Powerfleet, Inc. 10-K

Item 8. Financial Statements and Supplementary Data INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of the Independent Registered Public Accounting Firm - Deloitte & Touche (PCAOB ID No. 1130 ) 50 Report of the Independent Registered Public Accounting Firm - Ernst & Young LLP (PCAOB ID No. 42 ) 53 Consolidated Balance Sheets as of March 31, 2024 and 2025 54 Consolidated Statements of Operations for the Years Ended December 31, 2022 and 2023, Three Months Ended March 31, 2024, and Year Ended March 31, 2025 56 Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2022 and 2023, Three Months Ended March 31, 2024, and Year Ended March 31, 2025 57 Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2022 and 2023, Three Months Ended March 31, 2024, and Year Ended March 31, 2025 58 Consolidated Statements of Cash Flows for the Years Ended December 31, 2022 and 2023, Three Months Ended March 31, 2024, and Year Ended March 31, 2025 60 Notes to the Consolidated Financial Statements 63 49 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Powerfleet, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Powerfleet, Inc. and subsidiaries (the “Company”) as of March 31, 2025, the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows, for the year ended March 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2025, and the results of its operations and its cash flows for the year ended March 31, 2025, in conformity with the accounting principles generally accepted in the United States of America. The consolidated balance sheets of the Company as of March 31, 2024, December 31, 2023, and December 31, 2022, and the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for the three-months period ended March 31, 2024 and for the years ended December 31, 2023, and December 31, 2022, (the “comparative financial statements”), before the effects of the retrospective adjustments to the disclosures for a change in the composition of reportable segments and the adoption of ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07), discussed in Notes 2 and 15 to the financial statements, were audited by a predecessor auditor whose report, dated August 22, 2024, expressed an unqualified opinion on those statements. We also have audited the adjustments to these comparative financial statements to retrospectively adjust the disclosures to apply the change in accounting for the adoption of ASU 2023-07 in 2025, as discussed in Notes 2 and 15 to the financial statements. Our procedures included 1) comparing the adjustment amounts of segment revenues, cost of revenues, selling and marketing expenses, general and administrative expenses, development costs incurred, development costs capitalized, depreciation and amortization expenses, and assets to the Company’s accounting records, (2) testing the mathematical accuracy of the reconciliations of segment amounts to the comparative financial statements, and (3) comparing the amounts of significant segment expenses to the Company’s accounting records. In our opinion, such retrospective adjustments are appropriate and have been properly applied. However, we were not engaged to audit, review, or apply any procedures to the consolidated balance sheets of the Company as of March 31, 2024, December 31, 2023, and December 31, 2022, and the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for the three-months period ended March 31, 2024 and for the years ended December 31, 2023, and December 31, 2022 other than with respect to these retrospective adjustments, and accordingly, we do not express an opinion or any other form of assurance on those comparative financial statements taken as a whole. We have also 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 March 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated June 26, 2025, expressed an adverse opinion on the Company’s internal control over financial reporting. Basis for Opinion 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 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 the financial statements are free of material misstatement, whether due to error or fraud. Our audit 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 audit 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 audit provides a reasonable basis for our opinion. Critical Audit Matters 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 critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and 50 we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Determination of Accounting Acquirer and Assessment of the Accounting Treatment - Refer to Note 3 to the financial statements Critical Audit Matter Description As described in Note 3 to the financial statements, the Company consummated the MiX Combination and acquired MiX Telematics Limited (“MiX”) on April 2, 2024, for $370 million. We identified the determination of the accounting acquirer and assessment of the accounting treatment in the combination with MiX as a critical audit matter. Evaluating the Company’s accounting treatment of the combination required significant auditor judgment. Specifically, a high degree of auditor judgment was required to evaluate the Company’s determination of the accounting acquirer. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the determination of the accounting acquirer and assessment of the accounting treatment included the following, among others: • We evaluated the design and tested the operating effectiveness over the Company's control to evaluate the determination of the accounting acquirer. • We evaluated management’s accounting memorandum that documented the factors in ASC 805 that the Company considered in determining the accounting acquirer, including voting interests held by the former shareholder groups and the composition of the board of directors and senior management of the combined Company and corroborated the information in the accounting analysis to third party sources and underlying supporting information. • We utilised our accounting technical specialists to evaluate the Company’s determination of the accounting acquirer including the assessment of the voting interests of the various shareholder groups held in the Company post transaction and the composition of the board of directors and senior management of the combined entities. MiX Combination - Refer to Note 2Y and 3 to the financial statements Critical Audit Matter Description The Company completed the MiX Combination for $370 million on April 2, 2024. The Company accounted for the acquisition under the acquisition method of accounting for business combinations. Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values, including trade name of $10 million, developed technology of $30 million and customer relationships of $113 million (the “acquired intangible assets”). Management estimated the fair value of the trade name and developed technology using the relief from royalty method. Management estimated the fair value of the customer relationships using the multi-period excess earnings method, which is a discounted cash flow method. The fair value determination of the trade name, developed technology, and customer relationships required management to make significant estimates and assumptions related to future cash flows and the selection of the discount rates. We identified the fair value of acquired trade name, developed technology and customer relationships from the MiX Combination as a critical audit matter because of the significant assumptions and estimates used in the valuation of the acquired intangible assets that possess higher degrees of complexity and sensitivity to the valuations. This required a high degree of audit judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s assumptions. The significant assumptions and estimates management makes to fair value the acquired intangible assets primarily relate to the future projected revenue and the discount rates applied to the future cash flows. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to future projected revenue and the selection of the discount rates applied to the future cash flows for the acquired intangible assets included the following, among others: • We tested the effectiveness of internal controls over management’s accounting and valuation of intangible assets, including the review of forecasts of future cash flows, revenue growth rates and the selection of the discount rate. 51 • With the assistance of our fair value specialists, we evaluated the valuation methodologies, and the reasonableness of the customer attrition rates, useful lives, royalty rates and discount rates, including testing the underlying source information and the mathematical accuracy of the calculations, and developing a range of independent estimates and comparing those to the customer attrition rates, useful lives and royalty rates selected by management. • We assessed the reasonableness of management’s future projected revenue by comparing the projections to historical results, certain peer companies, industry data, and Board of Directors presentations. • We evaluated whether the future projected revenue was consistent with evidence obtained in other areas of the audit. Fleet Complete Acquisition - Refer to Note 2Y and 3 to the financial statements Critical Audit Matter Description The Company completed the Fleet Complete acquisition for $190 million on October 1, 2024. The Company accounted for the acquisition under the acquisition method of accounting for business combinations. Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values, including trade name of $4 million, developed technology of $25 million and customer relationships of $70 million (the “acquired intangible assets”). Management estimated the fair value of the trade name and developed technology using the relief from royalty method. Management estimated the fair value of the customer relationships using the multi-period excess earnings method, which is a discounted cash flow method. The fair value determination of the trade name, developed technology, and customer relationships required management to make significant estimates and assumptions related to future cash flows and the selection of the discount rates. We identified the fair value of acquired trade name, developed technology and customer relationships from the Fleet Complete acquisition as a critical audit matter because of the significant assumptions and estimates used in the valuation of the acquired intangible assets that possess higher degrees of complexity and sensitivity to the valuations. This required a high degree of audit judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s assumptions. The significant assumptions and estimates management makes to fair value the acquired intangible assets primarily relate to the future projected revenue and the discount rates applied to the future cash flows. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to future projected revenue and the selection of the discount rates applied to the future cash flows for the acquired intangible assets included the following, among others: • We tested the effectiveness of internal controls over management’s accounting and valuation of intangible assets, including the review of forecasts of future cash flows, revenue growth rates and the selection of the discount rate. • With the assistance of our fair value specialists, we evaluated the valuation methodologies, and the reasonableness of the customer attrition rates, useful lives, royalty rates and discount rates, including testing the underlying source information and the mathematical accuracy of the calculations, and developing a range of independent estimates and comparing those to the customer attrition rates, useful lives and royalty rates selected by management. • We assessed the reasonableness of management’s future projected revenue by comparing the projections to historical results, certain peer companies, industry data, and Board of Directors presentations. • We evaluated whether the future projected revenue was consistent with evidence obtained in other areas of the audit. /s/ Deloitte & Touche Johannesburg, South Africa June 26, 2025 We have served as the Company’s auditor since 2024. 52 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Powerfleet, Inc. Opinion on the Financial Statements We have audited the consolidated balance sheet of Powerfleet, Inc. and subsidiaries (the Company) as of March 31, 2024, the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity and cash flows for the three-month period ended March 31, 2024 and each of the two years in the period ended December 31, 2023, and the related notes (the 2024 transition period consolidated financial statements). In our opinion, the 2024 transition period consolidated financial statements, present fairly, in all material respects, the financial position of the Company at March 31, 2024, and the results of its operations and its cash flows for the three-month period ended March 31, 2024 and each of the two years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. Basis for Opinion 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 audits. 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. /s/ Ernst & Young LLP We served as the Company’s auditor from 2019 to 2024. Iselin, New Jersey August 22, 2024 53 POWERFLEET, INC. AND SUBSIDIARIES Consolidated Balance Sheets (In thousands, except per share data) March 31, 2024 March 31, 2025 ASSETS Current assets: Cash and cash equivalents $ 24,354 $ 44,392 Restricted cash 85,310 4,396 Accounts receivable, net of allowance for credit losses of $ 3,197 and $ 4,057 as of March 31, 2024 and 2025, respectively 30,333 78,623 Inventory, net 21,658 18,350 Prepaid expenses and other current assets 8,133 23,319 Total current assets 169,788 169,080 Fixed assets, net 12,719 58,011 Goodwill 83,487 383,146 Intangible assets, net 19,652 258,582 Right-of-use asset 7,428 12,339 Severance payable fund 3,796 3,796 Deferred tax asset 2,781 3,934 Other assets 9,029 21,183 Total assets $ 308,680 $ 910,071 LIABILITIES Current liabilities: Short-term bank debt and current maturities of long-term debt $ 1,951 $ 41,632 Accounts payable 20,025 41,599 Accrued expenses and other current liabilities 13,983 45,327 Deferred revenue - current 5,842 17,375 Lease liability - current 1,789 5,076 Total current liabilities 43,590 151,009 Long-term debt - less current maturities 113,810 232,160 Deferred revenue - less current portion 4,892 5,197 Lease liability - less current portion 5,921 8,191 Accrued severance payable 4,597 6,039 Deferred tax liability 4,465 57,712 Other long-term liabilities 2,496 3,021 Total liabilities 179,771 463,329 Commitments and Contingencies (Note 18) Convertible redeemable preferred stock: Series A - 100 shares authorized, $ 0.01 par value; 60 and 0 shares issued and outstanding at March 31, 2024 and 2025, respectively, at redemption value of $ 90,273 at March 31, 2024 90,273 — STOCKHOLDERS’ EQUITY Preferred stock; authorized 50,000 shares, $ 0.01 par value — — Common stock; authorized 175,000 shares, $ 0.01 par value; 38,709 and 135,379 shares issued at March 31, 2024 and March 31, 2025, respectively; shares outstanding, 37,212 and 133,316 at March 31, 2024 and 2025, respectively 387 1,343 Additional paid-in capital 202,607 671,400 54 Accumulated deficit ( 154,796 ) ( 205,783 ) Accumulated other comprehensive loss ( 985 ) ( 8,850 ) Treasury stock; 1,497 and 2,063 common shares at cost at March 31, 2024 and 2025, respectively ( 8,682 ) ( 11,518 ) Total Powerfleet, Inc. stockholders’ equity 38,531 446,592 Non-controlling interest 105 150 Total equity 38,636 446,742 Total liabilities, convertible redeemable preferred stock, and stockholders’ equity $ 308,680 $ 910,071 See accompanying notes to consolidated financial statements. 