What changed in this filing

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Item 1. Financial Statements

2022-05-10 compared with 2021-11-10 · 383 added, 436 removed, 546 unchanged (60% of the section changed)

4 unchanged sentences

December 31, 2021 *

September 30, 2021

March 31, 2022

Current assets:

1 unchanged sentence

Restricted cash

Accounts receivable, net of allowance for doubtful accounts of $ 2,364 and $ 2,968 in

2020 and 2021, respectively

Accounts receivable, net of allowance for doubtful accounts of $ 3,176

in 2021 and 2022, respectively

Inventory, net

18 unchanged sentences

Accrued severance payable

Deferred tax liability

Other long-term liabilities

3 unchanged sentences

Convertible redeemable preferred stock:

Series A – 100 shares authorized, $ 0.01 par value;

55 and 55 shares issued and outstanding at December 31, 2020 and September 30, 2021

Series A – 100

shares authorized, $ 0.01

shares issued and outstanding at December 31, 2021 and March 31, 2022

Preferred stock;

1 unchanged sentence

Common stock;

authorized 75,000 shares, $ 0.01 par value;

authorized 75,000 shares,

$ 0.01 par value;

and 37,570 shares issued at December 31,

31, 2020 and September 30, 2021, respectively;

shares outstanding, 31,101 and 35,957 at December 31, 2020 and September 30,

2021, respectively

2021 and March 31, 2022, respectively;

shares outstanding, 35,882 and 36,146

at December 31, 2021 and March 31, 2022, respectively

Additional paid-in capital

2 unchanged sentences

Treasury stock;

1,179 and 1,300 common shares at cost at December 31, 2020 and September 30, 2021, respectively

1,381 and 1,424 common shares at cost at December 31, 2021

and March 31, 2022, respectively

Total PowerFleet, Inc.

2 unchanged sentences

Total liabilities and stockholders’ equity

from audited balance sheet as of December 31, 2020.

* Derived from audited

balance sheet as of December 31, 2021.

accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

thousands, except per share data)

Three Months Ended

September 30,

Nine Months Ended

September 30,

Three Months Ended March 31,

Total revenues

2 unchanged sentences

Cost of services

Total cost of revenue

cost of revenue

Operating expenses:

1 unchanged sentence

Research and development expenses

Operating Expenses

Total Operating expenses

Income (loss) from operations

16 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Net loss attributable to common stockholders

Other comprehensive (loss) income, net:

Foreign currency translation adjustment

5 unchanged sentences

thousands, except per share data)

Paid-in Capital

Other Comprehensive Income (Loss)

Comprehensive

Income (Loss)

Non-controlling

Stockholders’

Balance at January 1, 2021

$ ( 121,150 )

Net loss attributable to common stockholders

Net loss attributable to non-controlling interest

Foreign currency translation adjustment

Issuance of restricted shares

Forfeiture of restricted shares

Vesting of restricted stock units

Shares issued pursuant to exercise of stock options

Shares withheld pursuant to vesting of restricted stock

Shares withheld pursuant to exercise of stock options

Stock based compensation

Common shares issued, net of issuance costs

Balance at March 31, 2021

$ ( 122,937 )

Net loss attributable to common stockholders

Net loss attributable to non-controlling interest

Foreign currency translation adjustment

Forfeiture of restricted shares

Shares issued pursuant to exercise of stock options

Shares withheld pursuant to vesting of restricted stock

Stock based compensation

Balance at June 30, 2021

at January 1, 2022

$ ( 134,437 )

Net loss attributable to common stockholders

Net loss attributable to non-controlling interest

Foreign currency translation adjustment

Issuance of restricted shares

Forfeiture of restricted shares

Shares issued pursuant to exercise of stock options

Shares withheld pursuant to vesting of restricted stock

Common shares issued under the 2020 ATM

Common shares issued under the 2020 ATM, shares

Stock based compensation

Balance at September 30, 2021

loss attributable to common stockholders

loss attributable to non-controlling interest

currency translation adjustment

of restricted shares

of restricted stock units

issued pursuant to exercise of stock options

withheld pursuant to vesting of restricted stock

withheld pursuant to exercise of stock options

based compensation

shares issued, net of issuance costs

at March 31, 2022

$ ( 137,366 )

Paid-in Capital

Other Comprehensive Income (Loss)

Comprehensive

Income (Loss)

Non-controlling

Stockholders’

Balance at January 1, 2020

$ ( 112,143 )

Net loss attributable to common stockholders

Net loss attributable to non-controlling interest

Foreign currency translation adjustment

Issuance of restricted shares

Forfeiture of restricted shares

Vesting of restricted stock units

Shares issued pursuant to exercise of stock options

Shares withheld pursuant to exercise of stock options

Shares withheld pursuant to vesting of restricted stock

Stock based compensation

Balance at March 31, 2020

$ ( 115,569 )

Net loss attributable to common stockholders

Net loss attributable to non-controlling interest

Foreign currency translation adjustment

Issuance of restricted shares

Forfeiture of restricted shares

Vesting of restricted stock units

Shares issued pursuant to exercise of stock options

Shares withheld pursuant to vesting of restricted stock

Common shares issued under the 2020 ATM

Stock based compensation

Balance at June 30, 2020

at January 1, 2021

$ ( 121,150 )

Net loss attributable to common stockholders

Net loss attributable to non-controlling interest

Foreign currency translation adjustment

Issuance of restricted shares

Forfeiture of restricted shares

Vesting of restricted stock units

Shares issued pursuant to exercise of stock options

Shares withheld pursuant to vesting of restricted stock

Stock based compensation

Balance at September 30, 2020

loss attributable to common stockholders

currency translation adjustment

of restricted shares

of restricted stock units

issued pursuant to exercise of stock options

withheld pursuant to vesting of restricted stock

withheld pursuant to exercise of stock options

based compensation

shares issued, net of issuance costs

at March 31, 2021

$ ( 122,937 )

3 unchanged sentences

thousands, except per share data)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities

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Lease liabilities

Accrued severance payable, net

Net cash (used in) provided by operating activities

Cash flows from investing activities:

Proceeds from sale of property and equipment

Capital expenditures

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of the Company

October 3, 2019, PowerFleet, Inc.

(together with its subsidiaries, “PowerFleet,” the “Company,” “we,”

“our” or “us”) completed the acquisition of Pointer Telocation Ltd.

(the “Transactions”), as a result

of which I.D.

Company is a global leader of Internet-of-Things (“IoT”) solutions providing valuable business intelligence for managing

high-value enterprise assets that improve operational efficiencies.

Systems, Inc.

Systems”) and PowerFleet Israel Ltd.

(“PowerFleet Israel”) each became direct,

wholly-owned subsidiaries of the Company and Pointer Telocation Ltd.

