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Item 1A. Risk Factors

2024-05-09 compared with 2023-03-31 · 548 added, 699 removed, 556 unchanged (69% of the section changed)

Risk Factors.

addition to the other information contained in this Annual Report on Form 10-K, the following risk factors should be considered carefully

addition to the other information contained in this Form 10-K, the following risk factors should be considered carefully

in evaluating the Company’s business.

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These risks include, among others, the following:

We have incurred significant

losses and have a substantial accumulated deficit.

If we cannot achieve profitability, the market price of our common stock could

decline significantly.

The inability of our supply

chain to deliver certain key components, such as semiconductors, could materially adversely affect our business, financial condition

and results of operations.

We provide no assurance that we will be able to successfully integrate any businesses, products, technologies or

personnel that we have acquired or might acquire in the future.

Our expansion into new

products, services, and technologies subjects us to additional risks.

If we are unable to keep

up with rapid technological change, we may be unable to meet the needs of our customers, which could materially and adversely affect

our financial condition and results of operations and reduce our ability to grow our market share.

We may be subject to breaches

of our information technology systems, which could damage our reputation, vendor, and customer relationships, and our customers’

access to our services.

The industry in which we

operate is highly competitive, and competitive pressures from existing and new companies could have a material adverse effect on

our financial condition and results of operations.

We may not be able to successfully

execute our strategic initiatives or meet our long-term financial goals.

We are an international

company and may be susceptible to a number of political, economic and geographic risks that could harm our business.

Conditions and changes

in the global economic environment may adversely affect our business and financial results.

The international scope

of our business exposes us to risks associated with foreign exchange rates.

We may need to obtain additional

capital to fund our operations that could have negative consequences on our business.

If the market for our technology

does not develop or become sustainable, expands more slowly than we expect or becomes saturated, our revenues will decline and our

financial condition and results of operations could be materially and adversely affected.

may incur additional charges for excess and obsolete inventory, which could adversely affect our cost of sales and gross profit.

long and variable sales cycles for our solutions may cause our revenues and operating results to vary significantly from quarter

to quarter or year to year.

may not realize the anticipated benefits and cost savings of the MiX Combination.

our business and MiX Telematics’ business may be more difficult, time-consuming or costly than expected.

market price for shares of our common stock may decline as a result of the MiX Combination, including as a result of some of our

stockholders adjusting their portfolios.

MiX Combination may not be accretive, and may be dilutive, to the combined company’s earnings per share, which may negatively

affect the market price of shares of our common stock.

have incurred significant losses and have a substantial accumulated deficit.

If we cannot achieve profitability, the market price

of our common stock could decline significantly.

inability of our supply chain to deliver certain key components, such as semiconductors, could materially adversely affect our business,

financial condition and results of operations.

expansion into new products, services, and technologies subjects us to additional risks.

we are unable to keep up with rapid technological change, we may be unable to meet the needs of our customers, which could materially

and adversely affect our financial condition and results of operations and reduce our ability to grow our market share.

Inaccurate output from artificial intelligence could result in brand

and reputation damage.

are subject to breaches of our information technology systems, which could damage our reputation, vendor, and customer relationships,

and our customers’ access to our services.

industry in which we operate is highly competitive, and competitive pressures from existing and new companies could have a material

adverse effect on our financial condition and results of operations.

may not be able to successfully execute our strategic initiatives or meet our long-term financial goals.

are an international company and may be susceptible to a number of political, economic and geographic risks that could harm our business.

and changes in the global economic environment may adversely affect our business and financial results.

international scope of our business exposes us to risks associated with foreign exchange rates.

may need to obtain additional capital to fund our operations that could have negative consequences on our business.

the market for our technology does not develop or become sustainable, expands more slowly than we expect or becomes saturated, our

revenues will decline and our financial condition and results of operations could be materially and adversely affected.

rely significantly on channel partners to sell our products, and disruptions to, or our failure to develop and manage our channel

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and adversely affected.

may become involved in an intellectual property dispute that could subject us to significant liability and divert the time and attention

have been, and may continue to become, involved in intellectual property disputes that could subject us to significant liability and divert the time and attention

of our management and prevent us from selling our products.

Our Israeli subsidiaries have incurred significant indebtedness.

The terms of the A&R Credit Agreement restrict

Powerfleet Israel’s and Pointer’s current and future operations, particularly their ability to respond to changes or

take certain actions.

In connection with the MiX Combination, we have incurred

significant additional indebtedness to finance the redemption of our Series A preferred stock.

The restatement of our previously issued consolidated financial statements and the related analysis and ongoing remedial

measures have been time-consuming and expensive and could expose us to additional risks that could materially adversely affect our financial

position, results of operations and cash flows.

In connection with the preparation of our annual financial statements for the fiscal year ended December 31, 2023,

we identified material weaknesses in our internal control over financial reporting.

Any failure to maintain effective internal control

over financial reporting could harm us.

rely on subcontractors to manufacture and deliver our products.

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business, financial condition or results of operations.

Israeli subsidiaries have incurred significant indebtedness to finance the Transactions.

terms of the Credit Agreement restrict Powerfleet Israel’s and Pointer’s current and future operations, particularly

their ability to respond to changes or to take certain actions.

we lose our executive officers, or are unable to recruit additional personnel, our ability to manage our business could be materially

and adversely affected.

unpredictability of our quarterly operating results could adversely affect the market price of our common stock.

provide financing to our customers for the purchase of our products, which may increase our credit risks in the event of a deterioration

in a customer’s financial condition or in global credit conditions.

Our cash and cash equivalents could be adversely affected by a downturn

in the financial and credit markets.

cash and cash equivalents could be adversely affected by a downturn in the financial and credit markets.

impairment or intangible impairment charges may affect our results of operations in the future.

connection with the preparation of our annual financial statements for the fiscal year ended December 31, 2022, we identified material

weaknesses in our internal control over financial reporting.

Any failure to maintain effective internal control over financial reporting

could harm us.

have operations located in Israel, and therefore our results may be adversely affected by

political, military and economic conditions in Israel.

have operations located in Israel, and therefore our results may be adversely affected by political, military and economic conditions

of our employees in Israel are required to perform military reserve duty.

may be adversely affected by a change of the Israeli Consumer Price Index.

Argentine government may enact or enforce measures to preempt or respond to social unrest

or economic turmoil which may adversely affect our business in Argentina.

uncertainty and volatility in Brazil may adversely affect our business.

Brazilian government has exercised, and may continue to exercise, significant influence over the Brazilian economy.

instability in Brazil may adversely affect Brazil’s economy and investment levels and have a material adverse effect on the

uncertainty and volatility in Mexico may adversely affect our business.

of our Series A Preferred Stock can exercise significant control over the Company, which could limit the ability of our stockholders

to influence the outcome of key transactions, including a change of control.

Series A Preferred Stock has rights, preferences and privileges that are not held by, and are preferential to, the rights of holders

of our common stock, which could adversely affect our liquidity and financial condition, and may result in the interests of the holders

of Series A Preferred Stock differing from those of the holders of our common stock.

issuance of our common stock upon conversion of the Series A Preferred Stock will cause dilution to then existing Company stockholders

and may depress the market price of our common stock.

Fluctuations in the value of the South African Rand may have a significant

impact on our reported revenue and results of operations, which may make it difficult to evaluate our business performance between reporting

If we do not achieve applicable Broad-Based Black Economic Empowerment objectives in our South African businesses, we risk not being able to renew certain of our existing contracts

which service South African government and quasi-governmental customers, as well as not being awarded future corporate and governmental

contracts, each of which would result in the loss of revenue.

Socio-economic inequality in South Africa or regionally may subject

us to political and economic risks, which may affect the ownership or operation of our business.

concentration of common stock ownership among our executive officers and directors could limit the ability of other stockholders

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price of our common stock to decline.

Charter provides that the Court of Chancery of the State of Delaware will be the exclusive forum for certain legal actions between

Amended and Restated Certificate of Incorporation, as amended provides that the Court of Chancery of the State of Delaware will be the exclusive forum for certain legal actions between

us and our stockholders, which could limit stockholders’ ability to obtain a judicial forum viewed by the stockholders as more

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be subject to uncertainty.

Charter contains a provision renouncing our interest and expectancy in certain corporate opportunities which may prevent us from

receiving the benefit of certain corporate opportunities.

of Delaware law or the Charter could delay or prevent an acquisition of the Company, even if the acquisition would be beneficial

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Related to Our Business

may not realize the anticipated benefits and cost savings of the MiX Combination.

The success of the

MiX Combination will depend, in part, on our ability to realize the anticipated benefits and cost savings from combining the two businesses.

Our ability to realize these anticipated benefits and cost savings is subject to certain risks, including, among others:

parties’ ability to successfully combine their respective businesses;

risk that the combined businesses will not perform as expected;

extent to which the parties will be able to realize the expected synergies, which include realizing potential savings from re-assessing

priority assets and aligning investments, eliminating duplication and redundancy, adopting an optimized operating model between both

companies and leveraging scale, and creating value resulting from the combination of the two businesses;

possibility that the aggregate consideration being paid for MiX Telematics is greater than the value we will derive from the MiX

possibility that the combined company will not achieve the unlevered free cash flow that the parties have projected;

incurrence of additional indebtedness in connection with the MiX Combination and the resulting limitations placed on the combined

company’s operations;

assumption of known and unknown liabilities of MiX Telematics, including potential tax and employee-related liabilities.

we are not able to successfully integrate the businesses within the anticipated time frame, or at all, the anticipated cost savings,

synergies operational efficiencies and other benefits of the MiX Combination may not be realized fully or may take longer to realize

than expected, and the combined company may not perform as expected.

our business and MiX Telematics’ business may be more difficult, time-consuming or costly than expected.

and MiX Telematics have operated independently prior to completion of the MiX Combination on April 2, 2024, and there

can be no assurances that our businesses can be integrated successfully.

It is possible that the integration process could result in

the loss of key employees, the disruption of our company’s ongoing business or unexpected integration issues, such as higher

than expected integration costs and an overall post-completion integration process that takes longer than originally anticipated.