55 POWERFLEET, INC. AND SUBSIDIARIES Consolidated Statements of Operations (In thousands, except per share data) Year Ended December 31, Three Months Ended March 31, Year Ended March 31, 2022 2023 2024 2025 Revenues: Products $ 56,945 $ 49,741 $ 12,080 $ 85,584 Services 78,967 83,995 21,660 276,931 Total revenues 135,912 133,736 33,740 362,515 Cost of revenues: Cost of products 42,569 36,404 9,514 61,961 Cost of services 28,350 30,256 8,023 106,017 Total cost of revenues 70,919 66,660 17,537 167,978 Gross profit 64,993 67,076 16,203 194,537 Operating expenses: Selling, general and administrative expenses 63,492 71,253 21,832 204,361 Research and development expenses 8,472 8,380 2,018 16,061 Total operating expenses 71,964 79,633 23,850 220,422 Loss from operations ( 6,971 ) ( 12,557 ) ( 7,647 ) ( 25,885 ) Interest income 71 103 259 926 Interest expense, net 994 ( 1,602 ) ( 709 ) ( 20,330 ) Bargain purchase - Movingdots — 9,034 — — Other income (expense), net 24 ( 29 ) ( 55 ) ( 1,163 ) Net loss before income taxes ( 5,882 ) ( 5,051 ) ( 8,152 ) ( 46,452 ) Income tax expense ( 870 ) ( 589 ) ( 352 ) ( 4,517 ) Net loss before non-controlling interest ( 6,752 ) ( 5,640 ) ( 8,504 ) ( 50,969 ) Non-controlling interest ( 2 ) ( 35 ) ( 11 ) ( 18 ) Net loss ( 6,754 ) ( 5,675 ) ( 8,515 ) ( 50,987 ) Accretion of preferred stock ( 5,906 ) ( 7,139 ) ( 9,996 ) — Preferred stock dividend ( 4,231 ) ( 4,493 ) ( 1,128 ) ( 25 ) Net loss attributable to common stockholders $ ( 16,891 ) $ ( 17,307 ) $ ( 19,639 ) $ ( 51,012 ) Net loss per share attributable to common stockholders - basic and diluted $ ( 0.48 ) $ ( 0.49 ) $ ( 0.55 ) $ ( 0.43 ) Weighted average common shares outstanding - basic and diluted 35,393 35,628 35,813 119,877 See accompanying notes to consolidated financial statements. 56 POWERFLEET, INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive Loss (In thousands) Year Ended December 31, Three Months Ended March 31, Year Ended March 31, 2022 2023 2024 2025 Net loss attributable to common stockholders $ ( 16,891 ) $ ( 17,307 ) $ ( 19,639 ) $ ( 51,012 ) Foreign currency translation adjustment ( 1,601 ) 594 ( 369 ) ( 7,865 ) Total other comprehensive (loss) income ( 1,601 ) 594 ( 369 ) ( 7,865 ) Comprehensive loss $ ( 18,492 ) $ ( 16,713 ) $ ( 20,008 ) $ ( 58,877 ) See accompanying notes to consolidated financial statements. 57 POWERFLEET, INC. AND SUBSIDIARIES Consolidated Statements of Changes in Stockholders’ Equity (In thousands) Common Stock Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Treasury Stock Non-Controlling Interest Total Stockholder’s Equity Number of Shares Amount Balance at January 1, 2022 37,263 $ 373 $ 224,852 $ ( 134,052 ) $ 391 $ ( 8,299 ) $ 86 $ 83,351 Net loss attributable to common stockholders — — ( 10,137 ) ( 6,754 ) — — — ( 16,891 ) Net income attributable to non-controlling interest — — — — — — 2 2 Foreign currency translation adjustment — — — — ( 1,601 ) — ( 10 ) ( 1,611 ) Issuance of restricted shares 492 5 ( 5 ) — — — — — Forfeiture of restricted shares ( 186 ) ( 2 ) 2 — — — — — Vesting of restricted stock units 36 — — — — — — — Shares withheld pursuant to vesting of restricted stock — — — — — ( 211 ) — ( 211 ) Stock-based compensation — — 4,343 — — — — 4,343 Balance at December 31, 2022 37,605 $ 376 $ 219,055 $ ( 140,806 ) $ ( 1,210 ) $ ( 8,510 ) $ 78 $ 68,983 Retained earnings adjustment for adoption of ASU 2016-13 — — — 200 — — — 200 Net loss attributable to common stockholders — — ( 11,632 ) ( 5,675 ) — — — ( 17,307 ) Net income attributable to non-controlling interest — — — — — — 35 35 Warrant issued in connection with acquisition — — 1,347 — — — — 1,347 Foreign currency translation adjustment — — — — 594 — ( 11 ) 583 Issuance of restricted shares 1,247 13 ( 13 ) — — — — — Forfeiture of restricted shares ( 152 ) ( 2 ) 2 — — — — — Exercise of stock options 16 — 36 — — — — 36 Shares withheld pursuant to vesting of restricted stock — — — — — ( 141 ) — ( 141 ) Stock-based compensation — — 3,908 — — — — 3,908 Balance at December 31, 2023 38,716 $ 387 $ 212,703 $ ( 146,281 ) $ ( 616 ) $ ( 8,651 ) $ 102 $ 57,644 Net loss attributable to common stockholders — — ( 11,124 ) ( 8,515 ) — — — ( 19,639 ) Net income attributable to non-controlling interest — — — — — — 11 11 Foreign currency translation adjustment — — — — ( 369 ) — ( 8 ) ( 377 ) Forfeiture of restricted shares ( 7 ) — — — — — — — 58 Shares withheld pursuant to vesting of restricted stock — — — — — ( 31 ) — ( 31 ) Stock-based compensation — — 1,028 — — — — 1,028 Balance at March 31, 2024 38,709 387 $ 202,607 $ ( 154,796 ) $ ( 985 ) $ ( 8,682 ) $ 105 $ 38,636 Net loss attributable to common stockholders — — ( 25 ) ( 50,987 ) — — — ( 51,012 ) Net income attributable to non-controlling interest — — — — — — 18 18 Foreign currency translation adjustment — — — — ( 7,865 ) — 22 ( 7,843 ) Proceeds from private placement, net of costs to issue common stock 20,000 200 66,259 — — — — 66,459 Acquired through MiX Combination — — 7,818 — — — 5 7,823 Shares issued in connection with MiX Combination 70,704 707 361,298 — — — — 362,005 Shares issued in connection with FC Acquisition 4,286 43 21,300 — — — — 21,343 Issuance of restricted shares 54 1 ( 1 ) — — — — — Shares issued for transaction bonus 174 1 888 — — — — 889 Shares withheld pursuant to vesting of restricted stock — — — — — ( 2,836 ) — ( 2,836 ) Issue of stock appreciation rights 842 — — — — — — — Exercise of stock options 610 4 1,894 — — — — 1,898 Stock-based compensation — — 9,362 — — — — 9,362 Balance as of March 31, 2025 135,379 1,343 671,400 ( 205,783 ) ( 8,850 ) ( 11,518 ) 150 446,742 See accompanying notes to consolidated financial statements. 59 POWERFLEET, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (In thousands) Year Ended December 31, Three Months Ended March 31, Year Ended March 31, 2022 2023 2024 2025 Cash flows from operating activities Net loss $ ( 6,754 ) $ ( 5,675 ) $ ( 8,515 ) $ ( 50,987 ) Adjustments to reconcile net loss to cash provided by (used in) operating activities: Non-controlling interest 2 35 11 18 Gain on bargain purchase — ( 9,034 ) — — Inventory write-downs 149 1,500 59 4,480 Stock-based compensation expense 4,343 3,908 1,028 9,362 Depreciation and amortization 8,262 9,445 1,943 47,494 Right-of-use assets, non-cash lease expense 2,756 2,814 763 5,007 Derivative mark-to-market adjustment — — — ( 504 ) Bad debts expense 66 1,767 970 9,418 Deferred income taxes 708 ( 6 ) 97 ( 4,872 ) Shares issued for transaction bonuses — — — 889 Lease termination and modification losses — — — 295 Other non-cash items 707 103 ( 112 ) 1,061 Changes in operating assets and liabilities: Accounts receivable ( 1,368 ) ( 1,460 ) 746 ( 14,048 ) Inventory ( 4,473 ) ( 1,743 ) 726 5,729 Prepaid expenses and other current assets ( 816 ) 791 ( 1,440 ) 5,474 Deferred costs 1,608 679 41 ( 8,437 ) Deferred revenue ( 627 ) ( 295 ) 112 1,748 Accounts payable and accrued expenses ( 533 ) 4,440 4,021 ( 12,162 ) Lease liabilities ( 2,739 ) ( 2,851 ) ( 694 ) ( 4,558 ) Accrued severance payable ( 42 ) ( 21 ) 36 1,248 Net cash provided by (used in) operating activities 1,249 4,397 ( 208 ) ( 3,345 ) Cash flows from investing activities Acquisition, net of cash assumed — 8,722 — ( 137,112 ) Purchase of investments ( 100 ) ( 100 ) — — Proceeds from sale of fixed assets — — — 12 Capitalized software development costs ( 2,219 ) ( 3,629 ) ( 591 ) ( 13,782 ) Capital expenditures ( 4,011 ) ( 3,464 ) ( 1,309 ) ( 20,008 ) Repayment of loan advanced to external parties — — — 294 Net cash (used in) provided by investing activities ( 6,330 ) 1,529 ( 1,900 ) ( 170,596 ) 60 Cash flows from financing activities Repayment of long-term debt ( 5,659 ) ( 4,408 ) ( 11,037 ) ( 2,642 ) Short-term bank debt, net 5,709 4,321 ( 10,030 ) 19,551 Purchase of treasury stock upon vesting of restricted stock ( 211 ) ( 141 ) ( 31 ) ( 2,836 ) Repayment of financing lease ( 121 ) ( 129 ) — — Payment of preferred stock dividend and redemption of preferred stock — ( 3,385 ) — ( 90,298 ) Proceeds from private placement, net — — — 66,459 Proceeds from long-term debt — — 115,000 125,000 Payment of long-term debt costs — — ( 1,081 ) ( 1,410 ) Proceeds from exercise of stock options, net — 36 — 1,898 Net cash (used in) provided by financing activities ( 282 ) ( 3,706 ) 92,821 115,722 Effect of foreign exchange rate changes on cash and cash equivalents ( 3,408 ) ( 877 ) ( 381 ) ( 2,657 ) Net (decrease) increase in cash and cash equivalents, and restricted cash ( 8,771 ) 1,343 90,332 ( 60,876 ) Cash and cash equivalents, and restricted cash at beginning of the period 26,760 17,989 19,332 109,664 Cash and cash equivalents, and restricted cash at end of the period $ 17,989 $ 19,332 $ 109,664 $ 48,788 Reconciliation of cash and cash equivalents, and restricted cash, at beginning of the period Cash and cash equivalents 26,452 17,680 19,022 24,354 Restricted cash 308 309 310 85,310 Cash and cash equivalents, and restricted cash, at beginning of the period $ 26,760 $ 17,989 $ 19,332 $ 109,664 Reconciliation of cash and cash equivalents, and restricted cash, at end of the period Cash and cash equivalents 17,680 19,022 24,354 44,392 Restricted cash 309 310 85,310 4,396 Cash and cash equivalents, and restricted cash, at end of the period $ 17,989 $ 19,332 $ 109,664 $ 48,788 Supplemental disclosure of cash flow information: Cash paid for: Taxes $ 63 $ 175 $ 262 $ 4,283 Interest $ 1,308 $ 1,656 $ 447 $ 15,335 Noncash investing and financing activities: Issuance of derivative on long-term debt $ — $ — $ 2,226 $ — Common stock issued for transaction bonus $ — $ — $ — $ 9 61 Shares issued in connection with MiX Combination $ — $ — $ — $ 362,005 Shares issued in connection with FC Acquisition $ — $ — $ — $ 21,343 Value of warrant issued in connection with Movingdots acquisition $ — $ 1,347 $ — $ — Value of licensed intellectual property acquired in connection with Movingdots acquisition $ — $ 1,517 $ — $ — Preferred stock dividends paid in shares $ 4,231 $ 1,108 $ — $ — See accompanying notes to consolidated financial statements. 62 POWERFLEET, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements In thousands (except per share data) NOTE 1 - DESCRIPTION OF THE COMPANY Description of the Company Powerfleet, Inc. (the “Company” or “Powerfleet”) is a global provider of Artificial Intelligence-of-Things (“AIoT”) solutions providing valuable business intelligence for managing high-value enterprise assets that improve operational efficiencies. The Company has a primary listing on The Nasdaq Global Market and a secondary listing on the Main Board of the Johannesburg Stock Exchange. On April 2, 2024 (the “Implementation Date”), 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 (“Powerfleet Sub”), and MiX Telematics Limited, formerly 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 consolidated financial statements as of and for the year ended March 31, 2025 include the financial results of MiX Telematics and its subsidiaries from the Implementation Date. See Note 3 for additional information. On October 1, 2024 (the “FC Closing Date”), the Company consummated the transactions contemplated by the Share Purchase Agreement, dated as of September 18, 2024 (the “Purchase Agreement”), by and among Golden Eagle Topco, LP (“Golden Eagle LP”), the persons that are party to the Purchase Agreement under the heading “Other Sellers” (the “Other Sellers” and, together with Golden Eagle LP, the “Sellers”), the Company and Powerfleet Canada Holdings Inc., a wholly owned subsidiary of the Company (the “Canadian SPV” and, together with the Company, the “Purchasers”), pursuant to which the Purchasers acquired all of the direct and indirect common shares in the capital of Golden Eagle Canada Holdings, Inc. (“Canada Holdco”) and Complete Innovations Holdings Inc. (“CIH”), and all of the issued and outstanding shares of common stock of Golden Eagle Holdings, Inc. (together with Canada Holdco and CIH, “Fleet Complete”). As a result, Fleet Complete became an indirect, wholly owned subsidiary of the Company (the “FC Acquisition”). The consolidated financial statements as of and for the year ended March 31, 2025 include the financial results of Fleet Complete and its subsidiaries from the FC Closing Date. See Note 3 for additional information. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [A] Basis of preparation and consolidation: The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and should be read in conjunction with the accompanying notes thereto. On May 8, 2024, the Company’s Board of Directors approved a change in its fiscal year end from December 31 to March 31 in order to better align the Company’s reporting calendar with the April 2, 2024 close of the MiX Combination and MiX Telematics’ historical March 31 fiscal year end. The consolidated financial statements include the accounts of the Company and its wholly owned and majority-owned subsidiaries. All material intercompany balances and transactions have been eliminated on consolidation. We round amounts in the consolidated financial statements to thousands. [B] Use of estimates: The preparation of consolidated 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Such management estimates include, but are not limited to, assumptions used in business combinations, allowance for credit losses, income taxes, realization of deferred tax assets, accounting for uncertain tax positions, the impairment of intangible assets, including goodwill and long-lived assets, capitalized software development costs, standalone selling prices (“SSP”), valuation of the derivative asset, and market-based stock-based compensation costs. Actual results could differ materially from those estimates and assumptions made. 63 [C] Cash and cash equivalents: The Company considers all highly liquid debt instruments with an original maturity of three months or less when purchased to be cash equivalents unless they are legally or contractually restricted. The Company’s cash and cash equivalent balances exceed Federal Deposit Insurance Corporation (“FDIC”) and other local jurisdictional limits. Restricted cash at March 31, 2024 consisted of escrow amounts of $ 85,000 for a facilities agreement (the “Facilities Agreement”) with FirstRand Bank Limited (acting through its Rand Merchant Bank division) (“RMB”) deposited in escrow for the MiX Combination and cash of $ 310 held in escrow for purchases from a vendor. Restricted cash at March 31, 2025 consisted of cash of $ 3,336 held in escrow related to the FC Acquisition to secure certain tax liabilities, cash of $ 311 held in escrow for purchases from a vendor, cash of $ 698 held by MiX Telematics Enterprise BEE Trust to be used solely for the benefit of its beneficiaries and c ash securing guarantees of $ 51 issued in respect of property lease agreements entered into by MiX Telematics Australasia. [D] Accounts receivable and allowance for credit losses: Accounts receivable are recorded at the invoiced amount and do not bear interest. Amounts collected on trade accounts receivable are included in net cash provided by operating activities in the Consolidated Statement of Cash Flows. The Company maintains an allowance for credit losses against its accounts receivable for potential losses. The Company’s receivables were evaluated to determine an appropriate allowance for credit losses. For trade receivables, the Company’s historical collections were analyzed by the number of days past due to determine the uncollectible rate in each range of days past due and considerations of any changes expected in the future. The estimate of the allowance for credit losses is charged to the allowance for credit losses based on the age of receivables multiplied by the historical uncollectible rate for the range of days past due or earlier if the account is deemed uncollectible for other reasons. Recoveries of amounts previously charged as uncollectible are credited to the allowance for credit losses. The Company does not have any off-balance sheet credit exposure related to its customers. An analysis of the allowance for credit losses for the periods ended March 31, 2024 and 2025 is as follows (in thousands): Allowance for credit losses, December 31, 2023 $ 2,797 Current period provision for expected credit losses 970 Write-offs charged against the allowance ( 545 ) Foreign currency translation ( 25 ) Allowance for credit losses, March 31, 2024 $ 3,197 Current period provision for expected credit losses 9,418 Write-offs charged against the allowance ( 8,908 ) Foreign currency translation 350 Allowance for credit losses, March 31, 2025 $ 4,057 [E] Revenue recognition: The 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. Incidental 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 an expense when the products are sold (see Note 12). Revenue is recognized when performance obligations under the terms of a contract with the 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. The Company utilizes significant judgment to determine whether control of the hardware has transferred to the customer (i.e. distinct to the customer separate from SaaS services provided). 