| DESCRIPTION OF BUSINESS | NOTE 1 — DESCRIPTION OF BUSINESS Overview MICT, 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 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”)
1,800 (or $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 (or $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 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 (or $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. 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 pursuant to that certain agreement and plan of 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, as amended and restated on April 15, 2020 (the “Restated
Merger Agreement” or “Merger”). MICT is a holding company conducting financial technology 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) 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,
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 $3,000 (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
(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 have been guaranteed by its majority 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 (reflecting the net asset value of Magpie estimated at
$2,034 recorded as a working capital, and a premium $902 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 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 40,000 (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 September 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 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. 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 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. 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 (approximately $8,290) in the offering. The Company did not participate in the offering,
and, as a result, the Company owned 31.47% of the outstanding ordinary shares of Micronet and 26.77% on a fully diluted basis as of September
30, 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 30,000 (approximately $4,700) (the “AW Frame Work Loan Amount”) which, if utilized, will be used
for working capital purposes of All Weather. In consideration for the AW Frame Work Loan, the parties entered into various
additional agreements which 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 30, 2022, the Company granted All Weather shareholders an additional loan in the sum of approximately $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 purchase by MICT of such equity interests in All Weather on such commercial and other terms to be agreed
by the parties. 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 RMB30,000 ($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. 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 September 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
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) 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), 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. 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
30, 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 term of the loan shall start from the date when
the loan is 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 shareholders pledged all 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. 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 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 term of the loan under this agreement shall start
from the date when the loan is actually paid and shall continue until the shareholders repay all the loan in accordance with this agreement.
The agreement 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 Beijing 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.
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 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. Loan Agreement Pursuant to this agreement,
Bokefa agreed to provide loans to the shareholders of All Weather. The term of the loan is 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 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. 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 shareholders 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 shareholders 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. 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 (All Weather, Beijing Fucheng and Tianjin Dibao) included in the Company’s unaudited condensed consolidated
financial statemen |
