What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-05-09 compared with 2023-03-31 · 463 added, 302 removed, 110 unchanged (87% of the section changed)

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following discussion is intended to assist you in understanding our financial condition and results of operations and should be read

in conjunction with the financial statements and related notes included elsewhere in this Annual Report on Form 10-K.

in conjunction with the financial statements and related notes included elsewhere in this Form 10-K.

Many of the amounts

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Accordingly, some information may appear not to compute accurately.

(together with its subsidiaries, “Powerfleet,” the “Company,” “we,” “our” or “us”)

is a global leader of Internet-of-Things (IOT) solutions providing valuable business intelligence for managing high-value

enterprise assets that improve operational efficiencies.

Restatement of Previously Issued Consolidated Financial

described in the Explanatory Note included in this Form 10-K, we have restated our previously issued consolidated financial

statements for the Non-Reliance Periods.

As a result, we have also restated certain previously reported financial information for the

fiscal years ended December 31, 2022 and 2021 in this “Item 7.

Management’s Discussion and Analysis of Financial Condition

and Results of Operations,” including but not limited to financial information under the sections entitled “Results of Operations”

and “Liquidity and Capital Resources—Capital Requirements” to conform the discussion with the restated information.

See Note 2 to our consolidated financial statements, included Item 8 of this Form 10-K, for additional information on

the restatement of, and the related effects on, our consolidated financial statements for the Non-Reliance Periods.

is a global leader of IOT solutions providing valuable business intelligence for managing high-value enterprise

assets that improve operational efficiencies.

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

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

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

On April 2, 2024, we consummated the MiX Combination, pursuant to which MiX Telematics became our indirect, wholly

owned subsidiary.

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

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

These solutions utilize

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

PowerFleet for Logistics solutions are designed to provide bumper-to-bumper asset management, monitoring, and visibility for

over-the-road based assets such as heavy trucks, dry-van trailers, refrigerated trailers and shipping containers and their

associated cargo.

These systems provide mobile-asset tracking and condition-monitoring solutions to meet the transportation

market’s desire for greater visibility, safety, security, and productivity throughout global supply chains.

Our PowerFleet for

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

or automotive original equipment manufacturer (OEM) partners.

We achieve this by providing critical information that can be used to

increase revenues, reduce costs and improve customer service.

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

and productivity, reduce costs, and improve profitability.

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

deliver advanced mobility solutions that connect assets to increase visibility operational efficiency and profitability.

vertical markets we differentiate ourselves by being OEM agnostic and helping mixed fleets view and manage their assets similarly.

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

These insights include a full set of operational Key Performance Indicators (KPIs) to drive operational and strategic

These KPIs leverage industry comparisons to show how a company is performing versus their peers.

The more data the

system collects, the more accurate a client’s understanding becomes.

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

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

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

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

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

a private fleet, or automotive OEM partners.

We achieve this by providing critical information that

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

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

productivity, reduce costs, and improve profitability.

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

We deliver advanced mobility solutions that connect

assets to increase visibility operational efficiency and profitability by leveraging our Unity platform product strategy.

Across our vertical

markets we differentiate ourselves by being OEM agnostic and helping mixed fleets view and manage their assets similarly.

All of our solutions

are paired with SaaS analytics platforms to provide an even deeper layer of insights.

These insights include a full set of operational

KPIs to drive operational and strategic decisions.

These KPIs leverage industry comparisons to show how a company is performing versus

The more data the system collects, the more accurate a client’s understanding becomes.

analytics platform, which is integrated into our customers’ management systems, is designed to provide a single, integrated view

of asset and operator activity across multiple locations that provides enterprise-wide benchmarks and peer-industry comparisons.

for analytics, as well as the data contained therein, to differentiate us from our competitors, make a growing contribution to revenue, add value to our solutions, and help keep us at the forefront of the wireless asset management markets we serve.

sell our wireless mobility solutions to both corporate-level executives, division heads and site-level management within the

We also utilize channel partners such as independent dealers and OEMs who may opt for

us to white label our product.

Typically, our initial system deployment serves as a basis for potential expansion across the

customer’s organization.

We work closely with customers to help maximize the utilization and benefits of our system and

demonstrate the value of enterprise-wide deployments.

Post-implementation, we consult with our customers to further extend and

customize the benefits to the enterprise by delivering enhanced analytics capabilities.

for analytics, as well as the data contained therein, to differentiate us from our competitors, make a growing contribution to revenue,

add value to our solutions, and help keep us at the forefront of the wireless asset management markets we serve.

sell our wireless mobility solutions to both corporate-level executives, division heads and site-level management within the enterprise.

We also utilize channel partners such as independent dealers and OEMs who may opt for us to white label our product.

Typically, our initial

system deployment serves as a basis for potential expansion across the customer’s organization.

We work closely with customers

to help maximize the utilization and benefits of our system and demonstrate the value of enterprise-wide deployments.

Post-implementation,

we consult with our customers to further extend and customize the benefits to the enterprise by delivering enhanced analytics capabilities.

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

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aviation, manufacturing, aerospace and defense, homeland security and vehicle rental.

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.

As of December 31, 2022, we had cash (including

restricted cash) and cash equivalents of $18.0 million, working capital of $35.5 million, and an accumulated deficit of $141.4

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.

Accounting Estimates

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.

As of December 31, 2023, we

had cash (including restricted cash) and cash equivalents of $19.3 million, working capital of $23.5 million, and an accumulated

deficit of $146.3 million.

Our primary sources of cash are cash flows from 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 facilities.

To date, we have not

generated sufficient cash flow solely from operating activities to fund our operations.

Accounting Policies and Estimates

have adopted various accounting policies that govern the application of accounting principles generally accepted in the United States

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Our significant accounting policies are described in Note 3 to our consolidated financial

statements included in this Annual Report on Form 10-K.

statements included in this Form 10-K.

