What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-05-10 compared with 2022-11-09 · 244 added, 246 removed, 312 unchanged (61% of the section changed)

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to be correct.

are a number of risks and uncertainties that could cause the Company’s actual results to differ materially from the forward-looking

statements contained in this report.

Important factors that could cause the Company’s actual results to differ materially from

those expressed as forward-looking statements herein include, but are not limited, to:

There are a number of risks and uncertainties that could cause the Company’s

actual results to differ materially from the forward-looking statements contained in this report.

Important factors that could cause the

Company’s actual results to differ materially from those expressed as forward-looking statements herein include, but are not limited,

future economic and business conditions;

to recognize the anticipated benefit of the acquisition of Pointer Telocation Ltd.

the loss of any of the Company’s

key customers or reduction in the purchase of the Company’s products by any such customers;

the failure of the markets for the

Company’s products to continue to develop;

the possibility that the Company may not be able to integrate successfully the business,

operations and employees of I.D.

Systems, Inc.

Systems”) and Pointer;

the Company’s inability to adequately

protect its intellectual property;

the ability to recognize the anticipated benefit of the acquisition of Movingdots GmbH (“Movingdots”);

the loss of any of the Company’s key customers or reduction in the purchase of the Company’s products by any such customers;

the failure of the markets for the Company’s products to continue to develop;

the possibility that the Company may not be able to

integrate successfully the business, operations and employees of Movingdots;

the Company’s inability to adequately protect its intellectual

the Company’s inability to manage growth;

the effects of competition from a wide variety of

local, regional, national and other providers of wireless solutions;

changes in laws and regulations or changes in generally accepted

accounting policies, rules and practices;

changes in technology or products, which may be more difficult or costly, or less effective,

than anticipated;

the effects of outbreaks of pandemics or contagious diseases, including the length and severity of the recent global

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

and other risks detailed from time to time

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

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

the effects of competition from a wide variety of local, regional, national

and other providers of wireless solutions;

changes in laws and regulations or changes in generally accepted accounting policies, rules

and practices;

changes in technology or products, which may be more difficult or costly, or less effective, than anticipated;

of outbreaks of pandemics or contagious diseases, including the length and severity of the recent global outbreak of the novel coronavirus,

COVID-19, and its impact on the Company’s business;

and other risks detailed from time to time in the Company’s filings with

the Securities and Exchange Commission (the “SEC”), including the Company’s annual report on Form 10-K for the year

ended December 31, 2022 (the “2022 Annual Report”).

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

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

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

productivity, reduce costs, and improve profitability.

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

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

These solutions utilize

a variety of communications capabilities such as Bluetooth ® , WiFi, and proprietary radio frequency.

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

based assets such as heavy trucks, dry-van trailers, refrigerated trailers and shipping containers and their associated cargo.

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

visibility, safety, security, and productivity throughout global supply chains.

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

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

We achieve this by providing critical information that

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

patented technologies are a proven solution for organizations that must monitor and analyze their assets to improve safety, increase

efficiency, reduce costs, and drive profitability.

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

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

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

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

With 46 patents and patent applications and over 25 years’ experience, we believe we are well positioned to evolve our offerings

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

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

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

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

homogeneously.

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

even deeper level of insights and understanding of how assets are utilized and how drivers and operators operate those assets.

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

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

because we are original equipment manufacturer (OEM) agnostic, we help organizations view and manage their mixed assets homogeneously.

All of our solutions are paired with software as a service (SaaS) and analytics platforms to provide an even deeper level of insights

and understanding of how assets are utilized and how drivers and operators operate those assets.

These insights include a full set of

Key Performance Indicators (KPIs) to drive operational and strategic decisions.

Our customers typically get a return on their

investment in less than 12 months from deployment.

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

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Our solutions

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

other enterprise management systems and third-party applications.

also feature open application programming interfaces (APIs) for additional integrations and development to boost other enterprise

management systems and third-party applications.

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

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real-time alerts.

objective is to become a leading global provider of IoT SaaS solutions for high-value enterprise assets to drive optimized operations

and create safer environments.

In the first quarter of 2023 we began to consolidate and augment many of our existing capabilities on a single customer

software platform branded as “Unity.” We have designed our Unity platform to enable rapid and deep integration with IoT devices

and third-party business systems to a highly scalable data pipeline that powers artificial intelligence-driven insights to help companies

save lives, time, and money.

Unity is an increasingly important initiative to meet our objective of becoming a leading global provider

of IoT SaaS solutions for high-value enterprise assets to drive optimized operations and create safer environments.

To achieve this goal,

we intend to prove value, retain and grow business with existing customers and pursue opportunities with new customers by:

business solutions by vertical markets and go to market strategies to each market;

positioning ourselves as

an innovative thought leader;

maintaining a world class

sales and marketing team;

identifying, seizing, and

managing revenue opportunities;

expanding our customer

base, achieving wider market penetration and educating customers with mixed assets in their organization about our other applications;

implementing improved marketing,

sales and support strategies;

shortening our initial

sales cycles by helping our customers through:

and quantifying benefits expected from our solutions;

accelerating transitions

from implementation to roll-out;

building service revenue

through long-term SaaS contracts;

differentiating

our product offering through analytics, machine learning, unique sensors, and value-added services;

producing incremental revenue

at a high profit margin;

expanding our partnerships

and integrations.

also plan to expand into new applications and markets by:

pursuing opportunities

to integrate our system with computer hardware and software vendors, including:

transportation management

warehouse management systems;

labor and timecard systems;

enterprise resource planning;

yard management systems;

establishing relationships

with global distributors;

evaluating and pursuing

strategically sound acquisitions of companies.

Applications of our IoT Solutions

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

improve their operations, safety, and bottom line.

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

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

core applications our IoT solutions address include:

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

their operations, safety, and bottom line.

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

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

core applications that our IoT solutions address include:

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

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

We also offers

We also offer

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

accidents, injuries, and damage.

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

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

and outliers that can be used as flags for interventions.

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internally and with customers.

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

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

the number of assets needed.

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

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

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

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

and work change, Electronic Driver Logging (ELD) and automated record keeping for regulatory compliance, monitoring of asset pools and

geofence violations, and various reporting insights that flag under-utilized assets, the closest assets, and alerts on dwell time and

exceeding the allotted time for loading and unloading.

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

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as a Service:

We provide system monitoring, help desk technical support, escalation procedure development, routine diagnostic data

analysis and software updates services as part of the ongoing contract term.

We provide system monitoring, help desk technical support, escalation procedure development, routine diagnostic

data analysis and software updates services as part of the ongoing contract term.

These services ensure deployed systems remain in optimal

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overviews, troubleshooting guides, and issue escalation procedures.

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

provide our consulting services both as a standalone service to study the potential benefits of implementing an IoT business intelligence

solution and as part of the system implementation itself.

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

interest rates, higher inflation, supply chain disruptions, the ongoing COVID-19 pandemic, and the conflict between Russia and Ukraine

interest rates, higher inflation, fluctuations in currency values, supply chain disruptions and the conflict between Russia and Ukraine

have resulted in significant economic disruption and adversely impacted the broader global economy, including our customers and suppliers.

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The IRA is federal legislation designed to

raise revenue from lowering of prescription drug prices and imposition of certain corporate tax measures, while authorizing spending

on energy and climate change initiatives, subsidizing the Affordable Care Act, and enacting of certain tax reforms.

Management continues

to monitor any potential impact of the IRA on our results.

No immediate or direct effect from the legislation has had a material impact

on our results at this time.

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.

Management continues to monitor any potential

impact of the IRA on our results.

No immediate or direct effect from the legislation has had a material impact on our results at this

CHIPS and Science Act (“CHIPS”) was signed into law in August 2022.

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and commercialize new products and technologies.

of September 30, 2022, we had cash (including restricted cash) and cash equivalents of $17.0 million and working capital of $36.6 million.

of March 31, 2023, we had cash (including restricted cash) and cash equivalents of $25.1 million and working capital of $41.8 million.

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

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

will provide sufficient funds to cover capital requirements through November

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

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

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

report and in our 2022 Annual Report.

Accounting Policies

the three-month period ended September 30, 2022, there were no significant changes to our critical accounting policies as identified

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

the three-month period ended March 31, 2023, there were no significant changes to our critical accounting policies as identified in our

2022 Annual Report.

of Operations

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

Months Ended September 30,

Three Months Ended March 31,

Cost of revenue:

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Selling, general and administrative expenses

Research and development

Research and development expenses

Total operating expenses

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Interest expense

Other income (expenses)

Net loss before income taxes

Income tax benefit

Net loss before non-controlling

Bargain purchase - Movingdots

Other income (expenses), net

Net income (loss) before income taxes

Income tax benefit (expense)

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 shareholders

Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021

Revenues increased by approximately $5.0 million, or 17.2%, to $34.3 million in the three months ended September 30, 2022, from $29.2

million in the same period in 2021.

from products increased approximately $3.2 million, or 30%, to $14.0 million in the three months ended September 30, 2022, from $10.8

million in the same period in 2021.

The increase in product revenue is principally due to increased product sales in our Powerfleet for

Logistics business and Powerfleet for Industrial business.

from services increased approximately $1.8 million, or 9.8%, to $20.3 million in the three months ended September 30, 2022, from $18.5

million in the same period in 2021.

The increase in services revenue is principally due to an increase in our install base that generates

service revenue and installation revenue.

Cost of revenues increased by approximately $2.1 million, or 14.2%, to $17.1 million in the three months ended September

30, 2022, from $14.9 million for the same period in 2021.

Gross profit was $17.2 million in the three months ended September 30, 2022,

compared to $14.3 million in the same period in 2021.

As a percentage of revenues, gross profit increased to 50.1% in 2022 from 48.8%

The increase in gross profit as a percentage of revenue was principally due to improved management of raw materials costs related

to the global supply chain issues and electronic component shortages.

of products increased by approximately $1.6 million, or 20.4%, to $9.8 million in the three months ended September 30, 2022, from

$8.2 million in the same period in 2021.

Gross profit for products was $4.2 million in the three months ended September 30, 2022,

compared to $2.6 million in the same period in 2021.

As a percentage of product revenues, gross profit increased to 29.8% in 2022

from 24.2% in 2021.

The increase in gross profit as a percentage of revenue was principally due to product mix and improved

management of raw materials costs related to the global supply chain issues and electronic component shortages.

of services increased by approximately $0.4 million, or 6.8%, to $7.3 million in the three months ended September 30, 2022, from $6.8

million in the same period in 2021.

Gross profit for services was $12.9 million in the three months ended September 30, 2022, compared

to $11.6 million in the same period in 2021.

As a percentage of service revenues, gross profit increased to 64.1% in 2022 from 63.1%

The increase in gross profit as a percentage of services revenues was principally due to an increase in our install base that

generates service revenue.

GENERAL AND ADMINISTRATIVE EXPENSES .

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

$2.7 million, or 19.3%, to approximately $16.7 million in the three months ended September 30, 2022, compared to $14.0 million in the

same period in 2021, principally due to foreign currency losses, increased salaries and related expenses, and marketing expenses.

As a percentage of revenues, SG&A expenses increased to 48.6% in the three months ended September 30, 2022, from 47.7% in the same

period in 2021, primarily due to the reasons described above.

AND DEVELOPMENT EXPENSES .

Research and development (“R&D”) expenses decreased by approximately $1.0 million, or 36.6%,

to approximately $1.7 million in the three months ended September 30, 2022, compared to $2.7 million in the same period in 2021 principally

due to the capitalization of software development expenses for new product development.

As a percentage of revenues, R&D expenses

decreased to 5.1% in the three months ended September 30, 2022, from 9.4% in the same period in 2021, primarily due to the reason described

Interest expense decreased by approximately $446 thousand, or 57.4%, to approximately $(331) thousand in the three

months ended September 30, 2022, compared to $(777) thousand in the same period in 2021, principally due to foreign currency

translation gains from the Term Facilities.

LOSS ATTIBUTABLE TO COMMON STOCKHOLDERS .

Net loss was $3.5 million, or $(0.10) per basic and diluted share, for the three months

ended September 30, 2022, as compared to net loss of $4.5 million, or $(0.13) per basic and diluted share, for the same period in 2021.

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

Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

Revenues increased by approximately $10.3 million, or 11.2%, to $102.0 million in the nine months ended September 30, 2022, from $91.8

million in the same period in 2021.

from products increased by approximately $5.6 million, or 14.8%, to $43.2 million in the nine months ended September 30, 2022, from $37.6

Net income (loss) attributable to common shareholders

Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022

Revenues decreased by approximately $0.3 million, or 1%, to $32.8 million in the three months ended March 31, 2023, from $33.2

million in the same period in 2022.

The increase in product revenue is due to increased product sales in our Powerfleet for Logistics

business and Powerfleet for Industrial business.

from services increased by approximately $4.7 million, or 8.7%, to $58.8 million in the nine months ended September 30, 2022, from $54.1

from products decreased approximately $2.0 million, or 13.8%, to $12.4 million in the three months ended March 31, 2023, from $14.4

million in the same period in 2022.

The increase in services revenue is principally due to an increase in our install base that generates

service revenue.

OF REVENUES .

Cost of revenues increased by approximately $7.2 million, or 15.4%, to $54.2 million in the nine months ended September

The decrease in product revenue was due to decreased product sales from our Powerfleet GmbH

subsidiary, where we are actively shutting down sales from low margin contracts, and product sales in Israel.

from services increased approximately $1.7 million, or 8.9%, to $20.4 million in the three months ended March 31, 2023, from $18.8 million

in the same period in 2022.

The increase in services revenue was principally due to an increase in our installed base that generates service

Cost of revenues decreased by approximately $2.5 million, or 13.5%, to $16.2 million in the three months ended March

31, 2023, from $18.8 million for the same period in 2022.

Gross profit was $47.8 million in the nine months ended September 30, 2022,

Gross profit was $16.6 million in three months ended March 31, 2023,

compared to $14.4 million for the same period in 2022.

As a percentage of revenues, gross profit decreased to 46.9% in 2022 from 48.8%

The decrease in gross profit as a percentage of revenue was principally due to higher raw materials costs related to the global

supply chain issues.

of products increased by approximately $6.0 million, or 21.9%, to $33.2 million in the nine months ended September 30, 2022, from $27.2

million in the same period in 2021.

Gross profit for products was $10.1 million in the nine months ended September 30, 2022, compared

to $10.5 million in the same period in 2021.

As a percentage of product revenues, gross profit decreased to 23.3% in 2022 from 27.8%

The decrease in gross profit as a percentage of revenue was impacted by product mix, higher costs associated with supply chain

issues, electronic component shortages and inflation.

of services increased by approximately $1.3 million, or 6.3%, to $21.1 million in the nine months ended September 30, 2022, from $19.8

million in the same period in 2021.

Gross profit for services was $37.7 million in the nine months ended September 30, 2022, compared

to $34.3 million in the same period in 2021.

As a percentage of service revenues, gross profit increased to 64.2% in 2022 from 63.4%

The increase in gross profit as a percentage of services revenues was principally due to an increase in our install base that

generates service revenue.

GENERAL AND ADMINISTRATIVE EXPENSES .

SG&A expenses increased by approximately $6.4 million, or 15.6%, to approximately $47.4

million in the nine months ended September 30, 2022, compared to $41.0 million in the same period in 2021, principally due to increased

salaries and related expenses, foreign currency losses, marketing and travel expenses, and professional fees.

As a percentage of revenues, gross profit increased to 50.6% in 2023 from

43.4% in 2022.

The increase in gross profit as a percentage of revenues was principally due to decisions to stop fulfilling low

margin orders and the decrease in raw materials costs related to the global supply chain issues which were more prevalent in the

first quarter of 2022 than the first quarter of 2023.

of products decreased by approximately $3.0 million, or 24.8%, to 9.0 million in the three months ended March 31, 2023, from $12.0 million

in the same period in 2022.

Gross profit for products was $3.4 million in the three months ended March 31, 2023, compared to $2.4 million

in the same period in 2022.

As a percentage of product revenues, gross profit increased to 27.4% in 2023 from 16.8% in 2022.

in gross profit as a percentage of revenues is the result of ceasing to fulfill certain low margin orders, and relief from supply chain issues and electronic

component shortages that drove up the cost of materials in the first quarter of 2022.

of services increased by approximately $0.4 million, or 6.4%, to $7.2 million in the three months ended March 31, 2023, from $6.8 million

in the same period in 2022.

Gross profit for services was $13.2 million in the three months ended March 31, 2023, compared to $12.0 million

in the same period in 2022.

As a percentage of service revenues, gross profit increased to 64.7% in 2023 from 63.9% in 2022.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.

Selling, general and administrative (“SG&A”) expenses increased by approximately $1.9 million, or 12.6%, to

approximately $16.8 million in the three months ended March 31, 2023, compared to $14.9 million in the same period in 2022,

principally due to increased salaries, investments in marketing programs and increased professional services fees, including costs associated with our acquisition of Movingdots.

As a percentage

of revenues, SG&A expenses increased to 46.4% in the nine months ended September 30, 2022, from 44.7% in the same period in 2021,

primarily due to the reasons described above.

of revenues, SG&A expenses increased to 51.1% in the three months ended March 31, 2023, from 45.0% in the same period in

AND DEVELOPMENT EXPENSES .

R&D expenses decreased by approximately $1.3 million, or 15.7%, to approximately $7.0 million in the

nine months ended September 30, 2022, compared to $8.3 million in the same period in 2021, principally due to the capitalization of software

development expenses for new product development.

As a percentage of revenues, R&D expenses decreased to 6.8% in the nine months

ended September 30, 2022, from 9.0% in the same period in 2021, primarily due to the reason described above.

Interest expense decreased by approximately $2.7 million, or 187.3%, to approximately $(1.3) million in the nine months ended

September 30, 2022, compared to $1.4 million in the same period in 2021, principally due to foreign currency translation gains from the

Term Facilities.

LOSS ATTIBUTABLE TO COMMON STOCKHOLDERS.

Net loss was $9.0 million, or $(0.25) per basic and diluted share, for the nine months ended

September 30, 2022, as compared to net loss of $10.2 million, or $(0.30) per basic and diluted share, for the same period in 2021.

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

Research and development (“R&D”) expenses decreased by approximately $1.5 million, or 46.6%,

to approximately $1.7 million in the three months ended March 31, 2023, compared to $3.2 million in the same period in 2022, principally

due to higher levels of capitalized software associated with the build out of our Unity platform and new device firmware.

As a percentage of revenues, R&D expenses decreased to 5.2% in the three months ended March

31, 2023, from 9.7% in the same period in 2022.

INCOME (LOSS) ATTIBUTABLE TO COMMON STOCKHOLDERS.

Net income was $3.5 million, or $0.11 per basic and diluted share, for

the three months ended March 31, 2023, as compared to net loss of $4.1 million, or $(0.12) per basic and $(0.12) per diluted share,

for the same period in 2022.

The increase in net income was primarily the result of the $7.2 million gain on bargain purchase associated with our acquisition of Movingdots.

and Capital Resources

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of our common stock upon the exercise of options.

As of September 30, 2022, we had cash (including restricted cash) and cash equivalents

As of March 31, 2023, we had cash (including restricted cash) and cash equivalents

of $25.1 million and working capital of $41.8 million.

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payable in our acquisition of Pointer.

addition, our wholly-owned subsidiaries, Powerfleet Israel and Pointer (the “Borrowers”) are party to a Credit Agreement

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

(“Hapoalim”), pursuant to which Hapoalim agreed to provide Powerfleet

Israel with two senior secured term loan facilities in an aggregate principal amount of $30 million (comprised of two facilities in the

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

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

The outstanding amount under the term loan facilities was $21.3 million as of September 30, 2022.

The proceeds of the term loan facilities

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

The proceeds of the revolving credit

facility may be used by Pointer for general corporate purposes.

As of September 30, 2022, the Company borrowed $3.9 million under the

revolving credit facility.

addition, our wholly owned subsidiaries, Powerfleet Israel and Pointer (collectively, the “Borrowers”) are party to a Credit

Agreement (the “Credit Agreement”) with Bank Hapoalim B.M (“Hapoalim”), pursuant to which Hapoalim agreed to

provide Powerfleet Israel with two senior secured term loan facilities denominated in NIS in an initial aggregate principal amount of

$30 million (comprised of the two facilities in the aggregate principal amount of $20 million (the “Term A Facility”) and

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

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

The outstanding amount under the term loan facilities

was approximately NIS51.7 million, or $14.3 million, as of March 31, 2023.

The proceeds of the term loan facilities were used

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

The proceeds of the revolving credit facility may

be used by Pointer for general corporate purposes.

August 23, 2021, the Borrowers entered into an amendment (the “Amendment”), effective as of August 1, 2021, to the Credit

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

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.

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 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.

As of March 31, 2023, the Company borrowed

approximately NIS20.6 million, or $5.7 million, under the revolving credit facilities.

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

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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.

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

Pursuant to the

shelf registration statement, we may offer to the public from time to time, in one or more offerings, up to $60.0 million of our 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, we closed an underwritten public offering (the “Underwritten Public Offering”) of 4,427,500 shares of common

stock (which includes the full exercise of the underwriters’ over-allotment option) for gross proceeds of approximately $28.8 million,

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 our shelf registration statement.

a result of rising interest rates, higher inflation, supply chain disruptions the ongoing COVID-19 pandemic and the conflict between

Russia and Ukraine, there remains uncertainty surrounding the potential impact of such events on our results of operations and cash flows.

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

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

of September 30, 2022, we had cash (including restricted cash) and cash equivalents of $17.0 million and working capital of $36.6 million.

also 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.

a result of global supply chain disruptions, the conflict between Russia and Ukraine, rising interest rates, fluctuations in currency

values, inflation and other cost increases, there remains uncertainty surrounding the potential impact of such events on our results

of operations and cash flows.

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

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

On March 31, 2023, we completed our acquisition of Movingdots.

this acquisition will provide significant additional liquidity, with net cash proceeds of $8.7 million expected to exceed the associated

transaction, integration, and rationalization costs.

See “Business Acquisitions” below for more information regarding the

acquisition of Movingdots.

of March 31, 2023, we had cash (including restricted cash) and cash equivalents of $25.1 million and working capital of $41.8 million.

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

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

funds to cover capital requirements through at least November 9, 2023.

funds to cover capital requirements through at least May 10, 2024.

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

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on our business, financial condition and results of operations.

cash used in operating activities was $1.7 million for the nine months ended September 30, 2022, compared to net cash used in operating

activities of $1.2 million for the same period in 2021.

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

30, 2022, reflects a net loss of $5.3 million and includes non-cash charges of $3.2 million for stock-based compensation, $6.2 million

for depreciation and amortization expense and $2.1 million for right of use asset amortization.

Changes in working capital items included:

increase in accounts receivable of $3.0 million;

increase in inventory of $5.5 million;

increase in prepaid expenses and other assets of $0.7 million;

increase in accounts payable of $1.7 million;

decrease in lease liabilities of $2.0 million.

cash used in investing activities was $4.0 million for the nine months ended September 30, 2022, compared to net cash used in investing

activities of $2.5 million for the same period in 2021.

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

2022 and 2021 was related to capital expenditures.

cash used in financing activities was $0.5 million for the nine months ended September 30, 2022, compared to net cash provided by financing

activities of $19.7 million for the same period in 2021.

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

2022 was primarily due to the repayment of long-term debt of $4.3 million, partially offset by net borrowings under the line of credit

of $3.9 million.

The change from the same period in 2021 was primarily due to the net proceeds from our stock offering of $26.9 million

which was offset by the repayment of long-term debt of $4.0 million and the payment of preferred stock dividends of $3.1 million.

During the three months ended March 31, 2023,

net cash provided by operating activities was $1.8 million, compared to net cash used in operating activities of $2.1 million for

the same period in 2022.

The net cash provided by operating activities for the first quarter of 2023 primarily included a

non-operating cash benefit of $7.2 million for gain on bargain purchase, non-cash charges of $0.8 million for stock-based

compensation, $2.2 million for depreciation and amortization expense, and $0.7 million for right-of-use asset amortization.

in working capital items included a decrease in accounts receivable of $0.8 million, an increase in inventory of $0.2 million, a

decrease in prepaid expenses and other assets of $0.2 million, a decrease in accounts payable of $0.7 million, and a decrease in

lease liabilities of $0.7 million.

For the same period in the prior year, net cash used

in operating activities was $2.1 million.

Net cash provided by investing activities for the three months ended March 31, 2023 was $6.8 million, compared to

net cash used in investing activities of $0.6 million for the same period in 2022.

The increase in net cash provided by investing activities

was primarily due to $8.7 million in net proceeds from the acquisition of Movingdots, partly offset by $1.1 million for the purchase of

fixed assets and $0.7 million for capitalized software development costs.

In contrast, the net cash used in investing activities of $0.6

million in the same period in 2022 was primarily for the purchase of fixed assets.

During the three months ended March 31, 2023, net cash used in financing activities was $1.4 million, compared to

$1.7 million for the same period in 2022.

The decrease in net cash used in financing activities was primarily due to the repayment of

long-term debt totaling $1.3 million in the first quarter of 2023, as opposed to $1.5 million in the first quarter of 2022.

Sheet Arrangements

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

of September 30, 2022, there have been no material charges in contractual obligations as disclosed under the caption “Contractual

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

inflation and other macroeconomic trends in the U.S.

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

our operating costs.

We expect the inflationary environment to continue for the remainder of the year, resulting in corresponding pressure

on our operating costs and gross margins.

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

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

of March 31, 2023, there have been no material charges in contractual obligations as disclosed under the caption “Contractual Obligations

and Commitments” in Item 7 of our 2022 Annual Report.

inflation and other macroeconomic conditions in the U.S.

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

impacted our operating costs.

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

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

addition to focusing on our core applications, we adapt our systems to meet our customers’ broader asset management needs and seek

opportunities to expand our solution offerings through strategic acquisitions.

March 6, 2023, we entered into a definitive share purchase and transfer agreement (the “SPA”)

with Swiss Re Reinsurance Holding Company Ltd (“Swiss Re”) to acquire all of the outstanding shares of Movingdots for consideration consisting

of €1 and the issuance by us of a ten-year warrant to purchase 800,000 shares of our common stock at an exercise price of $7.00

Under the SPA, Swiss Re was required to ensure that Movingdots had available cash and cash equivalents of at least €8,000,000

as of the closing date.

The transaction closed on March 31, 2023.

of Recently Issued Accounting Pronouncements

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis