What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-03-31 compared with 2022-03-16 · 702 added, 627 removed, 886 unchanged (60% of the section changed)

1 unchanged sentence

TO CONSOLIDATED FINANCIAL STATEMENTS

of Independent Registered Public Accounting Firm (PCAOB ID No.

Balance Sheets at December 31, 2020 and 2021

Statements of Operations for the Years Ended December 31, 2019, 2020 and 2021

Statements of Comprehensive Loss for the Years Ended December 31, 2019, 2020 and 2021

Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2019, 2020 and 2021

Statements of Cash Flows for the Years Ended December 31, 2019, 2020 and 2021

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Consolidated Balance Sheets at December 31, 2021 and 2022

Consolidated Statements of Operations for the Years Ended December 31, 2020, 2021 and 2022

Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2020, 2021 and 2022

Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2020, 2021 and 2022

Consolidated Statements of Cash Flows for the Years Ended December 31, 2020, 2021 and 2022

Notes to the Consolidated Financial Statements

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the Stockholders and the Board of Directors of PowerFleet, Inc.

and subsidiaries

on the Financial Statements

We have audited the accompanying consolidated

balance sheets of PowerFleet, Inc.

and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements

of operations, comprehensive loss, cash flows, and changes in stockholders’ equity for each of the three years in the period ended

December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion,

the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31,

2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021,

in conformity with U.S.

have audited the accompanying consolidated balance sheets of PowerFleet, Inc.

and subsidiaries (the Company) as of December 31, 2022

and 2021, the related consolidated statements of operations, comprehensive loss, cash flows, and changes in stockholders’ equity

for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated

financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial

position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years

in the period ended December 31, 2022, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public

Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31,

2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the

Treadway Commission (2013 framework) and our report dated March 16, 2022 expressed an adverse opinion thereon.

These financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our

We are a public accounting firm registered with the Public Company Accounting Oversight Board (PCAOB) and are required to be independent

with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities

and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the

risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s

internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework

issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 31, 2023 expressed

an adverse opinion thereon.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud,

and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts

and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates

made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a

reasonable basis for our opinion.

Audit Matters

The critical audit matter communicated below is

a matter arising from the current period audit of the financial statements that was communicated or required to be communicated

to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved

our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any

way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter

below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

critical audit matters communicated below are matters arising from the current period audit of the financial statements that was

communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material

to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication

of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we

are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts

or disclosures to which they relate.

of the Matter

December 31, 2022, the Company’s goodwill was $83.5 million.

As discussed in Note 2 and 7 to the consolidated financial

statements, goodwill is tested for impairment at least annually at the reporting unit level.

Auditing management’s annual goodwill impairment test was complex

and highly judgmental due to the significant estimations required to determine the fair value of the reporting unit.

In particular, the

fair value estimates were sensitive to significant assumptions, including the weighted average cost of capital, revenues, cost growth

and terminal growth rate all of which are affected by expectations about future operations and market conditions.

We Addressed the

obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill

impairment review process, including controls over management’s development and review of the significant assumptions described

above and review of the reasonableness of the data utilized in the Company’s valuation analysis.

To test the fair value of the Company’s reporting unit, we performed

audit procedures that included, among others, assessing methodologies and testing the significant assumptions discussed above and the

underlying data used by the Company in its analysis.

We compared the significant assumptions used by management to current industry and

economic trends, including key performance indicators, and evaluated whether changes in the company’s business would affect the

significant assumptions.

We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant

assumptions to evaluate the changes in the fair value of the reporting units that would result from changes in the assumptions.

In performing

our testing, we utilized internal valuation specialists to assist us in evaluating the Company’s valuation model and related significant

Taxes – Uncertain Tax Positions

Description of the Matter

discussed in Note 17 of the consolidated financial statements, the Company has recorded a

liability of $0.5 million related to uncertain tax positions as of December 31, 2020.

Company conducts business in the US and various foreign countries and is therefore subject

to US federal and state income taxes, as well as income taxes of multiple foreign jurisdictions.

Due to the multinational operations of the Company and changes in global income tax laws

and regulations, including those in the US, there is complexity in the accounting for and

monitoring of the provision for uncertain tax positions.

Auditing management’s identification and

measurement of uncertain tax positions involved complex analysis and auditor judgment related to the evaluation of the income tax consequences

of changes in income tax laws and regulations in various jurisdictions, which are often subject to interpretation.

How We Addressed the

Matter in Our Audit

audit procedures included, among others, evaluating the Company’s assumptions and the

underlying data used to identify its uncertain tax positions and to estimate the amount of

the related unrecognized income tax benefits by jurisdiction.

We obtained an understanding

of the Company’s legal structure by reviewing its organizational charts and related

legal documents.

Due to the complexity of the tax law in various jurisdictions, we involved

our income tax professionals to assess the Company’s interpretation of and compliance

with tax laws in these jurisdictions, as well as to identify relevant tax law changes.

certain circumstances, we involved our income tax professionals to evaluate the technical

merits of the Company’s tax positions and to evaluate income tax opinions or other

third-party advice obtained by the Company.

We also evaluated the Company’s income

tax disclosures included in Note 17 to the consolidated financial statements in relation

to these matters .

/s/ Ernst & Young LLP

We served as the Company’s auditor since 2019.

Iselin, New Jersey

of the Matter

discussed in Note 16 of the consolidated financial statements, the Company has recorded a liability of $0.4 million related to

uncertain tax positions as of December 31, 2022.

The Company conducts business in the US and various foreign countries and is therefore

subject to US federal and state income taxes, as well as income taxes of multiple foreign jurisdictions.

Due to the multinational

operations of the Company and changes in global income tax laws and regulations, including those in the US, there is complexity in

the accounting for and monitoring of the provision for uncertain tax positions.

management’s identification and measurement of uncertain tax positions involved complex analysis and auditor judgment related

to the evaluation of the income tax consequences of changes in income tax laws and regulations in various jurisdictions, which are

often subject to interpretation.

We Addressed the Matter in Our Audit

audit procedures included, among others, evaluating the Company’s assumptions and the underlying data used to identify its

uncertain tax positions and to estimate the amount of the related unrecognized income tax benefits by jurisdiction.

We obtained an

understanding of the Company’s legal structure by reviewing its organizational charts and related legal documents.

complexity of the tax law in various jurisdictions, we involved our income tax professionals to assess the Company’s interpretation

of and compliance with tax laws in these jurisdictions, as well as to identify relevant tax law changes.

In certain circumstances,

we involved our income tax professionals to evaluate the technical merits of the Company’s tax positions and to evaluate income

tax opinions or other third-party advice obtained by the Company.

Ernst & Young LLP

served as the Company’s auditor since 2019.

of Independent Registered Public Accounting Firm

the Stockholders and the Board of Directors of PowerFleet, Inc.

and subsidiaries

on Internal Control Over Financial Reporting

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(the COSO criteria).

In our opinion, because of the effect of the material weakness described below on the achievement of the objectives

In our opinion, because of the effect of the material weaknesses described below on the achievement of the objectives

of the control criteria, PowerFleet, Inc.

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reporting as of December 31, 2022, based on the COSO criteria.

material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a

reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented

or detected on a timely basis.

The following material weakness has been identified and included in management’s assessment.

has identified a material weakness in controls related to various processes at the company’s Israel component.

also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated

balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive loss,

cash flows, and changes in stockholders’ equity for each of the three years in the period ended December 31, 2021, and the related

This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the

2021 consolidated financial statements, and this report does not affect our report dated March 16, 2022, which expressed an unqualified

opinion thereon.

material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is

a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be

prevented or detected on a timely basis.

The following material weaknesses have been identified and included in management’s

Management has identified material weaknesses in controls related to the determination of standalone selling price,

capitalized software costs and the financial statement close process.

also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the

consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations,

comprehensive loss, cash flows, and changes in stockholders’ equity for each of the three years in the period ended December

31, 2022, and the related notes.

These material weaknesses were considered in determining the nature, timing and extent of audit tests

applied in our audit of the 2022 consolidated financial statements, and this report does not affect our report dated March 31, 2023,

which expressed an unqualified opinion thereon.

Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment

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Ernst & Young LLP

Iselin, New Jersey

AND SUBSIDIARIES

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thousands, except per share data)

of December 31,

As of December 31,

Current assets:

Cash and cash

Cash and cash equivalents

Restricted cash

Accounts receivable, net

of allowance for doubtful accounts of $ 2,364 and $ 3,176 in 2020 and 2021, respectively

Accounts receivable, net of allowance for doubtful accounts of $ 3,176 and $ 2,567 in 2021 and 2022, respectively

Inventory, net

Deferred costs - current

expenses and other current assets

Prepaid expenses and other current assets

Total current assets

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Current liabilities:

Short-term bank debt and

current maturities of long-term debt

Accounts payable and accrued

Short-term bank debt and current maturities of long-term debt

Accounts payable and accrued expenses

Deferred revenue - current

liability - current

Lease liability - current

Total current liabilities

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Other long-term liabilities

Total liabilities

Commitments and Contingencies (note 17)

MEZZANINE EQUITY

Convertible redeemable

preferred stock:

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 December 31, 2021

55 and 59 shares issued and outstanding at December 31, 2021 and December 31, 2022, respectively

Preferred stock;

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Common stock;

authorized 75,000 shares, $ 0.01

authorized 75,000 shares, $ 0.01 par value;

37,263 and 37,605 shares issued at December 31, 2021 and December 31, 2022, respectively;

shares outstanding,

31,101 and 35,882 at December 31, 2020 and December 31, 2021, respectively

shares outstanding, 35,882 and 36,170 at December 31, 2021 and December 31, 2022, respectively

Additional paid-in capital

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Treasury stock;

1,179 and 1,381 common shares

at cost at December 31, 2020 and December 31, 2021, respectively

1,381 and 1,435 common shares at cost at December 31, 2021 and December 31, 2022, respectively

Total Powerfleet, Inc.

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Non-controlling interest

Total liabilities and

stockholders’ equity

Total liabilities and stockholders’ equity

ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Cost of services

Total cost of revenue

cost of revenues

Operating expenses:

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Research and development expenses

Acquisition related expenses

Total Operating expenses

Operating expenses

Loss from operations

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Other comprehensive (loss) income, net:

Unrealized (loss) gain on investments

Reclassification of net realized investment loss (gain) included in net loss

Foreign currency translation adjustment

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thousands, except per share data)

Paid-in Capital

Accumulated Other

Number of Shares

Accumulated Deficit

Comprehensive Income (Loss)

Non-controlling

Stockholders’

Treasury Stock

controlling Interest

Stockholders’ Equity

Balance at January 1, 2020

$ ( 112,143 )

Net loss attributable to common

Foreign currency translation

Reclassification of realized

losses on investments, net of unrealized amounts

Shares issued pursuant to Pointer

Share based awards assumed Pointer

Shares issued relating to Keytroller

acquisition consideration

Shares issued pursuant to CarrierWeb

Shares issued pursuant to exercise

of stock options

Shares withheld pursuant to exercise

of stock options

Net loss attributable to common stockholders

Net loss attributable to non-controlling interest

Foreign currency translation adjustment

Issuance of restricted shares

1 unchanged sentence

Vesting of restricted stock units

Shares withheld pursuant to vesting

of restricted stock

Shares issued pursuant to exercise of stock options

Shares withheld pursuant to exercise of stock options

Shares withheld pursuant to vesting of restricted stock

Common shares issued

Common shares issued, shares

Common shares issued, net of

issuance costs

Common shares issued, net of

issuance costs,shares

Stock based compensation

Net loss attributable to non-controlling

Balance at December 31, 2020

$ ( 121,150 )

Net loss attributable to common

Net loss attributable to non-controlling

Foreign currency translation

Net loss attributable to common stockholders

Net loss attributable to non-controlling interest

Foreign currency translation adjustment

Issuance of restricted shares

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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

Common shares issued

Shares issued pursuant to exercise of stock options

Shares withheld pursuant to exercise of stock options

Shares withheld pursuant to vesting of restricted stock

Common shares issued, net of issuance costs

Stock based compensation

Balance at December 31, 2021

$ ( 134,437 )

Net loss attributable to common

Net loss attributable to non-controlling

Foreign currency translation

$ ( 134,437 )

Net loss attributable to common stockholders

Net income attributable to non-controlling interest

Net income (loss) attributable

to non-controlling interest

Foreign currency translation adjustment

Issuance of restricted shares

1 unchanged sentence

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

Common shares issued, net of

issuance costs

Shares withheld pursuant to vesting of restricted stock

Stock based compensation

Balance at December 31, 2022

$ ( 141,440 )

ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Year Ended December 31,

Cash flows from operating activities (net of net assets acquired):

Cash flows from operating:

Adjustments to reconcile net loss to cash (used in) provided by operating activities:

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Bad debt expense

Change in contingent consideration

Deferred income taxes

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Cash flows from investing activities:

Acquisitions, net of cash assumed

Proceeds from sale of property and equipment

Capital expenditures

Purchases of investments

Proceeds from the sale and maturities of investments

Capitalized software development

Proceeds from the sale of property and equipment

Purchase of investment

Net cash (used in) provided by investing activities

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Net proceeds from stock offering

Payment of preferred stock dividends

Proceeds from convertible note

Repayment of convertible note

Proceeds from long-term-debt

Payment of preferred stock dividends

Repayment of long-term debt

Debt issuance costs

Repayment of financing lease

Short-term bank debt, net

17 unchanged sentences

Noncash investing and financing activities:

Unrealized (loss) gain on investments

Value of shares withheld pursuant to exercise of stock options

Value of shares issued relating to acquisition contingent consideration

Value of shares issued pursuant to acquisitions

ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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of COVID-19 and Supply Chain Disruptions

global outbreak of 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.

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

ensure supply.

The Company incurred supply chain constraint expenses which lowered its gross margins and decreased its profitability

primarily during the last six months of 2021.

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 audited consolidated financial statements, the full extent to which the COVID-19 pandemic may materially impact

the Company’s business, results of operations and financial condition is uncertain.

of December 31, 2021, the Company had cash (including restricted cash) and cash equivalents of $ 26,760

and working capital of $ 43,622 .

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.

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.

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.

The Company incurred supply chain constraint expenses which lowered its

gross margins and decreased its profitability primarily during the last six months of 2021 and first nine months of 2022.

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

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

supply chain disruptions, may materially impact the Company’s business, results of operations and financial condition is

of presentation

audited consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries.

material intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial

statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) for financial information and the instructions to Form 10-K.

Accordingly, they do not include all of the information and

footnotes required by U.S.

GAAP for complete financial statements.

In the opinion of management, such statements 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 December 31, 2022, the consolidated results of its operations for the twelve-month periods ended December 31, 2021

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

consolidated cash flows for the twelve-month periods ended December 31, 2021 and 2022.

of December 31, 2022, the Company had cash (including restricted cash) and cash equivalents of $ 18.0 million and working capital of $ 35.5

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 Telocation

(“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

(“PowerFleet Israel”) and Pointer Telocation Ltd.

and, together with PowerFleet Israel, the “Borrowers”) 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 denominated in New Israeli Shekels (NIS) in an initial aggregate principal amount of $ 30,000

(comprised of two facilities in the aggregate

2 unchanged sentences

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 as of December 31, 2021.

Note 11 for additional information.

Company has on file a shelf registration statement on Form S-3 that was declared effective by the Securities and Exchange Commission

(the “SEC”) on November 27, 2019.

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 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.

The specific terms of any

future offering will be determined at the time of the offering and described 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 810

shares of common stock for approximately

in gross proceeds.

We terminated

the equity distribution agreement effective as of August 14, 2020.

See Note 14 for additional information regarding the ATM Offering.

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.

revolving credit facility to Pointer in an initial 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 of Pointer.

The proceeds of the revolving credit

facility may be used by Pointer for general corporate purposes.

The Company borrowed net NIS 20,091 ,

under the revolving credit facility as of December 31.

See Note 10 for additional information.

October 31, 2022, the Borrowers entered into a third amendment to the Credit Agreement (the “Third Amendment”) with

The Third Amendment provides for, among other things, a new revolving credit facility to Pointer denominated in NIS in

an initial aggregate principal amount of $ 10

million (the “New Revolver”).

The New Revolver will be available for a period of one month, commencing on October 31,

2022, and will continue to be available for successive one-month periods until and including October 30, 2023, unless the Borrowers

deliver a notice to Hapoalim of their request not to renew the New Revolver.

New Revolver will initially bear interest at the Secured Overnight Financing Rate plus 2.59%.

Such interest is subject to monthly changes

by Hapoalim, provided that Hapoalim gives Pointer advance notice regarding such change prior to the end of the applicable calendar month .

New Revolver is secured by a first ranking fixed pledge and assignment by Pointer over its new bank account, which was opened in

connection with the New Revolver, and all of the rights relating thereunder as well as a cross guarantee by Powerfleet Israel.

is required to pay a credit allocation fee equal to 0.5 % per annum on undrawn and uncancelled amounts of the New Revolver.

has a one-year $ 1,000 revolving credit facility available for use with Discount Bank, which renews annually, subject to the bank’s

Pointer did not have any borrowings outstanding under the revolving credit facility with Discount Bank as of December 31, 2022.

