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 ) 52 Report of the Independent Registered Public Accounting Firm - Ernst & Young LLP (PCAOB ID No. 42) 54 Consolidated Balance Sheets as of March 31, 2025 and 2026 55 Consolidated Statements of Operations for the Year Ended December 31, 2023, Three Months Ended March 31, 2024, and Years Ended March 31, 2025 and 2026 57 Consolidated Statements of Comprehensive (Loss) Income for the Year Ended December 31, 2023, Three Months Ended March 31, 2024, and Years Ended March 31, 2025 and 2026 58 Consolidated Statements of Changes in Stockholders’ Equity for the Year Ended December 31, 2023, Three Months Ended March 31, 2024, and Years Ended March 31, 2025 and 2026 59 Consolidated Statements of Cash Flows for the Year Ended December 31, 2023, Three Months Ended March 31, 2024, and Years Ended March 31, 2025 and 2026 61 Notes to the Consolidated Financial Statements 64 51 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 sheets of Powerfleet, Inc. and subsidiaries (the “Company”) as of March 31, 2026 and 2025, the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows, for each of the years in the two-year period ended March 31, 2026, 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, 2026 and 2025, and the results of its operations and its cash flows for each of the years in the two-year period ended March 31, 2026, in conformity with the accounting principles generally accepted in the United States of America. 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, 2026, 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 15, 2026, expressed an unqualified 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 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. 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 we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate. Redeemable Non-controlling Interests - Refer to Notes 2[AB] and 3 to the consolidated financial statements Critical Audit Matter Description On February 1, 2026, the Company, through its subsidiary MiX Telematics Africa (Pty) Ltd (“MiX Africa”), entered into a shareholders agreement between MiX Africa, MiX Telematics Ltd and Macrocomm Group (Pty) Ltd (“Macrocomm”) that provides Macrocomm with a put option redemption feature redeemable in future periods. As potential redemption of the non-controlling interest is not solely within the Company’s control, the non-controlling interest and redemption feature are presented as “temporary equity” within the Company’s consolidated balance sheet. We identified the accounting for the redeemable non-controlling interest arrangement as a critical audit matter given the complexities involved in auditing management’s accounting conclusions which required a high degree of auditor judgment and an increased extent of audit effort, including the need to involve professionals in our firm with expertise in financial instruments when performing audit procedures to assess the unit of accounting for the redeemable non-controlling interest and put option; 52 balance sheet classification of the redeemable non-controlling interest, including whether embedded features of the redeemable non-controlling interest meets the definition of a derivative and requires bifurcation; how the redeemable non-controlling interest should be initially and subsequently measured; and the impacts of the redeemable non-controlling interest on the determination of earnings per share given the redemption features of the non-controlling interest. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the accounting for the redeemable non-controlling included the following, among others: • We evaluated the design and tested the operating effectiveness of internal controls over the accounting for the redeemable non-controlling interest, including those over the identification and application of the relevant accounting guidance to account for the redeemable non-controlling interest. • We evaluated the key terms of the underlying non-controlling interest agreements, including put options features. • We evaluated, with the assistance of professionals in our firm with expertise in financial instruments, the appropriateness of the Company’s accounting for the redeemable non-controlling interest based on the underlying contractual arrangements and the relevant authoritative accounting guidance, including accounting conclusions regarding the appropriate unit of accounting for the redeemable non-controlling interest and put options; balance sheet classification of the redeemable non-controlling interest, including whether embedded features of the redeemable non-controlling interest meet the definition of a derivative and require bifurcation; how the redeemable non-controlling interests should be initially and subsequently measured; and the impacts of the redeemable non-controlling interest on the determination of earnings per share given the redemption features of the non-controlling interest. Goodwill impairment assessment – Refer to Notes 2[I] and 8 to the consolidated financial statements Critical Audit Matter Description As discussed in Note 2[I] to the consolidated financial statements, the Company, which is organized, and operates a single reporting unit, performs goodwill impairment testing on an annual basis as of October 1st of each year. The Company also performs testing more frequently when events or circumstances occur that indicate that it is more likely than not that an impairment has occurred. The estimated fair value of the reporting unit was derived using a market approach. The market approach valuation utilizes observable market data from comparable publicly traded companies and incorporates assumptions including the selection of comparable companies and a control premium representative of management’s expectation of a hypothetical acquisition of the reporting unit. We identified the Company’s goodwill impairment assessment as a critical audit matter. The evaluation of the methodology and significant assumptions used to estimate the fair value of the reporting unit involved a high degree of auditor judgment and specialized skills and knowledge. Specifically, the control premium assumption used to determine the average share price of the Company’s stock involved subjective assessments of market and economic conditions. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the goodwill impairment assessment included the following, among others: • We evaluated the design and tested the operating effectiveness of internal controls related to the Company’s estimated fair value of the reporting unit, including controls over the application of valuation approaches and development of the significant assumptions. • We involved valuation professionals with specialized skills and knowledge to evaluate the reasonableness of the Company's control premium by comparing it to data from publicly available premium studies for public company transactions. /s/ Deloitte & Touche Johannesburg, South Africa June 15, 2026 We have served as the Company’s auditor since 2024. 53 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 statements of operations, comprehensive (Loss) Income, changes in stockholders’ equity and cash flows of Powerfleet, Inc. and subsidiaries (the “Company”) for the three-month period ended March 31, 2024 and for the year ended December 31, 2023, and the related notes. In our opinion, the 2024 consolidated financial statements, present fairly, in all material respects, the results of its operations and its cash flows for the three-month period ended March 31, 2024 and the year 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 54 POWERFLEET, INC. AND SUBSIDIARIES Consolidated Balance Sheets (In thousands, except per share data) March 31, 2025 March 31, 2026 ASSETS Current assets: Cash and cash equivalents $ 44,392 $ 36,496 Restricted cash 4,396 4,322 Accounts receivable, net of allowance for credit losses of $ 4,057 and $ 9,177 as of March 31, 2025 and 2026, respectively 78,623 93,820 Inventory, net 18,350 22,448 Prepaid expenses and other current assets 23,319 22,094 Total current assets 169,080 179,180 Fixed assets, net 58,011 62,398 Goodwill 383,146 411,995 Intangible assets, net 258,582 255,518 Right-of-use asset 12,339 15,893 Severance payable fund 3,796 4,445 Deferred tax asset 3,934 4,537 Other assets 21,183 21,599 Total assets $ 910,071 $ 955,565 LIABILITIES Current liabilities: Short-term bank debt and current maturities of long-term debt $ 41,632 $ 50,355 Accounts payable 41,599 46,353 Accrued expenses and other current liabilities 45,327 37,699 Deferred revenue - current 17,375 20,159 Lease liability - current 5,076 3,386 Total current liabilities 151,009 157,952 Long-term debt - less current maturities 232,160 229,669 Deferred revenue - less current portion 5,197 4,005 Lease liability - less current portion 8,191 13,505 Accrued severance payable 6,039 5,666 Deferred tax liability 57,712 60,063 Other long-term liabilities 3,021 3,090 Total liabilities 463,329 473,950 Commitments and Contingencies (Note 19) REDEEMABLE NON-CONTROLLING INTERESTS Redeemable non-controlling interests — 6,009 STOCKHOLDERS’ EQUITY Preferred stock; authorized 50,000 shares, $ 0.01 par value — — Common stock; authorized 175,000 shares, $ 0.01 par value; 135,379 and 136,224 shares issued at March 31, 2025 and March 31, 2026, respectively; shares outstanding, 133,316 and 134,158 at March 31, 2025 and 2026, respectively 1,343 1,343 Additional paid-in capital 671,400 682,344 Accumulated deficit ( 205,783 ) ( 226,335 ) 55 Accumulated other comprehensive (loss) income ( 8,850 ) 29,660 Treasury stock; 2,063 and 2,066 common shares at cost at March 31, 2025 and 2026, respectively ( 11,518 ) ( 11,518 ) Total Powerfleet, Inc. stockholders’ equity 446,592 475,494 Non-controlling interest 150 112 Total equity 446,742 475,606 Total liabilities, redeemable non-controlling interests and stockholders’ equity $ 910,071 $ 955,565 See accompanying notes to consolidated financial statements. 56 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, 2023 2024 2025 2026 Revenues: Products $ 49,741 $ 12,080 $ 85,584 $ 83,975 Services 83,995 21,660 276,931 359,802 Total revenues 133,736 33,740 362,515 443,777 Cost of revenues: Cost of products 36,404 9,514 61,961 59,153 Cost of services 30,256 8,023 106,017 138,202 Total cost of revenues 66,660 17,537 167,978 197,355 Gross profit 67,076 16,203 194,537 246,422 Operating expenses: Selling, general and administrative expenses 71,253 21,832 204,361 208,487 Research and development expenses 8,380 2,018 16,061 18,359 Total operating expenses 79,633 23,850 220,422 226,846 (Loss) income from operations ( 12,557 ) ( 7,647 ) ( 25,885 ) 19,576 Interest income 103 259 926 780 Interest expense ( 1,602 ) ( 709 ) ( 20,330 ) ( 27,526 ) Bargain purchase - Movingdots 9,034 — — — Other expense ( 29 ) ( 55 ) ( 1,163 ) ( 4,086 ) Net loss before income taxes ( 5,051 ) ( 8,152 ) ( 46,452 ) ( 11,256 ) Income tax expense ( 589 ) ( 352 ) ( 4,517 ) ( 8,688 ) Net loss before non-controlling interest ( 5,640 ) ( 8,504 ) ( 50,969 ) ( 19,944 ) Non-controlling interest ( 35 ) ( 11 ) ( 18 ) ( 608 ) Net loss ( 5,675 ) ( 8,515 ) ( 50,987 ) ( 20,552 ) Accretion of preferred stock ( 7,139 ) ( 9,996 ) — — Preferred stock dividend ( 4,493 ) ( 1,128 ) ( 25 ) — Net loss attributable to common stockholders $ ( 17,307 ) $ ( 19,639 ) $ ( 51,012 ) $ ( 20,552 ) Net loss per share attributable to common stockholders - basic and diluted $ ( 0.49 ) $ ( 0.55 ) $ ( 0.43 ) $ ( 0.15 ) Weighted-average common shares outstanding - basic and diluted 35,628 35,813 119,877 133,761 See accompanying notes to consolidated financial statements. 57 POWERFLEET, INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive (Loss) Income (In thousands) Year Ended December 31, Three Months Ended March 31, Year Ended March 31, 2023 2024 2025 2026 Net loss attributable to common stockholders $ ( 17,307 ) $ ( 19,639 ) $ ( 51,012 ) $ ( 20,552 ) Foreign currency translation adjustment 594 ( 369 ) ( 7,865 ) 38,510 Total other comprehensive income (loss) 594 ( 369 ) ( 7,865 ) 38,510 Comprehensive (loss) income $ ( 16,713 ) $ ( 20,008 ) $ ( 58,877 ) $ 17,958 See accompanying notes to consolidated financial statements. 58 POWERFLEET, INC. AND SUBSIDIARIES Consolidated Statements of Changes in Stockholders’ Equity (In thousands) Common Stock Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive (Loss) Income Treasury Stock Non-Controlling Interest * Total Stockholder’s Equity Number of Shares Amount Balance at January 1, 2023 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 ) — — — — — — — 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 59 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 Net loss attributable to common stockholders — — — ( 20,552 ) — — — ( 20,552 ) Foreign currency translation adjustment — — — — 38,510 — — 38,510 Issue of stock appreciation rights and restricted share awards 832 — — — — — — — Exercise of stock options 13 — 39 — — — — 39 Stock-based compensation — — 7,541 — — — — 7,541 Dividends declared — — — — — — ( 38 ) ( 38 ) MiX Africa Equity rebalancing — — 3,364 — — — — 3,364 Balance as of March 31, 2026 136,224 $ 1,343 $ 682,344 $ ( 226,335 ) $ 29,660 $ ( 11,518 ) $ 112 $ 475,606 (*) Excludes redeemable non-controlling interests. See accompanying notes to consolidated financial statements. 60 POWERFLEET, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (In thousands) Year Ended December 31, Three Months Ended March 31, Year Ended March 31, 2023 2024 2025 2026 Cash flows from operating activities Net loss $ ( 5,675 ) $ ( 8,515 ) $ ( 50,987 ) $ ( 20,552 ) Adjustments to reconcile net loss to cash provided by (used in) operating activities: Non-controlling interest 35 11 18 608 Gain on bargain purchase ( 9,034 ) — — — Inventory reserve 1,500 59 4,480 2,339 Stock-based compensation expense 3,908 1,028 9,362 7,541 Depreciation and amortization 9,445 1,943 47,494 60,280 Right-of-use assets, non-cash lease expense 2,814 763 5,007 4,056 Derivative mark-to-market adjustment — — ( 504 ) ( 775 ) Bad debts expense 1,767 970 9,418 10,988 Deferred income taxes ( 6 ) 97 ( 4,872 ) ( 1,737 ) Shares issued for transaction bonuses — — 889 — Lease termination and modification losses — — 295 ( 233 ) Other non-cash items 103 ( 112 ) 1,061 ( 2,159 ) Changes in operating assets and liabilities: Accounts receivable ( 1,460 ) 746 ( 14,048 ) ( 21,232 ) Inventories ( 1,743 ) 726 5,729 ( 4,464 ) Prepaid expenses and other current assets 791 ( 1,440 ) 5,474 2,201 Deferred costs 679 41 ( 8,437 ) ( 8,545 ) Deferred revenue ( 295 ) 112 1,748 1,623 Accounts payable, accrued expenses and other current liabilities 4,440 4,021 ( 12,162 ) 5,228 Lease liabilities ( 2,851 ) ( 694 ) ( 4,558 ) ( 3,685 ) Accrued severance payable ( 21 ) 36 1,248 ( 1,021 ) Net cash provided by (used in) operating activities 4,397 ( 208 ) ( 3,345 ) 30,461 Cash flows from investing activities Acquisition, net of cash assumed 8,722 — ( 137,112 ) 55 Purchase of investments ( 100 ) — — — Proceeds from sale of fixed assets — — 12 140 Capitalized software development costs ( 3,629 ) ( 591 ) ( 13,782 ) ( 18,532 ) Capital expenditures ( 3,464 ) ( 1,309 ) ( 20,008 ) ( 21,618 ) Repayment of loan advanced to external parties — — 294 207 Net cash provided by (used in) investing activities 1,529 ( 1,900 ) ( 170,596 ) ( 39,748 ) 61 Cash flows from financing activities Repayment of long-term debt ( 4,408 ) ( 11,037 ) ( 2,642 ) ( 5,604 ) Short-term bank debt, net 4,321 ( 10,030 ) 19,551 5,716 Purchase of treasury stock upon vesting of restricted stock ( 141 ) ( 31 ) ( 2,836 ) — Repayment of financing lease ( 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 39 Net cash (used in) provided by financing activities ( 3,706 ) 92,821 115,722 151 Effect of foreign exchange rate changes on cash and cash equivalents ( 877 ) ( 381 ) ( 2,657 ) 1,166 Net increase (decrease) in cash and cash equivalents, and restricted cash 1,343 90,332 ( 60,876 ) ( 7,970 ) Cash and cash equivalents, and restricted cash at beginning of the period 17,989 19,332 109,664 48,788 Cash and cash equivalents, and restricted cash at end of the period $ 19,332 $ 109,664 $ 48,788 $ 40,818 Reconciliation of cash and cash equivalents, and restricted cash, at beginning 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 beginning of the period $ 17,989 $ 19,332 $ 109,664 $ 48,788 Reconciliation of cash and cash equivalents, and restricted cash, at end of the period Cash and cash equivalents 19,022 24,354 44,392 36,496 Restricted cash 310 85,310 4,396 4,322 Cash and cash equivalents, and restricted cash, at end of the period $ 19,332 $ 109,664 $ 48,788 $ 40,818 Supplemental disclosure of cash flow information: Cash paid for: Taxes (1) $ 175 $ 262 $ 4,283 $ 7,250 Interest $ 1,656 $ 447 $ 15,335 $ 24,490 Noncash investing and financing activities: Issuance of derivative on long-term debt $ — $ 2,226 $ — $ — Common stock issued for transaction bonus $ — $ — $ 9 $ — Shares issued in connection with MiX Combination $ — $ — $ 362,005 $ — 62 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 $ 1,108 $ — $ — $ — Issuance of redeemable non-controlling interest $ — $ — $ — $ 8,765 Rebalancing of ownership percentage between parent and subsidiaries $ — $ — $ — $ ( 3,364 ) (1) Following the adoption of ASU 2023-09, for the year ended March 31, 2026, income taxes paid amounted to $ 4.0 million for South Africa, $ 1.1 million for Israel, $ 1.0 million for Australia, $ 0.5 million for Mexico and $ 0.7 million to other jurisdictions. See accompanying notes to consolidated financial statements. 63 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, 2026 include the financial results of MiX Telematics and its subsidiaries. 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, 2026 include the financial results of Fleet Complete and its subsidiaries. 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, redeemable non-controlling interest, and market-based stock-based compensation costs. Actual results could differ materially from those estimates and assumptions made. 64 [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 and other local jurisdictional limits. Restricted cash at March 31, 2025 totaled $ 4,396 and consisted primarily 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. Restricted cash at March 31, 2026 totaled $ 4,322 and consisted primarily of cash of $ 3,156 held in escrow related to the FC Acquisition to secure certain tax liabilities, cash of $ 312 held in escrow for purchases from a vendor, cash of $ 720 held by MiX Telematics Enterprise BEE Trust to be used solely for the benefit of its beneficiaries, cash securing guarantees of $ 58 issued in respect of property lease agreements entered into by MiX Telematics Australasia, c ash securing guarantees of $ 76 issued in respect of property lease agreements entered into by Fleet Complete Australia. [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 statements 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, 2025 and 2026 is as follows (in thousands): 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 Current period provision for expected credit losses 16,780 Write-offs charged against the allowance ( 12,753 ) Foreign currency translation 1,093 Allowance for credit losses, March 31, 2026 $ 9,177 [E] Revenue recognition: The Company generates revenue from sales of products and from customer SaaS, data integration and hosting infrastructure fees. The revenue streams are categorized as product revenue and services revenue, based on the nature of the underlying goods and services provided. Product revenues consists primarily of revenue derived from the sale of hardware devices. Service revenue consists primarily of revenue derived from the provision of recurring subscription services, as well as professional implementation and other non-recurring services. The Company also generates revenue through distributor and channel partner arrangements and, to a lesser extent, leasing arrangements. 65 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 collected concurrently with revenue-producing activities are excluded from revenue. The Company applies the following five‑step model under ASC 606 to determine revenue recognition: (i) identification of the contract with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when, or as, the performance obligations are 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. Product Revenue Product revenue consists primarily of hardware, parts and accessories relating to AI-enabled cameras, in-vehicle telematics devices and in-warehouse devices and sensors. Product revenue is recognized at a point in time when control transfers to the customer, typically upon shipment or delivery in accordance with contractual terms. Recurring Subscription Services Recurring subscription revenue consists primarily of access to the Company’s cloud‑based software platforms, data analytics, hosted applications, and connectivity services that enable data transmission between devices and the Company’s systems. Subscription arrangements are generally non‑cancellable and range from one to five years . Recurring subscription services represent a series of distinct services that are substantially the same and have the same pattern of transfer to the customer. Accordingly, these services are accounted for as a single performance obligation satisfied over time, as customers simultaneously receive and consume the benefits of the services. Revenue is recognized ratably over the contractual service period beginning when the services are made available to the customer. Professional Implementation and Other Non-Recurring Services Professional and other non-recurring services consist primarily of implementation, installation, configuration, training, and technical support services. Revenue from professional services is recognized at a point in time when the services are performed, as these services are typically short-term in nature and customers receive the benefit upon completion of the services provided. Distributor and Partner Arrangements The Company sells its products and services both directly to customers and indirectly through distributors and channel partners. 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. 66 Transaction Price and Allocation - Standalone Selling Price (SSP) For contracts containing multiple performance obligations, the Company applies judgment in identifying performance obligations and determining whether promised goods or services are distinct or should be combined as a single performance obligation. 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. Contract Balances Contract liabilities (deferred revenue) consist of amounts invoiced or received in advance of satisfying performance obligations, primarily related to subscription, connectivity, maintenance, and support services. Deferred revenue is recognized over the applicable service period and classified as current or long‑term based on the timing of expected satisfaction of performance obligations. Costs to Obtain Contracts Incremental costs of obtaining contracts, primarily sales commissions paid to employees and distributors, are capitalized when the Company expects to recover those costs. These costs are amortized on a systematic basis over the estimated period of benefit, generally one to five years . Warranties The Company’s standard hardware warranties represent assurance-type warranties and are not separate performance obligations under ASC 606. Expected costs associated with these warranties are recognized as an expense when the related products are sold and are accounted for in accordance with ASC 460. Remaining Performance Obligations The Company has elected the practical expedients permitted under ASC 606 and therefore does not disclose the value of remaining performance obligations for: (i) contracts with original expected durations of one year or less; and (ii) contracts for which revenue is recognized in an amount corresponding directly with the value transferred to the customer. [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 and finished products. Inventory write-downs are established in order to report inventories at the lower of cost or net realizable value in the consolidated balance sheets. 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. 67 [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 impairment at the reporting unit level on October 1 of each year and between annual tests if a triggering event indicates the possibility of an impairment. As of October 1, 2025, 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. During the quarter March 31, 2026, the Company experienced a decline in its market capitalization as a result of a decrease in its stock price, which represented a triggering event requiring the Company’s management to perform quantitative goodwill impairment tests. The Company performed a quantitative assessment whereby the fair value of its single reporting unit, including the implied control premium, was estimated and compared to its market capitalization as of March 31, 2026 to determine if the fair value is reasonable compared to external market indicators. Market capitalization is determined by multiplying the number of shares of common stock outstanding by the market price of its common stock as of the assessment date. The control premium, or the amount paid by a new controlling shareholder for the benefits resulting from synergies and other potential benefits derived from controlling the acquired company, is determined by utilizing data from publicly available premium studies for similarly situated public company transactions. As a result of this quantitative assessment, the Company determined that the fair value of the reporting unit was not less than its carrying amount and thus goodwill was not impaired as of March 31, 2026. Changes in judgments, assumptions, and estimates could result in significantly different fair value estimates. For the year ended December 31, 2023, the three months ended March 31, 2024, and the years ended March 31, 2025 and 2026, the Company did not incur an impairment charge . 68 [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 accrued expenses and other current liabilities in the consolidated balance sheets. 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 $ 8,380 , $ 2,018 , $ 16,061 and $ 18,359 for the year ended December 31, 2023, the three months ended March 31, 2024, and the years ended March 31, 2025 and 2026, 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 5 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 year ended December 31, 2023, the three months ended March 31, 2024, and the years ended March 31, 2025 and 2026, 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 year ended December 31, 2023, the three months ended March 31, 2024, and the years ended March 31, 2025 and 2026, the Company contributed $ 379 , $ 88 , $ 456 , and $ 567 , respectively, to the plan. 69 [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 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 sheets. 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 sheets 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 $ 3,908 , $ 1,028 , $ 9,362 , and $ 7,541 , for the year ended December 31, 2023, the three months ended March 31, 2024, and the years ended March 31, 2025 and 2026, 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 statements 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. The Company grants restricted stock units (“RSUs”) and performance stock units (“PSUs”) to employees and directors under its equity incentive plans. Each RSU represents a contingent right to receive one share of the Company’s common stock upon vesting. RSUs are generally subject to service-based vesting conditions and vest in equal installments over a three-year period, provided the recipient remains employed by, or continues to provide service to, the Company through each applicable vesting date. PSUs represent the right to receive a variable number of shares of the Company’s common stock upon vesting, subject to the achievement of specified performance criteria and continued service requirements. The grant-date fair value of RSUs is based on the closing market price of the Company’s common stock on the grant date and is recognized as stock-based compensation expense on a straight-line basis over the requisite service period. Compensation expense for RSUs with performance conditions is recognized over the requisite service period when achievement of the performance conditions becomes probable. The PSU’s vest upon the achievement of specified performance targets established for the Company’s executive officers and senior management team, subject to the continued employment of the participant through the applicable vesting date. Compensation expense related to these awards is recognized over the requisite service period based on the grant-date fair value of the awards and the probability of achieving the applicable performance conditions. 70 [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 statements of operations. For the year ended December 31, 2023, the three months ended March 31, 2024, and the years ended March 31, 2025 and 2026, 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. [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, 2026 Fair Value Carrying Amount Total Fair Value Level 1 Level 2 Level 3 Debt $ 280,024 $ 281,081 $ — $ 281,081 $ — Prepayment derivative $ 3,505 $ 3,505 $ — $ — $ 3,505 71 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 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 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 Repayments ( 207 ) — Foreign currency translation difference 13 — Net change in fair value — 775 Balance at March 31, 2026 $ — $ 3,505 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 years ended March 31, 2025 and 2026. [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 statements of operations . Advertising and marketing expense for the year ended December 31, 2023, the three months ended March 31, 2024, and the years ended March 31, 2025 and 2026 amounted to $ 2,300 , $ 1,698 $ 5,000 and $ 7,551 , 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. 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). 72 Foreign currency transaction gains and losses related to operational expenses denominated in a currency other than the functional currency are included in the determination of net income (loss). Foreign currency transaction gains (losses) primarily related to long-term debt of $ 839 , $( 43 ), $( 1,790 ) and $( 3,862 ) for the year ended December 31, 2023, the three months ended March 31, 2024, and the years ended March 31, 2025 and March 31, 2026, respectively, are included in interest expense in the consolidated statements 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. [W] Recently adopted 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 and was adopted prospectively by the Company during the year ended March 31, 2026. See Note 17 and consolidated statements of cash flow for details. [X] Recently issued accounting pronouncements: 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. On September 18, 2025, the FASB released ASU 2025-06, which amends certain aspects of the accounting for, and disclosure of, software costs under ASC 350-40. The amendments also supersede the guidance on website development costs in ASC 350-50 and relocate that guidance, along with the recognition requirements for development costs specific to websites, to ASC 350-40. Although the ASU makes targeted improvements to ASC 350-40, it does not fully align the framework for accounting for internally developed software costs that are subject to ASC 350-40 with the framework applied to software to be sold or marketed externally that is subject to ASC 985-20. The FASB also chose not to amend the guidance on costs of software licenses that are within the scope of ASC 985-20. The amendments “are effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods.” Early adoption is permitted as of the beginning of an annual reporting period. The Company is evaluating the effect of adopting ASU 2025-06. In December 2025, the FASB issued ASU 2025‑12, Codification Improvements (“ASU 2025-12”), which includes technical corrections and clarifications to various Topics in the FASB Accounting Standards Codification. The amendments are intended to improve the clarity and consistency of existing guidance and are not expected to significantly change current accounting practice. The amendments are effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. Early adoption is permitted. The Company is evaluating the effect of adopting ASU 2025-12. In December 2025, the FASB issued ASU 2025‑11, Interim Reporting (Topic 270): Narrow‑Scope Improvements (“ASU 2025-11”), which clarifies the application of interim reporting guidance and improves the organization’s required interim disclosures. The standard is effective for interim reporting periods beginning after December 15, 2027 for public business entities. Early adoption is permitted. The Company is evaluating the effect of adopting ASU 2025-11. 73 [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 statements of operations. [Z] Restructuring expenses The Company records one-time employee termination benefits associated with exit or disposal activities in accordance with ASC 420-10, Exit or Disposal Cost Obligations (“ASC 420”), and post-employment benefits under ASC 712-10, Compensation – Nonretirement Postemployment Benefits, when such obligations are probable and reasonably estimable. A liability for one-time termination benefits is recognized on the date the plan is communicated to affected employees, provided that no more-than-insignificant future service is required. Contract termination and other exit costs are recognized when the related obligation is incurred. Lease-related items are accounted for in accordance with ASC 842, Leases (“ASC 842”), including right-of-use (“ROU”) asset impairments and lease modifications. Only costs that are not lease liabilities under ASC 842 and that meet the recognition criteria of ASC 420 are included in restructuring charges. The Company reassesses expected restructuring expenses each reporting period and records adjustments to estimates, including reversals, as necessary. [AA] Non-controlling interests The Company presents non-controlling interests in consolidated entities within equity, separate from the equity attributable to Powerfleet stockholders, to the extent that such non-controlling interests do not have redemption features that are not solely within the control of the Company, as discussed below. Net income (loss) attributable to non-controlling interests is presented below net income (loss) before non-controlling interest. Earnings per share is determined after the impact of the non-controlling interests’ share in net income of the Company. [AB] Redeemable non-controlling interests The Company presents non-controlling interests in the mezzanine (“temporary equity”) section of the consolidated balance sheets, between liabilities and equity, to the extent that such non-controlling interests have redemption features, such as a put option, that is redeemable at a fixed or determinable price on a fixed or determinable date at the option of the holder, or upon the occurrence of an event that is not solely within the control of the Company. Due to its redeemable features that are outside the control of the Company, the redeemable non-controlling interest is and will continue to be reported in the mezzanine section in the consolidated balance sheets for as long as the put option is exercisable by the option holder. The carrying amount of the redeemable non-controlling interest, initially valued at fair value as part of acquisition accounting, is adjusted each reporting period to equal the greater of the (i) redemption value or (ii) carrying value of the non-controlling interest, adjusted each reporting period through income or loss attributable to the non-controlling interest and adjusted for any distributions made to date. Any measurement adjustments, if applicable, to the redeemable non-controlling interest are recognized in additional paid-in capital in the consolidated balance sheets. Refer to Note 3 herein for further details related to the redeemable non-controlling interests. 74 NOTE 3 - ACQUISITION Acquisition During Fiscal Year 2026 RTS Acquisition On February 1, 2026 (the “RTS Closing Date”), MiX Telematics Africa (Pty) Ltd. (“MiX Africa”), a wholly owned subsidiary of the Company, entered into an agreement for the acquisition of RTS Solutions Africa (Pty) Ltd. (“RTS”) from Macrocomm Group (Pty) Ltd (“Macrocomm”). Mix Africa acquired 100 % of the issued and outstanding equity shares of RTS in exchange for the issuance of 127 shares of MiX Africa to Macrocomm, representing 11.27 % of MiX Africa’s outstanding equity shares with an issuance date fair value of $ 8,765 , which constituted the total consideration transferred to Macrocomm. The RTS 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. 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 allocation of purchase price was as follows (in thousands): Assets acquired: Cash and cash equivalents $ 247 Accounts receivable, net 909 Inventory, net 1,320 Prepaid expenses and other current assets 17 Fixed assets, net 75 Intangible assets, net Trade name 586 Developed technology 558 Total assets acquired $ 3,712 Liabilities assumed: Accounts payable and accrued expenses $ 213 Lease liability - current 62 Deferred tax liability 309 Total liabilities assumed $ 584 Total identifiable net assets acquired $ 3,128 Goodwill 5,637 Purchase price consideration $ 8,765 Total revenue and net income of RTS included in the consolidated statement of operations for the year ended March 31, 2026 was $ 708 and $ 1 , respectively. 75 The above fair values of assets acquired and liabilities assumed 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 February 1, 2026 becomes available and final valuation and analysis are completed. 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 discounted cash flow analyses to assess certain components of its purchase price allocation as a result of the acquisition. The fair value of the market related intangible asset was determine using an income approach based on the relief from royalty method. The fair value of the developed technology was determined using the multi-period excess earnings method. For the fair value estimates, the Company used (i) forecasted future cash flows, (ii) historical and projected financial information, (iii) revenue growth rates, (iv) customer attrition rates, (v) royalty rates, and (vi) discount rates, as relevant, that market participants would consider when estimating fair values. 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 the preliminary fair value of the assets acquired and assumed liabilities during the measurement period, which extends through January 31, 2027, 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; • Fixed assets, for which the preliminary estimates are subject to revision for finalization of preliminary appraisals; • 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; • 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, and the impact of the revisions of estimates for the items; and • Goodwill will be subject to adjustment for the impact of the revisions of estimates for these 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 preliminary estimated fair values of the components of the identifiable intangible assets acquired (in thousands) and their estimated useful lives: Fair value Weighted-average useful lives Trade name $ 586 14 years Developed technology 558 5 years $ 1,144 Acquisition - Related Expenses The Company expensed a total of $ 225 of acquisition-related costs in the consolidated statements of operations related to the RTS Acquisition in the year ended March 31, 2026. Acquisition-related costs are classified as selling, general and administrative expenses in the consolidated statements of operations. 76 Financial Information If the business acquired in the RTS Acquisition was acquired on April 1, 2025, it would have contributed revenue of $ 4.1 million and a net loss of $ 356 for the year ended March 31, 2026, of which $ 153 related to the amortization of acquired identifiable intangible assets. Redeemable Non-Controlling Interests In connection with the RTS Acquisition, MiX Africa and MiX Telematics Ltd entered into a shareholders agreement with Macrocomm, which provides, among other things, Macrocomm with an option, exercisable within six months following the fifth year anniversary of consummation of the RTS Acquisition, to require MiX Africa or its nominee to purchase all equity interests in MiX Africa held by Macrocomm for either (i) the greater of (x) an amount based on a predetermined formula applied to MiX Africa’s revenue for the immediately preceding financial year and (y) R 90,000 , with settlement in cash, and (ii) a fixed number of shares of the Company’s common stock (provided that the Company’s common stock is then-listed on the Johannesburg Stock Exchange) (the “Put Option”). As a result of the put option redemption feature, and because the redemption is not solely within the control of the Company, the non-controlling interest is considered redeemable and is classified in temporary equity within the Company’s consolidated balance sheets, initially at its acquisition date fair value. The non-controlling interest is adjusted each reporting period for income (or loss) attributable to the non-controlling interest and any applicable distributions made. Although the non-controlling interest is not currently redeemable, the Company has concluded that it is probable that it will become redeemable in the future. Accordingly, because the Company has elected the immediate method to recognize changes in the redemption value as they occur, each reporting period a measurement period adjustment, if any, is recorded to adjust the non-controlling interest to the greater of (x) the redemption value, assuming it was redeemable at the reporting date, or (y) its carrying value. The fair value of the redeemable non-controlling interest, including the Put Option, recognized on the acquisition date was $ 8,765 . The fair value was estimated by applying the Monte Carlo simulation method. Key assumptions include risk-neutral expected growth rates based on management’s assessments of expected growth in revenue of MiX Africa, adjusted by appropriate factors capturing their correlation with the market and volatility, discounted at an appropriate discounting rate. The table below presents the reconciliation of changes in redeemable non-controlling interests (in thousands): Year ended March 31, 2026 Beginning balance $ — Issuance of redeemable non-controlling interest 8,765 Rebalancing of ownership percentage between parent and subsidiaries ( 3,364 ) Net income (loss) attributable to redeemable non-controlling interest 608 Ending balance $ 6,009 Pursuant to ASC 810, Consolidation, on the accounting and reporting for non-controlling interests and changes in ownership interests of a subsidiary, changes in a parent’s ownership interest (and transactions with non-controlling interests unit holders in the subsidiary) while the parent retains its controlling interest in its subsidiary should be accounted for as equity transactions. The carrying value of the non-controlling interests shall be adjusted to reflect the change in its ownership interest in the subsidiary, with the offset to equity attributable to the parent. Accordingly, as a result of the issuance of 127 shares of common stock of Mix Africa to Macrocomm on February 4, 2026 (pursuant to the RTS acquisition), which resulted in a change to the ownership percentages between Powerfleet stockholders’ equity and non-controlling interests in Mix Africa, the Company has decreased the above redeemable non-controlling interests in MiX Africa and increased additional paid-in capital in the Company’s stockholders’ equity by $ 3,364 as of March 31, 2026. 77 Reconciliation of Acquisition, Net of Cash Assumed The following table is a reconciliation of acquisition, net of cash assumed in the consolidated statements of cash flows for the period ended March 31, 2026 (in thousands): RTS Acquisition $ 247 Powerfleet Africa Sky ( 192 ) Acquisition, net of cash assumed $ 55 Acquisitions During Fiscal Year 2025 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. 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 78 * 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. 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. 79 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. 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 statements 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, Business Combinations, 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. 80 $ 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 for 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 , net of costs, received on October 1, 2024. 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. 81 The 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, including 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 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. The initial accounting for the business combination was completed as of September 30, 2025. The fair values of the identifiable assets acquired and liabilities assumed are final and will not be subsequently adjusted. Accordingly, no future adjustments to these amounts or to the resulting goodwill will be recorded. 82 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 Acquisition-Related Expenses The Company expensed a total of $ 6,443 and $ 1,160 of ac quisition-related costs in the consolidated statements of operations related to the FC Acquisition in the years ended March 31, 2025 and March 31, 2026, respectively. Acquisition-related costs are classified as selling, general and administrative expenses in the consolidated statements 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 statements of cash flows for the period ended March 31, 2025 (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 year ended December 31, 2023, the three months ended March 31, 2024, and the years ended March 31, 2025 and 2026 (in thousands): Year Ended December 31, Three Months Ended March 31, Year Ended March 31, 2023 2024 2025 2026 Products $ 49,741 $ 12,080 $ 85,584 $ 83,975 Services 83,995 21,660 276,931 359,802 $ 133,736 $ 33,740 $ 362,515 $ 443,777 83 The balances of contract assets and contract liabilities from contracts with customers are as follows as of March 31, 2025 and 2026 (in thousands): March 31, 2025 2026 Contract Assets: Deferred contract cost (1) $ 11,894 $ 12,431 Deferred costs - current $ 2 $ — Contract Liabilities: Deferred revenue – services (2) $ 21,466 $ 23,337 Deferred revenue – products (2) 1,106 827 22,572 24,164 Less: Deferred revenue – current ( 17,375 ) ( 20,159 ) Deferred revenue – long term $ 5,197 $ 4,005 (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 year ended December 31, 2023, the three months ended March 31, 2024, and the years ended March 31, 2025 and 2026, the Company recognized revenue of $ 6,046 , $ 1,975 , $ 4,666 and $ 22,203 , 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, 2025 2026 Sales-type lease receivables, current $ 1,062 $ 831 Prepaid expenses 9,038 8,865 Contract assets 5,088 5,017 Tax receivables 553 1,190 VAT receivable 1,901 1,669 Sundry debtors 5,424 4,037 Other current assets 253 485 $ 23,319 $ 22,094 84 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 weighted-average cost method or the first-in first-out (FIFO) method. Inventories consist of the following (in thousands): March 31, 2025 2026 Components $ 11,859 $ 8,495 Finished goods, net 6,491 13,953 $ 18,350 $ 22,448 NOTE 7 - FIXED ASSETS Fixed assets are stated at cost, less accumulated depreciation and amortization, and are summarized as follows (in thousands): March 31, 2025 2026 Installed and uninstalled products $ 61,564 $ 73,750 Computer software 11,523 11,807 Computer and electronic equipment 6,294 8,596 Furniture and fixtures 3,054 4,004 Leasehold improvements 1,459 650 Plant and equipment 276 278 Assets in progress 7 107 84,177 99,192 Accumulated depreciation and amortization ( 26,166 ) ( 36,794 ) $ 58,011 $ 62,398 Depreciation and amortization expense for the year ended December 31 , 2023, the three months ended March 31, 2024, and the years ended March 31, 2025 and 2026 was $ 3,876 , $ 955 , $ 19,876 and $ 23,279 , resp ectively. This includes amortization of costs associated with computer software for the year ended December 31, 2023, the three months ended March 31, 2024, and the years ended March 31, 2025 and 2026 of $ 605 , $ 339 , $ 5,734 and $ 4,589 , 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. 85 The following table summarizes identifiable intangible assets of the Company as of March 31, 2025 and March 31, 2026 (in thousands): March 31, 2026 Useful Lives (In Years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Definite-lived: Customer relationships 9 - 13 $ 213,107 $ ( 40,868 ) $ 172,239 Trademark and tradename 3 - 15 23,637 ( 8,291 ) 15,346 Patents 7 - 11 2,128 ( 961 ) 1,167 Technology 3 - 5 85,187 ( 36,165 ) 49,022 Software to be sold or leased 3 - 5 22,875 ( 5,296 ) 17,579 346,934 ( 91,581 ) 255,353 Indefinite-lived: Customer list 104 — 104 Trademark and tradename 61 — 61 165 — 165 Total $ 347,099 $ ( 91,581 ) $ 255,518 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 At March 31, 2026, the weighted-average remaining amortization periods for customer relationships, trademarks and tradenames, patents, technology, and capitalized software to be sold or leased were 10.2 , 9.8 , 3.0 , 2.8 , and 2.8 years, respectively. Amortization expense for the year ended December 31, 2023, the three months ended March 31, 2024, and the years ended March 31, 2025 and 2026 was $ 5,569 , $ 988 , $ 27,619 an d $ 37,001 , respectively. 86 Estimated future amortization expense for each of the five succeeding fiscal years for these intangible assets is as follows: Years ending March 31, 2027 $ 47,232 2028 40,746 2029 31,234 2030 24,228 2031 18,940 Thereafter 92,973 $ 255,353 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 Businesses acquired Powerfleet Africa Sky 552 RTS Acquisition 5,637 Foreign currency translation difference 22,660 Balance at March 31, 2026 $ 411,995 Refer to Note 3 for additional information regarding the change in the carrying amount of goodwill from April 1, 2024 to March 31, 2026 as a result of the FC Acquisition and RTS Acquisition. 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. For the year ended December 31, 2023, the three months ended March 31, 2024, and the years ended March 31, 2025 and 2026, the Company did not incur an impairment charge . 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 three to five years . There were 1,292 shares available for future issuance under the 2018 Plan as of March 31, 2026. 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. 87 During the year ended March 31, 2026, the Company granted RSUs and PSUs under the 2018 Plan to certain executives in consideration for services rendered. The RSUs vest in equal installments over a three-year period, subject to continued employment on the applicable vesting dates. The actual number of PSUs that may vest ranges from 0 % to 167 % of the target award, depending on the achievement by the Company of specified performance criteria in accordance with the terms of the applicable award agreement and the 2018 Plan. 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. [A] Stock Options: During the year ended March 31, 2026, the Company did not grant any market-based stock options. The following table summarizes the activity relating to the Company’s market-based stock options for the year ended March 31, 2026: Options (in thousands) Weighted- Average Exercise Price ($) Weighted-Average Contractual Remaining Term (years) Aggregate Intrinsic Values (in thousands) Outstanding as of April 1, 2025 5,200 13.85 — — Granted — — — — Exercised — — — — Forfeited ( 110 ) 3.12 — — Outstanding as of March 31, 2026 5,090 14.09 5.93 $ 35 Exercisable as of March 31, 2026 — — — $ — During the year ended March 31, 2026, the Company did not grant any options to purchase 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, 2026: Options (in thousands) Weighted- Average Exercise Price ($) Weighted-Average Contractual Remaining Term (years) Aggregate Intrinsic Values (in thousands) Outstanding as of April 1, 2025 1,890 4.51 — — Granted — — — — Exercised ( 13 ) 3.13 — — Forfeited ( 70 ) 4.75 — — Outstanding as of March 31, 2026 1,807 4.51 5.18 $ 17 Exercisable as of March 31, 2026 1,732 4.51 5.05 $ 17 88 The Company recorded stock-based compensation expense of $ 2,712 , $ 688 , $ 3,098 , and $ 1,376 for the year ended December 31, 2023, the three months ended March 31, 2024, and the years ended March 31, 2025 and 2026, respectively, in connection with awards made under the stock option plans, including market-based and time-based options. The decrease in the recognized expense is because the prior year included 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 fair value of options vested during the year ended December 31, 2023, the three months ended March 31, 2024, and the years ended March 31, 2025 and 2026 amounted to $ 931 , $ 532 , $ 1,752 and $ 365 , respectively. The total intrinsic value of options exercised during the year ended March 31, 2026 and December 31, 2023 amounted to $ 24 and $ 9 , respectively. There were no option exercises that occurred during the three months ended March 31, 2024 and the year ended March 31, 2025. As of March 31, 2026, there was $ 189 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 0.47 years. As of March 31, 2026, there was $ 1,018 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 1.11 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. During the year ended March 31, 2026, the Company granted 373 restricted shares of common stock to the Company’s senior management team, which vest in equal installments over a three-year period, provided that they remain employed by the Company on each scheduled vesting date. The Company also granted an additional 11 restricted shares of common stock to the Company’s senior management team, which vest in equal installments over a 12 -month period, provided that they remain employed by the Company on each scheduled vesting date. The grant date for these awards was determined to be April 23, 2025. The Company granted additional 1,335 restricted shares of common stock to the Company’s senior management team, which vest in equal installments over a three-year period, provided that they remain employed by the Company on each scheduled vesting date. The grant date for these awards was determined to be February 25, 2026. During the year ended March 31, 2026, the Company granted 1,475 restricted shares of common stock to the Company’s executive officers and senior management team, which vest in full if specified performance targets are achieved and provided that they remain employed by the Company on the scheduled vesting date. The grant date for these awards was determined to be April 23, 2025. The Company granted additional 2,671 restricted shares of common stock to the Company’s senior management team, which vest in full if specified performance targets are achieved and provided that they remain employed by the Company on the scheduled vesting date. The grant date for these awards was determined to be February 25, 2026. 89 A summary of all unvested restricted stock for the year ended March 31, 2026 is as follows: Time-Based Restricted Shares Market-Based Restricted Shares Performance-Based Restricted Shares Number of Unvested Shares (in thousands) Weighted- Average Grant Date Fair Value ($) Number of Unvested Shares (in thousands) Weighted- Average Grant Date Fair Value ($) Number of Unvested Shares (in thousands) Weighted- Average Grant Date Fair Value ($) Unvested, March 31, 2025 732 5.58 938 5.35 — — Granted, April 23, 2025 384 4.75 — — 1,475 4.75 Granted, February 25, 2026 1,335 3.70 — — 2,671 3.70 Vested/Exercised ( 395 ) 5.33 ( 104 ) 5.59 — — Forfeited or expired ( 71 ) 4.75 — — ( 153 ) 4.75 Unvested, March 31, 2026 1,985 4.24 834 5.35 3,993 4.05 The Company recorded stock-based compensation expenses of $ 1,196 , $ 340 , $ 3,337 , and $ 4,379 for the year ended December 31, 2023, the three months ended March 31, 2024, and the years ended March 31, 2025 and 2026, respectively, in connection with restricted stock grants. As of March 31, 2026, there was $ 18,460 of total unrecognized compensation cost related to unvested shares. [C] Stock Appreciation Rights: The following table summarizes the activity relating to the Company’s stock appreciation rights ( “SARs”) for the year ended March 31, 2026: 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, 2025 3,238 2.44 Granted — — Exercised ( 644 ) 2.78 Forfeited ( 225 ) 2.33 Outstanding as of March 31, 2026 2,369 2.36 2.29 Exercisable as of March 31, 2026 1,063 2.52 1.68 $ 592 The total stock-based compensation expense recognized during the year ended March 31, 2026 and 2025 was $ 1,443 and $ 2,926 , respectively. As of March 31, 2026, there was $ 2,513 of unrecognized compensation cost related to unvested SARs. This amount is expected to be recognized over a weighted-average period of 1.80 years. [D] Warrants: On April 21, 2025, the Company issued to Private Capital Management Holdings, L.P., an affiliate of Private Capital Management, LLC (“PCM”), a warrant to purchase 130 shares of common stock in lieu of granting certain equity compensation to Andrew Martin, one of the Company’s directors and a partner and member of the investment research team at PCM. The warrants become exercisable in 10 equal installments on the last day of each quarter starting June 30, 2024. 90 The fair value of each warrant on grant date is estimated using the Black-Scholes option-pricing model reflecting the following assumptions: Expected volatility 70.0 % Expected life of warrants 5.2 Risk free interest rate 4.0 % Dividend yield — Fair value of warrants granted during the quarter $ 2.79 The total stock-based compensation expense recognized during the year ended March 31, 2026 was $ 343 . As of March 31, 2026, there was $ 20 of unrecognized compensation cost related to unvested warrants. This amount is expected to be recognized over a weighted-average period of 0.5 years. NOTE 10 - NET LOSS PER SHARE Net loss per share for the year ended December 31, 2023, the three months ended March 31, 2024, and the years ended March 31, 2025 and 2026 are as follows (in thousands, except per share data): Year Ended December 31, Three Months Ended March 31, Year Ended March 31, 2023 2024 2025 2026 Basic and diluted loss per share Net loss attributable to common stockholders $ ( 17,307 ) $ ( 19,639 ) $ ( 51,012 ) $ ( 20,552 ) Net loss per share attributable to common stockholders - basic and diluted $ ( 0.49 ) $ ( 0.55 ) $ ( 0.43 ) $ ( 0.15 ) Weighted-average common share outstanding - basic and diluted 35,628 35,813 119,877 133,761 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. 91 NOTE 11 - SHORT-TERM BANK DEBT AND LONG-TERM DEBT Amounts outstanding under short‑term and long‑term debt were classified on the consolidated balance sheets as follows (in thousands): March 31, 2025 2026 Short-term bank debt $ 36,788 $ 44,072 Current maturities of long-term debt $ 4,844 $ 6,283 Long-term debt - less current maturities $ 232,160 $ 229,669 As of March 31, 2026, the Company had debt outstanding under credit facilities with Bank Hapoalim B.M. (“Hapoalim”) and FirstRand Bank Limited (acting through its Rand Merchant Bank division) (“RMB”). As of March 31, 2026, short-term bank debt consisted of $ 44,062 of borrowing facilities and $ 10 of book overdrafts. Summary of Debt Facilities Short-Term Debt The following table summarizes the Company’s revolving credit facilities as of March 31, 2026 (in thousands): Facility Denominated Currency Total Committed Amount (USD equivalent at balance sheet date) Amount Outstanding (Drawn) Available Borrowing Capacity (Undrawn) Interest Rate Final Maturity Classification RMB General Facility ** ZAR $ 20,520 $ 20,630 $ — SA Prime – 0.75 % On demand (April 2, 2026) Current RMB Revolving Credit Facility A USD $ 10,000 $ 5,000 $ 5,000 SOFR + 2.5 % February 1, 2027 Current RMB Revolving Credit Facility B ZAR $ 10,553 $ — $ 10,553 South African rand overnight index average + 1.95 % February 1, 2027 Current Hapoalim Revolving Credit Facility C USD/ NIS $ 10,000 $ 4,181 $ 5,819 USD denominated: SOFR + 2.15 % NIS denominated : Hapoalim Prime + 2.5 % February 27, 2027 Current Hapoalim Revolving Credit Facility D USD $ 20,000 $ 14,251 $ 5,749 SOFR + 2.59 % June 30, 2026 Current $ 71,073 $ 44,062 $ 27,121 ** The outstanding balance exceeds the committed amount primarily due to the accrual of interest on the foreign debt balance as of the reporting date. 92 RMB General Facility As part of the MiX Combination, MiX Telematics entered into a committed general banking facility with RMB in the principal amount of R 350,000 (the equivalent of $ 20,520 at March 31, 2026) (the “RMB General Facility”). The RMB General Facility was repayable on demand and had a contractual term of 365 days from the available date. Repayment, including capitalized interest, was originally due by the earlier of the available date or April 2, 2026. Interest was calculated on the daily outstanding balance, compounded monthly in arrears and payable quarterly. Subsequent to March 31, 2026, the Company continued discussions with RMB regarding the establishment of a new general banking facility and certain additional operational banking facilities in connection with the transition of the Company’s South African transactional banking relationship to RMB. The proposed arrangements include a general banking facility intended to support working capital and cash management requirements, as well as additional operational banking facilities supporting transactional banking activities. The proposed facilities have received credit approval from RMB and remain subject to the execution of definitive documentation and receipt of certain corporate approvals. The Company expects to finalize the arrangements following completion of these internal approval and documentation processes. 2026 RMB Revolving Credit Facilities On February 5, 2026, the Company, together with certain wholly owned subsidiaries, entered into a facilities agreement with RMB (the “RMB Revolving Credit Facilities Agreement”) providing revolving credit facilities in the aggregate principal amounts of $ 10,000 (“RMB Revolving Credit Facility A”) and R 180,000 (“RMB Revolving Credit Facility B” and, together with RMB Revolving Credit Facility A, the “RMB Revolving Credit Facilities”), respectively. The RMB Revolving Credit Facilities are available for general corporate purposes. The RMB Revolving Credit Facilities will mature one year from closing. Loans made under the RMB Revolving Credit Facilities may be voluntarily prepaid, in whole or in part, without penalty or premium, at any time upon prior written notice. In addition, the RMB Revolving Credit Facilities Agreement provides for certain customary mandatory prepayment requirements. The Company was required to pay a non-refundable upfront fee in the amount of $ 0.1 million. In addition, the Company is required to pay a commitment fee on the undrawn portion of each RMB Revolving Credit Facility during the availability period, calculated at a rate equal to (i) 35 % per annum of the applicable margin if utilization is less than 50 % of the relevant RMB Revolving Credit Facility, (ii) 20 % per annum of the applicable margin if utilization is equal to or greater than 50 % of RMB Revolving Credit Facility A, and (iii) 26 % per annum of the applicable margin if utilization is equal to or greater than 50 % of RMB Revolving Credit Facility B. Hapoalim Revolving Credit Facilities On March 18, 2024, Powerfleet Israel Ltd. (“Powerfleet Israel”) and Pointer Telocation Ltd. (“Pointer” and, together with Powerfleet Israel, the “Borrowers”) entered into an amended and restated credit agreement (as amended, the “A&R Credit Agreement”). The A&R Credit Agreement provides for 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 Revolving Credit Facility C” and “Hapoalim Revolving Credit Facility D,” respectively, and, collectively, the “Hapoalim Revolving Credit Facilities”). On December 30, 2024, the Borrowers entered into an amendment to the A&R Credit Agreement, which increases the principal amount available under Hapoalim Revolving Credit Facility D from $ 10,000 to $ 20,000 . The proceeds of the Hapoalim Revolving Credit Facilities may be used by Pointer for general corporate purposes, including working capital and capital expenditures. The Company is required to pay non‑utilization and credit allocation fees on undrawn balances equal to 0.5 % per annum on undrawn and uncancelled amounts. The Hapoalim Revolving Credit Facilities are 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 its assets, as well as cross‑guarantees between Powerfleet Israel and Pointer, subject to specified exclusions. The weighted-average interest rate on short-term borrowings as of March 31, 2025 and March 31, 2026 was 8.75 % and 7.90 %, respectively. 93 Long-Term Debt The following table summarizes the Company’s loan facilities as of March 31, 2026 (in thousands): Facility Denominated Currency Original Principal Amount (USD equivalent) Outstanding Balance Interest Rate Final Maturity Classification Hapoalim Term Facility A NIS $ 20,000 $ 15,004 Hapoalim Prime ( 5.5 %) + 2.2 % March 18, 2029 Non-current Hapoalim Term Facility B ** NIS $ 10,000 $ 11,542 Hapoalim Prime ( 5.5 %) + 2.3 % March 18, 2029 Non-current RMB Term Facility A USD $ 42,500 $ 42,500 8.699 % to March 31, 2027, thereafter SOFR + 4.85 % March 31, 2028 Non-current RMB Term Facility B USD $ 42,500 $ 42,500 8.979 % fixed March 31, 2029 Non-current New RMB Term Facility USD $ 125,000 $ 125,000 5.0 % + SOFR October 31, 2029 Non-current $ 240,000 $ 236,546 ** The outstanding balance of the Hapoalim Term Facility B exceeds the original USD equivalent principal amount due to foreign currency fluctuations with no required principal payments until maturity. Hapoalim Term Facilities The A&R Credit Agreement also provides for 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 Term Facility A” and “Hapoalim Term Facility B,” respectively, and, collectively, the “Hapoalim Term Facilities”). Hapoalim Term Facility A amortizes in quarterly installments over its five-year term, while Hapoalim Term Facility B does not amortize and is payable in full at maturity. The A&R Credit Agreement was accounted for as a modification of the prior term loan facilities, as the change in the present value of future cash flows was less than 10% under the guidance in ASC 470‑50. The proceeds ($ 30,000 ), less the prepayment of the prior term loan facilities (approximately $ 11,200 ), amounting to approximately $ 18,800 , were recorded as an increase in the carrying value of the prior term loan facilities that was recognized previously. For the year ended December 31, 2023 and the three months ended March 31, 2024, the Company recorded $ 133 and $ 110 , respectively, of additional deferred costs to the original debt issuance costs and the refinancing fee paid to Hapoalim. For the years ended March 31, 2025 and 2026, the Company recorded a cost of $ 33 and $ 80 , respectively, net of additional deferred costs and credit to the original debt issuance costs and amortization of the original debt issuance costs. The Company recorded charges of $ 572 , $ 111 , $ 2,410 and $ 2,371 to interest expense on its consolidated statements of operations for the year ended December 31, 2023, the three months ended March 31, 2024, and the years ended March 31, 2025 and 2026, respectively, related to interest expense associated with the Hapoalim debt. Hapoalim Covenants 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 total 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. As of March 31, 2026, the Company was in compliance with all applicable financial and non‑financial covenants, and no events of default had occurred. 94 RMB Term Facilities On March 7, 2024, the Company, together with certain of its wholly owned subsidiaries, entered into a facilities agreement (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 Term Facility A” and “RMB Term Facility B,” respectively, and, collectively, the “RMB Term Facilities”). The RMB Term Facilities were drawn in full and used to redeem all the then-outstanding shares of the Company’s Series A convertible preferred stock (“Series A Preferred Stock”) and for general corporate purposes. On October 31, 2025, the Company and RMB entered into a first amendment and restatement agreement (the “ First Amendment and Restatement Agreement”), which amended and restated the Facilities Agreement to, among other things, extend maturities and modify interest terms. Under the terms of the First Amendment and Restatement Agreement, RMB Term Facility A matures on March 31, 2028, and RMB Term Facility B matures on March 31, 2029. Interest is payable quarterly in arrears. The Company may prepay the RMB Term 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 Term 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 Term Facilities. Certain optional and contingent prepayment features within the RMB Term Facilities were determined to be embedded derivatives requiring bifurcation under of ASC 815-15 Embedded Derivatives. The embedded derivatives were separated from the debt host contracts and accounted for at fair value, with the debt host contracts recorded at amortized cost. Upon initial recognition of the RMB Term Facilities, a Prepayment Derivative asset of $ 610 and $ 1,616 for RMB Term Facility A and RMB Term 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 Term 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, 2026: Facility A Facility B Risk-free interest rate volatility 36 % 28 % Risk-free rate 3.68 % 3.81 % Credit rating B+ B+ 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 Term Facility A, a change of -10% in credit spread volatility would result in no change in the derivative asset, while a change of +10% in credit spread volatility would result in an increase in the derivative asset of $ 10 . For the Prepayment Derivative asset in RMB Term Facility B, a change of -10% in credit spread volatility would result in a decrease in the derivative asset of $ 10 , while a change of +10% in credit spread volatility would result in an increase in the derivative asset of $ 30 . The Prepayment Derivative assets are included in Other assets and their fair values were $ 850 and $ 1,880 for RMB Term Facility A and RMB Term Facility B, respectively, as of March 31, 2025 and, $ 1,215 and $ 2,291 for RMB Term Facility A and RMB Term Facility B, respectively, as of March 31, 2026. 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, 2026 and March 31, 2025, the Co mpany recorded $ 192 and $ 93 , respectively of amortization of the original debt issuance costs and the refinancing fee to RMB. For the years ended March 31, 2025 and March 31, 2026, the Company recorded interest expense of $ 7,588 and $ 7,617 respectively. 95 New RMB Term Facility On September 27, 2024, the Company, together with certain of its wholly owned subsidiaries, entered into a term loan facility with RMB in an aggregate principal amount of $ 125,000 (the “New RMB Term Facility”), the proceeds of which were used to pay a portion of the purchase price of approximately $ 190,000 in connection with the FC Acquisition. Interest on the New RMB Term Facility is payable quarterly in arrears. The stated interest rate at March 31, 2026 was 8.68 %. The Company paid a non-refundable deal structuring fee of $ 1,250 to RMB on October 1, 2024. Total debt issuance costs incurred were $ 1,433 , inclusive of the non-refundable deal structuring fee. For the years ended March 31, 2025 and 2026, the Company recorded $ 113 and $ 242 , respectively of amortization of these costs and $ 5,946 and $ 11,653 , respectively, of interest expense . The New RMB Term Facility is guaranteed, on a joint and several basis, by certain wholly owned subsidiaries and secured by first‑priority security interests over their share capital. RMB Covenants The RMB facilities agreements contain 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, which must be less than (i) 2.75 from June 30, 2026 through March 30, 2027, and (ii) 2.50 thereafter, and the ratio of the Company’s consolidated EBITDA to consolidated total finance costs, which must exceed (i) 3.00 from September 30, 2025 through September 29, 2026 and (ii) 3.50 thereafter. The RMB facilities agreements also include representations, warranties, events of default and other provisions customary for financings of this type. The occurrence of any event of default under the RMB facilities agreements may result in all outstanding indebtedness under the RMB Term Facilities or New RMB Term Facility, as applicable, becoming immediately due and payable. The RMB facilities agreements include an equity cure provision, allowing the Company to remedy a breach of the above financial covenants by receiving a qualifying shareholder contribution (a “Cure Amount”) within 45 days of the relevant Measurement Date (as defined in each of the RMB facilities agreements). The Cure Amount may be applied as a notional reduction in net borrowings or finance costs solely for covenant compliance purposes. The use of this provision is limited to (i) no more than two consecutive Measurement Periods (as defined in each of the RMB Facilities Agreements) and (ii) a maximum of three times over the life of RMB facilities agreements, as applicable. All Cure Amounts must be applied toward mandatory prepayment of outstanding loans under the RMB Term Facilities or New RMB Term Facility, as applicable. As of March 31, 2026, the Company was in compliance with all applicable financial and non‑financial covenants, and no events of default had occurred. Contractual Maturities Scheduled contractual maturities of the long-term debt as of March 31, 2026 are as follows (in thousands): 2026 $ — 2027 6,348 2028 48,848 2029 56,350 2030 125,000 Thereafter — 236,546 Less: Current portion ( 6,283 ) Less: Debt costs and prepayment ( 594 ) Total $ 229,669 96 NOTE 12 - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consist of the following (in thousands): March 31, 2025 2026 Accrued warranty $ 1,479 $ 959 Accrued compensation 27,825 22,890 Government authorities 6,982 10,533 Other current liabilities 9,041 3,317 $ 45,327 $ 37,699 The following table summarizes warranty activity for the periods ended March 31, 2025 and 2026 (in thousands): Accrued warranty reserve, March 31, 2024 $ 2,926 Accrual for product warranties issued 365 Product replacements and other warranty expenditures ( 510 ) Expiration of warranties ( 109 ) Acquired through MiX Combination and FC Acquisition 954 Foreign currency translation difference ( 8 ) Accrued warranty reserve, March 31, 2025 (1) $ 3,618 Accrual for product warranties issued 544 Product replacements and other warranty expenditures ( 821 ) Expiration of warranties ( 1,245 ) Foreign currency translation difference 106 Accrued warranty reserve, March 31, 2026 (1) $ 2,202 (1) Includes non-current accrued warranty included in other long-term liabilities at March 31, 2025 and 2026 of $ 2,139 and $ 1,243 , respectively. NOTE 13 - RESTRUCTURING EXPENSES The Company initiated restructuring actions in connection with the integration of MiX Telematics and Fleet Complete to streamline operations and capture operating synergies. These actions included workforce reductions and employee terminations related to consolidation of overlapping functions. The Company’s restructuring plans are generally country- or region-specific and are typically completed within a one-year period. For the years ended March 31, 2025 and 2026, the Company recognized restructuring expenses of $ 4,673 and $ 3,463 , respectively, primarily consisting of employee termination costs. Restructuring expenses are recorded in selling, general and administrative expenses in the consolidated statements of operations. 97 The following table summarizes the details of the Company’s restructuring liability (included in accrued expenses and other current liabilities on the consolidated balance sheets) (in thousands): March 31, 2025 March 31, 2026 Opening balance $ 60 $ 1,324 Assumed in business combination 216 — Charges 4,673 3,463 Cash payments ( 3,604 ) ( 3,580 ) Foreign currency translation ( 21 ) — Closing balance $ 1,324 $ 1,207 As of March 31, 2026, the Company incurred expenses of $ 8,136 in connection with restructuring activities and expects to incur additional charges, primarily for severance, with most related cash outflows expected within the next 12 months. In addition to these restructuring expenses, the Company recognized inventory write-downs related to hardware rationalization (included in cost of revenue) and retention, leadership transition, and other professional costs (included in selling, general and administrative expenses) associated with the restructuring activities. Lease-related impairments and modifications, if any, are accounted for under ASC 842 (included in other income/expenses). NOTE 14 - 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 for 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”). During the year ended December 31, 2023, the three months ended March 31, 2024, and the year ended March 31, 2025, the Company paid $ 4,493 , $ 1,128 and $ 25 , respectively, in dividends to the holders of the Series A Preferred Stock. The following table summarizes the dividend paid activity (in thousands): Dividends paid in cash Dividends paid in shares Total 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 Year Ended March 31, 2026 $ — $ — $ — 98 (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 . NOTE 15 - ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME Comprehensive (loss) income includes net loss and foreign currency translation gains and losses. The accumulated balances for each classification of other comprehensive (loss) income are as follows (in thousands): Foreign currency translation adjustment Accumulated other comprehensive (loss) income Balance at January 1, 2023 $ ( 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 ) Net current period change 38,510 38,510 Balance at March 31, 2026 $ 29,660 $ 29,660 There were no reclassification adjustments out of accumulated other comprehensive (loss) income during the period. NOTE 16 - 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 statements of operations. The Company derives its revenue from product revenue and service revenue. Product revenue consists primarily of the sale of hardware devices. Service revenue consists primarily of recurring subscription services as well as professional implementation and other non-recurring services. The measure of segment assets is reported on the consolidated balance sheets as net fixed assets. 99 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, 2023 2024 2025 2026 Total revenues $ 133,736 $ 33,740 $ 362,515 $ 443,777 Total cost of revenues 66,660 17,537 167,978 197,355 Selling and marketing expenses 24,076 5,720 53,048 73,160 General and administrative expenses 41,303 15,152 141,803 127,029 Development costs incurred 12,716 3,417 28,881 34,771 Development costs capitalized ( 4,336 ) ( 1,399 ) ( 12,820 ) ( 16,412 ) Depreciation and amortization 5,874 960 9,510 8,298 Interest income 103 259 926 780 Interest expense ( 1,602 ) ( 709 ) ( 20,330 ) ( 27,526 ) Bargain purchase - Movingdots 9,034 — — — Other expense ( 29 ) ( 55 ) ( 1,163 ) ( 4,086 ) Income tax expense ( 589 ) ( 352 ) ( 4,517 ) ( 8,688 ) Net loss before non-controlling interest ( 5,640 ) ( 8,504 ) ( 50,969 ) ( 19,944 ) Non-controlling interest ( 35 ) ( 11 ) ( 18 ) ( 608 ) Accretion of preferred stock ( 7,139 ) ( 9,996 ) — — Preferred stock dividend ( 4,493 ) ( 1,128 ) ( 25 ) — Net loss attributable to common stockholders $ ( 17,307 ) $ ( 19,639 ) $ ( 51,012 ) $ ( 20,552 ) The following table summarizes revenues by geographic region (in thousands): Year Ended December 31, Three Months Ended March 31, Year Ended March 31, 2023 2024 2025 2026 North America $ 74,671 $ 18,090 $ 121,623 $ 159,339 Israel 41,689 11,267 49,555 58,385 Africa 3,283 863 97,586 109,702 Europe and Middle East 1,908 1,016 43,190 51,092 Australia — — 30,962 42,963 Other 12,185 2,504 19,599 22,296 $ 133,736 $ 33,740 $ 362,515 $ 443,777 100 The following table summarizes long-lived assets by geographic region (in thousands): March 31, 2025 March 31, 2026 North America $ 13,051 $ 16,409 Israel 2,249 1,576 Africa 32,391 33,004 Europe and Middle East 4,824 6,098 Australia 825 550 Other 4,671 4,761 $ 58,011 $ 62,398 NOTE 17 - 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, 2023 2024 2025 2026 U.S. operations $ ( 16,494 ) $ ( 7,990 ) $ ( 46,935 ) $ ( 41,764 ) Foreign operations 11,443 ( 162 ) 483 30,508 $ ( 5,051 ) $ ( 8,152 ) $ ( 46,452 ) $ ( 11,256 ) 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, 2023 2024 2025 2026 Current: Federal $ — $ — $ — $ — State 68 25 110 86 Foreign 519 220 6,174 10,339 Total current provision $ 587 $ 245 $ 6,284 $ 10,425 Deferred: Federal $ — $ — $ — $ — State — — ( 85 ) — Foreign 2 107 ( 1,682 ) ( 1,737 ) Total deferred provision $ 2 $ 107 $ ( 1,767 ) $ ( 1,737 ) Total provision for income taxes $ 589 $ 352 $ 4,517 $ 8,688 101 Upon adoption of ASU 2023-09, the reconciliation of taxes at the statutory U.S. federal income tax rate to the Company’s effective income tax rate is as follows: Year Ended March 31, 2026 Income tax benefit at the federal statutory rate $ ( 2,364 ) 21.0 % State and local income taxes, net of federal taxes 355 ( 3.2 ) % Increase (decrease) in valuation allowance 7,310 ( 64.9 ) % Over (under) provision prior years ( 1,219 ) 10.8 % Cross-border tax effect - GILTI inclusion 1,793 ( 15.9 ) % Permanent differences and other 748 ( 6.6 ) % Foreign tax effects: South Africa Statutory tax rate difference 354 ( 3.1 ) % Non-deductible (non-taxable) foreign exchange movements ( 1,482 ) 13.2 % Permanent differences and other 687 ( 6.1 ) % Australia Statutory tax rate difference 338 ( 3.0 ) % Permanent differences and other 218 ( 1.9 ) % Israel Statutory tax rate difference 204 ( 1.8 ) % Israel CFC Income 348 ( 3.1 ) % Over (Under) provision prior years 621 ( 5.5 ) % Permanent differences and other ( 174 ) 1.5 % Mexico Statutory tax rate difference ( 12 ) 0.1 % Over (Under) provision prior years 689 ( 6.1 ) % Permanent differences and other 404 ( 3.6 ) % Canada Statutory tax rate difference 274 ( 2.4 ) % Increase (decrease) in valuation allowance ( 1,759 ) 15.6 % Brazil Statutory tax rate difference 245 ( 2.2 ) % Permanent differences and other ( 226 ) 2.0 % Other foreign jurisdictions Statutory tax rate difference 21 ( 0.2 ) % Foreign tax paid 393 ( 3.5 ) % Over (Under) provision prior years 316 ( 2.8 ) % Permanent differences and other 606 ( 5.4 ) % Effective Income tax rate $ 8,688 ( 77.2 ) % 102 The difference between income taxes at the statutory federal income tax rate and income taxes reported in the consolidated statements of operations for the year ended December 31, 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, 2023 2024 2025 Income tax benefit at the federal statutory rate $ ( 1,061 ) $ ( 1,712 ) $ ( 9,755 ) State and local income taxes, net of federal taxes ( 298 ) ( 145 ) ( 1,094 ) Increase (decrease) in valuation allowance 1,488 1,570 7,173 Remeasurement of deferred tax adjustments 4 8 542 Permanent differences and other 678 222 6,343 Non-deductible (non-taxable) foreign exchange movements — — ( 509 ) Over (Under) provision prior years — — 378 Foreign rate differential ( 1,924 ) 396 819 GILTI inclusion 1,586 — 120 Foreign tax paid — — 381 Other 57 13 119 Acquisition fees 59 — — $ 589 $ 352 $ 4,517 103 The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at March 31, 2025 and 2026 are presented below (in thousands): March 31, 2025 March 31, 2026 Deferred tax assets: Net operating loss carryforwards $ 48,572 $ 46,608 Capital loss carryforwards 9,388 10,465 Deferred revenue 4,184 3,197 Stock-based compensation 306 1,499 Federal research and development tax credits 1,058 1,058 Capitalized research 1,832 1,164 Inventories 1,062 466 Bad debt reserve 1,588 965 Deferred lease liability 167 6 Acquisition costs 1,004 930 Interest limitation 4,831 9,688 Other deductible temporary differences 8,818 10,148 Total gross deferred tax assets 82,810 86,194 Set-off of deferred tax balances ( 25,569 ) ( 22,799 ) Net deferred tax assets before valuation allowance 57,241 63,395 Less: valuation allowance ( 53,307 ) ( 58,858 ) Net deferred tax assets $ 3,934 $ 4,537 Deferred tax liabilities: Intangible amortization ( 65,025 ) ( 61,859 ) Right-of-use assets ( 650 ) ( 545 ) Deferred foreign currency gains ( 8,031 ) ( 7,258 ) Deferred commissions ( 1,623 ) ( 2,796 ) Other deductible temporary differences ( 7,952 ) ( 10,404 ) Total deferred tax liabilities ( 83,281 ) ( 82,862 ) Set-off of deferred tax balances 25,569 22,799 Net deferred tax liabilities ( 57,712 ) ( 60,063 ) Net deferred tax liabilities $ ( 53,778 ) $ ( 55,526 ) 104 A reconciliation of the beginning and ending amount of unrecognized tax positions for the periods ended March 31, 2025 and 2026 is as follows (in thousands): 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 Additions based on tax provisions taken related to current period 110 Reductions related to expiration of statute of limitations ( 33 ) Balance at March 31, 2026 $ 395 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, 2026, the Company had an aggregate net operating loss (“NOL”) carryforward of approximately $ 101,703 for U.S. federal income tax purposes. At March 31, 2026, the Company had an aggregate NOL carryforward of approximately $ 59,482 for state income tax purposes and a foreign NOL carryforwards of approximately $ 104,126 . Substantially all of the NOL carryforwards expire from 2026 through 2037 for pre-2018 federal NOL carryforwards and from 2026 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, 2026, the Company has New Jersey NOL carryforwards included above in the approximate amount of $ 7,921 , 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, 2026, in excess of annual debt service costs requirements. For the year ended March 31, 2026, the Company’s valuation allowance increased to $ 58,858 , compared to $ 53,307 as of March 31, 2025, 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 2026 by $ 5,551 . 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 18 - 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. ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and operating lease liabilities are recognized at the lease commencement date based on the present value of the future lease payments over the lease term. The operating lease ROU asset also includes any lease payments made in advance of lease commencement and excludes lease 105 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 statements 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, 2023 2024 2025 2026 Short-term lease cost $ 453 $ 57 $ 840 $ 1,394 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, 2023 2024 2025 2026 Non-cash activity: Right-of-use assets obtained in exchange for lease obligations $ 1,198 $ 2,018 $ 3,714 $ 7,440 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, 2025 March 31, 2026 Weighted-average remaining lease term - operating leases (in years) (1) 4.30 5.50 Weighted-average discount rate 7.8 % 7.3 % (1) Including expected renewals where appropriate. 106 Scheduled maturities of operating lease liabilities outstanding as of March 31, 2026 are as follows (in thousands): Year ending March 31, 2027 $ 5,529 2028 4,157 2029 3,052 2030 1,912 2031 1,358 Thereafter 4,205 Total lease payments 20,213 Less: Imputed interest ( 3,322 ) Present value of lease payments $ 16,891 NOTE 19 - 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. 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 and 2026 was $ 609 and $ 386 , respectively. No loss is consider ed probable under this arrangement. 107 Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure None. 108