What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-13 compared with 2023-08-10 · 502 added, 440 removed, 697 unchanged (57% of the section changed)

4 unchanged sentences

December 31, 2022

June 30, 2023

September 30, 2023

Current assets:

1 unchanged sentence

Restricted cash

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

$ 2,555 in 2022 and

2023, respectively

Accounts receivable, net of allowance for credit losses of $ 2,567 and $ 2,677 in 2022 and 2023,

Inventory, net

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Total liabilities

Commitments and Contingencies (note 22)

MEZZANINE EQUITY

1 unchanged sentence

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

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

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

Preferred stock;

1 unchanged sentence

Common stock;

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

authorized 75,000 shares, $ 0.01 par value;

37,605 and 38,699 shares issued at

December 31, 2022 and September 30, 2023, respectively;

shares outstanding, 36,170 and 37,214 at December 31, 2022 and

September 30, 2023, respectively

Additional paid-in capital

2 unchanged sentences

Treasury stock;

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

1,435 and 1,485 common shares at cost at December 31, 2022 and September 30, 2023, respectively

Total PowerFleet, Inc.

2 unchanged sentences

Total liabilities and stockholders’ equity

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

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 June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Total revenues

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Bargain purchase - Movingdots

Other income, net

Net income (loss) before income taxes

Income tax benefit (expense)

Net income (loss) before non-controlling interest

Other (expense) income, net

Net loss before income taxes

Income tax expense

Net loss before non-controlling interest

Non-controlling interest

Net income (loss)

Accretion of preferred stock

1 unchanged sentence

Net loss attributable to common stockholders

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

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

Net loss per share attributable to common stockholders - basic

Net loss per share attributable to common stockholders - diluted

Weighted average common shares outstanding - basic

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Net loss attributable to common stockholders

Other comprehensive (loss) income, net:

Other comprehensive income (loss), net:

Foreign currency translation adjustment

5 unchanged sentences

thousands, except per share data)

Additional Paid-in Capital

Accumulated Deficit

Other Comprehensive Income

Treasury Stock

Non-controlling Interest

Stockholders’ Equity

Paid-in Capital

Other Comprehensive Income (Loss)

Non-controlling

Stockholders’

Balance at January 1, 2023

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$ ( 136,671 )

Net loss attributable to common stockholders

8 unchanged sentences

$ ( 139,648 )

Net loss attributable to common stockholders

Foreign currency translation adjustment

Issuance of restricted shares

Shares withheld pursuant to vesting of restricted stock

Stock based compensation

Balance at September 30, 2023

$ ( 143,322 )

Number of Shares

Additional Paid-in Capital

Accumulated Deficit

Other Comprehensive Income

Other Comprehensive Income (Loss)

Treasury Stock

Non-controlling Interest

Stockholders’ Equity

Stockholders’

Balance at January 1, 2022

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$ ( 137,366 )

Net loss attributable to common stockholders

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$ ( 137,484 )

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

Issuance of restricted shares

Forfeiture of restricted shares

Shares withheld pursuant to vesting of restricted stock

Stock based compensation

Balance at September 30, 2022

$ ( 139,784 )

3 unchanged sentences

thousands, except per share data)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities

Net income (loss)

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

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Accrued severance payable, net

Net cash (used in) provided by operating activities

Net cash used in operating activities

Cash flows from investing activities:

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of Presentation

unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly owned and majority-owned

subsidiaries.

unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly owned and

majority-owned subsidiaries.

All material intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited condensed

consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States

of America (“U.S.

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

Accordingly, they do not include

all of the information and footnotes required by U.S.

GAAP for complete financial statements.

In the opinion of management, such statements

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

financial position of the Company as of 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.

accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles

generally accepted in the United States of America (“U.S.

GAAP”) for interim financial information and the instructions

to Form 10-Q.

Accordingly, they do not include all of the information and footnotes required by U.S.

GAAP for complete financial

In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which

are considered necessary for a fair presentation of the consolidated financial position of the Company as of September 30, 2023, the

consolidated results of its operations for the three- and nine-month periods ended September 30, 2022 and 2023, the consolidated

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

consolidated cash flows for the nine-month periods ended September 30, 2022 and 2023.