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

During 2020 and 2021 we proactively took steps to increase available cash on hand including, but not limited to, targeted

reductions in discretionary operating expenses and capital expenditures.

During 2020, 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.

Company believes that its available working capital, anticipated level of future revenues, expected cash flows from operations and available

8 unchanged sentences

Use of estimates :

The 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 realization of deferred tax assets, accounting for uncertain tax positions,

the impairment of intangible assets, including goodwill, and stand-alone selling price related to multiple element revenue

arrangements.

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

realization of deferred tax assets, accounting for uncertain tax positions, the impairment of intangible assets, including goodwill,

capitalized software development costs, stock-based compensation costs and standalone selling price related to multiple element

revenue arrangements.

Actual results could differ from those estimates.

of December 31, 2021, the impact of the COVID-19 pandemic continues to unfold.

of December 31, 2022, the impact of global uncertainties continue 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.

As events continue to evolve and additional

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

Cash and cash equivalents :

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Corporation (“FDIC”) and other local jurisdictional limits.

Restricted cash at December 31, 2020 and 2021 consists

of cash held in escrow for purchases from a vendor

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

held in escrow for purchases from a vendor.

Accounts receivable :

24 unchanged sentences

For products which do

not have stand-alone value to the customer separate from the SaaS services provided, the Company considers both hardware and SaaS services

not have standalone value to the customer separate from the SaaS services provided, the Company considers both hardware and SaaS services

a bundled performance obligation.

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Company also derives revenue from leasing arrangements.

Such arrangements provide for monthly payments covering product or system sale,

maintenance, support and interest.

These arrangements meet the criteria to be accounted for as sales-type leases.

Accordingly, an asset

is established for the “sales-type lease receivable” at the present value of the expected lease payments and revenue is deferred

and recognized over the service contract, as described above.

Maintenance revenues and interest income are recognized monthly over the

Such arrangements provide for monthly payments covering product or system

sale, maintenance, support and interest.

These arrangements meet the criteria to be accounted for as operating or sales-type leases.

Accordingly, for sales-type leases an asset is established for the “sales-type lease receivable” at the present value of

the expected lease payments and revenue is deferred and recognized over the service contract, as described above.

revenues and interest income are recognized monthly over the lease term.

Company’s contracts with customers may include multiple performance obligations.

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Leasehold improvements

Shorter of useful life or lease term

Shorter of useful life or

Long-lived assets :

17 unchanged sentences

amortization.

Intangible assets consist of trademarks and trade name, patents, customer relationships and other intangible assets.

Intangible assets consist of trademarks and trade name, patents, customer relationships, software to be sold or leased, and other intangible assets.

is tested at the reporting unit level, which is defined as an operating segment or one level below the operating segment.

operates in one operating segment which is its only reporting unit.

The Company tests its goodwill for impairment annually which is

the first day of the Company’s fourth quarter or when an indicator of impairment exists, by comparing the fair value of the reporting unit to its carrying value

In the evaluation of goodwill for impairment,

the Company has the option to perform a qualitative assessment to determine whether further impairment testing is necessary or to perform

a quantitative assessment by comparing the fair value of a reporting unit to its carrying amount, including goodwill.

Under the qualitative

assessment, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely

than not that its fair value is less than its carrying amount.

By eliminating “Step 2” from the goodwill impairment test,

the quantitative analysis of goodwill will result in an impairment loss for the amount that the carrying value of the reporting unit

exceeds its fair value which is limited to the total amount of goodwill allocated to the reporting unit.

The Company performed a market-based

quantitative assessment utilizing the guideline public company and guideline transaction approaches by comparing revenue and adjusted

EBITDA multiples of similar sized companies and similar sized transactions.

For the years ended December 31, 2019, 2020, and 2021, the

Company did not incur an impairment charge.

The Company tests its goodwill for impairment annually which is the

first day of the Company’s fourth quarter or when an indicator of impairment exists, by comparing the fair value of the reporting

unit to its carrying value.

the evaluation of goodwill for impairment, the Company has the option to perform a qualitative assessment to determine whether further

impairment testing is necessary or to perform a quantitative assessment by comparing the fair value of a reporting unit to its carrying

amount, including goodwill.

Under the qualitative assessment, an entity is not required to calculate the fair value of a reporting unit

unless the entity determines that it is more likely than not that its fair value is less than its carrying amount.

By eliminating “Step

2” from the goodwill impairment test, the quantitative analysis of goodwill will result in an impairment loss for the amount that

the carrying value of the reporting unit exceeds its fair value which is limited to the total amount of goodwill allocated to the reporting

Company performed a quantitative assessment whereby the fair value of the reporting unit is calculated using a market approach and a

discounted cash flow method, as a form of the income approach.

The market approach includes the use of comparative revenue and adjusted

EBITDA multiples to complement discounted cash flow results.

The discounted cash flow method is based on the present value of the projected

cash flows and a terminal value.

The terminal value represents the expected normalized future cash flows of the reporting unit beyond

the cash flows from the discrete projection period.

The fair value of the reporting unit is calculated based on the sum of the present

value of the cash flows from the discrete period and the present value of the terminal value.

The discount rate represented our estimate

of the WACC, or expected return, that a marketplace participant would have required as of the valuation date.

The application of our

goodwill impairment test required key assumptions underlying our valuation model.

discounted cash flow analysis factored in assumptions on discount rates and terminal growth rates to reflect risk profiles, as well as

revenue and cost growth relative to history and market trends and expectations.

The market multiples approach incorporated judgment involved

in the selection of comparable public company multiples and benchmarks.

The selection of companies and multiples was influenced by differences

in growth and profitability, and volatility in market prices of peer companies.

These valuation inputs are inherently judgmental, and

an adverse change in one or a combination of these inputs could trigger a goodwill impairment loss in the future.

For the years ended December

31, 2020, 2021 and 2022, the Company did not incur an impairment charge.

Product warranties :

Company typically provides a 1 – 8 year warranty on its products .

Estimated future warranty costs are accrued in the period that

the related revenue is recognized.

These estimates are derived from historical data and trends of product reliability and costs of repairing

and replacing defective products.

Estimated future warranty costs are accrued in the

period that the related revenue is recognized.

These estimates are derived from historical data and trends of product reliability

and costs of repairing and replacing defective products.

Research and development :

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investments have a high credit rating.

the year ended December 31, 2021, 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.

the year ended December 31, 2020, there were no customers who generated revenues greater than 10% of the Company’s consolidated

the years ended December 31, 2022, 2021, and 2020, 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.

the year ended December 31, 2019, one customer accounted for 20 % of the Company’s revenue.

Benefit plan :

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to the plan during the years ended December 31, 2020 and 2021.

In 2022, the Company contributed $285 to the plan.

Severance pay :

liability of the Company’s subsidiaries in Israel for severance pay is calculated pursuant to Israel’s Severance Pay Law

5273-1963 (the “Severance Law”) based on the most recent salary of the employees multiplied by the number of years of employment

as of balance sheet date and are presented on an undiscounted basis (the “Shut Down Method”).

Employees are entitled to one

month’s salary for each year of employment, or a portion thereof.

The liability for the Company and its subsidiaries in Israel

is fully provided by monthly deposits with insurance policies and by accrual.

The value of these policies is recorded as an asset in

the Company’s balance sheet.

5273-1963 (the “Severance Law”) based on the most recent salary of the employees multiplied by the number of years of

employment as of balance sheet date and are presented on an undiscounted basis.

Employees are

entitled to one month’s salary for each year of employment, or a portion thereof.

The liability for the Company and its

subsidiaries in Israel is fully provided by monthly deposits with insurance policies and by accrual.

The value of these policies is

recorded as an asset in the Company’s balance sheet.

deposited funds may be withdrawn only upon the fulfillment of the obligation pursuant to the Severance Law or labor agreements.

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amounted to $ 1,022 , $ 1,185 , and $ 1,084 , respectively.

Foreign currency translation :

Foreign currency :

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 to be highly inflationary, the financial statements of our subsidiary in Argentina have been remeasured as if its functional

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 to be highly inflationary, the financial statements of our subsidiary in Argentina have been remeasured as if its functional

currency was the USD.

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Net translation

gains (losses) from the translation of foreign currency are $ 653 ,

at December 31, 2019, 2020 and 2021, respectively,

gains (losses) from the translation of foreign currency are $ 134 , $ ( 8 ) and $ ( 1,601 ) at December 31, 2020, 2021 and 2022, respectively,

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

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 gains (losses) for the years ended December 31, 2019, 2020 and

2021 of $ ( 42 ) , $ 148 and $ ( 128 ) , respectively, are included in selling, general and administrative expenses in the Consolidated Statement

currency transaction 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 transaction gains (losses) for the years ended December 31, 2020,

2021 and 2022 of $ 148 ,

and $ ( 847 )

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

currency transaction gains (losses) related to long-term debt of $ ( 2,137 ) ,

for the years ended December 31, 2020, 2021 and 2022, respectively, are included in interest expense in the Consolidated Statement

of Operations.

Foreign currency translation gains (losses) related to long-term debt of $ ( 425 ) , $ ( 2,137 ) and $ 810 , respectively, for

the years ended December 31, 2019, 2020 and 2021, are included in interest expense in the Consolidated Statement of Operations.

Commitments and contingencies :

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financial statements.

January 2017, the FASB issued ASU No.

2017-04, “Intangibles - Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill

Impairment,” which simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill

impairment test.

Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill

with the carrying amount of that goodwill.

Under the amendments in ASU 2017-04, an entity should recognize an impairment charge for the

amount by which the carrying amount of a reporting unit exceeds its fair value;

however, the loss recognized should not exceed the total

amount of goodwill allocated to that reporting unit.

The updated guidance requires a prospective adoption.

The adoption of this standard

did not have an impact on the Company’s consolidated financial statements.

Reclassifications :

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had no effect on the previously reported results of operations.

3 - ACQUISITIONS

October 3, 2019, the Company completed the Transactions, as a result of which I.D.

Systems, Inc.

and PowerFleet Israel each became direct wholly-owned subsidiaries of the Company and Pointer became an indirect, wholly-owned subsidiary

of the Company.

Prior to the Transactions, PowerFleet, Inc.

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

financial statements from the date of the Transactions.

purchase method of accounting in accordance with ASC805, Business Combinations , was applied for the Transactions.

This requires

the total cost of an acquisition to be allocated to the tangible and identifiable intangible assets acquired and liabilities assumed

based on their respective fair values at the date of acquisition with the excess cost accounted for as goodwill.

Goodwill arising from

the acquisition is attributable to expected product and sales synergies from combining the operations of the acquired business with those

of the Company.

Systems has been determined to be the accounting acquirer in the Transactions.

following table summarizes the final purchase price allocation based on estimated fair values of the net assets acquired at the acquisition

OF PURCHASE PRICE ALLOCATION ON NET ASSETS ACQUIRED

Accounts receivable

Customer relationships

Trademark and tradename

Current liabilities assumed

Non current liabilities assumed

Net assets acquired

goodwill is not deductible for tax purposes.

results of operations of Pointer have been included in the consolidated statement of operations as of the effective date of the Transactions.

The following revenue and operating income of Pointer are included in the Company’s consolidated results of operations for the

year ended December 31, 2019:

OF PRO FORMA REVENUE AND EARNINGS

Operating loss

January 30, 2019, the Company completed the acquisition of substantially all of the assets of CarrierWeb, L.L.C.

and on July 30, 2019,

the Company completed the acquisition of substantially all of the assets of CarrierWeb Services Ltd.

(collectively, the “CarrierWeb

Acquisitions”).

purchase method of accounting in accordance with ASC805, Business Combinations , was applied for the CarrierWeb Acquisitions.

requires the total cost of an acquisition to be allocated to the tangible and identifiable intangible assets acquired and liabilities

assumed based on their respective fair values at the date of acquisition with the excess cost accounted for as goodwill.

Goodwill arising

from the acquisition is attributable to expected product and sales synergies from combining the operations of the acquired business with

those of the Company.

following table summarizes the final purchase price allocation of the CarrierWeb Acquisitions based on the fair values of the net assets acquired at the acquisition date:

OF PURCHASE PRICE ALLOCATION ON NET ASSETS ACQUIRED

Accounts receivable

Customer relationships

Trademark and tradename

Net assets acquired

goodwill is fully deductible for tax purposes.

results of operations from each of the CarrierWeb Acquisitions have been included in the consolidated statement of operations as of the

effective date of each such acquisition.

For the year ended December 31, 2019, the CarrierWeb Acquisitions contributed an aggregate of

approximately $ 3,809 to the Company’s revenues.

Operating income contributed by the CarrierWeb Acquisitions was not separately

identifiable due to Company’s integration activities and is impracticable to provide.

following table represents the combined pro forma revenue and earnings for the year ended December 31, 2019:

OF PRO FORMA REVENUE AND EARNINGS

December 31, 2019 (b)

Pro Forma Combined

Operating loss

Net loss per share - basic and diluted

pro forma results for the Transactions.

Pro forma results for the CarrierWeb Acquisitions are impracticable to provide as the acquisition

was a carve-out from a bankruptcy transaction.

combined pro forma revenue and earnings for the year ended 2019 for the Transactions were prepared as though such transactions had occurred

as of January 1, 2019.

The pro forma results do not include any anticipated cost synergies or other effects of the planned integration

This summary is not necessarily indicative of what the results of operations would have been had the Transactions occurred

during such period, nor does it purport to represent results of operations for any future periods.

3 - REVENUE RECOGNITION

Company and its subsidiaries generate revenue from sales of systems and products and from customer SaaS and hosting infrastructure fees.

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services.

Sales, value add, and other taxes the Company collects concurrently with revenue-producing activities are excluded from revenue.

items that are immaterial in the context of the contract are recognized as expense.

The expected costs associated with the Company’s

base warranties continue to be recognized as expense when the products are sold (see Note 11).

is recognized when performance obligations under the terms of a contract with our customer are satisfied.

Product sales are recognized

at a point in time when title transfers, when the products are shipped, or when control of the system is transferred to the customer,

which usually is upon delivery of the system and when contractual performance obligations have been satisfied.

For products which do

not have standalone value to the customer separate from the SaaS services provided, the Company considers both hardware and SaaS services

a bundled performance obligation.

Under the applicable accounting guidance, all of the Company’s billings for equipment and the

related cost for these systems are deferred, recorded, and classified as a current and long-term liability and a current and long-term

asset, respectively.

The deferred revenue and cost are recognized over the service contract life, ranging from one to five years, beginning

at the time that a customer acknowledges acceptance of the equipment and service.

Company recognizes revenue for remotely hosted SaaS agreements and post-contract maintenance and support agreements beyond our standard

warranties over the life of the contract.

Revenue is recognized ratably over the service periods and the cost of providing these services

is expensed as incurred.

Amounts invoiced to customers which are not recognized as revenue are classified as deferred revenue and classified

as short-term or long-term based upon the terms of future services to be delivered.

Deferred revenue also includes prepayment of extended

maintenance, hosting and support contracts.

Company earns other service revenues from installation services, training and technical support services which are short-term in nature

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

Company also derives revenue from leasing arrangements.

Such arrangements provide for monthly payments covering product or system

sale, maintenance, support and interest.

These arrangements meet the criteria to be accounted for as operating or sales-type leases.

Accordingly, for sales-type leases an asset is established for the “sales-type lease receivable” at the present value of

the expected lease payments and revenue is deferred and recognized over the service contract, as described above.

revenues and interest income are recognized monthly over the lease term.

Company’s contracts with customers may include multiple performance obligations.

For such arrangements, the Company allocates revenue

to each performance obligation based on its relative standalone selling price.

The Company generally determines standalone selling prices

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

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

the Company expects to recover those costs through future fees from the customers.

The Company amortizes the asset over one to five years

because the asset relates to the services transferred to the customer during the contract term of one to five years.

Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one

year or less and (ii) contracts for which the Company recognizes revenue at the amount to which the Company has the right to invoice

for services performed.

following table presents the Company’s revenues disaggregated by revenue source for the years ended December 31, 2020, 2021 and

OF REVENUE DISAGGREGATED BY REVENUE SOURCE

SCHEDULE OF REVENUE DISAGGREGATED BY REVENUE SOURCE

Year Ended December 31,

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Deferred revenue long term

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

For the years

ended December 31, 2020 and 2021, the Company recognized revenue of $ 10,242 and $ 10,249 , respectively, that was included in the deferred

revenue balance at the beginning of each reporting period.

The Company expects to recognize as revenue before year 2026, when it

transfers those goods and services and, therefore, satisfies its performance obligation to the customers.

The Company records deferred

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

For the years ended December 31, 2021

and 2022, the Company recognized revenue of $ 10,249 and $ 4,215 , respectively, that was included in the deferred revenue balance at

the beginning of each reporting period.

The Company expects to recognize as revenue before year 2027, when it transfers those goods

and services and, therefore, satisfies its performance obligation to the customers.

4 – PREPAID EXPENSES AND OTHER ASSETS

2 unchanged sentences

Year Ended December 31,

Finance receivables, current

Sales-type lease receivables, current

Prepaid expenses

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5 - INVENTORIES

are stated at the lower of cost or net realizable value.

Cost is determined using the “moving average” cost method or the

first-in first-out (FIFO) method.

Inventory consists of components, work in process and finished products.

Inventories are shown net

of valuation reserves of $ 515 and $ 260 at December 31, 2020 and 2021, respectively.

which primarily consists of finished goods and components used in the Company’s products, is stated at the lower of cost or

net realizable value using the “moving average” cost method or the first-in first-out (FIFO) method.

Inventory is shown

net of a valuation reserve of $ 260

at December 31, 2021 and $ 453

at December 31, 2022.

consist of the following:

14 unchanged sentences

Accumulated depreciation and amortization

and amortization expense for the years ended December 31, 2019, 2020 and 2021 was $ 1,380 , $ 3,097 , and $ 3,399 , respectively.

This includes

amortization of costs associated with computer software for the years ended December 31, 2019, 2020 and 2021 of $ 528 , $ 515 , and $ 426 ,

and amortization expense for the years ended December 31, 2020, 2021 and 2022 was $ 3,097 ,

and $ 3,183 ,

respectively.

This includes amortization of costs associated with computer software for the years ended December 31, 2020, 2021 and

2022 of $ 515 ,

respectively.

7 - INTANGIBLE ASSETS AND GOODWILL

Beginning in 2022, the Company began to capitalize software costs for software

to be sold, marketed, or leased to customers.

incurred internally in researching and developing software products are charged to expense until technological feasibility has been established

for the product.

Once technological feasibility is established, software costs are capitalized until the product is available for general

release to customers.

Judgment is required in determining when technological feasibility of a product is established.

The amortization

of these costs will be included in cost of revenue over the estimated life of the products.

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

OF INTANGIBLE ASSETS

SCHEDULE OF INTANGIBLE ASSETS

December 31, 2022

7 unchanged sentences

Covenant not to compete

Software to be sold or leased

Customer List

Trademark and tradename

December 31, 2020

Useful Lives (In Years)

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Lives (In Years)

Carrying Amount

Customer relationships

4 unchanged sentences

Trademark and tradename

continues to adversely impact the broader global economy and has caused significant volatility in financial markets.

Global uncertainties continue to adversely impact the broader global economy and has caused significant volatility in financial markets.

If there is a lack

6 unchanged sentences

goodwill, customer list and trademark and trade name of its acquired intangibles.

December 31, 2021, the weighted-average amortization period for the intangible assets was 9.1

December 31, 2022, the weighted-average amortization period for the intangible assets was 8.9 years.

At December 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 ,

years, respectively.

amortization periods for customer relationships, trademarks and trade names, patents, technology, and capitalized software to be sold

or leased were 11.9 , 9.6 , 7.0 , 4.3 , and 3.0 years, respectively.

expense for the years ended December 31, 2020, 2021 and 2022 was $ 5,328 , $ 5,154 , and $ 5,079, respectively.

1 unchanged sentence

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

SCHEDULE OF FINITE-LIVED INTANGIBLE ASSETS AMORTIZATION EXPENSE

Year ending December 31:

Finite-Lived Intangible

Assets, Net, Total

change in goodwill from January 1, 2020 to December 31, 2021 is as follows:

OF CHANGES IN GOODWILL

Balance as of January 1, 2020

PPA measurement period adjustment (a)

Balance as of December 31, 2020

Balance as of December 31, 2021

considering all information related to the finalization of income taxes the Company reduced

certain provisionally recorded deferred tax liabilities due to the new information with a

corresponding decrease in the Pointer acquisition goodwill

9 - NET LOSS PER SHARE

OF NET LOSS PER SHARE BASIC AND DILUTED

Basic and diluted loss per share

Net loss attributable to common stockholders

Weighted-average common share outstanding - basic and diluted

Net loss attributable to common stockholders - basic and diluted

loss per share is calculated by dividing net loss attributable to common shareholders by the weighted-average number of common shares

outstanding during the period.

Diluted loss per share reflects the potential dilution assuming common shares were issued upon the exercise

of outstanding options and the proceeds thereof were used to purchase outstanding common shares.

Dilutive potential common shares include

outstanding stock options, warrants and restricted stock and performance share awards.

We include participating securities (unvested

share-based payment awards and equivalents that contain non-forfeitable rights to dividends or dividend equivalents) in the computation

of EPS pursuant to the two-class method.

Our participating securities consist solely of preferred stock, which have contractual participation

rights equivalent to those of stockholders of unrestricted common stock.

The two-class method of computing earnings per share is an allocation

method that calculates earnings per share for common stock and participating securities.

During periods of net loss, no effect is given

to the participating securities because they do not share in the losses of the Company.

For the years ended December 31, 2019, 2020 and

2021, 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 12,865 , 11,998 and 11,628 ,

respectively, would have been anti-dilutive due to the loss.

intangible assets

Company tests for goodwill impairment at the reporting unit level on October 1 of each year and between annual tests if a triggering

event indicates the possibility of an impairment.

The Company monitors changing business conditions as well as industry and economic

factors, among others, for events which could trigger the need for an interim impairment analysis.

The Company concluded that a sustained

decline in its stock price coupled with continuing losses, represented a triggering event for impairment during the third quarter.

the Company performed an interim quantitative impairment analysis at September 30, 2022 using a market-based and income-based

quantitative assessment utilizing a combination of the (i) the guideline public company method applying revenue

and adjusted EBITDA multiples of similar companies and, (ii) the discounted cash flow method, respectively.

The fair value

determination used in the impairment assessment requires estimates of the fair values based present value or other valuation

techniques or a combination thereof, necessitating subjective judgments and assumptions by management.

These estimates and

assumptions could result in significant differences to the amounts reported if underlying circumstances were to change.

concluded that no impairment relating to goodwill existed at December 31, 2022.

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

8 - STOCK-BASED COMPENSATION

The Company’s stockholders

have approved the Company’s 2018 Incentive Plan (as amended the “2018 Plan”) pursuant to which the Company

may grant stock options, restricted stock and other equity-based awards with respect to up to an aggregate of 6,500

Company’s stockholders have approved the Company’s 2018 Incentive Plan (as amended the “2018 Plan”) pursuant

to which the Company may grant stock options, restricted stock and other equity-based awards with respect to up to an aggregate of 6,500

shares of the Company’s common stock with a vesting period of approximately four

7 unchanged sentences

connection with the Company’s acquisition of Pointer, the Company previously approved the grants of options to purchase 350

shares of the Company’s common stock to Mr.

Wolfe and options to purchase 150,000 shares of the Company’s common stock to

Mavrommatis on March 13, 2019 (the “Signing Bonus Options”) and the grants of additional options to purchase 350,000

shares of the Company’s common stock to Chris Wolfe, the Company’s former Chief Executive Officer, and options to purchase 150 shares of the Company’s common stock to

Ned Mavrommatis, the Company’s former Chief Financial Officer, on March 13, 2019 (the “Signing Bonus Options”) and the grants of additional options to purchase 350

shares of the Company’s common stock to Mr.

8 unchanged sentences

replace the Original Bonus Options:

(i) options to purchase 350,000 shares of the Company’s common stock to Mr.

Wolfe and options

to purchase 150,000 shares of the Company’s common stock to Mr.

Mavrommatis (the “New Signing Options”), which options

are subject to the terms of the 2018 Plan, have an exercise price of $ 6.28 per share, and will vest and become exercisable in full on

December 31, 2022 if the volume weighted average price of the Company’s common stock during a consecutive 30 trading day period

(the “30 Day VWAP”) reaches $12.00 at any point prior to December 31, 2022 , and (ii) options to purchase 350,000 shares of

the Company’s common stock to Mr.

Wolfe and options to purchase 150,000 shares of the Company’s common stock to Mr.

(the “New Closing Options”), which options are subject to the terms of the 2018 Plan, have an exercise price of $ 6.00 per

share, and will vest and become exercisable immediately upon the Company achieving a 30 Day VWAP of $10.00

connection with Mr.

David Mahlab’s retirement from his role as the Chief Executive Officer International of the Company, the Company

modified the vesting and exercise period of all unvested restricted stock, stock options and restricted stock units previously granted

Due to the modification of the terms of Mr.

Mahlab’s stock options, restricted stock and restricted stock units,

the Company recognized additional stock-based compensation expense of $ 1,261 ,

$- 0 - and $ 278 for the years ended

December 31, 2019, December 31, 2020 and December 31, 2021 respectively.

(i) options to purchase 350

shares of the Company’s common stock to

Wolfe and options to purchase 150

shares of the Company’s common stock to

Mavrommatis (the “New Signing Options”), which options are subject to the terms of the 2018 Plan, have an exercise price

per share, and will vest

and become exercisable in full on December 31, 2022 if the volume weighted average price of the Company’s common stock during a

consecutive 30 trading day period (the “30 Day VWAP”) reaches $12.00 at any point prior to December 31, 2022 ,

and (ii) options to purchase 350

shares of the Company’s common stock to

Wolfe and options to purchase 150

shares of the Company’s common stock to

Mavrommatis (the “New Closing Options”), which options are subject to the terms of the 2018 Plan, have an exercise price

per share, and will vest

and become exercisable immediately upon the Company achieving a 30 Day VWAP of $10.00.

the first fiscal quarter of 2022, the Company granted options to purchase 5,960

shares of the Company’s common stock to certain senior managers, including the Company’s executive officers, consisting of

options to purchase 895

shares of common stock with time-based vesting conditions and options to purchase 5,065

shares of common stock with performance-based vesting conditions (which we refer to as “market-based stock options”).

The market-based stock options have an exercise price that range from $ 2.85

The market-based stock 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 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 ( 1.7 %),

and expected stock price volatility ( 51.7 %)

over the expected life of awards ( 10

The weighted average fair value of market-based stock options granted during the period was $ 1.60 .

Stock options:

summary of the status of the Company’s stock options as of December 31, 2019, 2020 and 2021 and changes during the years then ended,

is presented below:

OF STOCK OPTIONS ACTIVITY

summary of the status of the Company’s stock options, relating to the Company’s market-based stock options that were

granted to certain senior managers, including the Company’s executive officers, as of December 31, 2020, 2021 and 2022 and

changes during the years then ended, is presented below:

SCHEDULE OF STOCK OPTIONS ACTIVITY

Number of Shares

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Exercisable at end of year

following table summarizes information about stock options at December 31, 2021.

OF STOCK OPTION INFORMATION BY EXERCISE PRICE RANGE

following table summarizes information about stock options, relating to the market-based stock options that were granted to certain

senior managers, including the Company’s executive officers, at December 31, 2022.

SUMMARY OF STOCK OPTION INFORMATION BY EXERCISE PRICE RANGE

Options Outstanding

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Weighted - Average Exercise Price

OF OPTIONS OUTSTANDING AND EXERCISABLE

11.94 – 16.47

16.48 – 21.00

summary of the status of the Company’s stock options, excluding the market-based stock options that were granted to certain

senior managers, including the Company’s executive officers, as of December 31, 2020, 2021 and 2022 and changes during the

years then ended, is presented below:

SCHEDULE OF STOCK OPTIONS ACTIVITY

Number of Shares

Weighted- Average Exercise Price

Number of Shares

Weighted- Average Exercise Price

Number of Shares

Weighted- Average Exercise Price

Outstanding at beginning of year

Share-based payments assumed

Forfeited or expired

Outstanding at end of year

Exercisable at end of year

following table summarizes information about stock options, excluding the market-based stock options that were granted to certain

senior managers, including the Company’s executive officers, at December 31, 2022.

SUMMARY OF STOCK OPTION INFORMATION BY EXERCISE PRICE RANGE

Options Outstanding

Options Exercisable

Exercise Prices ($)

Number Outstanding

Weighted - Average Remaining Contractual Life in Years

Weighted- Average Exercise Price

Number Outstanding

Weighted - Average Exercise Price

SCHEDULE OF OPTIONS OUTSTANDING AND EXERCISABLE

As of December 31, 2022

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weighted-average assumptions:

OF FAIR VALUE STOCK OPTION ASSUMPTIONS

SCHEDULE OF FAIR VALUE STOCK OPTION ASSUMPTIONS

Year Ended December 31,

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data with respect to employee exercise periods.

Company valued the New Signing Options and the New Closing Options 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 ( 0.70 %), and expected stock price volatility ( 47 %)

over the expected life of awards ( 6 years).

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

the years ended December 31, 2020, 2021 and 2022, the Company recorded $ 1,587 , $ 1,684 , and $ 2,943 respectively, of stock-based compensation

expense in connection with the stock option grants.

fair value of options vested during the years ended December 31, 2019, 2020 and 2021 was $ 476 ,

and $ 1,201 ,

respectively.

The total intrinsic value of options exercised during the years ended December 31, 2019, 2020 and 2021 was $ 119 ,

respectively.

fair value of options vested during the years ended December 31, 2020, 2021 and 2022 was $ 1,974 , $ 1,201 , and $ 869 , respectively.

total intrinsic value of options exercised during the years ended December 31, 2020, 2021 and 2022 was $ 313 , $ 483 , and $ 0 , respectively.

of December 31, 2022, there was $ 2,009 of total unrecognized compensation costs related to non-vested options granted under the Company’s

stock option plans.

stock option plans excluding the market-based stock options that were granted to certain senior managers, including the Company’s executive officers.

That cost is expected to be recognized

over a weighted-average period of 2.98 years.

As of December 31, 2022, there was $ 6,007 of total unrecognized compensation costs related

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

senior managers, including the Company’s executive officers.

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

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years ended December 31, 2020, 2021 and 2022 is as follows:

OF NON-VESTED RESTRICTED STOCK ACTIVITY

SCHEDULE OF NON-VESTED RESTRICTED STOCK ACTIVITY

Non-Vested Shares

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expense in connection with the restricted stock grants.

As of December 31, 2021, there was $ 3,321 of total unrecognized compensation

cost related to non-vested shares.

As of December 31, 2022, there was $ 2,284 of total unrecognized compensation cost

related to non-vested shares.

That cost is expected to be recognized over a weighted-average period of 2.37 years.

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

The following table summarizes the activity relating

to the Company’s RSUs for the years ended December 31, 2019, 2020 and 2021:

OF NON-VESTED RESTRICTED STOCK ACTIVITY

The following table summarizes the activity relating to

the Company’s RSUs for the years ended December 31, 2020, 2021 and 2022:

SCHEDULE OF NON-VESTED RESTRICTED STOCK ACTIVITY

Number of Restricted Stock Units

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Restricted stock-units, non-vested, December 31, 2022

the years ended December 31, 2019, 2020 and 2021 the Company recorded $ 217 , $ 283 , and $ 203 respectively, of stock-based compensation

expense in connection with the RSUs.

As of December 31, 2021, there was $ 50 of total unrecognized compensation cost related to non-vested

That cost is expected to be recognized over a weighted-average period of 0.50 years.

the years ended December 31, 2020, 2021 and 2022 the Company recorded $ 283 , $ 203 , and $ 53, respectively, of stock-based compensation expense

in connection with the RSUs.

As of December 31, 2022 there was $- 0 - of total unrecognized compensation cost related to non-vested RSUs.

9 - NET LOSS PER SHARE

SCHEDULE OF NET LOSS PER SHARE BASIC AND DILUTED

Basic and diluted loss per share

Net loss attributable to common stockholders

Weighted-average common share outstanding - basic and diluted

Net loss attributable to common stockholders - basic and diluted

loss per share is calculated by dividing net loss attributable to common shareholders by the weighted-average number of common shares

outstanding during the period.

Diluted loss per share reflects the potential dilution assuming common shares were issued upon the exercise

of outstanding options and the proceeds thereof were used to purchase outstanding common shares.

Dilutive potential common shares include

outstanding stock options, warrants and restricted stock and performance share awards.

We include participating securities (unvested

share-based payment awards and equivalents that contain non-forfeitable rights to dividends or dividend equivalents) in the computation

of EPS pursuant to the two-class method.

Our participating securities consist solely of preferred stock, which have contractual participation

rights equivalent to those of stockholders of unrestricted common stock.

The two-class method of computing earnings per share is an allocation

method that calculates earnings per share for common stock and participating securities.

During periods of net loss, no effect is given

to the participating securities because they do not share in the losses of the Company.

For the years ended December 31, 2020, 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 11,998 , 11,628 and 16,571

respectively, would have been anti-dilutive due to the loss.

10 – SHORT-TERM BANK DEBT AND LONG-TERM DEBT

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Long term debt - less current maturities

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

in term loan borrowings on 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

connection with the Transactions, PowerFleet Israel incurred NIS

denominated debt in term loan borrowings on 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 initial 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

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 denominated in NIS

in an initial aggregate principal amount of $ 10,000

(collectively, the “Credit Facilities”).

As of December 31, 2022, the Company borrowed NIS 20,091 or $ 5,709 ,

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 original 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%.

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% (amended to SOFR + 2.15%).

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

availability under the Revolving Facility .

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

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

financial covenants, tested quarterly:

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 Israel;

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 of default.

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”),

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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 1 %

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.

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 December 31, 2022.

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of $ 1,451 , $ 1,078 , and $ 824 to interest expense on its consolidated statements of operations for the years ended December 31, 2020, 2021

and 2021, related to interest expense and amortization of debt issuance costs associated with the Credit Facilities.

and 2022 related to interest expense associated with the Credit Facilities.

October 31, 2022, the Borrowers entered into a third amendment to the Credit Agreement (the “Third Amendment”) with Hapoalim.

The Third Amendment provides for, among other things, the New Revolver.

The New Revolver will be available for a period

of one month, commencing on October 31, 2022, and will continue to be available for successive one-month periods until and including

October 30, 2023, unless the Borrowers deliver a notice to Hapoalim of their request not to renew the New Revolver.

New Revolver will initially bear interest at the Secured Overnight Financing Rate plus 2.59%.

Such interest is subject to monthly changes

by Hapoalim, provided that Hapoalim gives Pointer advance notice regarding such change prior to the end of the applicable calendar month .

New Revolver is secured by a first ranking fixed pledge and assignment by Pointer over its new bank account, which was opened in

connection with the New Revolver, and all of the rights relating thereunder as well as a cross guarantee by PowerFleet

is required to pay a credit allocation fee equal to 0.5 % per annum on undrawn and uncancelled amounts of the New Revolver.

Pointer has a one-year $ 1,000 revolving credit facility available for use with Discount Bank, which renews annually,

subject to the bank’s approval.

Pointer did not have any borrowings outstanding under the revolving credit facility with Discount

Bank as of December 31, 2022.

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

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payable and accrued expenses consist of the following:

SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Year Ended December 31,

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Other current liabilities

Accounts payable and

accrued expenses

Company’s products are warranted against defects in materials and workmanship for a period of 1-3 years from the date of acceptance

of the product by the customer .

The customers may purchase an extended warranty providing coverage up to a maximum of 60 months .

for estimated future warranty costs is recorded for expected or historical warranty matters related to equipment shipped and is included

in accounts payable and accrued expenses in the Consolidated Balance Sheets as of December 31, 2020 and 2021.

Accounts payable

and accrued expenses

Company’s products are warranted against defects in materials and workmanship for a period of 1-8 years from the date of

acceptance of the product by the customer .

customers may purchase an extended warranty providing coverage up to a maximum of 60 months .

A provision for estimated future

warranty costs is recorded for expected or historical warranty matters related to equipment shipped and is included in accounts

payable and accrued expenses in the Consolidated Balance Sheets as of December 31, 2021 and 2022.

following table summarizes warranty activity during the years ended December 31, 2021 and 2022:

SCHEDULE OF PRODUCT WARRANTY LIABILITY

OF PRODUCT WARRANTY LIABILITY

Year Ended December 31,

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Accrued warranty reserve, end of period (a)

Includes accrued warranty included in other long-term liabilities at December 31, 2020 and 2021 of $ 102 and $ 187 , respectively.

Includes accrued warranty included

in other long-term liabilities at December 31, 2021 and 2022 of $ 187 and $ 157 , respectively.

Company has operating leases for office space and office equipment.

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

condensed consolidated statements of operations during years ended December 31, 2019, 2020, and 2021.

consolidated statements of operations during years ended December 31, 2020, 2021, and 2022.

of lease expense are as follows:

SCHEDULE OF COMPONENTS OF LEASE EXPENSE

OF COMPONENTS OF LEASE EXPENSE

December 31, 2021

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cash flow information and non-cash activity related to the Company’s operating leases are as follows:

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

OF CASH FLOW INFORMATION AND NON CASH ACTIVITY OF OPERATING LEASES

December 31, 2021

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remaining lease term and discount rate for the Company’s operating leases are as follows:

SCHEDULE OF WEIGHTED AVERAGE REMAINING LEASE TERM AND DISCOUNT RATE

OF WEIGHTED AVERAGE REMAINING LEASE TERM AND DISCOUNT RATE

December 31, 2022

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

SCHEDULED MATURITIES OF OPERATING LEASE LIABILITIES

MATURITIES OF OPERATING LEASE LIABILITIES

Year ending December 31:

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and commissions and other offering expenses.

[B] ATM Offering:

May 14, 2020, we entered into an equity distribution agreement (the “Sales Agreement”) with Canaccord, pursuant to which

we could offer and sell, from time to time through an “at-the-market offering” program, with Canaccord as sales agent,

shares of our common stock having an aggregate offering price of up to $ 25,000 .

The Sales Agreement provided for the Company to pay

Canaccord a commission of 3.0 % of the aggregate gross proceeds from each sale of common stock occurring pursuant to the Sales Agreement.

The offer and sale of common stock in the ATM Offering were made pursuant to the Company’s shelf registration statement on

Form S-3 that was declared effective by the SEC on November 27, 2019, the base prospectus contained therein dated November 27, 2019,

and a prospectus supplement related to the ATM Offering dated May 14, 2020.

ATM Offering:

2020, we entered into an equity distribution agreement (the “Sales Agreement”) with Canaccord, pursuant to which we could

offer and sell, from time to time through an “at-the-market offering” program, with Canaccord as sales agent, shares

of our common stock having an aggregate offering price of up to $ 25,000 .

The Sales Agreement provided for the Company to pay Canaccord

a commission of 3.0 % of the aggregate gross proceeds from each sale of common stock occurring pursuant to the Sales Agreement.

offer and sale of common stock in the ATM Offering were made pursuant to the Company’s shelf registration statement on Form

S-3 that was declared effective by the SEC on November 27, 2019, the base prospectus contained therein dated November 27, 2019, and

a prospectus supplement related to the ATM Offering dated May 14, 2020.

The Company sold 810 shares of common stock through Canaccord

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The Sales Agreement was terminated effective as of August 14, 2020.

[C] Redeemable Preferred stock:

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

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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 year ended December 31, 2020, and December 31, 2021, the Company issued 1 and - 0 - additional shares of Series A Preferred

The 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 .

the year ended December 31, 2021 and December 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 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

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During the years ended December 31, 2020, 2021 and December

2021, the Company paid dividends in the amounts of $- 0 - and $ 4,112 shares respectively, to the holders of the Series A Preferred

31, 2022, the Company paid dividends in the amounts of $ 3,927 , $ 4,112 and $ 4,231 shares respectively, to the holders of the Series

A Preferred Stock.

As of December 31, 2021, and December 31, 2022, dividends in arrears were $- 0 - and $- 0 - respectively.

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so rendering the Series A Preferred Stock voting capital stock of the Company (such notice, a “Series A Voting Activation Notice”).

and after the delivery of a Series A Voting Activation Notice, all holders of the Series A Preferred Stock will be entitled to vote

with the holders of common stock as a single class on an as-converted basis (provided, however, that any holder of Series A Preferred

Stock shall not be entitled to cast votes for the number of shares of common stock issuable upon conversion of such shares of Series

A Preferred Stock held by such holder that exceeds the quotient of (1) the aggregate Series A Issue Price for such shares of Series

A Preferred Stock divided by (2) $5.57 (subject to adjustment for stock splits, stock dividends, combinations, reclassifications

From and after the delivery of a Series A Voting Activation Notice, all holders of the Series A Preferred Stock will be entitled

to vote with the holders of common stock as a single class on an as-converted basis (provided, however, that any holder of Series

A Preferred Stock shall not be entitled to cast votes for the number of shares of common stock issuable upon conversion of such shares

of Series A Preferred Stock held by such holder that exceeds the quotient of (1) the aggregate Series A Issue Price for such shares

of Series A Preferred Stock divided by (2) $5.57 (subject to adjustment for stock splits, stock dividends, combinations, reclassifications

and similar events, as applicable)).

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common stock that represent at least 10% of the voting power of the common stock, or the Investors or their affiliates continue to

hold at least 33% of the aggregate amount of Series A Preferred Stock issued to the Investors on the Original Issuance Date,

the consent of the holders of at least a majority of the outstanding shares of Series A Preferred Stock will be necessary for the

Company to, among other things, (i) liquidate the Company or any operating subsidiary or effect any deemed liquidation event (as

such term is defined in the Charter), except for a deemed liquidation event in which the holders of Series A Preferred Stock receive

an amount in cash not less than the Redemption Price (as defined below), (ii) amend the Company’s organizational documents

in a manner that adversely affects the Series A Preferred Stock, (iii) issue any securities that are senior to, or equal in priority

with, the Series A Preferred Stock or issue additional shares of Series A Preferred Stock to any person other than the Investors

or their affiliates, (iv) incur indebtedness above the agreed-upon threshold, (v) change the size of the Company’s board of

directors to a number other than seven, or (vi) enter into certain affiliated arrangements or transactions .

hold at least 33% of the aggregate amount of Series A Preferred Stock issued to the Investors on the Original Issuance Date, the

consent of the holders of at least a majority of the outstanding shares of Series A Preferred Stock will be necessary for the Company

to, among other things, (i) liquidate the Company or any operating subsidiary or effect any deemed liquidation event (as such term

is defined in the Charter), except for a deemed liquidation event in which the holders of Series A Preferred Stock receive an amount

in cash not less than the Redemption Price (as defined below), (ii) amend the Company’s organizational documents in a manner

that adversely affects the Series A Preferred Stock, (iii) issue any securities that are senior to, or equal in priority with, the

Series A Preferred Stock or issue additional shares of Series A Preferred Stock to any person other than the Investors or their affiliates,

(iv) incur indebtedness above the agreed-upon threshold, (v) change the size of the Company’s board of directors to a number

other than seven, or (vi) enter into certain affiliated arrangements or transactions .

any time, each holder of Series A Preferred Stock may elect to convert each share of such holder’s then-outstanding Series

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A Conversion Price is initially equal to $ 7.319 , subject to certain adjustments as set forth in the Charter.

At any time after the third anniversary of the Original Issuance Date, subject to certain conditions, the Company may redeem the Series A Preferred Stock for an amount per share, equal to the greater of (i) the product of (x) 1.5 multiplied by (y) the sum of the Series A Issue Price, plus all accrued and unpaid dividends and (ii) the product of (x) the number of shares of common stock issuable upon conversion of such Series A Preferred Stock multiplied by (y) the volume weighted average price of the common stock during the 30 consecutive trading day period ending on the trading date immediately prior to the date of such redemption notice or, if calculated in connection with a deemed liquidation event, the value ascribed to a share of common stock in such deemed liquidation event (the “Redemption Price”) .

any time after the third anniversary of the Original Issuance Date, subject to certain conditions, the Company may redeem the Series

A Preferred Stock for an amount per share, equal to the greater of (i) the product of (x) 1.5 multiplied by (y) the sum of the Series

A Issue Price, plus all accrued and unpaid dividends and (ii) the product of (x) the number of shares of common stock issuable upon

conversion of such Series A Preferred Stock multiplied by (y) the volume weighted average price of the common stock during the 30

consecutive trading day period ending on the trading date immediately prior to the date of such redemption notice or, if calculated

in connection with a deemed liquidation event, the value ascribed to a share of common stock in such deemed liquidation event (the

“Redemption Price”).

at any time (i) after the 66-month anniversary of the Original Issuance Date, (ii) following delivery of a mandatory conversion notice

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

with the Investors, pursuant to which the Company 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.

with the Investors, pursuant to which the Company 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

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accumulated balances for each classification of other comprehensive income (loss) are as follows:

SCHEDULE OF ACCUMULATED OTHER COMPREHENSIVE LOSS

OF ACCUMULATED OTHER COMPREHENSIVE LOSS

Foreign currency translation adjustment

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Net loss before income

provision for income taxes consist of the following:

provision for income taxes consists of the following:

OF PROVISION FOR INCOME TAXES

Year Ended December 31,

Total Current Income

Tax Expense (Benefit)

Total Deferred Income

Tax Expense (Benefit)

Total (benefit) provision for income taxes

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Federal research and development tax credits

Intangibles, amortization

Capitalized research

Bad Debt Reserve

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significant changes to its unrecognized tax positions during the next twelve months.

December 31, 2021, the Company had an aggregate net operating loss carryforward of approximately $ 83,085

December 31, 2022, the Company had an aggregate net operating loss carryforward of approximately $ 78,285 for U.S.

federal income tax purposes.

December 31, 2021, the Company had an aggregate net operating loss carryforward of approximately $ 35,037

for state income tax purposes and a foreign

net operating loss carryforward of approximately $ 35,902 .

At December 31, 2022, the Company had an aggregate net operating loss carryforward of approximately

for state income tax purposes and a foreign net operating loss carryforward of approximately $ 31,868 .

Substantially all of the net operating loss carryforwards expire from 2023 through 2037 for pre-2018 federal net operating loss carryforwards

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of its net operating loss carryforwards under the same Internal Revenue Code provision.

December 31, 2021, the Company has New Jersey net operating loss carryforwards (“NJ NOLs”) included above in the approximate

amount of $ 5,071

expiring through 2041, which are available

to reduce future earnings which would otherwise be subject to state income tax.

December 31, 2022, the Company has New Jersey net operating loss carryforwards (“NJ NOLs”) included above in the

approximate amount of $ 5,006

expiring through 2041, which are available to reduce future earnings which would otherwise be subject to state income

Company is asserting permanent reinvestment of all accumulated undistributed earnings of its foreign subsidiaries as of December 31,

1 unchanged sentence

the year ended December 31, 2022, the Company’s valuation allowance decreased to $ 43,654

compared to $ 46,070

as of December 31, 2020 primarily due to expiration of other net operating losses.

The Company has provided a valuation allowance against the full

amount of its domestic deferred tax assets and the majority of the foreign deferred tax assets.

The valuation allowance was established

because of the uncertainty of realization of the deferred tax assets due to lack of sufficient history of generating taxable income.

Realization is dependent upon generating sufficient taxable income prior to the expiration of the net operating loss carryforwards in

future periods.

The valuation allowance increased in 2020 and decreased in 2021 by $ 3,953 ,

compared to $ 44,228 as of

December 31, 2021 primarily due to utilization of the net operating losses.

The Company has provided a valuation allowance against

the full amount of its domestic deferred tax assets and the majority of the foreign deferred tax assets.

The valuation allowance was

established because of the uncertainty of realization of the deferred tax assets due to lack of sufficient history of generating

taxable income.

Realization is dependent upon generating sufficient taxable income prior to the expiration of the net operating loss

carryforwards in future periods.

The valuation decreased in 2021 and 2022 by $ 1,842 ,

respectively.

11 unchanged sentences

Contingencies:

for normal operating leases, the Company is not currently subject to any material commitments.

time to time, the Company is involved in various litigation matters involving claims incidental to its business and acquisitions, including

20 unchanged sentences

The aggregate

amount claimed to be owed under the notice was approximately $ 10,476

as of December 31, 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 is $ 45 .

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

this reason, the Company has not made any provision.

amount claimed to be owed under the notice was approximately $ 11,777 as of December 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.

remaining claim after this administrative decision is $ 202 .

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 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.

February 24, 2022, Pointer Mexico received a notification for 2015 tax assessment in the amount of $ 238 regarding the underpayment of

VAT and government fees from the Mexican Tax Service (“MTS”).

Under the statute and case law, Pointer Mexico was entitled

to appeal before the MTS or file a lawsuit before the Federal Court of Administrative Justice (Tribunal Federal de Justicia Administrativa).

On April 19, 2022, Pointer Mexico filed an appeal for revocation of the assessment.

May 3, 2022, Pointer Mexico filed additional evidence before the MTS.

On January 24, 2023, the MTS resolved the administrative revocation

appeal, confirming the tax assessment against Pointer Mexico.

Against this last resolution, Pointer Mexico is entitled to appeal before

the Federal Court of Administrative Justice.

The term for the filing of this appeal lapses on March 8, 2023.

Based on the current analysis

of the facts and case, the Company has recorded a provision of $ 238 .

February 24, 2022, Pointer Mexico received a notification for 2016 and 2017 tax assessment in the amounts of $ 268

respectively, regarding the underpayment of VAT and government fees from the MTS.

Under the statute and case law, Pointer Mexico was

entitled to appeal before the MTS or file a lawsuit before the Federal Court of Administrative Justice.

On April 19, 2022, Pointer

Mexico filed an appeal for revocation of the assessment.

On May 2, 2022, Pointer Mexico filed additional evidence before the MTS.

of December 31, 2022, the MTS has not resolved the administrative revocation appeal.

The Company’s legal counsel is of the

opinion that the chance of loss is not probable and for this reason the Company has not made any provision.

18 – SUBSEQUENT EVENTS

January 5, 2022, Steve Towe was appointed as

the new Chief Executive Officer, succeeding Chris Wolfe.

March 6, 2023, the Company entered into a definitive share purchase and transfer agreement (the “Agreement”) with Swiss

Re Reinsurance Holding Company Ltd (the “Seller”) to acquire all of the outstanding shares of Movingdots GmbH

(“Movingdots”), a wholly-owned subsidiary of the Seller, for consideration consisting of € 1

and the issuance by the Company of a ten-year warrant to purchase 800,000

shares of the Company’s common stock at an exercise price of $ 7.00

Under the Agreement, the Seller is required to ensure that Movingdots has available cash and cash equivalents of at least

as of the closing date.

The transaction closed on March 31, 2023.

Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.

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-K

Item 8. Financial Statements and Supplementary Data