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 inChina . - 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 intoChina andAsia , including launching a commodity platform fromSingapore , which is initially focused on food and agricultural produce
“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
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 inChina 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.
Forward-looking Statement
This press release contains express or implied forward-looking statements within the Private Securities Litigation Reform Act of 1995 and other
ADDITIONAL INFORMATION
Participants in the Solicitation
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
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
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(USD In Thousands, Except Share and Par Value Data)
2022 | 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 | ||||||
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 |
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(USD In Thousands, Except Share and Par Value Data)
2022 | 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; | 122 | 122 | ||||||
Additional paid in capital | 220,911 | 220,786 | ||||||
Accumulated other comprehensive loss | (443 | ) | (414 | ) | ||||
Accumulated deficit | (85,080 | ) | (76,394 | ) | ||||
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
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(USD In Thousands, Except Share and Earnings Per Share Data)
Three months ended | ||||||||
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 | $ | (8,686 | ) | $ | (4,461 | ) | ||
Loss per share attributable to | ||||||||
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
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
Three months ended | ||||||||
(Dollars in Thousands, other than share and per share amounts) | ||||||||
2022 | 2021 | |||||||
GAAP net loss attributable to | $ | (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 | $ | (7,825 | ) | $ | (3,409 | ) | ||
Non-GAAP net loss per diluted share attributable to | $ | (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 | $ | (0.07 | ) | $ | (0.83 | ) | ||
Weighted average common shares outstanding used in per share calculations | 122,435,576 | 85,554,624 |
Source:
2022 GlobeNewswire, Inc., source