The results of operations for the three- and

nine-month periods ended September 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 September 30, 2023, the Company had cash (including restricted cash) and cash equivalents of $ 19,600

and working capital approximately $ 34,500 .

The Company’s primary sources of cash are cash flows from the sales of its products and services, 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

loan facilities denominated in New Israeli Shekels (NIS) in an initial aggregate principal amount of $ 30,000 (comprised of two facilities

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

principal amount of $ 10,000 .

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.

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 8,420 , or $ 2,200 , under the revolving credit facility as of September 30, 2023.

13 for additional information.

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

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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.

The Company borrowed net NIS 32,500 , or $ 8,500 ,

under the New Revolver facility as of September 30, 2023.

See Note 13 for additional information.

New Revolver initially bears interest at the Secured Overnight Financing Rate (“SOFR”) plus 2.59%.

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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.

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

August 10, 2024.

October 10, 2023, the Company entered into an Implementation Agreement (the “Implementation Agreement”), by and among

the Company, Main Street 2000 Proprietary Limited, a private company incorporated in the Republic of South Africa and a wholly owned

subsidiary of the Company (“Powerfleet Sub”), and MiX Telematics Limited, a public company incorporated under the laws

of the Republic of South Africa (“MiX Telematics”), pursuant to which MiX Telematics will become an indirect, wholly

owned subsidiary of the Company.

The Implementation Agreement requires, as a condition to closing of the transactions contemplated

therein, that the Company obtain a debt and/or equity financing (the “Financing”) in an amount sufficient to provide for

the redemption in full of all outstanding shares of the Company’s Series A Convertible Preferred Stock (“Series A

Preferred Stock”).

Company has incurred recurring losses and negative cash flows from operations since inception and had an accumulated deficit of $ 143.3

million as of September 30, 2023.

The Company anticipates incurring additional losses until such time that growth in revenue and gross

margin from its strategic plan centered on its Unity SaaS platform and Industrial safety product offerings exceed necessary investments

in operating expenses, capital expenditures and debt financing costs.

The Company has received credit committee

approval from its existing lender, Hapoalim, to enter into a new 5-year term debt facility with an approximate value of $ 30

While the Company believes it is highly probable that it will enter into a binding credit agreement by year end, there can

be no assurance that the Company will enter into such a credit agreement.

If the Company does not enter into a binding credit agreement with Hapoalim by year end, the Company may be required to delay key strategic

product initiatives and market expansion activities, which could adversely affect its business prospects.

believes the Company’s cash and cash equivalents of $ 19.6

million as of September 30, 2023 in conjunction with cash generated from the execution of its strategic plan over the next 12

months, are sufficient to fund the projected operations for at least the next 12 months from the issuance date of these

financial statements (November 13, 2024) and service the Company’s outstanding obligations.

Such expectation is based, in part, on the achievement of a certain

volume of assumed revenue and gross margin;

however, there is no guarantee the Company will achieve this amount of revenue and gross

margin during the assumed time period.

Management assessed various additional operating cost reduction options that are available to

the Company and would be implemented, if assumed levels of revenue and gross margin are not achieved and additional funding is not

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 related to market based awards, warrant assumptions, and standalone selling price related

to multiple element revenue arrangements.

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

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”) 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 intellectual property (the “Acquisition”).

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

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 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”) 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 intellectual property (the “Acquisition”).

The Acquisition was consummated

on March 31, 2023 (the “Movingdots Closing”).

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

Movingdots end-to-end telematics app solution will enhance Powerfleet’s software-as-a-service (“SaaS”)-based

fleet intelligence platform, Unity, with additional customization capabilities and insurance risk insights.

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recognized approximately $ 0

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.

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

ending September 30, 2023, respectively.

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

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

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

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

The sale of Movingdots was not subject

to a competitive bidding process.

Under the Agreement, the Seller also agreed to make a cash injection into Movingdots prior to the

Movingdots Closing in a form of additional paid in capital to ensure Movingdots had available cash in the amount of € 8,000

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.

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

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 € 8,000 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 12 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.

