What changed in this filing

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Item 1. Financial Statements

2023-05-10 compared with 2022-11-09 · 585 added, 576 removed, 467 unchanged (71% of the section changed)

3 unchanged sentences

thousands, except per share data)

December 31, 2021 *

September 30, 2022

March 31, 2023

Current assets:

Cash and cash

Cash and cash equivalents

Restricted cash

Accounts receivable, net

of allowance for doubtful accounts of $ 3,176 and $ 2,835 in 2021 and 2022, respectively

Accounts receivable, net of allowance for credit losses of $ 2,567 and $ 2,328 in 2022 and 2023, respectively

Inventory, net

Deferred costs - current

expenses and other current assets

Prepaid expenses and other current assets

Total current assets

Deferred costs - less current portion

Fixed assets, net

4 unchanged sentences

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

5 unchanged sentences

Other long-term liabilities

Total liabilities

Commitments and Contingencies (note 22)

MEZZANINE EQUITY

Convertible redeemable

preferred stock:

Convertible redeemable preferred stock:

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

55 and 58 shares issued and outstanding at December 31,

2021 and September 30, 2022

59 and 60 shares issued and outstanding at December 31, 2022 and March 31, 2023

Preferred stock;

1 unchanged sentence

Common stock;

authorized 75,000 shares, $ 0.01

37,263 and 37,584 shares issued at December 31, 2021 and September 30, 2022, respectively;

shares outstanding, 35,882

and 36,156 at December 31, 2021 and September 30, 2022, respectively

authorized 75,000 shares, $ 0.01 par value;

37,605 and 37,621 shares issued at December 31, 2022 and March 31, 2023, respectively;

shares outstanding, 36,170 and 36,170 at December 31, 2022 and March 31, 2023, respectively

Additional paid-in capital

Accumulated deficit

Accumulated other comprehensive gain (loss)

Accumulated other comprehensive loss

Treasury stock;

and 1,429 common shares at cost at December 31, 2021 and September 30, 2022, respectively

1,435 and 1,451 common shares at cost at December 31, 2022 and March 31, 2023, respectively

Total PowerFleet, Inc.

stockholders’

Non-controlling interest

Total liabilities and

stockholders’ equity

Non-controlling interest

Total liabilities and stockholders’ equity

from audited balance sheet as of December 31, 2022.

3 unchanged sentences

thousands, except per share data)

Three Months Ended March 31,

Total revenues

4 unchanged sentences

Operating expenses:

Selling, general and administrative

and development expenses

Operating expenses

Selling, general and administrative expenses

Research and development expenses

Total operating expenses

Loss from operations

Interest income

Interest expense

Other (expense) income,

Net loss before income taxes

Interest expense, net

Bargain purchase - Movingdots

Other (expense) income, net

Net income (loss) before income taxes

Income tax benefit (expense)

Net loss before non-controlling interest

Net income (loss) before non-controlling interest

Non-controlling interest

Net income (loss)

Accretion of preferred stock

Preferred stock dividend

Net loss attributable

to common stockholders

Net loss per share attributable

to common stockholders - basic and diluted

Weighted average common

shares outstanding - basic and diluted

Net income (loss) attributable to common stockholders

Net income (loss) per share attributable to common stockholders - basic

Net income (loss) per share attributable to common stockholders -diluted

Weighted average common shares outstanding – basic

Weighted average common shares outstanding - diluted

accompanying notes to unaudited condensed consolidated financial statements.

AND SUBSIDIARIES

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Comprehensive Income (Loss)

thousands, except per share data)

Months Ended September 30,

attributable to common stockholders

Other comprehensive (loss) income, net:

Foreign currency translation

Total other comprehensive

income (loss)

Comprehensive

Three Months Ended

Net income (loss) attributable to common stockholders

Foreign currency translation adjustment

Total other comprehensive income

Comprehensive income (loss)

accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

thousands, except per share data)

Number of Shares

Comprehensive

Income (Loss)

Stockholders’

Number of Shares

Comprehensive

Income (Loss)

Stockholders’

Accumulated Deficit

Comprehensive Income (Loss)

Treasury Stock

Non-controlling Interest

Stockholders’ Equity

Balance at January 1, 2023

$ ( 141,440 )

Net loss attributable to common stockholders

Net income attributable to non-controlling interest

Net income (loss) attributable to common stockholders

Net loss attributable to non-controlling interest

Foreign currency translation adjustment

1 unchanged sentence

Forfeiture of restricted shares

Vesting of restricted stock units

Shares withheld pursuant to vesting of restricted

Shares withheld pursuant to vesting of restricted stock

Stock based compensation

Warrant issuance in connection with acquisition

Balance at March 31, 2023

$ ( 136,671 )

Net loss attributable to common stockholders

Net income attributable to non-controlling interest

Foreign currency translation adjustment

Forfeiture of restricted shares

Shares withheld pursuant to vesting of restricted

Stock based compensation

Balance at June 30, 2022

$ ( 136,671 )

Net loss attributable

to common stockholders

Net income attributable

to non-controlling interest

Issuance of restricted

Foreign currency translation

Forfeiture of restricted shares

Shares withheld pursuant

to vesting of restricted stock

Stock based compensation

Balance at September 30, 2022

$ ( 139,784 )

Paid-in Capital

Comprehensive Income (Loss)

Non-controlling

Stockholders’

Treasury Stock

Non-controlling Interest

Stockholders’ Equity

Balance at January 1, 2022

$ ( 134,437 )

Net loss attributable to common stockholders

Net income (loss) attributable to common stockholders

Net income attributable to non-controlling interest

Net income (loss) attributable to non-controlling interest

Foreign currency translation adjustment

2 unchanged sentences

Vesting of restricted stock units

Shares issued pursuant to exercise of stock

Shares withheld pursuant to vesting of restricted

Shares withheld pursuant to exercise of stock

Shares withheld pursuant to vesting of restricted stock

Stock based compensation

Common shares issued,

net of issuance costs

Balance at March 31, 2022

$ ( 137,366 )

Net loss attributable to common stockholders

Net loss attributable to non-controlling interest

Foreign currency translation adjustment

Forfeiture of restricted shares

Vesting of restricted stock units

Shares issued pursuant to exercise of stock

Shares withheld pursuant to vesting of restricted

Stock based compensation

Balance at June 30, 2021

$ ( 137,366 )

Net loss attributable to common stockholders

Net loss attributable to non-controlling interest

Net income (loss) attributable to

non-controlling interest

Foreign currency translation adjustment

Issuance of restricted shares

Forfeiture of restricted shares

Stock based compensation

Shares issued pursuant to exercise of stock

Shares withheld pursuant to vesting of restricted

Balance at September 30, 2021

$ ( 127,720 )

accompanying notes to unaudited condensed consolidated financial statements.

AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Condensed Consolidated Statements of Cash Flows

thousands, except per share data)

Cash flows from operating

Adjustments to reconcile net loss to cash (used

in) provided by operating activities:

Three Months Ended March 31,

Cash flows from operating activities

Net income (loss)

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

Non-controlling interest

Gain on bargain purchase

Inventory reserve

Stock based compensation

Stock based compensation expense

Depreciation and amortization

Right-of-use assets, non-cash

lease expense

Right-of-use assets, non-cash lease expense

Bad debt expense

2 unchanged sentences

Accounts receivable

Prepaid expenses and other

Prepaid expenses and other assets

Deferred costs

Deferred revenue

Accounts payable and accrued

Accounts payable and accrued expenses

Lease liabilities

severance payable, net

cash provided by (used in) operating activities

Cash flows from investing

Net cash (used in) provided by operating activities

Acquisitions, net of cash assumed

Purchase of investments

Capitalized software development costs

Capital expenditures

cash (used in) investing activities

Cash flows from financing

Net proceeds from stock offering

Payment of preferred stock dividends

Net cash (used in) provided by investing activities

Cash flows from financing activities:

Repayment of long-term debt

Short-term bank debt, net

Proceeds from exercise of stock options, net

Purchase of treasury

stock upon vesting of restricted stock

cash provided by (used in) financing activities

Effect of foreign exchange

rate changes on cash and cash equivalents

Net increase (decrease)

in cash, cash equivalents and restricted cash

Cash, cash equivalents

and restricted cash - beginning of period

cash equivalents and restricted cash - end of period

Reconciliation of cash, cash equivalents, and

restricted cash, beginning of period

Purchase of treasury stock upon vesting of restricted stock

Net cash used in financing activities

Effect of foreign exchange rate changes on cash and cash equivalents

Net (decrease) increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash - beginning of period

Cash, cash equivalents and restricted cash - end of period

Reconciliation of cash, cash equivalents, and restricted cash, beginning of period

Cash and cash equivalents

Cash, cash equivalents,

and restricted cash, beginning of period

Reconciliation of cash, cash equivalents, and

restricted cash, end of period

Restricted cash

Cash, cash equivalents, and restricted cash, beginning of period

Reconciliation of cash, cash equivalents, and restricted cash, end of period

Cash and cash equivalents

Cash, cash equivalents,

and restricted cash, end of period

Supplemental disclosure

of cash flow information:

Restricted cash

Cash, cash equivalents, and restricted cash, end of period

Supplemental disclosure of cash flow information:

Cash paid for:

Noncash investing and financing

Value of shares withheld

pursuant to exercise of stock options

Noncash investing and financing activities:

Value of warrant issued in connection with Movingdots acquisition

accompanying notes to unaudited condensed consolidated financial statements.

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of the Company

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

high-value enterprise assets that improve operational efficiencies.

(the “Company” or “Powerfleet”) is a global leader of Internet-of-Things (“IoT”) solutions

providing valuable business intelligence for managing high-value enterprise assets that improve operational efficiencies.

Systems, Inc.

Systems”) was incorporated in the State of Delaware in 1993.

Powerfleet, Inc.

was incorporated in the

Powerfleet was incorporated in the

State of Delaware in February 2019 for the purpose of effectuating the transactions (the “Transactions”) pursuant to which

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Systems and Pointer.

of COVID-19 and Supply Chain Disruptions

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.

During the three- and nine-month periods ended September 30, 2022, the Company incurred supply

chain constraint expenses which lowered its gross margins and decreased its profitability.

The supply chain disruptions and the related

global semiconductor chip shortage have delayed and may continue to delay the timing of some orders and expected deliveries of the Company’s

If the impact of the supply chain disruptions are more severe than the Company expects, it could result in longer lead times,

inventory supply challenges and further increased costs, all of which could result in the deterioration of the Company’s results,

potentially for a longer period than currently anticipated.

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

chain issues may materially impact the Company’s business, results of operations and financial condition is uncertain.

of presentation

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

financial position of the Company as of September 30, 2022, the consolidated results of its operations for the three- and nine-month

periods ended September 30, 2021 and 2022, the consolidated change in stockholders’ equity for the three-month periods ended March

31, June 30, and September 30, 2021 and 2022, and the consolidated cash flows for the nine-month periods ended September 30, 2021 and

The results of operations for the three- and nine-month periods ended September 30, 2022 are not necessarily indicative of the

operating results for the full year.

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

statements and related disclosures for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K for

the year then ended.

of September 30, 2022, the Company had cash (including restricted cash) and cash equivalents of $ 17,012 and working capital of $ 36,658 .

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.

financial position of the Company as of March 31, 2023, the consolidated results of its operations for the three-month periods ended

March 31, 2022 and 2023, the consolidated change in stockholders’ equity for the three-month periods ended March 31, 2022 and 2023,

and the consolidated cash flows for the three-month periods ended March 31, 2022 and 2023.

The results of operations for the three-month

period ended March 31, 2023 are not necessarily indicative of the operating results for the full year.

These financial statements should

be read in conjunction with the audited consolidated financial statements and related disclosures for the year ended December 31, 2022

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

of March 31, 2023, the Company had cash (including restricted cash) and cash equivalents of $ 25,089 and

working capital approximately $ 41,800 .

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

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

To date, the Company has

not generated sufficient cash flows solely from operating activities to fund its operations.

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

(“Powerfleet Israel”) and Pointer, are party to a

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

(“Hapoalim”), pursuant to which Hapoalim

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

(comprised of two facilities in the aggregate principal amount of $ 20,000

and $ 10,000 )

and a five-year

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

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

acquisition of Pointer.

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

Company borrowed net $ 3,949

under the revolving credit facility as of September 30, 2022.

See Note 11 for additional information.

June 2012, Pointer entered into a one-year $ 1,000 revolving credit facility with Discount Bank, which renews annually, subject to the

bank’s approval.

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

did not have any borrowings outstanding under the revolving credit facility with Discount Bank as of September 30, 2022.

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, a new revolving credit facility to Pointer in the 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 principal amount of $ 20,000 and $ 10,000 ) and a five-year 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

The Company borrowed net NIS 20,637 , or $ 5,709 , under the revolving credit facility as of March 31, 2023.

See Note 13 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 will be 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.

The New Revolver is available for a period of one month that commenced 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 initially bears interest at the Secured Overnight Financing Rate (“SOFR”) 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.

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.

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

of the COVID-19 pandemic, there continues to be significant uncertainty surrounding the potential impact on our results of operations

and cash flows.

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

reductions in discretionary operating expenses and capital expenditures.

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 March 31, 2023.

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

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

November 9, 2023.

May 10, 2024.

2 – USE OF ESTIMATES

preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect

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

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

The Company continually evaluates

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

The most significant estimates relate to

capitalized software, realization of deferred tax assets, the impairment of intangible assets including goodwill, and market-based stock compensation

Actual results could differ from those estimates.

of September 30, 2022, the impact of COVID-19 continues to unfold.

In addition, the Company has experienced increased economic uncertainty

due to rising interest rates, higher inflation and supply chain disruptions.

As a result, many of our estimates and assumptions required

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

As events continue to evolve and additional information becomes

available, our estimates may change materially in future periods.

GAAP requires management to make estimates and assumptions that affect the

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

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

The Company continually evaluates estimates used in the

preparation of the financial statements for reasonableness.

The most significant estimates relate to realization of deferred tax assets,

accounting for uncertain tax positions, the impairment of intangible assets, including goodwill, capitalized software development costs,

stock-based compensation costs, warrant assumptions, and standalone selling price related to multiple element revenue arrangements.

Actual results could differ

from those estimates.

3 – ACQUISITION

On March 6, 2023, the Company entered into a

share purchase and transfer agreement (the “Agreement”) with Swiss Re Reinsurance Holding Company Ltd (the

“Seller”), pursuant to which the Company would acquire all of the outstanding shares of Movingdots GmbH

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

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

per share (the “Common Stock Warrants”) with fair value of approximately $ 1.3

million at March 31, 2023 (the “Acquisition”) and noncash consideration with an immaterial fair value in the form of a

non-exclusive irrevocable, perpetual, fully paid-up, royalty free license agreement between Movingdots and the Seller for certain of

the acquired IP.

The Acquisition was consummated on March 31, 2023 (the “Movingdots Closing”).

As a result of the Acquisition, Movingdots, a

German company providing insurance telematics and sustainable mobility solutions, became a direct, wholly owned subsidiary of

Movingdots end-to-end telematics app solution will enhance Powerfleet’s SaaS-based fleet intelligence platform,

Unity, with additional customization capabilities and insurance risk insights.

Movingdots’ expertise in safety and

sustainability aligns with Unity’s focus on data-powered applications.

The Acquisition also strengthens Powerfleet’s

global reach, particularly in Europe.

As part of the Agreement the Seller was also

obligated to (i) transfer certain intellectual property rights from the Seller to Movingdots, (ii) enter into a distribution

agreement pursuant to which the Seller is allowed to promote the Movingdots solutions, and (iii) grant a license agreement between

the Seller’s affiliates and Movingdots.

The warrant was valued using the Black-Scholes Model using the following

OF WARRANTS VALUATION ASSUMPTIONS

Expected volatility

Expected term (in years)

Risk free interest rate

Dividend yield

Fair value per share

Warrants measurement input

Price Allocation

Acquisition met the criteria for a business combination to be accounted for using the acquisition method under ASC 805, Business

Combinations (“ASC 805”), with the Company identified as the legal and the accounting acquirer.

There is certain

information that is not readily available at the time the financial statements of Movingdots were prepared as the Acquisition closed on March 31, 2023.

For provisional

purchase price allocation purposes, the assets acquired and liabilities assumed are stated at their carrying values which management

assumed approximates their fair values given their short-term nature.

Also, the Company recognized approximately $ 0.3

million of acquisition-related costs which were expensed in the consolidated statement of operations.

following table details the provisional allocation of the purchase price to the assets acquired and liabilities assumed in

connection with the acquisition of Movingdots:

OF PURCHASE PRICE ALLOCATION IN ASSETS ACQUIRED AND LIABILITIES

Consideration :

Fair value of Powerfleet warrants on March 31, 2023

Total consideration

Assets acquired:

Accounts receivable

Prepaid expenses

Other current assets

Total assets acquired

Liabilities assumed:

Trade payable

Deferred credits

Provisions and other liabilities

Total liabilities assumed

Total identifiable net assets acquired

Gain on bargain purchase

Purchase price consideration

provisional fair value estimates of the assets acquired and liabilities assumed, including intangibles and income taxes, and the

noncash consideration are subject to subsequent adjustments as additional information is obtained during the applicable measurement

Determining the fair values of the assets and liabilities of Movingdots required certain assumptions and

with the requirements of ASC 805, the Company assessed whether all assets acquired and liabilities assumed have been appropriately identified,

measured and recognized, and performed re-measurements to verify that the consideration paid, assets acquired and liabilities assumed

have been properly valued.

After applying the requirements of ASC 805-30-25-4, the Company recognized a gain on bargain purchase as the

estimated fair value of the identifiable net assets acquired exceeded the purchase consideration transferred by approximately $ 7.2 million.

Management believes that the recognized gain on bargain purchase represents the best estimates of the economic effect of the Acquisition

based on all information that was available and existed as of the dates the financial statements were issued.

gain on bargain purchase primarily resulted from the Seller’s motivation to divest its investment in Movingdots and its

telematic business, which was deemed a non-core business of the Seller on a go-forward basis.

The sale of Movingdots was not subject to a competitive bidding process.

Under the Agreement, the Seller also agreed to make

a cash injection into Movingdots prior to the Movingdots Closing in a form of additional paid in capital to ensure Movingdots had

available cash in the amount of € 8

million, to be used to ensure the liquidity of Movingdots and for broader combined business

the Company makes an on-sale transfer of any shares of Movingdots that were acquired in connection with the Acquisition at any time

between the signing date of the Agreement and through twelve months after the Movingdots Closing, to any third-party purchaser (an

“on-sale transfer”), for an amount that is in excess of the purchase price consideration transferred, then the Company

shall pay the Seller an amount in cash (“on sale compensation”) equal to (i)

€8 million plus (ii) the difference between such on-sale transfer price less the purchase price net of the net present value of

the Common Stock Warrants.

The on-sale transfer is wholly within the Company’s control and the

Company does not currently have an intention to enter into an on-sale transfer.

views that the insurance telematics and sustainability are important spaces for the Company to have propositions to enable future strategic

value, supporting the more evolved, IOT data-rich mass subscription space.

The acquisition of Movingdots and its business will, among

other things:

strategic relationships with some key customers such as Mercedes, BMW and Vodafone;

provide greater go-to-market opportunity to the Company with the European beachhead for future regional expansion, customer acquisition tool

to upsell the Company’s portfolio into German and European markets, and maintain a distribution channel and partnership with

the Company with access to a team with technical skillsets across application development and management, cloud platform development,

user experience/user interface design development and technical product management;

The following table represents the combined pro forma

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

SCHEDULE OF PRO FORMA REVENUE AND EARNINGS

Three Months Ended March 31, 2022

Pro forma combined

Operating loss

Net loss per share – basic and diluted

The following table represents the combined pro forma

revenue and earnings for the three-month period ended March 31, 2023:

Three Months Ended March 31, 2023

Pro forma combined

Operating loss

Net income (loss) per share – basic

Net income (loss) per share - diluted

The combined pro forma revenue

and earnings for the three-month periods ended March 31, 2022 and 2023 were prepared as though the Acquisition had occurred

as of January 1, 2022.

This summary is not necessarily indicative of what the results of operations would have been had the Acquisition occurred as of that date, nor does it purport to represent results of operations for any future periods.

4 – CASH AND CASH EQUIVALENTS

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

Restricted cash at December 31, 2021 and September 30, 2022 consists of cash

held in escrow for purchases from a vendor.

Restricted cash at December 31, 2022 and March 31, 2023 consists of cash held

in escrow for purchases from a vendor.

5 - REVENUE RECOGNITION

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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.

15 unchanged sentences

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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for services performed.

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

30, 2021 and 2022:

SCHEDULE OF REVENUE DISAGGREGATED BY REVENUE SOURCE

Months Ended September 30,

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

SCHEDULE OF DEFERRED REVENUE

contract costs

following table presents the Company’s revenues disaggregated by revenue source for the three-months ended March 31, 2022 and 2023:

OF REVENUE DISAGGREGATED BY REVENUE SOURCE

Three Months Ended March 31,

balances of contract assets and contract liabilities from contracts with customers are as follows as of December 31, 2022 and March

OF DEFERRED REVENUE

December 31, 2022

March 31, 2023

Deferred contract costs

Deferred costs

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Deferred revenue - products (1)

Deferred revenue

and contract liabilities - current portion

Deferred revenue and

contract liabilities - less current portion

Deferred revenue and contract liabilities - current portion

Deferred revenue and contract liabilities - less current portion

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

For the three-

and nine-month periods ended September 30, 2021 and 2022, the Company recognized revenue of $ 2,547 and $ 7,767 , respectively, and

$ 3,174 and $ 8,040 , respectively, that was included in the deferred revenue balance at the beginning of each reporting period.

Company expects to recognize as revenue these deferred revenue balances before the year 2027, when the services are performed and,

therefore, satisfies its performance obligation to the customers.

For the three-month

periods ended March 31, 2022 and 2023, the Company recognized revenue of $ 2,515 and $ 2,240 , respectively, that was

included in the deferred revenue balance at the beginning of each reporting period.

The Company expects to recognize as revenue these

deferred revenue balances before the year 2028, when the services are performed and, therefore, satisfies its performance obligation

to the customers.

6 – ALLOWANCE FOR CREDIT LOSSES

The Company’s accounts receivable were evaluated to determine an

appropriate allowance for credit losses related to trade receivables.

The Company’s historical collections were analyzed by the

number of days past due to determine the uncollectible rate in each range of days past due.

The estimate of the allowance for credit losses

is charged to the allowance for credit losses based on the age of receivables multiplied by the historical uncollectible rate for the

range of days past due or earlier if the account is deemed uncollectible for other reasons.

Recoveries of amounts previously charged as

uncollectible are credited to the allowance for credit losses.

analysis of the allowance for credit losses for the period ended March 31, 2023 is as follows:

OF ALLOWANCE FOR CREDIT LOSSES

Allowance for credit losses, December 31, 2022

Allowance for credit losses, beginning balance

Current period provision for expected credit losses

Write-offs charged against the allowance

Foreign currency translation

Allowance for credit losses, March 31, 2023

Allowance for credit losses, ending balance

the quarter ended March 31, 2023, the change in the allowance for credit losses was due to the change in the age of receivables.

7 – PREPAID EXPENSES AND OTHER ASSETS

expenses and other current assets consist of the following:

SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS

Finance receivables, current

OF PREPAID EXPENSES AND OTHER CURRENT ASSETS

December 31, 2022

March 31, 2023

Sales-type lease receivables, current

Prepaid expenses

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Inventory is shown net of

a valuation reserve of $ 260 at December 31, 2021 and $ 406 at September 30, 2022.

a valuation reserve of $453 at December 31, 2022 and $375 at March 31, 2023.

consist of the following:

SCHEDULE OF INVENTORIES

OF INVENTORIES

Work in process

Finished goods, net

Inventory, net

9 - FIXED ASSETS

assets are stated at cost, less accumulated depreciation and amortization, and are summarized as follows:

SCHEDULE OF FIXED ASSETS

Installed products

Computer software

Computer and electronic equipment

Furniture and fixtures

Leasehold improvements

Property, plant and equipment, gross

Accumulated depreciation

and amortization

Property, plant and equipment,

and amortization expense of fixed assets for the three- and nine-month periods ended September 30, 2021 was $ 865 and $ 2,498 , respectively,

and for the three- and nine- month periods ended September 30, 2022 was $ 752 and $ 2,336 , respectively.

This includes amortization of

costs associated with computer software for the three- and nine-month periods ended September 30, 2021 of $ 106 and $ 316 , respectively,

and for the three- and nine-month periods ended September 30, 2022 of $ 11 and $ 145 , respectively.

OF FIXED ASSETS

and electronic equipment

depreciation and amortization

and amortization expense of fixed assets for the three-month periods ended March 31, 2022 and March 31, 2023 was $ 814

and $ 1,026 , respectively.

This includes

amortization of costs associated with computer software for the three-month periods ended March 31, 2022 and March 31, 2023 of $ 109

respectively.

10 - INTANGIBLE ASSETS AND GOODWILL

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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, 2021 and September 30, 2022:

following table summarizes identifiable intangible assets of the Company as of December 31, 2022 and March 31, 2023:

SCHEDULE OF INTANGIBLE ASSETS

Carrying Amount

March 31, 2023

Useful Lives (In Years)

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Customer relationships

Trademark and tradename

Software to be sold or leased

Favorable contract interest

Covenant not to compete

Software to be sold or leased

Customer List

Trademark and tradename

Carrying Amount

December 31, 2022

Useful Lives (In Years)

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Customer relationships

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Covenant not to compete

Software to be sold or leased

Customer List

Trademark and tradename

September 30, 2022, the weighted-average amortization period for the intangible assets was 8.9 years.

At September 30, 2022, the weighted-average

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

not to compete were 11.9 , 9.6 , 7.0 , 4.3 , 0.0 and 5.0 years, respectively.

expense for the three- and nine-month periods ended September 30, 2021 was $ 1,282 and $ 3,879 , respectively, and for the three- and nine-month

periods ended September 30, 2022 was $ 1,267 and $ 3,816 , respectively.

Estimated future amortization expense for each of the five succeeding

fiscal years for these intangible assets is as follows:

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

there is a lack of recovery or further global softening in certain markets, or a sustained decline in the value of the Company’s

common stock, the Company may conclude that indicators of impairment exist and would then be required to calculate whether or not an

impairment exists for its goodwill, other intangibles, and long-lived assets, the results of which could result in material impairment

The Company tests goodwill and other indefinite lives intangible assets on an annual basis in the fourth quarter and more frequently

if the Company believes indicators of impairment exists.

As of December 31, 2022 and March 31, 2023, the Company determined that no impairment

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

March 31, 2023, the weighted-average amortization period for the intangible assets was 8.7 years.

At March 31, 2023, the weighted-average 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 ,

years, respectively.

expense for the three-month periods ended March 31, 2022 and March 31, 2023 was $ 1,274

and $ 1,207 ,

respectively.

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

SCHEDULE OF FINITE-LIVED INTANGIBLE ASSETS AMORTIZATION EXPENSE

Year ending December 31:

2023 (remaining)

Finite-Lived intangible

The 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.

Accordingly, the Company performed an interim quantitative impairment analysis

at September 30, 2022 using a market-based quantitative assessment utilizing a combination of the (i) the guideline public company method(“GPC”)

applying revenue and adjusted EBITDA multiples of similar companies and, (ii) the discounted cash flow method (‘DCF”).

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.

The Company concluded that

no impairment relating to goodwill existed at September 30, 2022.

have been no changes in the carrying amount of goodwill from January 1, 2022 to September 30, 2022.

intangible assets

have been no changes in the carrying amount of goodwill from January 1, 2023 to March 31, 2023.

For the three-month period ended March 31, 2023, the Company did not identify

any indicators of impairment.

11 - STOCK-BASED COMPENSATION

the first fiscal quarter of 2022, the Company granted options to purchase 5,065,000 shares of the Company’s common stock to certain

The options have an exercise price that range from $ 2.85 to $ 21.00 .

The options will vest and become exercisable if the volume

weighted average price of the Company’s common stock during a consecutive 60-day trading period (the “60 Day VWAP”)

ranges between $ 10.50 and $ 21.00 .

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

model using a daily price forecast over ten years until expiration utilizing Geometric Brownian Motion that considers a variety of factors

including, but not limited to, the Company’s common stock price, risk-free rate ( 1.7 %), and expected stock price volatility ( 51.7 %)

over the expected life of awards ( 10 years ).

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

During the first fiscal quarter of 2023, the Company granted 75 shares

of restricted stock to certain executives, which vests as to 25 % of such shares on each of the first, second, third and fourth anniversaries

of the grant date, provided that the executive is employed by the Company on each such date.

the first fiscal quarter of 2023, the Company granted options to purchase 405

shares of the Company’s common stock to certain executives, consisting of options to purchase 130 shares of common stock with

time-based vesting conditions and options to purchase 275 shares of common stock with performance-based vesting conditions (which we

refer to as “market-based stock options”).

The options have an exercise price of $ 3.00 .

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”) reaches 12.00 .

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 ( 3.7 % ),

and expected stock price volatility ( 50 % )

over the expected life of awards ( 5.1

The weighted average fair value of market-based stock options granted during the period was $ 1.38 .

Stock options:

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

for the nine-month period ended September 30, 2022:

for the three-month period ended March 31, 2023:

SCHEDULE OF STOCK OPTIONS ACTIVITY

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following table summarizes the activity relating to the Company’s stock options, excluding the market-based stock options that

were granted to certain executives, for the nine-month period ended September 30, 2022:

were granted to certain executives, for the three-month period ended March 31, 2023:

Exercise Price

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Dividend yield

Weighted-average fair value of options granted

Weighted-average fair value of options granted during year

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

data with respect to employee exercise periods.

Company recorded stock-based compensation expense of $ 345 and $ 1,061 , for the three- and nine-month periods ended September 30, 2021,

respectively, and $ 809 and $ 2,110 , for the three- and nine-month periods ended September 30, 2022, respectively, in connection with awards

made under the stock option plans.

fair value of options vested during the nine-month periods ended September 30, 2021 and 2022 was $ 508 and $ 409 , respectively.

intrinsic value of options exercised during the three-month periods ended September 30, 2021 and 2022 was $ 470 and $- 0 -, respectively.

of September 30, 2022, there was approximately $ 6,558 of unrecognized compensation cost related to non-vested options granted under the

Company’s stock option plans for the performance stock options that were granted to certain executives.

That cost is expected to

be recognized over a weighted-average period of 3.20 years.

of September 30, 2022, there was approximately $ 2,266 of unrecognized compensation cost related to non-vested options granted under the

Company’s stock option plans that exclude the performance stock options.

That cost is expected to be recognized over a weighted

average period of 3.10 years.

Company recorded stock-based compensation expense of $ 34 and $ 618 for the three-month periods ended March 31, 2022 and March 31, 2023,

respectively, in connection with awards made under the stock option plans.

fair value of options vested during the three-month periods ended March 31, 2022 and 2023 was $ 235

respectively.

There were no option exercises that occurred during the three-month periods ended March 31, 2022 and 2023.

of March 31, 2023, there was $ 1,657 of total unrecognized compensation cost related to non-vested options granted under the Company’s

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 2.58 years.

of March 31, 2023, there was $ 5,838 of total unrecognized compensation cost 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

That cost is expected to be recognized over a weighted-average period of 3.20 years.

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

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A summary of all non-vested restricted stock

for the nine-month period ended September 30, 2022 is as follows:

for the three-month period ended March 31, 2023 is as follows:

SCHEDULE OF NON-VESTED RESTRICTED STOCK ACTIVITY

Number of Non-

Vested Shares

1 unchanged sentence

Date Fair Value

Restricted stock, non-vested, beginning

Restricted stock, non-vested,

end of period

Company recorded stock-based compensation expense of $ 533

for the three- and nine-month periods ended September 30, 2021, respectively, and $ 254

and $ 997 for the three-and nine-month periods ended September 30, 2022, respectively, in connection with restricted stock

As of September 30, 2022, there was $ 2,557

Restricted stock, non-vested, beginning of year

Restricted stock, non-vested, end of period

Company recorded stock-based compensation expenses of $ 388

for the three-month periods ended March 31, 2022 and 2023, respectively, in connection with restricted stock grants.

As of March 31,

2023, there was $ 1,877

of total unrecognized compensation cost related to non-vested shares.

1 unchanged sentence

period of 2.43

Restricted Stock Units:

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

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

restricted stock units for the three-month period ended September 30, 2022:

SCHEDULE OF NON-VESTED RESTRICTED STOCK ACTIVITY

Restricted Stock

Average Grant

Date Fair Value

Restricted stock units, non-vested,

beginning of year

Restricted stock units,

non-vested, end of period

Company recorded stock-based compensation expense of $ 51 and

for the three- and nine-month periods ended September 30, 2021, respectively, and $ 7 and

for the three- and nine-month periods ended September 30, 2022, respectively, in connection with the RSUs.

As of September 30, 2022,

there was $ 3 total

unrecognized compensation cost related to non-vested RSUs.

That cost is expected to be recognized over a weighted-average period of 0.13 years.

10 - NET LOSS PER SHARE

loss per share for the three- and nine-month periods ended September 30, 2021 and 2022 are as follows:

12 - NET INCOME (LOSS) PER SHARE

income (loss) per share for the three-month periods ended March 31, 2022 and 2023 are as follows:

SCHEDULE OF NET LOSS PER SHARE BASIC AND DILUTED

Months Ended September 30,

Basic and diluted loss per

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 earnings per share 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 nine-month periods

ended September 30, 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 11,939 and 16,517 , respectively, would have been anti-dilutive due to the loss.

Three Months Ended

Basic and diluted loss per share

Net income (loss) attributable to common stockholders

Preferred stock dividend and accretion

Allocation of earning to participating securities

Numerator for basic EPS – income available to common stockholders

Weighted-average common share outstanding - basic

Effect of dilutive securities

Weighted-average common share outstanding - diluted

Net income (loss) attributable to common stockholders - basic

Net income (loss) attributable to common stockholders - diluted

income (loss) per share is calculated by dividing net income (loss) attributable to common shareholders by the weighted-average

number of common shares outstanding during the period.

Diluted income (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

Dilutive potential common shares include outstanding stock options, warrants and restricted stock and performance share

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 earnings per share 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 three-month period ended March 31, 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 16,882 would

have been anti-dilutive due to the loss.

For the three-month period ended March 31, 2023, the two-class method of computing earnings

per share was anti-dilutive.

As a result, the weighted-average number of shares outstanding used in the computation of diluted

earnings per share does not include 9,277

shares from the conversion of preferred stock, warrants, stock options and restricted stock awards because the effect would have

been anti-dilutive.

13 - SHORT-TERM BANK DEBT AND LONG-TERM DEBT

1 unchanged sentence

maturities of long-term debt

Long term debt - less

current maturities

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

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

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

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

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

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

As of September 30, 2022, the Company borrowed

term debt - less current maturities

connection with the Transactions, Powerfleet Israel incurred NIS denominated debt in term loan borrowings on the closing date of the Transactions (the “Closing Date”) under the

Credit Agreement, pursuant to which Hapoalim agreed to provide Powerfleet Israel with two senior secured term loan facilities in an 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 denominated in NIS in an initial aggregate

principal amount of $ 10,000

(collectively, the “Credit Facilities”).

As of March 31, 2023, the Company borrowed NIS 20,637 ,

under the Revolving Facility.

3 unchanged sentences

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

dollar-denominated loans, LIBOR + 4.6%.

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

availability under the Revolving Facility .

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

Pointer over all of its assets.

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

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

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 .

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;

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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”),

August 23, 2021, the Borrowers entered into an amendment (the “Amendment”),

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

9 unchanged sentences

levels to Pointer’s EBITDA.

The Company is in compliance with the covenants as of September 30, 2022.

The Company is in compliance with all covenants as of March 31, 2023.

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

For the three- and nine-month periods ended

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

For the three- and nine-month periods ended

September 30, 2022, amortization of the debt issuance costs was $ 49 and $ 168 , respectively.

The Company recorded charges of $ 268 and

$ 821 for the three- and nine-month periods ended September 30, 2021, respectively, and $ 196 and $ 642 for the three- and nine-month periods

ended September 30, 2022, respectively, to interest expense on its consolidated statements of operations related to interest expense

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

June 2012, Pointer entered into a one-year $ 1,000 revolving credit facility with Discount Bank, which renews annually, subject to the

bank’s approval.

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

did not have any borrowings outstanding under the revolving credit facility with Discount Bank as of September 30, 2022.

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, a new revolving credit facility to Pointer in the 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%.

For the three-month periods ended March 31,

2022 and 2023, the Company recorded $ 64 and $ 44 , respectively, of amortization of the debt issuance costs.

The Company recorded charges

of $ 236 and $ 160 to interest expense on its consolidated statements of operations for the three-month periods ended March 31, 2022 and

2023, respectively related to interest expense associated with the Credit Facilities.

October 31, 2022, the Borrowers entered into 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 SOFR + 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 will be 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.

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.

maturities of the long-term debt as of September 30, 2022 are as follows:

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 March 31, 2023.

maturities of the long-term debt as of March 31, 2023 are as follows:

SCHEDULE OF MATURITIES OF LONG TERM DEBT

Year ending December 31:

October - December 2022

April – March 2024

January – December 2024

Long Term debt

Current Portion

Current Portion through March 31, 2024

Term B Facility is not subject to amortization over the life of the loan and instead the original principal amount is due in one installment

2 unchanged sentences

payable and accrued expenses consist of the following:

SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

December 31, 2022

March 31, 2023

Accounts payable

3 unchanged sentences

Other current liabilities

Accounts payable and

accrued expenses

Company’s products are warranted against defects in materials and workmanship for a period of one to three years from the date

Accounts payable

and accrued expenses

Company’s products are warranted against defects in materials and workmanship for a period of one to eight years from the date

of acceptance of the product by the customer .

2 unchanged sentences

shipped and is included in accounts payable and accrued expenses in the Condensed Consolidated Balance Sheets as of December 31, 2022

and September 30, 2022.

following table summarizes warranty activity for the nine-month periods ended September 30, 2021 and 2022:

SCHEDULE OF PRODUCT WARRANTY LIABILITY

Accrued warranty reserve, beginning

and March 31, 2023.

following table summarizes warranty activity for the three-month periods ended March 31, 2022 and 2023:

OF PRODUCT WARRANTY LIABILITY

Three Months Ended March 31,

Accrued warranty reserve, beginning of year

Accrual for product warranties issued

1 unchanged sentence

Expiration of warranties

Accrued warranty reserve,

end of period ( a )

non-current accrued warranty included in other long-term liabilities at December 31, 2021 and September 30, 2022 of $ 187 and $ 167 ,

respectively.

Accrued warranty reserve, end of period (a)

non-current accrued warranty included in other long-term liabilities at March 31, 2022 and March 31, 2023 of $ 186 and $ 157 , respectively.

15 - STOCKHOLDERS’ EQUITY

Public Offering:

February 1, 2021, the Company closed an 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.

Redeemable preferred stock

5 unchanged sentences

(the “Investors”).

For the nine-month periods ended September 30, 2021 and September 30, 2022, the Company issued - 0 - and 3 additional shares of Series

A Preferred Stock, respectively.

For the three-month periods ended March 31, 2022 and March 31, 2023, the Company issued 1 and 1 additional shares of Series A Preferred

Stock, respectively.

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

12 unchanged sentences

of Incorporation (the “Charter”).

During the nine-month period ended September 30, 2022, the Company paid dividends in the

amounts of 3 shares to the holders of the Series A Preferred Stock.

As of September 30, 2022, dividends in arrears were $- 0 -.

During the three-month periods ended March 31, 2022 and 2023, the Company paid dividends

in shares in amounts equal to $ 1,028 and $ 1,107 , respectively, to the holders of the Series A Preferred Stock.

As of March 31, 2023, dividends

in arrears were $- 0 -.

Consent Rights

39 unchanged sentences

an amount per share equal to the Redemption Price.

14 - ACCUMULATED OTHER COMPREHENSIVE LOSS

16 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Comprehensive

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

accumulated balances for each classification of other comprehensive loss for the nine-month period ended September 30, 2022 are as follows:

SCHEDULE OF ACCUMULATED OTHER COMPREHENSIVE LOSS

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

accumulated balances for each classification of other comprehensive income (loss) for the three-month period ended March 31, 2023 are

OF ACCUMULATED OTHER COMPREHENSIVE LOSS

Foreign currency

Accumulated other

comprehensive

1 unchanged sentence

Balance at January 1, 2023

Net current period

Balance at September

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

Net current period change

Balance at March 31, 2023

accumulated balances for each classification of other comprehensive income (loss) for the three-month period ended March 31, 2022

are as follows:

Foreign currency

Accumulated other

comprehensive

1 unchanged sentence

Balance at January 1, 2022

Net current period

Balance at September

Net current period change

Balance at March 31, 2022

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 currency

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.

The Company also has foreign operations where the functional currency is the local currency.

For these operations, assets

and liabilities are translated using the end-of-period exchange rates and revenues, expenses and cash flows are translated using average

rates of exchange for the period.

Equity is translated at the rate of exchange at the date of the equity transaction.

Translation adjustments

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

Net translation gains/(losses)

from the translation of foreign currency financial statements of $( 423 ) and $( 1,441 ) at September 30, 2021 and 2022, respectively, 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

these operations, assets and liabilities are translated using the end-of-period exchange rates and revenues, expenses and cash flows

are translated using average rates of exchange for the period.

Equity is translated at the rate of exchange at the date of the

equity transaction.

Translation adjustments are recognized in stockholders’ equity as a component of accumulated other

comprehensive income (loss).

Net translation gains (losses) from the translation of foreign currency financial statements of $( 253 )

at March 31, 2022 and 2023, respectively, are included in comprehensive income (loss) in the Consolidated Statement of Changes in

Stockholders’ Equity.

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

30, 2021 of $( 345 ) and $( 139 ), respectively, and for the three- and nine-month periods ended September 30, 2022 of $( 922 ) and $( 1,844 ),

Foreign currency transaction gains (losses) for the three-month periods ended March 31, 2022

and 2023 of $( 203 )

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

Foreign currency

translation gains (losses) related to long-term debt of $( 261 ) and $ 151 for the three- and nine-month periods ended September 30, 2021,

respectively, and $ 191 and $ 2,803 for the three- and nine-month periods ended September 30, 2022, respectively, are included in interest

expense in the Consolidated Statement of Operations.

transaction gains related to long-term debt of $ 544

for the three-month periods ended March 31, 2022 and 2023, respectively, are included in interest expense in the Consolidated Statement

of Operations.

17 – SEGMENT INFORMATION

1 unchanged sentence

The following table summarizes revenues by geographic region.

SCHEDULE OF REVENUES AND LONG LIVED ASSETS BY GEOGRAPHICAL REGION

Months Ended September 30,

OF REVENUES AND LONG LIVED ASSETS BY GEOGRAPHICAL REGION

Three Months Ended March 31,

United States

December 31, 2022

March 31, 2023

Long lived assets by geographic region:

9 unchanged sentences

SCHEDULE OF INCOME BEFORE INCOME TAX DOMESTIC AND FOREIGN

Months Ended September 30,

Three Months Ended March 31,

Domestic pre-tax book income (loss)

Foreign pre-tax book

income/(loss)

Foreign pre-tax book income (loss)

Total income before income (loss) taxes

Income tax benefit (expense)

Total income (loss)

Total income (loss) after taxes

Effective tax rate

the three- and nine-month periods ended September 30, 2021 and September 30, 2022, the effective tax rate differed from the statutory

tax rates primarily due to the mix of domestic and foreign earnings amongst taxable jurisdictions, recorded valuation allowances to fully

reserve against deferred tax assets in non-Israel foreign jurisdictions and certain discrete items.

August 16, 2022, the President of the United States signed into law H.R.

5376, commonly referred to as the Inflation Reduction Act of

2022 (the “IRA”).

The tax measures include, among other items, a corporate alternative minimum tax of 15 %;

an excise tax

of 1 % on corporate stock buy-backs;

energy-related tax credits;

and additional funding for the IRS for taxpayer services and enforcement.

The passage of the IRA did not have a material impact to the Company nor its calculated AETR as of September 30, 2022.

August 9, 2022, the President of the United States signed into law H.R.

4346, “The CHIPS and Science Act of 2022.” Tax measures

include a 25% advanced investment tax credit (ITC) for certain investments in semiconductor manufacturing.

The passage of the CHIPS and

Science Act did not have a material impact to the Company nor its calculated AETR as of September 30, 2022.

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

response to the COVID-19 pandemic.

The ARPA implemented new entity taxation provisions as well as extended unemployment benefits and

related incentives to provide further economic relief to US businesses.

The passage of the ARPA did not have a material impact to the

Company nor its calculated AETR as of September 30, 2022.

the three-month periods ended March 31, 2022 and 2023, the effective tax rate differed from the statutory tax rates primarily due to

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

tax assets in non-Israel jurisdictions and certain discrete items.

On August 16, 2022, the President of the United States signed into law

5376, commonly referred to as the Inflation Reduction Act of 2022 (the “IRA”).

The IRA is federal legislation designed

to raise revenue from, among other things, the imposition of certain corporate tax measures, while authorizing spending on energy and

climate change initiatives and subsidizing the Affordable Care Act.

The IRA also introduced a 1 % excise tax on certain corporate stock

buybacks, which would impose a nondeductible 1% excise tax on the fair market value of certain stock that is “repurchased”

during the taxable year by a publicly traded U.S.

corporation or acquired by certain of its subsidiaries.

The passage of the IRA did not

have a material impact to the Company nor its calculated AETR as of March 31, 2023.

On August 9, 2022, the President of the United States signed into law H.R.

4346, “The CHIPS and Science Act of 2022.” CHIPS is a federal statue providing funding for research and domestic production

of semiconductors.

Additional funding can be provided through CHIPS to various federal agencies as well as towards climate science research.

Tax measures include a 25% advanced investment tax credit for certain investments in semiconductor manufacturing.

The passage of the CHIPS

and Science Act did not have a material impact to the Company nor its calculated AETR as of March 31, 2023.

Company has operating leases for office space and office equipment.

The Company’s leases have remaining lease terms of one year

to seven years , some of which include options to extend the lease term for up to five years .

to three years , some of which include options to extend the lease term for up to five years .

Company has lease arrangements which are classified as short-term in nature.

1 unchanged sentence

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

condensed consolidated statements of operations during the three- and nine-months ended September 30, 2021 and 2022.

condensed consolidated statements of operations during the three-months ended March 31, 2022 and 2023.

of lease expense are as follows:

SCHEDULE OF COMPONENTS OF LEASE EXPENSE

Months Ended September 30,

term lease cost:

OF COMPONENTS OF LEASE EXPENSE

Months Ended March 31,

Short term lease cost:

cash flow information and non-cash activity related to our operating leases are as follows:

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

Months Ended September 30,

OF CASH FLOW INFORMATION AND NON CASH ACTIVITY OF OPERATING LEASES

Months Ended March 31,

Non-cash activity:

assets obtained in exchange for lease obligations

Right-of-use assets obtained in exchange for lease obligations

Weighted-average

remaining lease term and discount rate for our operating leases are as follows:

SCHEDULE OF WEIGHTED AVERAGE REMAINING LEASE TERM AND DISCOUNT RATE

Weighted-average remaining lease

term (in years)

OF WEIGHTED AVERAGE REMAINING LEASE TERM AND DISCOUNT RATE

March 31, 2023

Weighted-average remaining lease term (in years)

Weighted-average discount rate

maturities of operating lease liabilities outstanding as of September 30, 2022 are as follows:

SCHEDULED MATURITIES OF OPERATING LEASE LIABILITIES

Year ending December 31:

October - December 2022

maturities of operating lease liabilities outstanding as of March 31, 2023 are as follows:

MATURITIES OF OPERATING LEASE LIABILITIES

April - December 2023

Total lease payments

Imputed interest

value of lease liabilities

Present value of lease liabilities

20 - FAIR VALUE OF FINANCIAL INSTRUMENTS

8 unchanged sentences

SCHEDULE OF FAIR VALUE OF FINANCIAL INSTRUMENTS

March 31, 2023

Carrying Amount

Long term debt

21 - CONCENTRATION OF CUSTOMERS

the nine-month periods ended September 30, 2021 and 2022, there were no customers who generated revenues greater than 10% of the Company’s

the three-month periods ended March 31, 2022 and 2023, 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.

11 unchanged sentences

(“Pointer Brazil”) received a notification of lack of payment of VAT tax (Brazilian

ICMS tax) in the amount of $ 217 , plus $ 978 of interest and penalty, totaling $ 1,195 as of September 30, 2022.

ICMS tax) in the amount of $ 208 plus $ 1,087 of interest and penalty, totaling $ 1,295 as of March 31, 2023.

The Company is vigorously

10 unchanged sentences

amount claimed to be owed under the notice was approximately $ 12,283

as of September 30, 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.

as of March 31, 2023.

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 $ 211 .

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.

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.

reason, the Company has not made any provision.

February 24, 2022, Pointer Mexico received a notification for 2016 and 2017 tax assessment in the amounts of $ 268 and $ 476 , respectively,

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.

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.

As of March 31, 2023, 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.

23 - RECENT ACCOUNTING PRONOUNCEMENTS

7 unchanged sentences

be valued at amortized cost presented at the net amount expected to be collected with a valuation provision.

This updated standard is

effective for fiscal years beginning after December 15, 2022.

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

financial statements.

22 – SUBSEQUENT EVENTS

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, a new revolving credit facility to Pointer in the 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 will be 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.

The Company adopted ASU

2016-13 on January 1, 2023.

The adoption of the standard did not result in a material impact on the consolidated financial statements.

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

What changed 10-Q

Item 1. Financial Statements