Certain accounting policies involve significant judgments and assumptions by

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are described below.

generate revenue from sales of systems and products and from customer SaaS and hosting infrastructure fees.

Revenue is measured as the

amount of consideration the Company expects to receive in exchange for transferring goods or providing services.

and our subsidiaries generate revenue from sales of systems and products and from customer SaaS and hosting infrastructure fees.

Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing

Sales, value add, and other taxes we collect concurrently with revenue-producing activities are excluded from

Incidental items that are immaterial in the context of the contract are recognized as expense.

The expected costs

associated with our base warranties continue to be recognized as an expense when the products are sold.

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

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

For products which do

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

a bundled performance obligation.

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

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

asset, respectively.

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

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

contracts with customers may include multiple performance obligations.

For such arrangements, the Company allocates revenue to each performance

obligation based on its relative standalone selling price.

The Company generally determines standalone selling prices based on observable

prices charged to customers or adjusted market assessment or using expected cost-plus margin when one is available.

Adjusted market assessment

price is determined based on overall pricing objectives taking into consideration market conditions and entity specific factors.

recognize an asset for the incremental costs of obtaining the contract arising from the sales commissions to employees because the Company

expects to recover those costs through future fees from the customers.

The Company amortizes the asset over one to five years because

the asset relates to the services transferred to the customer during the contract term of one to five years.

For products which are

not distinct to the customer separate from the SaaS services provided, we consider both hardware and SaaS services a bundled

performance obligation.

Under the applicable accounting guidance, all of our billings for future services are deferred

and classified as a current and long-term liability.

The deferred revenue is recognized over the service contract life, ranging from

one to five years, beginning at the time that a customer acknowledges acceptance of the equipment and service.

Payment terms are generally

30 days after invoice date.

We recognize revenue for remotely hosted SaaS agreements and post-contract maintenance and support agreements beyond our standard

warranties over the life of the contract.

Revenue is recognized ratably over the service periods and the cost of providing these services

is expensed as incurred.

Amounts invoiced to customers which are not recognized as revenue are classified as deferred revenue and classified

as short-term or long-term based upon the terms of future services to be delivered.

Deferred revenue also includes prepayment of extended

maintenance, hosting and support contracts.

We earn other service revenues from installation services, training and technical support services which are short-term in nature

and revenue for these services is recognized at the time of performance when the service is provided.

also derive revenue from leasing arrangements.

Such arrangements provide for monthly payments covering product or system sale,

maintenance, support and interest.

These arrangements meet the criteria to be accounted for as operating or sales-type leases.

Accordingly, for sales-type leases an asset is established for the “sales-type lease receivable” at the present value of

the expected lease payments and revenue is deferred and recognized over the service contract, as described above.

revenues and interest income are recognized monthly over the lease term.

Our contracts with customers may include multiple performance obligations.

For such arrangements, we allocate revenue

to each performance obligation based on our relative standalone selling price (“SSP”).

Judgment is required to determine

the SSP for each distinct performance obligation.

We generally determine standalone selling prices based on observable prices

charged to customers.

Significant pricing practices

taken into consideration include our discounting practices, the size and volume of our transactions, the customer demographic, price

lists, our go-to-market strategy and historical and current sales and contract prices.

As our go-to-market strategies evolve, we may

modify our pricing practices in the future, which could result in changes to SSP.

certain cases, we are able to establish SSP based on observable prices of products or services sold separately in comparable circumstances

to similar customers.

We use a single amount to estimate SSP when it has observable prices.

If SSP is not directly observable, for example

when pricing is highly variable, we use a range of SSP.

We determine the SSP range using information that may include pricing practices

or other observable inputs.

We typically have more than one SSP for individual products and services due to the stratification of those

products and services by customer size.

We recognize an asset for the incremental costs of obtaining the contract arising from the sales commissions to employees because

we expect to recover those costs through future fees from the customers.

We amortize the asset over one to five years

because the asset relates to the services transferred to the customer during the contract term of one to five years.

and Intangibles

represents costs in excess of fair values assigned to the underlying net assets of acquired businesses.

Goodwill and intangible assets

deemed to have indefinite lives are not amortized and are tested for impairment on an annual basis and between annual tests whenever

events or changes in circumstances indicate that the carrying amount may not be recoverable.

Intangible assets other than goodwill are

amortized over their useful lives unless the lives are determined to be indefinite.

Intangible assets are carried at cost, less accumulated

amortization.

Intangible assets consist of trademarks and trade names, patents, customer relationships and other intangible assets.

is tested at the reporting unit level, which is defined as an operating segment or one level below the operating segment.

operates in one reportable segment which is its only reporting unit.

The Company operates in one operating segment which is its only

reporting unit.

The Company tests its goodwill for impairment annually which is the first day of the Company’s fourth quarter or

when an indicator of impairment exists, by comparing the fair value of the reporting unit to its carrying value.

Company performed a quantitative assessment whereby the fair value of the reporting unit is calculated using a market approach and a

discounted cash flow method, as a form of the income approach.

The market approach includes the use of comparative revenue and adjusted

EBITDA multiples to complement discounted cash flow results.

Goodwill and intangible

assets deemed to have indefinite lives are not amortized and are tested for impairment on an annual basis and between annual tests

whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Intangible assets other than

goodwill are amortized over their useful lives unless the lives are determined to be indefinite.

Intangible assets are carried at

cost, less accumulated amortization.

Intangible assets consist of trademarks and trade names, patents, customer relationships and

other intangible assets.

Goodwill is tested at the reporting unit level, which is defined as an operating segment or one level below

the operating segment.

We operate in one reportable segment which is our only reporting unit.

We test our goodwill for impairment

annually, which is the first day of our fourth quarter or when an indicator of impairment exists, by comparing the fair value of the

reporting unit to its carrying value.

test for goodwill impairment at the reporting unit level on October 1 of each year and between annual tests if a triggering event indicates

the possibility of an impairment.

