| DESCRIPTION OF BUSINESS | NOTE
1 — DESCRIPTION OF BUSINESS Overview MICT Inc., or 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 of common stock 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 September 5, 2019, Micronet closed a public equity offering
on the TASE. As a result, our ownership interest in Micronet was further diluted from 33.88% to 30.48%. We currently hold and control
30.48% of Micronet's issued and outstanding shares. The initial 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 May 19, 2020, the Company, via MICT Telematics Ltd., a wholly
owned subsidiary of the Company, or MICT Telematics, initiated under Israeli law, a partial tender offer pursuant to which it has
tendered to purchase up to 8,000,000 ordinary shares, par value 0.1 NIS, of Micronet, at a proposed purchase price of NIS 0.16
per share (or approximately $0.05), or the Tender Offer. On June 4, 2020, Micronet filed an immediate report with the
TASE, announcing an amendment to MICT Telematics' Tender Offer, or the Amended Tender Offer. Pursuant to the Amended Tender
Offer, the number of ordinary shares to be offered to be purchased by MICT Telematics pursuant to the Amended Tender Offer will
be up to 6,000,000 ordinary shares, and the proposed purchase price was changed to NIS 0.30 per share (or approximately $0.09 per
share), for aggregate gross proceeds to Micronet of NIS 1,800,000 (or approximately $520). The Amended Tender Offer will remain
open until June 11, 2020 at 2:00 PM Israel time The Amended Tender Offer has been accepted, however, it is subject to certain conditions.
On June 11, 2020, Micronet filed an immediate report with the TASE reporting that the Amended Tender Offer has been fully accepted.
Subject to fulfillment of the closing conditions the Company will own 45.53% of the issued and outstanding ordinary shares of Micronet
following the completion of the Amended Tender Offer. On June 10, 2020, the Company further informed Micronet that, assuming
the full subscription of such Amended Tender Offer is accepted, the Company intends to, but shall not be required to, participate
in a public offering of Micronet's ordinary shares, or the 2020 Micronet Offering, pursuant to which the Company may purchase
up to $900 of Micronet's ordinary shares. On November 7, 2019, the Company and GFH Intermediate Holdings
Ltd., a British Virgin Islands company, or Intermediate, entered into, and MICT Merger Subsidiary Inc., a to-be-formed British
Virgin Islands company and a wholly owned subsidiary of the Company, or Merger Sub, was to enter into, upon execution of a joinder
agreement, or the Joinder Agreement, an Agreement and Plan of Merger, or the Original Agreement. On April 15, 2020, the Company, Intermediate, and Global Fintech
Holding Ltd., a British Virgin Islands company and the sole shareholder of Intermediate, or GFH, entered into, and Merger Sub shall,
upon execution of the Joinder Agreement, enter into, an Amended and Restated Agreement and Plan of Merger, or the Restated Merger
Agreement, pursuant to which, among other things, subject to the satisfaction or waiver of the conditions set forth in the Restated
Merger Agreement, Merger Sub shall merge with and into Intermediate, with Intermediate continuing as the surviving entity, and
each outstanding share of Intermediate shall be cancelled in exchange for the right of the holder thereof to receive a convertible
promissory note in the principal amount of approximately $25,000, or the Consideration Note, which shall be convertible into shares
of our common stock, or collectively, the Acquisition. The Consideration Note shall be issued at the closing of the Acquisition
and shall be, under certain circumstances, automatically convertible into shares of our common stock, at a conversion price of
$1.10 per share. The Restated Merger Agreement amended and restated the Original Agreement in its entirety. On November 7, 2019, the Company entered into a Securities Purchase
Agreement, or the Primary Purchase Agreement, with certain investors, or 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 during 2020, or the Primary Convertible Debentures,
with an aggregate principal amount of approximately $15,900, or the Primary Convertible Debenture Offering. The proceeds of $15,900
from the sale of the Primary Convertible Debentures were funded on January 21, 2020. Concurrently with entry into the Primary Purchase
Agreement, the Company entered into a separate Securities Purchase Agreement, or the Non-Primary Purchase Agreement and, together
with the Primary Purchase Agreement, the Purchase Agreements, with certain investors, or 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 during 2020, or the Non-Primary Convertible Debentures, and, together with the Primary Convertible
Debentures, the Convertible Debentures, with an aggregate principal amount of $9,000, together with the Primary Convertible Debenture
Offering, the Convertible Debenture Offering. The Convertible Debentures were convertible into our shares of our common stock at
a conversion price of $1.41 per share. The Convertible Debentures were to be due upon the earlier of (i) six months from the date
of issuance and (ii) the termination of the Original Agreement. On March 13, 2020, the Company received a notice of exercise of
remedies, or the Notice, from the Primary Purchasers pursuant to the Primary Purchase Agreement and the Primary Convertible Debentures
with an aggregate principal amount of approximately $15,900, or the Outstanding Principal, issued to the Primary Purchasers pursuant
to the Primary Purchase Agreement on January 17, 2020. The Notice advised that two Triggering Events (as defined in the Primary
Purchase Agreement) had occurred and are continuing as a result of the failure by the Company (a) to file with the U.S. Securities
and Exchange Commission, or the SEC, a registration statement by January 30, 2020, as required by Section 2(a) of that certain
registration rights agreement by and between the Primary Purchasers and the Company and clause (g) of the definition of "Triggering
Event" in each Primary Convertible Debenture and (b) to respond to the SEC by February 21, 2020, with respect to the SEC's
comments on the Company's preliminary proxy statement received on February 6, 2020, or the SEC Response, as required by clause
(e) of the definition of "Triggering Event" in each Primary Convertible Debenture. The Notice also advises that the
Company has failed to timely deliver to each Purchaser the trigger event notices with respect to such trigger events as required
by Section 6(b) of each Primary Convertible Debenture, which failure due to the lapse of the applicable grace period resulted in
two Events of Default under Section 8(a)(ii) of each Primary Convertible Debenture. As
a result of the Notice, the Primary Purchasers exercised their right to an optional redemption pursuant to Section 6(b) of each
Primary Convertible Debenture and declared the occurrence and continuance of an event of default, each of which accelerated the
Company's obligation to repay all outstanding balances under the Primary Convertible Debentures, or the Optional Redemption.
On March 16, 2020, the Outstanding Principle was transferred from the Company to the Purchasers. As a result, the Primary Purchase
Agreement was terminated. On
April 21, 2020, the Company entered into a series of Note Purchase Agreements, or the April Purchase Agreements, with certain
investors, or the PIPE Purchasers, pursuant to which, among other things, the PIPE Purchasers agreed, subject to the satisfaction
or waiver of the conditions set forth in the April Purchase Agreement, to purchase from the Company certain convertible notes,
or the April Convertible Notes, with an aggregate principal amount of approximately $11.0 million, or the April Convertible Notes
Offering. The April Convertible Notes shall be convertible into shares of common stock of the Company at a conversion price of
$1.10 per share, or the April Conversion Shares. Approximately $8.0 million of the April Convertible Notes will be due two years
from the date of issuance, while approximately $3.0 million of the April Convertible Notes will be due five years from the date
of issuance. The Company is obligated to pay interest to the PIPE Purchasers on the outstanding principal amount at the rate of
1.0% per annum, payable on each conversion date, in cash or, at the Company's option, in shares of its common stock. In
April and May 2020, the Company issued April Convertible Notes with an aggregate principal amount of approximately $5.9 million,
which will be due two years from the date of issuance. The sale and issuance of the entire $11.0 million of April Convertible
Notes has not occurred as of the date of the quarterly report on Form 10-Q in which these financial statements are included and
there can be no assurance that we and the PIPE Purchasers ever close on the issuance of the remaining $5.1 million of April Convertible
Notes. In
June 2019, the Company entered into a Securities Purchase Agreement, or the Note Purchase Agreement, with BNN, pursuant to which
BNN agreed to purchase from the Company $2,000 of convertible notes, which subscription amount shall be subject to increase by
up to an additional $1,000 as determined by BNN and the Company, or collectively, the Convertible Notes. Convertible Notes in
the amount of $2,000 were issued on July 31, 2019. The Convertible Notes, convertible into up to 2,727,272 shares of common stock,
were sold together with certain common stock purchase warrants to purchase up to 2,727,272 shares of common stock. The Convertible
Notes have a duration of two years. On January 21, 2020, the Company entered into a Conversion Agreement,
or the Conversion Agreement, with BNN, pursuant to which BNN agreed to convert outstanding Convertible Notes in the amount of $2,000
into 1,818,181 shares of the Company's newly-designated Series B Convertible Preferred Stock, par value $0.001 per share,
with a stated value of $1.10 per share, or the Series B Preferred Stock. On June 4, 2019, the Company commenced
an offering, or the Preferred Offering, of its Series A Preferred Stock, or the Series A Preferred Stock, by entering into a securities
purchase agreement, or the Preferred Securities Purchase Agreement, pursuant to which the Company agreed to sell 3,181,818 shares
of Series A Preferred Stock. The Series A Preferred Stock, convertible into up to 6,363,636 shares of common stock of the Company,
was issued together with preferred warrants, or the Series A Preferred Warrants, to purchase up to 4,772,727 shares of common stock,
for aggregate gross proceeds of $7,000 to the Company. During January 2020, the Company completed
a second closing of the sale of Series A Convertible Preferred Stock, pursuant to which it sold 795,455 additional shares of Series
A Preferred Stock and 1,193,183 accompanying Preferred Warrants to purchase up to 1,084,712 shares of the Company's common
stock, for aggregate gross proceeds of $1,750. The Company paid an aggregate of $140 in fees in with respect to this closing of
the Preferred Offering. The
Company filed a Form S-3 registration statement (File No. 333-219596) under the Securities Act of 1933, as amended, with the SEC
using a "shelf" registration process, which was declared effective on July 31, 2017. Under this shelf registration
process, the Company may, from time to time, sell common stock, warrants or units in one or more offerings up to a total dollar
amount of $30,000, subject to certain limitations as set forth in General Instruction I.B.6. of Form S-3, pursuant to which the
Company has sold approximately $1,000 of its securities to date. |