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

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

following table represents the combined pro forma revenue and earnings for the three- and nine-month periods ended September 30,

OF PRO FORMA REVENUE AND EARNINGS

Three Months Ended

June 30, 2022

Six Months Ended

June 30, 2022

Pro forma combined

September 30, 2022

Nine Months Ended

September 30, 2022

Operating loss

Net loss per share - basic and diluted

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

Net loss per share - basic

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

Three Months Ended

June 30, 2023

Six Months Ended

June 30, 2023

Pro forma combined

September 30, 2023

Nine Months Ended

September 30, 2023

Operating loss

Net income (loss) per share - basic

Net income (loss) per share - diluted

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.

Net loss per share – basic and diluted

Net loss per share – basic

unaudited combined pro forma revenue and earnings for the three and nine-month periods ended September 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 (in Israel and Germany).

cash at December 31, 2022 and June 30, 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).

Restricted cash at December 31, 2022

and September 30, 2023 consists of cash held in escrow for purchases from a vendor.

5 - REVENUE RECOGNITION

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

Product sales are recognized

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

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

For products which do

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

a bundled performance obligation.

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

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

asset, respectively.

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

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

Product sales are

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

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

products which do not have standalone value to the customer separate from the SaaS services provided, the Company considers both

hardware and SaaS services a bundled performance obligation.

Under the applicable accounting guidance, all of the Company’s

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

liability and a current and long-term asset, respectively.

The deferred revenue and cost are recognized over the service contract

life, ranging from one to five years, beginning at the time that a customer acknowledges acceptance of the equipment and

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

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for services performed.

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

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

30, 2022 and 2023:

OF REVENUE DISAGGREGATED BY REVENUE SOURCE

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,

Three Months Ended

September 30,

Nine Months Ended

September 30,

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

OF CONTRACT ASSETS AND CONTRACT LIABILITIES FROM CONTRACTS WITH CUSTOMERS

December 31, 2022

June 30, 2023

September 30, 2023

Deferred contract cost

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

For the three-month

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.

three-month periods ended September 30, 2022 and 2023, the Company recognized revenue of $ 1,457

and $ 1,407 ,

respectively, which was included in the deferred revenue balance at the beginning of each reporting period.

For the nine-month

periods ended September 30, 2022 and 2023, the Company recognized revenue of $ 5,349

and $ 5,413 ,

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

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 June 30, 2023 is as follows:

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 September 30, 2023 is as follows:

OF ALLOWANCE FOR CREDIT LOSSES

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Foreign currency translation

Allowance for credit losses, June 30, 2023

Allowance for credit losses, September 30, 2023

Allowance for credit losses, ending balance

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

the nine-months ended September 30, 2023, the change in the allowance for credit losses was due to the change in the age of trade receivables.

7 – PREPAID EXPENSES AND OTHER ASSETS

2 unchanged sentences

December 31, 2022

June 30, 2023

September 30, 2023

Sales-type lease receivables, current

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Other current assets

Prepaid expenses and

other current assets

Prepaid expenses and other current assets

8 - INVENTORY

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Inventory is shown net of

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

a valuation reserve of $ 453 at December 31, 2022 and $ 701 at September 30, 2023.

consist of the following:

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December 31, 2022

June 30, 2023

September 30, 2023

Work in process

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December 31, 2022

June 30, 2023

September 30, 2023

Installed products

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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.

and amortization expense of fixed assets for the three- and nine-month periods ended September 30, 2022 was $ 752

and $ 2,336 ,

respectively, and for the three- and nine-month periods ended September 30, 2023 was $ 657

and $ 2,641 ,

respectively.

This includes amortization of costs associated with computer software for the three- and nine-month periods ended September

30, 2022 of $ 11

respectively, and for the three- and nine-month periods ended September 30, 2023 of $ 24

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 June 30, 2023:

SCHEDULE OF INTANGIBLE ASSETS

June 30, 2023

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

OF INTANGIBLE ASSETS

September 30, 2023

Useful Lives (In Years)

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Gross Carrying

Customer relationships

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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

December 31, 2022

Useful Lives (In Years)

Gross Carrying

Customer relationships

Trademark and tradename

Favorable contract interest

Covenant not to compete

Software to be sold or leased

Customer list

Trademark 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 June 30, 2023, the Company determined that no impairment

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

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

At June 30, 2023, the weighted-average

As of December 31, 2022 and September 30, 2023, the Company determined that

no impairment existed to the goodwill, customer list and trademark and trade name of its acquired intangibles.