We performed a quantitative assessment whereby the fair value of the reporting unit is calculated using

a market approach and a discounted cash flow method, as a form of the income approach.

The market approach includes the use of comparative

revenue multiples to complement discounted cash flow results.

The discounted cash flow method is based on the present value of the projected

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an adverse change in one or a combination of these inputs could trigger a goodwill impairment loss in the future.

the years ended December 31, 2020, 2021 and 2022, the Company did not incur an impairment charge.

In connection with our goodwill impairment testing as of October 1, 2023, the estimated fair value exceeded its carrying

value by approximately 6%.

the years ended December 31, 2021, 2022 and 2023, we did not incur an impairment charge.

accordance with ASC 805 , Business Combinations (ASC 805), we recognize the tangible and intangible assets

acquired and liabilities assumed based on their estimated fair values.

Determining these fair values requires management to make significant

estimates and assumptions, especially with respect to intangible assets.

recognize identifiable assets acquired and liabilities assumed at their acquisition date fair value.

During the measurement period, which may be

up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding

offset to goodwill or bargain purchase to the extent we identify adjustments to the preliminary fair values.

Upon the conclusion of the

measurement period or final determination of the values of assets acquired or liabilities assumed, any subsequent adjustments are recorded

to the consolidated statements of operations.

use the asset and liability method of accounting for deferred income taxes.

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of Operations

following table sets forth certain items related to our statement of operations as a percentage of revenues for the periods indicated

and should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this Annual

Report on Form 10-K.

following table sets forth certain items related to our statement of operations as a percentage of revenues for the periods

indicated and should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in

this Form 10-K.

A detailed discussion of the material changes in our operating results is set forth below.

Year Ended December 31,

Cost of Revenue:

2021 (As restated)

2022 (As restated)

Total revenues

Cost of revenues:

Cost of products

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Interest income

Interest expense

Other income (expenses) net,

Interest expense, net

Bargain purchase - Movingdots

Other (expense) income, net

Net loss before income taxes

Income tax benefit (expense)

Income tax expense

Net loss before non-controlling interest

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Preferred stock dividend

Net loss attributable to common shareholders

Net loss attributable to common stockholders

Ended December 31, 2023 Compared to Year Ended December 31, 2022

Revenues increased by approximately $8.9 million, or 7.1%, to $135.2 million in 2022 from $126.2 million in 2021.

from products increased by approximately $3.3 million, or 6.3%, to $56.3 million in 2022 from $53.0 million in 2021.

The increase in

product revenues is attributable to an increase in sales by our Powerfleet for Logistics and Powerfleet for Industrial products.

from services increased by approximately $5.6 million, or 7.7%, to $78.8 million in 2022 from $73.2 million in 2021.

The increase in

services revenues is principally due to an increase in our install base that generates service revenue.

Cost of revenues increased by approximately $5.0 million, or 7.5%, to $71.0 million in 2022 from $66.0 million in 2021.

Gross profit was $64.2 million in 2022 compared to $60.2 million in 2021.

As a percentage of revenues, gross profit decreased to 47.5%

in 2022 from 47.7% in 2021.

The decrease in gross profit as a percentage of revenues was principally due to increases in raw material costs as a result of global supply chain issues.

of products increased by approximately $3.2 million, or 8.1%, to $42.6 million in 2022 from $39.4 million in 2021.

Gross profit for

products was $13.7 million in 2022 compared to $13.5 million in 2021.

As a percentage of product revenues, gross profit decreased to

24.3% in 2022 from 25.5% in 2021.

The decrease in gross profit as a percentage of product revenues was impacted by product mix,

higher costs associated with supply chain issues, electronic component shortages and inflation.

of services increased by approximately $1.8 million, or 6.7%, to $28.4 million in 2022 from $26.6 million in 2021.

Gross profit for services

was $50.5 million in 2022 compared to $46.6 million in 2021.

As a percentage of service revenues, gross profit increased to 64.0% in

2022 from 63.7% in 2021.

The increase in gross profit as a percentage of services revenues was principally

due to an increase in our install base that generates service revenue.

GENERAL AND ADMINISTRATIVE EXPENSES.

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

approximately $5.9 million, or 10.3%, to $63.0 million in 2022 compared to $57.1 million in 2021, inclusive of higher foreign

currency losses of $0.7 million and higher severance costs of $0.7 million.

Other drivers of the increase in expenses include

increased salaries and related expenses, professional fees, and marketing and travel expenses.

As a percentage

of revenues, SG&A expenses increased to 46.6% in the year ended December 31, 2022, from 45.2% in the same period in

AND DEVELOPMENT EXPENSES.

Research and development (“R&D”) expenses decreased by approximately $2.1 million, or

18.9%, to $9.0 million in 2022 compared to $11.1 million in 2021, principally due to the capitalization of software development

expenses for new product development, which increased by $2.2 million in 2022.

As a percentage of revenues, R&D expenses decreased to 6.7% in the year ended December

decreased by approximately $2.2 million, or 1.6%, to $133.7 million in 2023 from $135.9 million (as restated) in 2022.

Revenues from products decreased by

approximately $7.2 million, or 12.7%, to $49.7 million in 2023 from $56.9 million (as restated) in 2022.

The decrease in product

revenues was due to decreased product sales in Germany, where we are actively shutting down sales from low margin contracts, large

logistics companies recalibrating demand following aggressive builds during the pandemic, and lower product sales in and out of

Israel reflecting geopolitical headwinds and a proactive decision to shutter our hardware-only line of business.

These decreases

were offset by increases in product revenue in our Powerfleet for Vehicles business in the United States due to new unit purchases

from new and existing customers.

Revenues from services increased by

approximately $5.0 million, or 6.4%, to $84.0 million in 2023 from $79.0 million (as restated) in 2022.

The increase in services

revenues was principally due to an increase in our install base that generates service revenue, with revenue growth concentrated in

North America where a positive market response to our Unity SaaS product offering has been a significant contributing factor.