(“Pointer”) became an indirect, wholly-owned subsidiary

of the Company.

Prior to the Transactions, PowerFleet had no material assets, did not operate any business and did not conduct any activities,

other than those incidental to its formation and the Transactions.

Systems was determined to be the accounting acquirer in the Transactions.

As a result, the historical financial statements of I.D.

Systems for the periods prior to the Transactions are considered to be the historical

financial statements of PowerFleet and the results of Pointer have been included in the Company’s consolidated financial statements

from the date of the Transactions.

Company is a global leader and provider of subscription-based wireless Internet-of-Things (IoT) and machine-to-machine (M2M) solutions

for securing, controlling, tracking, and managing high-value enterprise assets such as industrial trucks, tractor trailers, containers,

cargo, and vehicles and truck fleets.

was incorporated in the State of Delaware in 1993.

PowerFleet, Inc.

was incorporated in the State of Delaware in February 2019 for

the purpose of effectuating the transactions (the “Transactions”) pursuant to which the Company acquired Pointer Telocation

(“Pointer”) and commenced operations on October 3, 2019.

Upon the closing of the Transactions, PowerFleet

became the parent entity of I.D.

Systems and Pointer.

of COVID-19 and Supply Chain Disruptions

global outbreak of a novel strain of coronavirus, COVID-19, and mitigation efforts by governments to attempt to control its spread, has

resulted in significant economic disruption and continues to adversely impact the broader global economy.

The extent of the impact on

the Company’s business and financial results will depend largely on future developments that cannot be accurately predicted at

this time, including the duration of the spread of the outbreak, the extent and effectiveness of containment actions and the impact of

these and other factors on capital and financial markets and the related impact on the financial circumstances of our employees, customers

and suppliers.

In addition, the Company has experienced a significant

impact to its supply chain given COVID-19 and the related global semiconductor chip shortage, including delays in supply chain deliveries,

extended lead times and shortages of certain key components, some raw material cost increases and slowdowns at certain production facilities.

The ongoing COVID-19 pandemic,

and mitigation efforts by governments to attempt to control its spread, has resulted in significant economic disruption and continues

to adversely impact the broader global economy.

The extent of the impact of the pandemic on our business and financial results

will depend largely on the future developments that cannot be accurately predicted at this time, including the duration of the

spread of the outbreak and COVID-19 variants, the extent and effectiveness of containment actions and vaccination campaigns,

and the impact of these and other factors on capital and financial markets and the related impact on the financial circumstances

of our employees, customers and suppliers.

In addition, the Company has experienced

a significant impact to its supply chain given COVID-19 and the related global semiconductor chip shortage, including delays in supply

chain deliveries, extended lead times and shortages of certain key components, some raw material cost increases and slowdowns at certain

production facilities.

As a result of these supply chain issues, the Company has had to increase its volume of inventory to ensure supply.

During the three-month

period ended September 30, 2021, the Company incurred supply chain constraint expenses which lowered its gross margins and decreased

its profitability.

The supply chain disruptions and the related global semiconductor chip shortage have delayed and may continue to delay

the timing of some orders and expected deliveries of the Company’s products.

If the impact of the supply chain disruptions are

more severe than the Company expects, it could result in longer lead times, inventory supply challenges and further increased costs,

all of which could result in the deterioration of the Company’s results, potentially for a longer period than currently anticipated.

During the three-month period ended March 31, 2022, the Company incurred supply chain constraint expenses which lowered its gross

margins and decreased its profitability.

The supply chain disruptions and the related global semiconductor chip shortage have

delayed and may continue to delay the timing of some orders and expected deliveries of the Company’s products.

If the impact of

the supply chain disruptions are more severe than the Company expects, it could result in longer lead times, inventory supply challenges

and further increased costs, all of which could result in the deterioration of the Company’s results, potentially for a longer

period than currently anticipated.

of the date of these unaudited consolidated financial statements, the full extent to which the COVID-19 pandemic and the related supply

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include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the consolidated

financial position of the Company as of September 30, 2021, the consolidated results of its operations for the three- and nine-month

periods ended September 30, 2020 and 2021, the consolidated change in stockholders’ equity for the three-month periods ended March

31, June 30, and September 30, 2020 and 2021 and the consolidated cash flows for the nine-month periods ended September 30, 2020 and

The results of operations for the three- and nine-month periods ended September 30, 2021 are not necessarily indicative of the

operating results for the full year.

These financial statements should be read in conjunction with the audited consolidated financial

statements and related disclosures for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K for

the year then ended.

Reclassifications

prior amounts have been reclassified to conform with the current year presentation for comparative purposes.

These reclassifications

had no effect on the previously reported results of operations.

of September 30, 2021, the Company had cash and cash equivalents of $ 34,129 and working capital of $ 49,369 .

The Company’s primary

sources of cash are cash flows from operating activities, its holdings of cash, cash equivalents and investments from the sale of its

capital stock and borrowings under its credit facility.

To date, the Company has not generated sufficient cash flows solely from operating

activities to fund its operations.

addition, PowerFleet Israel and Pointer are party to a Credit Agreement (the “Credit Agreement”) with Bank Hapoalim B.M.

(“Hapoalim”), pursuant to which Hapoalim agreed to provide PowerFleet Israel with two senior secured term loan facilities

in an aggregate principal amount of $ 30,000 (comprised of two facilities in the aggregate principal amount of $ 20,000 and $ 10,000 ) and

a five-year revolving credit facility to Pointer in an aggregate principal amount of $ 10,000 .

The proceeds of the term loan facilities

were used to finance a portion of the cash consideration payable in our acquisition of Pointer.

The proceeds of the revolving credit

facility may be used by Pointer for general corporate purposes.

The Company has not borrowed under the revolving credit facility since

its inception and does not have any borrowings as of September 30, 2021.

financial position of the Company as of March 31, 2022, the consolidated results of its operations for the three-month periods ended

March 31, 2021 and 2022, the consolidated change in stockholders’ equity for the three-month periods ended March 31, 2021

and 2022, and the consolidated cash flows for the three-month periods ended March 31, 2021 and 2022.

The results of operations

for the three-month period ended March 31, 2022 are not necessarily indicative of the operating results for the full year.

These financial

statements should be read in conjunction with the audited consolidated financial statements and related disclosures for the year ended

December 31, 2021 included in the Company’s Annual Report on Form 10-K for the year then ended.

of March 31, 2022, the Company had cash (including restricted cash) and cash equivalents of $ 20,867

and working capital of $ 40,504 .

The Company’s primary sources of cash are cash flows from operating activities, its holdings of cash, cash equivalents and investments

from the sale of its capital stock and borrowings under its credit facility.

To date, the Company has not generated sufficient cash flows

solely from operating activities to fund its operations.

addition, the Company’s subsidiaries, PowerFleet Israel Ltd.

