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: June 30, 2021

☐ 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 August 13, 2021, there were 121,485,557 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.	31

Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	43

Item 4.	Controls and Procedures.	43

	PART II - OTHER INFORMATION

Item 1A.	Risk Factors.	46

Item 3.	Defaults Upon Senior Securities

Item 6.	Exhibits.	46

SIGNATURES		47

EXHIBIT INDEX

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)

	June 30, 2021		December 31, 2020
ASSETS
Current assets:
Cash	$	114,183	$	29,049
Trade accounts receivable, net		16,052		523
Inventories		-		2,002
Other current assets		2,314		1,756
Related party		1,230		-
Held for sales assets		-		350
Total current assets		133,779		33,680

Property and equipment, net		261		417
Intangible assets, net		19,493		17,159
Goodwill		19,788		22,405
Investment and loan to Magpie (formerly: Huapei)		-		3,038
Right-of-use assets		2,689		291
Long-term deposit and prepaid expenses		172		266
Micronet Ltd. equity method investment		965		-
Restricted cash escrow		477		477
Total long-term assets		43,845		44,053

Total assets	$	177,624	$	77,733

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

MICT, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

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

	June 30, 2021			December 31, 2020
LIABILITIES AND EQUITY

Current maturity of long term bank loans	$	-		$	884
Trade accounts payable		11,798			838
Related party		-			163
Other current liabilities		3,489			5,102
Total current liabilities		15,287			6,987

Long term escrow		477			477
Lease liability		2,533			164
Deferred tax liabilities		3,513			4,256
Accrued severance pay		54			153
Total long-term liabilities		6,577			5,050
Total liabilities		21,864			12,037

Stockholders’ Equity:
Common stock; $0.001 par value, 250,000,000 shares authorized, 120,700,995 and 68,757,450 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively		121			68
Additional paid in capital		218,373			102,333
Capital reserve related to transaction with the minority shareholder		-			(174	)
Accumulated other comprehensive income (loss)		89			(196	)
Accumulated loss		(62,823	)		(39,966	)
MICT, Inc. stockholders’ equity		155,760			62,065

Non-controlling interests		-			3,631

Total equity		155,760			65,696

Total liabilities and equity	$	177,624		$	77,733

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

MICT, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

	Six months ended June 30,						Three months ended June 30,
	2021			2020			2021			2020

Net revenues	$	21,276		$	-		$	12,341		$	-
Cost of revenues		18,667			-			11,675			-
Gross profit		2,609			-			666			-

Operating expenses:
Research and development		619			-			388			-
Selling and marketing		2,352			-			1,351			-
General and administrative		19,421			1,438			14,853			668
Amortization of intangible assets		1,569			-			643			-
Total operating expenses		23,961			1,438			17,235			668

Loss from operations		(21,352	)		(1,438	)		(16,569	)		(668	)
Loss from equity investment		(163	)		(786	)		(163	)		(146	)
Other (income) loss, net		83			-			(4	)		-
Financial income (expenses), net		(275	)		157			291			381
Gain (loss) on equity investment held in Micronet		(1,934	)		665			(1,934	)		665
Income (loss) before provision for income taxes		(23,641	)		(1,402	)		(18,379	)		232
Taxes on income (tax benefit)		(339	)		6			17			5

Net income (loss)		(23,302	)		(1,408	)		(18,396	)		227
Net loss attributable to non-controlling interests		(445	)		-			-			-

Net income (loss) attributable to MICT, Inc.	$	(22,857	)	$	(1,408	)	$	(18,396	)	$	227

Earnings (loss) per share attributable to MICT, Inc.
Basic	$	(0.22	)	$	(0.12	)	$	(0.16	)	$	0.02
Diluted	$	(0.22	)	$	(0.12	)	$	(0.16	)	$	0.00

Weighted average common shares outstanding:
Basic		102,992,830			11,092,144			117,634,776			11,094,784
Diluted		102,992,830			11,092,144			117,634,766			19,901,263

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

MICT, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(USD In Thousands)

	Six months ended June 30,						Three months ended June 30,
	2021			2020			2021			2020

Net income (loss)	$	(23,302	)	$	(1,408	)	$	(18,396	)	$	227
Other comprehensive income (loss), net of tax:
Currency translation adjustment		285			94			(321	)		164
Total comprehensive income (loss)		(23,017	)		(1,314	)		(18,717	)		391
Comprehensive loss attributable to non-controlling interests		(642	)		-			(3	)		-
Comprehensive income (loss) attributable to MICT, Inc.	$	(22,375	)	$	(1,314	)	$	(18,714	)	$	391

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)

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

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		-		-		-		-				18,182		-		-		22		-			-		-		22
Stock based compensation		-		-		-		-		-		-		-		-		69		-			-		-		69
Comprehensive loss		-		-		-		-		-		-		-		-		-		(1,408	)		94		-		(1,314	)
Entering the control of a subsidiary		-		-		-		-		-		-		-		-		-		-			-		2,172		2,172
Issuance of shares, net- Series A Convertible Preferred Stock		-		-		1		795,455		-		-		-		409		-		-			-		-		410
Issuance of shares, net- Series B Convertible Preferred Stock		2		1,818,182		-		-		-		-		1,914		-		-		-			-		-		1,916
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

	Common Stock				(A) Additional Paid-in		Accumulated			Accumulated Other Comprehensive			Capital reserve related to transaction with the			Non- controlling			Total Stockholders’
	Amount		Shares		Capital		Loss			Income (Loss)			minority			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
Issuance of shares, net- Series A Convertible Preferred Stock		-		-		-		-			-			-			-			-
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

(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.

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

Balance, March 31, 2020		2		1,818,182		3		3,181,818		11		11,089,532		1,914		6,437		14,169		(18,609	)		0		0		3,927
Shares issued to service providers and employees		-		-		-		-		-		18,182		-		-		22		-			-		-		22
Stock based compensation		-		-		-		-		-		-		-		-		7		-			-		-		7
Comprehensive loss		-		-		-		-		-		-		-		-		-		227			164		-		391
Entering the control of a subsidiary		-		-		-		-		-		-		-		-		-		-			-		2,172		2,172
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

	Common Stock				(B) Additional Paid-in		Accumulated			Accumulated Other Comprehensive			Capital reserve related to transaction with the			Non- controlling			Total Stockholders’
	Amount		Shares		Capital		Loss			Income			minority			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	)
Issuance of shares, net- Series A Convertible Preferred Stock		-		-		-		-			-			-			-			-
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.

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)

	Six months ended June 30,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(23,302	)	$	(1,408	)

Adjustments to reconcile net loss to net cash used in operating activities:
Gain on previously held equity interest in Micronet Ltd.		-			(665	)
Depreciation and amortization		1,648			3
Stock-based compensation for employees and consultants		458			69
Loss from loss of control in Micronet Ltd.		1,934			-
Loss from equity investment		163			786
Impairment of equity method investment in Micronet Ltd.		-			(187	)
Impairment of loan to Micronet Ltd.		-			(84	)
Interest and exchange rate differences on loans		-			19
Interest and exchange rate differences on loans from others		-			66
Changes in assets and liabilities
Change in deferred taxes, net		(545	)		-
Change in long-term deposit and prepaid expenses		240			-
Change in right of use assets		(2,464	)		-
Change in lease liability		2,402			-
Due to related party		167			-
Increase in trade accounts receivable, net		(15,447	)		-
Increase in other accounts receivable		(892	)		(410	)
Increase in trade accounts payable		11,881			-
Increase (decrease) in other current liabilities		(692	)		121
Net cash used in operating activities		(24,449	)		(1,690	)

MICT, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(USD In Thousands)

	Six months ended June 30,
	2021			2020
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	$	(294	)	$	(2	)
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
Loan to related party		(500	)		(125	)
Net cash acquired on an variable interest entity acquired - Guangxi Zhongtong		460			-
Deconsolidation of Micronet Ltd. (Appendix C)		(2,466	)		-
Net cash used in investing activities		(5,857	)		(374	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of current maturity of long term bank loans		(195	)		-
Receipt of loans from others, net		-			8,141
Repayment on account of redemption		-			(15,900	)
Payments on account of shares		-			15,900
Proceeds from issuance of shares and warrants		113,741			22
Proceeds from exercise of warrants		1,894			-
Issuance of convertible preferred shares net		-			409
Net cash provided by financing activities		115,440			8,572

NET INCREASE IN CASH		85,134

SEC Form 10-Q filed by MICT, Inc.