COST OF REVENUES.

Cost of revenues decreased

by approximately $4.3 million, or 6.0%, to $66.7 million in 2023 from $70.9 million in 2022.

Gross profit was $67.1 million in 2023 compared

to $65.0 million (as restated) in 2022.

As a percentage of revenues, gross profit increased to 50.2% in 2023 from 47.8% in 2022.

Cost of products decreased by approximately $6.2

million, or 14.5%, to $36.4 million in 2023 from $42.6 million in 2022.

Gross profit for products was $13.3 million in 2023 compared

to $14.4 million (as restated) in 2022.

As a percentage of product revenues, gross profit increased to 26.8% in 2023 from 25.2% in 2022.

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

orders and decreases in raw materials costs related to global supply chain issues, which were more prevalent in 2022 than 2023.

Cost of services increased by approximately $1.9 million, or 6.7%,

to $30.3 million in 2023 from $28.4 million in 2022.

Gross profit for services was $53.7 million in 2023 compared to $50.6 million (as restated)

As a percentage of service revenues, gross profit minimally decreased to 64.0% in 2023 from 64.1% in 2022.

The decrease in gross

profit as a percentage of services revenues was principally due to an increase in our install base that generates service revenue, offset

by reduction due to the commencement of amortization for our Unity SaaS platform.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.

Selling, general and administrative (“SG&A”) expenses increased by approximately $7.8 million, or 12.2%, to $71.3

million in 2023 compared to $63.5 million (as restated) in 2022.

The increase was principally due to an aggregate of $5.5 million in transaction-related

costs in connection with our acquisition of Movingdots GmbH (“Movingdots”) and business combination with MiX Telematics,

$2.1 million in SG&A costs incurred by Movingdots after the closing of such transaction, and increased salaries, investments in marketing

programs and professional services fees.

As a percentage of revenues, SG&A expenses increased to 53.3% in the year ended December

31, 2023, from 46.7% in the same period in 2022.

Interest expense decreased by $3.8 million, or 136.0%, to $(1.0) million in 2022 from $2.8 million in 2021, principally

due to foreign currency translation gains from the Term Facilities.

LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS.

Net loss attributable to common stockholders was $11.9 million, or $(0.34) per basic and

diluted share, for 2022 as compared to net loss of $18.1 million, or $(0.52) per basic and diluted share, for the same period in 2021.

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

RESEARCH AND DEVELOPMENT EXPENSES.

and development (“R&D”) expenses decreased by approximately $0.1 million, or 1.1%, to $8.4 million in 2023 compared to

$8.5 million (as restated) in 2022, principally due to the capitalization of software development expenses for new product development and

reduction in salaries and wages offset in part by the acquisition of Movingdots, which added $2.0 million to expenses.

As a percentage

of revenues, R&D expenses increased to 6.3% in the year ended December 31, 2023 from 6.2% in the same period in 2022.

INTEREST EXPENSE.

Interest expense

increased by $2.6 million, or 261.2%, to $1.6 million in 2023 from $(1.0) million in 2022, principally due to foreign currency

translation gains from the term facilities under the Prior Credit Agreement with Hapoalim.

NET LOSS ATTRIBUTABLE TO COMMON

STOCKHOLDERS.

Net loss attributable to common stockholders was $17.3 million, or $(0.49) per basic and diluted share, for 2023

as compared to net loss of $16.9 million (as restated), or $(0.48) per basic and diluted share, for the same period in 2022.

increase in net loss was due primarily to transaction costs of $5.5 million with respect to the Movingdots acquisition and the

business combination with MiX Telematics, plus incremental SG&A spend from the Movingdots acquisition of $2.1 million, plus

an increase in accretion of preferred stock of $1.2 million, offset by the bargain gain on the purchase of Movingdots of $9.0

Ended December 31, 2022 Compared to Year Ended December 31, 2021

Revenues increased by approximately $12.6 million, or 11.1%, to $126.2 million in 2021 from $113.6 million in 2020.

from products increased by approximately $7.3 million, or 16.1%, to $53.0 million in 2021 from $45.7 million in 2020.

The increase in

product revenue is attributable to an increase in sales by our Powerfleet for Logistics products.

from services increased by approximately $5.3 million, or 7.8%, to $73.2 million in 2021 from $67.9 million in 2020.

The increase in

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

Cost of revenues increased by approximately $11.4 million, or 21.0%, to $66.0 million in 2021 from $54.6 million in

Gross profit was $60.2 million in 2021 compared to $59.0 million in 2020.

As a percentage of revenues, gross profit decreased to

47.7% in 2021 from 52.0% in 2020.

The decrease in gross profit as a percentage of revenue was principally due to changes in product mix

and higher costs for components as a result of the global supply chain issues.

of products increased by approximately $9.2 million, or 30.5%, to $39.4 million in 2021 from $30.2 million in 2020.

Gross profit for

products was $13.5 million in 2021 compared to $15.4 million in 2020.

As a percentage of product revenues, gross profit decreased to

25.5% in 2021 from 33.8% in 2020.

The decrease in gross profit as a percentage of product revenues was primarily due to a $400,000 one-time

expense related to an incentive program to expand business with an existing customer that is one of the largest chassis lessors in North

Product gross profit was also impacted by product mix, higher costs associated with supply chain issues, electronic component

shortages and inflation.

of services increased by approximately $2.2 million, or 9.1%, to $26.6 million in 2021 from $24.4 million in 2020.

Gross profit for services

was $46.6 million in 2021 compared to $43.6 million in 2020.

As a percentage of service revenues, gross profit decreased to 63.7% in

2021 from 64.2% in 2020.

Revenues increased by approximately $10.0 million, or 7.9%,

to $135.9 million (as restated) in 2022 from $126.0 million (as restated) in 2021.

