights related to Guangxi Zhongtong’s business and operations in order to secure repayment of the GZ Frame Work Loan Amount.

~~This transaction~~

MICT, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except Share and Par Value data)

was structured pursuant to a Variable Interest Entity (“VIE”) Structure (in which we do not hold the shares). As such, and given our direct ownership in Bokefa and its contractual arrangements with Guangxi Zhongtong, we are regarded as Guangxi Zhongtong’s controlling entity and primary beneficiary of Guangxi Zhongtong business. We have, therefore, consolidated the financial position and operating results of Guangxi Zhongtong into our consolidated financial statements, using the fair value of the assets and liabilities of Guangxi Zhongtong in accordance with U.S. GAAP. ~~Please see below for VIE related disclosure.~~

Beijing Fucheng Lianbao Technology Co., Ltd (“Beijing Fucheng”) is an entity incorporated on December 29, 2020, in which ~~“Bokefa~~Bokefa owns 24% equity interest with the remaining 76% controlled by Bokefa through VIE agreements. On February 10, 2021, Beijing Fucheng acquired all of the shares of Beijing Yibao Technology Co., Ltd., (“Beijing Yibao”) which holds 100% of the equity interest in Beijing Fucheng Insurance Brokerage Co., Ltd. (“Fucheng Insurance”). Fucheng Insurance is a Chinese insurance brokerage agency and a nation-wide licensed entity which offers insurance brokerage services for a broad range of insurance products. Fucheng Insurance, ~~with and~~ through their nationwide license, will give us the flexibility to offer and create tailor-made insurance products, leverage customers directly or through distribution partners and procure better deals with both our existing and new insurance company partners. Fucheng Insurance further enables us to accelerate the onboarding of new agents onto our platforms all throughout China. It also creates the opportunity to promote our business through some of China’s biggest online portals, which will provide business-to-business-to-consumer (B2B2C) as well as business-to-consumer (B2C) channels. When Fucheng Insurance initiates its nationwide rollout of its mobile application, it will facilitate access to those portals’ ~~vast~~large customer bases which will also offer MICT’S full suite of insurance products. Beijing Fucheng shares were acquired for approximately ~~$5.7 million,~~$5,700, and funded through MICT. For further information please refer to Note 7.

On June 16, 2021, Micronet announced that it completed a public equity offering on the TASE. Pursuant to the offering, Micronet sold an aggregate of 18,400 securities units (the “Units”) at a price of NIS 14.6 per Unit with each Unit consisting of 100 ordinary shares, 25 series A options and 75 series B options, resulting in the issuance of 1,840,000 ordinary shares, 460,000 series A options and 1,380,000 series B options. Micronet raised total gross proceeds of NIS ~~26,864,000~~26,864 (approximately ~~$8,290,000)~~$8,290) in the offering. The Company did not participate in the offering, and, as a result, the Company owned ~~36.95%~~31.47% of the outstanding ordinary shares of Micronet and ~~26.56%~~26.83% on a fully diluted basis as of ~~September~~June 30, ~~2021.~~2022.

On July 1, 2021, Bokefa entered into a transaction with the shareholders of All Weather Insurance Agency Co., Ltd (“All Weather”), a local Chinese entity with business and operations in the field of broker insurance (the “Transaction”). Pursuant to the Transaction, Bokefa agreed to provide the All Weather shareholders with a frame work loan (the “AW Frame Work Loan”) for a total amount of up to RMB ~~30 million~~30,000 (approximately ~~$4.7 million)~~$4,700) (the “AW Frame ~~work~~Work Loan Amount”) which, if utilized, will be ~~ued~~used for working capital purposes of All Weather. In consideration for the AW Frame Work Loan, the parties entered into various additional agreements which include: (i) a pledge agreement pursuant to which the shareholders pledged their shares for the benefit of Bokefa in order to secure the amount for the AW Frame Work Loan Amount (ii) an exclusive option agreement pursuant to which Bokefa has an exclusive option to purchase the entire issued and outstanding common shares of All Weather from the Shareholders (“Option Agreement”) under such terms set forth in the Option Agreement (which include an exercise price not less than the maximum AW Frame Work Loan Amount and the right to convert the AW Frame Work Loan Amount into the purchased shares) (iii) an entrustment agreement and power of attorney agreement pursuant to which the shareholders irrevocably entrusted and appointed Bokefa as their proxy and trustee to exercise on their behalf any and all rights under applicable law and the articles of association of All Weather in the shareholder’s equity interest in All Weather and (iv) a business cooperation agreement and a master exclusive service agreement which grants Bokefa rights related to All Weather’s business and operations in order to secure repayment of the AW Frame Work Loan Amount. The Transaction was structured as a VIE structure (pursuant to which we do not technically hold the shares) and as a result of our direct ownership in Bokefa and its contractual arrangements with All Weather, we are regarded as All Weather’s controlling entity and the primary beneficiary of All Weather’s business. On October 27, 2021, the entire AW Frame Work Loan Amount was utilized by the All Weather shareholders and the AW Frame Work Loan Amount was transferred to All Weather for purposes of working capital. In addition, as of ~~September~~June 30, ~~2021,~~2022, the Company granted All Weather shareholders ~~with~~ an additional loan in the sum of approximately ~~$776,000,~~$776 to be provided in advance to a transaction between the parties pursuant to which the VIE structure described above shall be replaced by an equity structure for ~~the~~ purchase by MICT of such equity interests in All Weather on such commercial and other terms to be agreed by the parties.

MICT, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except Share and Par Value data)

All Weather Appraisal Co., Ltd. (All Weather Appraisal) is a subsidiary of All Weather Insurance Agency Co., Ltd, which holds 99.6% equity in All Weather Appraisal. All Weather Appraisal is a nationwide company and is approved by the China Banking and Insurance Regulatory Commission, specializing in the appraisal, evaluation, inspection and damage assessment of subjects of Insurance.

On August 23, 2021, Beijing Yibao Technology Co., Ltd, Guangxi Zhongtong Insurance Agency Co., Ltd, and two shareholders of Guangxi Zhongtong entered into a capital increase agreement pursuant to which Beijing Yibao will invest approximately ~~RMB30 million (USD 4.7 million)~~RMB30,000 ($4,700) into Guangxi Zhongtong. On October 21, 2021, Beijing Yibao transferred ~~such~~the funds separately and the transaction closed. As a result of the transaction, Beijing ~~Yiabo~~Yibao now holds a sixty percent (60%) equity interest in Guangxi Zhongtong and is the controlling shareholder. As a condition of the closing, the previous agreements consummated on January 1, 2021 per the GZ Frame Work Loan became null and ~~void.~~void, and the loan should be repaid by the shareholders before December 31, 2022.

From January through September 2021, Shenzhen Bokefa Technology Co., Ltd (“Shenzhen Bokefa”) and Tianjin Dibao Technology Co., Ltd (“Tianjin Dibao”) were established under BI Intermediate as holding companies to further develop the Company’s insurance business in China. As of June 30, 2022, no substantial operations conducted in those two entities.

Our current business, following the completion of the acquisition of GFHI, is primarily comprised and focused on the growth and development of the GFHI financial technology ~~offering~~offerings and the marketplace in China. We are in the process of building various platforms for business opportunities in different insurance platform segments (formerly: verticals and technology ~~segments~~segments) in order to capitalize on such technology and business.

As a result of our acquisition of GFHI and the subsequent work we have undertaken with the management of GFHI, we are positioned to establish ourselves, through our operating subsidiaries and VIEs, to serve the markets as a financial technology company with a significant Chinese marketplace. We plan to expand on a global level as we continue to scale our business. GFHI has built various platforms to capitalize on business opportunities in a range of insurance platform segments (formerly: verticals and technology ~~segments,~~segments), which currently include stock trading and wealth management, commodities in segments of oil and gas trading and insurance brokerage. We are seeking to secure material contracts in all of these market segments in China while also developing opportunities in order to allow GFHI access to these markets. We will continue to increase the capabilities of our platforms through acquisition and/or licensing different technologies to support our efforts. By building secure, reliable and scalable platforms with high volume processing capability, we intend to provide customized solutions that address the needs of a highly diverse and broad client base.

We implemented our plans by capitalizing on Intermediate’s experience with local markets in China, as well as with the Company’s operating subsidiaries, which have begun to secure material contracts in fast growing market segments in China.

Our current opportunities have given us access the following market segments:

●

Stock trading and wealth management segment;

●

Commodities in the field of Oil and gas trading segment; and

●

Insurance brokerage segment

These opportunities will continue to be realized and executed through our business development efforts, which include the acquisition of potential target entities, business and assets (such as applicable required licenses) in the relevant business space and segments in which we plan to operate. This allows the Company to enter into the market quickly and leverage existing assets in order to promote our growth strategy.

On April 2, 2022, Shanghai Zhengzhong Energy Technology Co., Ltd. (Zhengzhong Energy”), our wholly owned subsidiary, entered into a transaction with the shareholders of Tianjin Dibao Technology Development Co. Ltd.(“Tianjin Dibao”) the parties have entered into various additional agreements, which was structured pursuant to a Variable Interest Entity (VIE) Structure according to which Zhengzhong Energy is the primary beneficiary of the 76% interest in Dibao, and the remaining 24% equity was held directly by Zhengzhong Energy.

MICT, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except Share and Par Value data)

On April 5, 2022, Beijing Fucheng Lianbao disposed its subsidiary of Beijing Fucheng Prospect Technology Co., Ltd (“Fucheng Prospect”).The shares previously held by Beijing Fucheng Lianbao were transferred to an individual Wang Yuanyuan on April 5, 2022. The stockholders’ deficit of Fucheng Prospect as of April 5, 2022 was $94 and transaction price was zero. The Company recognized a gain of $ 94 for disposing and stopped consolidating its financials starting from April.

The following diagram illustrates the Company’s corporate structure, including its subsidiaries, and variable interest entities (“VIEs”), as of ~~September~~June 30, ~~2021:~~2022:

VIE agreements with Guangxi Zhongtong:

On January 1, 2021, Bokefa, our wholly foreign-owned enterprise (“WFOE”), Guangxi Zhongtong, and nominee shareholders of Guangxi Zhongtong entered into six agreements, described below, pursuant to which Bokefa is deemed to have controlling financial interest and be the primary beneficiary of Guangxi Zhogntong. Therefore, Guangxi Zhongtong is deemed a VIE of Bokefa:

Loan Agreement

Pursuant to this agreement, Bokefa agreed to provide loans to the registered shareholders of Guangxi Zhongtong. The ~~effective~~ term of the loan ~~agreement~~shall start from the date when the loan is ~~unlimited, and~~actually paid, until the date on which the loan is repaid in full. The agreement shall terminate when the shareholders repay the loan. The loan should be used solely for Guangxi Zhongtong’s operating expenses and should be exclusively repaid by transferring shares of Guangxi Zhongtong to Bokefa when PRC Law permits.

Exclusive Option Agreement

The effective term of the agreement is unlimited and the agreement shall terminate upon the transfer of all the equity interest of Guangxi Zhongtong to Bokefa in accordance with relevant laws and provisions as provided in the agreement, or upon written notice by Bokefa to shareholders. In consideration of Bokefa’s loan arrangement, the shareholders have agreed to grant Bokefa an exclusive option to purchase their equity interest. Distribution of residual profits, if any, are restricted without the approval of Bokefa. Upon request by Bokefa, Guangxi Zhongtong is obligated to distribute profits to the shareholders of Guangxi Zhongtong, who must remit such profits to Bokefa immediately. Guangxi Zhongtong and its shareholders are required to act in a manner that is in the best interest of Bokefa with regards to Guangxi Zhongtong’s business operation.

Equity Pledge Agreement

The agreement will be terminated upon such date when the other agreements have been terminated. Pursuant to the agreement, the nominee ~~shareholder~~shareholders pledged all ~~its~~their equity interest in Guangxi Zhongtong to Bokefa as security for the obligations in the other agreements. Bokefa has the right to receive dividends on the pledged shares, and all shareholders are required to act in a manner that is in the best interest of Bokefa.

MICT, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except Share and Par Value data)

Business Cooperation Agreement

The agreement is effective until terminated by both parties. Guangxi Zhongtong and its shareholders agree that the legal person, directors, general manager and other senior officers of Guangxi Zhongtong should be appointed or elected by Bokefa. Guangxi Zhongtong and its shareholders agree that all the financial and operational decisions for Guangxi Zhongtong will be made by Bokefa.

Exclusive Service Agreement

The effective term of this agreement is for one year and it can be extended an unlimited number of times if agreed by both parties. Bokefa agrees to provide exclusive technical consulting and support services to Guangxi Zhongtong and Guangxi Zhongtong agrees to pay service fees to Bokefa.

Entrustment and Power of Attorney Agreement

The shareholders of Guangxi Zhongtong agreed to entrust all the rights to exercise their voting power and any other rights as shareholders of Guangxi Zhongtong to Bokefa. The shareholders of Guangxi Zhongtong have each executed an irrevocable power of attorney to appoint Bokefa as their attorney-in-fact to vote on their behalf on all matters requiring shareholder approval. The agreement is effective until deregistration of Guangxi Zhongtong.

On August 23, 2021, Beijing Yibao Technology Co., Ltd, Guangxi Zhongtong Insurance Agency Co., Ltd, and two shareholders of Guangxi Zhongtong entered into a capital increase agreement pursuant to which Beijing Yibao will invest approximately RMB30,000 ($4,700) into Guangxi Zhongtong. On October 21, 2021, Beijing Yibao transferred the funds separately and the transaction closed. As a result of the transaction, Beijing Yibao now holds a sixty percent (60%) equity interest in Guangxi Zhongtong and is the controlling shareholder. As a condition of the closing, the previous agreements consummated on January 1, 2021 per the GZ Frame Work Loan became null and void, and the loan should be repaid by the shareholders before December 31, 2022.

VIE agreements with Beijing Fucheng:

On December 31, 2020, as amended on August 25, 2021, Bokefa, Beijing Fucheng Lianbao Technology Co., Ltd. (“Beijing Fucheng”), and ~~a shareholder~~the shareholders of Beijing Fucheng entered into six agreements, described below, pursuant to which Bokefa is deemed to have a controlling financial interest and be the primary beneficiary of Beijing Fucheng,. Therefore, Beijing Fucheng is deemed a VIE of Bokefa. Beijing Fucheng was incorporated on December 29, 2020 and had no assets or liabilities as of December 31, 2020.

Loan Agreement

Pursuant to this agreement, Bokefa agreed to provide loans to the registered shareholders of Beijing Fucheng. The ~~effective~~ term of the loan under this agreement shall start from the date when the loan is ~~unlimited,~~actually paid and shall continue until the shareholders repay all the loan in accordance with this agreement. The agreement ~~terminates~~shall terminate when the shareholders repay the loan. The loan should be used solely for Beijing Fucheng’s operating expenses, and should be exclusively repaid by transferring shares of Beijing Fucheng to Bokefa when PRC Law permits.

Exclusive Option Agreement

The effective term of the agreement is unlimited and the agreement shall terminate upon the transfer of all of the equity interest of Bejing Fucheng to Bokefa in accordance with relevant laws and provisions as provided in the agreement, or upon written notice by Bokefa to the shareholders. In consideration for Bokefa’s loan arrangement, the shareholders have agreed to grant Bokefa an exclusive option to purchase their equity interest. Distribution of residual profits, if any, is restricted without the approval of Bokefa. Upon request by Bokefa, Beijing Fucheng is obligated to distribute profits to the shareholders of Beijing Fucheng, who must remit those profits to Bokefa immediately. Beijing Fucheng and its shareholders are required to act in a manner that is in the best interest of Bokefa with regards to Beijing Fucheng’s business operations.

MICT, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except Share and Par Value data)

Equity Pledge Agreement

~~Equity Pledge Agreement~~

The agreement will be terminated at the date when the other agreements have been terminated. Pursuant to the agreement, the shareholders pledged all their equity interest in Beijing Fucheng to Bokefa as security for ~~its~~their obligations under the agreements. Bokefa has the right to receive dividends on the pledged shares, and all shareholders are required to act in a manner that is in the best interest of Bokefa.

Business Cooperation Agreement

The agreement is effective until terminated by both parties. Beijing Fucheng and its shareholders agree that the legal person, directors, general manager and other senior officers of Beijing Fucheng should be appointed or elected by Bokefa. Beijing Fucheng and its shareholders agree that all financial and operational decisions of Beijing Fucheng will be made by Bokefa.

Exclusive Service Agreement

The effective term of this agreement is for one year and it can be extended an unlimited number of times if agreed by both parties. Bokefa agrees to provide exclusive technical consulting and support services to Beijing Fucheng and Beijing Fucheng agrees to pay service fees to Bokefa.

Entrustment and Power of Attorney Agreement

The shareholders of Beijing Fucheng agreed to entrust all the rights to exercise their voting power and any other rights as shareholders of Beijing Fucheng to Bokefa. The shareholders of Beijing Fucheng have each executed an irrevocable power of attorney to appoint Bokefa as their attorney-in-fact to vote on their behalf on all matters requiring shareholder approval. The agreement is effective until deregistration of Beijing Fucheng.

VIE agreements with All Weather:

On July 1, 2021, Bokefa, All Weather, and nominee shareholders of All Weather entered into six agreements, described below, pursuant to which Bokefa is deemed to have a controlling financial interest and be the primary beneficiary of All Weather. All Weather is deemed a VIE of ~~Bokefa~~Bokefa.

Loan Agreement

Pursuant to this agreement, Bokefa agreed to provide loans to the ~~registered~~ shareholders of All Weather. The ~~effective~~ term of the loan ~~agreement~~ is ~~unlimited,~~one year and shall start from the date when the loan is actually paid. The agreement shall terminate when the shareholders repay the loan. The loan should be used solely by All Weather for operating expenses, and should be exclusively repaid by transferring shares of All Weather to Bokefa when PRC Law permits.

Exclusive Option Agreement

The effective term of the agreement is unlimited and the agreement shall terminate upon the transfer of all of the equity interest of All Weather to Bokefa in accordance with relevant laws and provisions in the agreement, or upon written notice by Bokefa to the shareholders. In consideration for Bokefa’s loan arrangement, the shareholders have agreed to grant Bokefa an exclusive option to purchase their equity interest. Distribution of residual profits, if any, is restricted without the approval of Bokefa. Upon request by Bokefa, All Weather is obligated to distribute profits to the shareholders of All Weather, who must remit the profits to Bokefa immediately. All Weather and its shareholders are required to act in a manner that is in the best interest of Bokefa with regard to All Weather’s business operations.

~~Equity Pledge Agreement~~

Equity Pledge Agreement

The agreement will be terminated at the date when the other agreements have been terminated. Pursuant to the agreement, the nominee shareholders pledged all of their equity interest in All Weather to Bokefa as security for their obligations pursuant to the other agreements. Bokefa has the right to receive dividends on the pledged shares, and all shareholders are required to act in a manner that is in the best interest of Bokefa.

Business Cooperation Agreement

The agreement is effective until terminated by both parties. All Weather and its shareholders agree that the legal person, directors, general manager and other senior officers of All Weather should be appointed or elected by Bokefa. All Weather and its shareholders agree that all the financial and operational decisions of All Weather will be made by Bokefa.

MICT, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except Share and Par Value data)

Exclusive Service Agreement

The effective term of this agreement is for one year and it can be extended an unlimited number of times if agreed by both parties. Bokefa agrees to provide exclusive technical consulting and support services to All Weather and All Weather agrees to pay service fees to Bokefa.

Entrustment and Power of Attorney Agreement

The shareholders of All Weather agreed to entrust all their rights to exercise their voting power and any other rights as shareholders of All Weather to Bokefa. The shareholders of All Weather have each executed an irrevocable power of attorney to appoint Bokefa as their attorney-in-fact to vote on their behalf on all matters requiring shareholder approval. The agreement is effective until the deregistration of All Weather.

VIE agreements with Tianjin Dibao:

On April 2, 2022, Zhengzhong Energy, Tianjin Dibao, and nominee shareholder of Tianjin Dibao entered into six agreements, described below, pursuant to which Zhengzhong Energy is deemed to have a controlling financial interest and be the primary beneficiary of Tianjin Dibao. Tianjin Dibao is deemed a VIE of Zhengzhong Energy.

Loan Agreement

Pursuant to this agreement, Zhengzhong Energy agreed to provide loans to the shareholder of Tianjin Dibao. The term of the loan shall start from the date when the loan is actually paid. The agreement shall terminate when the shareholder repay the loan. The loan should be used solely to purchase Tianjin Dibao‘s 76% equity, and should be exclusively repaid by transferring shares of Tianjin Dibao to Zhengzhong Energy when PRC Law permits.

Exclusive Option Agreement

The effective term of the agreement is unlimited and the agreement shall terminate upon the transfer of all of the equity interest of Tianjin Dibao to Zhengzhong Energy in accordance with relevant laws and provisions in the agreement, or upon written notice by Zhengzhong Energy to the shareholder. In consideration for Zhengzhong Energy’s loan arrangement, the shareholder have agreed to grant Zhengzhong Energy an exclusive option to purchase their equity interest. Distribution of residual profits, if any, is restricted without the approval of Zhengzhong Energy. Upon request by Zhengzhong Energy, Tianjin Dibao is obligated to distribute profits to the shareholder of Tianjin Dibao, who must remit the profits to Zhengzhong Energy immediately. Tianjin Dibao and its shareholder are required to act in a manner that is in the best interest of Zhengzhong Energy with regard to Tianjin Dibao’s business operations.

Equity Pledge Agreement

The agreement will be terminated at the date when the other agreements have been terminated. Pursuant to the agreement, the nominee shareholder pledged all of their equity interest in Tianjin Dibao to Zhengzhong Energy as security for their obligations pursuant to the other agreements. Zhengzhong Energy has the right to receive dividends on the pledged shares, and all shareholder are required to act in a manner that is in the best interest of Zhengzhong Energy.

Business Cooperation Agreement

The agreement is effective until terminated by both parties. Tianjin Dibao and its shareholder agree that the legal person, directors, general manager and other senior officers of Tianjin Dibao should be appointed or elected by Zhengzhong Energy. Tianjin Dibao and its shareholder agree that all the financial and operational decisions of Tianjin Dibao will be made by Zhengzhong Energy.

MICT, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except Share and Par Value data)

Exclusive Service Agreement

The effective term of this agreement is for one year and it can be extended an unlimited number of times if agreed by both parties. Zhengzhong Energy agrees to provide exclusive technical consulting and support services to Tianjin Dibao and Tianjin Dibao agrees to pay service fees to Zhengzhong Energy.

Entrustment and Power of Attorney Agreement

The shareholder of Tianjin Dibao agreed to entrust all their rights to exercise their voting power and any other rights as shareholder of Tianjin Dibao to Zhengzhong Energy. The shareholder of Tianjin Dibao have each executed an irrevocable power of attorney to appoint Zhengzhong Energy as their attorney-in-fact to vote on their behalf on all matters requiring shareholder approval. The agreement is effective until the deregistration of Tianjin Dibao.

The assets and liabilities of the Company’s VIEs ~~(Guangxi Zhongtong, All~~(All Weather, Beijing Fucheng and ~~Beijing Fucheng)~~Tianjin Dibao) included in the Company’s unaudited condensed consolidated financial statements as of ~~September~~June 30, 2022 and December 31, 2021 are as follows:

	September 30, 2021 USD in thousands		June 30, 2022		December 31, 2021
	(Unaudited)
Current assets:
Cash	$	2,062	$	3,323	$	1,260
Trade accounts receivable, net		17,193		3,359		2,462
Other current assets		5,433		3,288		4,550
Total current assets		24,688		9,970		8,272

Property and equipment, net		254		213		208
Intangible assets				5,715		5,718
Long-term prepaid expenses		23		53		48
Right of use assets		139		442		530
Intangible assets		4,814
Restricted cash				1,523		1,632
Deferred tax assets				780		369
Total long-term assets		5,230		8,726		8,505

Total assets	$	29,918	$	18,696	$	16,777

Current liabilities:
Short term loan from others			$	743	$	1,155
Trade accounts payable	$	17,475		756		697
Related party				2,968		4,583
Other current liabilities		6,590		5,626		2,401
Total current liabilities		24,065		10,093		8,836


Long -term liabilities:
Long-term liabilities:
Lease liability	$	194		123		106
Deferred tax liability				224		224
Total long-term liabilities	$	194		347		330

Total liabilities	$	24,259	$	10,440	$	9,166

MICT, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except Share and Par Value data)

Net revenues, loss from operations and net loss of the VIEs that were included in the Company’s unaudited condensed consolidated financial statements for the three and ~~nine months~~six month ended ~~September~~June 30, 2022 and 2021 are as ~~follows:~~follows :

For the
Three Months
Ended For the
Nine Months
Ended
September 30, September 30,
2021 2021
USD
in thousands USD
in thousands
(Unaudited) (Unaudited)
Net revenues $ 17,445 $ 31,710
Loss from operations $ 603 $ (490 )
Net loss $ 603 $ (490 )

	For the six months Ended			For the six months Ended			For the Three months Ended			For the Three months Ended
	June 30,			June 30,			June 30,			June 30,
	2022			2021			2022			2021

Net revenues	$	19,593		$	14,265		$	10,729		$	8,055
Loss from operations	$	(2,321	)	$	(1,093	)	$	(137	)	$	(1,343	)
Net loss	$	(1,504	)	$	(1,101	)	$	68		$	(1,260	)

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair presentation of the Company’s financial position, its results of operations and its cash flows, as applicable, have been made. Interim results are not necessarily indicative of results to be expected for the full year. The information included in this Form 10-Q should be read in conjunction with information included in the Company’s December 31, ~~2020~~2021 annual report on Form 10-K filed on ~~March 31, 2021.~~June 17, 2022.

The Company’s operations and business may still be subject to adverse effect due to the unprecedented conditions surrounding the spread of COVID-19 throughout North America, Israel, China and the rest of the world. Although currently the COVID-19 (due to the measures implemented to reduce the spread of the virus) have not had a material adverse effect on the ~~Company~~Company’s consolidated financial ~~reports;~~reports, however, there were lockdowns in numerous provinces, which prevented employees of MICT and representatives of Friedman LLP, MICT’s registered independent audit firm from accessing a number of MICT’s offices in these affected provinces, which cause a delay in filing the financial reports on time. In addition, there was a decrease in revenues from Guangxi Zhongtong as a result of the lockdown in certain cities and regions due to the COVID-19 impacts.; there can be no assurance that Company’s financial reports will not be affected in the future from COVID-19 or resulting from restrictions and other government actions.

~~Principles of Consolidation~~

MICT, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except Share and Par Value data)

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the U.S. GAAP. The accompanying unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries and variable interest entities. All significant intercompany transactions and balances among the Company and its subsidiaries are eliminated upon consolidation.

Cash

Cash consists of cash on hand, demand deposits and time deposits placed with banks or other financial institutions and have original maturities of less than three months.

Accounts receivable, net

Accounts receivable include trade accounts due from customers. Accounts are considered overdue after thirty (30) days from payment due date. In establishing the required allowance for doubtful accounts, management considers historical collection experience, aging of the receivables, the economic environment, industry trend analysis, and the credit history and financial conditions of the customers. Management reviews its receivables on a regular basis to determine if the bad debt allowance is adequate, and adjusts the allowance when necessary. Delinquent account balances are written off against allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, allowance for doubtful accounts amounted to ~~nil~~approximately $2,557 and ~~approximately $5,000,~~$2,606, respectively.

~~Inventories~~

Inventories consisting of raw materials are stated at the lower of cost (first-in, first-out basis) or realizable value. Cost of work in process is comprised of direct materials, direct production costs and an allocation of production overheads based on normal operating capacity.

Foreign currency translation and transaction

The reporting currency of the Company is the U.S. dollar. The Companies in China conducts their businesses in the local currency, Renminbi (RMB), as its functional currency. The Companies in Israel conducts their businesses in the local currency, New Israeli Shekel (NIS), as its functional currency. The Companies in Hong Kong conducts their businesses in the local currency, Hong Kong Dollar (HKD), as its functional currency.

Assets and liabilities are translated at the noon buying rate in the City of New York for cable transfers of RMB, , NIS and HKD as certified for customs purposes by the Federal Reserve Bank of New York at the end of the period. The statement of income accounts are translated at the average translation rates and the equity accounts are translated at historical rates. Translation adjustments resulting from this process are included in accumulated other comprehensive income (loss). Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

Segment reporting

Accounting Standard Codification (“ASC”) Topic 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for detailing the Company’s business segments. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (the “CODM”), which is comprised of certain members of the Company’s management team.

MICT, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except Share and Par Value data)

Operating leases

The Company follows ASC No. 842, Leases. The Company determines if an arrangement is a lease or contains a lease at inception. Operating lease liabilities are recognized based on the present value of the remaining lease payments, discounted using the discount rate for the lease at the commencement date. As the rate implicit in the lease is not readily determinable for the operating lease, the Company generally uses an incremental borrowing rate based on information available at the commencement date to determine the present value of future lease payments. Operating lease right-of-use assets (“ROU assets”) represent the Company’s right to control the use of an identified asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets are generally recognized based on the amount of the initial measurement of the lease liability. Lease expense is recognized on a straight-line basis over the lease term.

ROU assets are reviewed for impairment when indicators of impairment are present. ROU assets from operating and finance leases are subject to the impairment guidance in ASC 360, Property, Plant, and Equipment, as ROU assets are long-lived nonfinancial assets.

ROU assets are tested for impairment individually or as part of an asset group if the cash flows related to the ROU asset are not independent from the cash flows of other assets and liabilities. An asset group is the unit of accounting for long-lived assets to be held and used, which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities.

The Company recognized no impairment of ROU assets as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

The operating lease is included in right-of-use assets and lease liability on the unaudited condensed consolidated balance sheets.

Investments

The Company’s long-term investments consist of equity investments in privately held entities accounted for using the measurement alternative and equity investments accounted for using the equity method. On January 1, 2018, the Company adopted ASU 2016-01 Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. According to the guidance, the Company accounts for the equity investments at fair value, with gains and losses recorded through net earnings. The Company elected to measure certain equity investments without readily determinable fair value at cost, less impairments, plus or minus observable price changes and assess for impairment quarterly.

The Company accounts for its equity investment over which it has significant influence but does not own a majority equity interest or otherwise control, using the equity method. The Company adjusts the carrying amount of the investment and recognizes investment income or loss for its share of the earnings or loss of the investee after the date of investment. The Company assesses its equity investment for other-than-temporary impairment by considering factors including, but not limited to, current economic and market conditions, operating performance of the entity, including current earnings trends and undiscounted cash flows, and other entity-specific information. The fair value determination, particularly for investments in a privately held entity, requires judgment to determine appropriate estimates and assumptions. Changes in these estimates and assumptions could affect the calculation of the fair value of the investment and determination of whether any identified impairment is other-than-temporary.

As of ~~September~~June 30, 2022 and December 31, 2021, the Company owned ~~36.95%~~31.47% and 36.8%, respectively, of shares in Micronet which was accounted for under equity method.

As of ~~September~~June 30, 2022 and December 31, 2021, the Company owned 24% of the shares in Beijing Fucheng and ~~controlled~~was the primary beneficiary of the remaining 76% of Beijing Fucheng through contractual arrangements as discussed in Note 1. Beijing Fucheng was therefore 100% consolidated in the unaudited condensed consolidated financial statements.

MICT, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except Share and Par Value data)

Fair value measurement

The accounting standard regarding fair value of financial instruments and related fair value measurements defines financial instruments and requires disclosure of the fair value of financial instruments held by the Company.

The accounting standards define fair value, establish a three-level valuation hierarchy for disclosures of fair value measurement and enhance disclosure requirements for fair value measures. The three levels are defined as follow:

●

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

●

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

●

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value.

Financial instruments included in current assets and current liabilities are reported in the consolidated balance sheets at face value or cost, which approximate fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rates of interest.

Intangible assets

The Company’s intangible assets with definite useful lives primarily consist of licensed software, capitalized development costs, platform system, and land-use rights. The Company amortizes its intangible assets with definite useful lives over their estimated useful lives and reviews these assets for impairment. The Company typically amortizes its intangible assets with definite useful lives on a straight-line basis over the shorter of the contractual terms or the estimated useful lives. The Company did not record any impairment of intangible assets as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

Intangible assets are stated at cost less accumulated amortization. Amortization is computed using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are as follows:

		Useful Life
Licensed & software		indefinite useful life and some of them for 10 years
Technology know-how		6 years
Trade name/ trademarks		indefinite useful life and some of them for 5 years
Customer relationship		55-10 years

Goodwill

Goodwill represents the excess of the purchase price over the estimated fair value of the net assets acquired in the acquisition of a business. We test goodwill for impairment annually in the fourth quarter and when events or changes in circumstances indicate that the fair value of a reporting unit with goodwill has been reduced below its carrying value. On January 26, 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” The standard simplifies the accounting for goodwill impairment by requiring a goodwill impairment to be measured using a single step impairment model, whereby the impairment equals the difference between the carrying amount and the estimated fair value of the specified reporting units in their entirety. This eliminated the second step of the previous impairment model that required companies to first estimate the fair value of all assets in a reporting unit and measure impairments based on those estimated fair values and a residual measurement approach. It also specifies that any loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The Company did not record any impairment of goodwill as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020.~~ 2021.

MICT, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except Share and Par Value data)

Use of Estimates and Assumptions

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in our consolidated financial statements include the useful lives of plant and equipment and intangible assets, capitalized development costs, impairment of long-lived assets, goodwill, intangible assets, allowance for doubtful accounts, revenue recognition, allowance for deferred tax assets and uncertain tax position. Actual results could differ from these estimates.

Revenue Recognition

~~In May 2014,~~We recognize our revenue under ASC 606. ASC 606 establishes principles for reporting information about the ~~FASB issued ASU No. 2014-09, “Revenue~~nature, amount, timing and uncertainty of revenue and cash flows arising from ~~Contracts with Customers (Topic 606)”,~~the entity’s contracts to provide goods or ~~ASU 2014-09. ASU 2014-09~~services to customers. The core principle requires an entity to recognize ~~the amount of~~ revenue to ~~which~~depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for ~~the transfer of promised~~those goods or services recognized as performance obligations are satisfied. It also requires us to ~~customers. ASU 2014-09 will replace most existing~~identify contractual performance obligations and determine whether revenue ~~recognition guidance~~should be recognized at a point in ~~U.S. GAAP~~time or over time, based on when ~~it becomes effective~~control of goods and permits the use of either the retrospective or cumulative effect transition method. We adopted Topic 606 on January 1, 2018 using the modified retrospective transition method, and the adoption did not haveservices transfers to a ~~material impact on our consolidated financial statements.~~customer.

We recognize revenue which represents the transfer of goods and services to customers in an amount that reflects the consideration to which we expect to be entitled in such exchange. We identify contractual performance obligations and determines whether revenue should be recognized at a point in time or over time, based on when control of goods and services are provided to customers.

We use a five-step model to recognize revenue from customer contracts. The five-step model requires us to (i) identify the contract with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur; (iv) allocate the transaction price to the respective performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy the performance obligation.

We derive our revenues from sales contracts with our customers with revenues being recognized upon performance of services. Our contracts with customers generally do not include a general right of return relative to the delivered products or services. We applied practical expedient when sales taxes were collected from customers, meaning sales tax is recorded net of revenue, instead of cost of revenue, which are subsequently remitted to governmental authorities and are excluded from the transaction price.

With respect to Micronet applicable revenue recognition U.S. GAAP requirements, Micronet implements a revenue recognition policy pursuant to which it recognizes its revenues at the amount to which it expects to be entitled when control of the products or services is transferred to its customers. Control is generally transferred when the Company has a present right to payment and title and the significant risks and rewards of ownership of products are transferred to its customers. There is limited discretion needed in identifying the point control passes: once physical delivery of the products to the agreed location has occurred, Micronet no longer has physical possession of the product and will be entitled at such time to receive payment while relieved from the significant risks and rewards of the goods delivered. For most of Micronet’s products sales, control transfers when products are shipped.

The Company’s revenues from the insurance division are generated from: a) providing customers with marketing promotion and information drainage services, which is to charge information service fees according to the customer traffic information provided to customers with business needs; b) to providing insurance brokerage services or insurance agency services on behalf of insurance carriers. With respect to the information drainage services and insurance brokerage services applicable to revenue recognition U.S. GAAP requirements, the company implements a revenue recognition policy pursuant to which it recognizes its revenues at the amount to which it expects to be entitled when control of the products or services is transferred to its customers. Control is generally transferred when the Company has a present right to payment and title and the significant risks and rewards of ownership of products are transferred to its customers. Our performance obligation to the insurance carrier is satisfied and commission revenue is recognized at the point in time when an insurance policy becomes effective. The Company provides customers with information drainage services and settles service charges with customers on the monthly basis. Performance obligation is satisfied ~~overtime during~~at point in time when the ~~contract term.~~requested information is delivered to the customer.

The Company’s revenues from the online stock trading platform are generated from stock trading commission income. Magpie provides trade execution to its customers. Commission revenue is recognized when transfer of control occurs. Trade execution performance obligation generally occurs on the trade date because that is when the underlying financial instrument (for a purchase) or purchaser (for a sale) is identified and the pricing is agreed upon.

MICT, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except Share and Par Value data)

In accordance with ASC 606-10-55, Revenue Recognition: Principal Agent Considerations, the Company considers several factors in determining whether it acts as the principal or as an agent in the arrangement of merchandise sales and provision of various related services and thus whether it is appropriate to record the revenues and the related cost of sales on a gross basis or record the net amount earned as service fees. For insurance brokerage services, we have identified our promise to sell insurance policies on behalf of the insurance carriers as the performance obligation in our contracts with the insurance carriers.

Income Taxes

Deferred taxes are determined utilizing the “asset and liability” method, whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and the tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, when it’s more likely than not that deferred tax assets will not be realized in the foreseeable future.

The Company applied FASB ASC Topic 740-10-25, “Income Taxes,” which provides guidance for recognizing and measuring uncertain tax positions and prescribes a threshold condition that a tax position must meet for any of the benefits of the uncertain tax position to be recognized in the financial statements. It also provides accounting guidance on derecognizing, classification and disclosure of these uncertain tax positions. The Company’s policy on classification of all interest and penalties related to unrecognized income tax positions, if any, is to present them as a component of income tax expense.

MICT and its subsidiaries and VIEs within the jurisdiction of the United States, Israel and China are subject to a tax examination for the most recent three, four and five years, respectively.

Stock-Based Compensation

Stock-based compensation granted to the Company’s employees and consultants are measured at fair value on grant date and stock-based compensation expense is recognized (i) immediately at the grant date if no vesting conditions are required, or (ii) using the accelerated attribution method, net of estimated forfeitures, over the requisite service period. The fair value of restricted shares is determined with reference to the fair value of the underlying shares.

At each date of measurement, the Company reviews internal and external sources of information to assist in the estimation of various attributes to determine the fair value of the share-based awards granted by the Company, including but not limited to the fair value of the underlying shares, expected life, expected volatility and expected forfeiture rates. The Company is required to consider many factors and make certain assumptions during this assessment. If any of the assumptions used to determine the fair value of the stock-based compensation changes significantly, stock-based compensation expense may differ materially in the future from that recorded in the current reporting period.

~~Reclassification~~Recently issued accounting pronouncements

~~Prior~~In May 2019, the FASB issued ASU 2019-05, which is an update to ASU Update No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for the measurement of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss methodology. The amendments in Update 2016-13 added Topic 326, Financial Instruments — Credit Losses, and made several consequential amendments to the ~~deconsolidation~~Codification. Update 2016-13 also modified the accounting for available-for-sale debt securities, which must be individually assessed for credit losses when fair value is less than the amortized cost basis, in accordance with Subtopic 326-30, Financial Instruments Credit Losses Available-for-Sale Debt Securities. The amendments in this Update address those stakeholders’ concerns by providing an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. For those entities, the targeted transition relief will increase comparability of ~~Micronet, Micronet had been taking active steps~~financial statement information by providing an option to ~~sell its building~~align measurement methodologies for similar financial assets. Furthermore, the targeted transition relief also may reduce the costs for some entities to comply with the amendments in Update 2016-13 while still providing financial statement users with decision-useful information. In November 2019, the FASB issued ASU No. 2019-10, which to update the effective date of ASU No. 2016-02 for private companies, not-for-profit organizations and certain smaller reporting companies applying for credit losses, leases, and hedging standard. The new effective date for these preparers is for fiscal years beginning after December 15, 2022. The Company does not expect the adoption of this ASU would have a material effect on the Company’s unaudited condensed consolidated financial statements.

MICT, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except Share and Par Value data)

In October 2021, the FASB issued ASU 2021-08, “Business Combinations”. The amendments in this Update address how to determine whether a contract liability is recognized by the acquirer in a business combination and resolve the inconsistency of measuring revenue contracts with customers acquired in a business combination by providing specific guidance on how to recognize and measure acquired contract assets and contract liabilities from revenue contracts in a business combination. The amendments in this Update apply to all entities that enter into a business combination within the ~~year 2021.~~scope of Subtopic 805-10, Business Combination-Overalls. For public business entities, ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early application is permitted. The ~~company reclassified~~amendments in this Update should be applied prospectively to business combinations occurring on or after the ~~related assets which were previously included in property~~effective date of the amendments. The Company does not expect the adoption of this standard to have a material impact on its unaudited condensed consolidated financial statements.

Except as mentioned above, the Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed consolidated balance sheets, unaudited condensed consolidated statements of operations, comprehensive loss and ~~equipment, net and intangible assets, net to held-for-sale as of December 31, 2020.~~cash flows.

Note 3 — Stockholders’ Equity

On November 2, 2020 the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain investors for the purpose of raising $25.0 million in gross proceeds for the Company (the “Offering”). Pursuant to the terms of the Purchase Agreement, the Company sold, in a registered direct offering, an aggregate of 10,000,000 units (each, a “Unit”), with each Unit consisting of one share of the Company’s common stock, par value $0.001 per share and one warrant to purchase 0.8 of one share of Common Stock at a purchase price of $2.50 per Unit. The warrants are exercisable nine months after the date of issuance at an exercise price of $3.12 per share and will expire five years following the date the warrants become exercisable. The closing of the sale of Units pursuant to the. Purchase Agreement occurred on November 4, 2020. By December 31, 2020, the Company had received a total of $22.325 million in gross proceeds pursuant to Offering and issued in the aggregate, 7,600,000 Units. The remaining gross proceeds, in the additional aggregate amount of $2.675 million, were received by the Company on March 1, 2021 and in consideration for such proceeds, the Company issued the remaining 2,400,000 units.

On February 11, 2021, the Company announced that it had entered into a securities purchase agreement (the “February Purchase Agreement”) with certain institutional investors for the sale of (i) 22,471,904 shares of common stock, (ii) 22,471,904 Series A warrants to purchase 22,471,904 shares of common stock and (iii) 11,235,952 Series B warrants to purchase 11,235,952 shares of common stock at a combined purchase price of $2.67 (the “February Offering”). The gross proceeds to the Company from the February Offering were expected to be approximately $60.0 million. The Series A warrants will be exercisable nine months after the date of issuance, have an exercise price of $2.80 per share and will expire five and one-half years from the date of issuance. The Series B warrants will be exercisable nine months after the date of issuance, have an exercise price of $2.80 per share and will expire three and one-half years from the date of issuance. The Company received net proceeds of $54.0 million on February 16, 2021 after deducting the placement agent’s fees and other expenses.

MICT, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except Share and Par Value data)

On March 2, 2021, the Company entered into a securities purchase agreement (the “March Purchase Agreement”) with certain investors for the purpose of raising approximately $54.0 million in gross proceeds for the Company. Pursuant to the terms of the March Purchase Agreement, the Company agreed to sell, in a registered direct offering, an aggregate of 19,285,715 shares of the Company’s common stock, par value $0.001 per share, at a purchase price of $2.675 per share and in a concurrent private placement, warrants to purchase an aggregate of 19,285,715 shares of common stock, at a purchase price of $0.125 per warrant, for a combined purchase price per share and warrant of $2.80 which was priced at the market under Nasdaq rules. The warrants are immediately exercisable at an exercise price of $2.80 per share, subject to adjustment, and expire five years after the issuance date. The closing date for the transaction consummated under the March Purchase Agreement was on March 4, 2021. The Company received net proceeds of $48.69 million on March 4, 2021, after deducting the placement agent’s fees and other expenses.

On May 17, 2021, the Company’s Board of Directors (the “Board”) unanimously approved a grant of fully vested 6,000,000 shares of common stock to Mr. Darren Mercer, the Company’s Chief Executive Officer. The issuance of the shares was pursuant to the Company’s long term incentive plan as previously approved by the stockholders and negotiated in connection with the Company’s acquisition of Global Fintech Holdings Limited. The Board unanimously agreed to issue the shares in recognition of Mr Mercer’s direct contribution to achieving numerous key deliverables including: (i) the completion of several acquisitions, including those of Fucheng Insurance and Magpie; (ii) obtaining regulatory approval from the Hong Kong SFC regarding the acquisition of Magpie; (iii) the execution of several major commercial contracts and partnerships, including with a number of major insurance agents and one of China’s largest payment service providers; (iv) the execution of an exclusive partnership with the Shanghai Petroleum and Natural Gas Trading Center to which allows MICT to provide financial services to its customers; (v) the successful launch of the insurance business in December 2020 and the delivery of significant revenues and revenue growth in Q1 2021; and (vi) the completion of capital raises totaling in excess of $140 million and broadening the Company’s institutional investor base.

On May 17, 2021, the Board unanimously approved a grant of fully vested 300,000 shares of common stock of the Company to Richard Abrahams, Magpie’s Chief Executive Officer.

Our 2012 Stock Incentive Plan (the “2012 Incentive Plan”) was initially adopted by the Board on November 26, 2012 and approved by our stockholders on January 7, 2013 and subsequently amended on September 30, 2014, October 26, 2015, November 15, 2017 and November 8, 2018. Under the 2012 Incentive Plan, as amended, up to 5,000,000 shares of our common stock, are currently authorized to be issued pursuant to option awards granted thereunder. On May 17, 2021, May 23, 2021 and June 28, 2021, the Company granted an aggregate of 125,000, 370,000 and 245,000 respectively, options under the 2012 Incentive Plan, with an exercise price of $1.41, $1.81 and $2.49, respectively, of which 310,000 options vested as of ~~September~~June 30, ~~2021.~~2022. This resulted in a stock-based compensation expense of approximately ~~$458,000~~$234,000 recorded for the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, based on a fair value determined using a Black-Scholes model.

On March 22, 2021, 20,000 shares of common stock were issued to an employee who exercised their options at an exercise price of $1.41.

In September 2021, the Board unanimously approved a grant of 87,000 fully vested shares of common stock of the Company to some of our employees.

On September 13, 2021, 40,000 shares of common stock were issued to an employee who exercised their options at an exercise price of $1.32.

On September 28, 2021, MICT granted 823,020 shares of common stock of the Company to China Strategic Investments Limited.

On May 10, 2022, MICT granted 1,659,500 shares of common stock of the Company to Cushman Holdings Limited, an unrelated third party, as an introducer fee for Tingo, Inc.

On May 10, 2022, MICT granted 858,631 shares of common stock of the Company to China Strategic Investments Limited, an unrelated third party, in connection with the GFHI acquisition as discussed in Note 1.

On May 10, 2022, MICT granted 612,500 shares of common stock of the Company to some of our Directors and employees. The shares were issued pursuant to the 2020 Incentive Plan.

On May 10, 2022, the Company’s Board of Directors (the “Board”) unanimously approved a grant of fully vested 4,000,000 shares of common stock to Mr. Darren Mercer, the Company’s Chief Executive Officer. The shares were issued under the Company’s long term incentive plan as such long term incentive plan previously approved by the stockholders and negotiated in connection with the Company’s acquisition of Global Fintech Holdings Limited. The Board unanimously agreed to issue the shares in recognition of Mr Mercer’s direct contribution to achieving numerous key deliverables including: (i) the completion of several acquisitions, including those of Fucheng Insurance and Magpie; (ii) obtaining regulatory approval from the Hong Kong SFC regarding the acquisition of Magpie; (iii) the execution of several major commercial contracts and partnerships, including with a number of major insurance agents and one of China’s largest payment service providers; (iv) the execution of an exclusive partnership with the Shanghai Petroleum and Natural Gas Trading Center to which allows MICT to provide financial services to its customers; (v) entered into an Agreement and Plan of Merger with Tingo (vi) the completion of capital raises totaling in excess of $140 million and broadening the Company’s institutional investor base.

MICT, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except Share and Par Value data)

The following table summarizes information about stock options outstanding and exercisable as of ~~September~~June 30, ~~2021:~~2022:

	Nine months ended September 30					Year ended December 31					Six months ended June 30					Year ended December 31
	2021					2020					2022					2021
	Number of Options			Weighted Average Exercise Price		Number of Options			Weighted Average Exercise Price		Number of Options			Weighted Average Exercise Price		Number of Options			Weighted Average Exercise Price
				$		$
Options outstanding at the beginning of year/period:		1,158,000			2.24		1,167,000			2.34		1,558,000		$	1.74		1,158,000		$	2.24
Changes during the year/period:
Granted		740,000			1.96		1,300,000			1.32		-		$	-		740,000		$	1.97
Exercised		(60,000	)		-		(1,198,000	)		-		-		$	-		(60,000	)	$	1.35
Forfeited		-			-		(111,000	)		2.81		(818,000	)	$	1.54		(280,000	)	$	1.41

Options outstanding at end of year/period		1,838,000			1.69		1,158,000			2.24		740,000		$	1.97		1,558,000		$	1.74
Options exercisable at end of year/period		1,398,000			1.78		1,138,000			2.36		402,500		$	1.69		1,118,000		$	1.57

The Company has warrants outstanding as follows:

	Warrants Outstanding			Warrants Exercisable			Average Exercise Price		Remaining Contractual Life		Warrants Outstanding		Average Exercise Price		Remaining Contractual Life
Balance, December 31, 2020		12,994,545			12,994,545		$	2.31		4.75
Balance, December 31, 2021												62,863,879	$	2.854		4.5
Granted		52,993,570			52,993,570		$	2.8		5.00		-	$	-		-
Forfeited		-			-		$	-		-		-	$	-		-
Exercised		(2,450,487	)		(2,450,487	)	$	1.01		5.00		-	$	-		-
Balance, September 30, 2021 (Unaudited)		63,537,628			63,537,628		$	2.76		4.77
Balance, June 30, 2022												62,863,879	$	2.854		4.25

NOTE 4 —- EQUITY INVESTMENT IN MICRONET

~~Micronet’s net revenues and net loss are presented if the acquisition date had occurred at the beginning of the annual reporting period.~~

Nine months ended
September 30, Three months ended
September 30,
2020 2020
USD
in thousands USD
in thousands
(Unaudited) (Unaudited)
Net revenues $ 1,438 $ 349
Net loss (18,565 ) (14,613 )

~~Management engaged a third-party valuation firm to assist them with the valuation of the intangible assets that are detailed in the schedule below.~~

Purchased identifiable intangible assets are amortized on a straight-line basis over their respective useful lives. The table set forth below summarizes the estimates of the fair value of assets acquired and liabilities assumed and resulting gain on bargain purchase. In addition, the following table summarizes the allocation of the preliminary purchase price as of the acquisition date:

~~Micronet Ltd. Purchase Price Allocation~~

~~(USD in thousands)~~

Total cash consideration $ 887
Total Purchase Consideration $ 887

Less:

Debt-free net working capital $ 788
Property and equipment 661
Right of use assets 310
Other assets 26
Borrowings (1,675 )
Severance payable (95 )
Lease liabilities (101 )
Intangible assets - trade name/ trademarks 270
Intangible assets - developed technology 1,580
Intangible assets - customer relationship 410
Intangible assets - ground 215
Deferred Tax liability (362 )
Fair value of net assets acquired $ 2,027

Noncontrolling interest $ (2,172 )
Gain on equity interest (665 )
Equity investment (921 )
Change in investment (3,758 )

Goodwill value $ 2,618

~~Loss of control of Micronet~~

As of March 31, 2021, the Company held 50.31% of ~~Micronet's~~Micronet’s issued and outstanding shares. On May 9, 2021, following the exercise of options by minority stockholders, the Company’s ownership interest was diluted to 49.88% and as a result the Company is no longer required to include Micronet’s operating results in its financial statements. From May 9, 2021, the Company accounted for the investment in Micronet in accordance with the equity method.

On June 16, 2021, Micronet announced that it had completed a public equity offering on the TASE. Pursuant to the offering, Micronet sold an aggregate number of 18,400 securities units (the “Units”) at a price of 14.6 NIS per Unit with each Unit consisting of 100 ordinary shares, 25 series A options and 75 series B options, resulting in the issuance of 1,840,000 ordinary shares, 460,000 series A options and 1,380,000 series B options. Micronet raised total gross proceeds of 26,864,000 NIS (approximately $8,290,000) in the Offering. The Company did not participate in the Offering, and, as a result, the Company owned ~~36.95%~~31.47% of the outstanding ordinary shares of Micronet and ~~26.56%~~26.83% on a fully diluted basis as of ~~September~~June 30, ~~2021.~~2022.

	May 9, 2021
	USD in thousands
	~~(Unaudited)~~
Micronet’s fair value as of May 9, 2021		1,127
Net assets		(6,185	)
Capital reserve from currency translation		134
Non-controlling interests		2,990
Net loss from loss of control		1,934

MICT, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except Share and Par Value data)

NOTE 5 — LOAN TO MICRONET

On November 13, 2019, the Company and Micronet executed a convertible loan agreement pursuant to which the Company agreed to loan to Micronet $500,000 (the “Convertible Loan”). The Convertible Loan bears interest at a rate of 3.95% calculated and paid on a quarterly basis. In addition, the Convertible Loan, if not converted, shall be repaid in four equal installments, the first of such installment payable following the fifth quarter after the issuance of the Convertible Loan, with the remaining three installments due on each subsequent quarter thereafter, such that the Convertible Loan shall be repaid in full upon the lapse of 24 months from its issuance. In addition, the outstanding principal balance of the Convertible Loan, and all accrued and unpaid interest, is convertible at the Company’s option, at a conversion price equal to 0.38 NIS per Micronet share. Pursuant to the convertible loan agreement, Micronet also agreed to issue the Company an option to purchase one of Micronet’s ordinary shares for each ordinary share that it issued as a result of a conversion of the Convertible Loan at an exercise price of 0.60 NIS per share, exercisable for a period of 15 months. On July 5, 2020, the Company had a reverse split where the price of the Convertible Loan changed from 0.08 NIS per Micronet share into 5.7 NIS per Micronet share. The option’s exercise price changed from 0.6 NIS per share to 9 NIS per Micronet share.

On January 1, 2020, the Convertible Loan was approved at a general meeting of the Micronet shareholders and as a result, the Convertible Loan and the transactions contemplated thereby became effective. The loan was repaid on January 4, 2022.

On August 13, 2020, MICT Telematics extended to Micronet an additional loan in the aggregate amount of ~~$175,000~~$175 (the “Loan Sum”) which governed the existing outstanding intercompany debt. The loan does not bear any interest and has a term of twelve months. The Loan Sum was granted for the purpose of supporting Micronet’s working capital and general corporate needs. The loan was repaid on August 25, 2021.

NOTE 6 — ~~GFH Intermediate Holdings Ltd (“GFHI”) Acquisition~~

On July 1, 2020, MICT completed its acquisition of GFHI pursuant to the previously announced agreement and plan of merger (the “Merger Agreement”) entered into on November 7, 2019 by and between MICT, Micronet, GFHI, Global Fintech Holding Ltd, a British Virgin Islands company and the sole shareholder of GFHI, and MICT Merger Subsidiary Inc., a British Virgin Islands company and a wholly owned subsidiary of MICT, as amended and restated on April 15, 2020. As described in the Merger Agreement, upon consummation of the acquisition, the outstanding share of GFHI were cancelled in exchange for a convertible promissory note in the principal amount of $25,000,000 issued to GFH by MICT. This note has been converted into 22,727,273 shares of common stock of MICT at a conversion price of $1.10 per share. As a result of the acquisition goodwill and intangible assets were created.

~~GFHI’s net revenues and net loss are presented as if the Company’s acquisition date had occurred at the beginning of the annual reporting period.~~

Nine months ended
September 30,
Three months ended
September 30,
2020 2020
USD
in thousands USD
in thousands
(Unaudited) (Unaudited)
Net revenues $ 349 $ 349
Net loss (16,021 ) (14,613 )

~~Management engaged a third-party valuation firm to assist them with the valuation of the intangible assets that are detailed in the schedule below.~~

As of the date of this Quarterly Report, COVID-19 and the resulting government regulations enacted in China and elsewhere have not had a material adverse effect on GFH I financial reports; however, there can be no assurance that GFH I financial reports will not be affected in the future from COVID-19 or resulting government actions.

~~GFH Intermediate Holdings LTD, Purchase Price Allocation~~

~~(USD in thousands)~~

Total share consideration (1) $ 32,050
Total Purchase Consideration $ 32,050

Less:

Intangible assets - trade name/ trademarks $ 580
Intangible assets - developed technology 11,490
Intangible assets - Customer database (2) 4,500
Deferred Tax liability (3) (4,308 )
Fair value of net assets acquired $ 12,262

Goodwill value (4) $ 19,788

~~(1)~~

~~The purchase consideration represented the fair value of the convertible promissory notes that were converted into common stock of MICT.~~

~~(2)~~

~~The customer database value is based on the cost to recreate, as indicated by management.~~

~~(3)~~

~~Represents the income tax effect of the difference between the accounting and income tax bases of the identified intangible assets, using an assumed statutory income tax rate of 26%.~~

~~(4)~~

~~The goodwill is not deductible for tax purposes.~~

~~NOTE 7~~ — BEIJING FUCHENG LIANBAO TECHNOLOGY CO., LTD TRANSACTION

On February 10, 2021, the Company closed a transaction pursuant to which it acquired (via Beijing Fucheng in which it holds 24% and engaged in a VIE structure) all of the shares of Beijing Yibao Technology Co., Ltd., and indirectly its fully owned subsidiary Beijing Fucheng Insurance Brokerage Co., Ltd. (the “Fucheng Insurance Transaction”).

The table set forth below summarizes the estimates of the fair value of assets acquired and liabilities ~~assumed and resulting gain on bargain purchase.~~assumed. In addition, the following table summarizes the allocation of the preliminary purchase price as of the acquisition date:

Beijing Fucheng Lianbao Technology Co., Ltd transaction, Purchase Price Allocation

~~(USD in thousands)~~

	(Unaudited)
Total cash consideration	$	5,711		$	5,711
Total Purchase Consideration	$	5,711		$	5,711

Less:

Net working capital	$	926		$	926
Property and equipment		26			26
License		4,814			4,814
Current liabilities		(55	)		(55	)
Fair value of net assets acquired	$	5,711		$	5,711

NOTE 7 — Guangxi Zhongtong Insurance Agency Co., Ltd Acquisition

On January 1, 2021, we entered into a transaction through Bokefa, with the shareholders of Guangxi Zhongtong Insurance Agency Co., Ltd (“Guangxi Zhongtong”), a local Chinese entity with business and operations in the insurance brokerage business. Pursuant to the transaction, we granted loans to Guangxi Zhongtong’s shareholders through a frame work loan (the “GZ Frame Work Loan”) the amount of up to RMB 40,000 (approximately $6,125) (“GZ Frame Work Loan Amount”) which is designated, if exercised, to be used as a working capital loan for Guangxi Zhongtong. As of June 30, 2022, only RMB 8,010 (approximately $1,243) was drawn down from the GZ Frame Work Loan for working capital and approximately $919 was drawn down for loans to shareholders of Guangxi Zhongtong (as stipulated in the agreement). In consideration for the GZ Frame Work Loan, the parties entered into various additional agreements which include: (i) a pledge agreement pursuant to which the shareholders have pledged their shares for the benefit of Bokefa in order to secure the GZ Frame work Loan Amount (ii) an exclusive option agreement pursuant to which Bokefa has an exclusive option to purchase the entire issued and outstanding common shares of Guangxi Zhongtong from the shareholders (“Option Agreement”) under such terms set forth therein (which include an exercise price not less than the maximum GZ Frame Work Loan Amount and the right to convert the GZ Frame Work Loan Amount into the purchased shares) (iii) an entrustment agreement and power of attorney agreement pursuant to which the shareholders irrevocably entrusted and appointed Tianjin Bokefa as their proxy and trustee to exercise on their behalf any and all rights under applicable law and the articles of association of Guangxi Zhongtong in the shareholder’s equity interest in Guangxi Zhongtong (iv) a business cooperation agreement and a master exclusive service agreement which grants Bokefa rights related to Guangxi Zhongtong’s business and operations in order to secure repayment of the GZ Frame Work Loan Amount.

MICT, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except Share and Par Value data)

This transaction was structured pursuant to a Variable Interest Entity, Structure (in which we do not hold the shares). As such, and given our direct ownership in Bokefa and its contractual arrangements with Guangxi Zhongtong, we are regarded as Guangxi Zhongtong’s controlling entity and primary beneficiary of Guangxi Zhongtong business. We have, therefore, consolidated the financial position and operating results of Guangxi Zhongtong into our consolidated financial statements, using the fair value of the assets and liabilities of Guangxi Zhongtong in accordance with U.S. GAAP. Beijing Fucheng Lianbao Technology Co., Ltd is an entity incorporated on December 29, 2020, in which Bokefa owns 24% equity interest with the remaining 76% controlled by Bokefa through VIE agreements. On February 10, 2021, Beijing Fucheng acquired all of the shares of Beijing Yibao Technology Co., Ltd., which holds 100% of the equity interest in Beijing Fucheng Insurance Brokerage Co., Ltd. (“Fucheng Insurance”). Fucheng Insurance is a Chinese insurance brokerage agency and a nation-wide licensed entity which offers insurance brokerage services for a broad range of insurance products. Fucheng Insurance, through their nationwide license, will give us the flexibility to offer and create tailor-made insurance products, leverage customers directly or through distribution partners and procure better deals with both our existing and new insurance company partners. Fucheng Insurance further enables us to accelerate the onboarding of new agents onto our platforms all throughout China. It also creates the opportunity to promote our business through some of China’s biggest online portals, which will provide business-to-business-to-consumer (B2B2C) as well as business-to-consumer (B2C) channels. When Fucheng Insurance initiates its nationwide rollout of its mobile application, it will facilitate access to those portals’ large customer bases which will also offer MICT’S full suite of insurance products. Beijing Fucheng shares were acquired for approximately $5,700, and funded through MICT.

On October 21, 2021, Yibao transferred such funds and the transaction closed. As a result of the transaction, Yibao now holds a sixty percent (60%) equity interest in Guangxi Zhongtong and is the controlling shareholder. As a condition of the Closing, the previous agreements consummated on January 1, 2021 per the Frame Work Loan became null and void.

Purchased identifiable intangible assets are amortized on a straight-line basis over their respective useful lives. The table set forth below summarizes the estimates of the fair value of assets acquired and liabilities assumed. In addition, the following table summarizes the allocation of the preliminary purchase price as of the acquisition date:

Guangxi Zhongtong Insurance agency co., Ltd, Purchase Price Allocation

Total cash consideration (1)	$	-
Total Purchase Consideration	$	-

Less:

Debt-free net working capital	$	613
Property and equipment		13
Intangible assets - Licenses		1,926
Intangible assets - customer relationship (1)		248
Deferred Tax liability (2)		(544	)
Fair value of net assets acquired	$	2,256

Noncontrolling interest	$	(3,231	)
Gain on equity interest		1,128
Equity investment		-
Change in investment		(2,103	)

Goodwill value (3)	$	(153	)

(1)	The customer database value is based on the cost to recreate, as indicated by management.

(2)	Represents the income tax effect of the difference between the accounting and income tax bases of the identified intangible assets, using an assumed statutory income tax rate of 26%.

(3)	The goodwill is not deductible for tax purposes.

MICT, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except Share and Par Value data)

NOTE 8— ALL WEATHER TRANSACTION

On July 1, 2021, we entered into a transaction through Bokefa, with the shareholders of All Weather, a local Chinese entity with business and operations in the insurance brokerage business. Pursuant to the transaction, we granted loans to All Weather’s shareholders through a frame work loan (the “AW Frame Work Loan”) the amount of up to RMB 30,000 (approximately $4,700) (“AW Frame Work Loan Amount”) which is designated, if exercised, to be used as a working capital loan for All Weather. As of June 30, 2022, RMB 30,000 (approximately $4,700) was drawn down from the AW Frame Work Loan for working capital. In consideration for the AW Frame Work Loan, the parties entered into various additional agreements which include: (i) a pledge agreement pursuant to which the shareholders have pledged their shares for the benefit of Bokefa in order to secure the AW Frame work Loan Amount (ii) an exclusive option agreement pursuant to which Bokefa has an exclusive option to purchase the entire issued and outstanding common shares of All Weather from the shareholders (“Option Agreement”) under such terms set forth therein (iii) an entrustment agreement and power of attorney agreement pursuant to which the shareholders irrevocably entrusted and appointed Bokefa as their proxy and trustee to exercise on their behalf any and all rights under applicable law and the articles of association of All Weather in the shareholder’s equity interest in All Weather (iv) a business cooperation agreement and a master exclusive service agreement which grants Bokefa rights related to All Weather’s business and operations in order to secure repayment of the AW Frame Work Loan Amount.

This transaction was structured pursuant to a Variable Interest Entity Structure (in which we do not hold the shares). As such, and given our direct ownership in Bokefa and its contractual arrangements with All Weather, we are regarded as All Weather’s controlling entity and primary beneficiary of All Weather’s business. We have, therefore, consolidated the financial position and operating results of All Weather into our consolidated financial statements, using the fair value of the assets and liabilities of All Weather in accordance with U.S. GAAP.

Purchased identifiable intangible assets are amortized on a straight-line basis over their respective useful lives. The table set forth below summarizes the estimates of the fair value of assets acquired and liabilities assumed. In addition, the following table summarizes the allocation of the preliminary purchase price as of the acquisition date:

All Weather, Purchase Price Allocation

Total cash consideration (1)	$	-
Total Purchase Consideration	$	-

Less:

Debt-free net working capital	$	(105	)
Property and equipment		153
Right of use assets		208
Lease liabilities		(258	)
Intangible assets - licencs (1)		849
Intangible assets - customer relationship (1)		54
Deferred Tax liability (2)		(226	)
Fair value of net assets acquired	$	675

Noncontrolling interest	$	(675	)
Change in investment		(675	)

Goodwill value (3)	$	-

(1)	The customer database value is based on the cost to recreate, as indicated by management.

(2)	Represents the income tax effect of the difference between the accounting and income tax bases of the identified intangible assets, using an assumed statutory income tax rate of 25%.

(3)	The goodwill is not deductible for tax purposes.

MICT, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except Share and Par Value data)

NOTE 9 — SEGMENTS

ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for detailing the Company’s business segments.

Operating segments are based upon our internal organization structure, the manner in which our operations are managed and the availability of separate financial information. As a result of our acquisition of GFHI on July 1, 2020, we currently serve the marketplace, through our operating subsidiaries, as a financial technology company (Fintech Industry) targeting the Chinese marketplace as well as other areas of the world. We have built and/or, are in the process of building, various platforms to capitalize on business opportunities in a range of insurance platform segments (formerly: verticals and technology ~~segments~~segments) including stock ~~trading and wealth management, oil and gas~~ trading and insurance brokerage services. We will continue to increase the capabilities of our platforms through acquisition and/or the licensing of different technologies to support our efforts in the different market segments. By building secure, reliable and scalable platforms with high volume processing capability, we intend to provide customized solutions that address the needs of a highly diverse and broad client base. First, we have launched our insurance platform, operated by GFHI, for the Chinese market and have been generating revenues in GFHI. While the revenues were not material in 2020, these revenues are building and we expect these revenues to continue to grow ~~in the 4th quarter~~ as this business establishes itself in the market as a reputable service available to consumers Secondly, Wewe are currently in the process of launching our securities trading software platform and accelerating the development and business around this segment. This is possible due to the recent completion of the acquisition of Magpie (formerly: Huapei) on February 26, 2021.

As a result of such acquisition, we have obtained the necessary licenses and permits to operate our online platform in the Hong Kong stock exchange.

ASAs we begin development of our oil and gas trading platform, we are looking to partner with an established and reputable Chinese organization to build out our technology, which will support two major elements of China’s energy sector.

During the period between June 23, 2020, and May 9, 2021 we ~~have~~ held a controlling interest in Micronet, and we ~~have~~ presented our mobile resource management (“MRM”) business operated by Micronet as a segment. As of May 9, 2021, the Company’s ownership interest was diluted and, as a result, we no longer include Micronet’s operating results in our consolidated financial statements.

The following table summarizes the financial performance of our operating segments:

	Nine months ended September 30, 2021												Six months ended June 30, 2022
(USD in thousands)	Verticals and technology			Mobile resource management			Online stock trading			Consolidated
													Insurance platform			Mobile resource management		Online stock trading			Consolidated
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenues from external customers	$	39,065			726			-		$	39,791		$	21,483			-		38		$	21,521
Segment operating loss		(5,496	)(1)		(827	)(2)		(4,208	)		(10,531	)		(6,090	)(1)		-		(6,038	)		(12,128	)
Non allocated expenses											(17,343	)										(11,612	)
Finance expenses and other											(1,167	)										(622	)
Consolidated loss before provision for income taxes										$	(29,041	)									$	(24,362	)

(1)	Includes ~~$2,198~~$1,591 of intangible assets amortization, derived from GFHI acquisition.

	Three months ended June 30, 2022
	Insurance platform			Mobile resource management		Online stock trading			Consolidated

Revenues from external customers	$	11,950			-		8		$	11,958
Segment operating loss		(1,795	)(1)		-		(2,494	)		(4,288	)
Non allocated expenses										(9,481	)
Finance expenses and other										(672	)
Consolidated loss before provision for income taxes									$	(14,441	)

(1)	Includes $733 of intangible assets amortization, derived from GFHI acquisition.

MICT, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except Share and Par Value data)

	Six months ended June 30, 2021
	Verticals and technology			Mobile resource management			Online stock trading			Consolidated
Revenues from external customers	$	20,550			726			-		$	21,276
Segment operating loss		(4,883	)(1)		(827	)(2)		(1,956	)		(7,666	)
Non allocated expenses											(13,686	)
Finance expenses and other											(2,289	)
Consolidated loss before provision for income taxes										$	(23,641	)

(1)	Includes $1,466 of intangible assets amortization, derived from GFHI. acquisitions.

(2)	Includes $103 of intangible assets amortization, derived from Micronet consolidation.

Nine months ended September 30, 2020
(USD in thousands) Verticals
and
technology Mobile
resource
management Online
stock
trading Consolidated
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues from external customers $ - 349 - $ 349
Segment operating loss (869 ) (769 ) - (1,638 )
Non allocated expenses (5,816 )
Finance expenses and other (8,786 )
Consolidated loss before provision for income taxes $ (16,240 )

	Three months ended September 30, 2021											Three months ended June 30, 2021
(USD in thousands)	Verticals and technology			Mobile resource management		Online stock trading			Consolidated
	(Unaudited)			(Unaudited)		(Unaudited)			(Unaudited)			Verticals and technology			Mobile resource management		Online stock trading			Consolidated
Revenues from external customers	$	18,515			-		-		$	18,515		$	12,341			-		-		$	12,341
Segment operating loss		(613	)		-		(2,252	)		(2,865	)		(2,916	)(1)		-		(1,956	)		(4,872	)
Non allocated expenses										(3,656	)										(11,697	)
Finance expenses and other										1,122											(1,810	)
Consolidated loss before provision for income taxes									$	(5,399	)									$	(18,379	)

(1)	Includes $733 of intangible assets amortization, derived from GFHI. acquisitions.

Three months ended September 30, 2020
(USD in thousands) Verticals
and
technology Mobile
resource
management Online
stock
trading Consolidated
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues from external customers $ - 349 - $ 349
Segment operating loss (869 ) (769 ) - (1,638 )
Non allocated expenses (4,378 )
Finance expenses and other (8,822 )
Consolidated loss before provision for income taxes $ (14,838 )

MICT, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except Share and Par Value data)

The following table summarizes the financial statements of our balance sheet accounts of the segments:

	As of September 30, 2021											As of June 30, 2022
(USD in thousands)	Verticals and technology			Mobile resource management		Online stock trading			Consolidated
	(Unaudited)			(Unaudited)		(Unaudited)			(Unaudited)			Insurance platform			Mobile resource management		Online stock trading			Consolidated
Assets related to segments	$	81,537	(2)	$	-		59,807	(4)	$	141,344		$	57,504	(2)	$	-	$	52,786	(4)	$	110,290
Non allocated Assets					-					40,806						-					41,685
Liabilities related to segments		(25,198	)(3)		-		(644	)		(25,842	)		(17,880	)(3)		-		(2,122	)		(20,002	)
Non allocated liabilities		-			-		-			(4,001	)		-			-		-			(2,908	)
Total Equity									$	152,307										$	129,065

(2)	Includes ~~$12,906~~$10,708 of intangible assets and $19,788 goodwill, derived from GFHI’s acquisition.

(3)	Includes ~~$3,322~~$2,784 of deferred tax liability, derived from GFHI acquisition.

The following table summarizes the financial statements of our balance sheet accounts of the segments:

	As of December 31, 2021
	Insurance platform			Mobile resource management		Online stock trading			Consolidated

Assets related to segments	$	86,474	(1)	$	-	$	60,581	(3)	$	147,055
Non allocated Assets					-					30,756
Liabilities related to segments		(23,516	)(2)		-		(3,953	)		(27,469	)
Non allocated liabilities		-			-		-			(2,620	)
Total Equity									$	147,722

(1)	Includes $19,292 of intangible assets and $19,788 goodwill, derived from GFHI’s acquisition.

(2)	Includes $3,728 of deferred tax liability, derived from GFHI acquisition.

~~(4)~~(3)

Includes ~~$989~~$1,222 of intangible assets.

As of December 31, 2020
(USD in thousands) Verticals
and
technology Mobile
resource
management Online
stock
trading Consolidated
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Assets related to segments $ 7,037 $ 7,017 - $ 14,054
Non allocated Assets - - - 63,679
Liabilities related to segments (638 ) (2,861 ) - (3,499 )
Non allocated liabilities - - - (8,538 )
Total Equity $ 65,696

NOTE 910 — ~~INTENGABLE~~INTANGIBLE ASSETS, NET

Useful life September 30, December 31,
(USD in thousands) years 2021 2020
Original amount: (Unaudited) (Unaudited)
Technology know-how 5-6 $ 11,490 $ 13,070
Trade name/ trademarks 5-10 597 850
Customer relationship 5-6 4,500 4,910
License 5,787 -
Software 102 -
22,476 18,830
Accumulated amortization:
Technology know-how (2,394 ) (1,116 )
trade name/ trademarks (145 ) (71 )
Customer related intangible assets (1,125 ) (484 )
Software (4 ) -
(3,668 ) (1,671 )
Net $ 18,808 $ 17,159

	Useful	June 30,			December 31,
	life years	2022			2021
Original amount:
Technology know-how	6	$	11,490		$	11,490
Trade name/ trademarks	Indefinite or 5 years		923			923
Customer relationship	5-10 years		4,802			4,802
License	Indefinite or 10 years		8,498			8,498
Software	10		167			172
			25,880			25,885
Accumulated amortization:
Technology know-how			(3,830	)		(2,873	)
trade name/ trademarks			(232	)		(174	)
Customer related intangible assets			(1,823	)		(1,355	)
License			(137	)		(39	)
Software			(10	)		(2	)
			(6,032	)		(4,443	)
Net		$	19,848		$	21,442

MICT, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except Share and Par Value data)

NOTE 1011 — TRADE ACCOUNTS RECEIVABLE, NET

For the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and the fiscal year ended December 31, ~~2020,~~2021, accounts receivable were comprised of the following:

	September 30,		December 31,
	2021		2020
	USD in thousands		USD in thousands			June 30,			December 31,
	(Unaudited)		(Unaudited)			2022			2021
Trade accounts receivable	$	20,644	$	528		$	14,582		$	20,485
Allowance for doubtful accounts		-		(5	)		(2,557	)		(2,606	)
	$	20,644	$	523		$	12,025		$	17,879

Movement of allowance for doubtful accounts ~~for~~ the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and the fiscal year ended December 31, ~~2020~~2021 are as follows:

September 30, December 31,
2021 2020
USD
in thousands USD
in thousands
(Unaudited) (Unaudited)
Beginning balance $ 5 $ 116
Provision (recovery) - (111 )
Decrease due to deconsolidation of Micronet (5 ) -
$ - $ 5

~~NOTE 11 — OTHER CURRENT ASSETS~~

September 30, December 31,
2021 2020
USD
in thousands USD
in thousands
(Unaudited) (Unaudited)
Prepaid expenses $ 3,627 $ 1,300
Advance to suppliers 2,088 230
Government departments and agencies receivables - 67
Prepaid tax 57 92
Others 4,442 67
$ 10,214 $ 1,756

	June 30,			December 31,
	2022			2021
Beginning balance	$	2,606		$	5
(Recovery) provision		80			2,574
Exchange fluctuation		(129	)		32
Decrease due to deconsolidation of Micronet		-			(5	)
	$	2,557		$	2,606

NOTE 12 — OTHER CURRENT ASSETS

	June 30,		December 31,
	2022		2021
Prepaid expenses	$	865	$	1,715
Advance to suppliers		4,502		4,027
Deposit		218		1,335
Business advance to employee		1,449		1,444
Other receivables		1,062		1,033
	$	8,096	$	9,554

NOTE 13 — RELATED PARTIES

Current assets – related parties

	September 30,		December 31,
	2021		2020
	USD in thousands		USD in thousands		June 30,		December 31,
	(Unaudited)		(Unaudited)		2022		2021
Shareholders of All Weather	$	776	$	-	$	3,241	$	3,680
Loan to Tingo (*)						3,018		-
Convertible loan to Micronet		534		-		-		535
Tianjing Bokefa and other related parties						272		-
Shareholders of Guangxi Zhongtong		857		-		827		919
	$	2,167	$	-	$	7,358	$	5,134

(*) On May 13, 2022, the Company and Tingo executed a loan agreement pursuant to which the Company agreed to loan Tingo (“Maker”) a sum of $3,000 (the “Note” and “Loan” respectively) . The Loan bear an annual interest of 5%. The principal balance of the Loan and any accrued and unpaid interest due under the Note shall be due and payable on May 10, 2024 (“Initial Maturity Date”), provided however that if the merger agreement executed between the parties shall be terminated pursuant to its terms, the Initial Maturity Date shall accelerate and the principal balance of the Loan and any accrued and unpaid interest due under the Note shall be due and payable on or before the 30th calendar day following such termination . The principal balance may be prepaid at any time by Maker without penalty.

On July 28, 2022, the Company agreed to replace the Note with a new note (“New Note”), pursuant to which the amount of the Loan granted under the New Note is $3,500, with all other terms remaining in effect without a change.

Current liabilities – related party

	June 30,		December 31,
	2022		2021
Shareholders of All Weather	$	256	$	4
	$	256	$	4

~~Current liabilities – related parties~~

MICT, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, December 31,
2021 2020
USD
in thousands USD
in thousands
(Unaudited) (Unaudited)
Yulan WU, legal representative of Beijing Fucheng $ - $ 156
Beijing Internet New Network Technology Development Co., Ltd - 7
$ - $ 163

(In Thousands, except Share and Par Value data)

NOTE 1314 — OPERATING LEASES

The Company follows ASC No. 842, Leases. The Company has operating leases for its office facilities. The Company’s leases have remaining terms of approximately 4 years. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company does not separate non-lease components from the lease components to which they relate, and instead accounts for each separate lease and non-lease component associated with that lease component as a single lease component for all underlying asset classes.

The following table provides a summary of leases by balance sheet location ~~for the nine months ended September~~as of June 30, ~~2021~~2022 and ~~the year ended~~ December 31, ~~2020:~~2021

Assets/liabilities	September 30,		December 31,		June 30,		December 31,
	2021		2020
	USD in thousands		USD in thousands
	(Unaudited)		(Unaudited)		2022		2021
Assets
Right-of-use assets	$	2,657	$	291	$	1,583	$	1,921

Liabilities
Lease liabilities- current portion	$	1,573		-	$	1,026	$	1,298
Lease liabilities- long term	$	1,132	$	164		699		691
Total Lease liabilities	$	2,705		164	$	1,725	$	1,989

The operating lease expenses for the ~~nine~~three and ~~three~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020 were as follows:~~

(USD in thousands) Nine months ended
September 30, Three months ended
September 30,
2021 2020 2021 2020
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Operating lease cost $ 1,111 $ 343 $ 581 $ 298

~~Maturities of operating lease liabilities for the nine months ended September 30,~~ 2021 were as follows:

	Six months ended June 30,				Three months ended June 30,
	2022		2021		2022		2021
Operating lease cost	$	673	$	530	$	261	$	229

~~Maturity~~

Maturities of operating lease liabilities were as follows:

(USD in thousands)
12 months ending September 30,
Operating
leases
(Unaudited)
2022 $ 1,573
2023 754
2024 328
2025 2
$ 2,657

	Twelve months ended June 30,
2023*		1,025
2024		672
2025		125
2026		14
2027		5
Total lease payment		1,841
Less: imputed interest		(79	)
Total		1,762

*	include operating leases with a term less than one year which was not capitalized in the right-of-use assets.

Lease term and discount rate	~~September~~June 30, ~~2021~~2022
	~~(Unaudited)~~
Weighted-average remaining lease term (years) – operating leases		~~2.276~~1.98
Weighted average discount rate – operating leases		~~10.98~~5.42	%

MICT, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except Share and Par Value data)

NOTE 1415 — PROVISION FOR INCOME TAXES

A.	~~Basis of Taxation~~

A. Basis of Taxation

United States:

On December 22, 2017, the U.S. Tax Cuts and Jobs Act, or the Act, was enacted, which significantly changed U.S. tax laws. The Act lowered the tax rate of the Company. The statutory federal income tax rate was 21% in ~~2019~~2020 and in the ~~nine~~Six months ended ~~September~~June 30, 2021 and ~~2020.~~2022. As of ~~September~~June 30, ~~2021~~2022 the operating loss carry forward were ~~$30,552,000,~~$44,735, among which there was ~~$5,115,600~~$5,115 expiring from 2025 through 2037, and the remaining ~~$25,406,400~~$39,620 has no expiration date.

Israel:

The Company’s Israeli subsidiaries and associated are governed by the tax laws of the state of Israel which had a general tax rate of 23% in the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020. The Company is entitled to various tax benefits in Israel by virtue of being granted the status of an “Approved Enterprise Industrial Company” as defined by the tax regulations. The benefits include, among other things, a reduced tax rate. In addition, the tax rate that applies to Preferred Enterprises in preferred areas is 16%.2022. As of ~~September~~June 30, ~~2021~~2022 the operating loss carry forward were ~~$6,289,000,~~$7,925, which does not have an expiration date.

Mainland China:

The Company’s Chinese subsidiaries in the PRC are subject to the PRC Corporate Income Tax Law (“CIT Law”) and are taxed at the statutory income tax rate of 25%. As of ~~September~~June 30, ~~2021~~2022 the operating loss carry forward was ~~$11,187 thousand,~~$9,361, which will expire from ~~2025~~2023 through ~~2026.~~ 2027.

~~Provision for Taxes~~

Hong Kong:

Our subsidiaries incorporated in Hong Kong, such as Magpie Securities Limited, BI Intermediate Limited, are subject to Hong Kong profit tax on their profits arising from their business operations carried out in Hong Kong. Hong Kong profits tax for a corporation from the year of assessment 2018/2019 onwards is generally 8.25% on assessable profits up to HK$2,000; and 16.5% on any part of assessable profits over HK$2,000. Under the Hong Kong Inland Revenue Ordinance, profits that we derive from sources outside of Hong Kong are generally not subject to Hong Kong profits tax.

As of June 30, 2022, the tax loss carry forward was $13,789 for Magpie Securities Limited, and the operating loss carry forward was $4,317 for BI Intermediate Limited. Tax losses can be carried forward indefinitely until utilized.

Singapore:

Our subsidiaries incorporated in Singapore are subject to an income tax rate of 17% for taxable income earned in Singapore. Singapore does not impose a withholding tax on dividends for resident companies. In 2021, we did not incur any income tax as there was no estimated assessable profit that was subject to Singapore income tax.

As of June 30, 2022, the operating loss carry forward was $142.

Subject to qualifying conditions, trade losses can be carried forward indefinitely while unutilized donations can be carried forward for up to 5 years of assessment.

B. Provision for (Benefit of) Income Taxes

(USD in thousands)	Nine months ended September 30,						Three months ended September 30,
	2021			2020			2021			2020			Six months ended June 30,						Three months ended June 30,
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			2022			2021			2022			2021
Current
Domestic	$	72		$	-		$	29		$	-		$	248		$	43		$	245		$	43
Foreign		123			-			92			(6	)		-			31			-			180
Total	$	195					$	121		$	(6	)	$	248		$	74		$	245		$	223
Deferred
Domestic	$			$			$			$			$	-		$	-		$	-		$	-
Foreign		(605	)		(219	)		(191	)		(219	)		(1,329	)		(413	)		(251	)		(206	)
Total	$	(605	)	$	(219	)	$	(191	)	$	(219	)
													$	(1,329	)	$	(413	)	$	(251	)	$	(206	)

MICT, Inc.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except Share and Par Value data)

~~Deferred Tax Assets and Liabilities~~

C. Deferred Tax Assets and Liabilities

Deferred tax reflects the net tax effects of temporary differences between the carrying amounts of assets or liabilities for financial reporting purposes and the amounts used for income tax purposes. ~~For the nine months ended September~~As of June 30, ~~2021~~2022 and ~~the year ended~~ December 31, ~~2020,~~2021, deferred tax assets were included in long-term deposit and prepaid expenses, and the Company’s deferred taxes were in respect of the following:

September 30, December 31,
2021 2020
USD
in thousands USD
in thousands
(Unaudited) (Unaudited)
Deferred tax assets
Provisions for employee rights and other temporary differences $ 130 $ 129
Net operating loss carry forward 10,219 9,564
Valuation allowance (10,219 ) (9,564 )
Deferred tax assets, net of valuation allowance 130 129
Deferred tax liabilities
Recognition of intangible assets arising from business combinations 3,323 4,256
Deferred tax assets and liabilities, net $ (3,193 ) $ (4,127 )

	June 30,			December 31,
	2022			2021
Deferred tax assets
Provisions for employee rights and other temporary differences	$	149		$	260
Provisions for bad debt		640			696
Net operating loss carry forward		16,569			12,034
Valuation allowance		(14,827	)		(11,226	)
Deferred tax assets, net of valuation allowance		2,531			1,764
Deferred tax liabilities
Recognition of intangible assets arising from business combinations		(3,544	)		(3,952	)
Deferred tax liabilities, net	$	(1,013	)	$	(2,188	)

NOTE 1516 — LEGAL PROCEEDINGS

In March 2017, MICT entered into an agreement with Sunrise Securities LLC (“Sunrise”) through Sunrise’s principal, Amnon Mandelbaum (the “Sunrise Agreement”), pursuant to which Sunrise agreed to assist MICT in identifying, analyzing, structuring, and negotiating suitable business opportunities, such as a sale of stock or assets, merger, tender offer, joint venture, financing arrangement, private placement, or any similar transaction or combination thereof. The parties initially disagreed as to the amount of the fee that would be payable upon the closing of the transactions contemplated by the reinstated merger agreement. There were also questions about the applicability of the Sunrise Agreement to the merger, and whether or not Sunrise was properly owed any transaction fee upon the closing of the said merger. In order to resolve the matter, the parties have executed a settlement and release agreement for the release and waiver of the above claims in consideration for the issuance of freely tradable shares of common stock of MICT worth no less than $1,500,000 (the “Shares”), which Shares were delivered as follows: (i) 67.5% of the Shares to Amnon Mandelbaum; (ii) 7.5% of the Shares to INTE Securities LLC; and (iii) 25% of the Shares to Amini LLC. In addition, by no later than February 16, 2021, MICT would issue 200,000 warrants to purchase 200,000 freely tradable registered shares of common stock of MICT and deliver original copies of such warrants within five business days of the date of issuance of the warrants. The Shares issuable upon exercise of the warrants would be registered on a registration statement. 150,000 of these warrants were issued to Amnon Mandelbaum and 50,000 of these warrants were issued to Amini LLC, or its designee as named in writing. Each warrant was exercisable into one share of registered common stock of MICT until one year after the date of issuance of the warrants at an exercise price of $1.01 per share, and in any other respects, on the same material terms and conditions as are applicable to MICT’s current outstanding warrants including, but not limited to: (i) cashless exercise at all times from the date of issuance of the warrants until to the expiration dates of the warrants, (ii) certain exercise price adjustments, and (iii) other terms that are no less favorable to MICT’s recently issued common stock purchase warrant agreements. MICT was not able to timely file a registration statement to register the Shares, and Shares underlying the warrants per the settlement agreement. The Sunrise parties notified MICT that it has breached the settlement agreement. Subsequently, on Marchopen legal proceeding as of June 30, 2021, MICT and the Sunrise parties signed an amended settlement agreement whereby MICT was obligated to make a $1,000,000 payment by March 31, 2021 and the share dollar amount set forth above was reduced from $1,500,000 to $500,000. MICT made the $1,000,000 payment. Furthermore, if MICT was not able to file a registration statement with the Securities and Exchange Commission for the Shares by June 4, 2021, we were required to make a $600,000 payment to settle the matter in full and Sunrise would not receive any MICT shares. On July 1, 2021, MICT made the $600,000 payment since there was a disagreement as to whether or not the registration statement was timely filed. This matter with Sunrise is now fully settled.

On September 22, 2020, the Company entered into a settlement and release agreement with Craig Marshak, (“Marshak”), in connection with a claim filed by Marshak against the Company and additional defendants. Pursuant to the settlement, and in consideration for a customary release and waiver for the benefit of MICT, MICT agreed to pay Marshak a sum of $125,000 in cash. Marshak then dismissed such claim. On January 15, 2021 the parties executed an amendment to the settlement and release agreement for the payment to Marshak of $315,000 in exchange for the tender back of 60,000 of the Company’s shares that were promised to Marshak as part of the settlement and release agreement. The $315,000 payment was made and this matter is settled in full.

On December 31, 2017, MICT, Enertec Systems 2001 Ltd., (“Enertec Systems”), previously our wholly-owned subsidiary, and Enertec Management Ltd., (“Enertec Management”) entered into a share purchase agreement (the “Share Agreement”), with Coolisys Technologies Inc., (“Coolisys”), a subsidiary of DPW Holdings, Inc. (“DPW”). Per the Share Agreement, Coolisys agreed to pay, at the closing (“Closing”) of the transaction, a purchase price of $5,250,000 and assume up to $4,000,000 of Enertec Systems’ debt. On May 22, 2018, MICT closed on the sale of all of the outstanding equity of Enertec Systems.

Upon Closing, MICT received gross proceeds of approximately $4,700,000, of which 10% was to be held in escrow (“Escrow Amount’) for up to 14 months after the Closing in order to satisfy any potential indemnification claims. The final consideration amount was adjusted due to Enertec Systems’ debts at the Closing. In addition, Coolisys also assumed approximately $4,000,000 of Enertec Systems’ debt.

~~In conjunction with,~~2022 and as a condition to, the Closing, the Company, Enertec Systems, Coolisys, DPW and Mr. David Lucatz, our former Chief Executive Officer and director, executed a consulting agreement, (the “Consulting Agreement”). Pursuant to the Consulting Agreement, we, via Mr. Lucatz, provided Enertec Systems with certain consulting and transitional services over a 3 year period as necessary (but in no event did the services exceed 20% of Mr. Lucatz’s time). Coolisys (via Enertec Systems) was obligated to pay us an annual consulting fee of $150,000 and to issue to us 150,000 restricted shares of DPW Class A common stock, (the “DPW Shares”). The DPW Shares were to be issued in three equal installments, with the initial installment vesting the day after the Closing and the remaining installments vesting on each of the first two (2) anniversaries of the Closing. The rights and obligations under the Consulting Agreement were assigned to Mr. Lucatz along with the DPW Shares.

Coolisys alleged the Company was in breach of the Share Agreement, and the Escrow Amount remained in escrow. On July 21, 2020, MICT management and MICT (the “Seller Parties”) received a statement of claim filed in the District Court of Tel Aviv (the “Court”) by Coolisys against the Seller Parties and its Board members for the approximate amount of $2,500,000, (the “Claim”). Pursuant to the Claim, Coolisys alleged that certain misrepresentations in the Share Agreement resulted in losses to Coolisys and requested, among other things, that the Court instruct the release of the Escrow Amount held by the escrow agent to Coolisys.

The Company filed its defense to the Claim on December 15, 2020. On September 14, 2021, the Court adopted a verdict giving effect to the parties settlement agreement pursuant to which the Claim was rejected. The parties have mutually released and waived all claims against the other and in consideration for the aforementioned, the Escrow Amount was released to Coolisys.

~~NOTE 16 — SUBSEQUENT EVENTS~~

On August 23, 2021, Beijing Yibao , Guangxi Zhongtong, and two shareholders of Guangxi Zhongtong entered into a capital increase agreement, pursuant to which Beijing Yibao will invest RMB30 million RMB (USD 4.7 million) into Guangxi Zhongtong. After the investment, Beijing Yibao will hold 60% of the shares in Guangxi Zhongtong and be the controlling shareholder. The VIE agreements signed with Guangxi Zhongtong on January 1, 2021 would become void once the full investment was received. On October 21, 2021, Guangxi Zhongtong received the funds transferred by Beijing Yibao and the transaction was completed.

On October 27, 2021, Bokefa transferred a loan to the shareholders of All Weather in the total amount of RMB 30 million (approximately $4.7 million). The loan was granted pursuant to the loan agreement signed on July 1, 2021, which is a part of a VIE Structure. The loan is designated to be used as working capital for All Weather.today.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This Quarterly Report on Form 10-Q (the “Quarterly Report”), contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other Federal securities laws, and is subject to the safe-harbor created by such Act and laws. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of such terms, or other variations thereon or comparable terminology. The statements herein and their implications are merely predictions and therefore inherently subject to known and unknown risks, uncertainties, assumptions and other factors that may cause actual results to be materially different from those contemplated by the forward-looking statements. Such factors include, but are not limited to changes in economic conditions, government regulations, contract requirements and abilities, competitive pressures and constantly changing technology and market acceptance of our products and services and other risks and uncertainties discussed in this annual Form 10-K report. Such forward-looking statements appear in this Item 2 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and may appear elsewhere in this Quarterly Report and include, but are not limited to, statements regarding the following:

●

our ownership position in Micronet’s share capital;

●

the impact of COVID-19 on both our operations and financial outlook and those of Intermediate, Micronet and MICT;

●

our financing needs and strategies, and our ability to continue to raise capital in the future;

●

our corporate development objectives;

●

our financial position and the value of and market for our common stock;

●

use of proceeds from any future financing, if any; and

●

the sufficiency of our capital resources.

Our business is subject to substantial risks, which increase the uncertainty inherent in the forward-looking statements contained or implied in this report. Except as required by law, we assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements. Further information on potential factors that could affect our business is described in our SEC filing and the risk factors included in Part II, Item IA below. Readers are also urged to carefully review and consider the various disclosures we have made below and in that report. The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements and related notes included elsewhere in this Quarterly Report.

Overview

MICT, Inc. (“MICT”, the “Company”, ~~“We”~~“we”, “us”, “our”) was formed as a Delaware corporation on January 31, ~~2002.~~2002 under the name Lapis Technologies, Inc. On March 14, 2013, we changed our corporate name ~~from Lapis Technologies, Inc.~~ to Micronet Enertec Technologies, Inc. On July 13, 2018, following the sale of our former subsidiary, Enertec Systems Ltd., we changed our name ~~from Micronet Enertec Technologies, Inc.~~ to MICT, ~~Inc..~~Inc. Our shares have been listed for trading on The Nasdaq Capital Market under the symbol “MICT” since April 29, 2013.

MICT Telematics Ltd (“MICT Telematics”) is a wholly-owned holding company established in Israel on December 31, 1991. On October 22, 1993, MICT Telematics established a wholly-owned holding company headquartered in Israel, MICT Management Ltd.

~~On February 1, 2019, BI Intermediate (Hong Kong) Limited (“BI Intermediate”) was incorporated in Hong Kong as a wholly-owned holding company of GFHI.~~

On December 11, 2019, Bokefa Petroleum and Gas Co., Ltd (“Bokefa Petroleum”) was incorporated in Hong Kong as a holding company, and is the wholly-owned subsidiary of BI Intermediate. On October 22, 2020 and March 8, 2021, Bokefa Petroleum established another two holding companies, Shanghai Zheng Zhong Energy Technologies Co., Ltd (“Shanghai Zheng Zhong”) and Tianin Bokefa Technology Co., Ltd. (“Bokefa”).

~~On June 10, 2020,~~ MICT ~~Telematics purchased 5,999,996 ordinary shares of Micronet Ltd.~~is a holding company conducting financial technology business through its subsidiaries and entities controlled through various VIE arrangements (“~~Micronet”~~VIE entities”). The company is principally focused on developing insurance broker business and products across approximately 120 cities in China through its subsidiaries and VIE entities, with planned expansion into additional markets. The company has developed highly scalable proprietary platforms for ~~aggregate proceeds of New Israeli Shekel (“NIS”) 1.8 Million (or $515,000)~~insurance products (B2B, B2B2C and B2C) and financial services/products (B2C), the technology for which is highly adaptable for other applications and markets. MICT through ~~a tender offer issued by~~its subsidiaries has also acquired and holds the requisite license and approvals with the Hong Kong Securities and Futures Commission to deal in securities and provide securities advisory and asset management services. MICT ~~Telematics. As a result, we have increased our ownership interest in Micronet~~also has memberships/registrations with the Hong Kong Stock Exchange, the London Stock Exchange and the requisite Hong Kong and China Direct clearing companies. MICT’s financial services business and first financial services product, the Magpie Invest app, is able to ~~45.53% of Micronet’s issued~~trade securities on NASDAQ, NYSE, TMX, HKSE, China Stock Connect, LSE, the Frankfurt Stock Exchange and ~~outstanding ordinary shares.~~ the Paris Stock Exchange.

Subsequently, on June 23, 2020 we, purchased through public offering consummated by Micronet on the Tel Aviv Stock Exchange (“TASE”), 10,334,000 of Micronet’s ordinary shares for total consideration of NIS 3,100,200 (or $887,000). As a result, we increased our ownership interest in Micronet to 53.39% of Micronet’s outstanding ordinary shares. MICT applied purchase accounting and began to consolidate Micronet’s operating results into our financial statements beginning on such date. MICT recognized a $665,000 gain on previously held equity in Micronet.

On October 11, 2020, Micronet consummated a public equity offering on the “TASE, in which the Company purchased 520,600 of Micronet’s ordinary shares and 416,480 of Micronet’s stock options convertible into 416,480 Micronet ordinary shares (at a conversion price of NIS 3.5 per share), for total consideration of NIS 4,961,202 (or $1,417,486). Following Micronet’s offering, including the purchase of Micronet shares, the exercise of our stock options and additional purchase of 115,851 Micronet shares from an individual seller, our ownership interest in Micronet was diluted from 53.39% to 50.31% of Micronet’s outstanding share capital. On May 9, 2021, following the exercise of options by minority stockholders, the Company’s ownership interest was diluted to 49.88% and, as a result we no longer consolidate Micronet’s operating results in our financial statements. As of May 9, 2021, the Company accounted for the investment in Micronet using the equity method of accounting.

~~Prior to July 1, 2020, MICT operated primarily through its Israel-based majority-owned subsidiary, Micronet.~~ Since July 1, 2020, after MICT completed its acquisition of GFHI (the ~~“Acquisition”~~“GFHI Acquisition”) ~~of GFH Intermediate Holdings Ltd. (“GFHI” or “Intermediate”),~~ pursuant to that certain ~~agreement~~Agreement and ~~plan~~Plan of ~~merger~~Merger entered into on November 7, 2019 by and between MICT, GFHI, Global Fintech Holding Ltd. (“GFH”), a British Virgin Islands company and the sole shareholder of ~~GFHI,~~GFH Intermediate Holdings Ltd. (“GFHI” or “Intermediate”), and MICT Merger Subsidiary Inc., a British Virgin Islands company and a wholly owned subsidiary of MICT (“Merger Sub”), as amended and restated on April 15, 2020 (the “Restated Merger Agreement” or “Merger”), we have been operating in the financial technology sector. GFHI is a financial technology company with a marketplace in China, as well as other areas of the world and is currently in the process of building various platforms for business opportunities in different insurance platform segments (formerly: verticals and technology ~~segments~~segments) in order to capitalize on such technology and business. GFHI plans to ~~continue to advance~~increase its capabilities and its technological platforms through acquisition and licensing technologies to support its growth efforts in the different market segments. After the Merger, MICT ~~includes~~included the business of Intermediate, ~~its~~MICT’s wholly-owned subsidiary, operating through ~~its~~Intermediate operating ~~subsidiaries, as described herein.~~subsidiaries.

~~On October 2, 2020, BI Intermediate entered into a strategic agreement (the “Strategic Agreement”) to acquire the entire share capital~~Following Intermediate’s acquisition of Magpie Securities Limited (“Magpie”), a Hong Kong ~~based~~ securities and ~~investments~~investment services firm, ~~for a total purchase price~~on February 26, 2021 and the subsequent receipt of approximately $3.0 million (“Purchase Price”). Magpie is licensed to trade securities on leading exchanges in Hong Kong, the U.S. and China, including China A-Shares, all of which are the primary target markets for Company’s global fintech business. The Strategic Agreement provided that the acquisition would be consummated in two phases, an initial purchase whereby 9% of the share capital of Magpie was acquired and thereafter, the remaining 91% of Magpie would be purchased by BI Intermediate upon, and subject to, theregulatory approval offrom the Hong Kong Securities and Futures Commission, ~~(SFC),~~Magpie is licensed to deal in securities, futures and options, and also undertake the ~~principal regulator~~business of ~~Hong Kong’s~~ securities advisory services and ~~futures markets. On November 11, 2020, BI~~ asset management.

Intermediate ~~closed~~launched Magpie Invest, a global stock trading app, on its acquisition of the first 9% and paid 9% of the Purchase Price. Additionally, pursuant to the Strategic Agreement, upon the initial closing, BI Intermediate loaned Magpie an amount equivalent to the remaining 91% of the Purchase Price. Upon closing on the remaining 91%, which remains subject to SFC approval, the loan would be cancelled, and BI Intermediate would acquire the remaining 91% of Magpie. The loan was secured against the pledge of 91% of the share capital of Magpie purchased at such time by BI Intermediate. The obligations of Magpie, and the seller of the interests of Magpie, under the loan agreement have been guaranteed by the majority shareholder of Magpie. On February 26,September 15, 2021, we finalized the acquisition of Magpie. The acquisition was consummated following the receipt of approval from the SFC effecting the change in the majority shareholder of Magpie. In consideration for the entire share capital of Magpie, we paid a total Purchase Price of $2.947 million (reflecting the net asset value of Magpie estimated at $2.034 million recorded as a working capital, and a premium $902 thousand that was recorded as a license in the Intangible assets). The Company, through ~~and together with the Company’s~~its wholly owned ~~subsidiaries, Beijing~~subsidiary, Magpie Securities ~~Consulting Services Co., Ltd~~Limited (“~~Beijing~~ Magpie”) ~~and Shenzhen Magpie Information Consulting Technology Co., Ltd (“Shenzhen Magpie”), are in the process of integrating its mobile app supporting platforms with Magpie’s licensed trading assets.~~

Upon completion of the Magpie acquisition, we were able to obtain the licenses and permits needed for operating our online platform. After we complete the appropriate system testing to ensure scale and reliability, we will be in. It is a ~~position to notify the Hong Kong regulator of our intended launch date. Our initial plan is to launch the online stock~~proprietary technology investment trading platform that is currently operational in Hong Kong. Magpie Invest’s technology allows the platform to connect to all major stock exchanges and we planned to expand into Australia and Switzerland by Q4 2022.

On January 1, 2021, we entered into a transaction through Bokefa, with the shareholders of Guangxi Zhongtong Insurance Agency Co., Ltd (“Guangxi Zhongtong”), a local Chinese entity with business and operations in the insurance brokerage business. Pursuant to the transaction, we loaned the Guangxi Zhongtong shareholders through a frame work loan (the “GZ Frame Work Loan”) in the amount of up to RMB 40 million (approximately $6,125,000) (“GZ Frame Work Loan Amount”) which is designated, if exercised, to be used as a working capital loan for Guangxi Zhongtong As of September 30, 2021, only RMB 8,010,000 (approximately $1,243,000) was drawn down from the GZ Frame Work Loan for working capital and approximately $857,000 was drawn down for loans to shareholders of Guangxi Zhongtong (as stipulated in the agreement). In consideration for the GZ Frame Work Loan, the parties entered into various additional agreements which include: (i) a pledge agreement pursuant to which the shareholders have pledged their shares for the benefit of Bokefa in order to secure the GZ Frame Work Loan Amount (ii) an exclusive option agreement pursuant to which Bokefa has an exclusive option to purchase the entire shares of Guangxi Zhongtong from the shareholders (“Option Agreement”) under such terms set forth therein (which include an exercise price not less than the maximum GZ Frame Work Loan Amount and the right to convert the GZ Frame Work Loan Amount into the purchased shares) (iii) an entrustment agreement and power of attorney agreement pursuant to which the shareholders irrevocably entrusted and appointed Tianjin Bokefa as their proxy and trustee to exercise on their behalf any and all rights under applicable law and the articles of association of Guangxi Zhongtong in the shareholder’s equity interest in Guangxi Zhongtong, and (iv) a business cooperation agreement and a master exclusive service agreement which grants Bokefa rights related to Guangxi Zhongtong’s business and operations in order to secure repayment of the GZ Frame Work Loan Amount.

This transaction was structured pursuant to a Variable Interest Entity (“VIE”) Structure (in which we do not hold the shares). Given our direct ownership in Bokefa and its contractual arrangements with Guangxi Zhongtong, we are regarded as Guangxi Zhongtong’s controlling entity and primary beneficiary of Guangxi Zhongtong’s business. We have, therefore, consolidated the financial position and operating results of Guangxi Zhongtong into our consolidated financial statements, using the fair value of the assets and liabilities of Guangxi Zhongtong, in accordance with U.S. GAAP.

Beijing Fucheng Lianbao Technology Co., Ltd (“Beijing Fucheng”) is an entity incorporated on December 29, 2020, in which Bokefa owns 24% equity interest with the remaining 76% controlled by Bokefa through VIE agreements. On February 10, 2021, Beijing Fucheng acquired all of the shares of Beijing Yibao Technology Co., Ltd., (“Beijing Yibao”) which holds 100% of the equity interest in Beijing Fucheng Insurance Brokerage Co., Ltd. (“Fucheng Insurance”). Fucheng Insurance is a Chinese insurance brokerage agency and is a nation-wide licensed entity which offers insurance brokerage services for a broad range of insurance products. Fucheng Insurance, with and through their nationwide license, will give us the flexibility to offer and create tailor-made insurance products, leverage customers directly or through distribution partners and procure better deals with both our existing and new insurance company partners. Fucheng Insurance further enables us to accelerate onboarding of new agents onto our platforms all throughout China. It also creates the opportunity to promote our business through some of China’s biggest online portals, which will provide business-to-business-to-consumer (B2B2C) as well as business-to-consumer (B2C) channels. When Fucheng Insurance initiates its nationwide rollout of its mobile application, it will facilitate access to those portals’ vast customer bases, which will also offer MICT’S full suite of insurance products. Beijing Fucheng shares were acquired for approximately $5.7 million, and funded through MICT. For further information, please refer to Note 7.

On June 16, 2021, Micronet announced that it completed a public equity offering on the TASE. Pursuant to the offering, Micronet sold an aggregate of 18,400 securities units (the “Units”) at a price of NIS 14.6 per Unit with each Unit consisting of 100 ordinary shares, 25 series A options and 75 series B options, resulting in the issuance of 1,840,000 ordinary shares, 460,000 series A options and 1,380,000 series B options. Micronet raised total gross proceeds of NIS 26,864,000 (approximately $8,290,000) in the offering. The Company did not participate in the offering, and, as a result, the Company owned 36.95% of the outstanding ordinary shares of Micronet and 26.56% on a fully diluted basis as of September 30, 2021.

On July 1, 2021, Bokefa entered into a transaction with the shareholders of All Weather Insurance Agency Co., Ltd (“All Weather”), a local Chinese entity with business and operations in the field of broker insurance (the “Transaction”). Pursuant to the Transaction, Bokefa agreed to provide the All Weather shareholders with a frame work loan (the “AW Frame Work Loan”) for a total amount of up to RMB 30 million (approximately $4.7 million) (the “AW Frame work Loan Amount”) which if and as utilized, will be sued for working capital purpose of All Weather. In consideration for the AW Frame Work Loan, the parties entered into various additional agreements which include: (i) a pledge agreement pursuant to which the shareholders pledged their shares for the benefit of Bokefa in order to secure the amount for the AW Frame Work Loan Amount (ii) an exclusive option agreement pursuant to which Bokefa has an exclusive option to purchase the entire issued and outstanding common shares of All Weather from the Shareholders (“Option Agreement”) under such terms set forth in the Option Agreement (which include an exercise price not less than the maximum AW Frame Work Loan Amount and the right to convert the AW Frame Work Loan Amount into the purchased shares) (iii) an entrustment agreement and power of attorney agreement pursuant to which the shareholders irrevocably entrusted and appointed Bokefa as their proxy and trustee to exercise on their behalf any and all rights under applicable law and the articles of association of All Weather in the shareholder’s equity interest in All Weather, and (iv) a business cooperation agreement and a master exclusive service agreement which grants Bokefa rights related to All Weather’s business and operations in order to secure repayment of the AW Frame Work Loan Amount. The Transaction above was structured pursuant to a VIE structure (pursuant to which we do not technically hold the shares) and as a result of our direct ownership in Bokefa and its contractual arrangements with All Weather, we are regarded as All Weather’s controlling entity and primary beneficiary of All Weather’s business. On October 27, 2021, the entire AW Frame Work Loan Amount was utilized by the All Weather shareholders and was transferred to All Weather for purpose of working capital. In addition, as of September 30, 2021, the Company granted the All Weather shareholders an additional loan in the sum of approximately $776,000, to be provided in advance to a transaction between the parties pursuant to which the VIE structure described above shall be replaced by an equity structure for the purchase by MICT of such equity interests in All Weather at such commercial and other terms to be agreed by the parties.

On August 23, 2021, Beijing Yibao, Guangxi Zhongtong, and two shareholders of Guangxi Zhongtong entered into a capital increase agreement, pursuant to which Beijing Yibao will invest approximately RMB30 million (USD 4.7 million) into Guangxi Zhongtong. On October 21, 2021, Yibao transferred such funds and the transaction closed. As a result of the transaction, Yiabo now holds a sixty percent (60%) equity interest in Guangxi Zhongtong and is the controlling shareholder. As a condition of the closing, the previous agreements consummated on January 1, 2021 per the GZ Frame Work Loan became null and void.

Our current business, following the completion of the Acquisition, is primarily comprised and focused on the growth and development of the GFHI financial technology offering and the marketplace in China. We are in the process of building various platforms for business opportunities in different verticals and technology segments in order to capitalize on such technology and business.

As a result of our Acquisition of GFHI and the subsequent work we have undertaken with the management of Intermediate, we are positioned to establish ourselves, through our operating subsidiaries, to serve the markets as a financial technology company with a significant Chinese marketplace. We plan to expand on a global level as we continue to scale our business. GFHI has built various platforms to capitalize on business opportunities in a range of verticals and technology segments, which currently include stock trading and wealth management, commodities in segments of oil and gas trading and insurance brokerage. We are seeking to secure material contracts in all of these market segments in China while also developing opportunities in order to allow GFHI access to these markets. We will continue to increase the capabilities of our platforms through acquisition and/or licensing different technologies to support our efforts. By building secure, reliable and scalable platforms with high volume processing capability, we intend to provide customized solutions that address the needs of a highly diverse and broad client base.

~~Our current opportunities have given us access the following market segments:~~

●

~~Stock trading and wealth management segment;~~

●

~~Commodities in the field of Oil and gas trading segment; and~~

●

~~Insurance brokerage segment~~

These opportunities will continue to be realized and executed through our business development efforts, which include the acquisition of potential target entities, business and assets (such as applicable required licenses) in the relevant business space and segments in which we plan to operate. ~~This allows~~We believe that this will allow the Company to enter into the market quickly and leverage existing assets in order to promote our growth strategy.

Prior to July 1, 2020, MICT operated primarily through its Israel-based then majority-owned subsidiary, Micronet. Micronet, through both its Israeli and U.S. operational offices, designs, develops, manufactures and sells rugged mobile computing devices that provide fleet operators and field workforces with computing solutions in challenging work environments. Micronet’s vehicle portable tablets are designed to increase workforce productivity and enhance corporate efficiency by offering computing power and communication capabilities that provide fleet operators with visibility into vehicle location, fuel usage, speed and mileage. Furthermore, users are able to manage the drivers in various aspects, such as: driver behavior, driver identification, reporting hours worked, customer/organization working procedures and protocols, route management and navigation based on tasks and time schedule. End users may also receive real time messages for various services, such as pickup and delivery, repair and maintenance, status reports, alerts, notices relating to the start and ending of work, digital forms, issuing and printing of invoices and payments. Through its SmartHub product, Micronet provides its consumers with services such as driver recognition, identifying and preventing driver fatigue, recognizing driver behavior, preventive maintenance, fuel efficiency and an advanced driver assistance system. In addition, Micronet provides TSPs a platform to offer services such as “Hours of Service.” Micronet previously commenced and continues to evaluate integration with other TSPs. On May 9, 2021, following the exercise of options by certain minority stockholders, the Company’s ownership interest of Micronet was diluted to 49.88% and as a result the Company is no longer required to consolidate Micronet’s financial statements with the Company’s and include Micronet’s operating results in its financial statements. the Company owned 31.47% of the outstanding ordinary shares of Micronet and 26.83% on a fully diluted basis as of June 30, 2022.

Potential Merger with Tingo, Inc.

On May 10, 2022, Tingo, Inc., a Nevada corporation (“Tingo” or the “Seller”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with MICT Merger Sub, Inc., a Nevada corporation and a wholly-owned subsidiary of MICT (“Merger Sub”), and MICT, Inc., a Delaware corporation (“MICT”).

Pursuant to the Merger Agreement, subject to the terms and conditions set forth therein, upon the consummation of the transactions contemplated by the Merger Agreement (the “Closing”), Merger Sub will merge with and into Tingo (the “Merger” and, together with the other transactions contemplated by the Merger Agreement, the “Transactions”), with the Seller continuing as the surviving corporation in the Merger and a wholly-owned subsidiary of MICT. It is expected that current holders of Tingo Shares will own approximately 77% of the total shares of the post-merger company and the current shareholders of MICT will own the remaining 23% of the Shares of the post-merger company.

Tingo is the leading Agri fintech company operating in Africa, with a marketplace platform that empowers social upliftment through mobile, technology and financial access for rural farming communities. Their ‘device as a service’ model allows them to add market leading applications to enable customers to trade, buy top ups, pay bills, access insurance and lending services. With 9.3 million existing customers, Tingo is seeking to expand its operations across select markets in Africa. Tingo’s strategic plan is to become the eminent Pan African Agri-Fintech business delivering social upliftment and financial inclusion to millions of SME farmers and women-led businesses. There can be no assurances given that the Company will consummate this merger since there are several conditions before the merger could be consummated including, but not limited to, the approval by the shareholders of the Company and Tingo, Regulatory approvals and other closing conditions.

As a result of the Merger, all of the issued and outstanding capital stock of the Seller immediately prior to the Closing, shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, in exchange for the right for each Seller Stockholder to receive its Pro Rata Share of the Merger Consideration, upon the terms and subject to the conditions set forth in the Merger Agreement.

As consideration for the Merger, the Seller Security Holders collectively shall receive from MICT, in the aggregate, a number of shares of MICT Common Stock equal to (the “Merger Consideration”) the product of (a) 3.44444 and (b) the number of shares of MICT Pre-Closing Common Stock (the total portion of the Merger Consideration amount payable to all Seller Stockholders in accordance with the Merger Agreement). This will result in Tingo shareholders receiving new MICT common shares in an amount equal to approximately 77.5% in the combined company, and current MICT shareholders owning approximately 22.5% on a fully diluted basis following the closing, with a combined estimated group value of $4.09 billion.

On June 15, 2022, Tingo, Merger Sub and MICT entered into an Amended and Restated Agreement and Plan of Merger, following the completion of extensive due diligence by MICT and its advisors. including financial due diligence, tax due diligence and quality of earnings analysis by Ernst & Young, financial analysis by Houlihan Lokey, legal, operational, corporate and local due diligence by the Nigerian office of Dentons and corporate due diligence and securities due diligence by Ellenoff Grossman & Schole.

In accordance with US GAAP, upon Closing, which is subject to Tingo stock holder approval, MICT stock holder approval, the satisfaction of regulatory requirements and the Registration Statement having been declared effective by the SEC, the Merger will be accounted for by MICT in its consolidated financial statements as a reverse acquisition.

The following diagram illustrates the Company’s current corporate structure, including its subsidiaries, and variable interest entities (“VIEs”), as of June 30, 2022:

VIE agreements with Guangxi Zhongtong:

On January 1, 2021, as amended on August 6, 2021, Bokefa, our wholly foreign-owned enterprise (“WFOE”), Guangxi Zhongtong, and nominee shareholders of Guangxi Zhongtong entered into six agreements, (together, the “Guangxi Zhongtong VIE Agreements”), described below, pursuant to which Bokefa is deemed to have controlling financial interest and be the primary beneficiary of Guangxi Zhogntong. Therefore, Guangxi Zhongtong is deemed a VIE of ~~Bokefa:~~Bokefa.

Loan Agreement

Pursuant to this agreement, Bokefa agreed to provide ~~a loan~~loans to the registered shareholders of Guangxi Zhongtong. The ~~effective~~ term of the loan ~~agreement~~shall start from the date when the loan is ~~unlimited, and~~actually paid, until the date on which the loan is repaid in full. The agreement shall terminate when the shareholders repay the loan. The loan should be used solely for Guangxi Zhongtong’s operating expenses and should be exclusively repaid by transferring shares of Guangxi Zhongtong to Bokefa when PRC Law permits.

Exclusive Option Agreement

The effective term of the agreement is unlimited and the agreement shall terminate upon the transfer of all the equity interest of Guangxi Zhongtong to Bokefa in accordance with relevant laws and provisions as provided in the agreement, or upon written notice by Bokefa to ~~the~~ shareholders. In consideration of Bokefa’s loan arrangement, the shareholders have agreed to grant Bokefa an exclusive option to purchase their equity interest. Distribution of residual profits, if any, are restricted without the approval of Bokefa. Upon request by Bokefa, Guangxi Zhongtong is obligated to distribute profits to the shareholders of Guangxi Zhongtong, who must remit such profits to Bokefa immediately. Guangxi Zhongtong and its shareholders are required to act in a manner that is in the best interest of Bokefa with regards to Guangxi Zhongtong’s business operation.

Equity Pledge Agreement

The agreement will be terminated upon such date when the other agreements have been terminated. Pursuant to the agreement, the nominee ~~shareholder~~shareholders pledged all ~~its~~their equity interest in Guangxi Zhongtong to Bokefa as security for ~~their~~the obligations ~~pursuant to~~in the other agreements. Bokefa has the right to receive dividends on the pledged shares, and all shareholders are required to act in a manner that is in the best interest of Bokefa.

Business Cooperation Agreement

Exclusive Service Agreement

Entrustment and Power of Attorney Agreement

On August 23, 2021, Beijing Yibao Technology Co., Ltd (“Beijing Yibao”), Guangxi Zhongtong Insurance Agency Co., Ltd (“Guangxi Zhongtong”), and two shareholders of Guangxi Zhongtong entered into a capital increase agreement pursuant to which Beijing Yibao will invest approximately RMB30 million (USD 4.7 million) into Guangxi Zhongtong. On October 21, 2021, Beijing Yibao transferred the funds separately and the transaction closed. As a result of the transaction, Beijing Yibao now holds a sixty percent (60%) equity interest in Guangxi Zhongtong and is the controlling shareholder. As a condition of the closing, the previous agreements consummated on January 1, 2021 per the GZ Frame Work Loan became null and void, and the loan should be repaid by the shareholders before December 31, 2022.

VIE agreements with Beijing Fucheng:

On December 31, 2020, as amended on August 25, 2021, Bokefa, Beijing Fucheng Lianbao Technology Co., Ltd. (“Beijing Fucheng”), and the shareholders of Beijing Fucheng entered into six agreements, described below, pursuant to which Bokefa is deemed to have a controlling financial interest and be the primary beneficiary of Beijing ~~Fucheng.~~Fucheng,. Therefore, Beijing Fucheng is deemed a VIE of Bokefa. Beijing Fucheng was incorporated on December 29, 2020 and had no assets or liabilities as of December 31, 2020.

Loan Agreement

Pursuant to this agreement, Bokefa agreed to provide ~~a loan~~loans to the registered shareholders of Beijing Fucheng. The ~~effective~~ term of the loan under this agreement shall start from the date when the loan is ~~unlimited,~~actually paid and shall continue until the shareholders repay all the loan in accordance with this agreement. The agreement ~~terminates~~shall terminate when the shareholders repay the loan. The loan should be used solely for Beijing Fucheng’s operating expenses, and should be exclusively repaid by transferring shares of Beijing Fucheng to Bokefa when PRC Law permits. As of June 30, 2022 the loans were not drawn.

Exclusive Option Agreement

Equity Pledge Agreement

The agreement will be terminated at the date when the other agreements have been terminated. Pursuant to the agreement, the shareholders pledged all their equity interest in Beijing Fucheng to Bokefa as security ~~its~~for their obligations under the agreements. Bokefa has the right to receive dividends ofon the pledged shares, and all shareholders are required to act in a manner that is in the best interest of Bokefa.

Business Cooperation Agreement

Exclusive Service Agreement

The effective term of this agreement is for one year and it can be extended an unlimited number of times if agreed by both parties. Bokefa agrees to provide exclusive technical consulting and support services to Beijing Fucheng and Beijing Fucheng agrees to pay service fees to Bokefa.

Entrustment and Power of Attorney Agreement

VIE agreements with All Weather:

Loan Agreement

~~Loan Agreement~~

Pursuant to this agreement, Bokefa agreed to provide ~~a loan~~loans to the ~~registered~~ shareholders of All Weather. The ~~effective~~ term of the loan ~~agreement~~shall start from the date when the loan is ~~unlimited, and~~actually paid until the date on which the loan is repaid in full. The agreement shall terminate when the shareholders repay the loan. The loan should be used solely by All Weather for operating expenses, and should be exclusively repaid by transferring shares of All Weather to Bokefa when PRC Law permits.

Exclusive Option Agreement

Equity Pledge Agreement

Business Cooperation Agreement

Exclusive Service Agreement

The effective term of this agreement is for one year and it can be extended an unlimited number of times if agreed by both parties. Bokefa agrees to provide exclusive technical consulting and support services to All Weather and All Weather agrees to pay service fees to Bokefa.

Entrustment and Power of Attorney Agreement

VIE agreements with Tianjin Dibao:

Loan Agreement

~~Non-GAAP Financial Measures~~

In addition to providing financial measurements based on generally accepted accounting principles in the U.S., or GAAP, we provide additional financial metrics that are not prepared in accordance with GAAP, or non-GAAP financial measures. Management uses non-GAAP financial measures, in addition to GAAP financial measures, to understand and compare operating results across accounting periods, for financial and operational decision making, for planning and forecasting purposes and to evaluate our financial performance.

Management believes that these non-GAAP financial measures reflect our ongoing business in a manner that allows for meaningful comparisons and analysis of trends in our business, as they exclude expenses and gains that are not reflective of our ongoing operating results. Management also believes that these non-GAAP financial measures provide useful information to investors in understanding and evaluating our operating results and future prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies.Exclusive Option Agreement

The ~~non-GAAP financial measures do not replace~~effective term of the ~~presentation~~agreement is unlimited and the agreement shall terminate upon the transfer of ~~our GAAP financial results and should only be used as a supplement~~all of the equity interest of Tianjin Dibao to ~~not as a substitute for, our financial results presented~~Zhengzhong Energy in accordance with ~~GAAP.~~relevant laws and provisions in the agreement, or upon written notice by Zhengzhong Energy to the shareholder. In consideration for Zhengzhong Energy’s loan arrangement, the shareholder have agreed to grant Zhengzhong Energy an exclusive option to purchase their equity interest. Distribution of residual profits, if any, is restricted without the approval of Zhengzhong Energy. Upon request by Zhengzhong Energy, Tianjin Dibao is obligated to distribute profits to the shareholder of Tianjin Dibao, who must remit the profits to Zhengzhong Energy immediately. Tianjin Dibao and its shareholder are required to act in a manner that is in the best interest of Zhengzhong Energy with regard to Tianjin Dibao’s business operations.

Equity Pledge Agreement

The ~~non-GAAP adjustments,~~agreement will be terminated at the date when the other agreements have been terminated. Pursuant to the agreement, the nominee shareholder pledged all of their equity interest in Tianjin Dibao to Zhengzhong Energy as security for their obligations pursuant to the other agreements. Zhengzhong Energy has the right to receive dividends on the pledged shares, and all shareholder are required to act in a manner that is in the ~~basis for excluding them from non-GAAP financial measures, are outlined below:~~best interest of Zhengzhong Energy.

●

~~Amortization of acquired intangible assets~~ - We are required to amortize the intangible assets, included in our GAAP financial statements, related to the Transaction and the Acquisition. The amount of an acquisition’s purchase price allocated to intangible assets and term of its related amortization are unique to these transactions. The amortization of acquired intangible assets are non-cash charges. We believe that such charges do not reflect our operational performance. Therefore, we exclude amortization of acquired intangible assets to provide investors with a consistent basis for comparing pre- and post-transaction operating results.

Business Cooperation Agreement

●

~~Expenses related to the settlement agreements~~ - These expenses relate to a settlement agreement as described in part III -Item 1. Legal Proceedings of this reports. We believe that these expenses do not reflect our operational performance. Therefore, we exclude them to provide the investors with a consistent basis for comparing pre- and post-transaction operating results.

●

~~Stock-based compensation -~~ is share based awards granted to certain individuals. They are non-cash and affected by our historical stock prices which are irrelevant to forward-looking analyses and are not necessarily linked to our operational performance.

●

~~Options-based compensation –~~ Refers to compensation components which includes stock options awards granted to certain employees, officers, directors or consultants of the Company. This is a non cash personal compensation component for our employees, officers, directors or consultants and its cost to the Company is calculated based on B&S. This these costs attributed to the grant of stock options are irrelevant to the forward-looking analyses and are not necessarily linked to our operational performance.

The ~~following table reconciles, for~~agreement is effective until terminated by both parties. Tianjin Dibao and its shareholder agree that the ~~periods presented, GAAP net loss attributable to MICT to non-GAAP net income attributable to MICT.~~legal person, directors, general manager and ~~GAAP loss per diluted share attributable to MICT to non-GAAP net loss per diluted share attributable to MICT.:~~

Nine months ended
September 30,

(Dollars in Thousands,
other than share and
per share amounts)
2021 2020
GAAP net loss attributable to MICT, Inc. $ (28,185 ) $ (15,559 )
Amortization of acquired intangible assets 2,301 778
Expenses related to settlement agreements 566 -
Expenses related to beneficial conversion feature expense - 8,482
Expenses related to purchase of a business - 1,295
Options- based compensation 585 -
Stock-based compensation 9,869 2,675
Income tax-effect of above non-GAAP adjustments (604 ) (199 )
Total Non-GAAP net loss attributable to MICT, Inc. $ (15,468 ) $ (2,528 )

Non-GAAP net loss per diluted share attributable to MICT, Inc. $ (0.15 ) $ (0.16 )
Weighted average common shares outstanding used in per share calculations 109,222,674 15,048,644
GAAP net loss per diluted share attributable to MICT, Inc. $ (0.26 ) $ (1.03 )
Weighted average common shares outstanding used in per share calculations 109,222,674 15,048,644

Three months ended
September 30,

(Dollars in Thousands,
other than share and
per share amounts)
2021 2020
GAAP net loss attributable to MICT, Inc. $ (5,328 ) $ (14,151 )
Amortization of acquired intangible assets 733 788
Expenses related to beneficial conversion feature expense - 8,482
Expenses related to purchase of a business - 935
Expenses related to settlement agreements 34 -
Options- based compensation 127 -
Stock-based compensation 1,501 2,584
Income tax-effect of above non-GAAP adjustments (190 ) (199 )
Total Non-GAAP net loss attributable to MICT, Inc. $ (3,123 ) $ (1,561 )

Non-GAAP net loss per diluted share attributable to MICT, Inc. $ (0.03 ) $ (0.07 )
Weighted average common shares outstanding used in per share calculations 121,419,308 22,832,683
GAAP net loss per diluted share attributable to MICT, Inc. $ (0.05 ) $ (0.61 )
Weighted average common shares outstanding used in per share calculations 121,419,308 22,832,683

~~Results~~other senior officers of ~~Operations~~Tianjin Dibao should be appointed or elected by Zhengzhong Energy. Tianjin Dibao and its shareholder agree that all the financial and operational decisions of Tianjin Dibao will be made by Zhengzhong Energy.

Exclusive Service Agreement

Entrustment and Power of Attorney Agreement

Results of Operations

Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2021,~~2022, Compared to Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020.~~2021.

As of June 23, 2020, we increased our ownership interest in Micronet to over 50% and started to consolidate Micronet’s operations into our financial statements up until May 9, 2021 when our ownership in Micronet was diluted to less than 50%. In addition, on July 1, 2020, we completed a merger transaction for the Acquisition of GFHI. We are consolidating the financial results of GFHI as of the date the Acquisition and for the period thereafter. Beginning December 2020, we launched our insurance platform operated by GFHI for the Chinese market and have been generating revenues in GFHI in this segment of our operations. During the first quarter of 2021, as described above, we entered into a certain transaction with ~~Guang Xi Zhong Tong,~~Guangxi Zhongtong, Beijing Fucheng Lianbao Technology Co., Ltd. and completed the acquisition of Magpie, which operates in the field of securities trading platforms. As a result of these transactions, we have started to consolidate the financial results of these companies and business lines into our business. On July 1, 2021, we entered into a VIE transaction with All Weather and started to consolidate the financial results and business lines of All Weather into our business once the transaction was consummated. On October 21, 2021 we completed the transaction of Guangxi Zhongtong, we currently holds a sixty percent (60%) equity interest in Guangxi Zhongtong.

These business activities conducted by MICT in combination with the completion of the above acquisitions, contributed to the following P&L items:

Revenues

Net revenues for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 were ~~$18,515,000~~$11,958,000 and ~~$39,791,000,~~$21,521,000, respectively, compared to ~~$349,000~~$12,341,000 and ~~$349,000~~$21,276,000 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, respectively. This represents ana decrease of $383,000 and increase of ~~$18,166,000 and $39,442,000, respectively,~~$245,000 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021, respectively.~~2022, respectively, as compared to the same period last year.

Net revenues related to the MRM segment for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 were $0 and ~~$726,000,~~$0, respectively, as compared to ~~$349,000~~$0 and ~~$349,000~~$726,000, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and reflects a decrease of ~~$349,000~~$0 and ~~an increase of $377,000~~$726,000 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021, respectively.~~2022. MRM revenues were solely contributed by Micronet. The changes is attributed to the consolidation of the MRM Segment (Micronet) results as of the second quarter of 2020 and the dilution in our ownership and voting interests in Micronet, causing us to cease consolidating Micronet’s operations in our financial statements commencing from May 9, 2021. Micronet did not generate any revenue during the second quarter of 2020 or since the beginning of the second quarter of 2021 until its deconsolidation.

Net revenues related to the verticals and technology segment for the three and nine months ended September 30, 2021 were $18,515,000 and $39,065,000, respectively, as compared to no revenues for the three and nine months ended September 30, 2020, and reflects an increase of $18,515,000 and $39,065,000, respectively, for the three and nine months ended September 30, 2021. The increase is attributed to the consolidation of the GFHI results as of July 1, 2020 and revenues generated as a result of certain commercial and business combination transaction entered by the Company during 2021 (as further detailed above).

~~Cost of revenues~~

Cost of revenues for the three and nine months ended September 30, 2021 were $15,769,000 and $34,436,000, respectively, compared to $347,000 and $347,000 for the three and nine months ended September 30, 2020, respectively. This represents an increase of $15,422,000 and $34,089,000, respectively, for the three and nine months ended September 30, 2021 as compared to the same period last year.

Cost of revenues related to the MRM segment for the three and nine months ended September 30, 2021 were $0 and $716,000, respectively, as compared to $347,000 and $347,000 for the three and nine months ended September 30, 2020 and reflects a decrease of $347,000 and an increase of $369,000, respectively, for the three and nine months ended September 30, 2021. The change is attributed to the consolidation of the MRM segment (Micronet) results ~~as of~~with the ~~second~~company during the first quarter of ~~2020 and~~2021 but not the ~~dilution in our ownership and voting interests in Micronet, causing us to cease consolidating Micronet’s operations in our financial statements commencing from May 9, 2021.~~ first quarter of 2022 as described above.

~~Cost of~~Net revenues related to the ~~verticals and technology~~insurance platform segment for the three and ~~nine~~six months ended ~~September~~June 30, 2022 were $11,950,000 and $21,483,000, as compared to $12,341,000 and $20,550,000 revenues for the three and six months ended June 30, 2021, respectively, ~~were $15,769,000~~ and ~~$33,720,000,~~reflects a decrease of $391,000 and increase of $933,000, for the three and six months ended June 30, 2022, respectively. On the one hand we have increase from the VIE transaction with All Weather which we started to consolidate their financial results and business lines of All Weather into our business once the transaction was consummated on July 1, 2021, on the other hand we have decrease in revenues from Guangxi Zhongtong as a result of the lockdown in certain cities and regions due to COVID-19.

Net revenues related to the online stock trading platform segment for the three and six months ended June 30, 2022 was $8,000 and $38,000, respectively as compared to $0 and $0 revenues for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, respectively and reflects an increase of ~~$15,769,000~~$8,000 and ~~$33,720,000,~~$38,000, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively. The increase is attributed to the ~~commercial~~acquisition of Magpie that was finalized on February 26, 2021, (as further detailed above). As the global stock markets trading keep going downwards, we stopped market campaign in the beginning of the year.

Cost of revenues

Cost of revenues for the three and ~~business combination transaction entered by~~six months ended June 30, 2022 were $9,885,000 and $18,183,000, respectively, compared to $11,675,000 and $18,667,000 for the ~~Company~~three and six months ended June 30, 2021, respectively. This represents a decrease of $1,790,000 and $484,000, for the three and six months ended June 30, 2022 as compared to the same period last year.

Cost of revenues related to the MRM segment for the three and six months ended June 30, 2022 were $0 and $0, as compared to $0 and $716,000 for the three and six months ended June 30, 2021, respectively, and reflects a decrease of $0 and $716,000 for the three and six months ended June 30, 2022, respectively. The change is attributed to the consolidation of the MRM segment (Micronet) results with the company during the first quarter of 2021 but not the first quarter of 2022 as described above .

Cost of revenues related to the insurance platform segment for the three and six months ended June 30, 2022, were $9,870,000 and $18,163,000, respectively, as compared to $11,620,000 and $17,896,000 for the three and six months ended June 30, 2021, respectively, and reflects a decrease of $1,750,000 and increase of $267,000, respectively, for the three and six months ended June 30, 2022. The increase is attributed to the VIE transaction with All Weather which we started to consolidate their financial results and business lines of All Weather into our business once the transaction was consummated on July 1, 2021.

Cost of revenues related to the online stock trading platform segment for the three and six months ended June 30, 2022 was $15,000 and $20,000 as compared to $55,000 and $55,000 Cost of revenues for the three and six months ended June 30, 2021, respectively, and reflects a decrease of $40,000 and $35,000, for the three and six months ended June 30, 2022, respectively. The increase is attributed to the acquisition of Magpie that was finalized on February 26, 2021, (as further detailed above).

Gross profit

Gross profit for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021 were $2,746,000~~2022 was $2,073,000 and ~~$5,355,000,~~$3,338,000, respectively, and represents ~~15%~~17% and ~~13%~~16% of the ~~revenues, respectively.~~revenues. This is in comparison to gross profit of ~~$2,000~~$666,000 and ~~$2,000~~$2,609,000, representing 5% and 12% of the revenues, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020, respectively. With~~2021, respectively, and reflects an increase of $1,407,000 and $729,000, for the ~~transactions~~three and ~~development~~six months ended June 30, 2022 as compared to the same period last year. The change was primarily attributable to the insurance platform segment as discussed below.

Gross profit related to the MRM (Micronet) segment for the three and six months ended June 30, 2022 were $0 and $0, respectively, as compared to gross profit of $0 and $10,000 for the three and six months ended June 30, 2021, respectively, and reflects a decrease of $0 and $10,000 for the three and six months ended June 30, 2022. MRM Gross profit were solely contributed by Micronet The change is attributed to the consolidation of the MRM segment (Micronet) results with the company during the first quarter of 2021 but not the first quarter of 2022 as described above.

Gross profit related to the insurance platform segment for the three and six months ended June 30, 2022 were $2,079,000 and $3,320,000, respectively, as compared to $721,000 and 2,654,000 for the three and six months ended June 30, 2021, respectively, and reflects an increase of $1,358,000 and $ 666,000, for the three and six months ended June 30, 2022 as compared to the same period last year. The increase is attributed to the VIE transaction with All Weather which we started to consolidate their financial results and business lines of All Weather into our ~~vertical and technology segment and~~business once the transaction was consummated on July 1, 2021.

Gross profit (loss) related to the online stock trading platform segment ~~our~~for the three and six months ended June 30, 2022 were $(6,000) and $18,000, respectively, as compared to $(55,000) and $(55,000) gross profit ~~increased accordingly.~~for the three and six months ended June 30, 2021, and reflects an increase of $49,000 and $73,000, respectively, for the three and six months ended June 30, 2022 as compared to the same period last year. The increase is attributed to the acquisition of Magpie that was finalized on February 26, 2021 (as further detailed above).

