What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-05-10 compared with 2021-11-10 · 285 added, 386 removed, 187 unchanged (78% of the section changed)

49 unchanged sentences

outbreak of the novel coronavirus, COVID-19, and its impact on the Company’s business;

and other risks detailed from time

to time in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including the Company’s

annual report on Form 10-K for the year ended December 31, 2020 and this quarterly report on Form 10-Q for the three months ended

September 30, 2021.

and other risks detailed from time to time

in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including the Company’s annual

report on Form 10-K for the year ended December 31, 2021 and this quarterly report on Form 10-Q for the three months ended March

may be other factors of which the Company is currently unaware or which it currently deems immaterial that may cause its actual results

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(together with its subsidiaries, “PowerFleet,” the “Company,” “we,” “our” or “us”)

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, trailers, containers, cargo, and light vehicles

and heavy truck fleets.

October 3, 2019, PowerFleet completed the acquisition of Pointer Telocation Ltd.

(the “Transactions”), as a result

of which I.D.

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.

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

enterprise assets that improve operational efficiencies.

are headquartered in Woodcliff Lake, New Jersey, with offices located around the globe.

patented technologies address the needs of organizations to monitor and analyze their assets to improve safety, increase efficiency and

productivity, reduce costs, and improve profitability.

Our patented technologies address the needs

of organizations to monitor and analyze their assets to improve safety, increase efficiency and productivity, reduce

costs, and improve profitability.

Our offerings are sold under the global brands PowerFleet, Pointer and Cellocator.

deliver advanced mobility solutions that connect assets to increase visibility operational efficiency and profitability.

Across our vertical

markets we differentiate ourselves by developing mobility platforms that collect data from unique sensors and by being OEM agnostic and

helping mixed fleets view and manage their assets homogeneously.

All of our solutions are paired with software as a service, or SaaS

and analytics platforms to provide an even deeper level of insights and understanding of how assets are utilized and how drivers and

operators operate those assets.

These insights include a full set of operational Key Performance Indicators, or KPI’s, to drive

operational and strategic decisions.

have an established history of IoT device development and innovation creating devices that can withstand harsh and rugged environments.

With 54 patents and patent applications and 25 years’ experience, we believe we are well positioned to evolve our offerings for

even greater value to customers through our cloud-based applications for unified operations.

deliver advanced data solutions that connect mobile assets to increase visibility, operational efficiency and profitability.

spectrum of vertical markets, we differentiate ourselves by developing mobility platforms that collect data from unique sensors.

because we are original equipment manufacturer (“OEM”) agnostic, we help organizations view and manage their mixed

assets homogeneously.

All of our solutions are paired with software as a service (“SaaS”) and analytics platforms

to provide an even deeper level of insights and understanding of how assets are utilized and how drivers and operators operate those

These insights include a full set of Key Performance Indicators (“KPI’s”) to drive operational and strategic

Our customers typically get a return on their investment in less than 12 months from deployment.

analytics platform and machine learning capabilities, which are integrated into our customers’ management systems, are designed

to provide a single, integrated view of asset and operator activity across multiple locations that provides enterprise-wide benchmarks

and peer-industry comparisons.

We look for analytics, as well as the data contained therein, to differentiate us from our competitors,

make a growing contribution to revenue, add value to our solutions, and help keep us at the forefront of the wireless asset management

markets we serve.

market and sell our wireless mobility solutions to a wide range of customers in the commercial and government sectors.

enterprise software applications have machine learning capabilities and are built to integrate with our customers’ management systems

to provide a single, integrated view of asset and operator activity across multiple locations while providing real-time enterprise-wide

benchmarks and peer-industry comparisons.

We look for analytics, as well as the data contained therein, to differentiate us from our

competitors, adding significant value to customers’ business operations, and helping to contribute to their bottom line.

Our solutions also feature open application programming interfaces (“API’s”) for additional integrations and development

to boost other enterprise management systems and third-party applications.

market and sell our connected IoT data solutions to a wide range of customers in the commercial and government sectors.

Our customers

operate in diverse markets, such as automotive manufacturing, retail, food and grocery distribution pharmaceutical and medical distribution,

logistics, shipping, freight transportation, heavy industry, wholesale distribution, manufacturing, aerospace and vehicle rental.

for Industrial (part of our Supply Chain Solutions Product Group)

PowerFleet for Industrial solutions are designed to provide on-premise or in-facility asset and operator management, monitoring, and

visibility for industrial trucks such as forklifts, man-lifts, tuggers and ground support equipment at airports.

These solutions are

broken down into five groups:

Essence, Expert, Enterprise, Safety, and Aviation and utilize a variety of communications capabilities

such as Bluetooth ®, WiFi, and proprietary RF.

is designed for low density fleets.

It consists of an easy-to-install, out-of-the-box-ready hardware and software solution.

provides electronic record keeping and safety checklists and is automated.

There is no need for IT departments with this solution,

and it is designed to keep small business operations regulatory compliant, efficient, and cost effective.

is designed for medium density fleets.

It is designed for multi-site visibility, reporting, and analytics.

It provides regulatory

compliance and live events by leveraging a company’s existing Wi-Fi network.

It delivers centralized recording, management

reports & robust graphing.

is for high density fleets with a global footprint.