Revenues from products increased by approximately $4.0 million, or

7.6%, to $56.9 million (as restated) in 2022 from $52.9 million (as restated) in 2021.

The increase in product revenues was attributable to an

increase in sales by our Powerfleet for Logistics and Powerfleet for Warehouse products.

Revenues from services increased by approximately $5.9 million, or

8.1%, to $79.0 million (as restated) in 2022 from $73.1 million (as restated) in 2021.

The increase in services revenues was principally due to

an increase in our install base that generates service revenue.

Cost of revenues increased by approximately $4.7 million, or 7.1%, to $70.9 million (as restated) in 2022 from $66.2

million (as restated) in 2021.

Gross profit was $65.0 million (as restated) in 2022 compared to $59.8 million (as restated) in 2021.

percentage of revenues, gross profit increased to 47.8% in 2022 from 47.4% in 2021.

The minimal increase in gross profit as a

percentage of revenues was principally due to less significant increases in raw material costs as a result of global supply chain

issues in 2022 than in 2021.

Cost of products increased by approximately $2.9 million, or 7.4%,

to $42.6 million in 2022 from $39.6 million (as restated) in 2021.

Gross profit for products was $14.4 million (as restated) in 2022 compared

to $13.3 million (as restated) in 2021.

As a percentage of product revenues, gross profit minimally increased to 25.2% in 2022 from 25.1% in

The gross profit as a percentage of product revenues was impacted by product mix, higher costs associated with supply chain issues,

electronic component shortages and inflation.

Cost of services increased by approximately $1.8 million, or 6.7%,

to $28.4 million in 2022 from $26.6 million in 2021.

Gross profit for services was $50.6 million (as restated) in 2022 compared to $46.5 million

(as restated) in 2021.

As a percentage of service revenues, gross profit increased to 64.1% in 2022 from 63.6% in 2021.

The increase in gross

profit as a percentage of services revenues was principally due to an increase in our install base that generates service revenue.

GENERAL AND ADMINISTRATIVE EXPENSES.

SG&A expenses increased by approximately

$5.2 million, or 10.0%, to $57.1 million in 2021 compared to $51.9 million in 2020 principally due to increased salaries due to the reversal

of temporary cost reduction initiatives implemented during the first quarter of 2020 in response to the impact and uncertainty caused

There was an additional $1.0 million increase in severance and recruiting related expenses.

As a percentage of revenues,

SG&A expenses decreased to 45.2% in the year ended December 31, 2021, from 45.7% in the same period in 2020.

SG&A expenses increased by approximately $7.0 million, or 12.3%, to $63.5

million (as restated) in 2022 compared to $56.5 million (as restated) in 2021, inclusive of higher foreign currency losses of $0.7 million and

higher severance costs of $0.7 million.

Other drivers of the increase in expenses include increased salaries and related expenses, professional

fees, and marketing and travel expenses.

As a percentage of revenues, SG&A expenses increased to 46.7% in the year ended December

31, 2022, from 44.9% in the same period in 2021.

AND DEVELOPMENT EXPENSES.

R&D expenses increased by approximately $0.5 million, or 4.4%,

to $11.1 million in 2021 compared to $10.6 million in 2020 principally due to increased salaries due to the reversal of temporary cost

reduction initiatives implemented during the first quarter of 2020 in response to the impact and uncertainty caused by COVID-19.

percentage of revenues, R&D expenses decreased to 8.8% in the year ended December 31, 2021from 9.3% in the same period in 2020.

Interest expense decreased by $1.7 million, or 38.1%, to $2.8 million in 2021 from $4.5 million in 2020, due to the

continued paydown of principal on our credit facility with Hapoalim and the full pay down in 2020 of the convertible unsecured

promissory notes in the aggregate principal amount of $5,000,000 (the “Notes”) that we issued to the Investors and a decrease

in the foreign currency translation losses related to long-term debt included in interest expense.

R&D expenses decreased by approximately $3.0 million, or 25.9%, to $8.5

million (as restated) in 2022 compared to $11.4 million (as restated) in 2021, principally due to the capitalization of software development expenses

for new product development, which increased by $1.7 million in 2022.

As a percentage of revenues, R&D expenses decreased to 6.2%

in the year ended December 31, 2022 from 9.1% in the same period in 2021.

Interest expense decreased by $3.8 million, or 136.0%, to $(1.0) million in 2022 from $2.8 million in 2021, principally

due to foreign currency translation gains from the term facilities under the Prior Credit Agreement with Hapoalim.

LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS.

Net loss attributable to common stockholders was $18.1 million, or $(0.52) per basic and

diluted share, for 2021 as compared to net loss of $13.6 million, or $(0.46) per basic and diluted share, for the same period in 2020.

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

and Capital Resources

Historically,

our capital requirements have been funded primarily from the net proceeds from the issuance of our securities, including any issuances

of our common stock upon the exercise of options.

As of December 31, 2022, we had cash (including restricted cash) and cash equivalents

of $18.0 million and working capital of $35.5 million, compared to cash (including restricted cash) and cash equivalents of $26.8 million

and working capital of $43.6 million as of December 31, 2021.

October 3, 2019, in connection with the completion of the Transactions, we issued and sold 50,000 shares of the Series A Preferred

Stock to the Investors pursuant to the terms of the Investment Agreement for an aggregate purchase price of $50.0

The proceeds received from such sale were used to finance a portion of the cash consideration payable in our acquisition of

on October 3, 2019, we issued and sold the Notes to the Investors at the closing of the Transactions.

We repaid in full the aggregate

principal amount of $5.0 million and accrued interest under the Notes on October 1, 2020.

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

Credit Agreement with Hapoalim, pursuant to which Hapoalim agreed to provide Powerfleet Israel with two senior secured term loan

facilities denominated in NIS in an initial aggregate principal amount of $30 million (comprised of the Term A Facility and the Term

B Facility in the aggregate principal amount of $20 million and $10 million, respectively) and a five-year revolving credit facility

to Pointer denominated in NIS in an initial aggregate principal amount of $10 million (the “Revolving Facility”).

outstanding amount under the term loan facilities was approximately NIS 55.3 million, or $15.9 million, as of December 31, 2022.