(“PowerFleet Israel”) and Pointer, are party to

a Credit Agreement (the “Credit Agreement”) with Bank Hapoalim B.M.

(“Hapoalim”), pursuant to which Hapoalim

provided PowerFleet Israel with two senior secured term loan facilities in an aggregate principal amount of $ 30,000

(comprised of two facilities in the aggregate

principal amount of $ 20,000

and $ 10,000 )

and a five-year

revolving credit facility to Pointer in an aggregate principal amount of $ 10,000 .

The proceeds of the term loan facilities were used to finance a portion of the cash consideration payable in the Company’s acquisition

The proceeds of the revolving credit facility may be used by Pointer for general corporate purposes.

The Company has not

borrowed under the revolving credit facility since its inception and does not have any borrowings under the revolving credit facility

as of March 31, 2022.

See Note 11 for additional information.

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Pursuant to the shelf registration statement, the Company may offer to the public from

time to time, in one or more offerings, up to $60,000 of our common stock, preferred stock, warrants, debt securities, and units, or

time to time, in one or more offerings, up to $60,000 of its common stock, preferred stock, warrants, debt securities, and units, or

any combination of the foregoing, at prices and on terms to be determined at the time of any such offering.

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in connection with such offering .

May 14, 2020, the Company entered into an equity distribution agreement for an “at-the-market offering” program (the “ATM

Offering”) with Canaccord Genuity LLC (“Canaccord”) as sales agent, pursuant to which we issued and sold an aggregate

of 810 shares of common stock for approximately $ 4,200 in gross proceeds.

The Company terminated the equity distribution agreement effective

as of August 14, 2020.

February 1, 2021, the Company closed an underwritten public offering (the “Underwritten Public Offering”) of 4,428

shares of common stock (which included the full

exercise of the underwriters’ over-allotment option) for gross proceeds of approximately $ 28,800 ,

February 1, 2021, the Company closed an underwritten public offering (the “Underwritten Public Offering”) of 4,428 shares

of common stock (which included the full exercise of the underwriters’ over-allotment option) for gross proceeds of approximately

$ 28,800 , before deducting the underwriting discounts and commissions and other offering expenses.

The offer and sale of common stock in the ATM

Offering and the Underwritten Public Offering were made pursuant to the Company’s shelf registration statement.

of the recent outbreak of COVID-19, there is significant uncertainty surrounding the potential impact on our results of operations and

During 2020 we proactively took steps to increase available cash on hand including, but not limited to, targeted reductions

The offer and sale of common stock

in the Underwritten Public Offering were made pursuant to the Company’s shelf registration statement.

of the COVID-19 pandemic, there is significant uncertainty surrounding the potential impact on our results of operations and cash flows.

During 2021 and 2022, we proactively took steps to increase available cash on hand including, but not limited to, targeted reductions

in discretionary operating expenses and capital expenditures.

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borrowings under its revolving credit facility with Hapoalim will provide sufficient funds to cover capital requirements through at least

November 10, 2022.

May 10, 2023.

2 – USE OF ESTIMATES

preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the

reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements

and the reported amounts of revenues and expenses during the reporting period.

The Company continually evaluates estimates used in the

preparation of the financial statements for reasonableness.

The most significant estimates relate to measurements of fair value of assets

acquired and liabilities assumed, realization of deferred tax assets, the impairment of tangible and intangible assets, the assessment

of the Company’s incremental borrowing rate used to determine its right-of-use asset and lease liability, deferred revenue and

stock-based compensation costs.

Actual results could differ from those estimates.

of September 30, 2021, the impact of the outbreak of COVID-19 continues to unfold.

As a result, many of our estimates and assumptions

required increased judgment and carry a higher degree of variability and volatility.

As events continue to evolve and additional information

becomes available, our estimates may change materially in future periods.

GAAP requires management to make estimates and assumptions that affect

the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial

statements and the reported amounts of revenues and expenses during the reporting period.

The Company continually evaluates

estimates used in the preparation of the financial statements for reasonableness.

The most significant estimates relate to

realization of deferred tax assets, the impairment of intangible assets, and stock-based compensation costs.

Actual results could

differ from those estimates.

of March 31, 2022, the impact of COVID-19 continues to unfold.

As a result, many of our estimates and assumptions required

increased judgment and carry a higher degree of variability and volatility.

As events continue to evolve and additional information becomes

available, our estimates may change materially in future periods.

3 – CASH AND CASH EQUIVALENTS

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Corporation (FDIC) and other local jurisdictional limits.

Restricted cash at December 31, 2020 and September 30, 2021 consists of cash

held in escrow for purchases from a vendor.

Restricted cash at December 31, 2021 and March 31, 2022 consists of cash held

in escrow for purchases from a vendor.

4 - REVENUE RECOGNITION

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and revenue for these services are recognized at the time of performance when the service is provided.

Company recognizes revenue on non-recurring engineering services over time, on an input-cost method performance basis, as determined

by the relationship of actual labor and material costs incurred to date compared to the estimated total project costs.

Estimates of total

project costs are reviewed and revised during the term of the project.

Revisions to project costs estimates, where applicable, are recorded

in the period in which the facts that give rise to such changes become known.

Company also derives revenue from leasing arrangements.

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based on observable prices charged to customers or adjusted market assessment or using expected cost-plus margin when one is available.

The adjusted market assessment price is determined based on overall pricing objectives taking into consideration market conditions and

entity specific factors.

Adjusted market assessment price is determined based on overall pricing objectives taking into consideration market conditions and entity

specific factors.

Company recognizes an asset for the incremental costs of obtaining the contract arising from the sales commissions to employees because

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for services performed.

product costs consist of logistics visibility solutions equipment costs deferred in accordance with our revenue recognition policy.

Company evaluates the realizability of the carrying amount of the deferred contract costs.

To the extent the carrying value of the deferred

contract costs exceed the contract revenue, an impairment loss will be recognized.

following table presents the Company’s revenues disaggregated by revenue source for the three- and nine-months ended September

30, 2020 and 2021:

following table presents the Company’s revenues disaggregated by revenue source for the three-months ended March 31, 2021 and 2022:

OF REVENUE DISAGGREGATED BY REVENUE SOURCE

Three Months Ended

Nine Months Ended

September 30,

balances of contract assets, and contract liabilities from contracts with customers are as follows as of December 31, 2020 and September

Three Months Ended March 31,

Total revenue

balances of contract assets, and contract liabilities from contracts with customers are as follows as of December 31, 2021 and March

OF DEFERRED REVENUE

December 31, 2020

September 30, 2021

Deferred contract costs

Deferred costs

contract costs

Deferred revenue- services

Deferred revenue - products (1)

revenue - products (1)

Deferred revenue

Deferred revenue and contract liabilities - current portion

Deferred revenue and contract liabilities - less current portion

revenue and contract liabilities - less current portion

Company records deferred revenues when cash payments are received or due in advance of the Company’s performance.

For the three-

and nine-month periods ended September 30, 2020 and 2021, the Company recognized revenue of $ 2,381 and $ 6,981 , respectively, and

$ 2,547 and $ 7,767 , respectively that was included in the deferred revenue balance at the beginning of each reporting period.

Company expects to recognize as revenue these deferred revenue balances before the year 2026, when the services are performed and,

therefore, satisfies its performance obligation to the customers.

For the three-month

periods ended March 31, 2021 and 2022, the Company recognized revenue of $ 2,718

and $ 2,208, respectively,

that was included in the deferred revenue balance

at the beginning of each reporting period.

The Company expects to recognize as revenue these deferred revenue balances before the

year 2027, when the services are performed and, therefore, satisfies its performance obligation to the customers.

5 – PREPAID EXPENSES AND OTHER ASSETS

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December 31, 2021

September 30, 2021

Finance receivables, current

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Other current assets

Prepaid expenses and other

current assets

Prepaid expenses and other current assets

6 - INVENTORY

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Inventory is shown net of

a valuation reserve of $ 515 at December 31, 2020, and $ 649 at September 30, 2021.

a valuation reserve of $ 260

at December 31, 2021, and $ 301

March 31, 2022.

consist of the following:

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December 31, 2021

September 30, 2021

Work in process

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December 31, 2021

September 30, 2021

Installed products

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Leasehold improvements

Property, plant and equipment, gross

Accumulated depreciation and amortization

and amortization expense of fixed assets for the three- and nine-month periods ended September 30, 2020 was $ 777 , and $ 2,163 , respectively,

and for the three- and nine-month periods ended September 30, 2021 was $ 865 and $ 2,498 , respectively.

Property, plant and equipment, net

and amortization expense of fixed assets for the three-month periods ended March 31, 2021 and March 31, 2022 was $ 845 ,

respectively.

This includes amortization of costs

associated with computer software for the three- and nine-month periods ended September 30, 2020 of $ 128 and $ 389 , respectively, and

for the three- and nine- month periods ended September 30, 2021 of $ 106 and $ 316 , respectively.

associated with computer software for the three-month periods ended March 31, 2021 and March 31, 2022 of $ 107

respectively.

8 - INTANGIBLE ASSETS AND GOODWILL

following table summarizes identifiable intangible assets of the Company as of December 31, 2020 and September 30, 2021:

following table summarizes identifiable intangible assets of the Company as of December 31, 2021 and March 31, 2022:

OF INTANGIBLE ASSETS

September 30, 2021 (Unaudited)

Useful Lives (In Years)

March 31, 2022 (Unaudited)

Gross Carrying Amount

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Trademark and tradename

September 30, 2021, the weighted-average amortization period for the intangible assets was 9.2 years.

At September 30, 2021, the weighted-average

March 31, 2022, the weighted-average amortization period for the intangible assets was 9.1

At March 31, 2022, the weighted-average

amortization periods for customer relationships, trademarks and trade names, patents, technology, favorable contract interests and covenant

not to compete were 11.9 , 9.6 , 9.8 , 4.3 , 4.0 and 5.0 years, respectively.

expense for the three- and nine-month periods ended September 30, 2020 was $ 1,331 and $ 3,996 respectively, and for the three- and nine-month

periods ended September 30, 2021 was $ 1,282 and $ 3,879 , respectively.

Estimated future amortization expense for each of the five succeeding

fiscal years for these intangible assets is as follows:

SCHEDULE OF FINITE-LIVED INTANGIBLE ASSETS, FUTURE AMORTIZATION EXPENSE

not to compete were 11.9 ,

years, respectively.

expense for the three-month periods ended March 31, 2021 and March 31, 2022 was $ 1,299

respectively.

Estimated future amortization

expense for each of the five succeeding fiscal years for these intangible assets is as follows:

OF FINITE-LIVED INTANGIBLE ASSETS AMORTIZATION EXPENSE

Year ending December 31:

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Finite-Lived intangible

Assets, Net, Total

have been no changes in the carrying amount of goodwill from January 1, 2020 to September 30, 2021.

the nine-month period ended September 30, 2021, the Company did not identify any indicators of impairment.

have been no changes in the carrying amount of goodwill from January 1, 2021 to March 31, 2022.

the three-month period ended March 31, 2022, the Company did not identify any indicators of impairment.

9 - STOCK-BASED COMPENSATION

The Company granted options to purchase

shares of the Company’s common stock to certain executives.

The options have an exercise price that range from $ 2.85

The options will vest and become exercisable if the volume weighted average price of the Company’s common stock during a consecutive

60-day trading period (the “60 Day VWAP”) ranges between $ 10.50

and $ 21.00 .

The Company valued the market-based performance stock option awards using a Monte Carlo simulation model using a daily price forecast

over ten years until expiration utilizing Geometric Brownian Motion that considers a variety of factors including, but not limited to,

the Company’s common stock price, risk-free rate ( 1.8 %), and expected stock price volatility ( 53.9 %) over the expected life of

awards ( 10 years ).

The weighted average fair value of options granted during the period was $ 1.27 .

Stock options:

following table summarizes the activity relating to the Company’s stock options for the nine-month period ended September 30, 2021:

following table summarizes the activity relating to the Company’s market based stock options that were granted to

certain executives for the three-month period ended March 31, 2022:

OF STOCK OPTIONS ACTIVITY

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Exercisable at end of period

The following table summarizes the activity

relating to the Company’s stock options, excluding the market based stock options that were granted to certain executives,

for the three-month period ended March 31, 2022:

Average Exercise Price

Weighted-Average

Remaining Contractual Terms

Intrinsic Value

at beginning of year

Forfeited or expired

Outstanding at end of period

Exercisable at end of period

fair value of each option grant on the date of grant is estimated using the Black-Scholes option-pricing model reflecting the following

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OF FAIR VALUE STOCK OPTION ASSUMPTIONS

September 30,

Expected volatility

Expected life of options (in years)

Risk free interest rate

Dividend yield

Weighted-average fair value of options granted during year

life of options (in years)

free interest rate

Weighted-average

fair value of options granted during year

volatility is based on historical volatility of the Company’s common stock and the expected life of options is based on historical

data with respect to employee exercise periods.