It improves safety and provides global visibility, advanced analytics, and

drives regulatory compliance and live event reporting by leveraging a company’s Wi-Fi network.

consists of a broad range of equipment for powered industrial vehicles such as lights and alarms, camera systems, vehicle speed

throttles, seatbelt systems, digital speedometers, weighing devices, safety systems, and anti-theft solutions.

enables visibility into airport ramp personnel and assets through real-time visibility and reporting, access control, and geo-fenced

for Logistics (part of our Supply Chain Solutions Product Group)

PowerFleet for Logistics solutions are designed to provide bumper-to-bumper asset management, monitoring, and visibility for over-the-road

based assets (heavy trucks, dry-van trailers, refrigerated trailers, shipping containers, etc.) and their associated cargo.

These systems

provide mobile-asset tracking and condition-monitoring solutions to meet the transportation market’s desire for greater visibility,

safety, security, and productivity throughout global supply chains.

leveraging a combination of cellular, Bluetooth ®, and satellite communications and web-based data management technologies, our Logistics

Visibility product family provides shippers and carriers with tools to better manage their tractors, drivers, trucks, refrigerated (Reefer)

trailers, dry van trailers, chassis and container fleets.

Our Logistics Visibility solutions enable quick access to actionable intelligence

that results in better utilization, control, safety, compliance, and security of our customers’ freight-carrying assets.

Logistics Visibility solutions consist of a combined hardware and software as a service solution that are designed to focus on providing

robust IoT monitoring, measuring, and management of the following asset types:

Class 7-8 Vehicles):

Our solutions sit in the “cab” of the truck.

They are designed to be regulatory compliant

Electronic Logging Devices or ELDs) solutions that provide real-time position reports, workflow management, inspection reporting,

engine performance information, two-way communication with the driver, and full Transportation Management System (TMS) integration.

Van Trailers:

By using asset tracking technology that leverages solar-powered super-capacitors and long-lasting batteries, along

with options connected to external power, we offer a variety of mobility platforms that vary by power source and price to provide

extended years of maintenance-free asset tracking and IoT performance.

Our FreightCAM cargo sensor camera takes actual high definition

pictures of the cargo in the dry van trailer and using machine learning can determine cube, floor space, how the trailer is loaded,

identify load shifts, and help our customer’s customer know how to unload the cargo.

Trailers / Containers:

Our reefer mobility platform is integrated with all major refrigeration unit brands and sensors to allow

complete remote two-way control combined with powerful dashboard and in easy-to-read reports on the status of cold chain products

Our system allows our customers to proactively manage their reefer loads versus other solutions that merely monitor temperature.

We provide multiple interoperable mobility platform options, which vary by power source and price, for continuous real-time visibility

of these assets while in transit, as well as more accurate arrival and departure information to better plan supply chain resource

Our new weight-on-axle sensor and our algorithms for determining if the chassis has a container on it or not enable our

customers to better optimize chassis utilization and improve their billing for chassis rentals.

We deliver full visibility of containers from the moment they are moved from the yard to the instant they reach their

final destination to increase container utilization and reduce transit cycle times.

Our container solutions also integrate with our

FreightCAM enabling our container customers to get the same benefits as our dry van customers.

Images, door sensors, and ‘cargo-area’ environmental sensors (temperature, humidity, shock, etc.) for true freight

visibility, root cause analysis for claims - including location and visual proof.

We have unique and patent pending machine learning

processes that can determine volume, load status, shifts in transit and help consignees know how to plan for unloading cargo.

increase asset utilization, our Logistics Visibility solutions can improve overall operating efficiency, increase revenue per mile, reduce

claims and claims processing times, and reduce the number of assets needed by delivering our customers.

This is achieved through proving

such things as two-way integrated workflows for drivers, control assignments and work change, Electronic Driver Logging (ELD) and inspections

for regulatory compliance, monitoring of asset pools and geofence violations, and various reporting insights that flag under-utilized

assets, the closest assets, and alerts on exceeding the allotted time for loading and unloading.

better control remote assets, our Logistics Visibility solutions provide our customers with technology that enables the identification

of a change in cargo status, geo-fencing alerts when an asset is approaching or leaving its destination, and on-board intelligence utilizing

a motion sensor and proprietary logic that identifies the beginning of a drive and the end of a drive.

to help improve asset and cargo security, our Logistics Visibility solutions allow our customers to enable things such as asset lockdown

with automated e-mail or text message, emergency tracking of assets (higher frequency of reports) if theft is expected, geo-fencing alerts

when an asset enters a prohibited geography or location, and near real-time sensors that alert based on changes in temperature and shock,

among other things.

for Vehicles (includes automotive, rental, smaller service and delivery vans)

PowerFleet for Vehicles solutions are designed both to enhance the vehicle fleet management process, whether it’s a rental car,

a private fleet, or automotive original equipment manufacturer, or OEM, partners.

We achieve this by providing critical information that

can be used to increase revenues, reduce costs and improve customer service.

example, our rental fleet management system automatically uploads vehicle identification number, mileage and fuel data as a vehicle enters

and exits the rental lot, which can significantly expedite the rental and return processes for travelers, and provide the rental company

with more timely inventory status, more accurate billing data that can generate higher fuel-related revenue, and an opportunity to utilize

customer service personnel for more productive activities, such as inspecting vehicles for damage and helping customers with luggage.

operate in diverse markets, such as manufacturing, automotive manufacturing, wholesale and retail, food and grocery distribution, pharmaceutical

and medical distribution, construction, mining, utilities, aerospace, vehicle rental, as well as logistics, shipping, transportation,

and field services.

Traditionally, these businesses have relied on manual, often paper-based, processes or on-premise legacy software

to operate their high-value assets, manage workforce resources, and distributed sites;

and face environmental,

safety, and other regulatory requirements.

In today’s landscape, it is crucial for these businesses to invest in solutions that

enable easy analysis and sharing of real-time information.

provide critical actionable information that powers unified operations throughout organizations.

We are solving the challenge of inefficient

data collection, real-time visibility, and analysis that leads to transformative business operations.

Our SaaS cloud-based applications

take data from our IoT devices and ecosystem of third-party and partner applications to present actionable information for customers

to increase efficiencies, improve safety and security, and increase their profitability in easy-to-understand reports, dashboards, and

real-time alerts.

Applications of our IoT Solutions:

Company provides real-time intelligence for organizations with high-value assets allowing them to make informed decisions and ultimately

improve their operations, safety, and bottom line.

Our applications enable organizations to capture IoT data from various types of assets

with devices and sensors creating a holistic view for analysis and action.

core applications our IoT solutions address include:

Organizations with expensive assets such as vehicles, machinery, or equipment need to keep track of where the assets

are located, monitor for misuse, and understand how and when assets are being used.

By having complete visibility of their assets, customers

can improve security, utilization and customer service.

In addition, our visibility solutions help with personnel workflows and resource

management, freight visibility through load status, equipment availability status, dwell and idle time, geofencing, two-way temperature

control and management, multizone temperature monitoring, arrival and departure times, and supply chain allocation.

Businesses must comply with government regulations and provide proof of compliance, which is commonly an onerous

process to enforce and maintain.

Our solutions provide critical data points and reports to help customers stay within compliance, avoid

fines for non-compliance, and automate the reporting process.

We deliver real-time position reports, hours-of-service, temperature monitoring

and control, electronic safety checklists, workflow management, controlling vehicle access to only authorized operators, inspection reports,

and history logs of use.

Our applications are designed to provide asset and operator management, monitoring, and visibility for safer environments.

Our solutions allow our customers to monitor their fleet of vehicles on various parameters, including but not limited to, vehicle location,

speed, engine fault codes, driver behavior, eco-driving, and ancillary sensors and can receive reports and alerts, either automatically

or upon request wirelessly via the internet, email, mobile phone or an SMS.

In addition, our dash camera provides critical video capture

that can be used to help exonerate drivers when in accidents or help bolster training and coaching programs of employees.

We also offers

preventative solutions such as safety warning products to alert vehicle operators of objects or pedestrians in their pathway to prevent

accidents, injuries, and damage.

Our analytics platform features dashboards with KPIs and can help manager identify patterns, trends

and outliers that can be used as flags for interventions.

Operational Efficiency & Productivity:

To increase utilization of mobile assets, our solutions enable the identification

of a change in status, real-time location, geo-fencing alerts when an asset is approaching or leaving its destination, cargo status,

and on-board intelligence utilizing a motion sensor and proprietary logic that identifies the beginning of a drive and the end of a drive.

Having this information enables customers to increase capacity, speed of service, right-size their fleets, and improve communication

internally and with customers.

In addition, customers can reduce revenue per mile, reduce claims and claims processing times, and reduce

the number of assets needed.

This is achieved through proving such things as two-way integrated workflows for drivers, control assignments

and work change, Electronic Driver Logging (“ELD”) and automated record keeping for regulatory compliance, monitoring

of asset pools and geofence violations, and various reporting insights that flag under-utilized assets, the closest assets, and alerts

on dwell time and exceeding the allotted time for loading and unloading.

help customers to automate processes and increase productivity of their employees.

Our applications enable customers to determine where

operators are assigned and can temporarily reassign them based on peak needs, evaluate any disparity in the amount employees are paid

compared to the time they actually spend operating a vehicle.

Our applications help answer the question of why does it take some employees

longer than others to do specific tasks, where to focus labor resources, and how to forecast vehicles and operators needed for future

addition, for our rental car vertical, our applications automatically upload vehicle identification number, mileage and fuel data as

a vehicle enters and exits the rental lot, which can significantly expedite the rental and return processes for travelers, and provide

the rental company with more timely inventory status, more accurate billing data that can generate higher fuel-related revenue, and an

opportunity to utilize customer service personnel for more productive activities, such as inspecting vehicles for damage and helping

customers with luggage.

solution for “car sharing” permits a rental car company to remotely control, track and monitor their rental vehicles wherever

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our customers with a variety of make-model-years in their fleet, we have developed an unmatched library of certified vehicle code interfaces

through our second-generation On-Board Diagnostics, or OBD-II, industry standard.

Our patented fleet management system helps fleet owners

improve asset utilization, reduce capital costs, and cut operating expenses, such as vehicle maintenance or service and support.

fleet management solutions allow our customers to monitor their fleet vehicles using a web-based application that can monitor various

parameters, including but not limited to, vehicle location, speed, engine fault codes, driver behavior, eco-driving, and ancillary sensors

and can receive reports and alerts, either automatically or upon request wirelessly via the internet, email, mobile phone or an SMS.

also provide stolen vehicle retrieval, or SVR, services, predominantly in Israel.

Most of the SVR products used to provide our SVR services

are mainly sold to (i) local car dealers and importers that in turn sell the products equipped in the vehicle to the end users who purchase

the SVR services directly from us, or (ii) leasing companies which purchase our SVR services in order to secure their own vehicles.

addition, in order to increase the added value services for our car dealer customers and end users, we have developed a connected car

solution which we provide based on the car infotainment system, which as of the date of this report, is offered by us in Israel only.