Specifically, issues that must be addressed in integrating the operations of our company and MiX Telematics in order to realize the

anticipated benefits of the MiX Combination so that the combined business performs as expected include, among others:

the companies’ separate operational, financial, reporting and corporate functions;

the companies’ technologies, products and services;

and eliminating redundant and underperforming operations and assets;

the companies’ operating practices, employee development, compensation and benefit programs, internal controls and other policies,

procedures and processes;

possible differences in corporate cultures and management philosophies;

employee morale and retaining key management and other employees;

and recruiting prospective employees;

consolidating

the companies’ corporate, administrative and information technology infrastructure;

sales, distribution and marketing efforts;

the movement of certain businesses and positions to different locations;

existing agreements with customers and vendors and avoiding delays in entering into new agreements with prospective customers and

geographically dispersed organizations;

potential actions that may be required in connection with obtaining regulatory approvals.

addition, at times, the attention of certain members of our management and our resources may be focused on the integration of the businesses of the two companies and diverted from day-to-day business operations, which may disrupt our ongoing

business and, consequently, the business of the combined company.

market price for shares of our common stock may decline as a result of the MiX Combination, including as a result of some of our stockholders

adjusting their portfolios.

The market value of our common stock at the time of

consummation of the MiX Combination varied significantly from the prices of our common stock on the date the Implementation Agreement

was executed, the date of our special meeting of stockholders relating to the MiX Combination and the closing date of the MiX Combination.

The market price of our common stock may

decline if, among other things, the operational cost savings estimates in connection with the integration of ours and MiX Telematics’

businesses are not realized, or if the costs related to the MiX Combination are greater than expected.

The market price also may decline

if we do not achieve the perceived benefits of the MiX Combination as rapidly or to the extent anticipated by financial or industry analysts

or if the effect of the MiX Combination on our financial position, results of operations or cash flows is not consistent with the expectations

of financial or industry analysts.

In addition, sales of our common stock by our stockholders

after the completion of the MiX Combination may cause the market price of our common stock to decrease.

Shareholders of MiX Telematics

may decide not to hold the shares of our common stock that they received in the MiX Combination.

Certain of our other stockholders, such as funds with limitations on their permitted holdings of stock in individual issuers, may be

required to sell the shares of our common stock that they received in the MiX Combination.

Such sales of our common stock could have the

effect of depressing the market price for our common stock and may take place promptly following the MiX Combination.

Any of these events may make it more difficult for

us to sell equity or equity-related securities and have an adverse impact on the price of our common stock.

The MiX Combination may not be accretive, and

may be dilutive, to the combined company’s earnings per share, which may negatively affect the market price of shares of our common

We currently believe the MiX Combination will result

in a number of benefits, including cost savings, operating efficiencies, and stronger demand for our products and services, and that the

MiX Combination will be accretive to our earnings.

This belief is based, in part, on preliminary current estimates that may materially

In addition, future events and conditions, including adverse changes in market conditions, additional transaction and integration-related

costs and other factors such as the failure to realize some or all of the anticipated benefits of the MiX Combination, could decrease

or delay the accretion that is currently anticipated or could result in dilution.

Any dilution of, or decrease in or delay of any accretion

to, the combined company’s earnings per share could cause the price of shares of our common stock to decline or grow at a reduced

have incurred significant losses and have a substantial accumulated deficit.

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of December 31, 2023, we had cash (including restricted cash) and cash equivalents of $19.3 million and working capital of $23.5 million.

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

sale of our capital stock and borrowings under our credit facility.

To date, we have not generated sufficient cash flow solely from operating

activities to fund our operations.

incurred net losses of approximately $13.6 million, $18.1 million and $11.9 million for the years ended December 31, 2020, 2021 and

2022, respectively, and have incurred additional net losses since inception.

At December 31, 2022, we had an accumulated deficit of approximately

$141.4 million.

Our ability to increase our revenues from the sale of our solutions will depend on our ability to successfully implement

our growth strategy and the continued expansion of our markets.

If our revenues do not grow or if our operating expenses continue to

increase, we may not be able to become profitable and the market price of our common stock could decline.

Our primary sources of cash are cash flows from the sales of products and services, our holdings of cash, cash equivalents and investments

from the sale of our capital stock and borrowings under our credit facility.

To date, we have not generated sufficient cash flow solely

from operating activities to fund our operations.

incurred net losses of approximately $22.1 million (as restated), $16.9 million (as restated) and $17.3 million for the years ended

December 31, 2021, 2022 and 2023, respectively, and have incurred additional net losses since inception.

At December 31, 2023, we

had an accumulated deficit of approximately $146.3 million.

Our ability to increase our revenues from the sale of our solutions will

depend on our ability to successfully implement our growth strategy and the continued expansion of our markets.

If our revenues do

not grow or if our operating expenses continue to increase, we may not be able to become profitable and the market price of our

common stock could decline.

inability of our supply chain to deliver certain key components, such as semiconductors, could materially adversely affect our business,

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products contain a significant number of components that we source globally.

If our supply chain fails to deliver products to us in sufficient

quality and quantity on a timely basis, we will be challenged to meet our customer order delivery timelines and could incur significant

additional expenses for expedited freight and other related costs.

Similarly, many of our customers are dependent on an ever-greater

number of global suppliers to manufacture their products.

These global supply chains have continued to be, adversely impacted

by events outside of our control, including macroeconomic events, trade restrictions, economic recessions and ongoing disruptions from the COVID-19 pandemic.

Over the past two years, we have experienced delays in supply chain deliveries,

extended lead times and shortages of key components, some raw material cost increases and slowdowns at certain production facilities.

These disruptions have delayed and may continue to delay the timing of some orders and expected deliveries of our products, which has impacted our business and results of operations.

If our supply chain fails to deliver products to us in

sufficient quality and quantity on a timely basis, we will be challenged to meet our customer order delivery timelines and could

incur significant additional expenses for expedited freight and other related costs.

Similarly, many of our customers are dependent

on an ever-greater number of global suppliers to manufacture their products.

These global supply chains have continued to be

adversely impacted by events outside of our control, including macroeconomic events, trade restrictions, economic recessions and

ongoing geopolitical conflicts.

Over the past two years, we have experienced delays in supply chain deliveries, extended lead times

and shortages of key components, some raw material cost increases and slowdowns at certain production facilities.

These disruptions

have delayed and may continue to delay the timing of some orders and expected deliveries of our products, which has impacted our

business and results of operations.

of the products we supply are reliant on semiconductors.

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disruptions may have a material adverse impact on our business, financial condition and results of operations.

provide no assurance that we will be able to successfully integrate any businesses, products, technologies or personnel that we have

acquired or might acquire in the future.

may, from time to time, consider combinations with or acquisitions of complementary companies, products, or technologies.

the event of any future acquisitions or combinations, we could:

stock that would dilute our current stockholders’ percentage ownership;

expenses related to the impairment of goodwill;

large and immediate write-offs.

may not be able to identify suitable acquisition candidates, and if we do identify suitable candidates, we may not be able to make these

acquisitions on acceptable terms, or at all.

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

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

(“Movingdots”), a leading provider of insurance telematics and sustainable mobility solutions and wholly owned

subsidiary of Swiss Re.

Our operation of any acquired business, including Movingdots, will involve numerous risks,

integrating the acquired operations, personnel, technologies or products;

unanticipated

of management’s time and attention from our core businesses;

effects on existing business relationships with suppliers and customers;

associated with entering markets in which we have no or limited prior experience;

loss of key employees, particularly those of acquired companies.

addition, if we make changes to our business strategy or if external conditions adversely affect our business operations, we may be required

to record an impairment charge for goodwill or intangibles, which would lead to decreased assets and reduced net operating performance.

expansion into new products, services, and technologies subjects us to additional risks.

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could materially and adversely affect our financial condition and results of operations and reduce our ability to grow our market share.

may be subject to breaches of our information technology systems, which could damage our reputation, vendor, and customer relationships,

output from artificial intelligence could result in brand and reputation damage.

intelligence (“AI”) is being integrated into a number of our solutions and/or products and could be a significant factor

in future service offerings.

While AI can present significant benefits, it also presents risks and challenges to our business.

Data sourcing,

technology, integration and process issues, program bias into decision-making algorithms, security challenges and the protection of personal

privacy could impair the adoption and acceptance of AI solutions.

If the output from AI solutions are deemed to be inaccurate or questionable,

our brand and reputation may be harmed and we may potentially be subject to legal liability claims.

are subject to breaches of our information technology systems, which could damage our reputation, vendor, and customer relationships,

and our customers’ access to our services.

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and is perceived by customers and partners to be secure.

We require user names and passwords in order to access our information technology

We require usernames and passwords in order to access our information technology

We also use encryption and authentication technologies to secure the transmission and storage of data.

Despite our security

measures, our information technology systems may be vulnerable to attacks by hackers or other disruptive problems.

measures, our information technology systems have been, and may continue to be, subject to cybersecurity threats and incidents.

Any such security

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industry in which we operate is highly competitive and influenced by the following:

advances in technology;

new product introductions;

evolving industry standards;

product improvements;

rapidly changing customer

intellectual property invention

and protection;

marketing and distribution

capabilities;

ability to attract and

retain highly skilled professionals;

competition from highly

capitalized companies;

entrance of new competitors;

ability of customers to

invest in information technology;

price competition.

in technology;

product introductions;

industry standards;

improvements;

changing customer needs;

property invention and protection;

and distribution capabilities;

to attract and retain highly skilled professionals;

from highly capitalized companies;

of new competitors;

of customers to invest in information technology;

products marketed by us and our competitors are becoming more complex.

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are an international company and may be susceptible to a number of political, economic and geographic risks that could harm our business.

are dependent on sales to customers outside the U.S.

are dependent on sales to customers outside the United States.

Our international sales are likely to account for a significant percentage of our

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As a result, the occurrence of any international, political, economic or geographic

event (for example, the COVID-19 pandemic, continued global supply chain disruptions, inflation and other cost increases, and the conflict

between Russia and Ukraine) could result in a significant decline in our revenue.

In addition, compliance with complex foreign and U.S.

laws and regulations that apply to our international operations will increase our cost of doing business in international jurisdictions.

These numerous and sometimes conflicting laws and regulations include internal control and disclosure rules, data privacy and filtering

requirements, anti-corruption laws, such as the Foreign Corrupt Practices Act, and other local laws prohibiting corrupt payments to governmental

officials, and anti-competition regulations, among others.

