What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-05-09 compared with 2023-03-31 · 1845 added, 844 removed, 744 unchanged (78% of the section changed)

2 unchanged sentences

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Consolidated Balance Sheets at December 31, 2021 and 2022

Consolidated Statements of Operations for the Years Ended December 31, 2020, 2021 and 2022

Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2020, 2021 and 2022

Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2020, 2021 and 2022

Consolidated Statements of Cash Flows for the Years Ended December 31, 2020, 2021 and 2022

Balance Sheets at December 31, 2022 (As restated) and 2023

Statements of Operations for the Years Ended December 31, 2021 (As restated), 2022 (As restated) and 2023

Statements of Comprehensive Loss for the Years Ended December 31, 2021 (As restated), 2022 (As restated) and 2023

Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2021 (As restated), 2022 (As restated) and

Statements of Cash Flows for the Years Ended December 31, 2021 (As restated), 2022 (As restated) and 2023

Notes to the Consolidated Financial Statements

1 unchanged sentence

the Stockholders and the Board of Directors of Powerfleet, Inc.

and subsidiaries

on the Financial Statements

have audited the accompanying consolidated balance sheets of PowerFleet, Inc.

and subsidiaries (the Company) as of December 31, 2022

and 2021, the related consolidated statements of operations, comprehensive loss, cash flows, and changes in stockholders’ equity

for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated

financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial

position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years

in the period ended December 31, 2022, in conformity with U.S.

We have audited the accompanying

consolidated balance sheets of PowerFleet, Inc.

and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated

statements of operations, comprehensive loss, changes in stockholders’ equity and cash flows for each of the three years in the

period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company

at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December

31, 2023, in conformity with U.S.

generally accepted accounting principles.

also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s

internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework

issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 31, 2023 expressed

an adverse opinion thereon.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud,

and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts

and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates

made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a

reasonable basis for our opinion.

We also have audited, in accordance with the standards of the Public Company

Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based

on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway

Commission (2013 framework), and our report dated May 9, 2024 expressed an adverse opinion thereon.

Restatement of 2022 and 2021 Financial Statements

As discussed in Note 2 to

the consolidated financial statements, the 2022 and 2021 consolidated financial statements have been restated to correct misstatements.

These financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance

with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards

of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements

are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material

misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures

included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included

evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation

of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Audit Matters

critical audit matters communicated below are matters arising from the current period audit of the financial statements that was

communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material

to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication

of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we

are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts

or disclosures to which they relate.

The critical audit matters communicated below are

matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the

audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially

challenging, subjective, or complex judgments.

The communication of the critical audit matters does not alter in any way our opinion on

the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing

a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

of the Matter

December 31, 2022, the Company’s goodwill was $83.5 million.

As discussed in Note 2 and 7 to the consolidated financial

statements, goodwill is tested for impairment at least annually at the reporting unit level.

Auditing management’s annual goodwill impairment test was complex

and highly judgmental due to the significant estimations required to determine the fair value of the reporting unit.

In particular, the

fair value estimates were sensitive to significant assumptions, including the weighted average cost of capital, revenues, cost growth

and terminal growth rate all of which are affected by expectations about future operations and market conditions.

At December 31, 2023, the Company reported $83.5 million of goodwill.

As discussed in Notes 3 and 9 to the consolidated

financial statements, goodwill is tested for impairment at least annually at the reporting unit level.

Auditing management’s annual goodwill impairment test was complex and highly judgmental due to the significant

estimation required to determine the fair value of the reporting unit.

In particular, the fair value estimate was sensitive to significant

assumptions, such as the weighted average cost of capital, revenue growth and cost growth all of which are affected by expectations about

future operations and market conditions.

Further, the identified material weakness relating to management not adequately preparing and

maintaining evidence of their review of significant assumptions relating to the annual goodwill impairment assessment affected our audit

procedures in this area.

We Addressed the

obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill

impairment review process, including controls over management’s development and review of the significant assumptions described

above and review of the reasonableness of the data utilized in the Company’s valuation analysis.

To test the fair value of the Company’s reporting unit, we performed

audit procedures that included, among others, assessing methodologies and testing the significant assumptions discussed above and the

underlying data used by the Company in its analysis.

We compared the significant assumptions used by management to current industry and

economic trends, including key performance indicators, and evaluated whether changes in the company’s business would affect the

significant assumptions.

We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant

assumptions to evaluate the changes in the fair value of the reporting units that would result from changes in the assumptions.

In performing

our testing, we utilized internal valuation specialists to assist us in evaluating the Company’s valuation model and related significant

Taxes – Uncertain Tax Positions

To test the fair value of the

Company’s reporting unit, we performed audit procedures with the assistance of internal valuation specialists that included,

among others, assessing methodologies and testing the significant assumptions discussed above and the underlying data used by the

Company in its analysis.

We compared the significant assumptions used by management to current industry and economic trends,

including key performance indicators, and evaluated whether changes in the Company’s business would affect the significant

We assessed the historical accuracy of management’s estimates and performed a sensitivity analysis of significant

assumptions to evaluate the changes in the fair value of the reporting unit that would result from changes in the assumptions.

compared the data used in the analysis to supporting documentation and analyses.

The nature and extent of our audit procedures

considered the inability to rely on controls over management’s goodwill impairment review process as a result of the material

weakness described above.

Uncertain Tax Positions

of the Matter

discussed in Note 16 of the consolidated financial statements, the Company has recorded a liability of $0.4 million related to

uncertain tax positions as of December 31, 2022.

The Company conducts business in the US and various foreign countries and is therefore

subject to US federal and state income taxes, as well as income taxes of multiple foreign jurisdictions.

As discussed in Note 18 of the consolidated financial statements, the Company has recorded a liability of $0.3 million

related to uncertain tax positions as of December 31, 2023.

The Company conducts business in the US and various foreign countries and

is therefore subject to US federal and state income taxes, as well as income taxes of multiple foreign jurisdictions.

Due to the multinational

operations of the Company and changes in global income tax laws and regulations, including those in the US, there is complexity in

the accounting for and monitoring of the provision for uncertain tax positions.

management’s identification and measurement of uncertain tax positions involved complex analysis and auditor judgment related

to the evaluation of the income tax consequences of changes in income tax laws and regulations in various jurisdictions, which are

often subject to interpretation.

operations of the Company and changes in global income tax laws and regulations, including those in the US, there is complexity in the

accounting for and monitoring of the provision for uncertain tax positions.

Auditing management’s identification and measurement of uncertain tax positions involved complex analysis and

auditor judgment related to the evaluation of the income tax consequences of changes in income tax laws and regulations in various jurisdictions,

which are often subject to interpretation.

We Addressed the Matter in Our Audit

audit procedures included, among others, evaluating the Company’s assumptions and the underlying data used to identify its

uncertain tax positions and to estimate the amount of the related unrecognized income tax benefits by jurisdiction.

We obtained an

understanding of the Company’s legal structure by reviewing its organizational charts and related legal documents.

complexity of the tax law in various jurisdictions, we involved our income tax professionals to assess the Company’s interpretation

of and compliance with tax laws in these jurisdictions, as well as to identify relevant tax law changes.

In certain circumstances,

we involved our income tax professionals to evaluate the technical merits of the Company’s tax positions and to evaluate income

tax opinions or other third-party advice obtained by the Company.

Our audit procedures included, among others, evaluating the Company’s assumptions and the underlying data used

to identify its uncertain tax positions and to estimate the amount of the related unrecognized income tax benefits by jurisdiction.

obtained an understanding of the Company’s legal structure by reviewing its organizational charts.

Due to the complexity of the

tax law in various jurisdictions, we involved our income tax professionals to assess the Company’s interpretation of and compliance

with tax laws in these jurisdictions, as well as to identify relevant tax law changes.

In certain circumstances, we involved our income

tax professionals to evaluate the technical merits of the Company’s tax positions and to evaluate income tax opinions or other third-party

advice obtained by the Company.

Ernst & Young LLP

served as the Company’s auditor since 2019.

have served as the Company’s auditor since 2019.

of Independent Registered Public Accounting Firm

the Stockholders and the Board of Directors of Powerfleet, Inc.

and subsidiaries

on Internal Control Over Financial Reporting

have audited PowerFleet, Inc.

and subsidiaries internal control over financial reporting as of December 31, 2022, based on criteria established

in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework)

(the COSO criteria).

In our opinion, because of the effect of the material weaknesses described below on the achievement of the objectives

of the control criteria, PowerFleet, Inc.

and subsidiaries (the Company) has not maintained effective internal control over financial

reporting as of December 31, 2022, based on the COSO criteria.

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

a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be

prevented or detected on a timely basis.

The following material weaknesses have been identified and included in management’s

Management has identified material weaknesses in controls related to the determination of standalone selling price,

capitalized software costs and the financial statement close process.

also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the

consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations,

comprehensive loss, cash flows, and changes in stockholders’ equity for each of the three years in the period ended December

We have audited PowerFleet, Inc.

and subsidiaries’ internal control over financial reporting as of December

31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations

of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, because of the effect of the material weaknesses described

below on the achievement of the objectives of the control criteria, PowerFleet, Inc.

and subsidiaries (the Company) has not maintained

effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

A material weakness is a deficiency, or

combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a

material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely

The following material weaknesses have been identified and included in management’s assessment.

Management has

identified material weaknesses in the design and operation of controls related to the determination of standalone selling price,

capitalized software, the Movingdots GmbH business combination, valuation of goodwill, measurement and valuation of the convertible

redeemable preferred stock and the financial statement close process, which includes the information technology general controls in

the areas of user access and change management over key information technology systems that support the Company’s financial

reporting processes, the related process-level information technology dependent manual controls and application controls.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)

(PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations,

comprehensive loss, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31,

2023, and the related notes.

These material weaknesses were considered in determining the nature, timing and extent of audit tests

applied in our audit of the 2022 consolidated financial statements, and this report does not affect our report dated March 31, 2023,

which expressed an unqualified opinion thereon.

Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment

of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal

Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial

reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect

to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange

Commission and the PCAOB.

conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists,

testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other

procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

These material weaknesses were considered in determining the nature, timing and extent of audit tests applied

in our audit of the 2023 consolidated financial statements, and this report does not affect our report dated May 9, 2024, which expressed

an unqualified opinion thereon.

The Company’s management is responsible for

maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial

reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to

express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm

registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities

laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance

with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether

effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting,

assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control

based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our

audit provides a reasonable basis for our opinion.

and Limitations of Internal Control Over Financial Reporting

company’s 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 for external purposes in accordance with generally accepted accounting

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the

maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in

accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance

with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection

of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of

any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,

or that the degree of compliance with the policies or procedures may deteriorate.

A company’s 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 for external purposes in accordance with generally accepted accounting principles.

A company’s internal control

over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,

accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions

are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and

that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition

of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because

of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Ernst & Young LLP

2 unchanged sentences

thousands, except per share data)

As of December 31,

December 31, 2022

(As restated)

December 31, 2023

Current assets:

1 unchanged sentence

Restricted cash

Accounts receivable, net of allowance for doubtful accounts of $ 3,176 and $ 2,567 in 2021 and 2022, respectively

Accounts receivable, net of allowance for credit losses of $ 2,567 and $ 2,797

in 2022 and 2023, respectively

Inventory, net

2 unchanged sentences

Total current assets

Deferred costs - less current portion

Fixed assets, net

17 unchanged sentences

Commitments and Contingencies (note 19)

MEZZANINE EQUITY

Convertible redeemable preferred stock:

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

55 and 59 shares issued and outstanding at December 31, 2021 and December 31, 2022, respectively

Series A – 100

shares authorized, $ 0.01

shares issued and outstanding at December 31, 2022 and December 31, 2023, respectively, at redemption value of $ 90,273 at December 31, 2023

STOCKHOLDERS’ EQUITY

Preferred stock;

authorized 50,000 shares, $ 0.01 par value;

authorized 50,000

shares, $ 0.01 par value;

Common stock;

4 unchanged sentences

Accumulated deficit

Accumulated other comprehensive gain (loss)

Accumulated other comprehensive loss

Treasury stock;

3 unchanged sentences

Non-controlling interest

Total liabilities and stockholders’ equity

Total liabilities, convertible redeemable preferred stock, and stockholders’ equity

ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7 unchanged sentences

Cost of services

cost of revenues

Total cost of revenues

Operating expenses:

1 unchanged sentence

Research and development expenses

Operating expenses

Total operating expenses

Loss from operations

Interest income

Interest expense

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

10 unchanged sentences

Net loss attributable to common stockholders

Other comprehensive (loss) income, net:

Foreign currency translation adjustment

Total other comprehensive income (loss), net

Total other comprehensive income (loss)

Comprehensive loss

3 unchanged sentences

thousands, except per share data)

Accumulated Other

Number of Shares

Accumulated Deficit

Comprehensive Income (Loss)

Treasury Stock

controlling Interest

Stockholders’ Equity

Balance at January 1, 2020

Comprehensive

Income (Loss)

Non-controlling

Stockholders’

Balance at January 1, 2021 (As issued)

$ ( 121,150 )

Net loss attributable to common stockholders

Net loss attributable to non-controlling interest

Foreign currency translation adjustment

Issuance of restricted shares

Forfeiture of restricted shares

Vesting of restricted stock units

Shares issued pursuant to exercise of stock options

Shares withheld pursuant to exercise of stock options

Shares withheld pursuant to vesting of restricted stock

Common shares issued

Stock based compensation

Balance at December 31, 2020

Restatement adjustments

at January 1, 2021 (As restated)

loss attributable to common stockholders (As restated)

loss attributable to non-controlling interest

currency translation adjustment

of restricted shares

of restricted stock units

issued pursuant to exercise of stock options

withheld pursuant to exercise of stock options

withheld pursuant to vesting of restricted stock

shares issued, net of issuance costs

based compensation

at December 31, 2021 (As restated)

$ ( 134,052 )

Net loss attributable to common stockholders

Net loss attributable to non-controlling interest

Foreign currency translation adjustment

Issuance of restricted shares

Forfeiture of restricted shares

Vesting of restricted stock units

Shares issued pursuant to exercise of stock options

Shares withheld pursuant to exercise of stock options

Shares withheld pursuant to vesting of restricted stock

Common shares issued, net of issuance costs

Stock based compensation

Balance at December 31, 2021

loss attributable to common stockholders (As restated)

income attributable to non-controlling interest

currency translation adjustment

of restricted shares

of restricted stock units

withheld pursuant to vesting of restricted stock

based compensation

at December 31, 2022 (As restated)

$ ( 140,806 )

Net loss attributable to common stockholders

Net income attributable to non-controlling interest

Net income (loss) attributable

to non-controlling interest

Foreign currency translation adjustment

Issuance of restricted shares

Forfeiture of restricted shares

Vesting of restricted stock units

Shares withheld pursuant to vesting of restricted stock

Stock based compensation

Balance at December 31, 2022

Retained earnings adjustment for adoption of ASU 2016-13

loss attributable to common stockholders (As restated)

income attributable to non-controlling interest

income (loss) attributable to non-controlling interest

issued in connection with acquisition

currency translation adjustment

of restricted shares

of stock options

withheld pursuant to vesting of restricted stock

based compensation

at December 31, 2023

$ ( 146,281 )

5 unchanged sentences

Year Ended December 31,

Cash flows from operating:

2021 (As restated)

2022 (As restated)

Cash flows from operating activities:

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

Non-controlling interest

Gain on bargain purchase

Inventory reserve

14 unchanged sentences

Cash flows from investing activities:

Acquisitions, net of cash assumed

Purchase of investments

Capitalized software development costs

Capital expenditures

Capitalized software development

Proceeds from the sale of property and equipment

Purchase of investment

Net cash (used in) provided by investing activities

1 unchanged sentence

Net proceeds from stock offering

Repayment of convertible note

Payment of preferred stock dividends

Repayment of long-term debt

Repayment of financing lease

Short-term bank debt, net

Proceeds from exercise of stock options, net

Purchase of treasury stock upon vesting of restricted stock

Repayment of financing lease

Payment of preferred stock dividend

Proceeds from exercise of stock options, net

Net cash (used in) provided by financing activities

Effect of foreign exchange rate changes on cash and cash equivalents

Net (decrease) increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash - beginning of period

Cash, cash equivalents and restricted cash - end of period

Reconciliation of cash, cash equivalents, and restricted cash, beginning of period

Net increase (decrease) in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash - beginning of year

Cash, cash equivalents and restricted cash - end of year

Reconciliation of cash, cash equivalents, and restricted cash, beginning of year

Cash and cash equivalents

Restricted cash

Cash, cash equivalents, and restricted cash, beginning of period

Reconciliation of cash, cash equivalents, and restricted cash, end of period

Cash, cash equivalents, and restricted cash, beginning of year

Reconciliation of cash, cash equivalents, and restricted cash, end of year

Cash and cash equivalents

Restricted cash

Cash, cash equivalents, and restricted cash, end of period

Cash, cash equivalents, and restricted cash, end of year

Supplemental disclosure of cash flow information:

2 unchanged sentences

Value of shares withheld pursuant to exercise of stock options

Value of warrant issued in connection with Movingdots acquisition

Value of licensed intellectual property acquired in connection with Movingdots acquisition

Preferred stock dividends paid in shares

ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11 unchanged sentences

2019 for the purpose of effectuating the transactions pursuant to which the Company acquired Pointer Telocation Ltd.

(the “Transactions”)

and commenced operations on October 3, 2019, upon the closing of the Transactions.

of COVID-19 and Supply Chain Disruptions

ongoing COVID-19 pandemic, and mitigation efforts by governments to attempt to control its spread, has resulted in significant economic

disruption and continues to adversely impact the broader global economy.

The extent of the impact of the pandemic on our business and

financial results will depend largely on the future developments that cannot be accurately predicted at this time, including the duration

of the spread of the outbreak and COVID-19 variants, the extent and effectiveness of containment actions and vaccination campaigns, and

the impact of these and other factors on capital and financial markets and the related impact on the financial circumstances of our employees,

customers and suppliers.

addition, the Company has experienced a significant impact to its supply chain given COVID-19 and the related global semiconductor

chip shortage, including delays in supply chain deliveries, extended lead times and shortages of certain key components, some raw

material cost increases and slowdowns at certain production facilities.

As a result of these supply chain issues, the Company has

had to increase its volume of inventory to ensure supply.

The Company incurred supply chain constraint expenses which lowered its

gross margins and decreased its profitability primarily during the last six months of 2021 and first nine months of 2022.

chain disruptions and the related global semiconductor chip shortage have delayed and may continue to delay the timing of some

orders and expected deliveries of the Company’s products.

If the impact of the supply chain disruptions are more severe than

the Company expects, it could result in longer lead times, inventory supply challenges and further increased costs, all of which

could result in the deterioration of the Company’s results, potentially for a longer period than currently

of the date of these audited consolidated financial statements, the full extent to which the COVID-19 pandemic and the related

supply chain disruptions, may materially impact the Company’s business, results of operations and financial condition is

of presentation

audited consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries.

material intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial

statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

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

Accordingly, they do not include all of the information and

footnotes required by U.S.

GAAP for complete financial statements.

In the opinion of management, such statements include all adjustments

(consisting only of normal recurring items) which are considered necessary for a fair presentation of the consolidated financial position

of the Company as of December 31, 2022, the consolidated results of its operations for the twelve-month periods ended December 31, 2021

and 2022, the consolidated change in stockholders’ equity for the twelve-month periods ended December 31, 2021 and 2022, and the

consolidated cash flows for the twelve-month periods ended December 31, 2021 and 2022.

of December 31, 2022, the Company had cash (including restricted cash) and cash equivalents of $ 18.0 million and working capital of $ 35.5

The Company’s primary sources of cash are cash flows from operating activities, its holdings of cash, cash equivalents

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

(the “Pointer Merger”)

and commenced operations on October 3, 2019, upon the closing of the Pointer Merger.

of Macroeconomic Conditions and Supply Chain Disruptions

interest rates and inflation, fluctuations in currency values, and the conflicts between Russia

and Ukraine and between Israel and Hamas have resulted in significant economic disruption and adversely impacted the broader global

economy, including our customers and suppliers.

The extent of the impact of such conditions on our business and financial results will

depend largely on future developments that cannot be accurately predicted at this time, including the duration of higher interest rates

and inflation, the resilience of currency values, and the resolution or escalation of geopolitical conflicts, particularly those between

Russia and Ukraine and between Israel and Hamas, and the impact of these and other factors on capital and financial markets and the related

impact on the financial circumstances of our employees, customers and suppliers.

addition, the Company has experienced a significant impact to its supply chain given the challenges stemming from ongoing

macroeconomic conditions, including delays in supply chain deliveries, extended lead times and shortages of certain key components,

some raw material cost increases and slowdowns at certain production facilities.

As a result of these supply chain issues, the

Company has had to increase its volume of inventory beginning in 2022 to ensure supply.

The Company incurred supply chain constraint

expenses which lowered its gross margins and decreased its profitability primarily during the last six months of 2021 and first nine

months of 2022.

The supply chain disruptions have delayed and may continue to delay the timing of some orders and expected

deliveries of the Company’s products.

If the impact of the supply chain disruptions is more severe than the Company expects,

it could result in longer lead times, inventory supply challenges and further increased costs, all of which could result in the

deterioration of the Company’s results, potentially for a longer period than currently anticipated.

of the date of these audited consolidated financial statements, the full extent to which global economic conditions and geopolitical

conflicts may materially impact the Company’s business, results of operations and financial condition is uncertain.

of December 31, 2023, the Company had cash (including restricted cash) and cash equivalents of $ 19,300 and working capital of $ 23,500 .

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

and investments from the sale of its capital stock and borrowings under its credit facilities.

To date, the Company has not generated sufficient

2 unchanged sentences

(“Powerfleet Israel”) and Pointer Telocation Ltd.

and, together with PowerFleet Israel, the “Borrowers”) are party to a Credit Agreement (the “Credit Agreement”)

with Bank Hapoalim B.M.

(“Hapoalim”), pursuant to which Hapoalim provided PowerFleet Israel with two senior secured term

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

(comprised of two facilities in the aggregate

principal amount of $ 20,000

(“Pointer” and, together with Powerfleet Israel, the “Borrowers”) were party to a Credit Agreement (the

“Prior Credit Agreement”) with Bank Hapoalim B.M.

(“Hapoalim”), pursuant to which Hapoalim provided

Powerfleet Israel with two senior secured term loan facilities denominated in New Israeli Shekels (“NIS”) in an initial

aggregate principal amount of $ 30,000

(comprised of two facilities in the aggregate principal amounts of $ 20,000

and $ 10,000 )

1 unchanged sentence

revolving credit facility to Pointer in an initial aggregate principal amount of $ 10,000 .

The proceeds of the term loan facilities were used to

finance a portion of the cash consideration payable in the Company’s acquisition of Pointer.

The proceeds of the revolving credit

facility may be used by Pointer for general corporate purposes.

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

acquisition of Pointer.

The Company borrowed net NIS 4,915 ,

1 unchanged sentence

See Note 12 for additional information.

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

The Third Amendment provides for, among other things, a new revolving credit facility to Pointer denominated in NIS in

an initial aggregate principal amount of $ 10

million (the “New Revolver”).

The New Revolver will be available for a period of one month, commencing on October 31,

2022, and will continue to be available for successive one-month periods until and including October 30, 2023, unless the Borrowers

deliver a notice to Hapoalim of their request not to renew the New Revolver.

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.

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.

of the COVID-19 pandemic, there is significant uncertainty surrounding the potential impact on our results of operations and cash

During 2020, 2021 and 2022, we proactively took steps to increase available cash on hand including, but not limited to,

targeted reductions in discretionary operating expenses and capital expenditures.

Company believes that its available working capital, anticipated level of future revenues, expected cash flows from operations and available

borrowings under its revolving credit facility with Hapoalim will provide sufficient funds to cover capital requirements through at least

March 31, 2024.

On March 18, 2024, the Borrowers entered into an amended

and restated credit agreement (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 $ 30,000 (comprised of two facilities in the aggregate principal amounts of $ 20,000

and $ 10,000 , respectively) and (ii) two revolving credit facilities to Pointer in an aggregate principal amount of $ 20,000 (comprised

of two revolvers in the aggregate principal amounts of $ 10,000 and $ 10,000 , respectively).

On March 18, 2024, Powerfleet Israel

drew down $ 30,000 in cash under the term loan facilities and used the proceeds to prepay approximately $ 11,200 , 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.

On April 2, 2024, the Company

consummated the transactions contemplated by the Implementation Agreement, dated as of October 10, 2023 (the “Implementation

Agreement”), that the Company entered into with Main Street 2000 Proprietary Limited, a private company incorporated in the

Republic of South Africa and a wholly owned subsidiary of the Company, and MiX Telematics Limited, a public company incorporated

under the laws of the Republic of South Africa (“MiX Telematics”), pursuant to which MiX Telematics became an indirect,

wholly owned subsidiary of the Company (the “MiX Combination”).

The Implementation Agreement required, as a condition to

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

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

In order to meet this condition, the Company entered into a facilities agreement (the “Facilities

Agreement”) with FirstRand Bank Limited (acting through its Rand Merchant Bank division) (“RMB”) on March 7, 2024

and shortly thereafter drew down $ 85,000 in

cash under the Facilities Agreement.

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

net proceeds received from RMB and from incremental borrowing capacity as a result of the refinancing of credit facilities with

Hapoalim to redeem in full $ 90,300 for the outstanding shares of the Series A Preferred Stock.

See Note 20 for additional information on the

financings that occurred after the year ended December 31, 2023.

believes the Company’s cash and cash equivalents of $ 19.3

million as of December 31, 2023 in conjunction with cash generated from the execution of its strategic plan over the next 12 months, and proceeds from the debt agreements 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 the Company’s outstanding obligations.

expectation is based, in part, on the achievement of a certain volume of assumed revenue and gross margin;

however, there is no

guarantee the Company will achieve this amount of revenue and gross margin during the assumed time period.

Management assessed

various additional operating cost reduction options that are available to the Company and would be implemented, if assumed levels of

revenue and gross margin are not achieved and additional funding is not obtained.

2 – RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS

of Restatement Adjustments

connection with the preparation of the Company’s audited consolidated financial statements for the year ended December 31,

2023, the Company determined that the accounting for the redemption premium associated with the Series A Preferred Stock was

understated resulting in an understatement of “net loss attributable to common stockholders” and “net loss per

share attributable to common stockholders” for each period, an understatement of the value of the convertible redeemable

preferred stock as of each balance sheet date, and an overstatement of the additional paid-in capital as of each balance sheet date.

The required adjustments to correct the redemption value of the calculation of the Series A Preferred Stock and the related

accretion of the value of the preferred stock in the consolidated statement of operations include the recording of a non-cash

accretion resulting in an increase in the net loss attributable to common stockholders, an increase in the

“convertible redeemable preferred stock”, and a decrease of “additional paid-in capital” for all annual and

interim periods in fiscal years 2021, 2022, and through September 30, 2023.

The correction of the error results in reporting the value of the convertible preferred stock including

the accretion to the redemption value from the date of original issuance through each balance sheet date applying the interest method.

The Company determined that it is appropriate to restate the financial statements for the fiscal years ended December 31, 2021 and 2022

and each of the interim periods during the 2022 and 2023 fiscal years included

in this Annual Report on Form 10-K in addition to correcting other unrelated immaterial errors that were previously either unrecorded

or recorded as out-of-period adjustments.

The following tables present the impact of all

of these adjustments on the Company’s previously reported consolidated financial statements.

The “As Reported” amounts

in the following tables are amounts derived from the Company’s previously filed Annual Reports on Form 10-K and Quarterly Reports

on Form 10-Q.

The amounts in the columns labeled “Redemption Premium Adjustment” represent the effect of adjustments resulting

from the correction of the understatement of the Company’s net loss attributable to common stockholders and net loss per share

attributable to common stockholders for each period for each period, as well as the impact of the cumulative amount on the value of the

convertible redeemable preferred stock and additional paid-in capital as of each balance sheet date.

The amounts in the columns labeled

“Other Adjustments” represent the effect of other adjustments that relate to other unrelated errors in previously filed financial

statements that were not material, individually or in the aggregate, to such filed financial statements.

The effects of the restatement

have been corrected in all impacted tables and footnotes throughout these consolidated financial statements.

Consolidation Financial Statements – Restatement

Reconciliation Tables

OF CONSOLIDATION FINANCIAL STATEMENTS

Audited Financial Statements

following table presents the impact of the financial statement adjustments on the Company’s previously reported Consolidated Balance

Sheet as of December 31, 2022:

31, 2022 (As restated)

Premium Adjustment

and cash equivalents

costs - current

expenses and other current assets

current assets

costs less current portion

bank debt and current maturities of long-term debt

payable and accrued expenses

revenue - current

liability - current

current liabilities

debt - less current maturities

revenue - less current portion

liability - less current portion

severance payable

tax liability

long-term liabilities

and Contingencies (note 19)

redeemable preferred stock

paid-in capital

other comprehensive loss

STOCKHOLDERS’ EQUITY

Powerfleet, Inc.

stockholders’ equity

Non-controlling

liabilities, convertible redeemable preferred stock, and stockholders’ equity

following table presents the impact of the financial statement adjustments on the Company’s previously reported Consolidated Statement

of Operations for the year ended December 31, 2021:

Ended December 31, 2021 (As restated)

Premium Adjustment

cost of revenues

general and administrative expenses

and development expenses

operating expenses

from operations

purchase – Movingdots

(expense) income, net

loss before income taxes

tax (expense) benefit

loss before non-controlling interest

Non-controlling

of preferred stock

stock dividends

loss attributable to common stockholders

loss per share attributable to common

stockholders – basic and diluted

average common shares outstanding – basic and diluted

following table presents the impact of the financial statement adjustments on the Company’s previously reported Consolidated Statement

of Operations for the year ended December 31, 2022:

Ended December 31, 2022 (As restated)

Premium Adjustment

cost of revenues

general and administrative expenses

and development expenses

operating expenses

from operations

purchase – Movingdots

(expense) income, net

loss before income taxes

tax (expense) benefit

loss before non-controlling interest

Non-controlling

of preferred stock

stock dividends

loss attributable to common stockholders

loss per share attributable to common stockholders – basic and diluted

average common shares outstanding – basic and diluted

The following table presents the impact of the financial statement adjustments on the Company’s previously reported

Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2021 and 2022, respectively:

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

premium adjustment

Paid-In Capital

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

premium adjustment

at December 31, 2020

$ ( 121,150 )

$ ( 121,287 )

loss attributable to common stockholders

of restricted shares

issued pursuant to exercise of stock options

shares issued, net of issuance costs

based compensation

at December 31, 2021

$ ( 134,437 )

$ ( 134,052 )

loss attributable to common stockholders

of restricted shares

based compensation

at December 31, 2022

$ ( 141,440 )

$ ( 140,806 )

following table presents the impact of the financial statement adjustments on the Company’s previously reported Consolidated Statement

of Comprehensive Loss for the years ended December 31, 2021 and 2022, respectively:

Ended December 31,

(As restated)

loss attributable to common stockholders

currency translation adjustment

other comprehensive loss

Comprehensive

following table presents the impact of the financial statement adjustments on the Company’s previously reported Consolidated Statement

of Cash Flows for the year ended December 31, 2021:

Ended December 31,

(As restated)

flows from operating activities

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

Non-controlling

on bargain purchase

based compensation expense

and amortization

assets, non-cash lease expense

non-cash items

expenses and other assets

payable and accrued expenses

severance payable, net

cash used in operating activities

flows from investing activities:

Acquisitions,

net of cash assumed

of investments

software development costs

cash (used in) provided by investing activities

flows from financing activities:

proceeds from stock offering

of long-term debt

of financing lease

bank debt, net

of treasury stock upon vesting of restricted stock

of preferred stock dividend

from exercise of stock options, net

cash used in financing activities

of foreign exchange rate changes on cash and cash equivalents

Net increase in cash, cash equivalents and restricted cash

cash equivalents and restricted cash – beginning of period

cash equivalents and restricted cash – end of period

Reconciliation

of cash, cash equivalents, and restricted cash, beginning of period

and cash equivalents

cash equivalents, and restricted cash, beginning of period

Reconciliation

of cash, cash equivalents, and restricted cash, end of period

and cash equivalents

cash equivalents, and restricted cash, end of period

disclosure of cash flow information:

investing and financing activities:

of shares withheld pursuant to exercise of stock options

The following table presents the impact of the

financial statement adjustments on the Company’s previously reported Consolidated Statement of Cash Flows for the year ended

December 31, 2022:

flows from operating activities

Ended December 31,

(As restated)

flows from operating activities

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

Non-controlling

on bargain purchase

based compensation expense

and amortization

assets, non-cash lease expense

non-cash items

expenses and other assets

payable and accrued expenses

severance payable, net

cash provided by operating activities

flows from investing activities:

Acquisitions,

net of cash assumed

of investments

software development costs

cash used in investing activities

flows from financing activities:

proceeds from stock offering

of long-term debt

of financing lease

bank debt, net

of treasury stock upon vesting of restricted stock

of preferred stock dividend

from exercise of stock options, net

cash used in financing activities

of foreign exchange rate changes on cash and cash equivalents

Net decrease in cash, cash equivalents and restricted cash

cash equivalents and restricted cash – beginning of period

cash equivalents and restricted cash – end of period

Reconciliation

of cash, cash equivalents, and restricted cash, beginning of period

and cash equivalents

cash equivalents, and restricted cash, beginning of period

Reconciliation

of cash, cash equivalents, and restricted cash, end of period

and cash equivalents

cash equivalents, and restricted cash, end of period

disclosure of cash flow information:

investing and financing activities:

Preferred stock dividends paid in shares

Unaudited Financial Statements

following table presents the impact of the financial statement adjustments on the Company’s previously reported unaudited Consolidated

Balance Sheet as of March 31, 2022:

Premium Adjustment

31, 2022 (As restated)

Premium Adjustment

and cash equivalents

costs – current

expenses and other current assets

current assets

costs less current portion

bank debt and current maturities of long-term debt

payable and accrued expenses

revenue current

liability – current

current liabilities

debt – less current maturities

revenue – less current portion

liability – less current portion

severance payable

tax liability

long-term liabilities

and Contingencies (note 19)

redeemable preferred stock

STOCKHOLDERS’ EQUITY

paid-in capital

other comprehensive loss

Powerfleet, Inc.

stockholders’ equity

Non-controlling

liabilities, convertible redeemable preferred stock, and stockholders’ equity

following table presents the impact of the financial statement adjustments on the Company’s previously reported unaudited

Consolidated Balance Sheet as of June 30, 2022:

30, 2022 (As restated)

Premium Adjustment

and cash equivalents

costs – current

expenses and other current assets

current assets

costs less current portion

bank debt and current maturities of long-term debt

payable and accrued expenses

revenue – current

liability – current

current liabilities

debt – less current maturities

revenue – less current portion

liability – less current portion

severance payable

tax liability

long-term liabilities

and Contingencies (note 19)

redeemable preferred stock

STOCKHOLDERS’ EQUITY

paid-in capital

other comprehensive loss

Powerfleet, Inc.

stockholders’ equity

Non-controlling

liabilities, convertible redeemable preferred stock, and stockholders’ equity

following table presents the impact of the financial statement adjustments on the Company’s previously reported unaudited

Consolidated Balance Sheet as of September 30, 2022:

30, 2022 (As restated)

Premium Adjustment

and cash equivalents

costs - current

expenses and other current assets

current assets

costs less current portion

bank debt and current maturities of long-term debt

payable and accrued expenses

revenue - current

liability - current

current liabilities

debt - less current maturities

revenue - less current portion

liability - less current portion

severance payable

tax liability

long-term liabilities

and Contingencies (note 19)

redeemable preferred stock

STOCKHOLDERS’ EQUITY

paid-in capital

other comprehensive loss

Powerfleet, Inc.

stockholders’ equity

Non-controlling

liabilities, convertible redeemable preferred stock, and stockholders’ equity

following table presents the impact of the financial statement adjustments on the Company’s previously reported unaudited

Consolidated Balance Sheet as of March 31, 2023:

31, 2023 (As restated)

Premium Adjustment

and cash equivalents

costs – current

expenses and other current assets

current assets

costs less current portion

bank debt and current maturities of long-term debt

payable and accrued expenses

revenue – current

liability – current

current liabilities

debt – less current maturities

revenue – less current portion

liability – less current portion

severance payable

tax liability

long-term liabilities

and Contingencies (note 19)

redeemable preferred stock

STOCKHOLDERS’ EQUITY

paid-in capital

other comprehensive loss

Powerfleet, Inc.

stockholders’ equity

Non-controlling

liabilities, convertible redeemable preferred stock, and stockholders’ equity

following table presents the impact of the financial statement adjustments on the Company’s previously reported unaudited

Consolidated Balance Sheet as of June 30, 2023:

30, 2023 (As restated)

Premium Adjustment

and cash equivalents

costs – current

expenses and other current assets

current assets

costs less current portion

bank debt and current maturities of long-term debt

payable and accrued expenses

revenue – current

liability – current

current liabilities

debt – less current maturities

revenue – less current portion

liability – less current portion

severance payable

tax liability

long-term liabilities

and Contingencies (note 19)

redeemable preferred stock

STOCKHOLDERS’ EQUITY

paid-in capital

other comprehensive loss

Powerfleet, Inc.

stockholders’ equity

Non-controlling

liabilities, convertible redeemable preferred stock, and stockholders’ equity

following table presents the impact of the financial statement adjustments on the Company’s previously reported unaudited Consolidated

Balance Sheet as of September 30, 2023:

30, 2023 (As restated)

Premium Adjustment

and cash equivalents

costs - current

expenses and other current assets

current assets

costs less current portion

bank debt and current maturities of long-term debt

payable and accrued expenses

revenue – current

liability – current

current liabilities

debt – less current maturities

revenue – less current portion

liability – less current portion

severance payable

tax liability

long-term liabilities

and Contingencies (note 19)

redeemable preferred stock

STOCKHOLDERS’ EQUITY

paid-in capital

other comprehensive loss

Powerfleet, Inc.

stockholders’ equity

Non-controlling

liabilities, convertible redeemable preferred stock, and stockholders’ equity

following table presents the impact of the financial statement adjustments on the Company’s previously reported unaudited Consolidated

Statement of Operations for the three months ended March 31, 2022 and 2023:

Months Ended March 31, 2022

(As restated)

Months Ended March 31, 2023

(As restated)

Premium Adjustment

Total cost of revenues

general and administrative expenses

and development expenses

operating expenses

from operations

purchase – Movingdots

(expense) income, net

loss before income taxes

tax (expense) benefit

loss before non-controlling interest

Non-controlling

of preferred stock

stock dividends

loss attributable to common stockholders

loss per share attributable to common

stockholders - basic and diluted

average common shares outstanding - basic

average common shares outstanding - diluted

following table presents the impact of the financial statement adjustments on the Company’s previously reported unaudited

Consolidated Statement of Operations for the three months ended June 30, 2022 and 2023:

Months Ended June 30, 2022

(As restated)

Months Ended June 30, 2023

(As restated)

Premium Adjustment

cost of revenues

general and administrative expenses

and development expenses

operating expenses

from operations

purchase – Movingdots

(expense) income, net

loss before income taxes

tax (expense) benefit

loss before non-controlling interest

Non-controlling

of preferred stock

stock dividends

loss attributable to common stockholders

loss per share attributable to common

stockholders – basic and diluted

average common shares outstanding – basic

average common shares outstanding – diluted

following table presents the impact of the financial statement adjustments on the Company’s previously reported unaudited Consolidated

Statement of Operations for the six months ended June 30, 2022 and 2023:

Months Ended June 30, 2022

(As restated)

Months Ended June 30, 2023

(As restated)

Premium Adjustment

cost of revenues

general and administrative expenses

and development expenses

operating expenses

from operations

purchase – Movingdots

(expense) income, net

loss before income taxes

tax (expense) benefit

loss before non-controlling interest

Non-controlling

of preferred stock

stock dividends

loss attributable to common stockholders

loss per share attributable to common

stockholders – basic and diluted

average common shares outstanding – basic

average common shares outstanding – diluted

following table presents the impact of the financial statement adjustments on the Company’s previously reported unaudited

Consolidated Statement of Operations for the three months ended September 30, 2022 and 2023:

Months Ended September 30, 2022

(As restated)

Months Ended September 30, 2023

(As restated)

Premium Adjustment

cost of revenues

general and administrative expenses

and development expenses

operating expenses

from operations

purchase – Movingdots

(expense) income, net

loss before income taxes

tax (expense) benefit

loss before non-controlling interest

Non-controlling

of preferred stock

stock dividends

loss attributable to common stockholders

loss per share attributable to common

stockholders – basic and diluted

average common shares outstanding – basic

average common shares outstanding – diluted

following table presents the impact of the financial statement adjustments on the Company’s previously reported unaudited

Consolidated Statement of Operations for the nine months ended September 30, 2022 and 2023:

Months Ended September 30, 2022

(As restated)

Months Ended September 30, 2023

(As restated)

Premium Adjustment

Total cost of revenues

general and administrative expenses

and development expenses

operating expenses

from operations

purchase - Movingdots

(expense) income, net

loss before income taxes

tax (expense) benefit

loss before non-controlling interest

Non-controlling

of preferred stock

stock dividends

loss attributable to common stockholders

loss per share attributable to common stockholders – basic and diluted

average common shares outstanding – basic

average common shares outstanding – diluted

following table presents the impact of the financial statement adjustments on the Company’s previously reported unaudited

Consolidated Statement of Comprehensive Loss for the three months ended March 31, 2022 and 2023, respectively:

Months Ended March 31,

(As restated)

loss attributable to common stockholders

currency translation adjustment (As Restated)

other comprehensive income (loss)

Comprehensive

following table presents the impact of the financial statement adjustments on the Company’s previously reported unaudited

Consolidated Statement of Comprehensive Loss for the three months ended June 30, 2022 and 2023, respectively:

Months Ended June 30,

(As restated)

loss attributable to common stockholders

currency translation adjustment (As restated)

other comprehensive income (loss)

Comprehensive

following table presents the impact of the financial statement adjustments on the Company’s previously reported unaudited

Consolidated Statement of Comprehensive Loss for the six months ended June 30, 2022 and 2023, respectively:

Months Ended June 30,

(As restated)

loss attributable to common stockholders

currency translation adjustment (As restated)

other comprehensive income (loss)

Comprehensive

following table presents the impact of the financial statement adjustments on the Company’s previously reported unaudited

Consolidated Statement of Comprehensive Loss for the three months ended September 30, 2022 and 2023, respectively:

Months Ended September 30,

(As restated)

loss attributable to common stockholders

currency translation adjustment (As restated)

other comprehensive income (loss)

Comprehensive

The following table presents the impact of

the financial statement adjustments on the Company’s previously reported unaudited Consolidated Statement of Comprehensive

Loss for the nine months ended September 30, 2022 and 2023, respectively:

Months Ended September 30,

(As restated)

loss attributable to common stockholders

currency translation adjustment (As restated)

other comprehensive loss

Comprehensive

following table presents the as restated balances in the unaudited

Consolidated Statements of Changes in Stockholders’ Equity for the three-month periods ended March 31, 2022, June 30, 2022,

and September 30, 2022:

Number of Shares

Additional Paid-in Capital

Accumulated Deficit

Accumulated Other Comprehensive Income (Loss)

Treasury Stock

Non-controlling Interest

Stockholders’

Balance at December 31, 2021 (As Reported)

$ ( 134,437 )

Effect of Restatement

Balance at January 1, 2022 (As Restated)

$ ( 134,052 )

Net loss attributable to common stockholders (As restated)

Net loss attributable to non-controlling interest

Foreign currency translation adjustment (As restated)

Issuance of restricted shares

Forfeiture of restricted shares

Vesting of restricted stock units

Shares withheld pursuant to vesting of restricted stock

Stock based compensation (As restated)

Balance at March 31, 2022 (As Restated)

$ ( 137,525 )

Net loss attributable to common stockholders (As restated)

Net loss attributable to non-controlling interest

Foreign currency translation adjustment (As restated)

Forfeiture of restricted shares

Shares withheld pursuant to vesting of restricted stock

Stock based compensation (As restated)

Balance at June 30, 2022 (As Restated)

$ ( 137,932 )

Net loss attributable to common stockholders (As restated)

Net loss attributable to non-controlling interest

Foreign currency translation adjustment

Issuance of restricted shares

Forfeiture of restricted shares

Shares withheld pursuant to vesting of restricted stock

Stock based compensation

Balance at September 30, 2022 (As Restated)

$ ( 139,534 )

following table presents the total quarterly net impact of the financial statement adjustments on the Company’s previously

reported unaudited Consolidated Statements of Changes in Stockholders’ Equity for the three-month periods ended March 31,

2023, June 30, 2023, and September 30, 2023:

Number of Shares

Additional Paid-in Capital

Accumulated Deficit

Accumulated Other Comprehensive Income (Loss)

Treasury Stock

Non-controlling Interest

Stockholders’

Number of Shares

Additional Paid-in Capital

Accumulated Deficit

Accumulated Other Comprehensive Income (Loss)

Treasury Stock

Non-controlling Interest

Stockholders’

Balance at January 1, 2023 (As Restated)

$ ( 140,806 )

Retained earnings adjustment for adoption of ASU 2016-13

Net (loss) income attributable to common stockholders (As restated)

Net loss attributable to non-controlling interest

Foreign currency translation adjustment

Issuance of restricted shares

Forfeiture of restricted shares

Shares withheld pursuant to vesting of restricted stock

Stock based compensation

Warrant issuance in connection with acquisition

Balance at March 31, 2023 (As Restated)

$ ( 135,961 )

Net loss attributable to common stockholders (As restated)

Net income attributable to non-controlling interest

Foreign currency translation adjustment

Issuance of restricted shares

Forfeiture of restricted shares

Exercise of stock options

Shares withheld pursuant to vesting of restricted stock

Stock based compensation

Balance at June 30, 2023 (As Restated)

$ ( 139,230 )

Net loss attributable to common stockholders (As restated)

Net loss attributable to non-controlling interest

Foreign currency translation adjustment

Issuance of restricted shares

Forfeiture of restricted shares

Exercise of stock options

Shares withheld pursuant to vesting of restricted stock

Stock based compensation

Balance at September 30, 2023 (As Restated)

$ ( 142,778 )

following table presents the impact of the financial statement adjustments on the Company’s previously reported unaudited

Consolidated Statement of Cash Flows for the three months ended March 31, 2022 and 2023:

Months Ended March 31,

(As restated)

flows from operating activities

(loss) income

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

Non-controlling

on bargain purchase

based compensation expense

and amortization

assets, non-cash lease expense

non-cash items

expenses and other assets

payable and accrued expenses

cash (used in) provided by operating activities

flows from investing activities:

Acquisitions,

net of cash assumed

of investments

software development costs

cash (used in) provided by investing activities

flows from financing activities:

of long-term debt

bank debt, net

of treasury stock upon vesting of restricted stock

cash used in by financing activities

of foreign exchange rate changes on cash and cash equivalents

(decrease) increase in cash, cash equivalents and restricted cash

cash equivalents and restricted cash - beginning of period

cash equivalents and restricted cash - end of period

Reconciliation

of cash, cash equivalents, and restricted cash, beginning of period

and cash equivalents

cash equivalents, and restricted cash, beginning of period

Reconciliation

of cash, cash equivalents, and restricted cash, end of period

and cash equivalents

cash equivalents, and restricted cash, end of period

disclosure of cash flow information:

investing and financing activities:

of warrant issued in connection with Movingdots acquisition

following table presents the impact of the financial statement adjustments on the Company’s previously reported unaudited

Consolidated Statement of Cash Flows for the six months ended June 30, 2022 and 2023:

Months Ended June 30,

(As restated)

flows from operating activities

Net loss (income)

Adjustments to reconcile net

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

Non-controlling

bargain purchase

based compensation expense

and amortization

assets, non-cash lease expense

non-cash items

expenses and other assets

payable and accrued expenses

severance payable, net

cash (used in) provided by operating activities

from investing activities:

Acquisitions, net of cash

Purchase of investments

Capitalized software development

cash (used in) provided by investing activities

from financing activities:

Repayment of long-term debt

Short-term bank debt, net

Purchase of treasury stock

upon vesting of restricted stock

Payment of preferred stock

from exercise of stock options

cash used in financing activities

of foreign exchange rate changes on cash and cash equivalents

Net (decrease)

increase in cash, cash equivalents and restricted cash

cash equivalents and restricted cash - beginning of period

cash equivalents and restricted cash - end of period

Reconciliation of cash, cash

equivalents, and restricted cash, beginning of period

cash equivalents

cash equivalents, and restricted cash, beginning of period

Reconciliation of cash, cash

equivalents, and restricted cash, end of period

cash equivalents

cash equivalents, and restricted cash, end of period

disclosure of cash flow information:

investing and financing activities:

of warrant issued in connection with Movingdots acquisition

following table presents the impact of the financial statement adjustments on the Company’s previously reported unaudited

Consolidated Statement of Cash Flows for the nine months ended September 30, 2022 and 2023:

Months Ended September 30,

2022 (As Restated)

(As Restated)

flows from operating activities

Adjustments to reconcile net

loss to cash (used in) provided by operating activities:

Non-controlling

bargain purchase

based compensation expense

and amortization

assets, non-cash lease expense

non-cash items

expenses and other assets

payable and accrued expenses

severance payable, net

cash used in operating activities

from investing activities:

Acquisitions, net of cash

Purchase of investments

Capitalized software development

cash (used in) provided by investing activities

from financing activities:

Repayment of long-term debt

Short-term bank debt, net

Purchase of treasury stock

upon vesting of restricted stock

Payment of preferred stock

from exercise of stock options

cash used in financing activities

of foreign exchange rate changes on cash and cash equivalents

Net (decrease)

increase in cash, cash equivalents and restricted cash

cash equivalents and restricted cash - beginning of period

cash equivalents and restricted cash - end of period

Reconciliation of cash, cash

equivalents, and restricted cash, beginning of period

cash equivalents

cash equivalents, and restricted cash, beginning of period

Reconciliation of cash, cash

equivalents, and restricted cash, end of period

cash equivalents

cash equivalents, and restricted cash, end of period

disclosure of cash flow information:

investing and financing activities:

of warrant issued in connection with Movingdots acquisition

3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

5 unchanged sentences

Use of estimates :

preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect

the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial

statements and the reported amounts of revenues and expenses during the reporting period.

The Company continually evaluates

estimates used in the preparation of the financial statements for reasonableness.

The most significant estimates relate to

realization of deferred tax assets, accounting for uncertain tax positions, the impairment of intangible assets, including goodwill,

capitalized software development costs, stock-based compensation costs and standalone selling price related to multiple element

revenue arrangements.

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

United States of America (“U.S.

The preparation of financial statements in conformity with U.S.

GAAP requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent

assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the

reporting period.

The Company continually evaluates estimates used in the preparation of the financial statements for

reasonableness.

The most significant estimates relate to realization of deferred tax assets, accounting for uncertain tax positions,

the impairment of intangible assets, including goodwill, capitalized software development costs, market-based stock-based

compensation costs, and assumptions used in business combinations.

Actual results could differ from those estimates.

of December 31, 2022, the impact of global uncertainties continue to unfold.

As a result, many of our estimates and assumptions

required increased judgment and carry a higher degree of variability and volatility.

As events continue to evolve and additional

information becomes available, our estimates may change materially in future periods.

of December 31, 2023, the impact of global uncertainties continues to unfold.

As a result, many of our estimates and assumptions required

increased judgment and carry a higher degree of variability and volatility.

As events continue to evolve and additional information becomes

available, our estimates may change materially in future periods.

Cash and cash equivalents :

5 unchanged sentences

held in escrow for purchases from a vendor.

Accounts receivable :

Accounts receivable and allowance for credit losses :

receivable are recorded at the invoiced amount and do not bear interest.

1 unchanged sentence

in net cash provided by operating activities in the consolidated statements of cash flows.

The Company maintains reserves against its

accounts receivable for potential losses.

Allowances for uncollectible accounts are estimated based on the Company’s periodic review

of accounts receivable balances.

In establishing the required allowance, management considers our customers’ financial condition,

the amount of receivables in dispute, and the current receivables aging and current payment patterns.

Account balances are charged off

against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

receivable are net of an allowance for doubtful accounts in the amount of $ 3,176 and $ 2,567 in 2021 and 2022, respectively.

The Company maintains an allowance for credit

losses against its accounts receivable for potential losses.

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

For trade receivables, the Company’s

historical collections were analyzed by the number of days past due to determine the uncollectible rate in each range of days past due

and considerations of any changes expected in the future.

The estimate of the allowance for credit losses is charged to the allowance

for credit losses based on the age of receivables multiplied by the historical uncollectible rate for the range of days past due or earlier

if the account is deemed uncollectible for other reasons.

Recoveries of amounts previously charged as uncollectible are credited to the

allowance for credit losses.

receivable is net of an allowance for credit losses in the amount of $ 2,567 and $ 2,797 in 2022 and 2023, respectively.

does not have any off-balance sheet credit exposure related to its customers.

analysis of the allowance for credit losses for the period ended December 31, 2023 is as follows:

OF ALLOWANCE FOR CREDIT LOSSES

Allowance for credit losses, December 31, 2022

Allowance for credit losses, beginning balance

Adjustment for adoption of ASU 2016-13

Current period provision for expected credit losses

Write-offs charged against the allowance

Foreign currency translation

Allowance for credit losses, December 31, 2023

Allowance for credit losses, ending balance

the year ended December 31, 2023, the change in the allowance for credit losses was due to the change in the age of trade

receivables, offset by write-offs of bad debts.

Revenue recognition :

4 unchanged sentences

The expected costs associated with the Company’s

base warranties continue to be recognized as expense when the products are sold (see Note 11).

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

base warranties continue to be recognized as an expense when the products are sold (see Note 13).

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

Product sales are recognized

1 unchanged sentence

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.

For products which are

not distinct 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 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.

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

7 unchanged sentences

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

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

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

Company also derives revenue from leasing arrangements.

Such arrangements provide for monthly payments covering product or system

sale, maintenance, support and interest.

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

maintenance, support and interest.

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

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

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

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

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

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

Maintenance revenues and interest

income are recognized monthly over the lease term.

Company’s contracts with customers may include multiple performance obligations.

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.

Company recognizes 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 such arrangements, the Company allocates

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

Judgment is required to

determine the SSP for each distinct performance obligation.

The Company generally determines standalone selling prices based on

observable prices charged to customers.

Significant pricing practices taken into consideration include the Company’s discounting practices, the size and volume of its

transactions, the customer demographic, price lists, its go-to-market strategy and historical and current sales and contract prices.

As the Company’s go-to-market strategies evolve, it may modify its pricing practices in the future, which could result in

changes to SSP.

certain cases, the Company is able to establish SSP based on observable prices of products or services sold separately in comparable

circumstances to similar customers.

The Company uses a single amount to estimate SSP when it has observable prices.

If SSP is not

directly observable, for example when pricing is highly variable, the Company uses a range of SSP.

The Company determines the SSP

range using information that may include pricing practices or other observable inputs.

The Company typically has more than one SSP

for individual products and services due to the stratification of those products and services by customer size.

The Company recognizes

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.

Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one

5 unchanged sentences

To the extent the carrying value of the deferred contract

costs exceed the contract revenue, an impairment loss will be recognized.

costs exceeds the contract revenue, an impairment loss will be recognized.

are stated at the lower of cost or net realizable value.

14 unchanged sentences

OF ESTIMATED USEFUL LIVES OF ASSET

Computer software

Installed products

Computers and electronic equipment

Furniture and fixtures

Leasehold improvements

Shorter of useful life or

and electronic equipment

of useful life or lease term

Long-lived assets :

17 unchanged sentences

amortization.

Intangible assets consist of trademarks and trade name, patents, customer relationships, software to be sold or leased, 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 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.

Intangible assets consist of trademarks and trade name, patents, customer relationships, software to be sold or leased,

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.

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.

the evaluation of goodwill for impairment, the Company has the option to perform a qualitative assessment to determine whether further

28 unchanged sentences

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

For the years ended December

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

In connection with the Company’s 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, the Company did not incur an impairment charge.

Product warranties :

Company typically provides a 1 – 5-year warranty on its products.

Estimated future warranty costs are accrued in the

period that the related revenue is recognized.

These estimates are derived from historical data and trends of product reliability

and costs of repairing and replacing defective products.

Estimated future warranty costs are accrued in the period that

the related revenue is recognized.

These estimates are derived from historical data and trends of product reliability and costs of repairing

and replacing defective products.

Research and development :

and development costs are charged to expense as incurred and consists primarily of salaries and related expenses, supplies and contractor

Research and development costs were $ 10,597 , $ 11,058 , and $ 8,964 in 2020, 2021 and 2022, respectively.

and development costs are charged to expense as incurred and consists primarily of salaries and related expenses, supplies and

contractor costs.

Research and development costs were $ 11,429

(as restated), $ 8,472

(as restated), and $ 8,380

in 2021, 2022 and 2023, respectively.

Patent costs :

8 unchanged sentences

investments have a high credit rating.

the years ended December 31, 2022, 2021, and 2020, there were no customers who generated revenues greater than 10% of the Company’s consolidated

total revenues or generated greater than 10 % of the Company’s consolidated accounts receivable.

the years ended December 31, 2023, 2022, and 2021, there were no customers who generated revenues greater than 10 % of the Company’s

consolidated total revenues or generated greater than 10 % of the Company’s consolidated accounts receivable.

Benefit plan :

3 unchanged sentences

The Company did not make any contributions

to the plan during the years ended December 31, 2020 and 2021.

In 2022, the Company contributed $285 to the plan.

to the plan during the year ended December 31, 2021.

In 2022 and 2023, the Company contributed $ 285 and $ 379 , respectively, to the plan.

Severance pay :

liability of the Company’s subsidiaries in Israel for severance pay is calculated pursuant to Israel’s Severance Pay Law

5273-1963 (the “Severance Law”) based on the most recent salary of the employees multiplied by the number of years of

employment as of balance sheet date and are presented on an undiscounted basis.

Employees are

entitled to one month’s salary for each year of employment, or a portion thereof.

The liability for the Company and its

subsidiaries in Israel is fully provided by monthly deposits with insurance policies and by accrual.

The value of these policies is

recorded as an asset in the Company’s balance sheet.

5273-1963 (the “Severance Law”) based on the most recent salary of the employees multiplied by the number of years of employment

as of balance sheet date and are presented on an undiscounted basis.

Employees are entitled to one month’s salary for each year

of employment, or a portion thereof.

The liability for the Company and its subsidiaries in Israel is fully provided by monthly deposits

with insurance policies and by accrual.

The value of these policies is recorded as an asset in the Company’s balance sheet.

deposited funds may be withdrawn only upon the fulfillment of the obligation pursuant to the Severance Law or labor agreements.

7 unchanged sentences

Company accounts for stock-based employee compensation for all share-based payments, including grants of stock options and restricted

stock, as an operating expense based on their fair values on grant date.

stock, as an operating expense based on their fair values on the grant date.

The Company recorded stock-based compensation expense of

$ 4,416 , and $ 4,343 for the years ended December 31, 2020, 2021 and 2022, respectively.

and $ 3,908 for

the years ended December 31, 2021, 2022 and 2023, respectively.

Company estimates the fair value of share-based option awards on the grant date using an option pricing model.

24 unchanged sentences

2023, interest and penalties were immaterial.

The Company elected to account for the U.S.

tax on its Global Intangible Low-Taxed Income (“GILTI”) from

its foreign subsidiaries as a period cost and, therefore included GILTI expense in its effective tax rate calculation.

Fair value of financial instruments :

1 unchanged sentence

The following is a brief description of those levels:

Unadjusted quoted

prices in active markets for identical assets or liabilities

Inputs other than

quoted prices that are observable for the asset or liability, either directly or indirectly.

These include quoted prices for similar

assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not

Unobservable inputs

that reflect the reporting entity’s estimates of market participant assumptions

Unadjusted quoted prices in active markets for identical assets or liabilities

Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.

These include quoted

prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets

that are not active.

Unobservable inputs that reflect the reporting entity’s estimates of market participant assumptions

Company’s cash and cash equivalents and investments in securities are carried at fair value.

4 unchanged sentences

period to maturity of these instruments.

The fair value of the Company’s long term debt is based on observable relevant market

information and future cash flows discounted at current rates, which are Level 2 measurements.

The fair value of the Company’s debt is based on observable relevant market information

and future cash flows discounted at current rates, which are Level 2 measurements.

OF FAIR VALUE OF FINANCIAL INSTRUMENTS

December 31, 2023

Long term debt

Carrying Amount

Advertising and marketing expense :

1 unchanged sentence

Advertising and marketing expense for the years ended December 31, 2021, 2022 and 2023

amounted to $ 1,022 , $ 1,185 , and $ 1,084 , respectively.

amounted to $ 1,185 ,

$ 1,130 (as restated),

and $ 2,300 ,

respectively.

Foreign currency :

15 unchanged sentences

which are included in comprehensive loss in the Consolidated Statement of Changes in Stockholders’ Equity.

currency transaction gains and losses related to operational expenses denominated in a currency other than the functional currency

are included in determining net income or loss.

Foreign currency transaction gains (losses) for the years ended December 31, 2020,

2021 and 2022 of $ 148 ,

and $ ( 847 )

currency transaction gains and losses related to operational expenses denominated in a currency other than the functional currency are

included in determining net income or loss.

Foreign currency transaction gains (losses) for the years ended December 31, 2021, 2022 and

2023 of $ ( 128 ) ,

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

currency transaction gains (losses) related to long-term debt of $ ( 2,137 ) ,

for the years ended December 31, 2020, 2021 and 2022, respectively, are included in interest expense in the Consolidated Statement

of Operations.

Foreign currency

transaction gains (losses) related to long-term debt of $ 810 ,

for the years ended December 31, 2021, 2022 and 2023, respectively, are included in interest expense in the Consolidated Statement of

Commitments and contingencies :

8 unchanged sentences

Recently 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 the standard did not have an 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.

Reclassifications :

prior amounts have been reclassified to conform with the current year presentation for comparative purposes.

These reclassifications

had no effect on the previously reported results of operations.

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.

The Company is evaluating the effect of adopting ASU 2023-07.

December 2023, the FASB issued Accounting Standards Update No.

2023-09, “Income Taxes (Topic 740):

Improvements 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.

ASU 2023-09 is effective for annual periods

beginning after December 15, 2024 on a retrospective or prospective basis.

The Company is 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

This updated standard is effective for fiscal years beginning after December 15, 2022.

The Company adopted ASU No.

on January 1, 2023.

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

[X] Business Combinations

In accordance with ASC 805, Business

Combinations (ASC 805), the Company recognizes 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.

The Company recognizes 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, the Company records adjustments to the assets acquired and liabilities assumed with the

corresponding offset to goodwill or bargain purchase to the extent that it identifies adjustments to the preliminary fair values.

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.

Segment Information :

Company has a single operating and reportable segment.

The Company’s chief operating decision maker is its Chief Executive Officer,

who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance,

and allocating resources.

The Company derives its revenue from the sale of systems and products and from customer SaaS and hosting infrastructure

fees (see Note 17 – Segment Information).

4 – ACQUISITION

March 6, 2023, the Company entered into a share purchase and transfer agreement (the “Movingdots Agreement”) with Swiss Re

Reinsurance Holding Company Ltd (“Swiss Re”), pursuant to which the Company would acquire all of the outstanding shares of

Movingdots GmbH (“Movingdots”), a wholly owned subsidiary of Swiss Re, for consideration consisting of € 1

and the issuance by the Company of a ten-year

warrant to purchase 800,000

shares of the Company’s common stock at

an exercise price of $ 7.00

per share (the “Swiss Re Warrants”)

with fair value of approximately $ 1,347

at March 31, 2023 and noncash consideration in

the form of a nonexclusive irrevocable, perpetual, fully paid-up, royalty free license agreement between Movingdots and Swiss Re for

certain of the acquired intellectual property (the “Movingdots Acquisition”) .

The Movingdots Acquisition was consummated

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

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

became a direct, wholly owned subsidiary of Powerfleet.

Movingdots’ end-to-end telematics app solution will enhance Powerfleet’s

software-as-a-service (“SaaS”)-based fleet intelligence platform, Unity, with additional customization capabilities and insurance

risk insights.

Movingdots’ expertise in safety and sustainability aligns with Unity’s focus on data-powered applications.

The Movingdots Acquisition also strengthens Powerfleet’s global reach, particularly in Europe.

Revenue and net loss of Movingdots since the Movingdots Closing included in the consolidated income statement was $ 523

and $( 3,808 ), respectively.

part of the Movingdots Agreement Swiss Re was also obligated to (i) transfer certain intellectual property rights from Swiss Re to Movingdots,

(ii) enter into a distribution agreement pursuant to which Swiss Re is allowed to promote the Movingdots solutions, and (iii) grant a

license agreement between Swiss Re’s affiliates and Movingdots.

Swiss Re Warrants were valued using the Black-Scholes Model using the following assumptions at the date of issuance:

OF WARRANTS VALUATION ASSUMPTIONS

Expected volatility

Expected term (in years)

Risk free interest rate

Dividend yield

Fair value per share

Warrants measurement input

Price Allocation

Movingdots Acquisition met the criteria for a business combination to be accounted for using the acquisition method under ASC 805,

Business Combinations (“ASC 805”), with the Company identified as the legal and the accounting acquirer.

recognized approximately $ 500

of acquisition-related costs which were expensed in the consolidated statement of operations for the year ended December 31,

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

of Movingdots:

OF PURCHASE PRICE ALLOCATION IN ASSETS ACQUIRED AND LIABILITIES

Consideration:

Fair value of Powerfleet warrants on March 31, 2023

Total consideration

Assets acquired:

Accounts receivable

Prepaid expenses

Total assets acquired

Liabilities assumed:

Accounts payable and accrued expenses

Total liabilities assumed

Total identifiable net assets acquired

Gain on bargain purchase

Purchase price consideration

The fair value estimates of the assets acquired

and liabilities assumed, including fixed assets and accounts payable and accrued expenses, were

subject to adjustments through the initial measurement period.

As of December 31, 2023, the measurement period was complete and an

adjustment of approximately $ 1,500

was recorded to increase the fixed assets above for valuation of intellectual property, internal use software, and adjustments of an approximate $ 300 increase in net assets acquired related primarily to reductions in accounts

payable and accrued expenses.

Adjustments resulted in an increase to the gain on

bargain purchase.

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

The intellectual property was valued using the

replacement method.

Since this asset does not directly generate revenue (i.e., it is intended to support other revenue-generating

assets and its utility is premised on avoided operating costs), the fair value analysis considers the costs that would be incurred

to recreate the intellectual property in the event that the intellectual property did not exist (or the agreement to license the

intellectual property did not exist).

The replacement cost method utilized assumptions on the length of time expected to be incurred

to recreate the intellectual property, the amount and cost of labor plus a 30% obsolescence factor, and 20% estimated developers

All other assets and liabilities acquired, as detailed

in the allocation chart above, were valued at fair value based on their short-term nature.

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

identified, measured and recognized, and performed re-measurements to verify that the consideration paid, assets acquired and

liabilities assumed have been properly valued.

After applying the requirements of ASC 805-30-25-4, the Company recognized a gain on

bargain purchase as the estimated fair value of the identifiable net assets acquired exceeded the purchase consideration transferred

by approximately $ 9,034 .

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

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

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

business, which was deemed a non-core business of Swiss Re on a go-forward basis.

The sale of Movingdots was not subject to a competitive

bidding process.

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

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

the liquidity of Movingdots and for broader combined business activities.

the Company makes an on-sale transfer of any shares of Movingdots that were acquired in connection with the Movingdots Acquisition at

any time between the signing date of the Movingdots Agreement and through 12 months after the Movingdots Closing, to any third-party

purchaser (an “on-sale transfer”), for an amount that is in excess of the purchase price consideration transferred, then

the Company shall pay Swiss Re an amount in cash (“on sale compensation”) equal to (i) €8,000, plus (ii) the difference

between such on-sale transfer price less the purchase price net of the net present value of the Swiss Re Warrants.

The Company does not

currently intend to enter into an on-sale transfer.

views that the insurance telematics and sustainability are important spaces for the Company to have propositions to enable future

strategic value, supporting the more evolved, IOT data-rich mass subscription space.

The acquisition of Movingdots and its business

will, among other things:

strategic relationships with some key customers such as Mercedes, BMW and Vodafone;

greater go-to-market opportunity to the Company with the European beachhead for future regional expansion, customer acquisition tool

to upsell the Company’s portfolio into German and European markets, and maintain a distribution channel and partnership with Swiss Re;

the Company with access to a team with technical skillsets across application development and management, cloud platform development,

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

following table represents the unaudited combined pro forma revenue and earnings for the annual periods ended December 31, 2022 and

OF PRO FORMA REVENUE AND EARNINGS

Year Ended December 31, 2022

Historical (as restated)

Pro forma combined

Operating loss

Net loss per share – basic and diluted

Net loss per share - basic

Year Ended December 31, 2023

Pro forma combined

Operating loss

Net loss per share – basic and diluted

Net loss per share - basic

unaudited combined pro forma revenue and earnings for the annual periods ended December 31, 2022 and 2023 were prepared as though

the Movingdots Acquisition had occurred as of January 1, 2022.

This summary is not necessarily indicative of what the results of

operations would have been had the Movingdots Acquisition occurred as of such date, nor does it purport to represent results of

operations for any future periods.

5 – REVENUE RECOGNITION

Company and its 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 the Company expects to receive in exchange for transferring goods or providing services.

Sales, value add, and other taxes the Company collects concurrently with revenue-producing activities are excluded from revenue.

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

The expected costs associated with the Company’s

base warranties continue to be recognized as expense when the products are sold (see Note 11).

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

Product sales are recognized

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

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

For products which do

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

a bundled performance obligation.

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

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

asset, respectively.

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

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

Company recognizes 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.

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

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

Company also derives 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.

Company’s 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.

Company recognizes 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.

Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one

year or less and (ii) contracts for which the Company recognizes revenue at the amount to which the Company has the right to invoice

for services performed.

following table presents the Company’s revenues disaggregated by revenue source for the years ended December 31, 2021, 2022 and

SCHEDULE OF REVENUE DISAGGREGATED BY REVENUE SOURCE

OF REVENUE DISAGGREGATED BY REVENUE SOURCE

Year Ended December 31,

2021 (as restated)

2022 (as restated)

balances of contract assets and contract liabilities from contracts with customers are as follows as of December 31, 2022 and 2023 are

OF DEFERRED REVENUE

OF CONTRACT ASSETS AND CONTRACT LIABILITIES FROM CONTRACTS WITH CUSTOMERS

Year Ended December 31,

Deferred contract costs

Deferred costs

2022 (as restated)

Deferred contract cost

Deferred cost

Deferred revenue – services (1)

Deferred revenue – products (1)

Deferred revenue

Deferred revenue – current portion

Deferred revenue – long term

The Company records deferred

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

For the years ended December 31, 2021

and 2022, the Company recognized revenue of $ 10,249 and $ 4,215 , respectively, that was included in the deferred revenue balance at

the beginning of each reporting period.

The Company expects to recognize as revenue before year 2027, when it transfers those goods

and services and, therefore, satisfies its performance obligation to the customers.

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

years ended December 31, 2022 and 2023, the Company recognized revenue of $ 5,929

(as restated) and $ 6,046 ,

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

The Company expects to

recognize as revenue through year 2028, when it transfers those goods and services and, therefore, satisfies its performance

obligation to the customers.

6 – PREPAID EXPENSES AND OTHER ASSETS

1 unchanged sentence

OF PREPAID EXPENSES AND OTHER CURRENT ASSETS

Year Ended December 31,

December 31, 2022 (as restated)

December 31, 2023

Sales-type lease receivables, current

2 unchanged sentences

Other current assets

Prepaid expenses and other

current assets

5 - INVENTORIES

which primarily consists of finished goods and components used in the Company’s products, is stated at the lower of cost or

net realizable value using the “moving average” cost method or the first-in first-out (FIFO) method.

Inventory is shown

net of a valuation reserve of $ 260

at December 31, 2021 and $ 453

at December 31, 2022.

Prepaid expenses and other current

7 – INVENTORY

which primarily consists of finished goods and components used in the Company’s products, is stated at the lower of cost or net

realizable value using the “moving average” cost method or the first-in first-out (FIFO) method.

Inventory is shown net of

a valuation reserve of $ 453 at December 31, 2022 and $ 524 at December 31, 2023.

consist of the following:

OF INVENTORIES

Year Ended December 31,

December 31, 2022

December 31, 2023

Work in process

4 unchanged sentences

OF FIXED ASSETS

Year Ended December 31,

December 31, 2022

Installed products

5 unchanged sentences

and amortization expense for the years ended December 31, 2021, 2022 and 2023 was $ 3,399 ,

and $ 3,183 ,

respectively.

This includes amortization of costs associated with computer software for the years ended December 31, 2020, 2021 and

2022 of $ 515 ,

and $ 3,876 , respectively.

This includes amortization of costs associated with computer software for the years ended December 31,

2021, 2022 and 2023 of $ 426 ,

respectively.

9 – INTANGIBLE ASSETS AND GOODWILL

Beginning in 2022, the Company began to capitalize software costs for software

to be sold, marketed, or leased to customers.

incurred internally in researching and developing software products are charged to expense until technological feasibility has been established

for the product.

Once technological feasibility is established, software costs are capitalized until the product is available for general

release to customers.

in 2022, the Company began to capitalize software costs for software to be sold, marketed, or leased to customers.

Costs incurred internally

in researching and developing software products are charged to expense until technological feasibility has been established for the product.

Once technological feasibility is established, software costs are capitalized until the product is available for general release to customers.

Judgment is required in determining when technological feasibility of a product is established.

The amortization

of these costs will be included in cost of revenue over the estimated life of the products.

The amortization of these costs will

be included in cost of revenue over the estimated life of the products.

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

SCHEDULE OF INTANGIBLE ASSETS

OF INTANGIBLE ASSETS

December 31, 2023

Useful Lives (In Years)

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Gross Carrying

Customer relationships

Trademark and tradename

Favorable contract interest

Covenant not to compete

Software to be sold or leased

1 unchanged sentence

Trademark and tradename

Lives (In Years)

Carrying Amount

December 31, 2022

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Customer relationships

Trademark and tradename

Favorable contract interest

Covenant not to compete

Software to be sold or leased

Customer list

Trademark and tradename

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

If there is a lack

of recovery or further global softening in certain markets, or a sustained decline in the value of the Company’s common stock,

the Company may conclude that indicators of impairment exist and would then be required to calculate whether or not an impairment exists

for its goodwill, other intangibles, and long-lived assets, the results of which could result in material impairment charges.

tests goodwill and other indefinite lives intangible assets on an annual basis in the fourth quarter and more frequently if the Company

believes indicators of impairment exists.

As of December 31, 2021 and 2022, the Company determined that no impairment existed to the

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

December 31, 2023, the weighted-average amortization period for the intangible assets was 8.6 years.

At December 31, 2022, the weighted-average

amortization periods for customer relationships, trademarks and trade names, patents, technology, and capitalized software to be sold

or leased were 11.9 , 9.6 , 7.0 , 4.3 , and 3.0 years, respectively.

expense for the years ended December 31, 2020, 2021 and 2022 was $ 5,328 , $ 5,154 , and $ 5,079, respectively.

Estimated future amortization

expense for each of the five succeeding fiscal years for these intangible assets is as follows:

At December 31, 2023, the weighted-average amortization periods for customer relationships, trademarks and trade names, patents,

technology, and capitalized software to be sold or leased were 11.9 ,

years, respectively.

expense for the years ended December 31, 2021, 2022 and 2023 was $ 5,154 ,

and $ 5,569 ,

respectively.

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

SCHEDULE OF FINITE-LIVED INTANGIBLE ASSETS AMORTIZATION EXPENSE

1 unchanged sentence

intangible assets

Company tests 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.

The Company monitors changing business conditions as well as industry and economic

factors, among others, for events which could trigger the need for an interim impairment analysis.

The Company concluded that a sustained

decline in its stock price coupled with continuing losses, represented a triggering event for impairment during the third quarter.

the Company performed an interim quantitative impairment analysis at September 30, 2022 using a market-based and income-based

quantitative assessment utilizing a combination of the (i) the guideline public company method applying revenue

and adjusted EBITDA multiples of similar companies and, (ii) the discounted cash flow method, respectively.

The fair value

determination used in the impairment assessment requires estimates of the fair values based present value or other valuation

techniques or a combination thereof, necessitating subjective judgments and assumptions by management.

These estimates and

assumptions could result in significant differences to the amounts reported if underlying circumstances were to change.

concluded that no impairment relating to goodwill existed at December 31, 2022.

have been no changes in the carrying amount of goodwill from January 1, 2022 to December 31, 2022.

Global uncertainties continue to adversely impact

the broader global economy and have caused significant volatility in financial markets.

If there is a lack of recovery or further global

softening in certain markets, or a sustained decline in the value of the Company’s common stock, the Company may conclude that indicators

of impairment exist and would then be required to calculate whether or not an impairment exists for its goodwill, other intangibles, and

long-lived assets, the results of which could result in material impairment charges.

The Company tests 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.

The Company monitors changing business conditions as well as industry and economic factors, among others, for events which could trigger

the need for an interim impairment analysis.

The Company performed a quantitative

impairment analysis at October 1, 2023 using a market-based and income-based quantitative assessment utilizing a combination of the (i)

the guideline public company method applying revenue multiples of similar companies and, (ii) the discounted cash flow method, respectively.

The fair value determination used in the impairment assessment requires estimates of the fair values based present value or other

valuation techniques or a combination thereof, necessitating subjective judgments and assumptions by management.

These estimates and assumptions

could result in significant differences to the amounts reported if underlying circumstances were to change.

The Company concluded that

no impairment relating to goodwill existed at December 31, 2023.

As of December 31, 2022 and 2023, the Company determined

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

There have been

no changes in the carrying amount of goodwill from January 1, 2023 to December 31, 2023.

10 – STOCK-BASED COMPENSATION

1 unchanged sentence

to which the Company may grant stock options, restricted stock and other equity-based awards with respect to up to an aggregate of 7,500

shares of the Company’s common stock with a vesting period of approximately four

There were 1,349

shares available for future issuance under the 2018 Plan as of December 31, 2022.

shares of the Company’s common stock with a vesting period of approximately four to five years .

There were 2,158 shares available

for future issuance under the 2018 Plan as of December 31, 2023.

2018 Plan is administered by the Compensation Committee of the Company’s Board of Directors, which has the authority to determine,

3 unchanged sentences

on the applicable grant date.

connection with the Company’s acquisition of Pointer, the Company previously approved the grants of options to purchase 350

shares of the Company’s common stock to Chris Wolfe, the Company’s former Chief Executive Officer, and options to purchase 150 shares of the Company’s common stock to

Ned Mavrommatis, the Company’s former Chief Financial Officer, on March 13, 2019 (the “Signing Bonus Options”) and the grants of additional options to purchase 350

shares of the Company’s common stock to Mr.

Wolfe and additional options to purchase 150 shares of the Company’s common

Mavrommatis on October 3, 2019 (the “Closing Bonus Options” and together with the Signing Bonus Options, the

“Original Bonus Options”).

The Original Bonus Options were subject to the terms of the Company’s 2018 Incentive Plan

(the “2018 Plan”), vested upon the attainment of adjusted EBITDA targets for the fiscal years ending December 31, 2020 and

December 31, 2021 and became exercisable 180 days after vesting, subject to acceleration in the event of certain change of control transactions.

The Signing Bonus Options had an exercise price of $ 6.28 per share and the Closing Bonus Options had an exercise price of $ 6.00 per share.

response to the impact of COVID-19, the Board terminated and cancelled the Original Bonus Options and approved the following grants to

replace the Original Bonus Options:

(i) options to purchase 350

shares of the Company’s common stock to

Wolfe and options to purchase 150

shares of the Company’s common stock to

Mavrommatis (the “New Signing Options”), which options are subject to the terms of the 2018 Plan, have an exercise price

per share, and will vest

and become exercisable in full on December 31, 2022 if the volume weighted average price of the Company’s common stock during a

consecutive 30 trading day period (the “30 Day VWAP”) reaches $12.00 at any point prior to December 31, 2022 ,

and (ii) options to purchase 350

shares of the Company’s common stock to

Wolfe and options to purchase 150

shares of the Company’s common stock to

Mavrommatis (the “New Closing Options”), which options are subject to the terms of the 2018 Plan, have an exercise price

per share, and will vest

and become exercisable immediately upon the Company achieving a 30 Day VWAP of $10.00.

the first fiscal quarter of 2022, the Company granted options to purchase 5,960

shares of the Company’s common stock to certain senior managers, including the Company’s executive officers, consisting of

options to purchase 895

shares of common stock with time-based vesting conditions and options to purchase 5,065

shares of common stock with performance-based vesting conditions (which we refer to as “market-based stock options”).

The market-based stock options have an exercise price that range from $ 2.85

the first fiscal quarter of 2022, the Company granted options to purchase 5,960 shares of the Company’s common stock to certain

senior managers, including the Company’s executive officers, consisting of options to purchase 895 shares of common stock with

time-based vesting conditions and options to purchase 5,065 shares of common stock with performance-based vesting conditions (which we

refer to as “market-based stock options”).

The market-based stock options have an exercise price that range from $ 2.85 to

The market-based stock options will vest and become exercisable if the volume weighted average price of the Company’s common

stock during a consecutive 60-day trading period (the “60 Day VWAP”) ranges between $ 10.50

and $ 21.00 .

The Company valued the market-based stock option awards using a Monte Carlo simulation model using a daily price forecast over ten

years until expiration utilizing Geometric Brownian Motion that considers a variety of factors including, but not limited to, the

Company’s common stock price, risk-free rate ( 1.7 %),

and expected stock price volatility ( 51.7 %)

over the expected life of awards ( 10

The weighted average fair value of market-based stock options granted during the period was $ 1.60 .

stock during a consecutive 60-day trading period (the “60 Day VWAP”) ranges between $ 10.50 and $ 21.00 .

The Company valued

the market-based stock option awards using a Monte Carlo simulation model using a daily price forecast over ten years until expiration

utilizing Geometric Brownian Motion that considers a variety of factors including, but not limited to, the Company’s common stock

price, risk-free rate ( 1.7 %), and expected stock price volatility ( 51.7 %) over the expected life of awards ( 10 years).

The weighted average

fair value of market-based stock options granted during the period was $ 1.60 .

the year ended December 31, 2023, the Company granted options to purchase 1,335 shares of the Company’s common stock to certain senior managers, including the Company’s executive officers, consisting of options

to purchase 470 shares of common stock with time-based vesting conditions and options to purchase 865 shares of common stock with performance-based

vesting conditions (which we refer to as “market-based stock options”).

The market-based stock options will vest and become

exercisable if the volume weighted average price of the Company’s common stock during a consecutive 60-day trading period (the

“60 Day VWAP”) reaches $ 12.00 .

The Company valued the market-based stock option awards using a Monte Carlo simulation model

using a daily price forecast over ten years until expiration utilizing Geometric Brownian Motion that considers a variety of factors

including, but not limited to, the Company’s common stock price, risk-free rate ( 3.7 %), and expected stock price volatility ( 50 %)

over the expected life of awards ( 5.1 years).

The weighted average fair value of market-based stock options granted during the year was

the year ended December 31, 2023, the Company granted 1,247

shares of restricted stock to certain senior managers, including the Company’s executive officers, which vest in four equal

installments over a four-year period, provided that the executive is employed by the Company on each scheduled vesting date.

grants included (i) a grant of 900

shares of restricted stock to Steve Towe, the Company’s Chief Executive Officer, which vests over four equal installments over

a four-year period, provided that the Mr.

Towe is employed by the Company on each scheduled vesting date, and (ii) grants of 82

shares of restricted stock to certain members of the board of directors, which vest in full on the first anniversary of the date of

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

Stock options:

summary of the status of the Company’s stock options, relating to the Company’s market-based stock options that were

granted to certain senior managers, including the Company’s executive officers, as of December 31, 2020, 2021 and 2022 and

changes during the years then ended, is presented below:

summary of the status of the Company’s stock options, relating to the Company’s market-based stock options that were granted

to certain senior managers, including the Company’s executive officers, as of December 31, 2021, 2022 and 2023 and changes during

the years then ended, is presented below:

SCHEDULE OF STOCK OPTIONS ACTIVITY

Number of Shares

Weighted- Average Exercise Price

Exercise Price

Number of Shares

Weighted- Average Exercise Price

Exercise Price

Number of Shares

Weighted- Average Exercise Price

Exercise Price

Outstanding at beginning of year

Share-based payments assumed

Forfeited or expired

1 unchanged sentence

Exercisable at end of year

following table summarizes information about stock options, relating to the market-based stock options that were granted to certain

senior managers, including the Company’s executive officers, at December 31, 2022.

following table summarizes information about stock options relating to the market-based stock options that were granted to certain senior

managers, including the Company’s executive officers, at December 31, 2023.

SUMMARY OF STOCK OPTION INFORMATION BY EXERCISE PRICE RANGE

9 unchanged sentences

$ 7.49 - $ 11.98

summary of the status of the Company’s stock options, excluding the market-based stock options that were granted to certain

senior managers, including the Company’s executive officers, as of December 31, 2020, 2021 and 2022 and changes during the

years then ended, is presented below:

$ 11.99 - $ 16.48

$ 16.49 - $ 21.00

summary of the status of the Company’s stock options, excluding the market-based stock options that were granted to certain senior

managers, including the Company’s executive officers, as of December 31, 2021, 2022 and 2023 and changes during the years then

ended, is presented below:

SCHEDULE OF STOCK OPTIONS ACTIVITY

Number of Shares

Weighted- Average Exercise Price

Number of Shares

Weighted- Average Exercise Price

Number of Shares

Weighted- Average Exercise Price

Outstanding at beginning of year

Share-based payments assumed

Forfeited or expired

Outstanding at end of year

Exercisable at end of year

following table summarizes information about stock options, excluding the market-based stock options that were granted to certain

senior managers, including the Company’s executive officers, at December 31, 2022.

Exercise Price

at beginning of year

at end of year

SUMMARY OF STOCK OPTION INFORMATION BY EXERCISE PRICE RANGE

7 unchanged sentences

Weighted - Average Exercise Price

$ 2.98 - $ 4.23

$ 4.24 - $ 5.48

$ 5.49 - $ 6.73

$ 6.74 - $ 7.96

SCHEDULE OF OPTIONS OUTSTANDING AND EXERCISABLE

1 unchanged sentence

Intrinsic Value

Contractual Life

Weighted - Average

Remaining Contractual

Life in Years

Options outstanding

5 unchanged sentences

Expected volatility

Expected life of options

Expected life of options (years)

Risk free interest rate

Dividend yield

Weighted-average fair value of options granted during year

Weighted-average fair value of options granted during the year

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

3 unchanged sentences

fair value of options vested during the years ended December 31, 2021, 2022 and 2023 was $ 1,201 , $ 869 , and $ 931 , respectively.

total intrinsic value of options exercised during the years ended December 31, 2020, 2021 and 2022 was $ 313 , $ 483 , and $ 0 , respectively.

intrinsic value of options exercised during the years ended December 31, 2021, 2022 and 2023 was $ 483 , $ 0 , and $ 9 , respectively.

of December 31, 2023, there was $ 1,342 of total unrecognized compensation costs related to non-vested options granted under the Company’s

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

That cost is expected to be recognized

over a weighted-average period of 2.98 years.

As of December 31, 2022, there was $ 6,007 of total unrecognized compensation costs related

to non-vested options granted under the Company’s stock option plans for the market-based stock options that were granted to certain

senior managers, including the Company’s executive officers.

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

executive officers.

That cost is expected to be recognized over a weighted-average period of 2.41 years.

of December 31, 2023, there was $ 4,655 of total unrecognized compensation costs related to non-vested options granted under the Company’s

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

That cost is expected to be recognized over a weighted-average period of 3.13 years.

Company estimates forfeitures at the time of valuation and reduces expense ratably over the vesting period.

9 unchanged sentences

SCHEDULE OF NON-VESTED RESTRICTED STOCK ACTIVITY

Non-Vested Shares

Number of Non-Vested Shares

Weighted- Average

Grant Date Fair Value

Non-vested, at January 1, 2020

Non-vested, January 1, 2021

Forfeited or expired

Non-vested, at December 31, 2020

Non-vested, December 31, 2021

Forfeited or expired

Non-vested, at December 31, 2021

Non-vested, December 31, 2022

Forfeited or expired

Non-vested, at December 31, 2022

Non-vested, December 31, 2023

the years ended December 31, 2021, 2022 and 2023, the Company recorded $ 2,529 , $ 1,347 , and $ 1,196 , respectively, of stock-based compensation

expense in connection with the restricted stock grants.

As of December 31, 2022, there was $ 2,284 of total unrecognized compensation cost

related to non-vested shares.

As of December 31, 2023, there was $ 3,349 of total unrecognized compensation

cost related to non-vested shares.

That cost is expected to be recognized over a weighted-average period of 3.03 years.

4 unchanged sentences

SCHEDULE OF NON-VESTED RESTRICTED STOCK ACTIVITY

Number of Restricted Stock Units

Weighted - Average Grant Date Fair Value

Pointer share-based payments assumed

Weighted-Average

Restricted stock-units, non-vested, January 1, 2021

Forfeited or expired

10 unchanged sentences

Basic and diluted loss per share

Net loss attributable to common stockholders

21 unchanged sentences

12 – SHORT-TERM BANK DEBT AND LONG-TERM DEBT

OF LONG TERM DEBT

Year Ended December 31,

SCHEDULE OF LONG-TERM DEBT

Short-term bank debt

1 unchanged sentence

Long-term debt - less current maturities

connection with the Transactions, PowerFleet Israel incurred NIS

denominated debt in term loan borrowings on the Closing Date under the Credit Agreement, pursuant to which Hapoalim agreed to

provide PowerFleet Israel with two senior secured term loan facilities in an initial aggregate principal amount of $ 30,000

(comprised of two facilities in the aggregate principal amount of $ 20,000

connection with the Pointer Merger, Powerfleet Israel incurred NIS denominated debt in term loan borrowings on the October 3, 2019 under the Prior Credit Agreement, pursuant to which Hapoalim agreed to provide Powerfleet Israel with

two senior secured term loan facilities in an initial aggregate principal amount of $ 30,000

(comprised of two facilities in the aggregate

principal amount of $ 20,000

and $ 10,000 ,

respectively (the “Term A Facility” and “Term B Facility”, respectively, and collectively, the “Term

Facilities”)) and a five-year revolving credit facility (the “Revolving Facility”) to Pointer denominated in NIS

in an initial aggregate principal amount of $ 10,000

(collectively, the “Credit Facilities”).

As of December 31, 2022, the Company borrowed NIS 20,091 or $ 5,709 ,

under the Revolving Facility.

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

The indicative interest rate provided for the Term

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

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

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

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

availability under the Revolving Facility .

The Credit Facilities are secured by the shares held by PowerFleet Israel in Pointer and by

Pointer over all of its assets.

The original Credit Agreement includes customary representations, warranties, affirmative covenants,

negative covenants (including the following financial covenants, tested quarterly:

respectively (the “Prior Term A Facility” and “Prior Term B Facility”, respectively, and collectively, the “Prior

Term Facilities”)) and a five-year revolving credit facility (the “Prior Revolving Facility”) to Pointer denominated

in NIS in an initial aggregate principal amount of $ 10,000

(collectively, the “Prior Credit Facilities”).

As of December 31, 2023, the Company borrowed NIS 4,915

under the Prior Revolving Facility.

The available balance at December 31, 2023 was approximately $ 4,800 .

Prior Credit Facilities were scheduled to mature on October

The indicative interest rate provided

for the Prior Term Facilities in the Prior Credit Agreement was approximately 4.73 %

for the Prior Term A Facility and 5.89 %

for the Prior Term B Facility.

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

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

The interest rate at December 31, 2023 was 7.53 %.

In addition, the Company agreed to pay a 1% commitment fee on the unutilized and uncancelled availability under the Prior Revolving Facility .

The Prior Credit Facilities were secured by the shares held by Powerfleet Israel in Pointer and by Pointer over all of its assets.

Prior Credit Agreement included customary representations, warranties, affirmative covenants, negative covenants (including the following

financial covenants, tested quarterly:

Pointer’s net debt to EBITDA;

net debt to working capital;

minimum equity of PowerFleet Israel;

Pointer’s net debt to working capital;

minimum equity

of Powerfleet Israel;

Powerfleet Israel equity to total assets;

PowerFleet Israel net debt

and Pointer EBITDA to current payments and events of default.

August 23, 2021, PowerFleet Israel and Pointer (the “Borrowers”) entered into an amendment (the “Amendment”),

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

The Amendment memorializes the agreements between the Borrowers

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

Pursuant to the Amendment, commencing as of November

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

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

The Amendment also provides, among other things, for

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

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

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

levels to Pointer’s EBITDA.

The Company is in compliance with the covenants as of December 31, 2022.

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

For the years ended December 31, 2020, 2021,

and 2022 the Company recorded $ 31 , $ 290 , and $ 215 respectively, of amortization of the debt issuance costs.

The Company recorded charges

of $ 1,451 , $ 1,078 , and $ 824 to interest expense on its consolidated statements of operations for the years ended December 31, 2020, 2021

and 2022 related to interest expense associated with the Credit Facilities.

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

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

The New Revolver will be available for a period

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

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

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

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

Pointer has a one-year $ 1,000 revolving credit facility available for use with Discount Bank, which renews annually,

subject to the bank’s approval.

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

Bank as of December 31, 2022.

maturities of the long-term debt as of December 31, 2022 are as follows:

OF MATURITIES OF LONG TERM DEBT

Year ending December 31:

Long Term debt

Current Portion

Term B Facility is not subject to amortization over the life of the loan and instead the original principal amount is to be due in one

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

Powerfleet Israel net debt to EBITDA;

and Pointer EBITDA to current payments

and events of default.

August 23, 2021, Powerfleet Israel and Pointer (the “Borrowers”) entered into an amendment (the

“Amendment”), effective as of August 1, 2021, to the Prior Credit Agreement with Hapoalim.

The Amendment memorialized

the agreements between the Borrowers and Hapoalim regarding a reduction in the interest rates of the two Prior Term Facilities.

Pursuant to the Amendment, commencing as of November 12, 2020, the interest rate with respect to the Prior Term A Facility was

reduced to a fixed rate of 3.65 %

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

The Amendment also provided, among other things, for (i) a reduction in the credit allocation fee on undrawn and

uncancelled amounts of the Prior Revolving Facility from 1 %

per annum, (ii) removal of the requirement that Powerfleet Israel maintain $ 3,000

on deposit in a separate reserve fund, and (iii) modifications to certain of the affirmative and negative covenants, including a

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

The Company was in compliance

with the covenants as of December 31, 2023.

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

For the years ended December 31, 2021, 2022, and 2023, the Company recorded $ 290 ,

respectively, of amortization of the debt issuance costs.

The Company recorded charges of $ 1,078 ,

to interest expense on its consolidated statements of operations for the years ended December 31, 2021, 2022 and 2023 related to

interest expense associated with the Prior Credit Facilities.

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

with Hapoalim.

The Third Amendment provided for, among other things, an additional revolving credit facility to Pointer denominated

in NIS in an initial aggregate principal amount of $ 10

million (the “Second Revolver”).

The Second Revolver was available for a period of one month, commencing on October 31,

2022, and continued to be available for successive one-month periods until the Company’s entry into the A&R Credit

As of December 31, 2023, the Company borrowed NIS 31,464 ,

under the Second Revolver.

The interest rate at December 31, 2023 was 7.97 %.

The available balance at December 31, 2023 was $ 1,325 .

See Note 20 (Subsequent Events) for additional information regarding the debt of the Company, including the A&R Credit Agreement and the Facilities

13 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

1 unchanged sentence

OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Year Ended December 31,

2022 (As restated)

Accounts payable

3 unchanged sentences

Other current liabilities

Accounts payable

and accrued expenses

Company’s products are warranted against defects in materials and workmanship for a period of 1-8 years from the date of

acceptance of the product by the customer .

customers may purchase an extended warranty providing coverage up to a maximum of 60 months .

A provision for estimated future

warranty costs is recorded for expected or historical warranty matters related to equipment shipped and is included in accounts

payable and accrued expenses in the Consolidated Balance Sheets as of December 31, 2021 and 2022.

Accounts payable and accrued expenses

Company’s products are warranted against defects in materials and workmanship for a period of 1-8 years from the date of acceptance

of the product by the customer .

The customers may purchase an extended warranty providing coverage up to a maximum of 60 months .

for estimated future warranty costs is recorded for expected or historical warranty matters related to equipment shipped and is included

in accounts payable and accrued expenses in the Consolidated Balance Sheets as of December 31, 2022 and 2023.

following table summarizes warranty activity during the years ended December 31, 2022 and 2023:

5 unchanged sentences

Expiration of warranties

Accrued warranty reserve, end of period (a)

Includes accrued warranty included

in other long-term liabilities at December 31, 2021 and 2022 of $ 187 and $ 157 , respectively.

Accrued warranty reserve, end of year (a)

accrued warranty included in other long-term liabilities at December 31, 2022 and 2023 of $ 1,309

(as restated) and $ 1,688 ,

respectively.

Company determines whether an arrangement is a lease at inception.

Company has operating leases for office space and office equipment.

The Company’s leases have remaining lease terms of one year

to seven years , some of which include options to extend the lease term for up to five years .

The Company’s leases have remaining lease terms of one

years, some of which include options

to extend the lease term for up to five years .

Right-of-use (“ROU”) assets represent

the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation

to make lease payments arising from the lease.

Operating lease ROU assets and operating lease liabilities are recognized at the lease

commencement date based on the present value of the future lease payments over the lease term.

The operating lease ROU asset also includes

any lease payments made in advance of lease commencement and excludes lease incentives.

The lease terms used in the calculations of the

operating ROU assets and operating lease liabilities include options to extend or terminate the lease when the Company is reasonably certain

that it will exercise those options.

Lease expense for lease payments is recognized on a straight-line basis over the lease term.

As the Company’s leases do not provide an implicit

rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present

value of lease payments.

The Company has lease agreements with lease and non-lease

components, which are generally not accounted for separately.

Company has lease agreements which are classified as short-term in nature.

These leases meet the criteria for operating lease classification.

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

consolidated statements of operations during years ended December 31, 2020, 2021, and 2022.

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

consolidated statements of operations.

of lease expense are as follows:

OF COMPONENTS OF LEASE EXPENSE

December 31, 2021

December 31, 2022

Year Ended December 31,

Short term lease cost:

1 unchanged sentence

OF CASH FLOW INFORMATION AND NON CASH ACTIVITY OF OPERATING LEASES

December 31, 2021

December 31, 2022

Year Ended December 31,

Non-cash activity:

12 unchanged sentences

Present value of lease liabilities

13 - STOCKHOLDERS’ EQUITY

15 – CONVERTIBLE REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’

Public Offering:

2 unchanged sentences

and commissions and other offering expenses.

ATM Offering:

2020, we entered into an equity distribution agreement (the “Sales Agreement”) with Canaccord, pursuant to which we could

offer and sell, from time to time through an “at-the-market offering” program, with Canaccord as sales agent, shares

of our common stock having an aggregate offering price of up to $ 25,000 .

The Sales Agreement provided for the Company to pay Canaccord

a commission of 3.0 % of the aggregate gross proceeds from each sale of common stock occurring pursuant to the Sales Agreement.

offer and sale of common stock in the ATM Offering were made pursuant to the Company’s shelf registration statement on Form

S-3 that was declared effective by the SEC on November 27, 2019, the base prospectus contained therein dated November 27, 2019, and

a prospectus supplement related to the ATM Offering dated May 14, 2020.

The Company sold 810 shares of common stock through Canaccord

under the Sales Agreement, received net proceeds from such sales of $ 4,000 , and paid Canaccord $ 125 in commissions with respect to

sales of common stock under the Sales Agreement.

The Sales Agreement was terminated effective as of August 14, 2020.

Redeemable Preferred stock:

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

A Preferred Stock and 50 shares are undesignated.

Convertible Redeemable Preferred Stock:

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

Stock and 50 shares are undesignated.

A Preferred Stock

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

shares of Series A Preferred Stock to ABRY Senior

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

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

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

(the “Investors”).

the year ended December 31, 2021 and December 31, 2022, the Company issued - 0 -

additional shares of Series A Preferred Stock.

Series A Preferred Stock has a liquidation preference equal to the greater of (i) the original issuance price of $ 1,000.00 per share,

subject to certain adjustments (the “Series A Issue Price”), 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 common stock immediately prior to such liquidation .

For the years ended December 31, 2022 and December 31, 2023, the Company issued 4 and 1 additional shares of Series A Preferred Stock.

OF PREFERRED CONVERTIBLE REDEEMABLE PREFERRED STOCK

Number of Shares

Balance at January 1, 2021

Dividend paid in kind shares issued

Accretion of preferred stock

Balance at December 31, 2021

Dividend paid in kind shares issued

Accretion of preferred stock

Balance at December 31, 2022

Dividend paid in kind shares issued

Accretion of preferred stock

Balance at December 31, 2023

Series A Preferred Stock has a liquidation preference equal to the greater of (i) the original issuance price of $ 1,000.00

per share, subject to certain adjustments (the “Series A Issue Price”), 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 common stock immediately prior to such liquidation .

As of December 31, 2023, the Series A Preferred Stock had a liquidation preference of $ 30,091 calculated in accordance

with clause (i) above.

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

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

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

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

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

Commencing on the 66-month anniversary of the date

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

anniversary thereafter, the dividend rate will increase by 100 basis points, until the dividend rate reaches 17.5 % per annum, subject

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

and Restated Certificate of Incorporation (the “Charter”).

During the years ended December 31, 2020, 2021 and December

31, 2022, the Company paid dividends in the amounts of $ 3,927 , $ 4,112 and $ 4,231 shares respectively, to the holders of the Series

A Preferred Stock.

As of December 31, 2021, and December 31, 2022, dividends in arrears were $- 0 - and $- 0 - respectively.

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

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

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

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

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

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

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

of Incorporation (the “Charter”).

The following table summarizes the dividend paid activity for the years ended December

31, 2021, 2022, and 2023:

OF DIVIDEND PAID ACTIVITY

paid in shares

Year Ended December 31, 2021

Year Ended December 31, 2022

Year Ended December 31, 2023

of December 31, 2022 and December 31, 2023, dividends in arrears were $- 0 -

respectively.

Consent Rights

36 unchanged sentences

at any time (i) after 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 Redemption Price.

June 9, 2021, the Company entered into a preferred stock redemption right agreement (the “Redemption Right Agreement”)

with the Investors, pursuant to which the Company had the right to redeem 10 shares of Series A Preferred Stock at a price of $ 1,450

per share plus all accrued and unpaid dividends, to be paid in cash.

The Company did not exercise its redemption right and the Redemption

Right Agreement automatically terminated on October 1, 2021.

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 Redemption Price.

The Company classifies its Series A Preferred

Stock outside of stockholders’ equity as the redemption of such shares is outside the Company’s control.

adjusts the carrying values of the Series A Preferred Stock to redemption value to the earliest redemption date using the effective

interest rate method.

Concurrently with the closing of the MiX Combination on April 2,2024, the Company redeemed in full all of the

outstanding shares of the Series A Preferred Stock (see Note

20, Subsequent Events).

16 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

7 unchanged sentences

Unrealized gain (losses) on investments

Accumulated other comprehensive income

Accumulated other comprehensive income (loss)

Balance at January 1, 2021

7 unchanged sentences

Company operates in one reportable segment, wireless IoT asset management.

The following table summarizes revenues on a percentage basis

by geographic region.

The following table summarizes revenues by geographic region.

OF REVENUES AND LONG LIVED ASSETS BY GEOGRAPHICAL REGION

Year Ended December 31,

2021 (as restated)

2022 (as restated)

United States

Year Ended December 31,

Long lived assets by geographic region:

3 unchanged sentences

OF LOSS BEFORE INCOME TAXES

Year Ended December 31,

2021 (As restated)

2022 (As restated)

Foreign operations

Net loss before income

provision for income taxes consists of the following:

Loss before income

provision for income taxes consists of the following for the years ended December 31:

OF PROVISION FOR INCOME TAXES

Year Ended December 31,

Total Current Income

Tax Expense (Benefit)

Total Deferred Income

Tax Expense (Benefit)

(As restated)

Total current provision

Total deferred provision

Total (benefit) provision for income taxes

difference between income taxes at the statutory federal income tax rate and income taxes reported in the Consolidated Statements of

Operations is attributable to the following:

Operations for the years ended December 31 is attributable to the following:

OF STATUTORY FEDERAL INCOME TAX RATE

Year Ended December 31,

(As restated)

Income tax benefit at the federal statutory rate

State and local income taxes, net of federal taxes

Increase (decrease) in valuation allowance

(Decrease) increase in valuation allowance

Remeasurement of deferred tax adjustments

2 unchanged sentences

GILTI inclusion

Income tax benefit

Acquisition fees

Income tax expense

tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at

1 unchanged sentence

OF DEFERRED TAX ASSETS AND LIABILITIES

Year Ended December 31,

Deferred tax assets:

Net operating loss carryforwards

Capital loss carryforwards

December 31, 2022

(As restated)

operating loss carryforwards

carryforwards

Deferred revenue

Stock-based compensation

Federal research and development tax credits

Capitalized research

Federal research

and development tax credits

Bad debt reserve

Deferred lease liability

Other deductible temporary differences

Total gross deferred tax assets

valuation allowance

Deferred tax assets, net

of valuation allowance

Deferred tax liabilities:

Deferred lease

deductible temporary differences

Acquisition costs

deferred tax assets

Intangible amortization

Fixed assets, depreciation

Total deferred tax liabilities

Net deferred tax (liabilities)/assets

reconciliation of the beginning and ending amount of unrecognized tax positions is as follows:

deferred tax liabilities

reconciliation of the beginning and ending amount of unrecognized tax positions is as follows as of December 31:

SCHEDULE OF UNRECOGNIZED TAX POSITIONS

Year Ended December 31,

2022 (As restated)

Balance at the beginning of the year

Additions based on tax provisions taken related to current year

Reductions related to expiration of statute of limitations

Balance at the end of year

2 unchanged sentences

significant changes to its unrecognized tax positions during the next twelve months.

December 31, 2022, the Company had an aggregate net operating loss carryforward of approximately $ 78,285 for U.S.

December 31, 2023, the Company had an aggregate net operating loss carryforward of approximately $ 78,675

federal income tax purposes.

At December 31, 2023, the Company had an aggregate net operating loss carryforward of approximately $ 39,263

for state income tax purposes and a foreign net operating loss carryforward of approximately $ 31,868 .

for state income tax purposes and

a foreign net operating loss carryforwards of approximately $ 29,020 .

Substantially all of the net operating loss carryforwards expire from 2024 through 2037 for pre-2018 federal net operating loss carryforwards

10 unchanged sentences

of its net operating loss carryforwards under the same Internal Revenue Code provision.

December 31, 2022, the Company has New Jersey net operating loss carryforwards (“NJ NOLs”) included above in the

approximate amount of $ 5,006

expiring through 2041, which are available to reduce future earnings which would otherwise be subject to state income

December 31, 2023, the Company has New Jersey net operating loss carryforwards (“NJ NOLs”) included above in the approximate

amount of $ 8,567 expiring through 2043, which are available to reduce future earnings which would otherwise be subject to state income

Company is asserting permanent reinvestment of all accumulated undistributed earnings of its foreign subsidiaries as of December 31,

2023 in excess of annual debt service costs requirements.

the year ended December 31, 2022, the Company’s valuation allowance decreased to $ 43,654

compared to $ 44,228 as of

December 31, 2021 primarily due to utilization of the net operating losses.

The Company has provided a valuation allowance against

the full amount of its domestic deferred tax assets and the majority of the foreign deferred tax assets.

The valuation allowance was

established because of the uncertainty of realization of the deferred tax assets due to lack of sufficient history of generating

taxable income.

Realization is dependent upon generating sufficient taxable income prior to the expiration of the net operating loss

carryforwards in future periods.

The valuation decreased in 2021 and 2022 by $ 1,842 ,

respectively.

the year ended December 31, 2023, the Company’s valuation allowance increased to $ 44,780 ,

compared to $ 43,692 (as restated) as

of December 31, 2022 primarily due to the increase of net operating losses and other timing differences.

The Company has provided a

valuation allowance against the full amount of its domestic deferred tax assets and the majority of the foreign deferred tax assets.

The valuation allowance was established because of the uncertainty of realization of the deferred tax assets due to lack of

sufficient history of generating taxable income.

Realization is dependent upon generating sufficient taxable income prior to the

expiration of the net operating loss carryforwards in future periods.

The valuation decreased in 2022 by $ 1,333 and

increased in 2023 by $ 1,088 .

for federal income tax returns are closed for the years through 2019.

7 unchanged sentences

tax returns are generally subject to examination based on the tax laws of the respective jurisdictions.

August 16, 2022, the President of the United States signed into law H.R.

5376, commonly referred to as the Inflation Reduction Act of

2022 (the “IRA”).

The IRA is federal legislation designed to raise revenue from, among other things, the imposition of certain

corporate tax measures, while authorizing spending on energy and climate change initiatives and subsidizing the Affordable Care Act.

The IRA also introduced a 1 % excise tax on certain corporate stock buybacks, which would impose a nondeductible 1% excise tax on the

fair market value of certain stock that is “repurchased” during the taxable year by a publicly traded U.S.

corporation or

acquired by certain of its subsidiaries.

The passage of the IRA did not have a material impact to the Company nor its calculated AETR

as of December 31, 2023.

August 9, 2022, the President of the United States signed into law H.R.

4346, “The CHIPS and Science Act of 2022.” CHIPS

is a federal statue providing funding for research and domestic production of semiconductors.

Additional funding can be provided through

CHIPS to various federal agencies as well as towards climate science research.

Tax measures include a 25% advanced investment tax credit

for certain investments in semiconductor manufacturing.

The passage of the CHIPS and Science Act did not have a material impact to the

Company nor its calculated AETR as of December 31, 2023.

19 - COMMITMENTS AND CONTINGENCIES

28 unchanged sentences

remaining claim after this administrative decision is $ 226 .

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

Tax Administrative Court.

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

costs will arise in respect to these claims.

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

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

in respect to these claims.

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

4 unchanged sentences

On April 19, 2022, Pointer Mexico filed an appeal for revocation of the assessment.

May 3, 2022, Pointer Mexico filed additional evidence before the MTS.

On January 24, 2023, the MTS resolved the administrative revocation

appeal, confirming the tax assessment against Pointer Mexico.

Against this last resolution, Pointer Mexico is entitled to appeal before

the Federal Court of Administrative Justice.

The term for the filing of this appeal lapses on March 8, 2023.

Based on the current analysis

of the facts and case, the Company has recorded a provision of $ 238 .

February 24, 2022, Pointer Mexico received a notification for 2016 and 2017 tax assessment in the amounts of $ 268

respectively, regarding the underpayment of VAT and government fees from the MTS.

Under the statute and case law, Pointer Mexico was

entitled to appeal before the MTS or file a lawsuit before the Federal Court of Administrative Justice.

On April 19, 2022, Pointer

Mexico filed an appeal for revocation of the assessment.

On May 2, 2022, Pointer Mexico filed additional evidence before the MTS.

of December 31, 2022, the MTS has not resolved the administrative revocation appeal.

The Company’s legal counsel is of the

opinion that the chance of loss is not probable and for this reason the Company has not made any provision.

On May 3, 2022, Pointer Mexico filed additional evidence

before the MTS.

On January 24, 2023, the MTS resolved the administrative revocation appeal, confirming the tax assessment against Pointer

Against this last resolution, Pointer Mexico is entitled to appeal before the Federal Court of Administrative Justice.

for the filing of this appeal lapses on March 8, 2023.

Based on the current analysis of the facts and case, the Company has recorded

a provision of $ 238 .

20 – SUBSEQUENT EVENTS

March 6, 2023, the Company entered into a definitive share purchase and transfer agreement (the “Agreement”) with Swiss

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

(“Movingdots”), a wholly-owned subsidiary of the Seller, for consideration consisting of € 1

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

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

Under the Agreement, the Seller is required to ensure that Movingdots has available cash and cash equivalents of at least

as of the closing date.

The transaction closed on March 31, 2023.

On February 28, 2024, the Company held a special meeting

of stockholders during which the stockholders approved, among other things, the issuance of shares of common stock of the Company to shareholders

of MiX Telematics pursuant to the Implementation Agreement and an amendment of the Company’s amended and restated certificate of

incorporation to increase the number of authorized shares of common stock from 75 million to 175 million (the “Charter Amendment”).

On March 22, 2024, the Company filed the Charter Amendment with the Secretary of State of the State of Delaware.

On March 7, 2024, the Company entered into the Facilities

Agreement with RMB, pursuant to which RMB agreed to provide the Company with two term loan facilities in an aggregate principal amount

of $ 85 million, comprised of two facilities in the aggregate principal amount of $ 42.5 million and $ 42.5 million, respectively.

of the term loan facilities were used by the Company to redeem all the outstanding shares of the Series A Preferred

Stock and for general corporate purposes.

The Company drew down $85 million in cash under the term loan facilities on March 13, 2024.

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.

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 two facilities 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 two revolvers in the aggregate principal amounts of $ 10

million and $ 10

million, respectively).

Powerfleet Israel drew down $ 30

million in cash under the term loan facilities on March 18, 2024 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.

April 2, 2024, the MiX Combination was consummated, and MiX Telematics became an indirect, wholly owned subsidiary of the Company.

Concurrently with the closing of the MiX Combination, the Company used the net proceeds received from RMB and from incremental

borrowing capacity as a result of the refinancing of credit facilities with Hapoalim to redeem in full for $ 90.3 million for all of

the outstanding shares of the Series A Preferred Stock.

Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.

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 8. Financial Statements and Supplementary Data