While the connected car solution enables the car dealer to preserve continuance relationship with the end users, it provides the end

users with a friendlier and richer user interface and enables us to expand our consumer target market to vehicles which do not require

SVR services.

through our second-generation On-Board Diagnostics (“OBD-II”), industry standard.

Our patented fleet management system helps

fleet owners improve asset utilization, reduce capital costs, and cut operating expenses, such as vehicle maintenance or service and

Our solutions allow our customers to reduce theft and improve inventory management.

Customers can lockdown their assets

with automated e-mail or text message alerts, emergency tracking of assets (higher frequency of reports) if theft is expected, geo-fencing

alerts when an asset enters a prohibited geography or location, and near real-time sensors that alert based on changes in temperature

and shock, among other things.

We also provide stolen vehicle retrieval (“SVR”) services.

Most of the SVR products used to

provide our SVR services are mainly sold to (i) local car dealers and importers that in turn sell the products equipped in the vehicle

to the end users who purchase the SVR services directly from us, or (ii) leasing companies which purchase our SVR services in order to

secure their own vehicles.

enable our customers to improve asset utilization, reduce capital costs, and cut operating expenses, such as vehicle maintenance or service

Our solutions provide engine performance, machine diagnostics, fuel consumption, and battery life to improve preventative

maintenance scheduling, increase uptime, and gain a longer service life of equipment.

Through our software applications, customers can

optimize capacity, analyze resource allocation, and improve utilization of assets to reduce capital expenses such as purchasing new or

leasing additional equipment.

Our applications provide root cause analysis for any cargo claims and helps with exoneration of drivers

in accidents via dash camera visibility.

and Machine Learning

analytics platforms provide our customers with a holistic view of their asset activity across their enterprise.

For example, in our PowerFleet

for Logistics solutions, our image machine learning system allows us to process images from our freight camera and other sources and

identify key aspects of operations and geospatial information such as location, work being accomplished, type of cargo, how cargo is

loaded and if there are any visible issues such as damage.

cloud-based software applications provide a single, integrated view of industrial asset activity across multiple locations, generating

enterprise-wide benchmarks, peer-industry comparisons, and deeper insights into asset operations.

This enables management teams to make

more informed, effective decisions, raise asset performance standards, increase productivity, reduce costs, and enhance safety.

For example, our image

machine learning system allows us to process images from our freight camera and other sources and identify key aspects of operations

and geospatial information such as location, work being accomplished, type of cargo, how cargo is loaded and if there are any visible

issues such as damage.

Performance Indicators & Benchmarks

cloud-based software applications provide a single, integrated view of asset activity across multiple locations, generating enterprise-wide

benchmarks, peer-industry comparisons, and deeper insights into asset operations.

In addition, our customers can set real-time alerts

for exception-based reporting or critical activity that needs immediate attention.

This enables management teams to make more informed,

effective decisions, raise asset performance standards, increase productivity, reduce costs, and enhance safety.

Specifically,

our analytics platforms allow users to quantify best-practice enterprise benchmarks for industrial asset utilization and safety, reveal

variations and inefficiencies in asset activity across both sites and geographic regions, or identify opportunities to eliminate or reallocate

assets, to reduce capital and operating costs.

our analytics platforms allow users to quantify best-practice enterprise benchmarks for asset utilization and safety, reveal variations

and inefficiencies in asset activity across both sites and geographic regions, or identify opportunities to eliminate or reallocate assets,

to reduce capital and operating costs.

We provide an extensive set of decision-making tools and a variety of standard and customized

reports to help businesses improve overall operations.

look for analytics and machine learning to make a growing contribution to drive platform and SaaS revenue, further differentiate our

offerings and add value to our solutions and help keep us at the forefront of the wireless mobility markets we serve, although there

can be no assurance if and to what extent analytics will do so.

We also use our analytics platform for our own internal platform quality

offerings and add value to our solutions.

We also use our analytics platform for our own internal platform quality control.

We provide the use of our systems as a remotely hosted service, with the system server and application software residing

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time and materials basis.

Support and Consulting Services .

We have developed a framework for the various phases of system training and support that offer our

customers both structure and flexibility.

Major training phases include hardware installation and troubleshooting, software installation

and troubleshooting, “train-the-trainer” training on asset hardware operation, preliminary software user training, system

administrator training, information technology issue training, ad hoc training during system launch and advanced software user training.

Support and Consulting Services for Ease of Use, Adoption, and Added Value .

We have developed a framework for the various phases

of system training and support that offer our customers both structure and flexibility.

Major training phases include hardware installation

and troubleshooting, software installation and troubleshooting, “train-the-trainer” training on asset hardware operation,

preliminary software user training, system administrator training, information technology issue training, ad hoc training during system

launch and advanced software user training.

Increasingly,

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overviews, troubleshooting guides, and issue escalation procedures.

provide our consulting services both as a stand-alone service to study the potential benefits of implementing a wireless fleet management

system and as part of the system implementation itself.

In some instances, customers prepay us for extended maintenance, support and

consulting services.

In those instances, the payment amount is recorded as deferred revenue and revenue is recognized over the service

COVID-19 pandemic has resulted in significant economic disruption and continues to adversely impact the broader global economy, including

certain of our customers and suppliers.