Violations of these laws and regulations could result in fines and penalties,

criminal sanctions against us, our officers, or employees, prohibitions on the conduct of our business and on our ability to offer our

products and services in one or more countries, and could also materially affect our brand, international expansion efforts, ability

to attract and retain employees, business, and operating results.

Although we plan to implement policies and procedures designed to ensure

compliance with these laws and regulations, there can be no assurance that our employees, contractors, or agents will not violate our

event (for example, continued global supply chain disruptions, inflation and other cost increases, and the conflict between Russia and

Ukraine and between Israel and Hamas) could result in a significant decline in our revenue.

compliance with complex foreign and U.S.

laws and regulations that apply to our international operations will increase our cost of doing

business in international jurisdictions.

These numerous and sometimes conflicting laws and regulations include internal control and disclosure

rules, data privacy and filtering requirements, anti-corruption laws, such as the Foreign Corrupt Practices Act, and other local laws

prohibiting corrupt payments to governmental officials, and anti-competition regulations, among others.

Violations of these laws and

regulations could result in fines and penalties, criminal sanctions against us, our officers, or employees, prohibitions on the conduct

of our business and on our ability to offer our products and services in one or more countries, and could also materially affect our

brand, international expansion efforts, ability to attract and retain employees, business, and operating results.

Although we plan to

implement policies and procedures designed to ensure compliance with these laws and regulations, there can be no assurance that our employees,

contractors, or agents will not violate our policies.

of the risks and challenges of doing business internationally include:

unexpected changes in regulatory

requirements;

fluctuations in international

currency exchange rates including its impact on unhedgeable currencies and our forecast variations for hedgeable currencies;

imposition of tariffs and

other barriers and restrictions;

management and operation

of an enterprise spread over various countries;

the burden of complying

with a variety of laws and regulations in various countries;

application of the income

tax laws and regulations of multiple jurisdictions, including relatively low-rate and relatively high-rate jurisdictions, to our

sales and other transactions, which results in additional complexity and uncertainty;

the conduct of unethical

business practices in certain developing countries;

general economic and geopolitical

conditions, including inflation and trade relationships;

war and acts of terrorism;

kidnapping and high crime

natural disasters or pandemics

(for example, the COVID-19 pandemic);

availability of U.S.

especially in countries with economies highly dependent on resource exports, particularly oil;

changes in export regulations.

changes in regulatory requirements;

in international currency exchange rates including its impact on unhedgeable currencies and our forecast variations for hedgeable

of tariffs and other barriers and restrictions;

and operation of an enterprise spread over various countries;

burden of complying with a variety of laws and regulations in various countries;

of the income tax laws and regulations of multiple jurisdictions, including relatively low-rate and relatively high-rate jurisdictions,

to our sales and other transactions, which results in additional complexity and uncertainty;

conduct of unethical business practices in certain developing countries;

economic and geopolitical conditions, including inflation and trade relationships;

and acts of terrorism;

and high crime rate;

disasters or pandemics (for example, the COVID-19 pandemic);

dollars especially in countries with economies highly dependent on resource exports, particularly oil;

in export regulations.

these factors and the impacts of these factors are difficult to predict, any one or more of them could adversely affect our business,

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adverse business conditions and liquidity concerns, as well as recent bank failures.

These events and the related uncertainty about future economic conditions could

negatively impact our customers and, among other things, postpone their decision-making, decrease their spending and jeopardize or

delay their ability or willingness to make payment obligations, any of which could adversely affect our business and results of

Uncertainty about current global economic conditions, in particular as a result of the continued global supply chain

disruptions, inflation and other cost increases, and the conflict between Russia and Ukraine and recent bank failures, could also cause volatility of our

During periods of economic downturns, our customers may decrease their demand for wireless technology solutions, as

well as the maintenance, support and consulting services we provide.

This slowdown may have an adverse effect on the wireless

solutions industry in general and on demand for our products and services, but the magnitude of that impact is uncertain.

growth is dependent, in part, upon the demand for our products and services.

Prolonged weakness in the economy may cause business

enterprises to delay or cancel wireless solutions projects, reduce their overall wireless solutions budgets and/or reduce or cancel

orders for our services.

This, in turn, may lead to longer sales cycles, delays in purchase decisions, and payment and collection

issues, and may also result in price pressures, causing us to realize lower revenues and operating margins.

Additionally, if our

customers cancel or delay their wireless solutions initiatives, our business, financial condition and results of operations could be

materially and adversely affected.

If the current uncertainty in the general economy does not change or continue to improve, our

business, financial condition and results of operations could be harmed.

recently, the closures of Silicon Valley Bank and Signature Bank and their placement into receivership with the Federal Deposit Insurance

Corporation (“FDIC”) created bank-specific and broader financial institution liquidity risk and concerns.

Although the Department

of the Treasury, the Federal Reserve, and the FDIC jointly released a statement that depositors at Silicon Valley Bank and Signature

Bank would have access to their funds, even those in excess of the standard FDIC insurance limits, future adverse developments with respect

to specific financial institutions or the broader financial services industry may lead to market-wide liquidity shortages.

of any bank in which we deposit our funds could reduce the amount of cash we have available for our operations or delay our ability to

access such funds.

Any such failure may increase the possibility of a sustained deterioration of financial market liquidity, or illiquidity

at clearing, cash management and/or custodial financial institutions.

In the event we have a commercial relationship with a bank that

has failed or is otherwise distressed, we may experience delays or other issues in meeting our financial obligations.

If other banks

and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking

system and financial markets, our ability to access our cash and cash equivalents may be threatened and could have a material adverse

effect on our business and financial condition.

These events and the related uncertainty about

future economic conditions could negatively impact our customers and, among other things, postpone their decision-making, decrease

their spending and jeopardize or delay their ability or willingness to make payment obligations, any of which could adversely affect

our business and results of operations.

Uncertainty about current global economic conditions, in particular as a result of the

continued global supply chain disruptions, inflation and other cost increases, and the conflicts between Russia and Ukraine and

between Israel and Hamas, and recent bank failures, could also cause volatility of our stock price.

During periods of economic

downturns, our customers may decrease their demand for wireless technology solutions, as well as the maintenance, support and

consulting services we provide.

This slowdown may have an adverse effect on the wireless solutions industry in general and on demand

for our products and services, but the magnitude of that impact is uncertain.

Our future growth is dependent, in part, upon the

demand for our products and services.

Prolonged weakness in the economy may cause business enterprises to delay or cancel wireless

solutions projects, reduce their overall wireless solutions budgets and/or reduce or cancel orders for our services.

This, in turn,

may lead to longer sales cycles, delays in purchase decisions, and payment and collection issues, and may also result in price

pressures, causing us to realize lower revenues and operating margins.

Additionally, if our customers cancel or delay their wireless

solutions initiatives, our business, financial condition and results of operations could be materially and adversely affected.

the current uncertainty in the general economy does not change or continue to improve, our business, financial condition and results

of operations could be harmed.

international scope of our business exposes us to risks associated with foreign exchange rates.

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offerings, debt financings, additional operating improvements, asset sales or strategic alliances and licensing arrangements.

the extent we raise additional capital by issuing equity securities, including pursuant to our shelf registration statement, our existing

the extent we raise additional capital by issuing equity securities, our existing

stockholders may experience substantial dilution.

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or services, our revenues will decline and our financial condition and results of operations could be materially and adversely affected.

may incur additional charges for excess and obsolete inventory, which could adversely affect our cost of sales and gross profit.

we strive to effectively manage our inventory, due to rapidly changing technology, and uneven customer demand, product cycles tend to

be short and the value of our inventory may be adversely affected by changes in technology that affect our ability to sell the products

in our inventory.

If we do not effectively forecast and manage our inventory, we may need to write off inventory as excess or obsolete,

which in turn, can adversely affect our cost of sales and gross profit.

have previously experienced, and may in the future experience, reductions in sales of older generation products as customers delay or

defer purchases in anticipation of new product introductions.

The reserves we have established for potential losses due to obsolete inventory

may, however, prove to be inadequate and may give rise to additional charges for obsolete or excess inventory.

long and variable sales cycles for our solutions may cause our revenues and operating results to vary significantly from quarter to quarter

or year to year, which could adversely affect the market price of our common stock.

expect that many customers who utilize our solutions will do so as part of a large-scale deployment of these solutions across multiple

or all divisions of their organizations.

A customer’s decision to deploy our solutions throughout its organization will involve

a significant commitment of its resources.

Accordingly, initial implementations may precede any decision to deploy our solutions enterprise-wide.

Throughout this sales cycle, we may spend considerable time and expense educating and providing information to prospective customers

about the benefits of our solutions.

timing of the deployment of our solutions may vary widely and will depend on the specific deployment plan of each customer, the complexity

of the customer’s organization and the difficulty of such deployment.

Customers with substantial or complex organizations may deploy

our solutions in large increments on a periodic basis.

Accordingly, we may receive purchase orders for significant dollar amounts on

an irregular and unpredictable basis.

Because of our limited operating history and the nature of our business, we cannot predict the

timing or size of these sales and deployment cycles.

Long sales cycles, as well as our expectation that customers will tend to place

large orders sporadically with short lead times, may cause our revenue and results of operations to vary significantly and unexpectedly

from quarter to quarter.

These variations could materially and adversely affect the market price of our common stock.

rely significantly on channel partners to sell our products, and disruptions to, or our failure to develop and manage our channel partners

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over competitors and our financial condition and results of operations could be materially and adversely affected.

may become involved in an intellectual property dispute that could subject us to significant liability, divert the time and attention

have been, and may continue to become, involved in intellectual property disputes that could subject us to significant liability, divert the time and attention

of our management and prevent us from selling our products, any of which could materially and adversely affect our financial condition

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of patents and other intellectual property rights.

Litigation may be necessary to enforce our intellectual property rights, defend ourselves

Litigation has been, and may continue to be, necessary to enforce our intellectual property rights, defend ourselves

against alleged infringement and determine the scope and validity of our intellectual property rights.

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If a claim of patent infringement was decided against us, we could be required to, among other things:

pay substantial damages

to the party making such claim;

stop selling, making, having

made or using products or services that incorporate the challenged intellectual property;

obtain from the holder

of the infringed intellectual property right a license to sell, make or use the relevant technology, which license may not be available

on commercially reasonable terms, or at all;

redesign those products

or services that incorporate such intellectual property.

substantial damages to the party making such claim;

selling, making, having made or using products or services that incorporate the challenged intellectual property;

from the holder of the infringed intellectual property right a license to sell, make or use the relevant technology, which license

may not be available on commercially reasonable terms, or at all;

those products or services that incorporate such intellectual property.

failure to obtain the necessary licenses or other rights could preclude the sale, manufacture or distribution of our products and could

materially and adversely affect our financial condition and results of operations.