Company recorded stock-based compensation expense of $ 366 and $ 1,209 for the three- and nine-month periods ended September 30, 2020,

respectively, and $ 345 and $ 1,061 , for the three- and nine-month periods ended September 30, 2021, respectively, in connection with awards

made under the stock option plans.

fair value of options vested during the nine-month periods ended September 30, 2020 and 2021 was $ 1,194 and $ 508 , respectively.

intrinsic value of options exercised during the nine-month periods ended September 30, 2020 and 2021 was $ 228 and $ 470 , respectively.

of September 30, 2021, there was approximately $ 3,089 of unrecognized compensation cost related to non-vested options granted under the

Company’s stock option plans.

That cost is expected to be recognized over a weighted-average period of 3.76 years.

Company recorded stock-based compensation expense of $ 377

for the three-month periods ended March 31,

2021 and March 31, 2022, respectively, in connection with awards made under the stock option plans.

fair value of options vested during the three-month periods ended March 31, 2021 and 2022 was $ 408

respectively.

The total intrinsic value of options

exercised during the three-month periods ended March 31, 2021 and 2022 was $ 451

and $ - 0 - ,

respectively.

of March 31, 2022, there was approximately $ 6,300

of unrecognized compensation cost related

to non-vested options granted under the Company’s stock option plans for the performance stock options that were granted to

certain executives.

That cost is expected to be recognized over a weighted-average period of 9.81

of March 31, 2022, there was approximately $ 2,982 of unrecognized compensation cost related to non-vested options granted under the Company’s

stock option plans that exclude the performance stock options.

That cost is expected to be recognized over a weighted average period

of 3.30 years.

Company estimates forfeitures at the time of valuation and reduces expense ratably over the vesting period.

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A summary of all non-vested restricted stock

for the nine-month period ended September 30, 2021 is as follows:

for the three-month period ended March 31, 2022 is as follows:

OF NON-VESTED RESTRICTED STOCK ACTIVITY

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Restricted stock, non-vested, beginning of year

Forfeited or expired

Restricted stock, non-vested, end of period

Company recorded stock-based compensation expense of $ 593 and $ 1,641 , respectively, for the three- and nine-month periods ended September

30, 2020, and $ 533 and $ 1,908 , respectively, for the three- and nine-month periods ended September 30, 2021, in connection with restricted

stock grants.

As of September 30, 2021, there was $ 3,609 of total unrecognized compensation cost related to non-vested shares.

is expected to be recognized over a weighted-average period of 2.6 years.

Company recorded stock-based compensation expense of $ 665

respectively, for the three-month periods ended

March 31, 2021 and 2022, in connection with restricted stock grants.

As of March 31, 2022, there was $ 3,330

of total unrecognized compensation cost related

to non-vested shares.

That cost is expected to be recognized over a weighted-average period of 2.97

Restricted Stock Units:

Company also grants restricted stock units (RSUs) to employees.

The following table summarizes the activity relating to the Company’s

restricted stock units for the nine-month period ended September 30, 2021:

Company also has granted restricted stock units (RSUs) to employees.

The following table summarizes the activity relating to the

Company’s restricted stock units for the three-month period ended March 31, 2022:

OF NON-VESTED RESTRICTED STOCK ACTIVITY

Weighted-Average

Number of Restricted Stock Units

Weighted-Average Grant Date Fair Value

Restricted stock units, non-vested, beginning of year

Restricted stock units, non-vested, end of period

Company recorded stock-based compensation expense of $ 33 and $ 228 , respectively, for the three- and nine-month periods ended September

30, 2020, and $ 51 and $ 152 , respectively, for the three- and nine-month periods ended September 30, 2021, in connection with the RSUs.

As of September 30, 2021, there was $ 99 total unrecognized compensation cost related to non-vested RSUs.

That cost is expected to be

recognized over a weighted-average period of 0.6 years.

Company recorded stock-based compensation expense of $ 55

respectively, for the three-month periods ended

March 31, 2021 and 2022, in connection with the RSUs.

As of March 31, 2022, there was $ 17

total unrecognized compensation cost related

to non-vested RSUs.

That cost is expected to be recognized over a weighted-average period of 0.6

10 - NET LOSS PER SHARE

loss per share for the three- and nine-month periods ended September 30, 2020 and 2021 are as follows:

loss per share for the three-month periods ended March 31, 2021 and 2022 are as follows:

OF NET LOSS PER SHARE BASIC AND DILUTED

Three Months Ended

Nine Months Ended

September 30,

Basic and diluted loss per share

17 unchanged sentences

loss, no effect is given to the participating securities because they do not share in the losses of the Company.

For the nine-month periods

ended September 30, 2020 and September 30, 2021, the basic and diluted weighted-average shares outstanding are the same, since the effect

For the three-month

periods ended March 31, 2021 and 2022, the basic and diluted weighted-average shares outstanding are the same, since the effect

from the potential exercise of outstanding stock options, conversion of preferred stock, and vesting of restricted stock and restricted

stock units totaling 12,070 and 11,939 , respectively, would have been anti-dilutive due to the loss.

stock units totaling 12,243

respectively, would have been anti-dilutive

due to the loss.

11 - SHORT-TERM BANK DEBT AND LONG-TERM DEBT

1 unchanged sentence

December 31, 2021

September 30, 2021

Short-term bank debt

March 31, 2022

Current maturities of long-term debt

Long term debt - less current maturities

connection with the Transactions, PowerFleet Israel incurred $ 30,000 in term loan borrowings on the closing date of the Transactions

(the “Closing Date”) under the Credit Agreement, pursuant to which Hapoalim agreed to provide PowerFleet Israel with two

senior secured term loan facilities in an aggregate principal amount of $ 30,000 (comprised of two facilities in the aggregate principal

amount of $ 20,000 and $ 10,000 , respectively (the “Term A Facility” and “Term B Facility”, respectively, and collectively,

the “Term Facilities”)) and a five-year revolving credit facility (the “Revolving Facility”) to Pointer in an

aggregate principal amount of $ 10,000 (collectively, the “Credit Facilities”).

On the first anniversary of the Closing Date,

the Company was required to deposit in a separate restricted deposit account the Israeli shekel (“NIS”) equivalent of $ 3,000 .

As of September 30, 2021, no amounts were outstanding under the Revolving Facility.

connection with the Transactions, PowerFleet Israel incurred $ 30,000

in term loan borrowings on the closing date

of the Transactions (the “Closing Date”) under the Credit Agreement, pursuant to which Hapoalim agreed to provide PowerFleet

Israel with two senior secured term loan facilities in an aggregate principal amount of $ 30,000

(comprised of two facilities in the aggregate

principal amount of $ 20,000

and $ 10,000 ,

respectively (the “Term A Facility” and “Term B Facility”, respectively, and collectively, the “Term Facilities”))

and a five-year

revolving credit facility (the “Revolving

Facility”) to Pointer in an aggregate principal amount of $ 10,000

(collectively, the “Credit Facilities”).

As of March 31, 2022, no amounts were outstanding under the Revolving Facility.