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

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

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

Agreement with Hapoalim.

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

rates of the Term A Facility and the Term B Facility.

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

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

was reduced to a fixed rate of 4.5% per annum.

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

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

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

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

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

The Third Amendment provides for, among other things, the New Revolver.

The New Revolver will be available for a

period of one month, commencing on October 31, 2022, and will continue to be available for successive one-month periods until and

including October 30, 2023, unless the Borrowers deliver a notice to Hapoalim of their request not to renew the New

As of December 31, 2022, the Company borrowed approximately NIS20.1 million,

or $5.7 million, under the revolving credit facilities.

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

Such interest is subject to monthly changes

by Hapoalim, provided that Hapoalim gives Pointer advance notice regarding such change prior to the end of the applicable calendar month.

New Revolver is secured by a first ranking fixed pledge and assignment by Pointer over its new bank account, which was opened in

connection with the New Revolver, and all of the rights relating thereunder as well as a cross guarantee by Powerfleet Israel.

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

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

Pointer did not have any borrowings outstanding under the revolving credit facility with Discount Bank as of December 31, 2022.

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

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

our results of operations and cash flows.

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

limited to, targeted reductions in discretionary operating expenses and capital expenditures and borrowing under the revolving

credit facility.

of December 31, 2022, we had cash (including restricted cash), cash equivalents and marketable securities of $18.0 million and working

capital of $35.5 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.

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

provide sufficient funds to cover capital requirements through at least March 31, 2024.

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

or decrease in our existing business base, the success, timing, and amount of investment required to bring new products to market, revenue

growth or decline and potential acquisitions.

Failure to generate positive cash flow from operations will have a material adverse effect

on our business, financial condition and results of operations.

cash provided by operating activities was $0.8 million for the year ended December 31, 2022, compared to net cash used in operating activities

of $5.0 million for the same period in 2021.

The net cash provided by operating activities for the year ended December 31, 2022 reflects

a net loss of $7.0 million and includes non-cash charges of $4.3 million for stock-based compensation, $8.3 million for depreciation

and amortization expense and $2.8 million for right of use asset amortization.

Changes in working capital items included:

Net loss attributable to common stockholders was $16.9 million (as restated), or

$(0.48) per basic and diluted share, for 2022 as compared to net loss of $22.1 million (as restated), or $(0.64) per basic and

diluted share, for the same period in 2021.

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

Loss Earnings (Loss) per Share

connection with our secondary listing on the Johannesburg Stock Exchange (“JSE”), we are required to calculate and publicly

disclose headline earnings (loss) per share and diluted headline earnings (loss) per share.

Headline loss per share is calculated using

net loss which has been determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

loss for the period represents the loss for the period attributable to common stockholders of Powerfleet adjusted for the

remeasurements that are more closely aligned to the operating or trading results as set forth below, and headline loss per share

represents headline loss divided by the weighted average number of shares of common stock outstanding.

table below presents a reconciliation between net loss attributable to common stockholders to headline loss for the years ended December

31, 2021 (as restated), 2022 (as restated) and 2023.

Year Ended December 31,

(in thousands, except per share data)

(As restated)

Net loss attributable to common stockholders

Adjusted for:

Reversal of Bargain purchase – Movingdots

Headline loss

Weighted average common shares outstanding on which the net loss attributable to common shareholders per share and headline loss per share has been calculated - basic and diluted

Net loss per share attributable to common stockholders – basic and diluted

Headline loss per share attributable to common stockholders – basic and diluted

of Non-GAAP Measures

above disclosure was prepared for the purpose of complying with the reporting requirements of the JSE and includes certain non-GAAP measures,

such as headline earnings (loss) and headline earnings (loss) per common share, and related reconciliations.

Liquidity and Capital Resources

On October 3, 2019, in connection with the completion of the Pointer

Merger, we issued and sold 50,000 shares of 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 amended, the “Investment Agreement”), for an aggregate purchase price of $50.0 million.

The proceeds received from such sale were used to finance a portion of the cash consideration payable in our acquisition of Pointer.

In addition, our wholly owned

subsidiaries, Powerfleet Israel and Pointer (collectively, the “Borrowers”) were party to the Prior Credit Agreement with

Hapoalim, pursuant to which Hapoalim agreed to provide Powerfleet Israel with two senior secured term loan facilities denominated in NIS

in an initial aggregate principal amount of $30 million (comprised of two facilities in the aggregate principal amounts of $20 million

and $10 million, respectively) and a five-year revolving credit facility to Pointer denominated in NIS in an initial aggregate principal

amount of $10 million.

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

acquisition of Pointer.

The outstanding amount under the revolving facility was approximately NIS 4,915, or $1,355, as of December 31,

On March 18, 2024, the Borrowers

entered into the A&R Credit Agreement, which refinanced the facilities under, and amended and restated, the Prior Credit Agreement.

The A&R Credit Agreement provides for (i) two senior secured term loan facilities denominated in NIS to Powerfleet Israel in an aggregate

principal amount of $30 million (comprised of Facility A and Facility B in the aggregate principal amounts of $20 million and $10 million,

respectively) and (ii) two revolving credit facilities to Pointer in an aggregate principal amount of $20 million (comprised of Facility

C and Facility D in the aggregate principal amounts of $10 million and $10 million, respectively).

The Term Facilities will mature on

March 18, 2029.

The Revolving Facilities are available for successive one-month periods until and including March 18, 2025, unless the

Borrowers deliver prior notice to Hapoalim of their request not to renew the Revolving Facilities.

On 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.

The proceeds of the Revolving Facilities may be used by Pointer for general corporate purposes, including

working capital and capital expenditures.