Israeli subsidiaries have incurred significant indebtedness.

On March 18, 2024, Powerfleet Israel Ltd.

Israel”) and Pointer entered into an amended and restated credit agreement (the “A&R Credit Agreement”), with Bank

Hapoalim B.M.

(“Hapoalim”), which refinanced the facilities under, and amended and restated, the prior credit agreement, dated

August 19, 2019 (as amended, the “Prior Credit Agreement”).

The A&R Credit Agreement provides Powerfleet Israel with two

senior secured term loan facilities denominated in New Israeli Shekel (“NIS”) in an aggregate principal amount of $30 million

(comprised of two facilities in the aggregate principal amounts of $20 million and $10 million, respectively (“Facility A”

and “Facility B,” respectively, and collectively, the “Term Facilities”)), and two revolving credit facilities

to Pointer in an aggregate principal amount of $20 million (comprised of two revolvers in the aggregate principal amounts of $10 million

and $10 million, respectively (“Facility C” and “Facility D,” respectively, and, collectively, the “Revolving

Facilities” and, together with the Term Facilities, the “Credit Facilities”)).

The outstanding amount under the facilities

made available pursuant to the Prior Credit Agreement was approximately NIS 40.1 million, or $11.1 million, as of December 31, 2023.

March 18, 2024, Powerfleet Israel drew down $30 million in cash under the Term Facilities and used the proceeds to prepay approximately

$11.2 million, representing the remaining outstanding balance, of the term loans extended to Powerfleet Israel under the Prior Credit

Agreement and distributed the remaining proceeds to Powerfleet.

Such indebtedness will have the effect, among other things, of reducing

Powerfleet Israel’s and Pointer’s flexibility to respond to changing business and economic conditions, will increase our borrowing

costs and, because such indebtedness is subject to floating interest rates and exposed to foreign currency fluctuations, may increase

Powerfleet Israel’s and Pointer’s vulnerability to fluctuations in market interest and foreign exchange rates.

Credit Agreement continues to require Powerfleet Israel and Pointer to satisfy various covenants, including negative covenants that directly

or indirectly restrict our ability to engage in certain transactions without the consent of the lender.

The indebtedness continues to

be secured by first ranking and exclusive fixed and floating charges, including by Powerfleet Israel over the entire share capital of

Pointer and by Pointer over all of its assets, as well as cross guarantees between Powerfleet Israel and Pointer.

This may also make it

more difficult for us to engage in future transactions without the consent of the lender.

The increased levels of indebtedness could also

reduce funds available to engage in investments in product development, capital expenditures and other activities and may create competitive

disadvantages for us relative to other companies with lower debt levels.

We may be required to raise additional financing for working

capital, capital expenditures, acquisitions or other general corporate purposes.

Our ability to arrange additional financing will depend

on, among other factors, our financial position and performance, as well as prevailing market conditions and other factors beyond its

We cannot assure you that we will be able to obtain additional financing on terms acceptable to us or at all.

The terms of the A&R Credit Agreement restrict

Powerfleet Israel’s and Pointer’s current and future operations, particularly their ability to respond to changes or to take

certain actions.

The A&R Credit Agreement contains a number of

restrictive covenants that impose significant operating and financial restrictions on Powerfleet Israel and Pointer and limits their ability

to engage in acts that may be in their long-term best interest, including restrictions on their ability to:

incur or guarantee additional indebtedness;

sell or otherwise dispose of assets;

enter into transactions with affiliates;

enter into new lines of business.

The A&R Credit Agreement also limits the ability

of Powerfleet Israel and Pointer to consolidate or merge with or into another person.

In addition, the covenants in the A&R

Credit Agreement require Powerfleet Israel and Pointer to maintain specified financial ratios, tested quarterly.

Their ability to meet

those financial ratios can be affected by events beyond their control, and they may be unable to meet them.

A breach of the covenants or restrictions under the

A&R Credit Agreement could result in an event of default, which may allow the lender to accelerate the indebtedness thereunder.

addition, an event of default under the A&R Credit Agreement would permit the lender to terminate all commitments to extend further

credit pursuant to the Revolving Facilities.

Furthermore, if Powerfleet Israel and Pointer are unable to repay the amounts due and payable

under the A&R Credit Agreement, the lender could proceed against the collateral granted to it to secure the indebtedness under the

A&R Credit Agreement.

In the event the lender accelerates the repayment of borrowings, Powerfleet Israel and Pointer may not have

sufficient assets to repay that indebtedness.

As a result of these restrictions, we may be:

limited in our flexibility in planning for, or reacting to, changes in our business and the markets we serve;

unable to raise additional debt or equity financing to fund working capital, capital expenditures, new product development expenses and other general corporate requirements;

unable to compete effectively or to take advantage of new business or strategic acquisition opportunities.

These restrictions may affect our ability to grow

in accordance with our strategy.

In connection with the MiX Combination, we have

incurred significant additional indebtedness to finance the redemption of our Series A preferred stock.

The closing of debt and/or equity financing in an

amount sufficient to provide for the redemption in full in cash of all outstanding shares of our Series A Preferred Stock was a condition

to closing the MiX Combination.

On March 7, 2024, we, together with certain of our wholly owned subsidiaries, entered into a facilities

agreement (the “Facilities Agreement”) with FirstRand Bank Limited (acting through its Rand Merchant Bank division) (“RMB”),

pursuant to which RMB agreed to provide us with two term loan facilities in an aggregate principal amount of $85 million, the proceeds

of which may be used to redeem all the outstanding shares of the Series A Preferred Stock and for general corporate purposes.

13, 2024, we drew down all $85 million available under such facilities.

On April 2, 2024, concurrently with the closing of the MiX Combination,

we used the net proceeds received from RMB and from incremental borrowing capacity as a result of the refinancing of Credit Facilities

to redeem in full all of the outstanding shares of the Series A Preferred Stock.

Such indebtedness will have the effect of, among other

things, reducing our flexibility to respond to changing business and economic conditions, will increase our borrowing costs and, to the

extent that such indebtedness is subject to floating interest rates, may increase our vulnerability to fluctuations in market interest

The increased levels of indebtedness could also reduce funds available to fund efforts to combine our and MiX Telematics’

businesses and realize expected benefits of the MiX Combination and/or engage in investments in product development, capital expenditures

and other activities and may create competitive disadvantages for the combined company relative to other companies with lower debt levels.

The restatement of

our previously issued consolidated financial statements and the related analysis and ongoing remedial measures have been time consuming

and expensive and could expose us to additional risks that could materially adversely affect our financial position, results of operations

and cash flows.

As discussed in the Explanatory

Note to this Form 10-K and in Note 2 to our consolidated financial statements included in this Form

10-K, we have restated our previously issued audited consolidated financial statements for the fiscal years ended December 31, 2021 and

2022 and our unaudited consolidated financial statements covering each of the interim periods during the 2022 and 2023 fiscal years.

restatements have been, and the remediation efforts we have begun to undertake are and will be, time-consuming and expensive and could

expose us to a number of additional risks that could materially adversely affect our financial position, results of operations and cash

In particular, we have incurred significant

expenses, including audit, legal, consulting and other professional fees, in connection with the restatement of our previously issued

financial statements and the ongoing remediation of material weaknesses in our internal control over financial reporting.

We are implementing and will continue to implement

additional processes to address such material weaknesses utilizing existing resources and adding new resources as needed.

To the extent

these steps are not successful, we could be forced to incur additional time and expense.

Our management’s attention has also been

diverted from the operation of our business in connection with the restatements and ongoing remediation of material weaknesses in our

internal controls.

In addition, the restatements and related matters could impair our reputation and could cause our stakeholders to

lose confidence in us, which could have an adverse effect on our business, results of operations, financial condition and stock price.

In connection with the preparation of our annual

financial statements for the fiscal year ended December 31, 2023, we identified material weaknesses in our internal control over financial

Any failure to maintain effective internal control over financial reporting could harm us.

Our management is responsible for

establishing and maintaining adequate internal control over financial reporting.

Internal control over financial reporting is a

process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial

statements in accordance with U.S.

generally accepted accounting principles.

We identified material weaknesses in our internal

control over financial reporting as of December 31, 2023, which have not been remediated (see Item 9A of this Form 10-K for more

information).

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

such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be

prevented or detected on a timely basis.

Our management has concluded that material weaknesses in our internal control over

financial reporting existed as of December 31, 2023 due to the lack of controls related to accounting for the redemption premium on

convertible redeemable preferred stock, the determination of standalone selling price, capitalized software costs and the financial

statement close process.

We are still considering the full extent of the procedures

to implement in order to remediate the material weaknesses described above.

As part of the business combination with MiX Telematics, we

expect to migrate our central corporate accounting function to MiX Telematics’ central corporate accounting function and team.

from this migration will include:

Implementation of a new enterprise resource planning (“ERP”) system;

Access to a larger and highly qualified team;

Mature internal risk team who are responsible for ensuring systems, process and controls are clearly documented and widely understood and followed throughout the organization.

The material weakness for the measurement and valuation of the convertible

redeemable preferred stock that necessitated the need to restate prior period financial statements will not require remediation in 2024

as all of the outstanding shares of the Series A Preferred Stock were redeemed in full in April 2024.

Additionally, the current remediation plan includes:

(i) utilizing external resources to support our efforts to rework certain control gaps across the various processes in Israel and the

United States with identified deficiencies;

(ii) implementing enhanced documentation associated with management review controls and validation

of the completeness and accuracy of key reports in Israel and the United States;

and (iii) training relevant personnel to reinforce existing

policies and enhancing policies with regard to appropriate steps and procedures required to be performed related to the execution and

documentation of internal controls.

We cannot assure you that any of our remedial measures will be effective in resolving this material

weakness or that we will not suffer from other material weaknesses in the future.

If our management is unable to conclude that we have

effective internal control over financial reporting, or to certify the effectiveness of such controls, or if additional material weaknesses

in our internal controls are identified in the future, we could be subject to regulatory scrutiny and a loss of public confidence, which

could have a material adverse effect on our business and our stock price.