Credit Facilities will mature on the date that is five years from the Closing Date.

The indicative interest rate provided for the Term

Facilities in the Credit Agreement was approximately 4.73% for the Term A Facility and 5.89% for the Term B Facility.

interest rate for the Revolving Facility is, with respect to NIS-denominated loans, Hapoalim’s prime rate + 2.5%, and with respect

to US dollar-denominated loans, LIBOR + 4.6%.

In addition, the Company agreed to pay a 1% commitment fee on the unutilized and

uncancelled availability under the Revolving Facility .

The Credit Facilities are secured by the shares held by PowerFleet Israel in Pointer and by Pointer over all of its assets.

Agreement includes customary representations, warranties, affirmative covenants, negative covenants (including the following financial

covenants, tested quarterly:

Facilities in the original Credit Agreement was approximately 4.73 % for the Term A Facility and 5.89 % for the Term B Facility.

rate for the Revolving Facility is, with respect to NIS-denominated loans, Hapoalim’s prime rate + 2.5%, and with respect to US

dollar-denominated loans, LIBOR + 4.6%.

In addition, the Company agreed to pay a 1% commitment fee on the unutilized and uncancelled

availability under the Revolving Facility .

The Credit Facilities are secured by the shares held by PowerFleet Israel in Pointer and by

Pointer over all of its assets.

The original Credit Agreement includes customary representations, warranties, affirmative covenants,

negative covenants (including the following financial covenants, tested quarterly:

Pointer’s net debt to EBITDA;

Pointer’s net debt to working capital;

minimum equity of PowerFleet

net debt to working capital;

minimum equity of PowerFleet Israel;

PowerFleet Israel equity to total assets;

PowerFleet Israel net debt to EBITDA;

and Pointer EBITDA to current payments and events

The Company is in compliance with the covenants as of September 30, 2021.

PowerFleet Israel net debt

and Pointer EBITDA to current payments and events of default.

August 23, 2021, PowerFleet Israel and Pointer (the “Borrowers”) entered into an amendment (the “Amendment”),

effective as of August 1, 2021, to the Credit Agreement with Hapoalim.

The Amendment memorializes the agreements between

the Borrowers and Hapoalim regarding a reduction in the interest rates of the two Term Facilities.

Pursuant to the Amendment, commencing

as of November 12, 2020, the interest rate with respect to the Term A Facility was reduced to a fixed rate of 3.65 %

per annum and the interest rate with respect

to the Term B Facility was reduced to a fixed rate of 4.5 %

The Amendment also provides,

among other things, for (i) a reduction in the credit allocation fee on undrawn and uncancelled amounts of the Revolving Facility from

per annum, (ii) removal of the requirement

that PowerFleet Israel maintain $ 3,000 on deposit in a separate reserve fund, and (iii) modifications to certain of the affirmative and

negative covenants, including a financial covenant regarding the ratio of the Borrowers’ debt levels to Pointer’s EBITDA.

The Amendment memorializes the agreements between the Borrowers

and Hapoalim regarding a reduction in the interest rates of the two Term Facilities.

Pursuant to the Amendment, commencing as of November

12, 2020, the interest rate with respect to the Term A Facility was reduced to a fixed rate of 3.65 % per annum and the interest rate

with respect to the Term B Facility was reduced to a fixed rate of 4.5 % per annum.

The Amendment also provides, among other things, for

(i) a reduction in the credit allocation fee on undrawn and uncancelled amounts of the Revolving Facility from 1 % to 0.5 % per annum,

(ii) removal of the requirement that PowerFleet Israel maintain $ 3,000 on deposit in a separate reserve fund, and (iii) modifications

to certain of the affirmative and negative covenants, including a financial covenant regarding the ratio of the Borrowers’ debt

levels to Pointer’s EBITDA.

The Company is in compliance with the covenants as of March 31, 2022.

connection with the Credit Facilities, the Company incurred debt issuance costs of $ 742 .

For the three- and nine-month periods ended

September 30, 2021, amortization of the debt issuance costs was $ 68 and $ 223 , respectively.

The Company recorded charges of $ 371 and

$ 1,114 for the three- and nine-month periods ended September 30, 2020, respectively, and $ 268 and $ 821 for the three- and nine-month

periods ended September 30, 2021, respectively, to interest expense on its consolidated statements of operations related to interest

expense and amortization of debt issuance costs associated with the Credit Facilities.

maturities of the long term debt as of September 30, 2021 are as follows:

For the three-month periods ended March 31,

2021 and 2022, amortization of the debt issuance costs was $ 83 and $ 64 , respectively.

The Company recorded charges of $ 277 and $ 236 for

the three-month periods ended March 31, 2021 and 2022, respectively, to interest expense on its consolidated statements of operations

related to interest expense and amortization of debt issuance costs associated with the Credit Facilities.

maturities of the long-term debt as of March 31, 2022 are as follows:

SCHEDULE OF MATURITIES OF LONG TERM DEBT

Sep, 30, 2021

Year ending December 31:

April - December 2022

Long term debt

6 unchanged sentences

December 31, 2021

September 30, 2021

Accounts payable

10 unchanged sentences

shipped and is included in accounts payable and accrued expenses in the Condensed Consolidated Balance Sheets as of December 31, 2021

and September 30, 2021.

following table summarizes warranty activity for the nine-month periods ended September 30, 2020 and 2021:

SCHEDULE OF PRODUCT WARRANTY LIABILITY

Nine Months Ended September

and March 31, 2022.

following table summarizes warranty activity for the three-month periods ended March 31, 2021 and 2022:

OF PRODUCT WARRANTY LIABILITY

Three Months Ended March

Accrued warranty reserve, beginning of year

3 unchanged sentences

Accrued warranty reserve, end of period (a)

non-current accrued warranty included in other long-term liabilities at December 31, 2020 and September 30, 2021 of $ 102

and $ 180 , respectively.

non-current accrued warranty included in other long-term liabilities at December 31, 2021 and March 31, 2022 of $ 187

respectively.

13 - STOCKHOLDERS’ EQUITY

4 unchanged sentences

Redeemable preferred stock

Company is authorized to issue 150 shares of preferred stock, par value $ 0.01 per share of which 100 shares are designated Series A Preferred

Convertible Stock (“Series A Preferred Stock”) and 50 shares are undesignated.

Company is authorized to issue 150

shares of preferred stock, par value $ 0.01

per share of which 100

shares are designated Series A Convertible

Preferred Stock (“Series A Preferred Stock”) and 50

shares are undesignated.

