What changed in this filing

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Item 1. Financial Statements

2023-08-10 compared with 2023-05-10 · 510 added, 425 removed, 627 unchanged (60% of the section changed)

3 unchanged sentences

thousands, except per share data)

March 31, 2023

December 31, 2022 *

June 30, 2023

Current assets:

1 unchanged sentence

Restricted cash

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

Accounts receivable, net of allowance for credit losses of $ 2,567 and

$ 2,555 in 2022 and

2023, respectively

Inventory, net

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Total liabilities

Commitments and Contingencies (note 22)

MEZZANINE EQUITY

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

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

59 and 60 shares issued and outstanding at December 31, 2022 and June 30, 2023

Preferred stock;

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Common stock;

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

authorized 75,000 shares,

$ 0.01 par value;

and 37,717 shares issued at December 31,

2022 and June 30, 2023, respectively;

shares outstanding, 36,170 and 36,265

at December 31, 2022 and June 30, 2023, respectively

Additional paid-in capital

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Treasury stock;

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

1,435 and 1,453 common shares at cost at December 31, 2022 and June 30, 2023, respectively

Total PowerFleet, Inc.

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Total liabilities and stockholders’ equity

from audited balance sheet as of December 31, 2022.

* Derived from audited balance sheet as of December 31, 2022.

accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

thousands, except per share data)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Total revenues

2 unchanged sentences

Cost of services

cost of revenues

Total cost of revenues

Operating expenses:

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Bargain purchase - Movingdots

Other (expense) income, net

Other income, net

Net income (loss) before income taxes

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Preferred stock dividend

Net income (loss) attributable to common stockholders

Net loss attributable to common stockholders

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

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AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Loss

thousands, except per share data)

Three Months Ended

Net income (loss) attributable to common stockholders

Six Months Ended

Net loss attributable to common stockholders

Other comprehensive (loss) income, net:

Foreign currency translation adjustment

Total other comprehensive income

Comprehensive income (loss)

Total other comprehensive income (loss)

Comprehensive loss

accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

thousands, except per share data)

Additional Paid-in Capital

Accumulated Deficit

Comprehensive Income (Loss)

Other Comprehensive Income

Treasury Stock

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$ ( 136,671 )

Comprehensive Income (Loss)

Net loss attributable to common stockholders

Net income attributable to non-controlling interest

Foreign currency translation adjustment

Issuance of restricted shares

Forfeiture of restricted shares

Exercise of stock options

Shares withheld pursuant to vesting of restricted stock

Stock based compensation

Balance at June 30, 2023

$ ( 139,648 )

Additional Paid-in Capital

Accumulated Deficit

Other Comprehensive Income

Treasury Stock

3 unchanged sentences

$ ( 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

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$ ( 137,366 )

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

Stock based compensation

Balance at June 30, 2022

$ ( 137,484 )

accompanying notes to unaudited condensed consolidated financial statements.

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

Consolidated Statements of Cash Flows

thousands, except per share data)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities

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Lease liabilities

Accrued severance payable, net

Net cash (used in) provided by operating activities

Cash flows from investing activities:

Acquisitions, net of cash assumed

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Purchase of treasury stock upon vesting of restricted stock

Payment of preferred stock dividend

Proceeds from exercise of stock options

Net cash used in financing activities

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of the Company

(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.

(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 was incorporated in the

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

the Company acquired Pointer Telocation Ltd.

Powerfleet was incorporated in the State

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

Company acquired Pointer Telocation Ltd.

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

Upon the closing of

the Transactions, Powerfleet became the parent entity of I.D.

Upon the closing of the

Transactions, Powerfleet became the parent entity of I.D.

Systems and Pointer.

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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 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.

financial position of the Company as of June 30, 2023, the consolidated results of its operations for the three- and six-month periods

ended June 30, 2022 and 2023, the consolidated change in stockholders’ equity for the three-month periods ended March 31 and June

30, 2022 and 2023, and the consolidated cash flows for the six-month periods ended June 30, 2022 and 2023.

The results of operations

for the three- and six- month periods ended June 30, 2023 are not necessarily indicative of the operating results for the full year.

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 June 30, 2023, the Company had cash (including restricted cash) and cash equivalents of $ 22,038 and working capital approximately

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.

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(“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

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

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 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.

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

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

The Company borrowed

net NIS 11,800 ,

under the revolving credit facility as of June 30, 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 Hapoalim.

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 $ 10,000 (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.

The Company borrowed net NIS 19,200 , or $ 5,200 , under the New Revolver facility as of June 30, 2023.

Note 13 for additional information.

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 .

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

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

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

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

May 10, 2024.

August 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 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.

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 related to market based awards, 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

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

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

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

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

per share (the “Common Stock Warrants”) and with fair value of approximately $ 1,300 at March 31, 2023 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 acquired intellectual property (the “Acquisition”).

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.

a result of the Acquisition, Movingdots, a German company providing insurance telematics and sustainable mobility solutions, became a

direct, wholly owned subsidiary of Powerfleet.

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

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.

warrant was valued using the Black-Scholes Model using the following assumptions at the date of issuance:

OF WARRANTS VALUATION ASSUMPTIONS

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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:

There was certain

information that was 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 $ 200

of acquisition-related costs which were expensed in the consolidated statement of operations for the three- and -six-month periods

ending June 30, 2023, respectively.

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

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Prepaid expenses

Other current assets

Total assets acquired

Liabilities assumed:

Trade payable

Deferred credits

Provisions and other liabilities

Accounts payable and accrued expenses

Total liabilities assumed

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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

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

consideration, are subject to subsequent adjustments as additional information is obtained during the applicable measurement period.

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

During the second

quarter of 2023, the valuation of certain assets acquired and liabilities assumed were revised resulting in an increase in the gain on

bargain purchase of $ 283 .

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

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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.

estimated fair value of the identifiable net assets acquired exceeded the purchase consideration transferred by approximately $ 7,500 .

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

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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.

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 € 8,000

to be used to ensure the liquidity of Movingdots and for broader combined business activities.

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) €8,000, 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 Company does not currently intend 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

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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

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

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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:

following table represents the combined pro forma revenue and earnings for the three-and six-month periods ended June 30, 2022:

SCHEDULE OF PRO FORMA REVENUE AND EARNINGS

Three Months Ended March 31, 2022

Three Months Ended

June 30, 2022

Six Months Ended

June 30, 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

following table represents the combined pro forma revenue and earnings for the three- and six-month periods ended June 30, 2023:

Three Months Ended

June 30, 2023

Six Months Ended

June 30, 2023

Pro forma combined

Operating loss

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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.

unaudited combined pro forma revenue and earnings for the three and six-month periods ended June 30, 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 such date, nor does it purport to represent results of operations for

any future periods.

4 – CASH AND CASH EQUIVALENTS

Company considers all highly liquid debt instruments with an original maturity of three months or less when purchased to be cash equivalents

unless they are legally or contractually restricted.

The Company’s cash and cash equivalent balances exceed Federal Deposit Insurance

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

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

in escrow for purchases from a vendor.

Company considers all highly liquid debt instruments with an original maturity of three months or less when purchased to be cash

equivalents unless they are legally or contractually restricted.

The Company’s cash and cash equivalent balances exceed

Federal Deposit Insurance Corporation (“FDIC”) and other local jurisdictional limits (in Israel and Germany).

cash at December 31, 2022 and June 30, 2023 consists of cash held in escrow for purchases from a vendor.

5 - REVENUE RECOGNITION

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Company also derives revenue from leasing arrangements.

Such arrangements provide for monthly payments covering product or system

sale, maintenance, support and interest.

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.

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.

Maintenance 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-months ended March 31, 2022 and 2023:

following table presents the Company’s revenues disaggregated by revenue source for the three-and six-months ended June 30, 2022

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

Three Months Ended June 30,

Six Months Ended June 30,

balances of contract assets and contract liabilities from contracts with customers are as follows as of December 31, 2022 and June 30,

OF CONTRACT ASSETS AND CONTRACT LIABILITIES FROM CONTRACTS WITH CUSTOMERS

December 31, 2022

March 31, 2023

Deferred contract costs

Deferred costs

June 30, 2023

Deferred contract cost

Deferred cost

Deferred revenue - services (1)

Deferred revenue - products (1)

Deferred revenue

Deferred revenue and contract liabilities - current portion

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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.

periods ended June 30, 2022 and 2023, the Company recognized revenue of $ 1,719 and $ 1,766 , respectively, which was included in the

deferred revenue balance at the beginning of each reporting period.

For the six-month periods ended June 30, 2022 and 2023, the Company

recognized revenue of $ 3,892 and $ 4,007 , respectively, which 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

Company’s receivables were evaluated to determine an appropriate allowance for credit losses.

For 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 and considerations of any changes expected in the future.

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:

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 June 30, 2023 is as follows:

OF ALLOWANCE FOR CREDIT LOSSES

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Foreign currency translation

Allowance for credit losses, March 31, 2023

Allowance for credit losses, June 30, 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.

the six-months ended June 30, 2023, the change in the allowance for credit losses was due to the change in the age of trade

7 – PREPAID EXPENSES AND OTHER ASSETS

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December 31, 2022

March 31, 2023

June 30, 2023

Sales-type lease receivables, current

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Inventory is shown net of

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

a valuation reserve of $ 453 at December 31, 2022 and $ 673 at June 30, 2023.

consist of the following:

OF INVENTORIES

December 31, 2022

June 30, 2023

Work in process

Finished goods, net

Inventory, Net

9 - FIXED ASSETS

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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.

December 31, 2022

June 30, 2023

Installed products

Computer software

Computer and electronic equipment

Furniture and fixtures

Leasehold improvements

Accumulated depreciation and amortization

and amortization expense of fixed assets for the three- and six-month periods ended June 30, 2022 was $ 770 and $ 1,584 , respectively,

and for the three- and six-month periods ended June 30, 2023 was $ 955 and $ 1,981 , respectively.

This includes amortization of costs

associated with computer software for the three- and six-month periods ended June 30, 2022 of $ 26 and $ 135 , respectively, and for the

three- and six-month periods ended June 30, 2023 of $ 24 and $ 59 , 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, 2022 and March 31, 2023:

following table summarizes identifiable intangible assets of the Company as of December 31, 2022 and June 30, 2023:

SCHEDULE OF INTANGIBLE ASSETS

March 31, 2023

Useful Lives (In Years)

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Customer relationships

Trademark and tradename

Favorable contract interest

Covenant not to compete

Software to be sold or leased

Customer List

Trademark and tradename

December 31, 2022

June 30, 2023

Useful Lives (In Years)

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Trademark and tradename

Lives (In Years)

Carrying Amount

relationships

and tradename

contract interest

not to compete

to be sold or leased

and tradename

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

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if the Company believes indicators of impairment exists.

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

As of December 31, 2022 and June 30, 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:

June 30, 2023, the weighted-average amortization period for the intangible assets was 8.6 years.

At June 30, 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 , and 3.0 years, respectively.

expense for the three- and six-month periods ended June 30, 2022 was $ 1,275 and $ 2,549 , respectively, and for the three- and six-month

periods ended June 30, 2023 was $ 1,311 and $ 2,518 , 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

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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.

have been no changes in the carrying amount of goodwill from January 1, 2023 to June 30, 2023.

the six-month period ended June 30, 2023, the Company did not identify any indicators of impairment.

11 - STOCK-BASED COMPENSATION

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 first fiscal quarter of 2023, the Company granted 75 shares

of restricted stock to certain executives, which vests in four equal installments over a four year period, provided that the

executive is employed by the Company on each scheduled vesting 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 years).

The weighted average

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

During the second fiscal quarter of 2023, the

Company issued 162

shares of restricted stock to certain employees, which vests over four equal installments over a four year period, provided that

the employee is employed by the Company on each scheduled vesting date.

During the second fiscal quarter of 2023,

the Company issued options to purchase 930

shares of the Company’s common stock to certain employees, consisting of options to purchase 340

shares of common stock with time-based vesting conditions and options to purchase 590

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 $ 3.13 .

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 % ),

The market-based stock options will vest and become exercisable if 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 .

The weighted average fair value of market-based stock options issued during the period was $ 1.56 .

Stock Options:

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

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

and employees for the six-month period ended June 30, 2023:

SCHEDULE OF STOCK OPTIONS ACTIVITY

Exercise Price

Weighted- Average Exercise Price

Weighted- Average Remaining Contractual Terms

Intrinsic Value

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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 three-month period ended March 31, 2023:

were granted to certain executives and employees, for the six-month period ended June 30, 2023:

Exercise Price

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data with respect to employee exercise periods.

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

Company recorded stock-based compensation expense of $ 1,267

for the three- and six-month periods ended June 30, 2022, respectively, and $ 585 and $ 1,203 for the three- and six-month periods

ended June 30, 2023, respectively, in connection with awards made under the stock option plans.

fair value of options vested during the six-month periods ended June 30, 2022 and 2023 was $ 376

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

of June 30, 2023, there was $ 1,784 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

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That cost is expected to be recognized over a weighted-average period of 2.71 years.

of March 31, 2023, there was $ 5,838 of total unrecognized compensation cost related to non-vested options granted under the Company’s

of June 30, 2023, there was $ 5,781 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

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A summary of all non-vested restricted stock

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

for the six-month period ended June 30, 2023 is as follows:

SCHEDULE OF NON-VESTED RESTRICTED STOCK ACTIVITY

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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.

Company recorded stock-based compensation expenses of $ 335 and

for the three- and six-month periods ended June 30, 2022, respectively, and $ 267 and

the three-and six-month periods ended June 30, 2023, respectively, in connection with restricted stock grants.

As of June 30, 2023,

there was $ 1,758 of

total unrecognized compensation cost related to non-vested shares.

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

period of 2.43

period of 2.62 years.

12 - NET INCOME (LOSS) PER SHARE

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

income (loss) per share for the three- and six-month periods ended June 30, 2022 and 2023 are as follows:

SCHEDULE OF NET LOSS PER SHARE BASIC AND DILUTED

Three Months Ended

Six Months Ended

Basic and diluted loss per share

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Preferred stock dividend and accretion

Preferred stock dividend paid

Preferred stock dividend accretion

Allocation of earning to participating securities

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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

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 six-month period

ended June 30, 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 16,438 would have been anti-dilutive due to the loss.

For the six-month period ended June 30, 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

9,484 shares from the conversion of preferred stock, warrants, stock options and restricted stock awards because the effect would have

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SCHEDULE OF LONG TERM DEBT

maturities of long-term debt

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 ,

December 31, 2022

June 30, 2023

Short-term bank debt

Current maturities of long-term debt

Long term debt - less current maturities

connection with the Transactions, Powerfleet Israel incurred NIS denominated debt in term loan borrowings on October 3, 2019 which

was 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

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 June 30, 2023, the Company borrowed NIS 11,800 ,

under the Revolving Facility.

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

The indicative interest rate provided for the Term

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

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

dollar-denominated loans, LIBOR + 4.6% (amended to SOFR + 2.15%).

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

and uncancelled availability under the Revolving Facility .

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:

Credit Facilities will mature on the date that is five years from the Closing Date, or October 3, 2024.

The indicative interest rate

provided for the Term Facilities in the original Credit Agreement was approximately 4.73 %

for the Term A Facility and 5.89 %

for the Term B Facility.

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

respect to US dollar-denominated loans, LIBOR + 4.6% (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;

net debt to working capital;

minimum equity of Powerfleet Israel;

Pointer’s net debt to working capital;

minimum equity of Powerfleet

Powerfleet Israel equity to total assets;

Powerfleet Israel net debt

and Pointer EBITDA to current payments and events of default).

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

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

The Amendment memorializes the agreements between the Borrowers

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

Pursuant to the Amendment, commencing as of November

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

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

The Amendment also provides, among other things, for

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

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

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

levels to Pointer’s EBITDA.

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

Powerfleet Israel net debt to EBITDA;

and Pointer EBITDA to current payments and

events of default).

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

Agreement with Hapoalim.

The Amendment memorializes the agreements between the Borrowers and Hapoalim regarding a reduction in the interest

rates of the two Term Facilities.

Pursuant to the Amendment, commencing as of November 12, 2020, the interest rate with respect to the

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

to a fixed rate of 4.5 % per annum.

The Amendment also provides, among other things, for (i) a reduction in the credit allocation fee

on undrawn and uncancelled amounts of the Revolving Facility from 1 % to 0.5 % per annum, (ii) removal of the requirement that Powerfleet

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

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

The Company is in compliance

with all covenants as of June 30, 2023.

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

For the three-month periods ended March 31,

For the three-month periods ended June 30,

2022 and 2023, the Company recorded $ 55 and $ 35 , respectively, of amortization of the debt issuance costs.

For the six-month periods ended June 30, 2022 and 2023, the Company recorded

$ 119 and $ 78 , 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

of $ 200 and $ 152 to interest expense on its consolidated statements of operations for the three-month periods ended June 30, 2022 and

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

The Company recorded charges of $ 436 and $ 312 to interest expense on its consolidated statements of operations for

the six-month periods ended June 30, 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.

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.

As of June 30, 2023, the Company borrowed NIS 19,200 , or $ 5,200 , under 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 .

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

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

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

Pointer did not have any borrowings outstanding under the revolving credit facility with Discount Bank as of March 31, 2023.

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

maturities of the long-term debt as of June 30, 2023 are as follows:

SCHEDULE OF MATURITIES OF LONG TERM DEBT

April – March 2024

January – December 2024

July 2023 – June 2024

July 2024 – October 2024

Long Term debt

Current Portion through March 31, 2024

Current Portion through June 30, 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

on the fifth anniversary of the date of the consummation of the Transactions.

on the fifth anniversary of the Closing Date.

14 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

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December 31, 2022

March 31, 2023

June 30, 2023

Accounts payable

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Other current liabilities

Accounts payable

and accrued expenses

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

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

and March 31, 2023.

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

and June 30, 2023.

following table summarizes warranty activity for the six-month periods ended June 30, 2022 and 2023:

OF PRODUCT WARRANTY LIABILITY

Three Months Ended March 31,

Six Months Ended June 30,

Accrued warranty reserve, beginning of year

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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.

non-current accrued warranty included in other long-term liabilities at June 30, 2022 and June 30, 2023 of $ 173 and $ 168 , respectively.

15 - STOCKHOLDERS’ EQUITY

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A Preferred Stock

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

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

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

shares of Series A Preferred Stock to ABRY Senior Equity V, L.P., ABRY Senior Equity Co-Investment Fund V, L.P and ABRY Investment

Partnership, L.P.

(the “Investors”).

For the 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.

For the six-month periods ended June 30, 2022 and 2023, the Company issued 2

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,

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

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

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

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

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

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

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

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

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

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

of Incorporation (the “Charter”).

During the three-month 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 -.

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

per annum (calculated on the basis of the Series A Issue Price), quarterly in arrears.

The dividends are payable at the

Company’s election, in kind, through the issuance of additional shares of Series A Preferred Stock, or in cash, provided no

dividend payment failure has occurred and is continuing and that there has not previously occurred two or more dividend payment

Commencing on the 66-month anniversary of the date on which any shares of Series A Preferred Stock are first issued (the

“Original Issuance Date”), and on each monthly anniversary thereafter, the dividend rate will increase by 100 basis

points, until the dividend rate reaches 17.5 %

per annum, subject to the Company’s right to defer the increase for up to three consecutive months on terms set forth in the

Company’s Amended and Restated Certificate of Incorporation (the “Charter”).

During the three-and six-month periods

ended June 30, 2022, the Company paid dividends in shares in amounts equal to $ 1,048 and

$ 2,076 respectively,

to the holders of the Series A Preferred Stock.

During the three-and six-month periods ended June 30, 2023, the Company paid

dividends in shares in amounts equal to $ 0 and $ 1,107 , respectively, to the holders of the Series A Preferred Stock.

payment for the three-month period ended June 30, 2023 totaled $ 1,128 and was paid in cash.

As of June 30, 2023, dividends in

arrears were $- 0 -.

Consent Rights

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an amount per share equal to the Redemption Price.

16 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Comprehensive

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

16 - ACCUMULATED OTHER COMPREHENSIVE LOSS

Comprehensive loss includes net loss and foreign currency translation gains and losses.

accumulated balances for each classification of other comprehensive loss for the six-month period ended June 30, 2023 are

OF ACCUMULATED OTHER COMPREHENSIVE LOSS

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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:

Balance at June 30, 2023

accumulated balances for each classification of other comprehensive loss for the six-month period ended June 30, 2022 are

Foreign currency

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Net current period change

Balance at March 31, 2022

Balance at June 30, 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 was the 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

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

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

and 2023 of $( 203 )

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 $( 1,453 ) and $ 212 at June 30, 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 transaction gains (losses) for the three- and six-month periods

ended June 30, 2022 of $( 719 )

and $ ( 922 ) ,

respectively, and for the three-and six-month periods ended June 30, 2023 of $ 56

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

Foreign currency

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.

Foreign currency transaction gains related to long-term debt for the three- and six-month periods ended June 30, 2022 of $ 2,068

respectively, and for the three-and-six month periods ended June 30, 2023 of $ 306

respectively, are included in interest expense in the Consolidated Statement of Operations.

17 – SEGMENT INFORMATION

2 unchanged sentences

OF REVENUES AND LONG LIVED ASSETS BY GEOGRAPHICAL REGION

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

United States

Total revenues

December 31, 2022

March 31, 2023

June 30, 2023

Long lived assets by geographic region:

United States

Long lived assets

18 - INCOME TAXES

7 unchanged sentences

SCHEDULE OF INCOME BEFORE INCOME TAX DOMESTIC AND FOREIGN

Three Months Ended March 31,

Domestic pre-tax book income (loss)

Foreign pre-tax book income (loss)

Three Months Ended June 30,

Six Months Ended June 30,

Domestic pre-tax book loss

Foreign pre-tax book income

Total income before income (loss) taxes

2 unchanged sentences

Effective tax rate

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.

the three- and six-month periods ended June 30, 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.

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 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 June 30, 2023.

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 June 30, 2023.

Company has operating leases for office space and office equipment.

4 unchanged sentences

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

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

condensed consolidated statements of operations during the three- and six-months ended June 30, 2022 and 2023.

of lease expense are as follows:

OF COMPONENTS OF LEASE EXPENSE

Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Short term lease cost:

1 unchanged sentence

OF CASH FLOW INFORMATION AND NON CASH ACTIVITY OF OPERATING LEASES

Months Ended March 31,

Six Months Ended June 30,

Non-cash activity:

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

Weighted-average

1 unchanged sentence

OF WEIGHTED AVERAGE REMAINING LEASE TERM AND DISCOUNT RATE

March 31, 2023

June 30, 2023

Weighted-average remaining lease term (in years)

Weighted-average discount rate

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

maturities of operating lease liabilities outstanding as of June 30, 2023 are as follows:

MATURITIES OF OPERATING LEASE LIABILITIES

April - December 2023

July - December 2023

Total lease payments

11 unchanged sentences

SCHEDULE OF FAIR VALUE OF FINANCIAL INSTRUMENTS

March 31, 2023

June 30, 2023

Carrying Amount

1 unchanged sentence

21 - CONCENTRATION OF CUSTOMERS

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.

the three-and six-month periods ended June 30, 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.

22 - COMMITMENTS AND CONTINGENCIES

10 unchanged sentences

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

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

ICMS tax) in the amount of $ 219 plus $ 1,155 of interest and penalty, totaling $ 1,374 as of June 30, 2023.

The Company is vigorously

9 unchanged sentences

The aggregate

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

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.

reason, the Company has not made any provision.

amount claimed to be owed under the notice was approximately $ 13,148 as of June 30, 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 $ 227 .

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

The Company’s legal counsel is of the opinion that the chance of loss is not probable and that no material costs will arise

in respect to these claims.

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

February 24, 2022, Pointer Mexico received a notification for 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.

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.

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

On May 2, 2022, Pointer Mexico filed additional evidence before

As of June 30, 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

11 unchanged sentences

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