UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 001-39080

POWERFLEET, INC.

(Exact name of registrant as specified in its charter)

Delaware		83-4366463
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		Identification No.)

123 Tice Boulevard
Woodcliff Lake, New Jersey		07677
(Address of principal executive offices)		(Zip Code)

(201) 996-9000

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.01 per share		PWFL		The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☒

Non-accelerated filer ☐	Smaller reporting company ☒

	Emerging growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant’s common stock, $0.01 par value per share, outstanding as of the close of business on May 8, 2023, was 36,088,250.

INDEX

PowerFleet, Inc. and Subsidiaries

	Page

PART I - FINANCIAL INFORMATION	3

Item 1. Financial Statements	3

Condensed Consolidated Balance Sheets as of December 31, 2022 and March 31, 2023 (unaudited)	3

Condensed Consolidated Statements of Operations (unaudited) - for the three months ended March 31, 2022 and 2023	4

Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) - for the three months ended March 31, 2022 and 2023	5

Condensed Consolidated Statement of Changes in Stockholders’ Equity (unaudited) - for the periods January 1, 2022 through March 31, 2022 and January 1, 2023 through March 31, 2023	6

Condensed Consolidated Statements of Cash Flows (unaudited) - for the three months ended March 31, 2022 and 2023	7

Notes to Unaudited Condensed Consolidated Financial Statements	8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	27

Item 3. Quantitative and Qualitative Disclosures About Market Risk	37

Item 4. Controls and Procedures	37

PART II - OTHER INFORMATION	38

Item 1. Legal Proceedings	38

Item 1A. Risk Factors	38

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	38

Item 6. Exhibits	39

Signatures	40

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

POWERFLEET, INC. AND SUBSIDIARIES

Condensed Balance Sheets

(In thousands, except per share data)

	December 31, 2022 ^			March 31, 2023
				(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	17,680		$	24,780
Restricted cash		309			309
Accounts receivable, net of allowance for credit losses of $2,567 and $2,328 in 2022 and 2023, respectively		32,493			31,442
Inventory, net		22,272			22,649
Deferred costs - current		762			523
Prepaid expenses and other current assets		7,709			7,959
Total current assets		81,225			87,662

Fixed assets, net		9,249			9,953
Goodwill		83,487			83,487
Intangible assets, net		22,908			22,328
Right of use asset		7,820			7,332
Severance payable fund		3,760			3,684
Deferred tax asset		3,225			2,496
Other assets		5,761			5,984
Total assets	$	217,435		$	222,926

LIABILITIES
Current liabilities:
Short-term bank debt and current maturities of long-term debt		10,312			9,359
Accounts payable and accrued expenses		26,598			27,682
Deferred revenue - current		6,363			6,327
Lease liability - current		2,441			2,481
Total current liabilities		45,714			45,849

Long-term debt, less current maturities		11,403			10,638
Deferred revenue - less current portion		4,390			4,378
Lease liability - less current portion		5,628			5,065
Accrued severance payable		4,365			4,396
Deferred tax liability		4,919			4,593
Other long-term liabilities		636			623

Total liabilities		77,055			75,542
Commitments and Contingencies (note 22)		-			-

MEZZANINE EQUITY
Convertible redeemable preferred stock: Series A – 100 shares authorized, $0.01 par value; 59 and 60 shares issued and outstanding at December 31, 2022 and March 31, 2023		57,565			58,840

Preferred stock; authorized 50,000 shares, $0.01 par value;		-			-
Common stock; authorized 75,000 shares, $0.01 par value; 37,605 and 37,621 shares issued at December 31, 2022 and March 31, 2023, respectively; shares outstanding, 36,170 and 36,170 at December 31, 2022 and March 31, 2023, respectively		376			376
Additional paid-in capital		233,521			234,425
Accumulated deficit		(141,440	)		(136,671	)
Accumulated other comprehensive loss		(1,210	)		(1,098	)
Treasury stock; 1,435 and 1,451 common shares at cost at December 31, 2022 and March 31, 2023, respectively		(8,510	)		(8,554	)

Total PowerFleet, Inc. stockholders’ equity		82,737			88,478
Non-controlling interest		78			66
Total equity		82,815			88,544
Total liabilities and stockholders’ equity	$	217,435		$	222,926

*	Derived from audited balance sheet as of December 31, 2022.

See accompanying notes to unaudited condensed consolidated financial statements.

POWERFLEET, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)


	Three Months Ended March 31,
	2022			2023

Revenues:
Products	$	14,392		$	12,404
Services		18,769			20,435
Total revenues		33,161			32,839

Cost of revenues:
Cost of products		11,978			9,002
Cost of services		6,784			7,219
Total cost of revenues		18,762			16,221

Gross profit		14,399			16,618

Operating expenses:
Selling, general and administrative expenses		14,912			16,787
Research and development expenses		3,229			1,723
Total operating expenses		18,141			18,510

Loss from operations		(3,742	)		(1,892	)
Interest income		13			24
Interest expense, net		100			(137	)
Bargain purchase - Movingdots		-			7,234
Other (expense) income, net		(1	)		(66	)

Net income (loss) before income taxes		(3,630	)		5,163

Income tax benefit (expense)		703			(397	)

Net income (loss) before non-controlling interest		(2,927	)		4,766
Non-controlling interest		(1	)		3

Net income (loss)		(2,928	)		4,769
Accretion of preferred stock		(168	)		(168	)
Preferred stock dividend		(1,028	)		(1,107	)

Net income (loss) attributable to common stockholders	$	(4,124	)	$	3,494

Net income (loss) per share attributable to common stockholders - basic	$	(0.12	)	$	0.11
Net income (loss) per share attributable to common stockholders -diluted	$	(0.12	)	$	0.11

Weighted average common shares outstanding – basic		35,332			35,548
Weighted average common shares outstanding - diluted		35,332			35,628

See accompanying notes to unaudited condensed consolidated financial statements.

POWERFLEET, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In thousands, except per share data)

(Unaudited)


	Three Months Ended
	March 31,
	2022			2023

Net income (loss) attributable to common stockholders	$	(4,124	)	$	3,494

Foreign currency translation adjustment		253			112

Total other comprehensive income		253			112

Comprehensive income (loss)	$	(3,871	)	$	3,606

See accompanying notes to unaudited condensed consolidated financial statements.

POWERFLEET, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Changes in Stockholders’ Equity

(In thousands, except per share data)

(Unaudited)


	Common Stock					Additional						Other
	Number of Shares			Amount		Paid-in Capital			Accumulated Deficit			Comprehensive Income (Loss)			Treasury Stock			Non-controlling Interest			Stockholders’ Equity

Balance at January 1, 2023		37,605		$	376	$	233,521		$	(141,440	)	$	(1,210	)	$	(8,510	)	$	78		$	82,815
Net income (loss) attributable to common stockholders		-			-		(1,275	)		4,769			-			-			-			3,494
Net loss attributable to non-controlling interest		-			-		-			-			-			-			(3	)		(3	)
Foreign currency translation adjustment		-			-		-			-			112			-			(9	)		103
Issuance of restricted shares		75			-		-			-			-			-			-			-
Forfeiture of restricted shares		(59	)		-		-			-			-			-			-			-
Shares withheld pursuant to vesting of restricted stock		-			-		-			-			-			(44	)		-			(44	)
Stock based compensation		-			-		832			-			-			-			-			832
Warrant issuance in connection with acquisition		-			-		1,347			-			-			-			-			1,347
Balance at March 31, 2023		37,621		$	376	$	234,425		$	(136,671	)	$	(1,098	)	$	(8,554	)	$	66		$	88,544
Balance		37,621		$	376	$	234,425		$	(136,671	)	$	(1,098	)	$	(8,554	)	$	66		$	88,544

	Common Stock				Additional						Other
	Number of Shares		Amount		Paid-in Capital			Accumulated Deficit			Comprehensive Income (Loss)		Treasury Stock			Non-controlling Interest		Stockholders’ Equity

Balance at January 1, 2022		37,263	$	373	$	234,083		$	(134,437	)	$	391	$	(8,299	)	$	86	$	92,197
Balance		37,263	$	373	$	234,083		$	(134,437	)	$	391	$	(8,299	)	$	86	$	92,197
Net loss attributable to common stockholders		-		-		(1,195	)		(2,929	)		-		-			-		(4,124	)
Net income (loss) attributable to common stockholders		-		-		(1,195	)

SEC Form 10-Q filed by PowerFleet Inc.