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. 64 When another party is involved in providing products or services to the end customer, the Company evaluates the nature of its promise to determine whether it is acting as an agent or principal in the sales transaction. The Company considers itself acting as a principal if it controls the specified products or services before they are transferred to the end customers, otherwise the Company is acting as an agent. The Company determines control as the ability to direct the use of, and obtain substantially all of the remaining benefits from, the products or services. Control includes the ability to prevent others from directing the use of, and obtaining the benefits from, the products or services. Revenue is recognized based on the gross amount of consideration to which the Company expects to be entitled to in exchange for the specified products or services when acting as a principal and is recognized based on any fee or commission to which it expects to be entitled to in exchange for arranging for the specified products or services to be provided by the other party. 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. The 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 current 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. The Company earns other service revenues from installation services, training and technical support services which are short-term in nature and revenue for these services is recognized at the time of performance when the service is provided. The 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. Maintenance revenues and interest income are recognized monthly over the lease term. The 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 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. In 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 distributors and 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 . The 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. [F] Inventory: Inventories are stated at the lower of cost or net realizable value. Cost is determined using the “moving average” cost method or the first-in first-out (“FIFO”) method. Inventory consists of components, work in process and finished products. 65 Inventory write-downs are established in order to report inventories at the lower of cost or net realizable value in the Consolidated Balance Sheet. The determination of inventory valuation reserves requires management to make estimates and judgments on the future salability of inventories. Valuation reserves for obsolete and slow-moving inventory are estimated based on assumptions of future sales forecasts, product life cycle expectations, the impact of new product introductions, production requirements, and specific identification of items, such as product discontinuance or engineering/material changes and by comparing the inventory levels to historical usage rates. [G] Fixed assets and depreciation: Fixed assets are recorded at cost, net of accumulated depreciation. Depreciation and amortization are recognized using the straight-line method over the estimated useful lives of the assets. The following table provides the range of estimated useful lives used for each asset type: Useful Life (years) Installed products 3 - 5 Computer software 3 - 5 Computers and electronic equipment 3 - 10 Furniture and fixtures 5 - 7 Leasehold improvements Shorter of useful life or lease term Plant and equipment 1 - 8 [H] Long-lived assets: Long-lived assets, which include definite lived intangible assets and fixed assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The recoverability of assets to be held and used is assessed by a comparison of the carrying amount of the assets to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets and would be charged to earnings. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. [I] Goodwill and intangibles: Goodwill represents costs in excess of fair values assigned to the underlying net assets of acquired businesses. Goodwill and intangible assets deemed to have indefinite lives are not amortized and are tested for impairment on an annual basis and between annual tests whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Intangible assets other than goodwill are amortized over their useful lives unless the lives are determined to be indefinite. Intangible assets are carried at cost, less accumulated amortization. Intangible assets consist of trademarks and trade names, patents, customer relationships and other intangible assets. 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 with one operating segment, which is its only reporting unit and aligns with its only reportable segment. The Company tests for goodwill impa irment 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. As of October 1, 2024, the Company performed a quantitative assessment whereby the fair value of the reporting unit is calculated using a market approach. The fair value of the reporting unit was substantially more than its carrying value. For the year ended March 31, 2025, the Company performed a qualitative assessment of goodwill. The Company considered such factors as the Company’s market capitalization as of March 31, 2025 and over a period of time, macroeconomic conditions, industry and market considerations, and overall financial performance. The fair value of the reporting unit was substantially more than its carrying value. For the years ended December 31, 2022 and 2023, the three months ended March 31, 2024, and the year ended March 31, 2025, the Company did not incur an impairment charge. 66 [J] Product warranties: The Company typically provides a 1 to 8-year warranty on its products. Estimated future warranty costs are accrued in the period that the related revenue is recognized and are included in accounts payable and accrued expenses in the Consolidated Balance Sheet. These estimates are derived from historical data and trends of product reliability and costs of repairing and replacing defective products. [K] Research and development: Research and development costs are charged to expense as incurred and consist primarily of salaries and related expenses, supplies and contractor costs. Research and development costs were $ 8,472 , $ 8,380 , $ 2,018 and $ 16,061 for the years ended December 31, 2022 and 2023, the three months ended March 31, 2024, and the year ended March 31, 2025, respectively. The Company capitalizes the portion of its internal-use software development costs that meets the criteria for capitalization. [L] Internal-use software and technology The Company capitalizes as intangible assets, internal-use software acquired or developed solely to meet the Company’s internal needs. Costs, excluding general and administrative costs such as general overheads, legal, research, business process engineering and data conversion costs, are capitalized from the date on which management implicitly or explicitly authorizes, or commits to fund, the project, and it is probable that the project will be completed and the software will perform the intended function (application development stage). All costs incurred during the preliminary development stage are expensed. Capitalization ceases when the project is substantially complete and the software is ready for its intended use. Costs, including annual licenses, associated with maintaining computer software programs, and training costs are expensed as incurred. Costs incurred for upgrades and enhancements (modifications to existing internal-use software that provides additional functionality) are capitalized during the application development stage. Software capitalized is amortized on a straight-line basis over its estimated useful life ranging from 3 to 7 years, commencing on the date when the software is ready for its intended use. [M] Patent costs: Costs incurred in connection with acquiring patent rights are charged to expense as incurred. [N] Concentration of credit risk: Financial instruments that potentially subject the Company and its subsidiaries to concentrations of credit risk consist principally of cash and cash equivalents and trade receivables. The Company’s cash and cash equivalents are invested primarily in deposits with major banks worldwide. Generally, these deposits may be redeemed upon demand and, therefore, bear low risk. Management believes that the financial institutions that hold the Company’s investments have a high credit rating. For the years ended December 31, 2022 and 2023, the three months ended March 31, 2024, and the year ended March 31, 2025, 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. [O] Benefit plan: The Company maintains a retirement plan under Section 401(k) of the Internal Revenue Code, which covers all eligible employees. All employees with U.S. source income are eligible to participate in the plan immediately upon employment. For the years ended December 31, 2022 and 2023, the three months ended March 31, 2024, and the year ended March 31, 2025, the Company contributed $ 285 , $ 379 , $ 88 , and $ 456 , respectively, to the plan. [P] Severance pay: The 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 67 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 and classified as severance payable fund in the Company’s Consolidated Balance Sheet. The deposited funds may be withdrawn only upon the fulfillment of the obligation pursuant to the Severance Law or labor agreements. The value of the deposited funds is based on the cash surrendered value of these policies, and includes profits or losses accumulated to balance sheet date. Some of the Company’s employees are subject to Section 14 of the Severance Law and the General Approval of the Labor Minister dated June 30, 1998, issued in accordance to the said Section 14, mandating that upon termination of such employees’ employment, all the amounts accrued in their insurance policies shall be released to them. The severance pay liabilities and deposits covered by these plans are not reflected in the Consolidated Balance Sheet as the severance pay risks have been irrevocably transferred to the severance funds. [Q] Stock-based compensation: The Company operates various stock-based compensation plans, under which the entity receives services from employees as consideration for equity instruments of the Company. Settlement has taken place out of a fresh issue of shares. The Company accounts for stock-based employee compensation for all share-based payments, including grants of stock options, restricted stock and stock appreciation rights, as an operating expense based on their fair values on the grant date. The Company recorded stock-based compensation expense of $ 4,343 , $ 3,908 , $ 1,028 , and $ 9,362 , for the years ended December 31, 2022 and 2023, the three months ended March 31, 2024, and the year ended March 31, 2025, respectively. The Company estimates the fair value of share-based option awards on the grant date using an option pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service period in the Company’s Consolidated Statement of Operations. The Company estimates forfeitures at the time of grant in order to estimate the amount of share-based awards that will ultimately vest. The estimate is based on the Company’s historical rates of forfeitures. Estimated forfeitures are revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. [R] Income taxes: The Company uses the asset and liability method of accounting for deferred income taxes. Deferred income taxes are measured by applying enacted statutory rates to net operating loss carryforwards and to the differences between the financial reporting and tax bases of assets and liabilities. Deferred tax assets are reduced, if necessary, by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company recognizes uncertainty in income taxes in the financial statements using a recognition threshold and measurement attribute of a tax position taken or expected to be taken in a tax return. The Company applies the “more-likely-than-not” recognition threshold to all tax positions, commencing at the adoption date of the applicable accounting guidance, which resulted in no unrecognized tax benefits as of such date. Additionally, there have been no unrecognized tax benefits subsequent to adoption. The Company has opted to classify interest and penalties that would accrue according to the provisions of relevant tax law as selling, general, and administrative expenses and incomes taxes, respectively, in the Consolidated Statement of Operations. For the years ended December 31, 2022 and 2023, the three months ended March 31, 2024, and the year ended March 31, 2025, 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. 68 [S] Fair value of financial instruments: The Company utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those levels: • Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities. • Level 2: 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. • Level 3: Unobservable inputs that reflect the reporting entity’s estimates of market participant assumptions. The carrying value of finance lease receivables approximates fair value due to the interest rate implicit in the instruments approximating current market rates. The carrying value of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued liabilities and short-term bank debt approximates their fair values due to the short period to maturity of these instruments. The fair value of the loans to external parties included in other non-current assets is determined using unobservable market data (Level 3 inputs) that represent management ’ s estimate of current interest rates that a commercial lender would charge borrower s. 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. The Prepayment Derivative (as defined below) within the RMB Facilities (as defined below) is classified as a Level 3 in the fair value hierarchy due to the use of at least one significant unobservable input which is the credit spread volatility (see Note 11). Fair value measurement of financial assets and liabilities on a recurring basis (in thousands): As of March 31, 2025 Fair Value Carrying Amount Total Fair Value Level 1 Level 2 Level 3 Loans to external parties $ 194 $ 194 $ — $ — $ 194 Debt $ 273,792 $ 275,179 $ — $ 275,179 $ — Prepayment derivative $ 2,730 $ 2,730 $ — $ — $ 2,730 As of March 31, 2024 Fair Value Carrying Amount Total Fair Value Level 1 Level 2 Level 3 Debt $ 115,761 $ 116,278 $ — $ 116,278 $ — Prepayment derivative $ 2,226 $ 2,226 $ — $ — $ 2,226 69 The following table shows a reconciliation from the opening balances to the closing balances for Level 3 fair values (in thousands): Loans to external parties Prepayment derivative Balance at December 31, 2023 $ — $ — Additions — 2,226 Balance at March 31, 2024 — 2,226 Assumed in business combinations 474 — Repayments ( 294 ) — Foreign currency translation difference 14 Net change in fair value — 504 Balance at March 31, 2025 $ 194 $ 2,730 There were no transfers between Level 1 or Level 2, or transfers in or out of Level 3, of the fair value hierarchy during the three months ended March 31, 2024 and the year ended March 31, 2025. [T] Advertising and marketing expense: Advertising and marketing costs are expensed as incurred and are classified a s s elling, general and administrative expenses on the Consolidated Statement of Operations . Advertising and marketing expense for the years ended December 31, 2022 and 2023, the three months ended March 31, 2024, and the year ended March 31, 2025 amounted to $ 1,130 , $ 2,300 $ 1,698 and $ 5,000 , respectively. [U] Foreign currency: The Company’s reporting currency is the U.S dollar (“USD”). For businesses where the majority of the revenues are generated in USD and a substantial portion of the costs are incurred in USD, the Company’s management believes that the USD is the primary currency of the economic environment and thus their functional currency. Due to the fact that Argentina has been determined to be highly inflationary, the financial statements of our subsidiary in Argentina have been remeasured as if its functional currency was the USD. The Company also has foreign operations where the functional currency is the local currency. For these operations, assets and liabilities are translated using the end-of-period exchange rates and revenues, expenses and cash flows are translated using average rates of exchange for the period. Equity is translated at the rate of exchange at the date of the equity transaction. Translation adjustments are recognized in stockholders’ equity as a component of accumulated other comprehensive income (loss). Foreign 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 (losses) gains for the years ended December 31, 2022 and 2023, and the three months ended March 31, 2024 of $( 847 ), $ 277 , and $( 193 ), respectively, are included in selling, general and administrative expenses in the Consolidated Statement of Operations. Foreign currency transaction gains related to long-term debt of $ 2,689 , $ 591 , and $ 151 , for the years ended December 31, 2022 and 2023, and the three months ended March 31, 2024, respectively, are included in interest expense in the Consolidated Statement of Operations. [V] Commitments and contingencies: From time to time, the Company is involved in various litigation matters involving claims incidental to its business and acquisitions, including employment matters, acquisition-related claims, patent infringement and contractual matters, among other issues. While the outcome of any such litigation matters cannot be predicted with certainty, management currently believes that the outcome of these proceedings, including the matters described below, either individually or in the aggregate, will not have a material adverse effect on its business, results of operations or financial condition. The Company records reserves related to legal matters when losses related to such litigation or contingencies are both probable and reasonably estimable. 70 [W] Recently adopted accounting pronouncements: In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which requires additional operating segment disclosures in annual and interim consolidated financial statements. ASU 2023-07 is effective for annual periods beginning after December 15, 2023 and for interim periods beginning after December 15, 2024 on a retrospective basis, with early adoption permitted. The Company adopted ASU 2023-07 on April 1, 2024, using a retrospective method (see Note 15 – Segment Information). [X] Recently issued accounting pronouncements: In 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. The Company is evaluating the effect of adopting ASU 2023-09. In November 2024, the FASB issued Accounting Standards Update No. 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”), which requires disclosure in a tabular format, on an annual and interim basis, purchases of inventory, employee compensation, depreciation, intangible asset amortization and depletion for each income statement line item that contains those expenses. The guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the effect of adopting ASU 2024-3. [Y] 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. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, any subsequent adjustments are recorded to the Consolidated Statement of Operations. [Z] Reclassification During fiscal year 2025, amounts previously presented on the consolidated balance sheets as “accounts payable and accrued expenses” are now presented as “accounts payable” and “accrued expenses and other current liabilities”. Prior period amounts previously presented as such have been reclassified to conform to the current period’s presentation. Certain other reclassifications have been made to the prior year’s financial statements to conform to the current year presentation. These reclassifications had no effect on the previously reported consolidated financial position, results of operations, cash flows, or accumulated deficit. NOTE 3 - ACQUISITION MiX Combination On the Implementation Date (April 2, 2024), the Company consummated the MiX Combination, pursuant to which Powerfleet Sub acquired all the issued ordinary shares of MiX Telematics (including those represented by MiX Telematics’ American Depositary Shares) through the implementation of a scheme of arrangement in accordance with Sections 114 and 115 of the South African Companies Act, No 71 of 2008, as amended, in exchange for shares of the Company’s common stock. As a result, MiX Telematics became the Company’s indirect, wholly owned subsidiary. 71 The MiX Combination met the criteria for a business combination to be accounted for using the acquisition method under ASC 805, with the Company identified as the legal and the accounting acquirer. The Company was determined to be the accounting acquirer under ASC 805, based on the evaluation of the following facts and circumstances favoring Powerfleet as the accounting acquirer over those supporting MiX Telematics as the accounting acquirer: • The majority of the Company’s board of directors following the MiX Combination was composed of directors with prior affiliation to the Company. In addition, the Company’s Chairperson continued in the role following the MiX Combination; • Following the MiX Combination, the majority of the senior management team, including the Chief Executive Officer, comprised the Company’s senior management team who were already operating in that capacity for the Company prior to the MiX Combination; • While the voting rights of 65.5 % in favor of MiX Telematics was an indicator that MiX Telematics may have been the acquirer, the Company believed that the weight of the indicator was tempered given that the negotiated premium paid by Powerfleet to MiX Telematics contributed to the relative ownership split and that, qualitatively, the significant reduction in the carryover MiX Telematics institutional investor base would have reduced the legacy MiX Telematics shareholders’ ability to control the combined entity, particularly in the light of the significant concentration of institutional investors on the Powerfleet side; and • While no individual or organized group owned a large minority interest in the combined entity, the largest institutional investor following the MiX Combination was an investor of legacy Powerfleet. Additionally, immediately following the closing of the MiX Combination, 30 % of the approximately 35 % of total shares held by shareholders of legacy Powerfleet were concentrated in the Company’s top 20 institutional shareholders, compared to only 9 % of the approximately 65 % of total shares held by shareholders of legacy MiX Telematics. The estimated fair value of the consideration transferred for MiX Telematics was $ 369,823 as of the Implementation Date, which consisted of the following: (in thousands, except for share price and exchange ratio) April 2, 2024 Number of MiX Telematics ordinary shares outstanding 554,021 Exchange ratio 0.12762 Shares of Powerfleet common stock issued for MiX Telematics ordinary shares outstanding 70,704 Powerfleet stock price* 5.12 Fair value of Powerfleet common stock transferred to MiX Telematics shareholders 362,005 Replacement of acquiree’s equity awards by the acquirer** 7,818 Total fair value of consideration 369,823 * Powerfleet’s closing share price on April 2, 2024. ** The portion of the fair-value-based measurement of the replacement award that is part of the consideration transferred in exchange for the acquiree equals the portion of the acquiree award that is attributable to pre-combination vesting. Allocation of Purchase Price The purchase price was allocated to the assets and liabilities assumed based on the estimated fair values at the date of acquisition. The excess of the purchase price over the fair value of the net assets acquired was allocated to goodwill. Goodwill is attributed to the assembled workforce, expected synergies from future expected economic benefits, including enhanced revenue growth from expanded products and capabilities, as well as substantial cost savings from duplicative overheads, streamlined operations and enhanced efficiency. Goodwill is not deductible for tax purposes. 72 The allocation of purchase price was as follows (in thousands): April 2, 2024 Assets acquired: Cash and cash equivalents $ 26,737 Restricted cash 794 Accounts receivable, net 24,250 Inventory, net 4,142 Prepaid expenses and other current assets 8,886 Fixed assets, net 35,587 Intangible assets, net 153,000 Right-of-use asset 3,794 Deferred tax assets 1,093 Other assets 973 Total assets acquired $ 259,256 Liabilities assumed: Short-term bank debt and current maturities of long-term debt $ 20,158 Accounts payable and accrued expenses 26,400 Deferred revenue - current 6,394 Lease liability - current 859 Income taxes payable 355 Lease liability - less current portion 2,852 Deferred tax liability 48,725 Other long-term liabilities 484 Total liabilities assumed $ 106,227 Total identifiable net assets acquired $ 153,029 Non-controlling interest ( 5 ) Goodwill 216,799 Purchase price consideration $ 369,823 The fair values of the assets acquired and liabilities assumed, including the identifiable assets acquired, have been determined using the income and cost approach, and are partially based on inputs that are unobservable. The Company used discounted cash flow (“DCF”) analyses to assess certain components of its purchase price allocation. The fair value of the customer relationships was determined using the multi-period excess earnings method. The fair value of the tradename and developed technology was determined using an income approach based on the relief from royalty method. For the fair values, the Company used (i) forecasted future cash flows, (ii) historical and projected financial information, (iii) synergies including cost savings, (iv) revenue growth rates, (v) customer attrition rates, (vi) royalty rates, and (vii) discount rates, as relevant, that market participants would consider when estimating fair values. The initial accounting for the business combination was complete at December 31, 2024. The fair values of the identifiable assets acquired and liabilities assumed are final and therefore, adjustments to them and the resulting goodwill will not occur in future. 73 Acquired Identifiable Intangible Assets The following table sets forth the fair values of the components of the identifiable intangible assets acquired and their estimated useful lives: (in thousands) Fair value Weighted average useful lives Trade name $ 10,000 14 years Developed technology 30,000 5 years Customer relationships 113,000 13 years $ 153,000 Acquisition-Related Expenses The Company expensed a total of $ 21,177 of acquisition-related costs related to the MiX Combination, $ 15,377 of which was expensed in the year ended March 31, 2025. Acquisition-related costs are classified as selling, general and administrative expenses in the Consolidated Statement of Operations. Financial Information The business acquired in the MiX Combination contributed revenue of $ 171,167 and a net loss of $ 10,730 for the year ended March 31, 2025. FC Acquisition On the FC Closing Date (October 1, 2024), the Company consummated the FC Acquisition, pursuant to which Fleet Complete became an indirect, wholly owned subsidiary of the Company in exchange for payment by the Purchasers of an aggregate purchase price of $ 190,000 , subject to certain customary working capital and other adjustments as described in the Purchase Agreement (as adjusted, the “Purchase Price”). The FC Acquisition met the criteria for a business combination to be accounted for using the acquisition method under ASC 805, with the Company identified as the legal and the accounting acquirer. The estimated fair value of the consideration transferred for the FC Acquisition was $ 189,950 as of the FC Closing Date, which consisted of the following: (in thousands, except for share price) October 1, 2024 Shares of Powerfleet common stock issued 4,286 Powerfleet stock price* 4.98 Fair value of Powerfleet common stock transferred 21,343 Cash consideration paid to former shareholders 16,225 Repayment of Fleet Complete’s existing debt 152,382 Total fair value of consideration 189,950 * Powerfleet’s closing share price on October 1, 2024. $ 60,000 of the cash portion of the Purchase Price was funded by the Private Placement, as described below, and $ 125,000 of the cash portion of the Purchase Price was funded with a senior secured term loan facility provided by RMB, as described in Note 11 below. Concurrently with the closing of the FC Acquisition, on October 1, 2024, the Company consummated a private placement contemplated by the Subscription Agreement, dated as of September 18, 2024, by and among the Company and various accredited investors party thereto (the “Investors”), pursuant to which the Investors purchased from the Company, and the Company issued to such Investors, an aggregate of 20,000 shares of the Company’s common stock at a price per share of $ 3.50 f 74 or aggregate gross proceeds of $ 70,000 (the “Private Placement”). $ 60,000 of such gross proceeds funded a portion of the Purchase Price with the remaining $ 10,000 in proceeds expected to be used by the Company for working capital and general corporate purposes. Timing of the receipt of proceeds, gross of issuance costs, was $ 62,000 by September 30, 2024, with the remaining $ 8,000 on October 1, 2024. Preliminary Allocation of Purchase Price The purchase price was allocated to the assets and liabilities assumed based on the estimated fair values at the date of acquisition. The excess of the purchase price over the fair value of the net assets acquired was allocated to goodwill. Goodwill is primarily attributed to the assembled workforce, expected synergies from future expected economic benefits, including enhanced revenue growth from expanded products and capabilities, as well as substantial cost savings from duplicative overheads, streamlined operations and enhanced efficiency. Goodwill is not deductible for tax purposes. The preliminary allocation of purchase price was as follows (in thousands): October 1, 2024 Assets acquired: Cash and cash equivalents $ 3,964 Accounts receivable, net 19,990 Inventory, net 6,598 Prepaid expenses and other current assets 9,144 Fixed assets, net 3,693 Intangible assets, net 101,261 Identifiable intangible assets acquired 99,000 Computer software 2,261 Right-of-use asset 2,823 Deferred tax assets — Other assets 4,555 Total assets acquired $ 152,028 Liabilities assumed: Accounts payable and accrued expenses 30,857 Deferred revenue - current 3,088 Lease liability - current 2,965 Deferred revenue - less current portion 1,118 Lease liability - less current portion 75 Accrued severance payable 216 Deferred tax liability 5,599 Other long-term liabilities 405 Total liabilities assumed $ 44,323 Total identifiable net assets acquired $ 107,705 Goodwill 82,245 Purchase price consideration $ 189,950 The above fair values of assets acquired and liabilities assumed are preliminary and are based on the information that was available as of the reporting date. The Company’s allocation of the purchase price to certain assets acquired and liabilities assumed is provisional and the Company will continue to adjust those estimates as additional information pertaining to events or circumstances present at October 1, 2024 becomes available and final valuation and analysis are completed. During the three-month period ended March 31, 2025, the Company recognized an adjustment of $ 7,496 against goodwill due to the 75 finalization of deferred income taxes. In addition, the Company is still in the process of determining the fair value of acquired assets and assumed liabilities, which may also result in adjustments of the provisional amounts recorded. The fair values of the assets acquired and liabilities assumed, including the identifiable assets acquired, have been preliminarily determined using the income and cost approach, and are partially based on inputs that are unobservable. The Company used DCF analyses to assess certain components of its purchase price allocation. The fair value of the customer relationships was determined using the multi-period excess earnings method. The fair value of the tradename and developed technology was determined using an income approach based on the relief from royalty method. For the fair value estimates, the Company used (i) forecasted future cash flows, (ii) historical and projected financial information, (iii) synergies including cost savings, (iv) revenue growth rates, (v) customer attrition rates, (vi) royalty rates, and (vii) discount rates, as relevant, that market participants would consider when estimating fair values. These estimates require judgment and are subject to change. Differences between the preliminary estimates and final accounting may occur, and those could be material. The Company believes that the information provides a reasonable basis for estimating the fair values of the acquired assets and assumed liabilities, but the potential for measurement period adjustments exists based on the Company’s continuing review of matters related to the acquisition. Adjustments to initial preliminary fair value of the assets acquired and assumed liabilities during the measurement period until October 1, 2025, will be recorded during the period in which the adjustments are determined, including the effect on earnings of any amounts we would have recorded in previous periods if the accounting had been completed (i.e. the historical reported financial statements will not be retrospectively adjusted). The provisional amounts for assets acquired and liabilities assumed include: • The fair value of accounts receivable and other receivables which may be subject to adjustment for reassessment of collectability as of the date of acquisition, collections and other adjustment subsequent to the acquisition; • Property and equipment, for which the preliminary estimates are subject to revision for finalization of preliminary appraisals; • Right-of-use assets and lease liabilities, which will be subject to adjustment upon completion of the review of the inputs, including sublease assumptions, for the calculations; • Acquired inventory, which values are still being assessed on an individual basis; • Prepaid expenses, accounts payable and accrued expenses, which will be subject to adjustment based upon completion of working capital clean up and assessment of other factors; • The recognition and measurement of contract assets and contract liabilities acquired in accordance with ASC 606 will be subject to adjustment upon completion of assessment; • Acquired intangible assets will be subject to adjustment as additional assets are identified, estimates and forecasts are refined and disaggregated, useful lives are finalized, and other factors deemed relevant are considered; • Deferred income taxes will be subject to adjustment based upon the completion of the review of the book and tax bases of assets acquired and liabilities assumed, applicable tax rates and the impact of the revisions of estimates for the items described above; and • Goodwill will be subject to adjustment for the impact of the revisions of estimates for the items described above. The Company will finalize the purchase price allocation no later than one year from the acquisition date. Acquired Identifiable Intangible Assets The following table sets forth estimated fair values of the components of the identifiable intangible assets acquired and their estimated useful lives: (in thousands) Fair value Weighted average useful lives Trade name $ 4,000 4.5 years Developed technology 25,000 5.5 years Customer relationships 70,000 9.5 years $ 99,000 76 Acquisition-Related Expenses The Company expensed a total of $ 6,443 of acquisition-related costs related to the FC Acquisition in the year ended March 31, 2025. Acquisition-related costs are classified as selling, general and administrative expenses in the Consolidated Statement of Operations. Financial Information If the business acquired in the FC Acquisition was acquired on April 1, 2024, it would have contributed revenue of $ 119,627 and a net loss of $ 8,705 for the year ended March 31, 2025. Reconciliation of Acquisition, Net of Cash Assumed The following table is a reconciliation of acquisition, net of cash assumed in the Consolidated Statement of Cash Flows (in thousands): MiX Combination: Cash and cash equivalents $ 26,737 Restricted cash 794 FC Acquisition: Cash consideration paid to former shareholders ( 16,225 ) Repayment of Fleet Complete’s existing debt ( 152,382 ) Cash and cash equivalents 3,964 Restricted cash — Acquisition, net of cash assumed $ ( 137,112 ) NOTE 4 - REVENUE RECOGNITION The following table presents the Company’s revenues disaggregated by revenue source for the years ended December 31, 2022 and 2023, the three months ended March 31, 2024, and the year ended March 31, 2025 (in thousands): Year Ended December 31, Three Months Ended March 31, Year Ended March 31, 2022 2023 2024 2025 Products $ 56,945 $ 49,741 $ 12,080 $ 85,584 Services 78,967 83,995 21,660 276,931 $ 135,912 $ 133,736 $ 33,740 $ 362,515 77 The balances of contract assets and contract liabilities from contracts with customers are as follows as of March 31, 2024 and 2025 (in thousands): March 31, 2024 2025 Contract Assets: Deferred contract cost (1) $ 2,632 $ 11,894 Deferred costs - current $ 42 $ 2 Contract Liabilities: Deferred revenue – services (2) $ 10,674 $ 21,466 Deferred revenue – products (2) 60 1,106 10,734 22,572 Less: Deferred revenue – current ( 5,842 ) ( 17,375 ) Deferred revenue – long term $ 4,892 $ 5,197 (1) Deferred Contract costs are included in Other assets on the Consolidated Balance Sheet. (2) 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, 2022 and 2023, the three months ended March 31, 2024, and the year ended March 31, 2025, the Company recognized revenue of $ 5,929 , $ 6,046 , $ 1,975 an d $ 4,666 , respectively, which was included in the deferred revenue balance at the beginning of each reporting period. The Company expects to recognize as revenue through year 2030, when it transfers those goods and services and, therefore, satisfies its performance obligation to the customers. NOTE 5 - PREPAID EXPENSES AND OTHER ASSETS Prepaid expenses and other current assets comprise the following (in thousands): March 31, 2024 2025 Sales-type lease receivables, current $ 1,100 $ 1,062 Prepaid expenses* 2,817 9,038 Contract assets 1,162 5,088 Tax receivables 125 553 VAT receivable — 1,901 Sundry debtors — 5,424 Other current assets 2,929 253 $ 8,133 $ 23,319 *This includes the prepaid portion of total deferred contract assets. 78 NOTE 6 - INVENTORY 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. Inventories consist of the following (in thousands): March 31, 2024 2025 Components $ 9,403 $ 11,859 Work in process 49 — Finished goods, net 12,206 6,491 $ 21,658 $ 18,350 NOTE 7 - FIXED ASSETS Fixed assets are stated at cost, less accumulated depreciation and amortization, and are summarized as follows (in thousands): March 31, 2024 2025 Installed and uninstalled products $ 11,030 $ 61,564 Computer software 11,496 11,523 Computer and electronic equipment 6,179 6,294 Furniture and fixtures 2,361 3,054 Leasehold improvements 1,498 1,459 Plant and equipment — 276 Assets in progress — 7 32,564 84,177 Accumulated depreciation and amortization ( 19,845 ) ( 26,166 ) $ 12,719 $ 58,011 Depreciation and amortization expense for the years ended December 31, 2022 and 2023, the three months ended March 31, 2024, and the year ended March 31, 2025 was $ 3,183 , $ 3,876 , $ 955 and $ 19,876 , respectively. This includes amortization of costs associated with computer software for the years ended December 31, 2022 and 2023, the three months ended March 31, 2024, and the year ended March 31, 2025 of $ 179 , $ 605 , $ 339 an d $ 5,734 , respectively. NOTE 8 - INTANGIBLE ASSETS AND GOODWILL The Company capitalizes 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 is included in cost of revenue over the estimated life of the products. 79 The following table summarizes identifiable intangible assets of the Company as of March 31, 2024 and March 31, 2025 (in thousands): March 31, 2025 Useful Lives (In Years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Definite-lived: Customer relationships 9 - 13 $ 200,868 $ ( 21,994 ) $ 178,874 Trademark and tradename 3 - 15 21,557 ( 5,805 ) 15,752 Patents 7 - 11 628 ( 553 ) 75 Technology 5 - 7 74,050 ( 21,705 ) 52,345 Software to be sold or leased 3 - 7 13,490 ( 2,119 ) 11,371 310,593 ( 52,176 ) 258,417 Indefinite-lived: Customer list 104 — 104 Trademark and tradename 61 — 61 165 — 165 Total $ 310,758 $ ( 52,176 ) $ 258,582 March 31, 2024 Useful Lives (In Years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Definite-lived: Customer relationships 9 - 12 $ 19,264 $ ( 8,012 ) $ 11,252 Trademark and tradename 3 - 15 7,553 ( 3,877 ) 3,676 Patents 7 - 11 628 ( 464 ) 164 Technology 7 10,911 ( 10,911 ) — Software to be sold or leased 3 5,159 ( 764 ) 4,395 43,515 ( 24,028 ) 19,487 Indefinite-lived: Customer list 104 — 104 Trademark and tradename 61 — 61 165 — 165 Total $ 43,680 $ ( 24,028 ) $ 19,652 At March 31, 2025 , the weighted-average amortization periods for customer relationships, trademarks and tradenames, patents, technology, and capitalized software to be sold or leased were 11.7 , 10.8 , 7.0 , 4.4 , and 4.3 years, res pectively. Amortization expense for the years ended December 31, 2022 and 2023, the three months ended March 31, 2024, and the year ended March 31, 2025 was $ 5,079 , $ 5,569 , $ 988 and $ 27,619 , respectively. 80 Estimated future amortization expense for each of the five succeeding fiscal years for these intangible assets is as follows: Years ending March 31, 2026 $ 36,334 2027 35,169 2028 34,199 2029 31,738 2030 23,194 Thereafter 97,783 $ 258,417 Reconciliation of Total Goodwill The following table is a reconciliation of the carrying amount of goodwill at the beginning and end of the reporting period (in thousands): Goodwill Balance at March 31, 2024 83,487 Businesses acquired MiX Combination 216,799 FC Acquisition 82,245 Foreign currency translation difference 615 Balance at March 31, 2025 383,146 A reconciliation for the comparative period has not been presented, as there were no movements in the carrying amount of goodwill during that period. Refer to Note 3 for additional information regarding the change in the carrying amount of goodwill from April 1, 2024 to March 31, 2025 as a result of the MiX Combination and FC Acquisition. NOTE 9 - STOCK-BASED COMPENSATION The Company’s stockholders have approved the Company’s 2018 Incentive Plan (as amended, the “2018 Plan”), pursuant to which the Company may grant stock options, restricted stock and other equity-based awards with respect to up to an aggregate of 17,500 shares of the Company’s common stock with a vesting period of approximately four to five years . There were 7,040 shares available for future issuance under the 2018 Plan as of March 31, 2025. The 2018 Plan is administered by the Compensation Committee of the Company’s Board of Directors, which has the authority to determine, among other things, the term during which an option may be exercised (not more than 10 years), the exercise price of an option and the vesting provisions. The Company recognizes all employee share-based payments in the statement of operations as an operating expense, based on their fair values on the applicable grant date. 81 [A] Stock Options: The following table summarizes the activity relating to the Company’s market-based stock options for the year ended March 31, 2025: Options (in thousands) Weighted- Average Exercise Price ($) Weighted Average Contractual Remaining Term (years) Aggregate Intrinsic Values (in thousands) Outstanding as of April 1, 2024 5,445 13.39 — — Granted — — — — Exercised — — — — Forfeited ( 245 ) 3.46 — — Outstanding as of March 31, 2025 5,200 13.85 6.96 $ 2,549 Exercisable as of March 31, 2025 — — — $ — During fiscal year 2025, the Company granted options to purchase 375 shares of common stock with time-based vesting conditions. The following table summarizes the activity relating to the Company’s stock options, excluding the market-based stock options, for the year ended March 31, 2025: Options (in thousands) Weighted- Average Exercise Price ($) Weighted Average Contractual Remaining Term (years) Aggregate Intrinsic Values (in thousands) Outstanding as of April 1, 2024 1,979 4.68 — — Granted 375 4.31 — — Exercised ( 367 ) 5.07 — — Forfeited ( 97 ) 5.22 — — Outstanding as of March 31, 2025 1,890 4.51 6.77 $ 2,089 Exercisable as of March 31, 2025 1,627 4.54 6.37 $ 1,779 The fair value of each option grant on the date of grant is estimated using the Black-Scholes option-pricing model reflecting the following weighted-average assumptions: December 31, 2022 December 31, 2023 March 31, 2025 Expected volatility 49.4 % 55.6 % 60.2 % Expected life of options 6.5 6.1 6.5 Risk free interest rate 1.73 % 3.87 % 4.23 % Dividend yield — — — Weighted-average fair value of options granted during the year $ 2.04 $ 1.66 $ 2.66 No options were granted during the three months ended March 31, 2024. Expected volatility is based on historical volatility of the Company’s common stock and the expected life of options is based on historical data with respect to employee exercise periods. 82 The Company recorded stock-based compensation expense of $ 2,943 , $ 2,712 , $ 688 , and $ 3,098 for the years ended December 31, 2022 and 2023, the three months ended March 31, 2024, and the year ended March 31, 2025, respectively, in connection with awards made under the stock option plans. The increase in the recognized expense is due to the approved acceleration of vesting of unvested restricted stock and stock option awards with time-based vesting conditions that were outstanding under the Powerfleet equity plans (including any inducement awards with time-based vesting) in connection with the closing of the MiX Combination. The accelerated vesting of the Company’s equity awards is not part of what was acquired in the MiX Combination, nor what was paid for in the MiX Combination, because it was for the benefit of the Company’s employees rather than for the benefit of MiX Telematics’ employees. Therefore, the acceleration of the equity awards was treated as a separate transaction from the MiX Combination and the acceleration of vesting was accounted for immediately upon closing of the MiX Combination on April 2, 2024. The fair value of options vested during the years ended December 31, 2022 and 2023, the three months ended March 31, 2024, and the year ended March 31, 2025 amounted to $ 869 , $ 931 , $ 532 and $ 1,752 , respectively. The total intrinsic value of options exercised during the year ended December 31, 2023 amounted to $ 9 . There were no option exercises that occurred during the years ended December 31, 2022, the three months ended March 31, 2024, and the year ended March 31, 2025. As of March 31, 2025, there was $ 682 of total unrecognized compensation costs related to unvested 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 0.97 years. As of March 31, 2025, there was $ 2,177 of total unrecognized compensation costs related to unvested 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. That cost is expected to be recognized over a weighted-average period of 1.91 years. The Company estimates forfeitures at the time of valuation and reduces expenses ratably over the vesting period. This estimate is adjusted periodically based on the extent to which actual forfeitures differ, or are expected to differ, from the previous estimate. [B] Restricted Stock Awards: The Company grants restricted stock to employees, whereby the employees are contractually restricted from transferring the shares until they are vested. The stock is unvested at the time of grant, and, upon vesting, there are no legal restrictions on the stock. Some participants have the option to have their shares withheld for their taxes upon vesting. Shares withheld for taxes are treated as a purchase of treasury stock. The fair value of each share is based on the Company’s closing stock price on the date of the grant. A summary of all unvested restricted stock for the year ended March 31, 2025 is as follows: Number of Unvested Shares (in thousands) Weighted- Average Grant Date Fair Value ($) Unvested, March 31, 2024 1,370 2.68 Granted 54 5.45 Vested/Exercised ( 1,370 ) 2.68 Forfeited or expired — — Unvested, March 31, 2025 54 5.45 The Company recorded stock-based compensation expenses of $ 1,347 , $ 1,196 , $ 340 , and $ 3,337 for the years ended December 31, 2022 and 2023, the three months ended March 31, 2024, and the year ended March 31, 2025, respectively, in connection with restricted stock grants. As of March 31, 2025, there was $ 36 of total unrecognized compensation cost related to unvested shares. That cost is expected to be recognized over a weighted-average period of 0.13 years. The increase in the recognized expense is due to the approved acceleration of vesting of unvested restricted stock and stock option awards with time-based vesting conditions that are outstanding under the Powerfleet equity plans (including any inducement awards with time-based vesting) in connection with the closing of the MiX Combination. The accelerated vesting of the Company’s equity awards is not part of what was acquired in the MiX Combination, nor what was paid for in the MiX Combination because it was for the benefit of the Company’s employees rather than for the benefit of MiX Telematics’ employees. Therefore, the accelerat 83 ion of the equity awards was treated as a separate transaction from the MiX Combination and the acceleration of vesting was accounted for immediately upon closing of the MiX Combination on April 2, 2024. During fiscal year 2025, the Company granted 1,250 restricted shares of common stock to the Company’s Chief Executive Officer, of which 312.5 shares vest in equal installments over a three-year period, provided that the executive is employed by the Company on each scheduled vesting date and 937.5 restricted shares with market-based vesting condition. The market-based restricted shares will vest in equal installments over a three-year period following the date on which the volume weighted average price of the Company’s common stock during a consecutive 60-day trading period (the “60 Day VWAP”) ranges between $ 6.00 and $ 10.00 . The Company valued the market-based restricted stock 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 ( 4.3 )%, and expected stock price volatility ( 57.5 )% over the expected life of awards ( 10 years). The weighted average fair value of market-based stock options granted during the period was $ 5.35 . Grant date for these awards was determined to be March 30, 2025. Time Based Restricted Shares Market Based Restricted Shares Number of Unvested Shares Weighted- Average Grant Date Fair Value Number of Unvested Shares Weighted- Average Grant Date Fair Value Unvested, March 31, 2024 — — — — Granted 313 5.59 938 5.35 Vested/Exercised — — — — Forfeited or expired — — — — Unvested, March 31, 2025 313 5.35 938 5.35 In addition to the above, the Company granted 364.6 restricted shares of common stock to the Company’s executive officers, which vest in equal installments over a three-year period, provided that the executive is employed by the Company on each scheduled vesting date. These grants included a grant of 174.3 shares of restricted stock to the Company’s Chief Executive Officer, which vests over three equal installments over a three-year period, provided that the executive is employed by the Company on each scheduled vesting date. Grant date for these awards was determined to be March 30, 2025. Number of Unvested Shares Weighted- Average Grant Date Fair Value Unvested, March 31, 2024 — — Granted 365 5.59 Vested/Exercised — — Forfeited or expired — — Unvested, March 31, 2025 365 5.59 [C] Stock Appreciation Rights: In connection with the closing of the MiX Combination, the Company assumed each of MiX Telematics’ share plans. MiX Telematics issued equity-classified share incentives under the MiX Telematics Long-Term Incentive Plan (“LTIP”) to directors and certain key employees within the Company. The LTIP provides for three types of grants to be issued, namely performance shares, restricted share units and stock appreciation rights (“SARs”). On the Implementation Date (April 2, 2024), the only issued and outstanding equity awards under the LTIP were SARs, and the Company assumed the outstanding SARs in issue. No additional performance shares or restricted share units will be issued or assumed by the Company. 84 The replacement of MiX Telematics’ share-based payment awards has been treated as a modification under ASC 718, Compensation—Stock Compensation as of the Implementation Date. The fair value of the replacement SARs issued was allocated between pre-combination and post-combination service based on the vesting period. The fair value related to pre-combination service is included as part of the fair value of the consideration in the MiX Combination (see Note 3), and the fair value related to post-combination service is to be recognized as an expense over the remaining vesting period. The total stock-based compensation expense recognized during the year ended March 31, 2025 was $ 2,926 . The following table summarizes the activities for the outstanding SARs: Number of SARs (in thousands) Weighted- Average Exercise Price ($) Weighted Average Contractual Remaining Term (years) Aggregate Intrinsic Values (in thousands) Outstanding as of April 1, 2024 — — Acquired through MiX Combination 5,740 2.61 Granted — — Exercised ( 2,004 ) 2.92 Forfeited ( 498 ) 2.43 Outstanding as of March 31, 2025 3,238 2.44 3.07 Exercisable as of March 31, 2025 856 2.86 1.78 $ 2,249 As of March 31, 2025, there was $ 5,574 of unrecognized compensation cost related to unvested SARs. This amount is expected to be recognized over a weighted-average period of 2.62 years. NOTE 10 - NET LOSS PER SHARE Net loss per share for the years ended December 31, 2022 and 2023, the three months ended March 31, 2024, and the year ended March 31, 2025 are as follows (in thousands, except per share data): Year Ended December 31, Three Months Ended March 31, Year Ended March 31, 2022 2023 2024 2025 Basic and diluted loss per share Net loss attributable to common stockholders $ ( 16,891 ) $ ( 17,307 ) $ ( 19,639 ) $ ( 51,012 ) Net loss per share attributable to common stockholders - basic and diluted $ ( 0.48 ) $ ( 0.49 ) $ ( 0.55 ) $ ( 0.43 ) Weighted-average common share outstanding - basic and diluted 35,393 35,628 35,813 119,877 Basic loss per share is calculated by dividing net loss attributable to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted loss per share reflects the potential dilution, assuming common shares were issued upon the exercise of outstanding options, and the proceeds thereof were used to purchase outstanding common shares. Dilutive potential common shares include outstanding stock options, warrants and restricted stock and performance share awards. We include participating securities (unvested share-based payment awards and equivalents that contain non-forfeitable rights to dividends or dividend equivalents) in the computation of earnings per share pursuant to the two-class method. The Company’s participating securities consist solely of preferred stock, which have contractual participation rights equivalent to those of stockholders of unrestricted common stock. The two-class method of computing earnings per share is an 85 allocation method that calculates earnings per share for common stock and participating securities. During periods of net loss, no effect is given to the participating securities because they do not share in the losses of the Company. NOTE 11 - SHORT-TERM BANK DEBT AND LONG-TERM DEBT March 31, 2024 2025 Short-term bank debt $ — $ 36,788 Current maturities of long-term debt $ 1,951 $ 4,844 Long-term debt - less current maturities $ 113,810 $ 232,160 Short-Term Bank Debt As of March 31, 2025, short-term debt comprised $ 35,435 of borrowing facilities and $ 1,353 of book overdrafts . RMB Facility On March 7, 2024, as part of the MiX Combination, MiX Telematics and Powerfleet entered into the Facilities Agreement with RMB. Following the signing of the Facilities Agreement, MiX Telematics entered into a Facility Notice and General Terms and Conditions (the “Credit Agreement”) with RMB on March 14, 2024 for a 364-day committed general banking facility of R 350,000 (the equivalent of $ 18,984 as at March 31, 2025 ) (the “RMB General Facility”). The Credit Agreement and the rights and obligations of the parties are subject to the terms and conditions of the Facilities Agreement, which is described in more detail below. The RMB General Facility is repayable on demand and has a term of 365 days from the Available Date (as defined therein). Repayment of the RMB General Facility, including capitalized interest, is due by the earlier of (a) the Available Date or (b) April 2, 2025, unless extended by agreement between MiX Telematics and RMB. Interest rate for the RMB General Facility is calculated at South African prime rate minus 0.75 % per annum and will be calculated on the daily outstanding balance, compounded monthly in arrears and repaid quarterly. During April 2025, the RMB General Facility repayment terms were extended by an additional 365 days on the same terms and conditions of the Facilities Agreement. As of March 31, 2025, $ 18,006 of the RMB General Facility was utilized. Hapoalim Debt As of March 31, 2025, Powerfleet Israel Ltd. (“Powerfleet Israel”) had utilized approximately $ 17,422 under the Hapoalim Revolving Facilities, which are described below . Long-Term Debt Hapoalim Debt In connection with the Pointer acquisition, Powerfleet Israel incurred New Israeli Shekels (“NIS”) denominated debt in term loan borrowings on October 3, 2019 under a Credit Agreement (the “Prior Credit Agreement”) with Bank Hapoalim B.M. (“Hapoalim”), 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 (composed of two facilities in the aggregate principal amount of $ 20,000 and $ 10,000 , respectively and a five-year revolving credit facility to Pointer Telocation Ltd. (“Pointer”) denominated in NIS in an initial aggregate principal amount of $ 10,000 (collectively, the “Prior Credit Facilities”). The Prior Credit Facilities were scheduled to mature on October 3, 2024. On March 18, 2024, Powerfleet Israel and Pointer (collectively, the “Borrowers”) entered into an amended and restated credit agreement (as amended, 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 (composed of two facilities in the aggregate principal amounts of $ 20,000 and $ 10,000 , respectively) (“Hapoalim Facility A” and “Hapoalim Facility B,” respect 86 ively, and, collectively, the “Hapoalim Term Facilities”) and (ii) two revolving credit facilities to Pointer in an aggregate principal amount of $ 20,000 (composed of two revolvers in the aggregate principal amounts of $ 10,000 and $ 10,000 , respectively) (“Hapoalim Facility C” and “Hapoalim Facility D,” respectively, and, collectively, the “Hapoalim Revolving Facilities” and, together with the Hapoalim Term Facilities, the “Hapoalim Credit Facilities”). Powerfleet Israel drew down $ 30,000 in cash under the Hapoalim Term Facilities on March 18, 2024 and used the proceeds to prepay approximately $ 11,200 , representing the remaining outstanding balance, of the Prior Credit Facilities, with the remaining proceeds distributed to Powerfleet. The proceeds of the Hapoalim Revolving Facilities may be used by Pointer for general corporate purposes, including working capital and capital expenditures. On December 30, 2024, the Borrowers entered into an amendment to the A&R Credit Agreement, which increases the principal amount available under Hapoalim Facility D from $ 10,000 to $ 20,000 and provides that the total principal amount of Hapoalim Facility D may be distributed to the Company or any of its subsidiaries by no later than December 31, 2025, subject to certain terms and conditions of the A&R Credit Agreement. As of March 31, 2025, Pointer had utilized $ 17,422 under the Hapoalim Revolving Facilities. The available undrawn facility balance at March 31, 2025 was $ 12,578 . The interest rates for borrowings under Hapoalim Facility A and Hapoalim Facility B are Hapoalim’s prime rate + 2.2 % per annum, and Hapoalim’s prime rate + 2.3 % per annum, respectively. Hapoalim’s prime rate at March 31, 2025 was 6 % . Interest is payable quarterly on March 25, June 25, September 25, and December 25 over five years. The first interest period ended on June 25, 2024. Hapoalim Facility A amortizes in quarterly installments over its five-year term and will be payable in the following aggregate annual amounts: (i) 10 % of the principal amount of Hapoalim Facility A from March 18, 2024 until March 18, 2025, (ii) 25 % of the principal amount of Hapoalim Facility A from March 18, 2025 until March 18, 2026, (iii) 27.5 % of the principal amount of Hapoalim Facility A from March 18, 2026 until March 18, 2027, (iv) 27.5 % of the principal amount of Hapoalim Facility A from March 18, 2027 until March 18, 2028, and (v) 10 % of the principal amount of Hapoalim Facility A from March 18, 2028 until March 18, 2029. Hapoalim Facility B does not amortize and will be payable in full on March 18, 2029. The interest rate for borrowings under Hapoalim Facility C is, with respect to NIS-denominated loans, Hapoalim’s prime rate + 2.5 %, and with respect to U.S. dollar-denominated loans, SOFR + 2.15 %. Borrowings under Hapoalim Facility D will bear interest at the applicable interest rate set forth in the standard form documents entered into in connection with each utilization of Hapoalim Facility D. In addition, Pointer is required to pay a credit allocation fee in NIS, with respect to Hapoalim Facility C, and a non-utilization fee in U.S. dollars, with respect to Hapoalim Facility D, in each case, equal to 0.5 % per annum on undrawn and uncancelled amounts of the revolving facilities during the period commencing on March 18, 2024 and ending on the last day of the applicable availability period of such revolving facilities. The Borrowers have also paid certain upfront fees and other fees and expenses to Hapoalim in connection with the A&R Credit Agreement. The Hapoalim Revolving Facilities were set to mature on March 18, 2025; however, on March 2, 2025, the payment terms were extended to February 27, 2026. Borrowings under the Hapoalim Term Facilities are voluntarily prepayable at any time, in whole or in part, and are not subject to any prepayment premium. Voluntary prepayments of the Hapoalim Term Facilities must be made in minimum increments of NIS 1 million. In addition to certain customary mandatory prepayment requirements, the A&R Credit Agreement also requires Powerfleet Israel to make prepayments on the Hapoalim Term Facilities to the extent it receives distributions from Pointer, except for any such distributions made to cover certain expenses of Powerfleet Israel in its normal course of operations. The A&R Credit Agreement contains certain customary affirmative and negative covenants, including financial covenants with respect to Pointer’s net debt levels which must be less than 100 % of Working Capital as defined in the A&R Credit Agreement, the ratio of each Borrower’s net debt to Pointer’s EBITDA must not exceed 4.75 , Powerfleet Israel’s minimum equity which must not be less than $ 60,000 , and the ratio of Powerfleet Israel’s equity to its total assets which must be greater than 35 % and the ratio of Pointer’s net debt to EBITDA ratio must not exceed 2 . The occurrence of any event of default under the A&R Credit Agreement may result in all outstanding indebtedness under the Hapoalim Credit Facilities becoming immediately due and payable. The financial covenants have been met for the quarter ended March 31, 2025. The Hapoalim Credit Facilities continue to be secured by first ranking and exclusive fixed and floating charges, including by Powerfleet Israel over the entire share capital of Pointer and by Pointer over all of its assets, as well as cross guarantees between Powerfleet Israel and Pointer, except that the Borrowers’ holdings in Pointer do Brasil Comercial Ltda., Pointer Argentina and Pointer South Africa are excluded from such floating charges. No other assets of the Company will serve as collateral under the Hapoalim Credit Facilities. 87 The Hapoalim Term Facilities under the A&R Credit Agreement have been accounted for as modifications of the term facilities that were provided under the Prior Credit Agreement because the change in the present value of the cash flows under the A&R Credit Agreement is less than 10 % of the present value of the cash flows under the Prior Credit Agreement. The proceeds of the Hapoalim Term Facilities ($ 40,000 ), less the prepayment of the term loans under the Prior Credit Facility (approximately $ 11,200 ), amounting to approximately $ 28,800 , has been recognized as an increase in the carrying value of the prior term loans that was recognized previously. For the years ended December 31, 2022, and 2023, and the three months ended March 31, 2024, the Company recorded $ 15 , $ 133 and $ 110 , respectively, of additional deferred costs to the original debt issuance costs and the refinancing fee paid to Hapoalim. For the year ended March 31, 2025, the Company recorded a cost of $ 33 net of additional deferred costs and credit to the original debt issuance costs and amortization of the original debt issuance co sts. The Company recorded charges of $ 824 , $ 572 , $ 111 and $ 2,410 to interest expense on its Consolidated Statement of Operatio ns for the years ended December 31, 2022 and 2023, the three months ended March 31, 2024, and the year ended March 31, 2025, respectively, related to interest expense associated with the Hapoalim debt. RMB Debt 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 $ 85,000 , composed of Facility A and Facility B, each with a principal amount of $ 42,500 (“RMB Facility A” and “RMB Facility B,” respectively, and collectively, the “RMB Facilities”). The Company drew down $ 85,000 in cash under the RMB Facilities on March 13, 2024, and the proceeds to redeem all the then-outstanding shares of the Company’s Series A convertible preferred stock (the “Series A Preferred Stock”) and for general corporate purposes. The RMB Facilities are guaranteed by the Company, I.D. Systems, Inc. (“I.D. Systems”) and Movingdots GmbH (“Movingdots”), and there is a security agreement over the shares in Main Street 2000 Proprietary Limited (“MS2000”), I.D. Systems, and Movingdots. The interest rates of borrowings under RMB Facility A and RMB Facility B are 8.699 % per annum and 8.979 % per annum, respectively. Interest is payable quarterly in arrears. RMB Facility A matures on March 31, 2027, and RMB Facility B matures on March 31, 2029. The Company may prepay the RMB Facilities at any time, subject to a minimum reduction of $ 5,000 and multiples of $ 1,000 . If the Company prepays any amount during the first or second annual period of the funding, a refinancing fee equal to 2 % or 1 %, respectively, of the prepayment will be payable. Also, the RMB Facilities are mandatorily prepayable upon the occurrence of uncertain future events, such as a change of control or a transfer of the business. In the event that either prepayment occurs, the respective prepayment amount will be adjusted for RMB’s break gains or losses, which relate mainly to the unwinding of interest rate derivatives (the “Prepayment Derivative”) which RMB entered into with third parties to fix the interest rates on the RMB Facilities. Since RMB’s break gains/losses could result in the Company prepaying at a discount, or a premium, of 10 % or more to the initial carrying amount of the RMB Facilities, the optional and contingent repayment features were to be embedded derivatives in the scope of ASC 815-15 Embedded Derivatives. The Prepayment Derivative within each RMB Facility has been bifurcated and accounted for at fair value separately from the respective debt-host contracts which are accounted for at amortized cost. The terms of the debt-host contracts have been bifurcated to adjust the carrying value of the debt upon separating the derivative. Upon initial recognition of the RMB Facilities, a Prepayment Derivative asset of $ 610 and $ 1,616 for RMB Facility A and RMB Facility B, respectively, was recognized with a corresponding increase in the initial carrying amount of each debt-host contract. The fair value of the embedded derivative is estimated using a “with-and-without” approach as the difference between the value of the RMB Facilities with and without the embedded derivative using both the binomial lattice model and discounted cash flow analysis. The following key assumptions were used in March 31, 2025: Facility A Facility B Credit spread volatility 55 % 35 % Credit spread 4.48 % 4.99 % Credit rating B B Risk free rate SOFR spot rate SOFR spot rate As of March 31, 2024 and 2025, the Secured Overnight Financing Rate ( SOFR ) spot rate was 5.34 % and 4.41 %, respectively . 88 The Prepayment Derivative is classified as a Level 3 in the fair value hierarchy due to the use of at least one significant unobservable input which is the credit spread volatility . At inception, the credit spread was an observable input based on the transaction price of the debt; however, in future periods, it will also be an unobservable input. For the Prepayment Derivative asset in RMB Facility A, a change of -10% in credit spread volatility would result in a decrease in the derivative asset of $ 82 , while a change of +10% in credit spread volatility would result in an increase in the derivative asset of $ 81 . For the Prepayment Derivative asset in RMB Facility B, a change of -10% in credit spread volatility would result in a decrease in the derivative asset of $ 218 , while a change of +10% in credit spread volatility would result in an increase in the derivative asset of $ 224 . The Prepayment Derivative assets are included in Other assets and their fair values were $ 610 and $ 1,616 for RMB Facility A and RMB Facility B, respectively, as of March 31, 2024 and, $ 850 and $ 1,880 for RMB Facility A and RMB Facility B, respectively, as of March 31, 2025. The debt-host contracts are accounted for at amortized cost. Total debt issuance costs of appr oximately $ 1,000 were incurred. For the year ended March 31, 2025, the Company recorded $ 93 , respectively, of amortization of the original debt issuance costs and the refinancing fee to RMB. For the year ended March 31, 2025, the Company recorded interest expense of $ 7,588 . RMB Term Facility On September 27, 2024, the Company, together with I.D. Systems and Movingdots, each a wholly owned subsidiary of the Company, entered into a Facility Agreement (the “Facility Agreement”) with RMB, pursuant to which RMB agreed to provide the Company with a term loan facility in an aggregate principal amount of $ 125,000 (the “New RMB Term Facility”). The Company drew down the full amount of the New RMB Term Facility on October 1, 2024, and used the proceeds to pay a portion of the Purchase Price in connection with the FC Acquisition. The Company’s obligations under the New RMB Term Facility are guaranteed, on a joint and several basis, by the Company, I.D. Systems and Movingdots. The New RMB Term Facility is secured by a first priority security interest over the entire share capital of I.D. Systems, Movingdots, MS2000 and Canadian SPV, each a wholly owned subsidiary of the Company. No other assets of the Company will serve as collateral under the New RMB Term Facility. The New RMB Term Facility will mature on the last business day of the month that is five years following the closing date of the Facility Agreement (the “Maturity Date”). The New RMB Term Facility does not amortize and will be payable on the Maturity Date. Borrowings under the New RMB Term Facility may be voluntarily prepaid at any time upon prior written notice, in whole or in part, subject to payment of a refinancing fee equal to (i) 2 % of the amount prepaid if such prepayment occurs before October 1, 2025, or (ii) 1 % of the amount prepaid if such prepayment occurs on or after October 1, 2025, but before October 1, 2026. No refinancing fee is payable if prepayment occurs on or after October 1, 2026. If voluntary prepayments are made in part, they must be made in minimum amounts of $ 5 million in integral multiples of $ 1 million. In addition, the Facility Agreement provides for certain customary mandatory prepayment requirements. In the event of any prepayment during a quarterly interest period the Company is also required to pay, or receive from, RMB an amount, such that RMB would be in the same economic position for that interest period had the prepayment only occurred at the end of such period. The amount payable or receivable will be calculated relative to the interest that RMB would be able to obtain by placing the amount prepaid on deposit with a leading bank in the London interbank market for a period from the prepayment until the end of such interest period. The New RMB Term Facility bears interest at 5 % per annum (provided no event of default is continuing), plus the applicable term SOFR reference rate (or an interpolated rate if SOFR is unavailable), payable quarterly in arrears on March 31, June 30, September 30, and December 31 each year, and on October 31, 2029. The stated interest rate at March 31, 2025 was 9.59 %. The Company paid a non-refundable deal structuring fee of $ 1,250 to RMB on October 1, 2024. Total debt issuance costs, including the $ 1,250 non-refundable deal structuring fee to RMB, of approximately $ 1,443 were incurred. For the year ended March 31, 2025, the Company recorded $ 113 of amortization of these costs and $ 5,946 of interest expense. The Facility Agreement contains certain customary affirmative and negative covenants, including financial covenants with respect to the ratio of the Company’s consolidated total net borrowings to consolidated EBITDA and the ratio of the Company’s consolidated EBITDA to consolidated total finance costs. The Facility Agreement also includes representations, warranties, events of default and other provisions customary for financings of this type. The occurrence of any event of default under the Facility Agreement may result in all outstanding indebtedness under the RMB Term Facility becoming immediately due and payable. 89 Scheduled contractual maturities of the long-term debt as of March 31, 2025 are as follows (in thousands): 2026 $ 4,913 2027 47,904 2028 5,404 2029 54,290 2030 125,000 Thereafter — 237,511 Less: Current portion ( 4,844 ) Less: Debt costs and prepayment penalty ( 507 ) Total $ 232,160 NOTE 12 - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consist of the following (in thousands): March 31, 2024 2025 Accrued warranty $ 1,138 $ 1,479 Accrued compensation 8,956 27,825 Government authorities 3,062 6,982 Other current liabilities 827 9,041 $ 13,983 $ 45,327 The following table summarizes warranty activity for the periods ended March 31, 2024 and 2025 (in thousands): Accrued warranty reserve, December 31, 2023 $ 2,653 Accrual for product warranties issued 441 Product replacements and other warranty expenditures ( 165 ) Expiration of warranties (over warranty accrual) ( 3 ) Foreign currency translation difference — Accrued warranty reserve, March 31, 2024 (1) $ 2,926 Accrual for product warranties issued 365 Product replacements and other warranty expenditures ( 510 ) Expiration of warranties (over warranty accrual) ( 109 ) Acquired through MiX Combination and FC Acquisition 954 Foreign currency translation difference ( 8 ) Accrued warranty reserve, March 31, 2025 (1) $ 3,618 (1) Includes non-current accrued warranty included in other long-term liabilities at March 31, 2024 and 2025 of $ 1,788 and $ 2,139 , respectively. 90 NOTE 13 - STOCKHOLDERS’ EQUITY Series A Preferred Stock In connection with the completion of the Pointer acquisition, 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. Concurrently with the closing of the MiX Combination on April 2, 2024, 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 $ 90,300 all of the outstanding shares of the Series A Preferred Stock. Dividends Holders of Series A Preferred Stock were 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 were 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 had occurred and was continuing and that there had 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 were first issued (the “Original Issuance Date”), and on each monthly anniversary thereafter, the dividend rate would increase by 100 basis points, until the dividend rate reached 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 (in thousands): Dividends paid in cash Dividends paid in shares Total Year Ended December 31, 2022 $ — $ 4,231 $ 4,231 Year Ended December 31, 2023 $ 3,385 $ 1,108 $ 4,493 Three Months Ended March 31, 2024 (1) $ 1,128 $ — $ 1,128 Year Ended March 31, 2025 $ 25 $ — $ 25 (1) Dividends for the period ended March 31, 2024, plus accrued dividends through April 2, 2024, were paid in cash on the redemption date of the Series A Preferred Stock. As of each of the periods presented in the above table, dividends in arrears were $ 0 . 91 NOTE 14 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Comprehensive loss includes net loss and foreign currency translation gains and losses. The accumulated balances for each classification of other comprehensive income (loss) are as follows (in thousands): Foreign currency translation adjustment Accumulated other comprehensive income (loss) Balance at January 1, 2022 $ 391 $ 391 Net current period change ( 1,601 ) ( 1,601 ) Balance at December 31, 2022 $ ( 1,210 ) $ ( 1,210 ) Net current period change 594 594 Balance at December 31, 2023 $ ( 616 ) $ ( 616 ) Net current period change ( 369 ) ( 369 ) Balance at March 31, 2024 $ ( 985 ) $ ( 985 ) Net current period change ( 7,865 ) ( 7,865 ) Balance at March 31, 2025 $ ( 8,850 ) $ ( 8,850 ) NOTE 15 - SEGMENT INFORMATION The Company operates in one reportable segment, wireless AIoT asset management. The Company has a single operating and reportable segment. The Company’s Chief Operating Decision Maker (“CODM”) is its Chief Executive Officer, who reviews financial information presented on a consolidated basis. The CODM makes operating decisions, assesses financial performance, and allocates resources based on consolidated net loss attributable to common stockholders as reported on the Company’s Consolidated Statement of Operations. The Company derives its revenue from the sale of systems and products and from customer SaaS and hosting infrastructure fees. The measure of segment assets is reported on the Consolidated Balance Sheet as net fixed assets. 92 The following table summarizes the revenues and significant expenses and regularly provided to the CODM (in thousands): Year Ended December 31, Three Months Ended March 31, Year Ended March 31, 2022 2023 2024 2025 Total revenues $ 135,912 $ 133,736 $ 33,740 $ 362,515 Total cost of revenues 70,919 66,660 17,537 167,978 Selling and marketing expenses 22,964 24,076 5,720 53,048 General and administrative expenses 34,564 41,303 15,152 141,803 Development costs incurred 10,641 12,716 3,417 28,881 Development costs capitalized ( 2,169 ) ( 4,336 ) ( 1,399 ) ( 12,820 ) Depreciation and amortization 5,964 5,874 960 9,510 Interest income 71 103 259 926 Interest expense, net 994 ( 1,602 ) ( 709 ) ( 20,330 ) Bargain purchase - Movingdots — 9,034 — — Other income (expense), net 24 ( 29 ) ( 55 ) ( 1,163 ) Income tax expense ( 870 ) ( 589 ) ( 352 ) ( 4,517 ) Net loss before non-controlling interest ( 6,752 ) ( 5,640 ) ( 8,504 ) ( 50,969 ) Non-controlling interest ( 2 ) ( 35 ) ( 11 ) ( 18 ) Accretion of preferred stock ( 5,906 ) ( 7,139 ) ( 9,996 ) — Preferred stock dividend ( 4,231 ) ( 4,493 ) ( 1,128 ) ( 25 ) Net loss attributable to common stockholders $ ( 16,891 ) $ ( 17,307 ) $ ( 19,639 ) $ ( 51,012 ) The following table summarizes revenues by geographic region (in thousands): Year Ended December 31, Three Months Ended March 31, Year Ended March 31, 2022 2023 2024 2025 North America $ 70,820 $ 74,671 $ 18,090 $ 121,623 Israel 44,580 41,689 11,267 49,555 Africa 3,241 3,283 863 97,586 Europe and Middle East 3,120 1,908 1,016 43,190 Australia — — — 30,962 Other 14,151 12,185 2,504 19,599 $ 135,912 $ 133,736 $ 33,740 $ 362,515 93 The following table summarizes long-lived assets by geographic region (in thousands): March 31, 2024 March 31, 2025 North America $ 4,083 $ 13,051 Israel 3,946 2,249 Africa 705 32,391 Europe and Middle East 2,850 4,824 Australia — 825 Other 1,135 4,671 $ 12,719 $ 58,011 NOTE 16 - INCOME TAXES Loss before income taxes consists of the following (in thousands): Year Ended December 31, Three Months Ended March 31, Year Ended March 31, 2022 2023 2024 2025 U.S. operations $ ( 10,303 ) $ ( 16,494 ) $ ( 7,990 ) $ ( 46,935 ) Foreign operations 4,421 11,443 ( 162 ) 483 $ ( 5,882 ) $ ( 5,051 ) $ ( 8,152 ) $ ( 46,452 ) The provision for income taxes consists of the following for the periods presented (in thousands): Year Ended December 31, Three Months Ended March 31, Year Ended March 31, 2022 2023 2024 2025 Current: Federal $ — $ — $ — $ — State 93 68 25 110 Foreign 69 519 220 6,174 Total current provision $ 162 $ 587 $ 245 $ 6,284 Deferred: Federal $ — $ — $ — $ — State — — — ( 85 ) Foreign 708 2 107 ( 1,682 ) Total deferred provision $ 708 $ 2 $ 107 $ ( 1,767 ) Total provision for income taxes $ 870 $ 589 $ 352 $ 4,517 94 The difference between income taxes at the statutory federal income tax rate and income taxes reported in the Consolidated Statement of Operations for the years ended December 31, 2022 and 2023, the three months ended March 31, 2024, and the year ended March 31, 2025 is attributable to the following (in thousands): Year Ended December 31, Three Months Ended March 31, Year Ended March 31, 2022 2023 2024 2025 Income tax benefit at the federal statutory rate $ ( 1,236 ) $ ( 1,061 ) $ ( 1,712 ) $ ( 9,755 ) State and local income taxes, net of federal taxes ( 313 ) ( 298 ) ( 145 ) ( 1,094 ) Increase (decrease) in valuation allowance ( 1,105 ) 1,488 1,570 7,173 Remeasurement of deferred tax adjustments 359 4 8 542 Permanent differences and other 810 678 222 6,343 Non-deductible (non-taxable) foreign exchange movements — — — ( 509 ) Over (Under) provision prior years — — — 378 Foreign rate differential ( 151 ) ( 1,924 ) 396 819 GILTI inclusion 2,425 1,586 — 120 Foreign tax paid — — — 381 Other 81 57 13 119 Acquisition fees — 59 — — $ 870 $ 589 $ 352 $ 4,517 95 The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at March 31, 2024 and 2025 are presented below (in thousands): March 31, 2024 March 31, 2025 Deferred tax assets: Net operating loss carryforwards $ 28,135 $ 48,572 Capital loss carryforwards 10,377 9,388 Deferred revenue 2,265 4,184 Stock-based compensation 230 306 Federal research and development tax credits 1,058 1,058 Capitalized research 1,524 1,832 Inventories 383 1,062 Bad debt reserve 639 1,588 Deferred lease liability 388 167 Acquisition costs 1,455 1,004 Interest limitation — 4,831 Other deductible temporary differences 2,859 8,818 Total gross deferred tax assets 49,313 82,810 Set-off of deferred tax balances — ( 25,569 ) Net deferred tax assets before valuation allowance 49,313 57,241 Less: valuation allowance ( 46,532 ) ( 53,307 ) Net deferred tax assets $ 2,781 $ 3,934 Deferred tax liabilities: Intangible amortization ( 3,958 ) ( 65,025 ) Right-of-use assets ( 348 ) ( 650 ) Deferred foreign currency gains — ( 8,031 ) Deferred commissions — ( 1,623 ) Other deductible temporary differences ( 159 ) ( 7,952 ) Total deferred tax liabilities ( 4,465 ) ( 83,281 ) Set-off of deferred tax balances — 25,569 Net deferred tax liabilities ( 4,465 ) ( 57,712 ) Net deferred tax liabilities $ ( 1,684 ) $ ( 53,778 ) 96 A reconciliation of the beginning and ending amount of unrecognized tax positions for the periods ended March 31, 2024 and 2025 is as follows (in thousands): Balance at December 31, 2023 $ 294 Additions based on tax provisions taken related to current period 27 Reductions related to expiration of statute of limitations — Balance at March 31, 2024 $ 321 Additions based on tax provisions taken related to current period 116 Reductions related to expiration of statute of limitations ( 119 ) Balance at March 31, 2025 $ 318 The unrecognized tax benefits, if recognized, would reduce the Company’s annual effective tax rate. The Company does not expect any significant changes to its unrecognized tax positions during the next 12 months. At March 31, 2025, the Company had an aggregate net operating loss (“NOL”) carryforward of approximately $ 83,930 for U.S. federal income tax purposes. At March 31, 2025, the Company had an aggregate NOL carryforward of approximately $ 37,775 for state income tax purposes and a foreign NOL carryforwards of approximately $ 101,519 . Substantially all of the NOL carryforwards expire from 2024 through 2037 for pre-2018 federal NOL carryforwards and from 2024 through 2044 for state purposes. The NOL carryforwards may be limited to use in any particular year based on Section 382 of the Internal Revenue Code of 1986, as amended (“IRC”), related to change of ownership restrictions. Section 382 of the IRC imposes an annual limitation on the utilization of NOL carryforwards based on long-term bond rates and the value of the corporation at the time of a change in ownership as defined by Section 382 of the IRC. In 2019 and 2024, the Company incurred a change in ownership under Section 382 of the IRC and this change of ownership is not expected to materially impact the Company’s ability to utilize its NOL carryforward amounts in the future. In addition, future stock issuances may subject the Company to further limitations on the utilization of its NOL carryforwards under the same IRC provision. At March 31, 2025, the Company has New Jersey NOL carryforwards included above in the approximate amount of $ 6,528 , expiring through 2044, which are available to reduce future earnings which would otherwise be subject to state income tax. The Company is asserting permanent reinvestment of all accumulated undistributed earnings of its foreign subsidiaries as of March 31, 2025, in excess of annual debt service costs requirements. For the year ended March 31, 2025, the Company’s valuation allowance increased to $ 53,307 , compared to $ 46,532 as of March 31, 2024, primarily due to the increase of NOLs and other timing differences. The Company has provided a valuation allowance against the full amount of its domestic net deferred tax assets and the majority of the foreign net 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 NOL carryforwards in future periods. The valuation allowance increased in 2025 by $ 6,775 . Audits for federal income tax returns are closed for the years through 2020. However, the Internal Revenue Service (“IRS”) can audit the NOLs generated during those years in the years that the NOLs are utilized. State income tax returns are generally subject to examination for a period of three to six years after the filing of the respective tax return. The state impact of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states. Foreign income tax returns are generally subject to examination based on the tax laws of the respective jurisdictions. NOTE 17 - LEASES The Company determines whether an arrangement is a lease at inception. The Company has operating leases for office space, office equipment and vehicles. The Company’s leases have remaining lease terms ranging from approximately 1 to 10 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 97 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. Where lease terms are 12 months or less, and meet the criteria for short-term lease classification, no ROU asset and no lease liability are recognized. Lease costs associated with the short-term leases are included in selling, general and administrative expenses on the Company’s Consolidated Statement of Operations. The components of lease cost are as follows (in thousands): Year Ended December 31, Three Months Ended March 31, Year Ended March 31, 2022 2023 2024 2025 Short-term lease cost $ 443 $ 453 $ 57 $ 840 Supplemental cash flow information and non-cash activity related to the Company’s operating leases are as follows (in thousands): Year Ended December 31, Three Months Ended March 31, Year Ended March 31, 2022 2023 2024 2025 Non-cash activity: Right-of-use assets obtained in exchange for lease obligations $ 1,450 $ 1,198 $ 2,018 $ 3,714 Reduction of right-of-use assets due to MiX Combination (1) $ — $ — $ — $ ( 946 ) (1) Subsequent to the MiX Combination, certain leases were terminated or modified due to the consolidation of leased space. Weighted-average remaining lease term and discount rate for our operating leases are as follows: March 31, 2024 March 31, 2025 Weighted-average remaining lease term - operating leases (in years) (1) 3.56 4.30 Weighted-average discount rate 6.1 % 7.8 % (1) Including expected renewals where appropriate. 98 Scheduled maturities of operating lease liabilities outstanding as of March 31, 2025 are as follows (in thousands): Year ending March 31, 2026 $ 5,513 2027 3,462 2028 2,319 2029 1,622 2030 907 Thereafter 1,865 Total lease payments 15,688 Less: Imputed interest ( 2,421 ) Present value of lease payments $ 13,267 NOTE 18 - COMMITMENTS AND CONTINGENCIES From time to time, the Company is involved in various litigation matters involving claims incidental to its business and acquisitions, including employment matters, acquisition-related claims, patent infringement and contractual matters, among other issues. While the outcome of any such litigation matters cannot be predicted with certainty, management currently believes that the outcome of these proceedings, including the matters described below, either individually or in the aggregate, will not have a material adverse effect on its business, results of operations or financial condition. The Company records reserves related to legal matters when losses related to such litigation or contingencies are both probable and reasonably estimable. In July 2015, Pointer do Brasil Comercial Ltda. (“Pointer Brazil”) received a tax deficiency notice alleging that th e services provided by Pointer Brazil should be classified as “telecommunication services” and therefore Pointer Brazil should be subject to the state value-added tax. The aggregate amount claimed to be owed under the notice was approximately $ 6,890 as of March 31, 2025. On August 14, 2018, the lower chamber of the State Tax Administrative Court in São Paulo rendered a decision that was favorable to Pointer Brazil in relation to the ICMS demands, but adverse in regards to the clerical obligation of keeping in good order a set of ICMS books and related tax receipts. The remaining claim after this administrative decision is $ 197 . The state has appealed to the higher chamber of the State Tax Administrative Court. Based on the Company’s legal counsel ’ s opinion, management is of the opinion that the chance of loss is not probable and that no material costs will arise in respect of these claims. For this reason, the Company has not m ade any provision. Mobile Telephone Networks Proprietary Limited (“MTN”), a network service provider of MiX Telematics Africa, a subsidiary of the Company, is entitled to claw back payments from MiX Telematics Africa in the event of early cancellation of the agreement or certain base connections not being maintained over the term of an amended network services agreement between the parties. No connection incentive s will be received in terms of the amended network services agreement. The maximum potential liability under the arrangement as of March 31, 2025 was $ 609 . No loss is consider ed probable under this arrangement. On August 30, 2024, Fleet Connect Solutions LLC (“Fleet Connect”) filed a complaint against the Company in the United States District Court for the Eastern District of Texas alleging infringement of a number of Fleet Connect’s patents. The Company filed an answer to Fleet Connect’s complaint on November 8, 2024, denying the claims together with counterclaims to invalidate Fleet Connect’s patents. The Company simultaneously filed a Section 101 motion seeking to invalidate some of the patents. In addition, on February 11, 2025, Fleet Connect filed a second lawsuit against the Company in the United States District Court of the Eastern District of Texas. The Company then filed a similar motion under Section 101 challenging the validity of some of the patents involved in this lawsuit as well. The Company is evaluating the claims with patent counsel, however based on currently available information, the Company is unable to make a reasonable estimate of loss or range of losses, if any, arising from this matter. 99 NOTE 19 - UNAUDITED CONDENSED FINANCIAL INFORMATION The unaudited condensed financial information for the three-month period ended March 31, 2023 is as follows (in thousands): Three Months Ended March 31, 2023 (Unaudited) Revenues: Products $ 12,508 Services 20,344 Total revenues 32,852 Cost of revenues: Cost of products 9,002 Cost of services 7,276 Total cost of revenues 16,278 Gross profit 16,574 Operating expenses: Selling, general and administrative expenses 16,941 Research and development expenses 1,723 Total operating expenses 18,664 Loss from operations ( 2,090 ) Interest income 24 Interest expense, net ( 137 ) Bargain purchase - Movingdots 7,234 Other income, net 3 Net income before income taxes 5,034 Income tax expense ( 392 ) Net income before non-controlling interest 4,642 Non-controlling interest 3 Net income 4,645 Accretion of preferred stock ( 1,655 ) Preferred stock dividend ( 1,107 ) Net income attributable to common stockholders $ 1,883 Net income per share attributable to common stockholders - basic and diluted $ 0.04 Weighted average common shares outstanding - basic 35,548 Weighted average common shares outstanding - diluted 35,628 100 Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure None. 101