The Credit Facilities continue

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, except that the Borrowers’

holdings in Pointer do Brasil Comercial Ltda., Pointer Argentina and Pointer South Africa are excluded from such floating charges.

other assets of our company will serve as collateral under the Credit Facilities.

Borrowings under the Term Facilities

will bear interest at a variable rate equal to the applicable prime interest rate, plus, in the case of borrowings under Facility A, 2.2%

per annum, and, in the case of borrowings under Facility B, 2.3% per annum.

Borrowings under Facility C will bear interest, in the case

of borrowings made in NIS, at the applicable prime interest rate plus 2.5%, or, in the case of borrowings made in U.S.

dollars, at SOFR

Borrowings under Facility D will bear interest at the applicable interest rate set forth in the standard form documents entered

into in connection with each utilization of Facility D.

Borrowings under the Term Facilities will be denominated in NIS, based on the

applicable conversion rate at the time of conversion but will be made available to the Borrowers in U.S.

dollars if requested by the Borrowers.

Pointer is required to pay a credit allocation fee

in NIS, with respect to Facility C, and a non-utilization fee in U.S.

dollars, with respect to Facility D, in each case, equal to 0.5%

per annum on undrawn and uncancelled amounts of the Revolving Facilities during the period commencing on March 18, 2024 and ending on

the last day of the applicable availability period of such Revolving Facilities.

As a result of global supply chain disruptions, the

conflicts between Russia and Ukraine and between Israel and Hamas, rising interest rates, fluctuations in currency values, inflation and

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

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

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

On April 2, 2024, we consummated the MiX

Combination, pursuant to which MiX Telematics became our indirect, wholly owned subsidiary.

The Implementation Agreement required,

as a condition to closing of the MiX Combination, that we obtain debt and/or equity financing in an amount sufficient to provide for

the redemption in full of all outstanding shares of our Series A Preferred Stock.

In order to meet this condition, we entered into

the Facilities Agreement on March 7, 2024 and shortly thereafter drew down $85 million in cash under the facilities provided

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 the full $90.3 million value of

the outstanding shares of Series A Preferred Stock.

We have incurred recurring losses and negative cash

flows from operations since inception and had an accumulated deficit of $146.3 million as of December 31, 2023.

We anticipate incurring

additional losses until such time that growth in revenue and gross margin from our strategic plan centered on our Unity SaaS platform

and Warehouse safety product offerings exceed necessary investments in operating expenses, capital expenditures and debt financing costs.

Management believes our cash and cash equivalents

of $19.3 million as of December 31, 2023, in conjunction with the debt proceeds from our lenders, plus cash generated from the execution

of our strategic plan over the next 12 months, are sufficient to fund the projected operations for at least the next 12 months from the

issuance date of these financial statements (May 9, 2024) and service our outstanding obligations.

Capital Requirements

As of December 31, 2023, we had cash (including

restricted cash), cash equivalents and marketable securities of $19.3 million and working capital of $23.5 million, compared to cash

(including restricted cash) and cash equivalents of $17.9 million and working capital of $36.7 million (as restated) as of December 31,

Our primary sources of cash are cash flows from 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 facilities.

The MiX Combination is also expected to

be a source of positive cash flow.

To date, we have not generated sufficient cash flow solely from operating activities to fund our

Our capital requirements depend on a variety of factors,

including, but not limited to, the length of the sales cycle, the rate of increase or decrease in our existing business base, the success,

timing, and amount of investment required to bring new products to market, revenue growth or decline and potential acquisitions.

to generate positive cash flow from operations will have a material adverse effect on our business, financial condition and results of

Net cash provided by operating activities was

$4.4 million for the year ended December 31, 2023, compared to net cash provided by operating activities of $1.2 million (as restated)

for the same period in 2022.

The net cash provided by operating activities for the year ended December 31, 2023 reflects a net loss

of $5.7 million and includes non-cash charges of $3.9 million for stock-based compensation, $9.4 million for depreciation and

amortization expense, a gain on bargain purchase of $9.0 million, and $2.8 million for right of use asset amortization.

operating assets and liabilities included:

increase in accounts receivable of $1.5 million;

1 unchanged sentence

decrease in lease liabilities of $2.9 million;

decrease in accounts payable and accrued expenses of $0.5 million.

cash used in operating activities was $5.0 million for the year ended December 31, 2021, compared to net cash provided by operating activities

of $8.8 million for the same period in 2020.

The net cash used in operating activities for the year ended December 31, 2021 reflects

a net loss of $13.3 million and includes non-cash charges of $4.7 million for stock-based compensation, $8.6 million for depreciation

and amortization expense and $2.9 million for right of use asset amortization.

Changes in working capital items included:

increase in accounts receivable of $9.7 million;

increase in inventory of $6.1 million;

increase in accounts payable and accrued expenses of $4.5 million.

cash used in investing activities was $5.8 million for the year ended December 31, 2022, compared to net cash used in investing

activities of $3.4 million for the same period in 2021.

The cash used in investing activities for the years ended December 31, 2022

and 2021 was primarily for the purchase of fixed assets and capitalized software development.

cash used in investing activities was $3.4 million for the year ended December 31, 2021, compared to net cash used in investing

cash provided by operating activities was $1.2 million (as restated) for the year ended December 31, 2022, compared to net cash used in

operating activities of $5.4 million (as restated) for the same period in 2021.

The net cash provided by operating activities for the

year ended December 31, 2022 reflects a net loss of $6.8 million (as restated) and includes non-cash charges of $4.3 million for

stock-based compensation, $8.3 million for depreciation and amortization expense and $2.8 million for right of use asset

amortization.

Changes in operating assets and liabilities included:

increase in accounts receivable of $1.4 million (as restated);

increase in inventory of $4.5 million;

decrease in lease liabilities of $2.7 million;

decrease in accounts payable and accrued expenses of $0.6 (as restated) million.

cash provided by investing activities was $1.5 million for the year ended December 31, 2023, compared to net cash used in investing

activities of $6.3 million (as restated) for the same period in 2022.