Given the dynamic nature of this situation, we cannot reasonably estimate the impact of COVID-19

or the supply chain disruptions on our financial condition, results of operations or cash flows into the foreseeable future.

ultimate extent of the effects of the COVID-19 pandemic and supply chain disruptions on the Company is highly uncertain and will

depend on future developments, and such effects could exist for an extended period of time even after the pandemic subsides.

provide our consulting services both as a stand-alone service to study the potential benefits of implementing an IoT business

intelligence solution and as part of the system implementation itself.

In some instances, customers prepay us for extended maintenance,

support and consulting services.

In those instances, the payment amount is recorded as deferred revenue and revenue is recognized over

the service period.

The ongoing COVID-19 pandemic and its

related impact on the global supply chain, inflation, and the conflict between Russia and Ukraine have resulted in significant economic

disruption and continue to adversely impact the broader global economy, including certain of our customers and suppliers.

Given the dynamic

nature of this situation, we cannot reasonably estimate the impact of COVID-19, the supply chain disruptions, inflation or the conflict

between Russia and Ukraine on our financial condition, results of operations or cash flows into the foreseeable future.

extent of the effects of the COVID-19 pandemic, supply chain disruptions, inflation and the conflict between Russia and Ukraine

on the Company is highly uncertain and will depend on future developments, and such effects could exist for an extended period of

time even after the pandemic subsides.

to Our Business

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and commercialize new products and technologies.

of September 30, 2021, we had cash (including restricted cash) and cash equivalents of $34.1 million and working capital of $49.4 million.

Our primary sources of cash are cash flows from operating activities, our holdings of cash, cash equivalents and investments from the

sale of our capital stock and borrowings under our credit facility.

To date, we have not generated sufficient cash flow solely from operating

activities to fund our operations.

of March 31, 2022, we had cash (including restricted cash) and cash equivalents of $20.9 million and working capital of $40.5

Our primary sources of cash are cash flows from operating activities, our holdings of cash, cash equivalents and investments

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

To date, we have not generated sufficient cash flow solely

from operating activities to fund our operations.

believe that our available working capital, anticipated level of future revenues, expected cash flows from operations and available borrowings

under its revolving credit facility with Bank Hapoalim B.M.

will provide sufficient funds to cover capital requirements through November

will provide sufficient funds to cover capital requirements through May 10,

risks and uncertainties to which we are subject are described under the heading “Risk Factors” in Part II, Item 1A of this

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Accounting Policies

the three-month period ended September 30, 2021, there were no significant changes to our critical accounting policies as identified

in our Annual Report on Form 10-K for the year ended December 31, 2020.

the three-month period ended March 31, 2022, there were no significant changes to our critical accounting policies as identified in our

Annual Report on Form 10-K for the year ended December 31, 2021.

of Operations

following table sets forth, for the periods indicated, certain operating information expressed as a percentage of revenue:

Three Months Ended

September 30,

Nine Months Ended

September 30,

Three Months Ended March 31,

Cost of Revenue:

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Net loss attributable to common shareholders

Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

Revenues increased by approximately $1.6 million or 6.0%, to $29.2 million in the three months ended September 30, 2021, from $27.6

million in the same period in 2020.

Revenues from products decreased approximately $0.1

million, or 1.2%, to 10.8 million in the three months ended September 30, 2021, from $10.9 million in the same period in 2020.

in product revenue is due to decreased product sales in the third quarter of 2021 versus the prior year due to supply

chain issues.

from services increased approximately $1.8 million, or 10.6%, to $18.5 million in the three months ended September 30, 2021, from $16.7

million in the same period in 2020.

The increase in services revenue is principally due to an increase in revenue resulting from our

PowerFleet for Vehicles solutions.

COST OF REVENUES.

Cost of revenues increased

by approximately $2.3 million, or 18.1%, to $15.0 million in the three months ended September 30, 2021, from $12.7

million for the same period in 2020.

Gross profit was $14.3 million in three months ended September 30, 2021, compared to $14.9

million for the same period in 2020.

As a percentage of revenues, gross profit decreased to 48.8% in 2021 from 54.1% in 2020.

The decrease in gross profit as a percentage of revenue was principally due to changes in product mix.

Cost of products increased by approximately $1.5 million,

or 22.0%, to $8.2 million in the three months ended September 30, 2021, from $6.7 million in the same period in 2020.

Gross profit for products was $2.6 million in the three months ended September 30, 2021, compared to $4.2 million

in the same period in 2020.

As a percentage of product revenues, gross profit decreased to 24.2% in 2021 from 38.6% in

The decrease in gross profit as a percentage of product revenues was primarily due to a $400,000 one-time

expense related to an incentive program to expand business with an existing customer that is one of the largest chassis lessors in

North America.

In exchange, the customer placed orders for approximately 3,000 units to be delivered in Q4 2021 and committed to

ordering 10,000 to 15,000 additional units in 2022.

Product gross profit was also impacted by product mix, higher costs associated

with supply chain issues and electronic component shortages and inflation.

Cost of services increased by approximately $0.8

million, or 13.9%, to $6.8 million in the three months ended September 30, 2021, from $6.0 million in

the same period in 2020.

Gross profit for services was $11.7 million in the three months ended September 30, 2021,

compared to $10.7 million in the same period in 2020.

As a percentage of service revenues, gross profit decreased to 63.1% in

2021 from 64.2% in 2020.

SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative (“SG&A”) expenses increased by approximately $2.4 million,

or 20.0%, to approximately $14.0 million in the three months ended September 30, 2021, compared to $11.6

million in the same period in 2020 principally due to increased salaries due to the reversal of temporary cost reduction

initiatives implemented during the first quarter of 2020 in response to the impact and uncertainty caused by COVID-19.

a percentage of revenues, SG&A expenses increased to 47.7% in the three months ended September 30, 2021, from 42.2%

in the same period in 2020.

