| DESCRIPTION OF BUSINESS | NOTE 1 — DESCRIPTION OF BUSINESS Overview MICT Inc., we, or the Company, was formed
as a Delaware corporation on January 31, 2002. On March 14, 2013, the Company changed its corporate name from Lapis Technologies,
Inc. to Micronet Enertec Technologies, Inc. On July 13, 2018, following the sale of its former subsidiary Enertec Systems Ltd.,
the Company changed the Company name from Micronet Enertec Technologies, Inc. to MICT, Inc. Our shares have been listed for trade
on the Nasdaq Capital Market, or Nasdaq, since April 29, 2013. The Company's business relates to its
ownership interest in its Israel-based, former subsidiary, Micronet Ltd., or Micronet, in which the Company previously held a
majority ownership interest that has since been diluted to a minority ownership interest. Micronet operates in the growing commercial
Mobile Resource Management, or MRM, market. 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. As of December 31, 2018, the Company
held 49.89% of Micronet's issued and outstanding shares, and together with an irrevocable proxy in our benefit from Mr.
David Lucatz, the Company's President and Chief Executive Officer, we held 50.07% of the voting interest in Micronet as
of such date. On February 24, 2019, Micronet closed a public equity offering on the Tel Aviv Stock Exchange, or the TASE. As
a result of Micronet's offering, our ownership interest in Micronet was diluted from 49.89% to 33.88%. On February 24,
2019, Mr. David Lucatz, our President and Chief Executive Officer, executed an irrevocable proxy assigning his voting power
over 1,980,000 shares of Micronet for our benefit. As a result, our voting interest in Micronet stood at 39.53% of the issued
and outstanding shares of Micronet. The decrease in the Company's voting interest in Micronet resulted in the
deconsolidation of Micronet's operating results from our financial statements as of February 24, 2019. Therefore,
commencing from February 24, 2019, the Company accounts for the investment in Micronet in accordance with the equity method.
As a result of the deconsolidation, the Company recognized a net gain of $299 in February 2019. On September 5, 2019, Micronet closed a public
equity offering on the TASE. As a result, our ownership interest in Micronet was diluted from 33.88% to 30.48%, and our current
voting interest in Micronet stands at 37.79% of the issued and outstanding shares of Micronet. Micronet's vehicle portable
tablets offers 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
third party telematics service providers, or TSPs, a platform to offer services such as "Hours of Service."
Micronet previously commenced and continues to evaluate integration with other TSPs. Micronet is currently entering the video analytics
device market by developing an all in-one video telematics device known as Micronet SmartCam. Micronet SmartCam technologically,
based on the powerful flexible android platform, is expected to be a ruggedized, integrated, and ready-to-go smart camera
supporting complete telematics features designed for in-vehicle use. Coupled with vehicle-connected interfaces, state of the art
diagnostic capabilities, and two cameras, it offers video analytics and telematics services, addressing safety, vehicle health,
and tracking needs of commercial fleets. We believe that Micronet SmartCam provides a versatile, advanced, and affordable mobile
computing platform for a variety of fleet management and video analytics solutions. The powerful computing platform, coupled with
the Android 9 operating system, allows the company customers to run their applications or pick and choose a set of applications
and services from Micronet marketplace. Micronet's customers consist primarily of application service providers, or ASPs,
and solution providers specializing in the MRM market. These companies sell Micronet's products as part of their MRM systems
and solutions. Currently, Micronet does not sell directly to end users. Micronet customers are generally MRM solution and service
providers, ASP providers in the transportation market, including long haul, local fleets' student transportation (yellow