In addition, if we do not maintain adequate financial and management

personnel, processes and controls, we may not be able to manage our business effectively or accurately report our financial performance

on a timely basis, which could cause a decline in our common stock price and adversely affect our results of operations and financial

rely on subcontractors to manufacture and deliver our products.

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This reliance involves a number of significant risks, including:

unavailability of materials

and interruptions in delivery of components and raw materials from our suppliers, which could result in manufacturing delays;

fluctuations in the quality

and price of components and raw materials.

unavailability

of materials and interruptions in delivery of components and raw materials from our suppliers, which could result in manufacturing

in the quality and price of components and raw materials.

currently do not have any long-term or exclusive purchase commitments with any of our suppliers.

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adversely affect our relationships with our customers.

federal government or independent standards organizations may implement significant regulations or standards that could adversely affect

our ability to produce or market our products.

products transmit radio frequency waves, the transmission of which is governed by the rules and regulations of the FCC, as well as other

federal and state agencies.

Our ability to design, develop and sell our products will continue to be subject to these rules and regulations

for the foreseeable future.

In addition, our products and services may become subject to independent industry standards.

The implementation

of unfavorable regulations or industry standards, or unfavorable interpretations of existing regulations by courts or regulatory bodies,

could require us to incur significant compliance costs, cause the development of the affected products to become impractical or otherwise

adversely affect our ability to produce or market our products.

The adoption of new industry standards applicable to our products may

require us to engage in rapid product development efforts that would cause us to incur higher expenses than we anticipated.

In some circumstances,

we may not be able to comply with such standards, which could materially and adversely affect our ability to generate revenues through

the sale of our products.

our products are complex, they may have undetected errors or failures when they are introduced, which could seriously harm our business,

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still may be errors or failures in our products, even after the commencement of commercial shipments.

We provide a reserve at

the time of shipment, which may not be sufficient to cover actual repair costs.

We provide a reserve at the time

of shipment, which may not be sufficient to cover actual repair costs.

Because our products are used in business-critical applications,

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Although we maintain insurance, there are no assurances that:

our insurance will provide

adequate coverage against potential liabilities if our products cause harm or fail to perform as promised;

adequate product liability

insurance will continue to be available to us in the future on commercially reasonable terms or at all.

insurance will provide adequate coverage against potential liabilities if our products cause harm or fail to perform as promised;

product liability insurance will continue to be available to us in the future on commercially reasonable terms or at all.

our insurance is insufficient to pay any product liability claims, our financial condition and results of operations could be materially

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our operations if implemented, there is now increased uncertainty regarding the long-term enforceability of our non-competition agreements

with employees in the U.S.

with employees in the United States.

If the enforceability of non-competition agreements is affected by future lawmaking or regulatory action,

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of our vendors or subcontractors to deliver our products could affect our business, financial condition or results of operations.

Israeli subsidiaries have incurred significant indebtedness to finance the Transactions.

connection with the Transactions, Powerfleet Israel Ltd.

(“Powerfleet Israel”) and Pointer entered into a credit

agreement, dated August 19, 2019 (the “Credit Agreement”), with Bank Hapoalim B.M.

(“Hapoalim”), pursuant to

which Hapoalim agreed to provide Powerfleet Israel with two senior secured term loan facilities denominated in New Israeli Shekel

(NIS) in an initial aggregate principal amount of $30,000,000 (comprised of two facilities in the initial aggregate principal

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

Facilities”)) and a five-year revolving credit facility to Pointer in an aggregate principal amount of

On October 31, 2022, Powerfleet Israel and Pointer entered into an amendment to the Credit Agreement with Hapoalim,

which provided for, among other things, a new revolving credit facility to Pointer in the aggregate principal amount of $10,000,000

(the “New Revolver”).

The outstanding amount under the term loan facilities was NIS 55,298,000, or $15,877,000, as of

December 31, 2022.

Such indebtedness will have the effect, among other things, of reducing Powerfleet Israel’s and

Pointer’s flexibility to respond to changing business and economic conditions, will increase our borrowing costs and, because such indebtedness is subject to floating interest rates and exposed to foreign currency fluctuations, may increase

Powerfleet Israel’s and Pointer’s vulnerability to fluctuations in market interest and foreign exchange rates.

Credit Agreement requires Powerfleet Israel and Pointer to satisfy various covenants, including negative covenants that directly or

indirectly restrict our ability to engage in certain transactions without the consent of the lender.

The indebtedness is secured by

first ranking and exclusive fixed and floating charges, including by Powerfleet Israel over the entire share capital of Pointer and

by Pointer over all of its assets, and a first ranking fixed pledge and assignment by Pointer over its bank account that was opened

in connection with the New Revolver and all of the rights relating thereunder, as well as cross guarantees between Powerfleet Israel

This may also make it more difficult for us to engage in future transactions without the consent of the lender.

increased levels of indebtedness could also reduce funds available to fund efforts to integrate I.D.

Pointer’s businesses and realize expected benefits of the Transactions and/or engage in investments in product development,

capital expenditures and other activities and may create competitive disadvantages for us relative to other companies with lower

We may be required to raise additional financing for working capital, capital expenditures, acquisitions or other

general corporate purposes.

Our ability to arrange additional financing will depend on, among other factors, our financial position

and performance, as well as prevailing market conditions and other factors beyond its control.

We cannot assure you that we will be

able to obtain additional financing on terms acceptable to us or at all.

terms of the Credit Agreement restrict Powerfleet Israel’s and Pointer’s current and future operations, particularly

their ability to respond to changes or to take certain actions.

Credit Agreement contains a number of restrictive covenants that impose significant operating and financial restrictions on

Powerfleet Israel and Pointer and limit their ability to engage in acts that may be in their long-term best interest, including

restrictions on their ability to:

incur or guarantee additional

indebtedness;

sell or otherwise dispose

enter into transactions

with affiliates;

enter into new lines of

Credit Agreement also limits the ability of Powerfleet Israel and Pointer to consolidate or merge with or into another

addition, the covenants in the Credit Agreement require Powerfleet Israel and Pointer to maintain specified financial ratios, tested

Their ability to meet those financial ratios can be affected by events beyond their control, and they may be unable to

breach of the covenants or restrictions under the Credit Agreement could result in an event of default, which may allow the lender

to accelerate the indebtedness thereunder.

In addition, an event of default under the Credit Agreement would permit the lender to

terminate all commitments to extend further credit pursuant to the revolving credit facility.

Furthermore, if Powerfleet Israel and

Pointer are unable to repay the amounts due and payable under the Credit Agreement, the lender could proceed against the collateral

granted to it to secure the indebtedness under the Credit Agreement.

In the event the lender accelerates the repayment of

borrowings, Powerfleet Israel and Pointer may not have sufficient assets to repay that indebtedness.

a result of these restrictions, we may be:

limited in our flexibility

in planning for, or reacting to, changes in our business and the markets we serve;

unable to raise additional

debt or equity financing to fund working capital, capital expenditures, new product development expenses and other general corporate

requirements;

unable to compete effectively

or to take advantage of new business or strategic acquisition opportunities.

restrictions may affect our ability to grow in accordance with our strategy.

we lose our executive officers, or are unable to recruit additional personnel, our ability to manage our business could be materially

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qualified personnel in the future, our ability to manage our business could be materially and adversely affected.

unpredictability of our quarterly operating results could adversely affect the market price of our common stock.

revenues and operating results may vary significantly from quarter to quarter due to a number of factors, many of which are outside of

our control, and any of which could adversely affect the market price of our common stock.

The main factors that may affect us include

the following:

variations in the sales

of our products to our significant customers;

variations in the mix of

products and services provided by us;

the timing and completion

of initial programs and larger or enterprise-wide purchases of our products by our customers;

the length and variability

of the sales cycle for our products;

the timing and size of

changes in market and economic

conditions, including fluctuations in demand for our products;

announcements of new products

by our competitors.

a result of these and other factors, revenues for any quarter are subject to significant variation that could adversely affect the market

price for our common stock.

provide financing to our customers for the purchase of our products, which may increase our credit risks in the event of a deterioration

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in which they are recorded.

connection with the preparation of our annual financial statements for the fiscal year ended December 31, 2022, we identified material

weaknesses in our internal control over financial reporting.

Any failure to maintain effective internal control over financial reporting

could harm us.

management is responsible for establishing and maintaining adequate internal control over financial reporting.

Internal control over

financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation

of financial statements in accordance with U.S.

generally accepted accounting principles.

We identified material weaknesses in our internal

control over financial reporting as of December 31, 2022, which have not been remediated (see Item 9A of this Annual Report on Form 10-K

for more information).

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

such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented

or detected on a timely basis.

Our management has concluded that material weaknesses in our internal control over financial reporting

existed as of December 31, 2022 due to the lack of controls related to the determination of standalone selling price, capitalized software

costs and the financial statement close process.

are still considering the full extent of the procedures to implement in order to remediate the material weaknesses described above;

however, the current remediation plan includes:

(i) implementation of a new enterprise resource planning (ERP) system (ii) utilizing

external resources to support our efforts to rework certain control gaps across the various processes in Israel and the U.S.

identified deficiencies, (iii) implementing enhanced documentation associated with management review controls and validation of the

completeness and accuracy of key reports in Israel and the U.S., and (iv) training relevant personnel to reinforce existing policies and

enhancing policies with regard to appropriate steps and procedures required to be performed related to the execution and

documentation of internal controls.

We cannot assure you that any of our remedial measures will be effective in resolving this

material weakness or that we will not suffer from other material weaknesses in the future.

our management is unable to conclude that we have effective internal control over financial reporting, or to certify the effectiveness

of such controls, or if additional material weaknesses in our internal controls are identified in the future, we could be subject to

regulatory scrutiny and a loss of public confidence, which could have a material adverse effect on our business and our stock price.

In addition, if we do not maintain adequate financial and management personnel, processes and controls, we may not be able to manage

our business effectively or accurately report our financial performance on a timely basis, which could cause a decline in our common

stock price and adversely affect our results of operations and financial condition.

have operations located in Israel, and therefore our results may be adversely affected by political, military and economic conditions

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and have negatively affected business conditions in Israel.

In addition, political uprisings and conflicts in various countries in the

Middle East, including Syria and Iraq, are affecting the political stability of those countries.

It is not clear how this instability

will develop and how it will affect the political and security situation in the Middle East.

the event that our facilities are damaged as a result of hostile action or hostilities otherwise disrupt the ongoing operation of our

facilities or the airports and seaports on which we depend to import and export our supplies and products, our ability to manufacture

and deliver products to customers could be materially adversely affected.

Additionally, the operations of our Israeli suppliers and contractors

may be disrupted as a result of hostile action or hostilities, in which event our ability to deliver products to customers may be materially

adversely affected.

Most recently, on October 7, 2023, Hamas terrorists invaded southern Israel

and launched missile strikes in a widespread terrorist attack on Israel.

On the same day, the Israeli government declared that the country

was at war and the Israeli military began to call up reservists for active duty, including a number of our Israeli employees, including

members of the management team in Israel.

As of the date of this report, the Israel-Hamas war remains ongoing and the conflict has had

an adverse impact on, and may continue to adversely impact, our supply chain, our ability to manufacture and deliver products in Israel

to customers and the stability of our Israeli workforce.

In addition, political uprisings and conflicts in various countries in the Middle

East, including Syria and Iraq, are affecting the political stability of those countries.

It is not clear how this instability will develop

and how it will affect the political and security situation in the Middle East.

several countries, principally in the Middle East, restrict doing business with Israel and Israeli companies, and additional countries

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Any disruption in our operations would harm our business.

may be adversely affected by a change of the Israeli Consumer Price Index.

exposure to market rate risk for changes in the Israeli Consumer Price Index (the “Israeli CPI”) relates primarily to loans

borrowed by us from banks and other lenders.

While we do not currently have any loans linked to the Israeli CPI, we may require additional

financing by means of loans linked to the Israeli CPI, in which case we will be exposed to the risk that the rate of Israeli CPI, which

measures inflation in Israel, will exceed the rate of devaluation of the NIS in relation to the U.S.

Dollar or that the timing of this

devaluation lags behind inflation in Israel.

This would have the effect of increasing the Dollar cost of our borrowings.

administrative order, certain provisions of the collective bargaining agreements between the Histadrut (General Federation of Labor in

Israel) and the Coordination Bureau of Economic Organizations, relating primarily to the length of the workday, pension contributions,

insurance for work-related accidents, and other conditions of employment are applicable to our employees.

In accordance with these provisions,

the salaries of the Company’s employees are partially indexed to the Israeli CPI.

In the event that inflation in Israel increases,

we will have to increase the salaries of our employees in Israel.

Argentine government may enact or enforce measures to preempt or respond to social unrest or economic turmoil which may adversely affect

our business in Argentina.

subsidiary Pointer Argentina operates in Argentina, where the government has historically exercised significant influence over the country’s

In recent years, Argentina has faced nationwide strikes that disrupted economic activity and have heightened political tension

and there has been a significant devaluation of the Argentine peso relative to the U.S.

In addition, future government policies

to preempt, or in response to, social unrest may include expropriation, nationalization, forced renegotiation or modification of existing

contracts, suspension of the enforcement of creditors’ rights, new taxation policies, customs duties and levies including royalty

and tax increases and retroactive tax claims, and changes in laws and policies affecting foreign trade and investment.

Such policies

could destabilize the country and adversely and materially affect the economy, and thereby our business.

Additionally, due to agreements

with the General Workers’ Union in Argentina and the country’s high inflation rate, we may be required to increase employee

salaries at a rate which could adversely affect Pointer Argentina’s business.

uncertainty and volatility in Brazil may adversely affect our business.

operate through our wholly owned subsidiary Pointer do Brasil Comercial Ltda.

(“Pointer Brazil”) in Brazil, which has periodically

experienced extremely high rates of inflation.

In 2021, Brazil reached a double-digit inflation rate.

Inflation, along with governmental

measures to fight inflation and public speculation about possible future measures, has had significant negative effects on the Brazilian

In addition, future governmental actions, including actions to adjust the value of the Brazilian real, may trigger increases

in inflation.

There can be no assurance that inflation will not affect our business in Brazil in the future.

In addition, any Brazilian

government’s actions to maintain economic stability, as well as public speculation about possible future actions, may contribute

significantly to economic uncertainty in Brazil.

It is also difficult to assess the impact that turmoil in the credit markets will have

on the Brazilian economy and on our future operations and financial results or our operations in Brazil.

Brazilian currency has devalued frequently, including during the last two decades.

Throughout this period, the Brazilian government has

implemented various economic plans and utilized a number of exchange rate policies, including sudden devaluations and periodic mini-devaluations,

during which the frequency of adjustments has ranged from daily to monthly, floating exchange rate systems, exchange controls and dual

exchange rate markets.

There have been significant fluctuations in the exchange rates between Brazilian currency and the U.S.

and other currencies.

of the Brazilian real relative to the U.S.

Dollar may create additional inflationary pressures in Brazil by generally increasing the

price of imported products and requiring recessionary governmental policies to curb aggregate demand.

On the other hand, further appreciation

of the Brazilian real against the U.S.

Dollar may lead to a deterioration of the current account and the balance of payments, as well

as dampen export-driven growth.

The potential impact of the floating exchange rate and measures of the Brazilian government aimed at

stabilizing the Brazilian real is uncertain.

In addition, a substantial increase in inflation may weaken investor confidence in Brazil,

impacting our ability to finance our operations in Brazil.

operations in Brazil are also subject to uncertainties in the Brazilian legal and regulatory system.

In August 2014, Pointer Brazil

received a notice from the Brazilian tax authority alleging that it had not paid an aggregate of $197,000 in value-added tax, the

Brazilian ICMS tax, plus $1,057,000 of interest and penalties, resulting in a total amount of $1,254,000 of alleged tax deficiency

as of December 31, 2022.

In July 2015, Pointer Brazil received another 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 $11,777,535 as of December 31,

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 with respect to the clerical obligation of keeping in good

order a set of ICMS books and related tax receipts.

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

Administrative Court.

While our legal counsel is of the opinion that it is probable that we will prevail in these proceedings and

that no material costs will arise in respect to these claims, litigation is inherently subject to many uncertainties and we cannot

provide any assurance that we will ultimately be successful.

Brazilian government has exercised, and may continue to exercise, significant influence over the Brazilian economy.

Brazilian economy has been characterized by significant involvement on the part of the Brazilian government, which often changes monetary,

credit and other policies to influence Brazil’s economy.

The Brazilian government’s actions to control inflation and affect

other policies have often involved wage and price controls, the Central Bank’s base interest rates, as well as other measures.

taken by the Brazilian government concerning the economy may have important effects on Brazilian corporations and other entities.

financial condition and results of operations in Brazil may be adversely affected by the following factors and the Brazilian government’s

response to the following factors:

devaluations and other

exchange rate movements;

exchange control policies;

employment levels;

social instability;

price instability;

energy shortages;

interest rates;

liquidity of domestic capital

and lending markets;

other political, diplomatic,

social and economic developments in or affecting Brazil, including election years for president, governors, and national congress.

instability in Brazil may adversely affect Brazil’s economy and investment levels and have a material adverse effect on the Company.

political environment has historically influenced, and continues to influence, the performance of the country’s economy.

crises have affected and continue to affect the confidence of investors and the general public and have historically resulted in economic

deceleration and heightened volatility in the securities issued by Brazilian companies.

recent economic instability in Brazil has contributed to a decline in market confidence in the Brazilian economy as well as to a deteriorating

political environment.

Despite the ongoing recovery of the Brazilian economy, weak macroeconomic conditions in Brazil are expected to

continue in 2023, political uncertainty can result from the presidential elections and the transition to a new government could have

an adverse effect on our business, results of operations and financial condition.

such new policies or changes to current policies may have a material adverse effect on the operations of our business in Brazil.

the political uncertainty resulting from the presidential elections and the transition to a new government may have an adverse effect

on our business, results of operations and financial.

uncertainty and volatility in Mexico may adversely affect our business.

18 unchanged sentences

high inflation rate, we may be required to increase employee salaries at a rate which could adversely affect our business.

Related to our Securities

of our Series A Preferred Stock can exercise significant control over the Company, which could limit the ability of our stockholders

to influence the outcome of key transactions, including a change of control.

connection with the closing of the Transactions, we issued Series A Convertible Preferred Stock, par value $0.01 per share (the

“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”) pursuant to the terms of an Investment and Transaction Agreement, dated

as of March 13, 2019 (as such agreement has been amended from time to time, the “Investment Agreement”).

Preferred Stock represents a significant percentage of the aggregate voting power of the Company.

Based on an initial conversion

price of $7.319, the Investors, who are the initial holders of the Series A Preferred Stock, own approximately 18% of the Company on

an as-converted basis as of March 20, 2023.

Except as required by applicable law or as otherwise specifically set forth in our

Amended and Restated Certificate of Incorporation (the “Charter”), the holders of Series A Preferred Stock will not be

entitled to vote on any matter presented to our stockholders unless and until any holder of Series A Preferred Stock provides

written notification to the Company that such holder is electing, on behalf of all holders of Series A Preferred Stock, to activate

their voting rights and in doing so rendering the Series A Preferred Stock voting capital stock of the Company (such notice, a

“Series A Voting Activation Notice”).

From and after the delivery of Series A Voting Activation Notice, all holders of

the Series A Preferred Stock will be entitled to vote with the holders of our common stock as a single class on an as-converted

basis unless and until such time as the holders of at least a majority of the outstanding shares of Series A Preferred Stock provide

further written notice to the Company that they elect to deactivate their voting rights.

In addition, the aggregate voting power of

the Series A Preferred Stock may increase further in connection with the accrual of dividends at an initial minimum rate of 7.5% per

annum, which may be payable, at our election, in kind through the issuance of additional shares of Series A Preferred Stock.

However, to the extent voting rights of the Series A Preferred Stock have been activated, any holder of Series A Preferred Stock

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

Preferred Stock held by such holder that exceeds the quotient of (i) the aggregate Series A Issue Price (as defined below) for such

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

reclassifications and similar events, as applicable).

As a result, the holders of shares of the Series A Preferred Stock have the

ability to significantly influence the outcome of any matter submitted for the vote of our stockholders.

addition, the Series A Preferred Stock will have representation on our board of directors and will have significant control over the

management and affairs of the Company.

So long as shares of Series A Preferred Stock remain outstanding and represent 15% or more, on

an as-converted basis, of the voting power of our common stock (irrespective of whether or not a Series A Voting Activation Notice has

been delivered to the Company), the holders of at least a majority of the outstanding shares of Series A Preferred Stock, voting as a

separate class, will be entitled to elect two directors (the “Series A Directors”) to our board of directors and any committee

or subcommittee thereof (subject to the application of SEC and Nasdaq independence requirements).

So long as any shares of Series A Preferred

Stock remain outstanding and represent less than 15% but not less than 5%, on an as-converted basis, of the voting power of our common

stock (irrespective of whether or not a Series A Voting Activation Notice has been delivered to the Company), the holders of at least

a majority of the outstanding shares of Series A Preferred Stock, voting as a separate class, will be entitled to elect one Series A

Director to our board of directors.

For so long as any shares of Series A Preferred Stock remain outstanding and there are no Series

A Directors on our board of directors, the holders of at least a majority of the outstanding shares of Series A Preferred Stock, voting

as a separate class, will be entitled to designate one non-voting observer to attend all meetings of our board of directors and committees

and subcommittees thereof, although the observer may be excluded from executive sessions of any committee at the discretion of such committee.

the Series A Preferred Stock will have consent rights over certain significant corporate transactions.

So long as shares of Series A

Preferred Stock are outstanding and convertible into shares of our common stock that represent at least 10% of the voting power of our

common stock, or the Investors or their affiliates continue to hold at least 33% of the aggregate amount of Series A Preferred Stock

issued to the Investors on the date on which any shares of Series A Preferred Stock are first issued (the “Original Issuance Date”),

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

among other things, (i) liquidate the Company or any operating subsidiary or effect any Deemed Liquidation Event (as defined in the Charter),

except for a Deemed Liquidation Event in which the holders of Series A Preferred Stock receive an amount in cash not less than the Redemption

Price (as defined below), (ii) amend our organizational documents in a manner that adversely affects the Series A Preferred Stock, (iii)

issue any securities that are senior to, or equal in priority with, the Series A Preferred Stock or issue additional shares of Series

A Preferred Stock to any person other than the Investors or their affiliates, (iv) incur indebtedness above the agreed-upon threshold,

(v) change the size of our board of directors to a number other than seven, or (vi) enter into certain affiliated arrangements or transactions.

Series A Preferred Stock has rights, preferences and privileges that are not held by, and are preferential to, the rights of holders

of our common stock, which could adversely affect our liquidity and financial condition, and may result in the interests of the holders

of Series A Preferred Stock differing from those of the holders of our common stock.

Series A Preferred Stock ranks senior to the shares of our common stock, with respect to dividend rights and rights on the distribution

of assets on any voluntary or involuntary liquidation, dissolution or winding up of the Company or upon a Deemed Liquidation Event.

Series A Preferred Stock has a liquidation preference equal to the greater of (i) $1,000 (subject to ratable adjustment in the case of

stock dividends (other than preferred dividends), stock splits, reverse stock splits, combinations, divisions and reclassifications affecting

the Series A Preferred Stock) (the “Series A Issue Price”) per share plus all accrued and unpaid dividends thereon (except

in the case of a Deemed Liquidation Event, then 150% of such amount) and (ii) the amount such holder would have received if the Series

A Preferred Stock had converted into our common stock immediately prior to such event.

addition, holders of Series A Preferred Stock will be entitled to cumulative dividends at a minimum rate of 7.5% per annum, quarterly

in arrears, as set forth in the Charter.

Commencing on the 66-month anniversary of 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 our right

to defer the increase for up to three consecutive months on the terms set forth in the Charter.

The dividends are payable at our 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 have not previously occurred two or more dividend payment failures.

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

by us, or (iii) upon a Deemed Liquidation Event, subject to Delaware law governing distributions to stockholders, the holders of the

Series A Preferred Stock may elect to require us to redeem all or any portion of the outstanding shares of Series A Preferred Stock for

an amount per share equal to the greater of (i) the product of (x) 1.5 multiplied by (y) the sum of the Series A Issue Price, plus all

accrued and unpaid dividends and (ii) the product of (x) the number of shares of our common stock issuable upon conversion of such Series

A Preferred Stock multiplied by (y) the volume weighted average price of our common stock during the 30 consecutive trading day period

ending on the trading date immediately prior to the date of such redemption notice or, if calculated in connection with a Deemed Liquidation

Event, the value ascribed to a share of our common stock in such Deemed Liquidation Event (the “Redemption Price”).

holders of Series A Preferred Stock elect to redeem all outstanding shares of Series A Preferred Stock and we have not redeemed all such

shares on the applicable date on which the redemption should occur, and such redemption has not been completed on the six month anniversary

thereof, the holders of at least a majority of the outstanding shares of Series A Preferred Stock will have the right to initiate, conduct

and direct, subject to the approval of our board of directors, a customary sale process regarding the sale of the Company and/or its

subsidiaries.

at any time after the third anniversary of the Original Issuance Date, provided that (i) we are not then in material breach of (or has

previously on no more than two occasions materially breached) any of provisions of the Charter, (ii) the terms of any other indebtedness

or agreement would not prohibit such redemption, and (iii) we have not previously exercised such redemption right, we may elect to redeem

all (but not less than all) shares of Series A Preferred Stock for an amount per share equal to the Redemption Price.

dividend and redemption payment obligations could significantly impact our liquidity and reduce the amount of our cash flows that are

available for working capital, capital expenditures, growth opportunities, acquisitions, and other general corporate purposes.

Our obligations

to the holders of Series A Preferred Stock could also limit our ability to obtain additional financing or increase its borrowing costs,

which could have an adverse effect on our financial condition.

The preferential rights described above could also result in divergent

interests between the holders of shares of Series A Preferred Stock and the holders of our common stock.

issuance of our common stock upon conversion of the Series A Preferred Stock will cause dilution to then existing Company stockholders

and may depress the market price of our common stock.

Series A Preferred Stock accrues dividends at an initial minimum rate of 7.5% per annum and following the 66-month anniversary of the

Original Issuance Date, such dividend rate could increase to as high as 17.5% per annum.

Each share of Series A Preferred Stock is convertible,

at the option of the holders, into the number of shares of our common stock equal to the quotient (rounded up to the nearest whole number)

of (i) the Series A Issue Price, plus any accrued and unpaid dividends, divided by (ii) the Series A Conversion Price, subject to adjustment

and certain anti-dilution adjustments.

The Series A Conversion Price is initially equal to $7.319.

issuance of our common stock upon conversion of the Series A Preferred Stock will result in immediate and substantial dilution to the

interests of holders of our common stock, and such dilution will increase over time in connection with the accrual of dividends on the

Series A Preferred Stock.

in the value of the South African Rand may have a significant impact on our reported revenue and results of operations, which may make

it difficult to evaluate our business performance between reporting periods.

majority of subscription agreements and operating expenses of our subsidiary, MiX Telematics, are incurred outside the United States

and denominated in foreign currencies and are subject to fluctuations due to changes in foreign currency exchange rates, particularly

changes in the South African Rand.

Currency fluctuations, particularly those in respect of the South African Rand, may positively or

negatively impact our reported income and expenses due to the effects of translating the functional currency of our foreign subsidiaries

into our reporting currency of U.S.

we do not achieve applicable Broad-Based Black Economic Empowerment objectives in our South African businesses,

we risk not being able to renew certain of our existing contracts which service South African government and quasi-governmental customers,

as well as not being awarded future corporate and governmental contracts, each of which would result in the loss of revenue.

South African government established a legislative framework for the promotion of Broad-Based Black Economic Empowerment (“B-BBEE”).

Achievement of B-BBEE objectives is measured by a scorecard which establishes a weighting for the various components of B-BBEE which

– measuring the share of Black ownership and corresponding rights in the business,

including voting rights among others.

Control – reflecting the percentage of Black people in managerial positions ranging from junior management

Development – measuring the amount of money that was spent on the training and development of Black people

including amongst others short courses, bursaries and learnerships.

and Supplier Development (including Preferential Procurement) – with enterprise development measuring

contributions to, and the development of small Black-owned businesses with the objective of enabling them to

supply goods and services to the company in the future;

with supplier development measuring contributions to,

and the development of Black-owned suppliers to help grow their businesses;

and with preferential procurement

measuring the extent to which goods and services are procured from suppliers that are empowered and have a good

B-BBEE rating;

● Socio-Economic

Development – assessing the initiatives that the company supports often to the benefit

of groups of individuals and communities with the objective of promoting income-generating

activities and sustainable access to the economy for these beneficiaries.

B-BBEE Codes have a continuous review process and are updated from time to time.

Various amendments and clarifications with more onerous

compliance requirements have been made over the years.

is important for us to make a meaningful contribution to the country, and we view the applicable B-BBEE objectives as an opportunity

for us to ensure a brighter future for all, moreover in the context of the National Development Plan 2030.

In addition, B-BBEE objectives

are pursued, by and large, by requiring parties who contract with corporate, governmental and state-owned enterprises in South Africa

to achieve B-BBEE compliance through satisfaction of the applicable scorecard.

Parties improve their B-BBEE contributor level when contracting

with businesses that have earned good B-BBEE contributor levels in relation to their scorecards.

subsidiary, MiX Telematics Enterprise SA (PTY) Ltd.

(“MiX Enterprise”), engages with government and state-owned enterprises

in tendering for business and is therefore required to maintain at least a certain B-BBEE contributor level to continue to provide the

Currently, certain material end-customers require MiX Enterprise to maintain at least a B-BBEE contributor between levels 1

and 2 as measured under the new B-BBEE Codes.

Additionally,

the Employment Equity Act of 1998 (the “Employment Equity Act”) promotes equality in the workplace and ensures that employees

are treated fairly and have equal opportunities within the workplace.

In April 2023, the Employment Equity Amendment Bill (the “Amendment

Bill”) was signed into law.

The main objectives of the Amendment Bill are to enable the Employment and Labour Minister to impose

sector-specific Employment Equity (“EE”) targets and compliance criteria to issue EE Compliance Certificates in terms of

Section 53 of the Employment Equity Act.

This has bestowed the South African government with the right to set specific equity targets

by sector and region.

Companies that want to do business with the South African government will be required to submit a certificate from

the Department of Employment and Labour confirming that they comply with the Employment Equity Act and its objectives.

