MICT, Inc.
Q2 2019 Earnings Call Transcript

Published: 14 Aug 2019

[Operator:]

Thank you. Good morning and thank you for calling in to review MICT's Second Quarter 2019 Results. Management will provide an overview of the results. Importantly, there is a slide presentation which management will use during their overview. This presentation can be found on the Investor Relations section of the company's website at www.mict-inc.com under Events and Presentations.You may also access a PDF copy of the presentation by clicking the link in the company's press release regarding these financial results issued this morning and then clicking a second link, labeled second quarter 2019 results. Callers accessing the PDF copy of the presentation will need to manually scroll through the slides as management goes through the presentation.I will now take a brief moment to read the Safe Harbor statement. During the course of this call, management will make expressed and implied forward-looking statements within the Private Securities Litigation Reform Act of 1995 and other U.S. Federal Securities Laws. These forward-looking statements include, but are not limited to those statements regarding the timing of the expected closing of the additional $1.75 million in the funding announced on July 2019 that believe that Micronet's sales with current customers reflecting a sign of confidence and satisfaction from Micronet's customer base, that MICT has a strong balance sheet with which to move forward with the planned completion of the definitive agreement with BNN Technology PLC, or BNN, ParagonEx Ltd. and other third parties, and the belief that MICT and BNN, with a combined management team, expertise and connections in global markets, can achieve market leading positions in the technology markets they target.Such forward-looking statements and their implications 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 presentation 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, 2018 filed with the Securities and Exchange Commission, and in the company’s annual report on Form 10-Q for the quarter ended June 30, 2019 filed with the securities and exchange commission.No offer or solicitation

[David Lucatz:]

Thank you. Good morning, everyone. During the second quarter of 2019, we continue to advance towards completion of an acquisition agreement that MICT entered into in December of 2018 with BNN, ParagonEx, and a group of founders. Just after the end of the second quarter in July 2019, we announced signing of certain definitive agreements relating to the offering by MICT, a separate investor of convertible notes and preferred stock, collectively totaling of $9 million, with $7.25 million of this amount already have been received by MICT and the remaining $1.75 million expected in the next six weeks.The completion of the $7.25 million to date has served a significant milestone for the company. Based on the convertible note opening, BNN invested $2 million in MICT, which instrument is contemplated to replace certain existing clinical instruments on more favorable terms. Micronet Ltd, in which MICT holds 39.63% both in stake continues to receive sales contracts with current customers, which we believe is a clear sign of confidence and satisfaction from its customer base.Micronet orders during the second quarter totaled $3.6 million for its 4th generation SmartHub hardware and its TREQ VMX platforms to existing customers, with $90,000 of the orders being recurring revenue. In addition, Micronet believes that the development of its next generation advanced technologies the top 8 and the SmartCAM is currently proceeding as planned.On Slide 6, we will review the second quarters 2019 financial results. We would like to remind our investors that MICT currently holds a 39.53% voting stake in Micronet. And therefore, based on U.S. GAAP rules, MICT no longer reports consolidated results due to its reduced ownership of Micronet effective March 1, 2019. While Micronet had a $3.6 million in sales for the three months ended June 30, 2019, revenue for MICT was $0 for the three months ended June 30, 2019, compared to $4.7 million for the three months ended June 30, 2018.Gross loss was $0 for the three months ended June 30, 2019, compared to gross profit of $1.53 million for the three months ended June 30, 2018. Research and development expenses for the three months ended June 30, 2019 was $0, as compared to $505,000 for the three months ended June 30, 2018.Selling, general and administrative expense was $670,000 for the three months ended June 30, 2019, as compared to $1.69 million for the three months ended June 30, 2018. Net loss attributed to MICT was $1.1 million for the three months ended June 30, 2019 as compared to a net profit of $3.5 million for the three months ended June 30, 2018.I will now turn the call Moran for a more detailed financial review.

[Moran Amran:]

Thank you, David, and good morning everyone. The next slide illustrated a revenue for both the three-and-six months period ending June 30, 2019 as compared to the same period in 2018. MICT reported $0 revenue for the three months ended June 30, 2019, as compared to $4.7 million during the same period in 2018. For the six months ended June 30, 2019 MICT reported $477,000 in revenues, as compared to $10.7 million in the same period of 2018.Slide 8 provides a more detailed breakdown of the numbers. Research and development expense for the three months ended June 30, 2019 was $0, compared to $505,000 for the three months ended June 30, 2018. Loss from operation were $670,000 for the three months ended June 30, 2019, compared to $883,000 for the three months ended June 30, 2018. Net loss attributed to MICT was $1.1 million for the three months ended June 30, 2019, compared to a net profit of $3.5 million for the three months ended June 30, 2018.On a per share basis, MICT reported a net loss of $0.1 per basic and diluted share from continuing operations for the three months ended June 30, 2019, compared to a net loss of $0.14 per basic and diluted share from continued operations and a net profit of $0.52 per basic and diluted share from discontinued operations for the three months ended June 30, 2018.Operating expense for the six months ended June 30, 2019 was $2.14 million, compared to [$4.83 million] in the first six months of 2018. Loss from operation was $2.51 million in the six months ending June 30, 2019, compared to $1.58 million in the same period in 2018. Net profit from loss of control in the first six months of 2019 was $299,000, compared to $0 in the first six months of 2018.Net loss attributed to MICT was $2 million in the first six months of 2019, compared to the net profit of $2.65 million in the first six months of 2018. On a per share basis, MICT reported a net loss of $0.19 per basic and diluted share from continued operation in the fist six months of 2019, compared to a net loss of $0.25 per basic and diluted share from continuing operation and a net profit per share of $0.54 from discontinued operation in the first six months of 2018.Turning to Slide 9. On our balance sheet, we have $56,000 in cash and cash equivalent as of June 30, 2019. MICT cash and cash equivalent as of June 30, 2019 don’t take into account the funds MICT received in July 2019, relating to a previous mentioned funding. We have $2.1 million deficits in working capital and a deficit of $865,000 in shareholders equity as of June 30, 2019.I will now turn the call back to David.

[David Lucatz:]

We are very pleased to have completed one or more closing in connection with the largest fund-raising effort in MICT history to date. We currently have a strong balance sheet with which to move forward into the planned completion of our condition agreement with BNN and ParagonEx, among the others. With our combined management team, expertise and connection in a global market, we believe we can achieve market leading position in the technology market we target. I would like to thank our dedicated employees. Thanks, and I look forward to speaking with you next quarter.

[Operator:]

Thank you. This concludes Micronet Enertec Technologies second quarter 2019 results conference call. Thank you for your participation. You may go ahead and disconnect.