busses) and fleet and field management systems for construction and heavy equipment. Micronet products are used by customers worldwide. Micronet operates and conducts its business
in the U.S. market through Micronet Inc., a wholly owned subsidiary located in Utah. The Micronet U.S.-based business, operations
and facilities include a logistics warehouse and distribution center, and technical service and support infrastructure as well
as sales and marketing capabilities which allow Micronet to continue expansion into the U.S. market while support its existing
U.S.-based customers with further accessibility and presence to local fleets and local MRM service providers. Acquisition Agreement with BNN Technology
PLC On December 18, 2018, we, Global Fintech Holdings Ltd., a British
Virgin Islands corporation, or GFH, GFH Merger Subsidiary, Inc., a Delaware corporation and a wholly-owned subsidiary of GFH, or
Merger Sub, BNN, Brookfield Interactive (Hong Kong) Limited, a Hong Kong company and a subsidiary of BNN, or BI China, ParagonEx
LTD, a British Virgin Islands company, or ParagonEx, certain holders of ParagonEx's outstanding ordinary shares and a trustee
thereof, and Mark Gershinson, in the capacity as the representative of the ParagonEx sellers, entered into an Acquisition Agreement,
or the Acquisition Agreement, pursuant to which, among other things, subject to the satisfaction or waiver of the conditions set
forth in the Acquisition Agreement, Merger Sub would merge with and into the Company, as a result of which each outstanding share
of the Company's common stock and warrant to purchase the same would be cancelled in exchange for the right of the holders
thereof to receive 0.93 substantially equivalent securities of GFH, after which GFH would acquire (i) all of the issued and outstanding
securities of BI China in exchange for newly issued ordinary shares of GFH and (ii) all of the issued and outstanding ordinary
shares of ParagonEx for a combination of cash in the amount equal to approximately $25 million (the majority of which was raised
in a private placement by GFH), unsecured promissory notes and newly issued ordinary shares of GFH, or collectively, the Transactions. In furtherance of the Transactions, and upon the terms and subject
to the conditions described in the Acquisition Agreement, BNN agreed to commence a tender offer, or the Offer, as promptly as practicable
and no event later than 15 business days after the execution of the Acquisition Agreement, to purchase up to approximately 20%
of the outstanding shares of the Company's common stock at a price per share of $1.65, net to the sellers in cash, without
interest, or the Offer Price. On March 13, 2019. the deadline for the Offer was extended to April 8, 2019. Additionally, following
the Transactions, it was contemplated that the certain of the company's operating business assets, including company's interest
in Micronet, would be spun off to company's stockholders who continue to retain shares of company's common stock after the Offer.
Subject to the terms and conditions of the Acquisition Agreement, and assuming that none of the shares of company's common stock
are purchased by BNN in connection with the Offer, company's stockholders would own approximately 5.27% of GFH after giving effect
to the transactions contemplated by the Acquisition Agreement. On May 31, 2019, we terminated the spin-off
of Micronet and in June 2019, the Offer was terminated. Effective November 7, 2019, we, BNN, BI China and ParagonEx (the "Parties")
entered into a mutual Termination Agreement (the "Termination Agreement"), pursuant to which the parties agreed to
terminate the 2018 Acquisition Agreement, effective immediately. Merger Agreement with GFH On November 7, 2019, company's, GFH
Intermediate Holdings Ltd., a British Virgin Islands company ("Intermediate") that is wholly owned by GFH entered
into, and MICT Merger Subsidiary Inc., a to-be-formed British Virgin Islands company and a wholly owned subsidiary of MICT ("Merger
Sub"), shall upon execution of a joinder enter into, an Agreement and Plan of Merger (the "Merger Agreement"),
pursuant to which, among other things, subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement,
Merger Sub will merge with and into Intermediate, with Intermediate continuing as the surviving entity, and each outstanding share
of Intermediate's common stock shall be cancelled in exchange for the right of the holders thereof to receive a substantially
equivalent security of MICT (collectively, the "Acquisition"). GFH will receive an aggregate of 109,946,914 shares
of MICT common stock as merger consideration in the Acquisition. Concurrent with the execution of the Merger
Agreement, Intermediate entered into (i) a share exchange agreement with Beijing Brookfield Interactive Science & Technology
Co. Ltd., an enterprise formed under the laws of the Peoples Republic of China ("Beijing Brookfield"), pursuant to
which Intermediate will acquire all of the issued and outstanding ordinary shares and other equity interest of Beijing Brookfield
from the shareholders of Beijing Brookfield in exchange for 16,310,759 newly issued shares of GFH and (ii) a share exchange agreement
with ParagonEx, shareholders of ParagoneEx specified therein (the "ParagonEx Sellers") and Mark Gershinson, pursuant
to which, the ParagonEx Sellers will transfer to Intermediate all of the issued and outstanding securities of ParagonEx in exchange
for Intermediate's payment and delivery of $10.0 million in cash, which is to be paid upon the closing of the Acquisition,
and 75,132,504 newly issued shares of GFH deliverable at the closing of the share exchange. After giving effect to the Acquisition,
the conversion of the Convertible Debentures (as defined below) and the conversion or exercise of the securities issued by MICT
pursuant to the Offering of Series A Convertible Preferred Stock and Warrants and the Offering of Convertible Note and Warrants,
each as further below, it is expected that MICT will have approximately $15.0 million of cash as well as ownership of ParagonEx
and Beijing Brookfield and that MICT's current stockholders will own approximately 11,089,532 shares, or 7.64%, of the 145,130,577
shares of MICT common stock outstanding. Consummation of the transactions contemplated
by the Merger Agreement is subject to certain closing conditions, including, among other things, approval by the stockholders of
MICT and receipt of a fairness opinion indicating that the transactions contemplated by the Merger Agreement are fair to the stockholders
of MICT. The Merger Agreement contains certain termination rights for the Company and Intermediate. The Merger Agreement also contains
customary representations, warranties and covenants made by, among others, MICT, Intermediate and Merger Sub, including as to the
conduct of their respective businesses (as applicable) between the date of signing the Merger Agreement and the closing of the
transactions contemplated thereby. The Merger Agreement provides that all
options to purchase shares of the Company's common stock that are outstanding and unexercised shall be accelerated in full
effective as of immediately prior to the effective time of the Acquisition. The options shall survive the closing of the Acquisition
for a period of 15 months from the date of the closing of the Acquisition and all equity incentive plans of the Company shall remain
in effect. Consummation of the Merger Agreement is
subject to various conditions, including the following mutual conditions of the parties unless waived: (i) the approval of the
Merger Agreement by the requisite vote of MICT's stockholders; (ii) expiration of the applicable waiting period under any
antitrust laws, including the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; (iii) receipt of requisite regulatory
approval, (iv) receipt of required consents and provision of required notices to third parties, (v) no law or order preventing
or prohibiting the Merger or the other transactions contemplated by the Merger Agreement or the Closing; (vi) no restraining order
or injunction preventing the Merger or the other transactions contemplated by the Merger Agreement; (vii) appointment or election
of the members of the post-Closing MICT board of directors as agreed, and (viii) the filing of the definitive proxy statement with
the SEC. In addition, prior to the consummation