A Preferred Stock

connection with the completion of the Transactions, on October 3, 2019, the Company issued 50 shares of Series A Preferred Stock to ABRY

Senior Equity V, L.P., ABRY Senior Equity Co-Investment Fund V, L.P and ABRY Investment Partnership, L.P.

connection with the completion of the Transactions, on October 3, 2019, the Company issued 50

shares of Series A Preferred Stock to ABRY Senior

Equity V, L.P., ABRY Senior Equity Co-Investment Fund V, L.P and ABRY Investment Partnership, L.P.

(the “Investors”).

For the nine-month periods ended September 30, 2020 and September 30, 2021, the Company issued 1 and - 0 - additional shares of Series

A Preferred Stock.

Series A Preferred Stock has a liquidation preference equal to the greater of (i) the original issuance price of $ 1,000.00 per share,

subject to certain adjustments (the “Series A Issue Price”), plus all accrued and unpaid dividends thereon (except in the

case of a deemed liquidation event, then 150% of such amount) and (ii) the amount such holder would have received if the Series A Preferred

Stock had converted into common stock immediately prior to such liquidation.

of Series A Preferred Stock are entitled to receive cumulative dividends at a minimum rate of 7.5 % per annum (calculated on the basis

of the Series A Issue Price), quarterly in arrears.

The dividends are payable at the Company’s election, in kind, through the issuance

of additional shares of Series A Preferred Stock, or in cash, provided no dividend payment failure has occurred and is continuing and

that there has not previously occurred two or more dividend payment failures.

Commencing on the 66-month anniversary of the date on which

any shares of Series A Preferred Stock are first issued (the “Original Issuance Date”), and on each monthly anniversary thereafter,

the dividend rate will increase by 100 basis points, until the dividend rate reaches 17.5 % per annum, subject to the Company’s

right to defer the increase for up to three consecutive months on terms set forth in the Company’s Amended and Restated Certificate

of Incorporation (the “Charter”).

During the nine-month period ended September 30, 2021, the Company paid dividends in the

amounts of $ 3,085 to the holders of the Series A Preferred Stock.

As of September 30, 2021, dividends in arrears were $- 0 -.

the three-month periods ended March 31, 2021 and March 31, 2022, the Company issued - 0 -

additional shares of Series A Preferred Stock.

Series A Preferred Stock has a liquidation preference equal to the greater of (i) the original issuance price of $ 1,000.00

share, subject to certain adjustments (the “Series A Issue Price”), plus all accrued and unpaid dividends thereon (except

in the case of a deemed liquidation event, then 150% of such amount), and (ii) the amount such holder would have received if the

Series A Preferred Stock had converted into common stock immediately prior to such liquidation.

of Series A Preferred Stock are entitled to receive cumulative dividends at a minimum rate of 7.5 %

per annum (calculated on the basis of the Series

A Issue Price), quarterly in arrears.

The dividends are payable at the Company’s election, in kind, through the issuance of additional

shares of Series A Preferred Stock, or in cash, provided no dividend payment failure has occurred and is continuing and that there has

not previously occurred two or more dividend payment failures.

Commencing on the 66-month anniversary of the date on which any shares

of Series A Preferred Stock are first issued (the “Original Issuance Date”), and on each monthly anniversary thereafter,

the dividend rate will increase by 100 basis points, until the dividend rate reaches 17.5 %

per annum, subject to the Company’s right

to defer the increase for up to three consecutive months on terms set forth in the Company’s Amended and Restated Certificate of

Incorporation (the “Charter”).

During the three-month period ended March 31, 2022, the Company paid dividends in the

to the holders of the Series A Preferred Stock.

As of March 31, 2022, dividends in arrears were $- 0 -.

Consent Rights

39 unchanged sentences

an amount per share equal to the Redemption Price.

June 9, 2021, we entered into a preferred stock redemption right agreement (the “Redemption Right Agreement”) with the Investors,

pursuant to which we had the right to redeem 10 shares of Series A Preferred Stock at a price of $ 1,450 per share plus

all accrued and unpaid dividends, to be paid in cash.

The Company did not exercise its redemption right and the Redemption Right Agreement

automatically terminated on October 1, 2021.

14 - ACCUMULATED OTHER COMPREHENSIVE LOSS

1 unchanged sentence

income (loss) includes net loss and foreign currency translation gains and losses.

accumulated balances for each classification of other comprehensive loss for the nine-month period ended September 30, 2021 are as follows:

accumulated balances for each classification of other comprehensive loss for the three-month period ended March 31, 2022 are as follows:

SCHEDULE OF ACCUMULATED OTHER COMPREHENSIVE LOSS

Foreign currency translation adjustment

Accumulated other comprehensive income

Accumulated other comprehensive income/(loss)

Balance at January 1, 2022

Net current period change

Balance at September 30, 2021

accumulated balances for each classification of other comprehensive loss for the nine-month period ended September 30, 2020 are as follows:

Foreign currency

translation adjustment

Accumulated other comprehensive income

Balance at March 31, 2022

accumulated balances for each classification of other comprehensive loss for the three-month period ended March 31, 2021 are as follows:

Foreign currency translation adjustment

Accumulated other comprehensive income/(loss)

Balance at January 1, 2021

Net current period change

Balance at September 30, 2020

Company’s reporting currency is the U.S dollar (USD).

For businesses where the majority of the revenues are generated in USD or

linked to the USD and a substantial portion of the costs are incurred in USD, the Company’s management believes that the USD is

the primary currency of the economic environment and thus their functional currency.

Balance at March 31, 2021

Company’s reporting currency is the U.S.

dollar (USD).

For businesses where the majority of the revenues are generated in

USD or linked to the USD and a substantial portion of the costs are incurred in USD, the Company’s management believes that the

USD is the primary currency of the economic environment and thus their functional currency.

Due to the fact that Argentina has been determined

7 unchanged sentences

are recognized in stockholders’ equity as a component of accumulated other comprehensive income (loss).

Net translation losses

from the translation of foreign currency financial statements of $ ( 1,942 ) and $ ( 423 ) at September 30, 2020 and 2021, respectively, are

included in comprehensive loss in the Consolidated Statement of Changes in Stockholders’ Equity.

Net translation gains/(losses)

from the translation of foreign currency financial statements of $ 1,334

at March 31, 2021 and 2022, respectively, are included in comprehensive loss in the Consolidated Statement of Changes in Stockholders’

currency translation gains and losses related to operational expenses denominated in a currency other than the functional currency are

included in determining net income or loss.

Foreign currency translation (losses) gains for the three- and nine-month periods ended September

30, 2020 of $ 296 and $ 155 , respectively, and for the three- and nine-month periods ended September 30, 2021 of $ ( 345 ) and $ ( 139 ) respectively,

are included in selling, general and administrative expenses in the Consolidated Statement of Operations.

Foreign currency translation

gains (losses) related to long-term debt of $ ( 261 ) and $ 151 , respectively, for the three- and nine-month periods ended September 30,

2021 are included in interest expense in the Consolidated Statement of Operations.