September 30, 2023, the weighted-average amortization period for the intangible assets was 8.5 years.

At September 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:

expense for the three- and nine-month periods ended September 30, 2022 was $ 1,267

and $ 3,816 ,

respectively, and for the three- and nine-month periods ended September 30, 2023 was $ 1,766

and $ 4,285 ,

respectively.

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

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 June 30, 2023.

the six-month period ended June 30, 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 September 30, 2023.

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

11 - STOCK-BASED COMPENSATION

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 75 shares of restricted stock to certain executives, which vest 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,

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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 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.

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 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 issued during the period was $ 1.56 .

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 issued during the period was $ 1.56 .

the third fiscal quarter of 2023, the Company granted 900 shares of restricted stock to Steve Towe, the Company’s Chief Executive

Officer, which vest over four equal installments over a four-year period, provided that the Mr.

Towe is employed by the Company on each

scheduled vesting date.

Additionally, 82 shares of restricted stock were granted to certain members of the board of directors, which

vest in full on the date of grant, provided that the director is a director of the Company on such date.

Stock Options:

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

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

and employees for the nine-month period ended September 30, 2023:

SCHEDULE OF STOCK OPTIONS ACTIVITY

Weighted- Average Exercise Price

Weighted- Average Remaining Contractual Terms

Exercise Price

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

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

Exercise Price

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SCHEDULE OF FAIR VALUE STOCK OPTION ASSUMPTIONS

September 30,

Expected volatility

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Dividend yield

Weighted-average fair value of options granted during year

Weighted-average fair value of options granted during the year

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

data with respect to employee exercise periods.

Company recorded stock-based compensation expense of $ 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.

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

Company recorded stock-based compensation expense of $ 809 and $ 2,110 for the three- and nine-month periods ended September 30, 2022,

respectively, and $ 781 and $ 1,984 for the three- and nine-month periods ended September 30, 2023, respectively, in connection with awards

made under the stock option plans.

fair value of options vested during the nine-month periods ended September 30, 2022 and 2023 was $ 409 and $ 582 , respectively.

of September 30, 2023, there was $ 1,561 of total unrecognized compensation cost related to non-vested options granted under the Company’s

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

executive officers.

That cost is expected to be recognized over a weighted-average period of 2.57 years.

of June 30, 2023, there was $ 5,781 of total unrecognized compensation cost related to non-vested options granted under the Company’s

of September 30, 2023, there was $ 5,245 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 six-month period ended June 30, 2023 is as follows:

for the nine-month period ended September 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 $ 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.

Company recorded stock-based compensation expenses of $ 254

for the three- and nine-month periods ended September 30, 2022, respectively, and $ 320

for the three -and nine-month periods ended September 30, 2023, respectively, in connection with restricted stock grants.

September 30, 2023, there was $ 3,704

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

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

period of 2.62 years.

12 - NET INCOME (LOSS) PER SHARE

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

period of 3.16

12 - NET LOSS PER SHARE

loss per share for the three- and nine-month periods ended September 30, 2022 and 2023 are as follows:

SCHEDULE OF NET LOSS PER SHARE BASIC AND DILUTED

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Basic and diluted loss per share

Net income (loss) attributable to common stockholders

Preferred stock dividend and accretion

Preferred stock dividend paid

Preferred stock dividend accretion

Allocation of earning to participating securities

Numerator for basic EPS – income available to common stockholders

Weighted-average common share outstanding - basic

Effect of dilutive securities

Weighted-average common share outstanding - diluted

Net income (loss) attributable to common stockholders - basic

Net income (loss) attributable to common stockholders - diluted

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

been anti-dilutive.

Net loss attributable to common stockholders

Weighted-average common share outstanding – basic and diluted

Net loss attributable to common stockholders – basic and diluted

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

shares outstanding during the period.

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

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

Dilutive potential

common shares include outstanding stock options, warrants and restricted stock and performance share awards.

participating securities (unvested share-based payment awards and equivalents that contain non-forfeitable rights to dividends or

dividend equivalents) in the computation of earnings per share pursuant to the two-class method.

Our participating securities

consist solely of preferred stock, which have contractual participation rights equivalent to those of stockholders of unrestricted

common stock.

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

common stock and participating securities.

During periods of net loss, no effect is given to the participating securities because

they do not share in the losses of the Company.

For the nine-month periods ended September 30, 2022 and 2023, 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 16,517

and 18,265 , respectively, would have been anti-dilutive due to the loss.

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

SCHEDULE OF LONG TERM DEBT

December 31, 2022

June 30, 2023

September 30,

Short-term bank debt

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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.

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 $ 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 September 30, 2023, the Company borrowed NIS 8,420 , or $ 2,200 , under the Revolving Facility.

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%).

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

The 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;

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:

net debt to EBITDA;

Pointer’s net debt to working capital;

minimum equity of Powerfleet

Powerfleet Israel equity to total assets;

minimum equity of Powerfleet Israel;

Powerfleet Israel equity to total

Powerfleet Israel net debt to EBITDA;

and Pointer EBITDA to current payments and

events of default).

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

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The Company is in compliance

with all covenants as of June 30, 2023.

with all covenants as of September 30, 2023.

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

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

For the three-month periods ended September 30, 2022 and 2023, the Company recorded $ 49

respectively, of amortization of the debt issuance costs.

For the nine-month periods ended September 30, 2022 and 2023, the Company

recorded $ 168

respectively, of amortization of the debt issuance costs.

The Company recorded charges of $ 196

to interest expense on its consolidated statements of operations for the three-month periods ended September 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.

The Company recorded charges of $ 642

to interest expense on its consolidated statements of operations for the nine-month periods ended September 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.

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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.

As of September 30, 2023, the Company borrowed NIS 32,500 , or $ 8,500 , under the New Revolver.

New Revolver will initially bear interest at the SOFR + 2.59%.

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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.

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

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

SCHEDULE OF MATURITIES OF LONG TERM DEBT

July 2023 – June 2024

July 2024 – October 2024

October 2023 - September 2024

Long Term debt

Current Portion through June 30, 2024

Current portion

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

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OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

December 31, 2022

June 30, 2023

September 30,

Accounts payable

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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 June 30, 2023.

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

and September 30, 2023.

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

OF PRODUCT WARRANTY LIABILITY

Six Months Ended June 30,

Nine Months Ended September 30,

Accrued warranty reserve, beginning of year

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Expiration of warranties

Accrued warranty reserve, end of period (a)

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

Accrued warranty reserve, end of period ( 1 )

non-current accrued warranty included in other long-term liabilities at September 30, 2022 and September 30, 2023 of $ 167 and $ 168 ,

respectively.

15 - STOCKHOLDERS’ EQUITY

Redeemable Preferred Stock

Company is authorized to issue 150 shares of preferred stock, par value $ 0.01 per share of which 100 shares are designated Series A Convertible

Preferred Stock (“Series A Preferred Stock”) and 50 shares are undesignated.

Company is authorized to issue 150 shares of preferred stock, par value $ 0.01 per share of which 100 shares are designated Series A

Preferred Stock and 50 shares are undesignated.

A Preferred Stock

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(the “Investors”).

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

For the nine-month periods ended September 30, 2022 and 2023, the Company issued 3

additional shares of Series A Preferred Stock, respectively.

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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 -.

During the three -and nine-month

periods ended September 30, 2022, the Company paid dividends in shares in amounts equal to $ 1,067

respectively, to the holders of the Series A Preferred Stock.

During the three -and nine-month periods ended September 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.

During the three -and nine-month periods ended September 30, 2023, the

Company paid dividends in cash in amounts equal to $ 1,128

and $ 2,257 ,

respectively, to the holders of the Series A Preferred Stock.

As of September 30, 2023, dividends in arrears were $- 0 -.

Consent Rights

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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

Comprehensive

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

accumulated balances for each classification of other comprehensive loss for the nine-month period ended September 30, 2023 are as follows:

OF ACCUMULATED OTHER COMPREHENSIVE LOSS

Foreign currency

translation adjustment

Accumulated other

comprehensive

income (loss)

Balance at January 1, 2023

Net current period change

Balance at June 30, 2023

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

Balance at September 30, 2023

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

Foreign currency

translation adjustment

Accumulated other

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Net current period change

Balance at June 30, 2022

Balance at September 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

For businesses where the majority of the revenues are generated

in USD or linked to the USD and a substantial portion of the costs are incurred in USD, the Company’s management believes that

the USD is the primary currency of the economic environment and thus their functional currency.

Due to the fact that Argentina has been

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

currency was the USD.

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

For these operations, assets

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

rates of exchange for the period.

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.

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

Net translation

losses from the translation of foreign currency financial statements of $( 1,441 ) and $ ( 694 ) at September 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 )

Foreign currency transaction losses for the three- and nine-month periods ended

September 30, 2022 of $( 922 )

and $( 1,844 ),

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

respectively, and for the three- and nine-month periods ended September 30, 2023 of $ ( 358 )

and $ ( 126 ) ,

respectively, are included in selling, general and administrative expenses 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

currency transaction gains related to long-term debt for the three- and nine-month periods ended September 30, 2022 of $ 191

and $ 2,803 ,

respectively, and for the three- and-nine month periods ended September 30, 2023 of $ 429

and $ 1,139 ,

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

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OF REVENUES AND LONG LIVED ASSETS BY GEOGRAPHICAL REGION

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended

September 30,

Nine Months Ended

September 30,

United States

Total revenues

December 31, 2022

June 30, 2023

September 30,

Long lived assets by geographic region:

2 unchanged sentences

18 - INCOME TAXES

Company records its interim tax provision based upon a projection of the Company’s annual effective tax rate (“AETR”).

This AETR is applied to the year-to-date consolidated pre-tax income to determine the interim provision for income taxes before discrete

The Company updates the AETR on a quarterly basis as the pre-tax income projections are revised and tax laws are enacted.

effective tax rate (“ETR”) each period is impacted by a number of factors, including the relative mix of domestic and foreign

earnings and adjustments to recorded valuation allowances.

The currently forecasted ETR may vary from the actual year-end due to the

changes in these factors.

The Company records its interim tax provision based upon a projection of the Company’s annual effective tax

rate (“AETR”).

This AETR is applied to the year-to-date consolidated pre-tax income to determine the interim provision for

income taxes before discrete items.

The Company updates the AETR on a quarterly basis as the pre-tax income projections are revised and

tax laws are enacted.

The effective tax rate (“ETR”) each period is impacted by a number of factors, including the relative

mix of domestic and foreign earnings and adjustments to recorded valuation allowances.

The currently forecasted ETR may vary from the

actual year-end due to the changes in these factors.

SCHEDULE OF INCOME BEFORE INCOME TAX DOMESTIC AND FOREIGN

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended

September 30,

Nine Months Ended

September 30,

Domestic pre-tax book loss

Foreign pre-tax book income

Total income before income (loss) taxes

Income tax benefit (expense)

Total income (loss) after taxes

Total loss before income taxes

Income tax expense

Total loss after taxes

Effective tax rate

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.

For the three- and nine-month periods ended September 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.

On 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 September 30, 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 September 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- and six-months ended June 30, 2022 and 2023.

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

of lease expense are as follows:

OF COMPONENTS OF LEASE EXPENSE

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended

September 30,

Nine Months Ended

September 30,

Short term lease cost:

1 unchanged sentence

OF CASH FLOW INFORMATION AND NON CASH ACTIVITY OF OPERATING LEASES

Six Months Ended June 30,

Nine Months Ended

September 30,

Non-cash activity:

2 unchanged sentences

OF WEIGHTED AVERAGE REMAINING LEASE TERM AND DISCOUNT RATE

June 30, 2023

September 30, 2023

Weighted-average remaining lease term (in years)

Weighted-average discount rate

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

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

MATURITIES OF OPERATING LEASE LIABILITIES

July - December 2023

October-December 2023

Total lease payments

11 unchanged sentences

SCHEDULE OF FAIR VALUE OF FINANCIAL INSTRUMENTS

June 30, 2023

September 30, 2023

Carrying Amount

1 unchanged sentence

21 - CONCENTRATION OF CUSTOMERS

the three-and six-month periods ended June 30, 2022 and 2023, there were no customers who generated revenues greater than 10 %

the three- and nine-month periods ended September 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 %

11 unchanged sentences

August 2014, Pointer do Brasil Comercial Ltda.

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

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

defending this tax assessment before the administrative court in Brazil, but in light of the administrative and judicial processes in

Brazil, it could take up to 14 years before the dispute is finally resolved.

In case the administrative court rules against the Company,

the Company could claim before the judicial court, an appellate court in Brazil, a substantial reduction of interest charged, potentially

reducing the Company’s total exposure.

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.

July 2015, Pointer Brazil received a tax deficiency notice alleging that the services provided by Pointer Brazil should be classified

as “telecommunication services” and therefore Pointer Brazil should be subject to the state value-added tax.

The aggregate

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.

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

(Brazilian ICMS tax) in the amount of $ 211

of interest and penalty, totaling $ 1,330

as of September 30, 2023.

The Company is vigorously defending this tax assessment before the administrative court in Brazil, but in

light of the administrative and judicial processes in Brazil, it could take up to 14 years before the dispute is finally resolved.

In case the administrative court rules against the Company, the Company could claim before the judicial court, an appellate court in

Brazil, a substantial reduction of interest charged, potentially reducing the Company’s total exposure.

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

July 2015, Pointer Brazil received a tax deficiency notice alleging that the services provided by Pointer Brazil should be

classified as “telecommunication services” and therefore Pointer Brazil should be subject to the state value-added tax.

The aggregate amount claimed to be owed under the notice was approximately $ 12,861

as of September 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 $ 218 .

The state has appealed to the higher chamber of the State Tax Administrative Court.

The Company’s legal

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

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

5 unchanged sentences

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.

As of August 31, 2023, the cases have been closed and no payments were imposed.

23 - RECENT ACCOUNTING PRONOUNCEMENTS

10 unchanged sentences

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

NOTE 24 – SUBSEQUENT EVENTS

October 10, 2023, the Company entered into the Implementation Agreement with Powerfleet Sub and MiX Telematics, pursuant to which, subject

to the terms and conditions thereof, Powerfleet Sub will acquire all of the issued ordinary shares of MiX Telematics, including those

represented by MiX Telematics’ American Depositary Shares, through the implementation of a scheme of arrangement (the “Scheme”)

in accordance with Sections 114 and 115 of the South African Companies Act, No.

71 of 2008, as amended (the “Companies Act”),

in exchange for shares of the Company’s common stock.

As a result of the transactions, including the Scheme, contemplated by the

Implementation Agreement (the “Scheme Transactions”), MiX Telematics will become an indirect, wholly owned subsidiary of

The Scheme Transactions have been approved by the boards of directors of both companies, are subject to customary closing

conditions, including approval by the Company’s stockholders and MiX Telematics’ shareholders.

The Scheme Transactions are

expected to close in the first quarter of 2024.

the closing of the Scheme Transactions, the combined company will remain Powerfleet and the Company’s common stock will continue

to be listed on The Nasdaq Global Market and the Tel Aviv Stock Exchange under the symbol “PWFL.” Additionally, the Company’s

common stock will be listed on the Johannesburg Stock Exchange by way of a secondary inward listing.

Telematics is a leading global provider of fleet and mobile asset management solutions delivered as SaaS to over one million global subscribers

spanning more than 120 countries.

MiX Telematics’ products and services provide enterprise fleets, small fleets, and consumers

with efficiency, safety, compliance, and security solutions.

The pending Scheme Transactions are expected to provide the Company with

operational synergies and access to a broader base of customers.

pending Scheme Transactions will be accounted for as a business combination and the Company has been identified as the accounting acquirer.

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