of the Merger, if the Merger Agreement is terminated after the closing of the Beijing Brookfield Acquisition or the ParagonEx Acquisition,
as the case may be, or if the Merger does not close by the outside date set forth in the Merger Agreement, the transactions contemplated
by the Beijing Brookfield Share Exchange Agreement and the ParagonEx Share Exchange Agreement, may be unwound. In the event of
an unwinding of such acquisitions, GFH will return the Beijing Brookfield shares to BI Interactive and the ParagonEx shares to
the Paragon Ex Sellers and in turn BI Interactive and the ParagonEx Sellers will return the shares of Global Fintech received in
the applicable share exchange. Voting Agreement " Offering of Series A Convertible Preferred
Stock and Warrants On June 4, 2019, we entered into a
Securities Purchase Agreement (the "Preferred Securities Purchase Agreement") with the purchasers named therein
(the "Preferred Purchasers") subject to approval by the Nasdaq Stock Market for as to the eligibility of the
transaction, pursuant to which we agreed to sell 3,181,818 shares of newly designated Series A Convertible Preferred Stock
with a stated value of $2.20 per share (the "Preferred Stock"). The Preferred Stock, which shall be convertible
into up to 6,363,636 shares of the company's common stock, par value $0.001 per share (the "Common Stock"),
shall be sold together with certain Common Stock purchase warrants (the "Preferred Warrants") to purchase up to
4,772,727 shares of Common Stock (representing 75% of the aggregate number of shares of Common Stock into which the Preferred
Stock shall be convertible), for aggregate gross proceeds of $7 million to us (the "Preferred Offering"). The
terms of the Preferred Securities Purchase Agreement were approved by Nasdaq Stock Market on July 31, 2019 and as a result
the company issued the preferred stock along with the warrants. The Preferred Stock shall be convertible
into Common Stock at the option of each holder of Preferred Stock at any time and from time to time at a conversion price of
$1.10 per share, and shall also convert automatically upon the occurrence of certain events, including the completion by us
of a fundamental transaction. Commencing on March 31, 2020, cumulative cash dividends shall become payable on the Preferred
Stock at the rate per share of 7% per annum, which rate shall increase to 14% per annum on June 30, 2020. We shall also have
the option to redeem some or all of the Preferred Stock, at any time and from time to time, beginning on December 31, 2019.
The holders of Preferred Stock shall vote together with the holders of Common Stock as a single class on as-converted basis,
and the holders of Preferred Stock holding a majority-in-interest of the Preferred Stock shall be entitled to appoint an
independent director to the company's board of directors (the "Preferred Director"). The Preferred
Securities Purchase Agreement provides for customary registration rights. The Preferred Warrants shall have an
exercise price of $1.01 (subject to customary adjustment in the event of future stock dividends, splits and the like), which
is above the average price of the Common Stock during the preceding five trading days of entry into the Preferred Securities
Purchase Agreement, and shall be exercisable immediately, until the earlier of (i) two years from the date of issuance or
(ii) the later of (a) 180 days after the closing by the Company of a change of control transaction, or (b) the
company's next debt or equity financing of at least $20 million. Offering of Convertible Note and Warrants On June 4, 2019, we entered into a
Securities Purchase Agreement (the "Note Purchase Agreement") with BNN subject to approval by the Nasdaq Stock
Market for as to the eligibility of the transaction, pursuant to which BNN agreed to purchase from us $2 million of
convertible notes, which subscription amount shall be subject to increase by up to an additional $1 million as determined by
BNN and us (collectively, the "Convertible Notes"). The Convertible Notes, which shall be convertible into up to
2,727,272 shares of Common Stock (using the applicable conversion ratio of $1.10 per share), shall be sold together with
certain Common Stock purchase warrants (the "Note Warrants") to purchase up to 2,727,272 shares of Common Stock
(representing 100% of the aggregate number of shares of Common Stock into which the Convertible Notes are convertible) (the
"Convertible Note Offering"). The Convertible Notes shall have a duration of two (2) years. The Convertible Notes shall be
convertible into Common Stock at the option of the Note Purchaser at any time and from time to time, and upon the issuance of
one or more Convertible Notes. Darren Mercer, the Chief Executive Officer of BNN, was appointed to the Company's board
of directors (the "Note Director"). The Note Purchase Agreement provides for customary registration rights. The
terms of the note purchase agreement were approved by Nasdaq Stock Market on July 31, 2019 and as a result the company issued
the convertible notes along with the warrants. The Note Warrants shall have an exercise price
of $1.01 (subject to customary adjustment in the event of future stock dividends, splits and the like), and shall be exercisable
immediately upon receipt of stockholder approval of the Convertible Note Offering, until the earlier of (i) two years from the
date of issuance or (ii) the later of (a) 180 days after the closing by the Company of a change of control transaction, or (b)
the company's next debt or equity financing of at least $20 million. In accordance with ASC 470 "Debt", the Company analyzed
the Note Purchase Agreement and the Preferred Securities Purchase Agreement (as described above) as combined transaction, as both
agreements were signed simultaneously with an overall objective and as a result allocated the total proceeds between convertible
notes, the warrants and Series A Convertible Preferred Stock based on their relative fair value at the closing date. The Company
analyzed the warrants issued, the convertible conversation feature and Series A Convertible Preferred Stock and concluded that
they meet the definition of an equity instrument. On January 21, 2020, we entered into a
Conversion Agreement with BNN, pursuant to which BNN agreed to convert the outstanding convertible note, issued on July 31,
2019, into 1,818,181 shares of the Company's newly-designated Series B Preferred Stock, par value $0.001 per share, with
a stated value of $1.10 per share (the "Series B Preferred") (collectively, the "Conversion"). In accordance
with the Conversion, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of Series B Preferred
with the Secretary of State of the State of Delaware on January 21, 2020 to designate the rights and preferences of up to 1,818,181
shares of Series B Preferred. Offering of Secured Convertible Debentures On November 7, 2019, we entered into a Securities
Purchase Agreement (the "Primary Purchase Agreement") with certain investors identified therein (the "Primary
Purchasers") pursuant to which, among other things, the Primary Purchasers agreed, subject to the satisfaction or waiver
of the conditions set forth in the Primary Purchase Agreement, to purchase from us 5% senior secured convertible debentures due
2020 (the "Primary Convertible Debentures") with an aggregate principal amount of approximately $15.9 million (the
"Primary Convertible Debenture Offering"). The proceeds of $15.9 million from the sale of the Primary Convertible
Debentures were funded on January 21, 2020. Concurrently with entry into the Primary Purchase Agreement, we entered
into a separate Securities Purchase Agreement (the "Non-Primary Purchase Agreement" and, together with the Primary
Purchase Agreement, the "Purchase Agreements") with certain investors identified therein (the "Non-Primary Purchasers"
and, together with the Primary Purchasers, the "Purchasers") pursuant to which, among other things, the Non-Primary
Purchasers agreed, subject to the satisfaction or waiver of the conditions set forth in the Non-Primary Purchase Agreement, to
purchase from us 5% senior secured convertible debentures due 2020 (the "Non-Primary Convertible Debentures" and,
together with the Primary Convertible Debentures, the "Convertible Debentures") with an aggregate principal amount
of $9.0 million (together with the Primary Convertible Debenture Offering, collectively, the "Convertible Debenture Offering").
The Convertible Debentures shall be convertible into our shares of Common Stock at a conversion price of $1.41 per share. The
Convertible Debentures will be due upon the earlier of (i) six months from the date of issuance and (ii) the termination of the
Merger Agreement. We are obligated to pay interest to the Purchasers on the outstanding principal amount at the rate of 5% per
annum, payable quarterly, in cash or, at our option in certain instances, in shares of Common Stock. We may not voluntarily prepay
any portion of the principal amount of the Convertible Debentures without the prior written consent of the Purchasers. Subject to stockholder approval of an increase
in the shares of Common Stock to allow for the full conversion of the Convertible Debentures into Common Stock, the Convertible
Debentures shall be convertible into Common Stock at the option of the Purchasers at any time and from time to time. Upon the
closing of the Acquisition and written notice from us to the Purchasers, the Purchasers shall be forced to convert the Convertible
Debentures into our shares of Common Stock (the "Forced Conversion"). Upon the occurrence of certain events, including,
among others, if we fail to file a preliminary proxy statement with respect to the Acquisition on or prior to November 18, 2019,
if the Forced Conversion does not occur on or before January 24, 2020, or certain breaches of the Primary Purchasers' Registration
Rights Agreement (as defined below), the Primary Purchasers are permitted to require us to redeem the Primary Convertible Debentures,
including any interest that has accrued thereunder, for cash. The Proceeds of $15.9 million from the sale of
the Primary Convertible Debentures were funded on January 21, 2020 and placed in a separate blocked account that shall remain
subject to a deposit account control agreement until the closing of the Merger. We shall not have access to such proceeds
until the closing of the Acquisition and only upon the satisfaction of certain other requirements, including, among other
things, effectiveness of the Resale Registration Statement (as defined below). The Purchase Agreements provide for customary
registration rights, pursuant to their respective registration rights agreement to be entered into at the time of the closing
of the Convertible Debenture Offering (each, a "Registration Rights Agreement"). Pursuant to the Registration Rights
Agreements, the we are obligated to, among other things, (i) file a registration statement (the "Resale Registration Statement")
with the SEC for purposes of registering the shares of Common Stock issuable upon the conversion of the Convertible Debentures
and (ii) use its best efforts to cause the Resale Registration Statement to be declared effective by the SEC as soon as practicable
after filing, and in any event no later than the effectiveness of the Acquisition. The Registration Rights Agreements contains
customary terms and conditions for a transaction of this type, including certain customary cash penalties on us for our failure
to satisfy the specified filing and effectiveness time periods. On November 12, 2019, the Company filed an Amended Certificate
of Designation of the Preferences, Rights and Limitations with the Secretary of State of Delaware to remove the prohibition on
forced conversions of the Company's Series A Preferred Stock, par value $0.001 per share, into shares of common stock in
the event the Company's stockholders approve the Acquisition after December 31, 2019. The proceeds of the Convertible Debenture Offering,
approximately $25 million out of which $15.9 million were received on January 2020, have been placed in a blocked bank
account, pursuant to a deposit account control agreement, to be entered into. The Company shall not have access to such
proceeds until the closing of the Acquisition and only upon the satisfaction of certain other requirements, including, among
other things, effectiveness of the Resale Registration Statement. In connection with the Convertible Debentures, on January
17, 2020, the Company, certain of its subsidiaries, the Primary Purchasers and the representative thereof, as collateral agent,
entered into a security agreement, or the Primary Security Agreement. Pursuant to the Primary Security Agreement, the Company
and certain of its subsidiaries granted to the Primary Purchasers a first priority security interest in, a lien upon and a right
of set-off against all of their personal property (subject to certain exceptions) to secure the Primary Convertible Debentures.
On January 17, 2020, the parties also entered into a registration rights agreement, or the Primary Registration Rights Agreement.
Pursuant to the Primary Registration Rights Agreement, the Company has agreed to, among other things, (i) file a registration
statement, or the Resale Registration Statement with SEC within seven business days following the filing of an initial proxy statement
with respect to the contemplated merger by and among the Company, Intermediate, and Merger Sub, for purposes of registering the
shares of common stock issuable upon conversion of the Primary Convertible Debentures, and (ii) use
its best efforts to cause the Resale Registration Statement to be declared effective by the SEC as soon as practicable after filing,
and in any event no later than the effectiveness of the . The Primary
Registration Rights Agreement contains customary terms and conditions for a transaction of this type, including certain customary
cash penalties on the Company for its failure to satisfy the specified filing and effectiveness time periods. In July 2019, the Company paid all of its
outstanding bank loans in the amount of $251. During 2019, the Company repaid the entire outstanding principal balance of the Series
B Convertible Debentures to YA II in the aggregate amount of $1,225, which was paid in shares of the Company's common stock,
and in October 31, 2019, the Company paid all of its outstanding principal balance, together with its accrued interest and a required
10% premium, of the Series A Convertible Debentures issued to YA II in the aggregate amount of $2,057 cash. |