Foreign currency translation (losses) gains for the three-month periods ended March 31, 2021

and 2022 of $ 150 and $( 203 ), respectively, are included in selling, general and administrative expenses in the Consolidated Statement

of Operations.

Foreign currency translation gains (losses) related to long-term debt of $ 1,027 and $ 544 , respectively, for the three-month

periods ended March 31, 2021 and 2022 are included in interest expense in the Consolidated Statement of Operations.

15 – SEGMENT INFORMATION

2 unchanged sentences

SCHEDULE OF REVENUES AND LONG LIVED ASSETS BY GEOGRAPHICAL REGION

Three Months Ended

September 30,

Nine Months Ended

September 30,

Three Months Ended March 31,

United States

Total revenues

December 31, 2021

September 30, 2021

March 31, 2022

Long lived assets by geographic region:

United States

Long lived assets

16 - INCOME TAXES

6 unchanged sentences

changes in these factors.

Company’s global ETR for the nine months ended September 30, 2020 and 2021 was ( 21.6 )%

and ( 11.9 )% ,

respectively.

For the nine months ended September 30, 2020 and 2021 the effective tax rate differs from the statutory tax rates primarily

due to the mix of domestic and foreign earnings amongst taxable jurisdictions and recorded valuation allowances to fully reserve against

net operating loss carryforwards and other deferred tax assets in the United States and non-Israel foreign jurisdictions where realization

of such tax attributes and deductible temporary differences remains uncertain at this time.

March 27, 2020, the President of the United States signed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”)

into law providing certain relief as a result of the COVID-19 pandemic.

The CARES Act, among other things, includes provisions relating

to the net operating loss carryback periods, alternative minimum tax credit refunds, modification to the net interest deduction limitations

and technical corrections to tax depreciation methods for qualified improvement property.

The CARES Act did not have a material impact

on the Company’s consolidated financial statements.

OF INCOME BEFORE INCOME TAX DOMESTIC AND FOREIGN

Months Ended March 31,

pre-tax book income/(loss)

income before income (loss) taxes

tax benefit (expense)

income (loss) after taxes

For the three-month periods ended March

31, 2021 and 2022, the effective tax rate differed from the statutory tax rates primarily due to the mix of domestic and

foreign earnings amongst taxable jurisdictions, recorded valuation allowances to fully reserve against deferred tax assets

in non-Israel jurisdictions and certain discrete items.

March 11, 2021, the President of the United States signed the American Rescue Plan Act (the “ARPA”) into law as a continuing

10 unchanged sentences

Lease costs associated with the short-term leases are included in selling, general and administrative expenses on the Company’s

condensed consolidated statements of operations during the three- and nine- months ended September 30, 2020 and 2021.

condensed consolidated statements of operations during the three-months ended March 31, 2021 and 2022.

of lease expense are as follows:

4 unchanged sentences

SCHEDULE OF CASH FLOW INFORMATION AND NON-CASH ACTIVITY OF OPERATING LEASES

Nine Months Ended

September 30,

Non-cash activity:

3 unchanged sentences

SCHEDULE OF WEIGHTED AVERAGE REMAINING LEASE TERM AND DISCOUNT RATE

September 30, 2021

March 31, 2022

Weighted-average remaining lease term (in years)

Weighted-average discount rate

maturities of operating lease liabilities outstanding as of September 30, 2021 are as follows:

maturities of operating lease liabilities outstanding as of March 31, 2022 are as follows:

SCHEDULED MATURITIES OF OPERATING LEASE LIABILITIES

Sep, 30, 2021

Year ending December 31:

October - December 2021

April - December 2022

Total lease payments

11 unchanged sentences

SCHEDULE OF FAIR VALUE OF FINANCIAL INSTRUMENTS

September 30, 2021

March 31, 2022

Carrying Amount

1 unchanged sentence

19 - CONCENTRATION OF CUSTOMERS

the nine-month periods ended September 30, 2020 and 2021, there were no customers who generated revenues greater than 10% of the Company’s

the three-month periods ended March 31, 2021 and 2022, there were no customers who generated revenues greater than 10% of the Company’s

consolidated total revenues or generated greater than 10% of the Company’s consolidated accounts receivable.

13 unchanged sentences

of interest and penalty, totaling $ 1,357

as of September 30, 2021.

as of March 31, 2022.

The Company is vigorously

6 unchanged sentences

and for this reason the Company has not made any provision.

In July 2015, Pointer Brazil received a tax

deficiency notice alleging that the services provided by Pointer Brazil should be classified as “telecommunication services”

and therefore Pointer Brazil should be subject to the state value-added tax.

The aggregate amount claimed to be owed under the notice

was approximately $ 10,585 as of June 30, 2021.

On August 14, 2018, the lower chamber of the State Tax Administrative Court in São

Paulo rendered a decision that was favorable to Pointer Brazil in relation to the ICMS demands, but adverse in regards to the clerical

obligation of keeping in good order a set of ICMS books and related tax receipts.

The remaining claim after this administrative decision

July 2015, Pointer Brazil received a tax deficiency notice alleging that the services provided by Pointer Brazil should be classified

as “telecommunication services” and therefore Pointer Brazil should be subject to the state value-added tax.

The aggregate

amount claimed to be owed under the notice was approximately $ 12,392

as of March 31, 2022.

On August 14, 2018,

the lower chamber of the State Tax Administrative Court in São Paulo rendered a decision that was favorable to Pointer Brazil

in relation to the ICMS demands, but adverse in regards to the clerical obligation of keeping in good order a set of ICMS books and related

tax receipts.

The remaining claim after this administrative decision is $ 189 .

The state has the opportunity to appeal to the higher chamber of the State Tax Administrative Court.

The Company’s legal

counsel is of the opinion that it is probable that the Company will prevail, and that no material costs will arise in respect to these

For this reason, the Company has not made any provision.

The Company’s legal counsel

is of the opinion that the chance of loss is not probable and that no material costs will arise in respect to these claims.

For this reason, the Company

has not made any provision.

21 - RECENT ACCOUNTING PRONOUNCEMENTS

December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2019-12, Simplifying the Accounting for Income Taxes which removes certain exceptions related to the approach for intraperiod tax allocation,

the methodology for calculating income taxes in an interim period, the recognition of deferred tax liabilities for outside basis differences

and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill.

The guidance is generally effective

as of January 1, 2021, with early adoption permitted.

The adoption of this standard did not have an impact on the Company’s consolidated

financial statements.

June 2016, the FASB issued ASU No.

8 unchanged sentences

effective for fiscal years beginning after December 15, 2022.

The Company is currently evaluating the impact of this ASU on the consolidated

financial statements.

The Company is currently evaluating the impact of this ASU on the

consolidated financial statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements