Powerfleet, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of the consolidated financial condition and results of operations of Powerfleet, Inc. and its subsidiaries (“Powerfleet,” the “Company,” “we,” “our” or “us”) should be read in conjunction with the condensed consolidated financial statements and related notes thereto appearing in Part I, Item 1 of this report and Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended March 31, 2025 (the “Form 10-K”). Many of the amounts and percentages in this section have been rounded for convenience of presentation, but actual recorded amounts have been used in computations. Accordingly, some information may appear not to be computed accurately. Cautionary Note Regarding Forward-Looking Statements This report contains “forward-looking statements” (within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), which may include information concerning our beliefs, plans, objectives, goals, expectations, strategies, anticipations, assumptions, estimates, intentions, future events, future revenues or performance, capital expenditures and other information that is not historical information. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. When used in this report, the words “seek,” “estimate,” “expect,” “anticipate,” “project,” “plan,” “contemplate,” “plan,” “continue,” “intend,” “believe” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements are based upon our current expectations and various assumptions. We believe there is a reasonable basis for its expectations and beliefs, but there can be no assurance that we will realize our expectations or that our beliefs will prove to be correct. There are risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in this report. Important factors that could cause our actual results to differ materially from those expressed as forward-looking statements herein include, but are not limited, to: the ability to realize all of the anticipated benefits of the MiX Combination and the FC Acquisition, and the potential challenges associated with the ongoing integration of the businesses; global economic conditions as well as exposure to political, trade and geographic risks, including tariffs and the conflict in the Middle East; disruptions or limitations in our supply chain, particularly with respect to key components; technological changes or product developments that may be more complex, costly, or less effective than expected; cybersecurity risks and our ability to protect our information technology systems from breaches; competitive pressures from a broad range of local, regional, national and other providers of wireless solutions; our ability to effectively navigate the international political, economic and geographic landscape; risks related to the protection and enforcement of our intellectual property rights; changes in applicable laws and regulations or changes in generally accepted accounting policies, rules and practices; and other risks and uncertainties disclosed from time to time in our filings with the Securities and Exchange Commission (the “SEC”), including our Form 10-K. There may be other factors of which we are currently unaware or which we currently deem immaterial that may cause our actual results to differ materially from the forward-looking statements. All forward-looking statements attributable to us or persons acting on our behalf apply only as of the date they are made and are expressly qualified in their entirety by the cautionary statements included in this report. Except as may be required by law, we undertake no obligation to publicly update or revise any forward-looking statement to reflect events or circumstances occurring after the date they were made or to reflect the occurrence of unanticipated events, or otherwise. Overview Powerfleet is a global provider of Internet-of-Things (“IoT”) solutions providing valuable business intelligence for managing high-value enterprise assets that improve operational efficiencies. We are headquartered in Woodcliff Lake, New Jersey, with offices located around the globe. On April 2, 2024, we acquired MiX Telematics, and on October 1, 2024, we acquired Fleet Complete. Since the closing of these acquisitions, we have made significant progress in integrating the businesses into our operations, with alignment of core functions and early realization of operational synergies. Recent Developments Higher interest rates, fluctuations in currency values, continued supply chain disruptions, changes in tariff policies and import and export restrictions, and the conflict in the Middle East have resulted in significant economic disruption and 33 adversely impacted the broader global economy, including our customers and suppliers. Given the dynamic and uncertain nature of the current macroeconomic environment, we cannot reasonably estimate the impact of such developments on our financial condition, results of operations or cash flows into the foreseeable future. While we do not currently believe that inflation and recently pronounced tariffs have had a material impact on our condensed consolidated financial statements, the ultimate extent of the effects of these developments remain highly uncertain, and such effects could exist for an extended period of time. Risks to Our Business We expect that many customers who utilize our solutions will do so as part of a large-scale deployment of these solutions across multiple or all divisions of their organizations. A customer’s decision to deploy our solutions throughout its organization will involve a significant commitment of its resources. Accordingly, initial implementations may precede any decision to deploy our solutions enterprise-wide. Throughout this sales cycle, we may spend considerable time and expense educating and providing information to prospective customers about the benefits of our solutions, and there can be no assurance that our solutions will be deployed on a wider scale by the customer. The timing of the deployment of our solutions may vary widely and will depend on the specific deployment plan of each customer, the complexity of the customer’s organization and the difficulty of such deployment. Customers with substantial or complex organizations may deploy our solutions in large increments on a periodic basis. Accordingly, we may receive purchase orders for significant dollar amounts on an irregular and unpredictable basis. Long sales cycles, as well as our expectation that customers will tend to place large orders sporadically with short lead times, may cause our revenue and results of operations to vary significantly and unexpectedly from quarter to quarter. These variations could materially and adversely affect the market price of our common stock. Our ability to increase our revenues and generate net income will depend on a number of factors, including, for example, our ability to: • increase sales of products and services to our existing customers; • convert our initial programs into larger or enterprise-wide purchases by our customers; • increase market acceptance and penetration of our products; and • develop and commercialize new products and technologies. Additional risks and uncertainties to which we are subject are described under the heading “Risk Factors” in our Form 10-K. Critical Accounting Policies For the three-month period ended June 30, 2025, there were no significant changes to our critical accounting policies as identified in the Form 10-K. 34 Results of Operations The following table sets forth, for the periods indicated, certain operating information expressed as a percentage of revenue: Three Months Ended June 30, 2024 2025 Revenues: Products 24.8 % 17.0 % Services 75.2 % 83.0 % Total revenues 100.0 % 100.0 % Cost of revenues: Cost of products 16.9 % 12.7 % Cost of services 30.5 % 33.1 % Total cost of revenues 47.4 % 45.8 % Gross profit 52.6 % 54.2 % Operating expenses: Selling, general and administrative expenses 72.6 % 51.5 % Research and development expenses 4.1 % 4.7 % Total operating expenses 76.7 % 56.2 % Loss from operations (24.2) % (2.1) % Interest income 0.4 % 0.2 % Interest expense, net (3.6) % (6.5) % Other expense, net (0.8) % (1.2) % Net loss before income taxes (28.2) % (9.5) % Income tax expense (1.4) % (0.3) % Net loss before non-controlling interest (29.6) % (9.9) % Non-controlling interest — % — % Net loss (29.5) % (9.9) % Preferred stock dividend 0.0% — % Net loss attributable to common stockholders (29.5) % (9.9) % 35 Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024 REVENUES. Revenues increased by $28.7 million, or 38.0%, to $104.1 million in the three months ended June 30, 2025, from $75.4 million in the same period in 2024. Revenues from products decreased by $1.1 million, or 5.8%, to $17.7 million in the three months ended June 30, 2025, from $18.7 million in the same period in 2024. The decrease in product revenues was primarily due to lower product revenue of $2.5 million in North America and $1.1 million in Europe, partially offset by the Fleet Complete business acquired which contributed $3.2 million in product revenues for the three months ended June 30, 2025. Revenues from services increased by $29.8 million, or 52.5%, to $86.5 million in the three months ended June 30, 2025, from $56.7 million in the same period in 2024. The increase in services revenues was principally due to underlying growth initiatives, offset in part by proactive measures to de-emphasize non-core lines of business, and the acquisition of Fleet Complete which contributed $26.2 million in services revenues. COST OF REVENUES. Cost of revenues increased by $11.9 million, or 33.1%, to $47.6 million in the three months ended June 30, 2025, from $35.8 million for the same period in 2024. The Fleet Complete business acquired contributed $12.1 million to cost of revenues for the three months ended June 30, 2025. Gross profit was $56.5 million in the three months ended June 30, 2025, compared to $39.6 million for the same period in 2024. As a percentage of revenues, gross profit increased to 54.2% in the three months ended June 30, 2025 from 52.6% in the same period in 2024. Cost of products increased by $0.5 million, or 3.7%, to $13.2 million in the three months ended June 30, 2025, from $12.8 million in the same period in 2024. Gross profit for products was $4.4 million in the three months ended June 30, 2025, compared to $6.0 million in the same period in 2024. As a percentage of product revenues, gross profit decreased to 25.1% in the three months ended June 30, 2025 from 32.0% in the same period in 2024. Gross profit as a percentage of product revenues was negatively impacted by tariffs in the US which increased underlying costs and delayed demand for high margin in-warehouse solutions. Cost of services increased by $11.4 million, or 49.4%, to $34.4 million in the three months ended June 30, 2025, from $23.0 million in the same period in 2024. The acquisition of Fleet Complete and the amortization of acquisition intangibles for the MiX Telematics and Fleet Complete transactions contributed $6.6 million and $2.8 million, respectively, to cost of services for the three months ended June 30, 2025. Gross profit for services was $52.1 million in the three months ended June 30, 2025, compared to $33.7 million in the same period in 2024. As a percentage of services revenues, gross profit increased to 60.2% in the three months ended June 30, 2025 from 59.4% in the same period in 2024. SELLING, GENERAL AND ADMINISTRATIVE (“SG&A”) EXPENSES. SG&A expenses decreased by $1.1 million, or 2.0%, to $53.7 million in the three months ended June 30, 2025, compared to $54.8 million in the same period in 2024, principally due to Fleet Complete business acquired which contributed $15.8 million and higher investments in go to market, offset in part by a decrease in acquisition-related expenses of $13.4 million, a decrease in accelerated stock-based compensation costs of $4.7 million and cost saving synergies realized for the three months ended June 30, 2025. As a percentage of revenues, SG&A expenses decreased to 51,5% in the three months ended June 30, 2025, from 72.6% in the same period in 2024. As a percentage of revenues, SG&A, excluding $4.2 million in acquisition-related, integration-related and restructuring-related expenses, increased to 47.5% in the three months ended June 30, 2025, from 45.6% in the same period in 2024. RESEARCH AND DEVELOPMENT (“R&D”) EXPENSES. R&D expenses increased by $1.8 million, or 56.6%, to $4.9 million in the three months ended June 30, 2025, compared to $3.1 million in the same period in 2024, principally due to $1.4 million incurred by Fleet Complete. As a percentage of revenues, R&D expenses increased to 4.7% in the three months ended June 30, 2025, from 4.1% in the same period in 2024. NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS. Net loss attributable to common stockholders was $10.2 million, or $(0.08) per basic and diluted share, for the three months ended June 30, 2025, as compared to net loss of $22.3 million, or $(0.21) per basic and diluted share, for the same period in 2024. The net loss was primarily the result of $5.8 million from the amortization of MiX Telematics and Fleet Complete acquisition-related intangibles; and $4.2 million in acquisition, integration and restructuring related expenses. 36 Non-GAAP Financial Information We use certain measures to assess the financial performance of our business. Certain of these measures are termed “non-GAAP measures” because they exclude amounts that are included in, or include amounts that are excluded from, the most directly comparable measure calculated and presented in accordance with GAAP, or are calculated using financial measures that are not calculated in accordance with GAAP. These non-GAAP measures include adjusted EBITDA. An explanation of the relevance of the non-GAAP measure, a reconciliation of the non-GAAP measure to the most directly comparable measure calculated and presented in accordance with GAAP and a discussion of its limitations is set out below. We do not regard this non-GAAP measure as a substitute for, or superior to, the equivalent measure calculated and presented in accordance with GAAP or that calculated using financial measure that is calculated in accordance with GAAP. Adjusted EBITDA We define adjusted EBITDA as net loss attributable to common stockholders before non-controlling interest, preferred stock dividend, interest expense (net), other expense (net), income tax expense, depreciation and amortization, stock-based compensation, foreign currency losses, restructuring-related expenses, derivative mark-to market adjustment, recognition of pre-October 1, 2024 contract assets (Fleet Complete), acquisition-related expenses and integration-related expenses. We have included adjusted EBITDA in this Quarterly Report on Form 10-Q because it is a key measure that our management and board of directors use to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget, and to develop short and long-term operational plans. In particular, the exclusion of certain expenses in calculating adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business. Accordingly, we believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results. Because our method for calculating adjusted EBITDA may differ from other companies’ methods, the non-GAAP measures may not be comparable to similarly titled measures reported by other companies. A reconciliation of net loss attributable to common stockholders (the most directly comparable financial measure presented in accordance with GAAP) to adjusted EBITDA for the periods shown is presented below. Reconciliation of Net Loss Attributable to Common Stockholders to Adjusted EBITDA Three Months Ended June 30, 2024 2025 (In thousands) Net loss attributable to common stockholders $ (22,337) $ (10,234) Non-controlling interest 13 — Preferred stock dividend 25 — Interest expense, net 2,916 6,590 Other expense, net — 23 Income tax expense 1,053 362 Depreciation and amortization 10,335 16,031 Stock-based compensation 5,929 1,853 Foreign currency losses 109 1,161 Restructuring-related expenses 1,198 2,442 Derivative mark-to-market adjustment — 104 Recognition of pre-October 1, 2024 contract assets (Fleet Complete) — 1,503 Acquisition-related expenses 14,494 1,130 Integration-related expenses — 675 Adjusted EBITDA $ 13,735 $ 21,640 Our use of adjusted EBITDA has limitations as analytical tools and should not be considered as performance measures in isolation from, or as a substitute for, analysis of our results as reported under GAAP. 37 Some of these limitations are: • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; • adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; • adjusted EBITDA does not consider the potentially dilutive impact of equity-based compensation; • adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; • other companies, including companies in our industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a comparative measure; and • certain of the adjustments (such as restructuring-related expenses and integration-related expenses) made in calculating adjusted EBITDA are those that management believes are not representative of our underlying operations and, therefore, are subjective in nature. Because of these limitations, adjusted EBITDA should be considered alongside other financial performance measures, including loss from operations, net loss and our other results. 38 Liquidity and Capital Resources On April 2, 2024, we consummated the MiX Combination, pursuant to which MiX Telematics became our indirect, wholly owned subsidiary. The Implementation Agreement required, as a condition to closing of the MiX Combination, that we obtain debt and/or equity financing in an amount sufficient to provide for the redemption in full of all outstanding shares of our Series A Preferred Stock. On April 2, 2024, concurrently with the closing of the MiX Combination, we used the net proceeds received from the RMB Facilities described above and incremental borrowing capacity as a result of the refinancing of Credit Facilities to redeem the full $90.3 million value of the outstanding shares of Series A Preferred Stock. In addition, our wholly owned subsidiaries, Powerfleet Israel and Pointer (collectively, the “Borrowers”) were party to the Prior Credit Agreement with Hapoalim, pursuant to which Hapoalim agreed to provide Powerfleet Israel with two senior secured term loan facilities denominated in NIS in an initial aggregate principal amount of $30 million (composed of two facilities in the aggregate principal amounts of $20 million and $10 million, respectively) and a five-year revolving credit facility to Pointer denominated in NIS in an initial aggregate principal amount of $10 million. The proceeds of the term loan facilities were used to finance a portion of the cash consideration payable in our acquisition of Pointer. On March 18, 2024, the Borrowers entered into the A&R Credit Agreement, which refinanced the facilities under, and amended and restated, the Prior Credit Agreement. The A&R Credit Agreement provides for (i) two senior secured term loan facilities denominated in NIS to Powerfleet Israel in an aggregate principal amount of $30 million (composed of Hapoalim Facility A and Hapoalim Facility B in the aggregate principal amounts of $20 million and $10 million, respectively) and (ii) two revolving credit facilities to Pointer in an aggregate principal amount of $20 million (composed of Hapoalim Facility C and Hapoalim Facility D in the aggregate principal amounts of $10 million and $10 million, respectively). The Hapoalim Term Facilities will mature on March 18, 2029. The Hapoalim Revolving Facilities are available for successive one-month periods until and including February 27, 2026, unless the Borrowers deliver prior notice to Hapoalim of their request not to renew the Hapoalim Revolving Facilities. On March 18, 2024, Powerfleet Israel drew down $30 million in cash under the Hapoalim Term Facilities and used the proceeds to prepay approximately $11.2 million, representing the remaining outstanding balance, of the term loans extended to Powerfleet Israel under the Prior Credit Agreement and distributed the remaining proceeds to us. 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 (the “Amendment”) to the A&R Credit Agreement. The Amendment increases the principal amount available under Hapoalim Facility D from $10 million to $20 million and provides that the total principal amount of Hapoalim Facility D may be distributed to us or any of our subsidiaries by no later than December 31, 2025, subject to certain terms and conditions of the A&R Credit Agreement. As of June 30, 2025, Powerfleet Israel had utilized approximately $15.4 million under the Hapoalim Revolving Facilities. 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 our company will serve as collateral under the Hapoalim Credit Facilities. 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 June 30, 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. 39 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. On March 7, 2024, we entered into the Facilities Agreement with RMB, pursuant to which RMB agreed to provide us with the RMB Facilities in an aggregate principal amount of $85 million, composed of RMB Facility A and RMB Facility B, each having a principal amount of $42.5 million. We drew down $85 million in cash under the RMB Facilities on March 13, 2024. The interest rates of RMB Facility A and RMB Facility B are 8.699% per annum and 8.979% per annum, respectively. Interest is payable quarterly in arrears. The principal under RMB Facility A and RMB Facility B is repayable in one installment on March 31, 2027 and March 31, 2029, respectively. Following the signing of the Facilities Agreement with RMB and MiX Telematics entered into the Credit Agreement on March 14, 2024, for 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 entered into on March 7, 2024. 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. As of June 30, 2025, $16,579 of the RMB General Facility was utilized. During April 2025, the RMB General Facility repayment terms were extended on the same terms and conditions of the Facilities Agreement. On September 27, 2024, we entered into the Facility Agreement with RMB, pursuant to which RMB agreed to provide us with the New RMB Term Facility in an aggregate principal amount of $125 million. On October 1, 2024, we drew down $125 million in cash under the New RMB Term Facility to pay a portion of the Purchase Price for the FC Acquisition. Interest is payable quarterly in arrears at an interest rate of 5% per annum plus the applicable term SOFR reference rate. The principal is repayable in one installment on October 31, 2029. As a result of global supply chain disruptions, the conflicts in the Middle East, fluctuations in currency values, inflation and other cost increases, there remains uncertainty surrounding the potential impact of such events on our results of operations and cash flows. We are proactively taking steps to increase the available cash on hand including, but not limited to, targeted reductions in discretionary operating expenses and capital expenditures and borrowing under our revolving credit facility. Capital Requirements As of June 30, 2025, we had cash and cash equivalents (including restricted cash) of $35.6 million and working capital of $11.2 million compared to cash and cash equivalents (including restricted cash) of $48.8 million and working capital of $18.1 million as of March 31, 2025. Our primary sources of cash are cash flows from sales of products and services, our holdings of cash, cash equivalents and proceeds from the sale of our capital stock and borrowings under our credit facilities. The FC Acquisition and MiX Combination are also expected to be a source of positive cash flow. To date, we have not generated sufficient cash flow solely from operating activities to fund our operations. Our capital requirements depend on a variety of factors, including, but not limited to, the length of the sales cycle, the rate of increase or decrease in our existing business base, the success, timing, and amount of investment required to bring new products to market, revenue growth or decline and potential acquisitions. Failure to generate positive cash flow from operations will have a material adverse effect on our business, financial condition and results of operations. 40 Operating Activities During the three months ended June 30, 2025, net cash provided by operating activities was $4.7 million, compared to net cash used in operating activities of $7.6 million for the same p eriod in 2024. The net cash provided by operating activities for the three months ended June 30, 2025 primarily included $16.0 million for depreciation and amortization expense, $1.9 million for bad debts expense, non-cash charges of $1.9 million for stock-based compensation, $1.0 million for ROU asset amortization, $0.1 million for derivative mark-to-market adjustment p artially offset by $0.5 million for other non-cash items . Changes in operating assets and liabilities included: • an increase in inventory, net of reserve of $4.7 million inclusive of inventory build to negate the impact of tariffs; • an increase in accounts receivables of $2.4 million; • a decrease in deferred costs of $2.7 million; • a decrease in lease liabilities of $0.9 million; • an increase in prepaid expenses and other assets of $1.3 million; • a decrease in deferred revenue of $0.4 million; partially offset by • an increase in accounts payable of $9.6 million; • an increase in accrued severance payable of $0.4 million. Investing Activities Net cash used in investing activities for the three months ended June 30, 2025 was $11.8 million, compared to net cash provided by investing activities of $19.6 million for the same period in 2024 . The net cash used by investing activities was primarily due to $8.1 million for the purchase of fixed assets and $3.7 million for capitalized software development costs. The net cash provided by investing activities of $19.6 million in the same period in 2024 was primarily due to $27.5 million in net cash assumed from the MiX Combination, partially offset by $5.6 million for the purchase of fixed assets and $2.3 million for capitalized software development costs. Financing Activities During the three months ended June 30, 2025 , net cash used in financing activities was $6.8 million, compared to $89.5 million net cash used in financing activities for the same period in 2024 . The cash used in financing activities was primarily due to the repayment of short-term bank debt of $5.4 million, and r epayment of long-term debt of $1.3 million. The decrease in net cash used in financing activities was primarily due to the repayment of Series A Preferred Stock of $90.3 million during the three months ended June 30, 2024. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. Impact of Recently Issued Accounting Pronouncements The Company is subject to recently issued accounting standards, accounting guidance and disclosure requirements. For a description of these new accounting standards, see Note 23 to our consolidated financial statements contained in Item 1 of Part I of this Quarterly Report on Form 10-Q, which is incorporated herein by reference. 41