RESEARCH AND DEVELOPMENT EXPENSES .

and development (“R&D”) expenses increased by approximately $0.2 million or 7.9%, to approximately $2.7

million in the three months ended September 30, 2021, compared to $2.5 million in the same period in 2020 principally due

to the reversal of temporary cost reduction initiatives implemented during the first quarter of 2020 in response to the impact and

uncertainty caused by COVID-19.

As a percentage of revenues, R&D expenses increased to 9.4% in the three months

ended September 30, 2021 from 9.2% in the same period in 2020, primarily due to the increase in revenue from 2021

NET LOSS ATTIBUTABLE TO COMMON STOCKHOLDERS .

Net loss was $4.5 million, or $(0.13) per basic and diluted share, for the three months ended September 30, 2021

as compared to net loss of $1.7 million, or $(0.06) per basic and diluted share, for the same period in 2020.

in the net loss was due primarily to the reasons described above.

Nine Months Ended September

30, 2021 Compared to Nine Months Ended September 30, 2020

Revenues increased by approximately

$7.6 million, or 9.1% to $91.8 million in the nine months ended September 30, 2021 from $84.2

million in the same period in 2020.

from products increased by approximately $4.2 million, or 12.4%, to $37.7 million in the nine months ended

September 30, 2021, from $33.5 million in the same period in 2020.

Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021

Revenues increased by approximately $4.2 million, or 14.3%, to $33.2 million in the three months ended March

31, 2022, from $29.0 million in the same period in 2021.

from products increased approximately $3.0 million, or 26%, to 14.4 million in the three months ended March

31, 2022, from $11.4 million in the same period in 2021.

The increase in product revenue is due to increased

product sales for PowerFleet for Vehicles solutions during the nine months ended September 30, 2021 versus the prior

year period, which was more significantly impacted by COVID-19.

Revenues from services increased by approximately

$3.5 million or 6.8% to $54.1 million in the nine months ended September 30, 2021, from $50.6

million in the same period in 2020.

The increase in services revenue is principally due to an increase in revenue resulting from our

PowerFleet for Vehicles solutions.

COST OF REVENUES .

Cost of revenues increased

by approximately $6.7 million, or 16.5%, to $47.0 million in the nine months ended September 30, 2021,

from $40.3 million for the same period in 2020.

Gross profit was $44.8 million in the nine months ended September

30, 2021, compared to $43.8 million for the same period in 2020.

As a percentage of revenues, gross profit decreased to 48.8%

in 2021 from 52.1% in 2020.

The decrease in gross profit as a percentage of revenue was principally due to changes in product

Cost of products increased by approximately $5.2 million,

or 23.4%, to $27.2 million in the nine months ended September 30 2021, from $22.0 million in the

same period in 2020.

Gross profit for products was $10.5 million in the nine months ended September 30, 2021,

compared to $11.5 million in the same period in 2020.

As a percentage of product revenues, gross profit decreased to 27.8% in

2021 from 34.3% in 2020.

The decrease in gross profit as a percentage of product revenues was primarily due to a $400,000 one-time

expense related to an incentive program to expand business with an existing customer that is one of the largest chassis lessors in

North America.

In exchange, the customer placed orders for approximately 3,000 units to be delivered in Q4 2021 and committed to

ordering 10,000 to 15,000 additional units in 2022.

Product gross profit was also impacted by product mix, higher costs associated

with supply chain issues and electronic component shortages and inflation.

Cost of services increased by approximately $1.5

million, or 8.3%, to $19.8 million in the nine months ended September 30, 2021 from $18.3 million

in the same period in 2020.

Gross profit for services was $34.3 million in the nine months ended September 30, 2021,

compared to $32.3 million in the same period in 2020.

As a percentage of service revenues, gross profit decreased to 63.4%

in 2021 from 63.9% in 2020.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES .

SG&A expenses increased by approximately $2.1 million, or 5.4%, to approximately $41.0 million in the

nine months ended September 30, 2021, compared to $38.9 million in the same period in 2020 principally due to

increased salaries due to the reversal of temporary cost reduction initiatives implemented during the first quarter of 2020

in response to the impact and uncertainty caused by COVID-19.

As a percentage of revenues, SG&A expenses decreased to 44.7% in the nine months ended

September 30, 2021 from 46.2% in the same period in 2020.

RESEARCH AND DEVELOPMENT EXPENSES .

expenses remained at $8.3 million in the nine months ended September 30, 2021, compared to $8.3 million in

the same period.

As a percentage of revenues, R&D expenses decreased to 9.0% in the nine months ended September

product sales in our PowerFleet for Logistics business.

from services increased approximately $1.2 million, or 6.8%, to $18.8 million in the three months ended March

31, 2022, from $17.6 million in the same period in 2021.

The increase in services revenue is principally due to an

increase in our install base that generates service revenue.

Cost of revenues increased by approximately $4.3 million, or 29.2%, to $18.8 million in the three

months ended March 31, 2022, from $14.5 million for the same period in 2021.

Gross profit was $14.4 million

in three months ended March 31, 2022, compared to $14.5 million for the same period in 2021.

As a percentage of

revenues, gross profit decreased to 43.4% in 2022 from 49.9% in 2021.

The decrease in gross profit as a percentage

of revenue was principally due to the increase in raw materials costs related to the global supply chain issues.

of products increased by approximately $3.8 million, or 46.9%, to $12.0 million in the three months ended March

31, 2022, from $8.2 million in the same period in 2021.

Gross profit for products was $2.4 million in the three

months ended March 31, 2022, compared to $3.2 million in the same period in 2021.

As a percentage of product revenues,

gross profit decreased to 16.8% in 2022 from 28.6% in 2021.

The decrease in gross profit as a percentage

of revenue was impacted by product mix, higher costs associated with supply chain issues and electronic component shortages and inflation.

of services increased by approximately $0.4 million, or 6.5%, to $6.8 million in the three months ended March 31, 2022,

from $6.4 million in the same period in 2021.

Gross profit for services was $12.0 million in the three months

ended March 31, 2022, compared to $11.2 million in the same period in 2021.

As a percentage of service revenues,

gross profit increased to 63.9% in 2022 from 63.8% in 2021.

GENERAL AND ADMINISTRATIVE EXPENSES .

Selling, general and administrative (“SG&A”) expenses increased by approximately

$1.3 million, or 9.6%, to approximately $14.9 million in the three months ended March 31, 2022, compared

to $13.6 million in the same period in 2021, principally due to increased salaries and increased professional services

As a percentage of revenues, SG&A expenses decreased to 45.0% in the three months ended March 31, 2022,

from 46.9% in the same period in 2021.

NET LOSS ATTIBUTABLE TO COMMON STOCKHOLDERS.

Net loss was $10.2 million or $(0.30) per basic and diluted share, for the nine months ended September 30,

2021 as compared to net loss of $10.1 million, or $(0.34) per basic and diluted share, for the same period in 2020.

decrease in the net loss was due primarily to the reasons described above

AND DEVELOPMENT EXPENSES .

Research and development (“R&D”) expenses increased by approximately $0.4 million,

or 17.7%, to approximately $3.2 million in the three months ended March 31, 2022, compared to $2.8 million

in the same period in 2021, principally due to the product development expenses.

As a percentage of revenues, R&D expenses

increased to 9.7% in the three months ended March 31, 2022, from 9.5% in the same period in 2021, primarily

due to the increase in revenue from 2022 to 2021.

LOSS ATTIBUTABLE TO COMMON STOCKHOLDERS .

Net loss was $4.1 million, or $(0.12) per basic and diluted share, for the

three months ended March 31, 2022, as compared to net loss of $3.0 million, or $(0.09) per basic and diluted share,

for the same period in 2021.

The decrease in the net loss was due primarily to the reasons described above.

and Capital Resources

Historically,

our capital requirements have been funded primarily from the net proceeds from the issuance of our securities, including any issuances

of our common stock upon the exercise of options.

As of September 30, 2021, we had cash and cash equivalents of $33.8 million and working

capital of $49.4 million.

October 3, 2019, in connection with the completion of the Transactions, we issued and sold 50,000 shares of our Series A Convertible

Preferred Stock, par value $0.01 per share (the “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”), affiliates of ABRY Partners II, LLC,

for an aggregate purchase price of $50.0 million.

The proceeds received from such sale were used to finance a portion of the cash consideration

payable in our acquisition of Pointer.

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 10,000 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.

We did not exercise our redemption right and the Redemption Right Agreement automatically

terminated on October 1, 2021.

In addition, PowerFleet Israel and Pointer (the

“Borrowers”) 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 million (comprised of two facilities in the aggregate principal amount of $20 million (the “Term A Facility”)

and $10 million (the “Term B Facility”)) and a five-year revolving credit facility to Pointer in an aggregate

principal amount of $10 million (the “Revolving Facility”).

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.

On August 23, 2021, 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 Term A Facility

and the Term B Facility.

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.

our capital requirements have been funded primarily from the net proceeds from the issuance of our securities, including any

issuances of our common stock upon the exercise of options.

As of March 31, 2022, we had cash (including restricted cash) and

cash equivalents of $20.9 million and working capital of $40.5 million.

On October 3, 2019, in connection with our acquisition

of Pointer, we issued and sold 50,000 shares of Series A Convertible Preferred Stock, par value $0.01 per share (the “Series

A Preferred Stock”), to ABRY Senior Equity V, L.P., ABRY Senior Equity Co-Investment Fund V, L.P and ABRY Investment Partnership,

(the “Investors”), pursuant to the terms of an Investment and Transaction Agreement, dated as of March 13, 2019 (as

such agreement has been amended from time to time, the “Investment Agreement”) for an aggregate purchase price of $50.0

The proceeds received from such sale were used to finance a portion of the cash consideration payable in our acquisition of

addition, our wholly-owned subsidiaries, PowerFleet Israel and Pointer (the “Borrowers”) 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 million (comprised of two facilities in the

aggregate principal amount of $20 million (the “Term A Facility”) and $10 million (the “Term B Facility”)) and

a five-year revolving credit facility to Pointer in an aggregate principal amount of $10 million (the “Revolving Facility”).

The outstanding amount under the term loan facilities was $22.4 million as of March 31, 2022.

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.

August 23, 2021, 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 Term A Facility and the Term B Facility.

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.

have on file a shelf registration statement on Form S-3 that was declared effective by the SEC on November 27, 2019.

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in a prospectus supplement that will be filed with the SEC in connection with such offering.

May 14, 2020, we 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 809,846 shares

of common stock for approximately $4.2 million in gross proceeds.

