View all news

MICT, Inc. Reports First Quarter 2022 Results

07/25/2022

MONTVALE, N.J., July 25, 2022 (GLOBE NEWSWIRE) -- MICT, Inc. (Nasdaq: MICT), (the "Company"), today announced its financial results for the first quarter ended March 31, 2022.

Q1 2022 Highlights and Recent Developments

  • Insurance business revenue for Q1 2022 amounted to $9.5m, up 16% against the year ago period, although overall revenues were impacted by strict COVID lockdown protocols in China.
  • B2B2C activities anticipated to launch during Q3 2022 through partnerships with several of China’s largest companies.
  • Insurance business is seeing significant improvement as China begins to open after months of lockdowns, pursuant to which it expects to achieve profitability and a cash positive position during the second half of the year.
  • Magpie received approval for a Capital Markets Services License from the Monetary Authority of Singapore. Magpie is making progress with its expansion into B2B and white-label activities. Revenues from such activities, along with significant reductions of operating costs, should accelerate Magpie’s route to profitability.
  • As of March 31, 2022, the cash position was approximately $86 million
  • Merger with Tingo Inc. (“Tingo”) is progressing towards completion, with comprehensive due diligence recently completed and the Amended and Restated Merger Agreement signed, as announced on June 15, 2022
  • MICT and Tingo are progressing on introducing Tingo’s fintech platforms into China and Asia, including launching a commodity platform from Singapore, which is initially focused on food and agricultural produce

Darren Mercer, MICT’s Chief Executive Officer commented, “Our first quarter performance was unavoidably impacted by the widespread COVID-19 lockdowns in China, which affected a large portion of the population and resulted in the closure of many of our offices, preventing us from processing a large portion of our insurance business. The strict lockdowns meant a large number of our agents were unable to write or process business, in addition to which trade in February 2022 was seasonally impacted by the Chinese New Year holidays. Despite such lockdowns, I would like to applaud our team for increasing our insurance business revenue by 16% versus this same period last year.

“While the first quarter performance was challenging, we are encouraged by the strong uptake in business that we are seeing as these lockdowns begin to ease and we expect a positive impact on revenue growth and margin expansion during the second half of the year.

“We plan to launch our new insurance platform in the third quarter, which is expected to contribute to our growth in the second half of 2022. This new platform, combined with our unique position and portfolio of nationwide licenses, should enable us to increase our market reach and the range of our insurance products, and also enable us to benefit from higher margin B2B2C transactions, which we believe will drive higher overall margins and enable the business to become cash generative before year end.

“As previously disclosed, we continue to develop our Magpie stock trading app to be a world class product, in parallel to which we are working on the launch of a number of complimentary financial services products, white-label partnerships and joint venture opportunities as part of our international expansion and with the aim of achieving profitability as quickly as possible, whilst also maximizing our return on capital.

“We are also excited about the opportunities that are expected to arise from our merger with Tingo and the numerous synergies it will create. As we move towards the completion of the Tingo merger, our relationship is already making progress with the introduction of Tingo’s agri-tech platform into key markets in China and Asia. We expect the merger to close between end of Q3 2022 and early Q4,” concluded Mr. Mercer.

Q1 2022 Financial Review

  • Revenue in the first quarter was $9.6 million versus $8.9 million in the year-ago period. As mentioned, the widespread COVID lockdown protocols in China negatively impacted our ability to write and process new business.
  • Gross profit was $1.3 million in the first quarter, down from $1.9 million in the year-ago period. Gross margin in the first quarter was 13.2%, down from 21.7% from year-ago period. The decline in gross margins was primarily driven by the combination of lower revenues and a higher fixed cost overhead.
  • Selling & marketing expenses were $2.5 million versus $1 million in the year-ago period, as the Company incurred expenditure to drive the growth of its insurance business and the launch of the Magpie stock trading app.
  • General and administrative (G&A) expenses were $7.3 million in the first quarter $4.6 million in the year-ago quarter. The increase was attributable in the main to lease expenses, office costs and salary expenses relating to the subsidiaries and VIE companies it acquired, as well as higher insurance costs.
  • The Net Loss attributable to MICT for the first quarter was $8.7 million versus a loss of $4.5 million in the year-ago period.
  • As of March 31, 2022, the cash position was approximately $86 million

About MICT, Inc.
MICT, Inc. (NasdaqCM: MICT) operates through its wholly owned subsidiary, GFH Intermediate Holdings Ltd ("GFHI"), and GFHI’s various fully owned subsidiaries or VIE structures. GFHI's versatile proprietary trading technology platform is designed to serve a large number of high growth sectors in the global fintech space. Primary areas of focus include online brokerage for equities trading and sales of insurance products in several high-growth foreign markets including Asia.

Forward-looking Statement

This press release contains express or implied forward-looking statements within the Private Securities Litigation Reform Act of 1995 and other U.S. Federal securities laws. All statements other than statements of historical fact contained in this press release are forward-looking statements. The words “believe,” “may” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, business prospectus, growth strategy and liquidity. Such forward-looking statements and their implications including, but not limited to, the ability to consummate the merger with Tingo involve known and unknown risks, uncertainties and other factors that may cause actual results or performance to differ materially from those projected. The forward-looking statements contained in this press release are subject to other risks and uncertainties, including those discussed in the “Risk Factors” section and elsewhere in the Company’s annual report on Form 10-K for the year ended December 31, 2021, and in subsequent filings with the Securities and Exchange Commission. Except as otherwise required by law, the Company is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.

ADDITIONAL INFORMATION

MICT, Inc., a Delaware corporation (“MICT”), intends to file with the U.S. Securities and Exchange Commission (the “SEC”) a registration statement on Form S-4 (as amended, the “Registration Statement”), which will include a preliminary proxy statement of MICT, and a prospectus in connection with the proposed business combination transaction (the “Business Combination”) involving MICT and Tingo, Inc., a Nevada corporation (“Tingo”). The definitive proxy statement and other relevant documents will be mailed to shareholders of MICT as of a record date to be established for voting on the Business Combination. Shareholders of MICT and other interested persons are advised to read, when available, the preliminary proxy statement, and amendments thereto, and the definitive proxy statement in connection with MICT’s solicitation of proxies for the special meeting to be held to approve the Business Combination because these documents will contain important information about MICT, Tingo and the Business Combination. Shareholders will also be able to obtain copies of the Registration Statement and the proxy statement/prospectus, without charge, once available, on the SEC’s website at www.sec.gov.

Participants in the Solicitation

MICT and Tingo and certain of their respective directors, executive officers, other members of management and employees, under SEC rules, may be deemed to be participants in the solicitation of proxies from the shareholders of MICT in favor of the approval of the Business Combination.

Additional information regarding the interests of such potential participants will also be included in the Registration Statement and other relevant documents when they are filed with the SEC. Free copies of these documents may be obtained as described in the preceding paragraph.

No Offer or Solicitation

This Press Release does not constitute a solicitation of a proxy, consent or authorization with respect to any securities or in respect of the Business Combination. This Press Release shall also not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any states or jurisdictions in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, or an exemption therefrom.

Contact information:

Tel: (201) 225-0190
info@mict-inc.com

P ART I - FINANCIAL INFORMATION

I tem 1. Financial Statements.

MICT, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(USD In Thousands, Except Share and Par Value Data)

    March 31,
2022
    December 31,
2021
 
ASSETS            
Current assets:            
Cash   $ 86,447     $ 94,930  
Trade accounts receivable, net     14,415       17,879  
Related parties     4,123       5,134  
Other current assets     10,194       9,554  
Total current assets     115,179       127,497  
                 
Property and equipment, net     651       677  
Intangible assets, net     20,648       21,442  
Goodwill     19,788       19,788  
Right of use assets     1,597       1,921  
Long-term deposit and prepaid expenses     621       824  
Deferred tax assets     2,634       1,764  
Restricted cash escrow     2,429       2,417  
Micronet Ltd. equity method investment     1,297       1,481  
Total long-term assets     49,665       50,314  
                 
Total assets   $ 164,844     $ 177,811  

MICT, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(USD In Thousands, Except Share and Par Value Data)

    March 31,
2022
    December 31,
2021
 
LIABILITIES AND EQUITY            
             
Short-term loan   $ 1,138     $ 1,657  
Trade accounts payable     10,823       14,416  
Deposit held on behalf of clients     2,903       3,101  
Related party     264       4  
Lease liabilities – current portion     1,079       1,298  
Other current liabilities     5,313       4,914  
Total current liabilities     21,520       25,390  
                 
Lease liabilities     601       691  
Deferred tax liabilities     3,749       3,952  
Accrued severance pay     55       56  
Total long-term liabilities     4,405       4,699  
Total liabilities     25,925       30,089  
                 
Stockholders’ Equity:                
Common stock; $0.001 par value, 250,000,000 shares authorized, 122,435,576 and 122,435,576 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively     122       122  
Additional paid in capital     220,911       220,786  
Accumulated other comprehensive loss     (443 )     (414 )
Accumulated deficit     (85,080 )     (76,394 )
MICT, Inc. stockholders’ equity     135,510       144,100  
                 
Non-controlling interests     3,409       3,622  
                 
Total equity     138,919       147,722  
                 
Total liabilities and equity   $ 164,844     $ 177,811  

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)

    Three months ended
March 31,
 
    2022     2021  
             
Revenues   $ 9,563     $ 8,935  
Cost of revenues     8,298       6,992  
Gross profit     1,265       1,943  
Operating expenses:                
Research and development     595       231  
Selling and marketing     2,517       1,001  
General and administrative     7,326       4,568  
Amortization of intangible assets     797       926  
Total operating expenses     11,235       6,726  
                 
Loss from operations     (9,970 )     (4,783 )
Loss from equity investment     (184 )     -  
Other income     155       87  
Financial income (expenses), net     78       (566 )
Loss before provision for income taxes     (9,921 )     (5,262 )
Income tax benefit     (1,076 )     (356 )
                 
Net loss     (8,845 )     (4,906 )
Net loss attributable to non-controlling stockholders     (159 )     (445 )
Net loss attributable to MICT, Inc.   $ (8,686 )   $ (4,461 )
Loss per share attributable to MICT, Inc.:                
Basic and diluted loss per share   $ (0.07 )   $ (0.05 )
                 
Weighted average common shares outstanding:                
Basic and diluted     122,435,576       88,554,624  

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

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.

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 loss attributable to MICT to non-GAAP net income attributable to MICT. and GAAP loss per diluted share attributable to MICT to non-GAAP net loss per diluted share attributable to MICT.

    Three months ended
March 31,
 
    (Dollars in Thousands,
other than share and
per share amounts)
 
    2022     2021  
GAAP net loss attributable to MICT, Inc.   $ (8,686 )   $ (4,461 )
Amortization of acquired intangible assets     797       786  
Expenses related to purchase of a business     143       465  
Options- based compensation     125       -  
Stock-based compensation     0       -  
Income tax-effect of above non-GAAP adjustments     (204 )     (199 )
Total Non-GAAP net loss attributable to MICT, Inc.   $ (7,825 )   $ (3,409 )
                 
Non-GAAP net loss per diluted share attributable to MICT, Inc.   $ (0.06 )   $ (0.04 )
Weighted average common shares outstanding used in per share calculations     122,435,576       85,554,624  
GAAP net loss per diluted share attributable to MICT, Inc.   $ (0.07 )   $ (0.83 )
Weighted average common shares outstanding used in per share calculations     122,435,576       85,554,624  


Primary Logo

Source: MICT, Inc.

Multimedia Files:

View all news