Accordingly, MiX

Telematics will not set its own EE targets, but certain targets will be imposed by the South African government.

to achieve applicable B-BBEE and EE objectives could jeopardize our ability to maintain existing business or to secure future business

from corporate, governmental or state-owned enterprises that could materially and adversely affect our business, financial condition

and results of operations.

Socio-economic

inequality in South Africa or regionally may subject us to political and economic risks, which may affect the ownership or operation

of our business.

own significant operations in South Africa.

As a result, we are subject to political and economic risks relating to South Africa.

Africa was transformed from a racially based government into a democracy in 1994, with successful rounds of democratic elections held

under a modern constitution during 1994, 1999, 2004, 2009, 2014 and most recently, in May 2019.

The next national elections are scheduled

to be held in 2024.

We fully support government policies aimed at redressing the disadvantages suffered by the majority of citizens under

the previous non-democratic dispensation and recognize that in order to implement these policies, our operations and profits may be impacted.

However, South Africa faces many challenges in overcoming substantial racial differences in levels of economic and social development

among its people.

While South Africa features highly developed and sophisticated business sectors and financial and legal infrastructure

at the core of its economy, large parts of the country’s black population, particularly in rural areas, do not have access to adequate

education, health care, housing and other services, including water and electricity.

In addition, South Africa also has a higher level

of unemployment than the United States.

ruling party which has controlled the South African government since democracy has committed itself to creating a stable, democratic,

free market economy, which it has largely achieved.

It remains difficult however, to predict the future political, social and economic

direction of South Africa or the manner in which any future government will attempt to address the country’s inequalities.

also difficult to predict the impact that addressing these inequalities will have on our business.

Furthermore, there has been regional,

political and economic instability in countries neighboring South Africa, which could materially and adversely affect our business, results

of operations and financial condition.

political conditions in South Africa are generally stable, changes may occur in the composition of its ruling party or in its political,

fiscal and legal systems which might affect the ownership or operation of our business, which may, in turn, materially and adversely

affect our business, financial condition and results of operations.

These risks may include changes in legislation, arbitrary interference

with private ownership of contract rights, and changes to exchange controls, taxation and other laws or policies affecting foreign trade

or investment and could materially and adversely affect our business, financial condition and results of operations.

Any changes in investment

ratings, regulations and policies or a shift in political attitudes both within and towards South Africa are beyond our control and could

materially and adversely affect our business, financial condition and results of operations.

Risks Related to our Securities

concentration of common stock ownership among our executive officers and directors could limit the ability of other stockholders of the

Company to influence the outcome of corporate transactions or other matters submitted for stockholder approval.

of March 20, 2023, our executive officers and directors beneficially owned, in the aggregate, approximately 3% of our outstanding common stock,

not including approximately 6,055,000 shares of common stock that our executive officers and directors may acquire upon the

exercise of outstanding options or if they otherwise acquire additional shares of common stock in the future.

As a result, our

officers and directors may have the ability to influence the outcome of all corporate actions requiring stockholder approval,

irrespective of how our other stockholders may vote, including the following actions:

the election of directors;

adoption of stock option

or other equity incentive compensation plans;

the amendment of our organizational

the approval of certain

mergers and other significant corporate transactions, including a sale of substantially all of our assets.

of May 1, 2024, our executive officers and directors beneficially owned, in the aggregate, approximately 6.47% of our outstanding

common stock, not including approximately 1,392,309 shares of common stock that our executive officers and directors may acquire

upon the exercise of outstanding options and stock appreciation rights, or if they otherwise acquire additional shares of common

stock in the future.

As a result, our officers and directors may have the ability to influence the outcome of all corporate actions

requiring stockholder approval, irrespective of how our other stockholders may vote, including the following actions:

election of directors;

of stock option or other equity incentive compensation plans;

amendment of our organizational documents;

approval of certain mergers and other significant corporate transactions, including a sale of substantially all of our assets.

sales of our common stock, including sales of our common stock acquired upon the exercise of outstanding options, may cause the market

3 unchanged sentences

sales also may make it more difficult for us to sell equity securities at a time and price that we deem appropriate.

have 36,170,299 shares of common stock outstanding as of March 20, 2023, of which 35,088,407 shares are freely transferable without

have 107,349,987 shares of common stock outstanding as of May 1, 2024, of which 100,400,538 shares are freely transferable without

restriction, and 6,949,449 shares are held by our officers and directors and, as such, are subject to the applicable volume, manner

1 unchanged sentence

In addition, as of December 31, 2023, time-based

options and market-based stock options subject to performance-based vesting conditions, to purchase 2,728,000 and 5,065,000 shares of our common stock, respectively, were issued

and outstanding, of which 1,247,000 and 0, respectively were vested.

The weighted-average exercise price of the vested

non-market based stock options is $5.79.

We also may issue additional shares of stock in connection with our business, including

in connection with acquisitions, and may grant additional stock options to our employees, officers, directors and consultants under

our stock option plans or warrants to third parties.

If a significant portion of these shares of common stock were sold in the

public market, the market value of our common stock could be adversely affected.

Charter provides that the Court of Chancery of the State of Delaware will be the exclusive forum for certain legal actions between us

options and market-based stock options subject to performance-based vesting conditions, to purchase 2,192,000 and 5,445,000 shares

of our common stock, respectively, were issued and outstanding, of which 1,189,000 and 0, respectively, were vested.

weighted-average exercise price of the vested non-market-based stock options is $5.54.

We also may issue additional shares of stock

in connection with our business, including in connection with acquisitions, and may grant additional stock options to our employees,

officers, directors and consultants under our stock option plans or warrants to third parties.

If a significant portion of these

shares of common stock were sold in the public market, the market value of our common stock could be adversely affected.

Amended and Restated Certificate of Incorporation, as amended, provides that the Court of Chancery of the State of Delaware will be the exclusive forum for certain legal actions between us

and our stockholders, which could limit stockholders’ ability to obtain a judicial forum viewed by the stockholders as more favorable

1 unchanged sentence

to uncertainty.

SIXTEENTH of the Charter provides, subject to certain exceptions enumerated in Article SIXTEENTH, that, unless we consent in writing

SIXTEENTH of our Amended and Restated Certificate of Incorporation (as amended,

the “Charter”) provides, subject to certain exceptions enumerated in Article SIXTEENTH, that, unless we consent in writing

to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for any

19 unchanged sentences

associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.

Charter contains a provision renouncing our interest and expectancy in certain corporate opportunities which may prevent us from receiving

the benefit of certain corporate opportunities.

“corporate opportunity” doctrine provides that corporate fiduciaries, as part of their duty of loyalty to the corporation

and its stockholders, may not take for themselves an opportunity that in fairness should belong to the corporation.

As such, a corporate

fiduciary may generally not pursue a business opportunity which the corporation is financially able to undertake and which, by its nature,

falls into the line of the corporation’s business and is of practical advantage to it, or in which the corporation has an actual

or expectant interest, unless the opportunity is disclosed to the corporation and the corporation determines that it is not going to

pursue such opportunity.

Section 122(17) of the DGCL, however, expressly permits a Delaware corporation to renounce in its certificate

of incorporation any interest or expectancy of the corporation in, or in being offered an opportunity to participate in, specified business

opportunities or specified classes or categories of business opportunities that are presented to the corporation or its officers, directors

or stockholders.

TWELFTH of the Charter contains a provision that, to the maximum extent permitted under the law of the State of Delaware, the Company

renounces any interest or expectancy of the Company in, or in being offered an opportunity to participate in, business opportunities

that are from time to time presented to the Series A Directors, any holder of Series A Preferred Stock (or the Company’s common

stock issuable upon the conversion of Series A Preferred Stock) or any partner, manager, member, director, officer, stockholder, employee

or agent or affiliate of any such holder.

Our board of directors believes that this provision, which is intended to provide that certain

business opportunities are not subject to the “corporate opportunity” doctrine, is appropriate, as the Investors, who are

the initial holders of the Series A Preferred Stock, and their affiliates invest in a wide array of companies, including companies with

businesses similar to the Company, and without such assurances, the Investors would be unwilling or unable to enter into the Investment

a result of this provision, we may not be offered certain corporate opportunities which could be beneficial to us and our stockholders.

While we are unable at this time to predict how this provision may adversely impact our stockholders, it is possible that we would not

be offered the opportunity to participate in a future transaction which might have resulted in a financial benefit to us, which could,

in turn, result in a material adverse effect on our business, financial condition, results of operations, or prospects.

of Delaware law or the Charter could delay or prevent an acquisition of the Company, even if the acquisition would be beneficial to our

stockholders, and could make it more difficult for stockholders to change our management.

Charter contains provisions that may discourage an unsolicited takeover proposal that stockholders may consider to be in their best interests.

We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control.

Together, these

provisions may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of

a premium over prevailing market prices for our securities.

These provisions include:

the right of the holders of the Series A Preferred

Stock to appoint up to two directors;

Charter contains provisions that may discourage an unsolicited takeover

proposal that stockholders may consider to be in their best interests.

We are also subject to anti-takeover provisions under Delaware

law, which could delay or prevent a change of control.

Together, these provisions may make more difficult the removal of management and

may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.

provisions include:

the absence of cumulative voting in the election of directors;

the ability of our board of directors

to issue up to 50,000 shares of currently undesignated and unissued preferred stock without prior stockholder approval;

the consent rights

of the holders of Series A Preferred Stock to certain corporate actions and transactions;

advance notice requirements for stockholder

proposals or nominations of directors;

limitations on the ability of stockholders to call special meetings or act by written consent;

preemptive rights of the holders of the Series A Preferred Stock to participate in future securities offerings of the Company;

the requirement

that certain amendments to the Charter be approved by 75% of the voting power of the outstanding shares of our capital stock;

ability of our board of directors to amend our bylaws without stockholder approval.

Unresolved Staff Comments.

the ability of our board of directors to issue up to

50,000 shares of currently undesignated and unissued preferred stock without prior stockholder approval;

advance notice requirements for

stockholder proposals or nominations of directors;

limitations on the ability of stockholders to call special meetings or act by written

the requirement that certain amendments to the Charter be approved by 75% of the voting power of the outstanding shares of our

capital stock;

and the ability of our board of directors to amend our bylaws without stockholder approval.

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

What changed 10-K

Item 1A. Risk Factors