We terminated the equity distribution agreement effective as of August

February 1, 2021, we closed an underwritten public offering (the “Underwritten Public Offering”) of 4,427,500 shares of common

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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 our shelf registration statement.

a result of the COVID-19 pandemic and the related supply chain disruptions,

there is significant uncertainty surrounding the potential impact of such events on our results of operations and cash flows.

We are proactively taking steps to increase available cash on hand including, but not limited to, targeted reductions in discretionary

operating expenses and capital expenditures and borrowing under the revolving credit facility.

of September 30, 2021, we had cash (including restricted cash) and cash equivalents of $34.1 million and working capital of $49.4

The offer and sale of common stock in the Underwritten Public Offering were made pursuant to our shelf registration statement.

As a result of the ongoing COVID-19 pandemic

and its related impact on the global supply chain, inflation, and the conflict between Russia and Ukraine, there remains

uncertainty surrounding the potential impact of such events on our results of operations and cash flows.

We are proactively taking

steps to increase available cash on hand including, but not limited to, targeted reductions in discretionary operating expenses and capital

expenditures and borrowing under the revolving credit facility.

of March 31, 2022, we had cash (including restricted cash) and cash equivalents of $20.9 million and working capital of $40.5

Our primary sources of cash are cash flows from operating activities, our holdings of cash, cash equivalents and investments

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believe our available working capital, anticipated level of future revenues and expected cash flows from operations will provide sufficient

funds to cover capital requirements through at least November 10, 2022.

funds to cover capital requirements through at least May 10, 2023.

capital requirements depend on a variety of factors, including, but not limited to, the length of the sales cycle, the rate of increase

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on our business, financial condition and results of operations.

cash used in operating activities was $1.2 million for the nine months ended September 30, 2021, compared to net cash provided by operating

activities of $5.3 million for the same period in 2020.

The net cash used in operating activities for the nine months ended September

30, 2021 reflects a net loss of $6.6 million and includes non-cash charges of $3.4 million for stock-based compensation, $6.4

million for depreciation and amortization expense and $1.8 million for right of use asset amortization.

Changes in working capital items

increase in accounts receivable of $7.5 million;

increase in accounts payable of $4.1 million;

cash used in operating activities was $2.1 million for the three months ended March 31, 2022, compared to net cash

provided by operating activities of $0.8 million for the same period in 2021.

The net cash used in operating activities

for the three months ended March 31, 2022, reflects a net loss of $2.9 million and includes non-cash charges of

$0.5 million for stock-based compensation, $2.1 million for depreciation and amortization expense and $0.7 million

for right of use asset amortization.

Changes in working capital items included:

increase in inventory of $1.9 million;

cash used in investing activities was $2.5 million for the nine months ended September 30, 2021, compared to net cash used in investing

activities of $2.0 million for the same period in 2020.

The cash used in investing activities for the nine months ended September 30,

2021 was for the purchase of fixed assets.

The cash used in investing activities in the same period in 2020 was primarily for the purchase

of fixed assets.

cash provided by financing activities was $19.7 million for the nine months ended September 30, 2021, compared to net cash provided by

financing activities of $2.3 million for the same period in 2020.

The change from the same period in 2020 was primarily due to the net

proceeds from our stock offering of $26.9 million offset by the repayment of long-term debt of $4.0 million and the payment of preferred

stock dividends of $3.1 million.

increase in prepaid expenses and other assets of 1.3 million;

increase in accounts payable of $0.8 million.

cash used in investing activities was $0.6 million for the three months ended March 31, 2022, compared to net

cash used in investing activities of $0.6 million for the same period in 2021.

The cash used in investing activities

for the three months ended March 31, 2022, was for the purchase of fixed assets.

The cash used in investing activities

in the same period in 2021 was primarily for the purchase of fixed assets.

cash used in financing activities was $1.6 million for the three months ended March 31, 2022, compared to

net cash provided by financing activities of $24.3 million for the same period in 2021.

The cash used in financing activities

for the three months ended March 31, 2022, was primarily due to the repayment of long-term debt of $1.5 million.

The change from

the same period in 2021 was primarily due to the net proceeds from our stock offering of $26.8 million which was

offset by the repayment of long-term debt of $1.3 million and the payment of preferred stock dividends of $1.0 million.

Sheet Arrangements

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condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

of September 30, 2021, there have been no material charges in contractual obligations as disclosed under the caption “Contractual

Obligations and Commitments” in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, except as

March 17, 2021, the Company entered into an office lease agreement for approximately 5,000 leasable square feet, in Frisco, Texas, to

be used as administrative offices.

The base rent for the leased premises is approximately $0.1 million per year.

The Company also will

be responsible for its pro rata share of any operating expenses, taxes and insurance expenses incurred in connection with the office

building in which the leased premises are located.

The initial term of the lease agreement is for a period of five years and five months,

which commenced on June 1, 2021 and will expire on October 31, 2026.

operate in several emerging market economies that are particularly vulnerable to the impact of inflationary pressures that could materially

and adversely impact our operations in the foreseeable future.

of March 31, 2022, there have been no material charges in contractual obligations as disclosed under the caption “Contractual Obligations

and Commitments” in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

inflation and other macroeconomic conditions in the U.S.

have resulted in higher costs of raw materials, freight, and labor, which has

impacted our operating costs.

In addition, we operate in several emerging market economies that are particularly vulnerable to the impact

of inflationary pressures that could materially and adversely impact our operations in the foreseeable future.

of Recently Issued Accounting Pronouncements

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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 2. Management’s Discussion and Analysis