The increase in net cash provided by investing activities was

primarily due to $8.7 million in net proceeds from the acquisition of Movingdots, partially offset by $3.6 million for the purchase

of fixed assets and $3.5 million (as restated) for capitalized software development costs.

cash used in investing activities was $6.3 million (as restated) for the year ended December 31, 2022, compared to net cash used in

investing activities of $3.0 million (as restated) for the same period in 2021.

The cash used in investing activities for the years

ended December 31, 2022 and 2021 was for the purchase of fixed assets and capitalized software development.

cash used in financing activities was $3.7 million for the year ended December 31, 2023, compared to net cash used in financing

activities of $0.3 million for the same period in 2022.

The cash used in investing activities for the years ended December 31, 2021 and 2020

was for the purchase of fixed assets and capitalized software development.

The increase in net cash used in financing activities was primarily due to

the payment in cash of preferred stock dividends totaling $3.4 million compared to $0 in 2022, net of the changes in the repayment of long-term debt and change in short-term debt, net balance.

cash used in financing activities was $0.3 million for the year ended December 31, 2022, compared to net cash provided by financing activities

3 unchanged sentences

dividends were not paid in cash and the net cash used in financing was primarily from the repayment of long-term debt, net of proceeds

cash provided by financing activities was $16.2 million for the year ended December 31, 2021, compared to net cash used in financing

activities of $3.9 million for the same period in 2020.

The change from the same period in 2020 was primarily due to the net proceeds

from our stock offering of $26.9 million offset by the repayment of long-term debt of $5.6 million and the payment of preferred stock

dividends of $4.1 million.

inflation and other macroeconomic conditions in the U.S.

5 unchanged sentences

opportunities to expand our solution offerings through strategic acquisitions.

March 6, 2023, we entered into the SPA with Swiss Re to acquire all of the outstanding shares of Movingdots for consideration

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

price of $7.00 per share.

Under the SPA, Swiss Re is required to

ensure that Movingdots has available cash and cash equivalents of at least €8,000,000 as of the closing date.

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

Company Ltd (“Swiss Re”) to acquire all of the outstanding shares of Movingdots for consideration consisting of €1 and

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

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

closing date.

The transaction closed on March 31, 2023.

On April 2, 2024, we consummated the MiX Combination, pursuant to which Powerfleet Sub acquired all the issued ordinary

shares of MiX Telematics, including those represented by MiX Telematics’ American Depositary Shares, through the implementation

of the Scheme in accordance with Sections 114 and 115 of the Companies Act, in exchange for shares of our common stock.

As a result, MiX

Telematics became our indirect, wholly owned subsidiary.

a result of the MiX Combination, the combined company remains Powerfleet and our common stock continues to be listed on The Nasdaq

Global Market and the Tel Aviv Stock Exchange under the symbol “PWFL.” Additionally, our common stock has been listed on

the JSE by way of a secondary inward listing under the symbol “PWR.”

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

spanning more than 120 countries.

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

with efficiency, safety, compliance, and security solutions.

The MiX Combination is expected to provide us with operational synergies

and access to a broader base of customers.

MiX Combination has been accounted for as a business combination, and we have been identified as the accounting acquirer.

Sheet Arrangements

3 unchanged sentences

Issued Accounting Pronouncements

December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2019-12, Simplifying the Accounting for Income Taxes which removes certain exceptions related to the approach for intraperiod tax allocation,

the methodology for calculating income taxes in an interim period, the recognition of deferred tax liabilities for outside basis differences

and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill.

The guidance is generally effective

as of January 1, 2021, with early adoption permitted.

The adoption of this standard did not have a material impact on the Company’s

consolidated financial statements.

June 2016, the FASB issued ASU No.

2016-13, “Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on

Financial Instruments,” which amends the guidance on measuring credit losses on financial assets held at amortized cost.

The amendment

is intended to address the issue that the previous “incurred loss” methodology was restrictive for an entity’s ability

to record credit losses based on not yet meeting the “probable” threshold.

The new language will require these assets to

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

This updated standard is

effective for fiscal years beginning after December 15, 2022.

The Company is currently evaluating

the impact of this ASU on the consolidated financial statements.

In November 2023, the Financial

Accounting Standards Board (“FASB”) issued Accounting Standards Update No.

2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which requires additional operating segment disclosures

in annual and interim consolidated financial statements.

ASU 2023-07 is effective for annual periods beginning after December 15, 2023

and for interim periods beginning after December 15, 2024 on a retrospective basis, with early adoption permitted.

We are evaluating

the effect of adopting ASU 2023-07.

In December 2023, the FASB issued Accounting Standards Update No.

2023-09, “Income Taxes (Topic 740):

to Income Tax Disclosures” (“ASU 2023-09”), which requires disclosure of disaggregated income taxes paid, prescribes

standard categories for the components of the effective tax rate reconciliation and modifies other income tax-related disclosures.

2023-09 is effective for annual periods beginning after December 15, 2024 on a retrospective or prospective basis.

We are evaluating

the effect of adopting ASU 2023-09.

In June 2016, the FASB issued ASU No.

2016-13, “Financial Instruments - Credit Losses

(Topic 326) Measurement of Credit Losses on Financial Instruments,” which amends the guidance on measuring credit losses on financial

assets held at amortized cost.

The amendment is intended to address the issue that the previous “incurred loss” methodology

was restrictive for an entity’s ability to record credit losses based on not yet meeting the “probable” threshold.

new language will require these assets to be valued at amortized cost presented at the net amount expected to be collected with a valuation

We adopted ASU No.

2016-13 on January 1, 2023.

The adoption of the standard did not result in a material impact on

the consolidated financial statements.

Quantitative and Qualitative Disclosures about Market Risks.

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 7. Management’s Discussion and Analysis