Selling and Marketing Expenses

Selling and Marketing expenses are part of operating expenses. Selling and marketing cost for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, were ~~$1,521,000~~$1,035,000 and ~~$3,874,000,~~$3,552,000, respectively, as compared to expenses of ~~$69,000~~$1,351,000 and ~~$69,000~~2,352,000 for three and ~~nine~~six months ended ~~September~~June 30, ~~2020, respectively.~~2021. This represents ana decrease of $316,000 and increase of ~~$1,452,000 and $3,805,000, respectively,~~$1,200,000, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 as compared to the same period last year. The ~~increase~~change is attributed to the ~~consolidation of~~decrease in Selling and Marketing expenses related to the ~~GFH results as of July 1, 2020 and expenses generated as~~insurance companies offset by increase in the online stock trading platform. The decrease is mainly a result of ~~certain commercial~~decrease in Selling and ~~business combination transaction entered~~Marketing expenses in a total amount of $613,000 and increase of $150,000, for the three and six months ended June 30, 2022. offset by the ~~Company during~~increase from the acquisition of online stock trading platform segment that was finalized on February 26, 2021 ~~(as further detailed above).~~ in a total amount of $297,000 and $1,076,000, for the three and six months ended June 30, 2022.

General and Administrative Expenses

General and administrative expenses are part of operating expenses. General and administrative expenses for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 were ~~$6,618,000~~$13,665,000 and ~~$26,039,000,~~$20,991,000, respectively, compared to ~~$4,899,000~~$14,853,000 and ~~$6,337,000~~$19,421,000 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, respectively. This represents ana decrease of $1,188,000 and increase of ~~$1,719,000 and $19,702,000, respectively,~~$1,570,000, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 as compared to the same period last year. The ~~increase~~change in general and administrative is mainly a result of (i) a decrease associated with the ~~acquisitions as noted above,~~issuance costs of shares and options to Directors, officers, employees and service providers in a total amount of $4,717,000 a non-cash expenses; and; (ii) ~~an increase~~a decrease in retainer for professional advice from various services providers, in connection with the completion of the public offering closed in February 2021 and March ~~2021;~~2021 offset by increase in expenses related to the insurance companies as well as increase in the online stock trading platform. The increase associated with the salary expenses following the acquisition of new subsidiaries and ~~(iii)~~VIEs transactions during 2021 and; (ii) an increase associated with the ~~D&O insurance (iv) issuance costs~~rent and maintenance expenses following the acquisition of ~~shares~~new subsidiaries and ~~options~~VIEs transactions during 2021, (iii) increase in merger transaction expenses related to ~~Directors officers and employees.~~the Tingo transaction in the amount of $3,136,000.

Research and Development Expenses

Research and development expenses are part of operating expenses. Research and development costs, which mainly include wages, materials and sub-contractors, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 were ~~$396,000~~$346,000 and ~~$1,015,000,~~$941,000, respectively, compared to ~~$230,000~~$388,000 and ~~$230,000~~$619,000 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, respectively. This represents ana decrease of $42,000 and increase of ~~$166,000 and $785,000,~~$322,000, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021, respectively,~~2022, as compared to the same period last year. The ~~increase~~change is attributed to the (i) decrease of $209,000 and increase of $118,000 for the three and six months ended June 30, 2022, as compared to the same period last year related to the development of the Stock trading application and; (ii) increase in $167,000 and $435,000 for the three and six months ended June 30, 2022, as compared to the same period last year related to the development of the insurance core system and sales platform and; (iii) a decrease of $0 and $231,000 for the three and six months ended June 30, 2022, as compared to the same period last year from consolidation of the ~~GFH~~MRM segment (Micronet) results with the company during the first quarter of 2021 but not the first quarter of 2022 as of July 1, 2020 and the dilution in our ownership and voting interests in Micronet, causing us to cease consolidating Micronet’s operations in our financial statements commencing from May 9, 2021 (as further detailed above). described above.

Loss from Operations

Our loss from operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 were ~~$6,521,000~~$13,770,000 and ~~$27,874,000,~~$23,740,000, respectively, compared to loss from operations of ~~$6,016,000~~$16,569,000 and ~~$7,454,000,~~$21,352,000, respectively, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020, respectively.~~2021. The ~~increase~~change in loss from operations is mainly a result of the ~~acquisitions~~increase in gross profit as mention ~~above, as well as the increase in general and administrative costs and increase in selling and marketing costs as explained in the section~~ above.

Financial ~~Expenses, net~~Income (Expense), Net

Financial income (expenses), net for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 were ~~$336,000~~expenses of $1,168,000 and ~~$61,000~~$1,089,000, respectively, compared to ~~$(8,960,000)~~an income of $291,000 and ~~$(8,803,000)~~expenses of $275,000 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, respectively. This represents ~~a decrease~~an increase in financial expenses of ~~$9,296,000~~$1,459,000 and ~~$8,864,000,~~$814,000, respectively, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. The ~~decrease~~change in financial expenses, net for the ~~nine~~three and six months ended ~~September~~June 30, ~~2021,~~2022, is primarily due to the ~~recognition of beneficial conversion expense of approximately $8,482,000 in 2020.~~exchange rate.

Net ~~Income (Loss)~~Loss Attributed to MICT, Inc.

Our net loss attributed to MICT, Inc. for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021, respectively, was $5,328,000~~2022, were $14,337,000 and ~~$28,185,000,~~$23,023,000 compared to ~~14,151,000~~$18,396,000 and ~~$15,559,000,~~$22,857,000, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020, respectively.~~2021. This represents a decrease of ~~$8,823,000~~$4,059,000 and increase of ~~$12,626,000~~$166,000 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021, respectively,~~2022, as compared to the same period last year. The change for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 is mainly a result of the ~~increase~~decrease in operating expenses ~~on the one hand,~~ and ~~on the other hand we can see an~~ increase in ~~revenues.~~gross profit.

Liquidity and Capital Resources

As of ~~September~~June 30, ~~2021,~~2022, our total cash balance was ~~$105,289,000,~~$76,053,000, as compared to ~~$29,049,000~~$94,930,000 as of December 31, ~~2020.~~2021. This reflects ~~an increase~~a decrease of ~~$76,240,000~~$18,877,000 in cash for the reasons described below.

~~Sales of our Securities~~

On November 2, 2020 the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain investors for the purpose of raising $25.0 million in gross proceeds for the Company (the “Offering”). Pursuant to the terms of the Purchase Agreement, the Company sold in a registered direct offering, an aggregate of 10,000,000 units (each, a “Unit”), with each Unit consisting of one share of the Company’s common stock, par value $0.001 per share, and one warrant to purchase 0.8 of one share of common stock at a purchase price of $2.50 per Unit. The warrants are exercisable nine months after the date of issuance at an exercise price of $3.12 per share and will expire five years following the date the warrants become exercisable. The closing of the sale of Units pursuant to the Purchase Agreement occurred on November 4, 2020. By December 31, 2020, the Company had received a total of $22.325 million in gross proceeds pursuant to Offering and issued in the aggregate, 7,600,000 Units. The remaining gross proceeds, in the additional aggregate amount of $2.675 million, were received by the Company on March 1, 2021 and in consideration for such proceeds, the Company issued the remaining 2,400,000 units.

On February 11, 2021, the Company announced that it has entered into a securities purchase agreement (the “February Purchase Agreement”) with certain institutional investors for the sale of (i) 22,471,904 shares of common stock, (ii) 22,471,904 Series A warrants to purchase 22,471,904 shares of common stock and (iii) 11,235,952 Series B warrants to purchase 11,235,952 shares of common stock at a combined purchase price of $2.67 (the “February Offering”). The gross proceeds to the Company from the February Offering were expected to be approximately $60.0 million. The Series A warrants are exercisable nine months after the date of issuance, have an exercise price of $2.80 per share and will expire five and one-half years from the date of issuance. The Series B warrants are exercisable nine months after the date of issuance, have an exercise price of $2.80 per share and will expire three and one-half years from the date of issuance. The Company received net proceeds of $54.0 million on February 16, 2021 after deducting the placement agent’s fees and other expenses.

On March 2, 2021, the Company entered into a securities purchase agreement (the “March Purchase Agreement”) with certain investors for the purpose of raising approximately $54.0 million in gross proceeds for the Company. Pursuant to the terms of the March Purchase Agreement, the Company agreed to sell, in a registered direct offering, an aggregate of 19,285,715 shares of the Company’s common stock, par value $0.001 per share, at a purchase price of $2.675 per Share and in a concurrent private placement, warrants to purchase an aggregate of 19,285,715 shares of common stock, at a purchase price of $0.125 per warrant, for a combined purchase price per share and warrant of $2.80 which was priced at the market under Nasdaq rules. The warrants are immediately exercisable at an exercise price of $2.80 per share, subject to adjustment, and expire five years after the issuance date. The closing date for the March Purchase Agreement was on March 4, 2021. The Company received net proceeds of $48.69 million on March 4, 2021, after deducting the placement agent’s fees and other expenses.

Loans Provided by MICT

On November 13, 2019, the Company and Micronet executed a convertible loan agreement pursuant to which the Company agreed to loan Micronet $500,000 (the “Convertible Loan”). The Convertible Loan bears interest at a rate of 3.95% calculated and paid on a quarterly basis. In addition, the Convertible Loan, if not converted, shall be repaid in four equal installments, the first of such installment payable following the fifth quarter after the issuance of the Convertible Loan, with the remaining three installments due on each subsequent quarter thereafter, such that the Convertible Loan shall be repaid in full upon the lapse of 24 months from its issuance. In addition, the outstanding principal balance of the Convertible Loan, and all accrued and unpaid interest, is convertible at the Company’s option, at a conversion price equal to 0.38 NIS per Micronet share. Pursuant to the Convertible Loan agreement, Micronet also agreed to issue the Company an option to purchase one of Micronet’s ordinary shares for each ordinary share that it issued as a result of a conversion of the Convertible Loan at an exercise price of 0.60 NIS per share, exercisable for a period of 15 months. On July 5, 2020, Micronet had a reverse split where the price of the Convertible Loan changed from 0.08 NIS per Micronet share into 5.7 NIS per Micronet share. The option’s exercise price changed from 0.6 NIS per share to 9 NIS per Micronet share.

On January 1, 2020, the Convertible Loan was approved at a general meeting of the Micronet shareholders, and the Convertible Loan and the transactions contemplated thereby became effective. The loan was repaid on January 4, 2022.

On August 13, 2020, MICT Telematics extended to Micronet an additional loan in the aggregate amount of $175,000 (the “Third Loan”) which governed the existing outstanding intercompany debt. The Third Loan does not bear any interest and has a term of twelve (12) months. The Third Loan was extended for the purpose of supporting Micronet’s working capital and general corporate needs. The loan was repaid on August 25, 2021.

On May 13, 2022, the Company and Tingo executed a loan agreement pursuant to which the Company agreed to loan Tingo (“Maker”) a sum of $3,000,000 (the “Note” and “Loan” respectively) . The Loan bear an annual interest of 5%. The principal balance of the Loan and any accrued and unpaid interest due under the Note shall be due and payable on May 10, 2024 (“Initial Maturity Date”), provided however that if the merger agreement executed between the parties shall be terminated pursuant to its terms, the Initial Maturity Date shall accelerate and the principal balance of the Loan and any accrued and unpaid interest due under the Note shall be due and payable on or before the 30th calendar day following such termination . The principal balance may be prepaid at any time by Maker without penalty.

On July 28, 2022, the Company agreed to replace the Note with a new note (“New Note”), pursuant to which the amount of the Loan granted under the New Note is $3,500,000, with all other terms remaining in effect without a change.

Debt Repayment

~~For~~As of June 30, 2022, the ~~nine months ended September 30, 2021, our total debt was $0~~Company had short-term loans from others of $922,000 comprised as ~~compared to $884,000 for the year ended~~follows: $922,000 loans of All Weather Insurance Agency that bear an interest of 0% will be repaid on December 31, ~~2020. The change in total debt~~2022.

As of June 30, 2022, the Company had short term lease liabilities of $1,026,000 which is ~~primarily~~ due ~~to the dilution in our ownership~~June 30, 2023, and ~~voting interests in Micronet, causing us to cease consolidating Micronet’s operations in our financial statements commencing from May 9, 2021.~~ long-term lease liabilities of $699,000, among which $672,000 is due June 30, 2024, $125,000 is due June 30, 2025, $14,000 is due June 30, 2026 and $5,000 is due June 30, 2027.

Total Current Assets, Trade Accounts Receivable and Working Capital

~~For the nine months ended September~~As of June 30, ~~2021,~~2022, our total current assets were ~~$138,314,000,~~$103,532,000, as compared to ~~$33,680,000 for the year ended~~$127,497,000 as of December 31, ~~2020.~~2021. The ~~increase~~decrease is mainly due to the ~~increase~~decrease in our cash as described above.

Our trade accounts receivable ~~for the nine months ended September~~as of June 30, ~~2021,~~2022, were ~~$20,644,000~~$12,025,000 as compared to ~~$523,000 for the year ended~~$17,879,000 as of December 31, ~~2020. The increase is due to consolidation of Zhongtong Insurance financial reports.~~2021.

~~For the nine months ended September~~As of June 30, ~~2021,~~2022, our working capital was ~~$112,980,000,~~$84,915,000, compared to ~~$26,693,000 for the year ended~~$102,107,000 as of December 31, ~~2020.~~2021. The ~~increase~~decrease is mainly due to the ~~increase~~decrease in our cash as described above.

For the
Nine Months Ended
September 30,
2021 2020
USD in thousands USD in thousands
(unaudited) (unaudited)
Net Cash Used in Operating Activities $ (35,081 ) $ (12,201 )
Net Cash Used in Investing Activities (6,487 ) (288 )
Net Cash Provided by Financing Activities 117,601 27,998
Translation adjustment on cash and restricted cash 207 (85 )
Cash and restricted cash at Beginning of Period 29,049 3,199
Cash and restricted cash at end of period $ 105,289 $ 18,623

	For the Six Months Ended June 30,
	2022			2021
	USD in thousands			USD in thousands
	(unaudited)			(unaudited)
Net Cash Used in Operating Activities	$	(16,134	)	$	(16,074	)
Net Cash Used in Investing Activities		(2,570	)		(5,857	)
Net Cash Provided by (Used in) Financing Activities		(736	)		107,065
Translation adjustment on cash and restricted cash		445			-
Cash and restricted cash at Beginning of Period		97,347			29,526
Cash and restricted cash at end of period	$	78,352		$	114,660

Cash Flow from Operating Activities

For the ~~nine~~six months ended ~~September~~June 30, 2022, net cash used in operating activities was $16,134,000, which primarily consists of net loss of $23,281,000 and various non-cash items of $6,219,000, as well as (1) changes in deferred tax, net of $1,174,000, (2) changes in trade account receivable of $(5,774,000), (3) changes in trade accounts payable of 6,137,000, (4) changes in deposit held on behalf of clients of $1,622,000, (5) changes in other current assets of $ (1,458,000), (6) changes in other current liabilities of $(1,692,000), (7) changes in related party of $(494,000), (8) changes in long-term deposit and prepaid expenses of $(369,000), (9) changes in right of use assets of $(338,000), and (10) change in lease liabilities of $264,000.

For the six months ended June 30, 2021, net cash used in operating activities was ~~$35,081,000,~~$16,074,000, which consists of the net cash used in operating activities of ~~$6,450,000~~$7,228,000 and with net loss of ~~$28,631,000.~~$23,302,000. The total net cash used in operating activities primarily consisted of: (1) Stock-based compensation for employees and consultants of ~~$(584,000)~~$(458,000), (2) Loss from loss of control in Micronet of $(1,934,000), (3) ~~gain~~Loss from equity investment of ~~$636,000,~~$(163,000), (4) Depreciation and amortization of $ ~~(2,416,000)~~(1,648,000), (5) issuance of shares for employees and consultants of $ (8,375,000), (6) Changes in assets and liabilities of $ ~~10,748,000.~~

For the nine months ended September 30, 2020, net cash used in operating activities was $12,201,000, which consists of the net cash used in operating activities of $3,820,000 and with net loss of $16,021,000. The total net cash used in operating activities primarily consisted of: (1) Gain on previously held equity interest in Micronet of $665,000, (2) Stock-based compensation for employees and consultants of $ (2,675,000), (3) Loss from equity investment of $(786,000), (4) Impairment of equity and loan method investment in Micronet of $263,000, (5) Interest and exchange rate differences on loans of $(16,000), (6) Depreciation and amortization of $ (890,000), (7) Changes in assets and liabilities of $(381,000).5,350,000.

Cash Flow from Investing Activities

For the ~~nine~~six months ended ~~September~~June 30, 2022, we had net cash used in investing activities of $2,570,000, which consisted of (1) net cash used in investing of purchase of property and equipment of $(104,000) and, (2) receipt of loan back from Micronet of $534,000 (3) loan to Tingo $(3,000,000).

For the six months ended June 30, 2021, we had net cash used in investing activities of ~~$6,487,000,~~$5,857,000, which consisted of the net cash used in investing activities of ~~$2,342,000,~~$3,097,000, deconsolidation of Micronet operations of $2,466,000, ~~loan to related party of $1,133,000~~ and purchase of property and equipment of ~~$546,000.~~$294,000. The majority net cash used in investing was for the investment in new companies and expansion of business activities.

For the nine months ended September 30, 2020, we had net cash used in investing activities of $288,000, which consisted of the net cash used in additional investment of Micronet of $(222,000), loan to Micronet of $(125,000), and purchase of property and equipment of $59,000.

Cash Flow from Financing Activities

For the ~~nine~~six months ended ~~September~~June 30, 2022, we had net cash used in financing activities of $736,000, which solely consisted of repayment of loan to others.

For the six months ended June 30, 2021, we had net cash provided by financing activities of ~~$117,601,000,~~$107,065,000, which primarily consisted of: (1) Proceeds from issuance of shares and warrants of ~~$115,242,000~~$105,366,000 from our public offering in February and March 2021; (2) proceeds from the exercise of warrants of ~~$2,554,000;~~$1,894,000; (3) Repayment of current maturity of long-term bank loans of $(195,000).

~~For~~

Non-GAAP Financial Measures

In addition to providing financial measurements based on generally accepted accounting principles in the ~~nine months ended September 30, 2020,~~U.S., or GAAP, we ~~had~~provide additional financial metrics that are not prepared in accordance with GAAP, or non-GAAP financial measures. Management uses non-GAAP financial measures, in addition to GAAP financial measures, to understand and compare operating results across accounting periods, for financial and operational decision making, for planning and forecasting purposes and to evaluate our financial performance.

The non-GAAP financial measures do not replace the presentation of our GAAP financial results and should only be used as a supplement to, not as a substitute for, our financial results presented in accordance with GAAP.

The non-GAAP adjustments, and the basis for excluding them from non-GAAP financial measures, are outlined below:

●

Amortization of acquired intangible assets - We are required to amortize the intangible assets, included in our GAAP financial statements, related to the Transaction and the Acquisition. The amount of an acquisition’s purchase price allocated to intangible assets and term of its related amortization are unique to these transactions. The amortization of acquired intangible assets are non-cash charges. We believe that such charges do not reflect our operational performance. Therefore, we exclude amortization of acquired intangible assets to provide investors with a consistent basis for comparing pre- and post-transaction operating results.

●

Expenses related to the settlement agreements - These expenses relate to a settlement agreement as described in part III -Item 1. Legal Proceedings of this reports. We believe that these expenses do not reflect our operational performance. Therefore, we exclude them to provide the investors with a consistent basis for comparing pre- and post-transaction operating results.

●

Stock-based compensation - is share based awards granted to certain individuals. They are non-cash and affected by our historical stock prices which are irrelevant to forward-looking analyses and are not necessarily linked to our operational performance.

●

Options-based compensation – Refers to compensation components which includes stock options awards granted to certain employees, officers, directors or consultants of the Company. This is a non cash personal compensation component for our employees, officers, directors or consultants and its cost to the Company is calculated based on B&S. This these costs attributed to the grant of stock options are irrelevant to the forward-looking analyses and are not necessarily linked to our operational performance.

The following table reconciles, for the periods presented, GAAP net ~~cash provided by financing activities of $27,998,000, which primarily consisted of receipt of loans from others,~~loss attributable to MICT to non-GAAP net ~~of $(63,000)~~income attributable to MICT. and ~~Proceeds from issuance of shares and warrants of $1,612,000 and issuance of convertible preferred shares~~GAAP loss per diluted share attributable to MICT to non-GAAP net ~~of $409,000. proceeds from the exercise of warrants of $2,366,000, payment received by convertible notes purchasers $23,674,000~~loss per diluted share attributable to MICT.

	Six months ended June 30,
	(Dollars in Thousands, other than share and per share amounts)
	2022			2021
GAAP net loss attributable to MICT, Inc.	$	(23,023	)	$	(22,857	)
Amortization of acquired intangible assets		1,594			1,568
Expenses related to settlement agreements		143			532
Options- based compensation		235			458
Stock-based compensation		3,824			8,368
Income tax-effect of above non-GAAP adjustments		(410	)		(414	)
Total Non-GAAP net loss attributable to MICT, Inc.	$	(17,637	)	$	(12,345	)

Non-GAAP net loss per diluted share attributable to MICT, Inc.	$	(0.14	)	$	(0.12	)
Weighted average common shares outstanding used in per share calculations		124,455,921			102,992,830
GAAP net loss per diluted share attributable to MICT, Inc.	$	(0.18	)	$	(0.22	)
Weighted average common shares outstanding used in per share calculations		124,455,921			102,992,830

	Three months ended June 30,
	(Dollars in Thousands, other than share and per share amounts)
	2022			2021
GAAP net loss attributable to MICT, Inc.	$	(14,337	)	$	(18,396	)
Amortization of acquired intangible assets		797			782
Expenses related to settlement agreements		-			67
Options- based compensation		110			458
Stock-based compensation		3,824			8,368
Income tax-effect of above non-GAAP adjustments		(206	)		(215	)
Total Non-GAAP net loss attributable to MICT, Inc.	$	(9,812	)	$	(8,936	)

Non-GAAP net loss per diluted share attributable to MICT, Inc.	$	(0.07	)	$	(0.08	)
Weighted average common shares outstanding used in per share calculations		126,431,864			117,634,776
GAAP net loss per diluted share attributable to MICT, Inc.	$	(0.11	)	$	(0.16	)
Weighted average common shares outstanding used in per share calculations		126,431,864			117,634,776

Financing Needs

The Company will be required to support its own operational financial needs, which include, among others, our general and administrative costs (such as for our various consultants in regulatory, tax, legal, accounting and other areas of business) and our financing costs related to the loans and funding instruments assumed by us.

We expect the net proceeds from the sale of the securities will be used to fund the growth and development of our business, as well as for working capital and for other general corporate purposes. We may also use a portion of the net proceeds to acquire or invest in businesses, products and technologies that are complementary to our business, but we currently have no commitments or agreements relating to any of these types of transactions.

Based on our current business plan, and in view of our cash balance following the transactions described in this Item 2, we anticipate that our cash balances will be sufficient to permit us to conduct our operations and carry out our contemplated business plans for at least the next 12 months from the date of this Report.

~~Critical Accounting Policies~~

~~Revenue Recognition~~

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”, or ASU 2014-09. ASU 2014-09 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. We adopted Topic 606 on January 1, 2018 using the modified retrospective transition method, and the adoption did not have a material impact on our consolidated financial statements.

The Company’s revenues are generated from: a) providing customers with marketing promotion and information drainage services, which is to charge information service fees according to the customer traffic information provided to customers with business needs; b) to providing insurance brokerage services or insurance agency services on behalf of insurance carriers. With respect to the information drainage services and insurance brokerage services applicable to revenue recognition U.S. GAAP requirements, the company implements a revenue recognition policy pursuant to which it recognizes its revenues at the amount to which it expects to be entitled when control of the products or services is transferred to its customers. Control is generally transferred when the Company has a present right to payment and title and the significant risks and rewards of ownership of products are transferred to its customers. Our performance obligation to the insurance carrier is satisfied and commission revenue is recognized at the point in time when an insurance policy becomes effective. The Company provides customers with information drainage services and settles service charges with customers on the monthly basis. Performance obligation is satisfied overtime during the contract term.

~~Investments~~

~~Operating leases~~

Item 3. Quantitative and Qualitative Disclosures about Market Risks.

Not applicable.

Item 4. Controls and Procedures.

Evaluation of ~~disclosure controls~~Disclosure Controls and ~~procedures~~Procedures

~~Pursuant to Rule 13a-15(b)~~We conducted an evaluation under the ~~Securities Exchange Act~~supervision of ~~1934, as amended, or the Exchange Act, the Company carried out an evaluation with the participation of the Company's management, including Mr. Darren Mercer, the Company's Interim~~our Chief Executive Officer and ~~Mrs. Moran Amran, the Company's Controller~~Chief Financial Officer (our ~~principal executive officer~~Principal Executive Officer and ~~principal financial officer,~~Principal Financial Officer, respectively), ofregarding the effectiveness of the ~~Company's~~Company’s disclosure controls and procedures (as defined ~~under Rule~~in Rules 13a-15(e) ~~or Rule~~and 15d-15(e) under the Exchange Act) as of ~~September~~June 30, ~~2021. Based upon that evaluation, the Company's principal executive officer~~2022 and ~~principal financial officer~~management concluded that ~~the Company's~~our disclosure controls and procedures are not effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including the Company's principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

During 2021 the Company has completed two significant acquisitions of business in China in the insurance brokerage field which included the acquisition of majority interests in Guangxi Zhongtong Insurance Agency Co., Ltd, and All Weather Insurance Agency Co., Ltd, each of them a local Chinese entity with business and operations in the field of broker insurance. The acquired entities are both private held companies managed and operated pursuant to local private accounting and business standards. As part of our internal control process, we identified an material weakness that the Company had insufficient number of personnel with an appropriate level of U.S. GAAP knowledge and experience and ongoing training in the application of U.S. GAAP and SEC reporting and disclosure requirements commensurate with the Company's financial reporting requirements.

~~We have started to undertake steps to strengthen our internal control~~ over financial reporting ~~including: (1) engaging a third party U.S. GAAP consulting firm~~is not effective at the reasonable assurance level due to support U.S. GAAP financial reporting as well as in SEC reporting requirements; (2) Hiring additional staff and CFO with U. S. GAAP knowledge and experience; Among other, on May 2021 we have appointed a Chief Financial Officer, a US CPA licensed individual with extensive knowledge and experience in the application of U.S. GAAP and SEC reporting and disclosure requirements, to manage the financial aspects of our local Chinese entities and the business operated by them; The financial team is further being expanded as we are in the process of hiring an additional controller for the our China operations as well as other team members, all with strong U.S. GAAP and SEC reporting and disclosure qualifications. (3) implementing regular and continuous U.S. GAAP accounting and financial reporting training programs for our accounting and financial reporting personnel.material weaknesses described below.

Changes in Internal Control Over Financial Reporting

The Company identified certain material weaknesses in internal control over financial reporting for the year ended December 31, 2021 as described in the last Form 10-Q filed with the SEC on July 25, 2022. With provinces opening again within the PRC, MICT is in the process of hiring additional staff in its finance department. During the quarter covered by this report, we hired an additional controller, as well as a new financial manager. Additionally, we conducted a mapping of the processes and controls that support financial reporting and also performed tests to examine the effectiveness of the controls. As part of the effectiveness test, gaps in the ITGC control process were identified for the companies that were acquired and did not manage to produce a control environment without gaps. These gaps were mapped and identified by us, and we built a remediation plan to reduce and to fix the gaps as early as this fiscal year. Our IT team has begun implementing the remediation plan and are in the process of fixing the gaps.

Other than as described above, there were not changes has occurred in the Company’s internal control over financial reporting during the quarterly period ended ~~September~~June 30, ~~2021,~~2022, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 5. Other.

On July 6, 2021, MICT’s audit committee terminated the Company’s engagement with Ziv Haft, a BDO Member Firm as the Company’s independent registered public accounting firm, effective immediately. The Company’s business focus shifted to China and Hong Kong, and we engaged Friedman LLP, who has a strong practice representing Chinese based operating companies listed on Nasdaq. Additionally, Friedman LLP is able to fully comply with the newly passed Holding Foreign Companies Accountabilities Act (“HFCAA”).None.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

~~From time to time, MICT, GFHI and/or Micronet may become subject to litigation incidental to its business.~~

In March 2017, MICT entered into a merger agreement (“Merger Agreement” or “Merger”) with Sunrise Securities LLC (“Sunrise”) through Sunrise’s principal, Amnon Mandelbaum, pursuant to which Sunrise agreed to assist MICT in identifying, analyzing, structuring, and negotiating suitable business opportunities. These opportunities included: a sale of stock or assets, merger, tender offer, joint venture, financing arrangement, private placement, or any similar transaction or combination thereof. The parties initially disagreed on the fee amount that would be payable upon the closing of the transactions contemplated by the Merger Agreement. There were also questions about whether or not Sunrise was owed any transaction fee upon the closing of the Merger. In order to resolve this matter, the parties executed a settlement and release agreement (“Settlement Agreement”) for the release and waiver of the above claims in consideration for the issuance of freely tradable shares of common stock of MICT worth no less than $1,500,000 (the “Settlement Shares” or “Shares”), which Settlement Shares were delivered as follows: (i) 67.5% of the Settlement Shares to Amnon Mandelbaum, (ii) 7.5% of the Settlement Shares to INTE Securities LLC, and (iii) 25% of the Settlement Shares to Amini LLC. In addition, no later than February 16, 2021, MICT issued 200,000 purchase warrants (“Warrants”) to purchase 200,000 freely tradable registered shares of Common Stock of MICT and deliver original copies of such Warrants within five business days of the date of issuance of the Warrants. The Shares issuable upon exercise of the Warrants were to be registered via a registration statement on Form S-1. 150,000 Warrants were issued to Amnon Mandelbaum, 50,000 Warrants were issued to Amini LLC, or its designee as named in writing. Each Warrant is exercisable into one share of registered common stock of MICT until one year after the date of the Warrants issuance, at an exercise price of $1.01 per Share. In all other respects, these Warrants contain the same material terms and conditions as are applicable to MICT’s current outstanding Warrants including, but not limited to, cashless exercise at all times from the date of issuance of the Warrants. The expiration dates of the Warrants, certain exercise price adjustments, and other terms as are no less favorable than MICT’s recently issued common stock purchase warrant agreements. MICT was not able to timely file a registration statement to register the Shares, and the Shares underlying the Warrants per the Settlement Agreement. Sunrise notified MICT that we were in breachopen legal proceeding as of ~~the Settlement Agreement. Subsequently, on March~~June 30, 2021, MICT and Sunrise signed an amended settlement agreement (the “Amended Settlement Agreement”) whereby MICT was required to make a $1,000,000 payment to Sunrise by March 31, 2021 and the settlement share dollar amount set forth above was reduced from $1,500,000 to $500,000. Furthermore, if MICT was not able to file a registration statement with the Securities and Exchange Commission for the Settlement Shares by June 4, 2021, we were required to make a $600,000 payment to settle the matter in full and Sunrise would not receive any the Settlement Shares. On July 1, 2021, MICT made the $600,000 payment as there was a disagreement as to whether or not the registration statement was timely filed. This matter with Sunrise is now fully settled.

On September 22, 2020, the Company entered into a settlement and release agreement (“Release Agreement”) with Craig Marshak, (“Marshak”), in connection with a claim filed by Marshak against the Company and additional defendants. Pursuant to the Release Agreement, MICT agreed to pay Marshak a sum of $125,000 in cash. On January 15, 2021 the parties executed an amendment to the Release Agreement whereby MICT agreed to pay Marshak a sum of $315,000 in cash by February 23, 2021. Marshak then dismissed his claim.

In March 2017, Micronet received notice from a previous customer, (the Complainant) relating to tests performed by the Complainant which allegedly revealed a defect in the materials included in the battery integrated into a certain product of Micronet. The Complainant then filed a complaint (“Complaint”) with the United States National Highway Traffic Safety Administration (the “Regulator”). The Complaint referred to an old product of Micronet. The Complainant had similar problems with the specific product named in the Complaint, which were covered under the product’s warranty. MICT resolved the problem, changed the battery and updated the software. Independent tests to examine the Complainant’s issues (including addressing the issue with the battery manufacturer) did not demonstrate any significant evidence supporting the Claim. Micronet has engaged in discussion with the Regulator2022 and as of the date hereof, Micronet has not received any demand or formal response from the Regulator. Currently, the Complainant has refused any payment from MICT, and each party as reserved its claims in this matter.

In February 2020, a former employee of Micronet filed a claim against Micronet in the Israeli Labor Court for a total amount of USD $150,000. He alleged that he was entitled to receive various salary payments and social benefits which were not previously paid to him. In response to the claim, Micronet filed its defense. The claim is currently being litigated, and the parties are currently submitting their affidavits in connection with the claim.

In June 2020, the previous Chief Executive Officer (“CEO”) of Micronet’s subsidiary in the U.S. sent a demand letter, addressed to Micronet, claiming he was owed compensation and severance due to Micronet’s breach of his employment agreement. He demanded a sum of USD $230,000 as a severance payment. On February 17, 2021, the parties executed a settlement and release agreement in consideration for the payment of USD $90,000 by Micronet to the previous CEO and each signed a mutual waiver and release of claims.

~~Sale of Enertec Systems 2001 Ltd.~~

On December 31, 2017, MICT, Enertec Systems 2001 Ltd., (“Enertec Systems”), a previously wholly-owned subsidiary, and Enertec Management Ltd., (“Enertec Management”) entered into a share purchase agreement (the “Share Agreement”), with Coolisys Technologies Inc., (“Coolisys”), a subsidiary of DPW Holdings, Inc. (“DPW”). Per the Share Agreement, Coolisys agreed to pay, at the closing (“Closing”) of the transaction, a purchase price of $5,250,000 and assume up to $4,000,000 of Enertec Systems’ debt. On May 22, 2018, MICT closed on the sale of all of the outstanding equity of Enertec Systems.

Upon Closing, MICT received gross proceeds of approximately $4,700,000, of which 10% was to be held in escrow (“Escrow Amount’) for up to 14 months after the Closing in order to satisfy any potential indemnification claims. The final consideration amount was adjusted based on Enertec Systems’ debt at the Closing. In addition, Coolisys also assumed approximately $4,000,000 of Enertec Systems’ debt.

In conjunction with, and as a condition to, the Closing, the Company, Enertec Systems, Coolisys, DPW and Mr. David Lucatz, our former Chief Executive Officer and director, executed a consulting agreement, (“Consulting Agreement”). Pursuant to the Consulting Agreement, we, via Mr. Lucatz, provided Enertec Systems with certain consulting and transitional services over a 3 year period as necessary (but in no event did the services exceed 20% of Mr. Lucatz’s time). Coolisys (via Enertec Systems) was obligated to pay us an annual consulting fee of $150,000 and to issue to us 150,000 restricted shares of DPW Class A common stock, (the “DPW Shares”). The DPW Shares were to be issued in three equal installments, with the initial installment vesting the day after the Closing and the remaining installments vesting on each of the first two (2) anniversaries of the Closing.

Coolisys alleged the Company was in breach of the Share Agreement, and the Escrow Amount remained in escrow. On July 21, 2020, MICT management and MICT (the “Seller Parties”) received a statement of claim filed in the District Court of Tel Aviv (the “Court”) by Coolisys against the Seller Parties and its board members in the amount of approximately $2,500,000, (the “Claim”). Pursuant to the Claim, Coolisys alleged that certain misrepresentations in the Share Agreement resulted in losses to Coolisys and requested, among other things, that the Court instruct the release of the Escrow Amount held by the escrow agent to Coolisys.

The Company filed its defense to the Claim on December 15, 2020. On September 14th 2021 the Court adopted a verdict giving effect to the parties settlement agreement pursuant to which the Claim was rejected. The parties have fully released and waived all claims against the other and in consideration for the aforementioned, the Escrow Amount was released to the Coolisys.today.

Item 1A. Risk Factors.

Please refer to our note on forward-looking statements on page 16 of this Quarterly Report on Form 10-Q, which is incorporated into this item by reference.

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in our ~~2020~~2021 Annual Report. The risks described in such ~~2020~~2021 Annual Report are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition, operating results and stock price.

Item 6. Exhibits.

Exhibit Number		Description

31.1*		Rule 13a-14(a) Certification of Chief Executive Officer.

31.2*		Rule 13a-14(a) Certification of ~~Principal~~Chief Financial Officer.

32.1**		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.

32.2**		Certification of ~~Principal~~Chief Financial Officer pursuant to 18 U.S.C. Section 1350.

101*		The following materials from MICT, Inc.’s Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2021,~~2022, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Income, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements.

104*		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*	Filed herewith

**	Furnished herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MICT, INC.

Date: ~~November 15, 2021~~August 22, 2022	By:	/s/ Darren Mercer
		Name:	Darren Mercer
		Title:	~~Interim~~ Chief Executive Officer

Date: ~~November 15, 2021~~August 22, 2022

By:

/s/ ~~Moran Amran~~ Kevin Chen

Name:

~~Moran Amran~~ Kevin Chen

Title:

~~Controller (Principal~~Chief Financial ~~and Accounting~~Officer

(Principal Financial Officer)

5354

0.09 0.16 0.16 0.22 102992830 117634776 124455921 126431864 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Upon the conversion of Series A and B convertible preferred stock, all preferred stock and common stock additional paid-in capital was combined into one account. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 The customer database value is based on the cost to recreate, as indicated by management. Represents the income tax effect of the difference between the accounting and income tax bases of the identified intangible assets, using an assumed statutory income tax rate of 26%. The goodwill is not deductible for tax purposes. 0 0 0 Represents the income tax effect of the difference between the accounting and income tax bases of the identified intangible assets, using an assumed statutory income tax rate of 25%. 0 6090000 0 0 1795000 0 0 4883000 827000 0 0 2916000 0 0 0 17880000 0 0 0 0 0 0 0 23516000 0 0 0 0 0 0 0 0 include operating leases with a term less than one year which was not capitalized in the right-of-use assets. 0 0 0 false --12-31 Q2 0000854800 indefinite useful life and some of them for 10 years indefinite useful life and some of them for 5 years iso4217:ILS xbrli:shares

	September 30, 2021		December 31, 2020
ASSETS
Current assets:
Cash	$	105,289	$	29,049
Trade accounts receivable, net		20,644		523
Inventories		-		2,002
Other current assets		10,214		1,756
Related parties		2,167		-
Held for sales assets		-		350
Total current assets		138,314		33,680

Property and equipment, net		631		417
Intangible assets, net		18,808		17,159
Goodwill		19,788		22,405
Investment and loan to Magpie (formerly: Huapei)		-		3,038
Right-of-use assets		2,657		291
Long-term deposit and prepaid expenses		188		266
Micronet Ltd. equity method investment		1,764		-
Restricted cash escrow		-		477
Total long-term assets		43,836		44,053

Total assets	$	182,150	$	77,733

	Series B Convertible Preferred Stock						Series A Convertible Preferred Stock						Common Stock				Additional Paid-in Capital – Series B Convertible Preferred			Additional Paid-in Capital – Series A Convertible Preferred			Additional Paid-in Capital – Common		Accumulated			Accumulated Other Comprehensive			Non- controlling		Total Stockholders’
	Amount			Shares			Amount			Shares			Amount		Shares		Stock			Stock			Stock		Deficit			Income (loss)			Interest		Equity

Balance, December 31, 2019		-			-			2			2,386,363			11		11,089,532		-			6,028			14,107		(16,974	)		70			-		3,244
Shares issued to service providers and employees		-			-			-			-			1		840,909		-			-			2,490		-			-			-		2,491
Exercising options for employees and consultants		-			-			-			-			1		1,198,000		-			-			2,365		-			-			-		2,366
Stock based compensation																								186										186
Comprehensive loss		-			-			-			-			-		-		-			-			-		(15,559	)		(347	)		-		(15,906	)
Entering the control of a subsidiary		-			-			-			-			-		-		-			-			-		-			-			2,000		2,000
Convertible note		-			-			-			-			14		13,636,364		-			-			22,400		-			-			-		22,414
GFH transaction		-			-			-			-			23		22,727,273		-			-			32,026		-			-			-		32,049
YA Exercising warrants		-			-			-			-			1		584,920		-			-			0		-			-			-		1
Hardon Exercising warrants		-			-			-			-			1		1,596,362		-			-			1,611		-			-			-		1,612
Issuance of shares, net- Series A Convertible Preferred Stock		-			-			1			795,455			-		-		-			409			-		-			-			-		410
Issuance of shares, net- Series B+A Convertible Preferred Stock		(2	)		(1,818,182	)		(3	)		(3,181,818	)		8		8,181,818		(1,914	)		(6,299	)		8,209		-			-			-		(2	)
Issuance of shares, net- Series B Convertible Preferred Stock		2			1,818,182			-			-			-		-		1,914			-			-		-			-			-		1,916
Balance, September 30, 2020		-			-			-			-			60		59,855,178		-			138			83,393		(32,533	)		(277	)		2,000		52,781

	Common Stock				(A) Additional Paid-in		Accumulated			Accumulated Other Comprehensive			Capital reserve related to transaction with the Minority			Non- controlling			Total Stockholders’
	Amount		Shares		Capital		Deficit			Loss			stockholders			Interest			Equity
Balance, December 31, 2020		68		68,757,450		102,333		(39,966	)		(196	)		(174	)		3,631			65,696
Shares issued to service providers and employees		7		7.010,020		9,869		-			-			-			-			9,876
Stock based compensation		-		-		585		-			-			-			-			585
Exercising options for employees and consultants				60,000		80		-			-			-			-			80
Net loss		-		-		-		(28,185	)		-			-			(446	)		(28,631	)
Other Comprehensive loss		-		-		-		-			(127	)		174			(197	)		(150	)
Loss of control of subsidiary		-		-		-		-			-			-			(2,989	)		(2,989	)
Issuance of shares upon November 2020 Securities Purchase Agreement		3		2,400,000		2,673		-			-			-			-			2,676
Issuance of shares upon February 2021 Purchase Agreement		23		22,471,904		53,977		-			-			-			-			54,000
Issuance of shares upon March 2021 Securities Purchase Agreement		19		19,285,715		48,671		-			-			-			-			48,690
Exercising warrants		2		2,450,487		2,472		-			-			-			-			2,474
Balance, September 30, 2021		122		122,435,576		220,660		(68,151	)		(323	)		-			(1	)		152,307

Cash at end of the period	$	105,289	$	18,146
Restricted cash at end of the period		-		477
Cash and restricted cash at end of the period	$	105,289	$	18,623

	June 23, 2020
Net working capital (borrowing excluded)	$	(351	)
Property and equipment		661
Intangible assets		2,475
Goodwill		2,618
Right of use assets		310
Other assets		26
Borrowings		(1,676	)
Micronet Ltd. investment in fair value		(1,573	)
Non-current liabilities		(558	)
Accumulated other comprehensive income		(28	)
Minority interest		(2,172	)
Net cash provided by acquisition	$	(268	)

	July 1, 2021
Net working capital	$	(908	)
Property and equipment		153
Cash	$	(755	)

	June 23, 2020
Net working capital	$	(473	)
Property and equipment		13
Net cash provided by acquisition	$	(460	)

	For the Three Months Ended		For the Nine Months Ended
	September 30,		September 30,
	2021		2021
	USD in thousands		USD in thousands
	(Unaudited)		(Unaudited)
Net revenues	$	17,445	$	31,710
Loss from operations	$	603	$	(490	)
Net loss	$	603	$	(490	)

	Nine months ended September 30,			Three months ended September 30,
	2020			2020
	USD in thousands			USD in thousands
	(Unaudited)			(Unaudited)
Net revenues	$	349		$	349
Net loss		(16,021	)		(14,613	)

Total share consideration (1)	$	32,050
Total Purchase Consideration	$	32,050

Less:

Intangible assets - trade name/ trademarks	$	580
Intangible assets - developed technology		11,490
Intangible assets - Customer database (2)		4,500
Deferred Tax liability (3)		(4,308	)
Fair value of net assets acquired	$	12,262

Goodwill value (4)	$	19,788

	Nine months ended September 30, 2020
(USD in thousands)	Verticals and technology			Mobile resource management			Online stock trading		Consolidated
	(Unaudited)			(Unaudited)			(Unaudited)		(Unaudited)
Revenues from external customers	$	-			349			-	$	349
Segment operating loss		(869	)		(769	)		-		(1,638	)
Non allocated expenses										(5,816	)
Finance expenses and other										(8,786	)
Consolidated loss before provision for income taxes									$	(16,240	)

	Three months ended September 30, 2020
(USD in thousands)	Verticals and technology			Mobile resource management			Online stock trading		Consolidated
	(Unaudited)			(Unaudited)			(Unaudited)		(Unaudited)
Revenues from external customers	$	-			349			-	$	349
Segment operating loss		(869	)		(769	)		-		(1,638	)
Non allocated expenses										(4,378	)
Finance expenses and other										(8,822	)
Consolidated loss before provision for income taxes									$	(14,838	)

	As of December 31, 2020
(USD in thousands)	Verticals and technology			Mobile resource management			Online stock trading		Consolidated
	(Unaudited)			(Unaudited)			(Unaudited)		(Unaudited)
Assets related to segments	$	7,037		$	7,017			-	$	14,054
Non allocated Assets		-			-			-		63,679
Liabilities related to segments		(638	)		(2,861	)		-		(3,499	)
Non allocated liabilities		-			-			-		(8,538	)
Total Equity									$	65,696

	Useful life		September 30,			December 31,
(USD in thousands)	years		2021			2020
Original amount:				(Unaudited)			(Unaudited)
Technology know-how		5-6	$	11,490		$	13,070
Trade name/ trademarks		5-10		597			850
Customer relationship		5-6		4,500			4,910
License				5,787			-
Software				102			-
				22,476			18,830
Accumulated amortization:
Technology know-how				(2,394	)		(1,116	)
trade name/ trademarks				(145	)		(71	)
Customer related intangible assets				(1,125	)		(484	)
Software				(4	)		-
				(3,668	)		(1,671	)
Net			$	18,808		$	17,159

(USD in thousands) 12 months ending September 30,	Operating leases
	(Unaudited)
2022	$	1,573
2023		754
2024		328
2025		2
	$	2,657

	For the Nine Months Ended September 30,
	2021			2020
	USD in thousands			USD in thousands
	(unaudited)			(unaudited)
Net Cash Used in Operating Activities	$	(35,081	)	$	(12,201	)
Net Cash Used in Investing Activities		(6,487	)		(288	)
Net Cash Provided by Financing Activities		117,601			27,998
Translation adjustment on cash and restricted cash		207			(85	)
Cash and restricted cash at Beginning of Period		29,049			3,199
Cash and restricted cash at end of period	$	105,289		$	18,623