aiot-20240930

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 September 30, 2024

☐ 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 of incorporation or organization)

(IRS Employer 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)

N/A

(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

AIOT

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 November 8, 2024 was 132,138,557.

INDEX

POWERFLEET, INC. AND SUBSIDIARIES


						Page

Part I - FINANCIAL INFORMATION						3
Item 1. Financial Statements (Unaudited)						3
Condensed Consolidated Balance Sheets as of March 31, 2024 and September 30, 2024						3
Condensed Consolidated Statements of Operations - for the three and six months ended September 30, 2023 and 2024						5
Condensed Consolidated Statements of Comprehensive Loss - for the three and six months ended September 30, 2023 and 2024						6
Condensed Consolidated Statement of Changes in Stockholders’ Equity - for the periods April 1, 2023 through September 30, 2023 and April 1, 2024 through September 30,2024						7
Condensed Consolidated Statements of Cash Flows - for the six months ended September 30, 2023 and 2024						9
Notes to Condensed Consolidated Financial Statements						11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations						36
Item 3. Quantitative and Qualitative Disclosures About Market Risk						52
Item 4. Controls and Procedures						53
Part II - OTHER INFORMATION
Item 1. Legal Proceedings						55
Item 1A. Risk Factors						56
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds						59

Item 6. Exhibits						59
Signatures						60

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

POWERFLEET, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)



	March 31, 2024 *		September 30, 2024

ASSETS
Current assets:
Cash and cash equivalents	$	24,354	$	25,962
Restricted cash	85,310		63,074
Accounts receivables, net of allowance for credit losses of $3,197 and $5,321 as of March 31, 2024 and September 30, 2024, respectively	30,333		64,819
Inventory, net	21,658		23,488
Deferred costs - current	42		13
Prepaid expenses and other current assets	8,091		17,985
Total current assets	169,788		195,341

Fixed assets, net	12,719		51,928
Goodwill	83,487		300,283
Intangible assets, net	19,652		167,320
Right-of-use asset	7,428		9,402
Severance payable fund	3,796		3,864
Deferred tax asset	2,781		3,602
Other assets	9,029		16,595

Total assets	$	308,680	$	748,335

LIABILITIES
Current liabilities:
Short-term bank debt and current maturities of long-term debt	$	1,951	$	35,339
Accounts payable and accrued expenses	34,008		66,098

Deferred revenue - current	5,842		10,447
Lease liability - current	1,789		2,248
Total current liabilities	43,590		114,132
Long-term debt - less current maturities	113,810		111,011
Deferred revenue - less current portion	4,892		4,674
Lease liability - less current portion	5,921		7,713
Accrued severance payable	4,597		4,677
Deferred tax liability	4,465		52,113

Other long-term liabilities	2,496		2,905



Total liabilities	179,771		297,225
Commitments and Contingencies (Note 22)


Convertible redeemable preferred stock: Series A - 100 shares authorized, $0.01 par value; 60 and 0 shares issued and outstanding at March 31, 2024 and September 30, 2024, respectively, at redemption value of $90,273 at March 31, 2024	90,273		—

STOCKHOLDERS’ EQUITY
Preferred stock; authorized 50,000 shares, $0.01 par value	—		—


Common stock; authorized 175,000 shares, $0.01 par value; 38,709 and 109,884 shares issued at March 31, 2024 and September 30, 2024, respectively; shares outstanding, 37,212 and 107,821 at March 31, 2024 and September 30, 2024, respectively	387		1,096
Additional paid-in capital	202,607		641,736
Accumulated deficit	(154,796)		(178,996)
Accumulated other comprehensive loss	(985)		(1,364)
Treasury stock; 1,497 and 2,063 common shares at cost at March 31, 2024 and September 30, 2024, respectively	(8,682)		(11,518)

Total Powerfleet, Inc. stockholders’ equity	38,531		450,954
Non-controlling interest	105		156
Total equity	38,636		451,110

Total liabilities, convertible redeemable preferred stock, and stockholders’ equity	$	308,680	$	748,335

* Derived from audited balance sheet as of March 31, 2024.

See accompanying notes to condensed consolidated financial statements.

POWERFLEET, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)


	Three Months Ended September 30,				Six Months Ended September 30,
	2023 (As Restated)		2024		2023		2024
Revenues:
Products	$	13,233	$	20,293	$	24,317	$	39,031
Services	21,010		56,725		42,018		113,417
Total revenues	34,243		77,018		66,335		152,448

Cost of revenues:
Cost of products	8,842		13,929		17,392		26,680
Cost of services	8,294		21,746		15,818		44,777
Total cost of revenues	17,136		35,675		33,210		71,457

Gross profit	17,107		41,343		33,125		80,991


Operating expenses:
Selling, general and administrative expenses	17,778		37,335		34,976		92,117

Research and development expenses	2,426		3,435		4,646		6,536
Total operating expenses	20,204		40,770		39,622		98,653

(Loss)/profit from operations	(3,097)		573		(6,497)		(17,662)


Interest income	23		168		45		472
Interest expense	(154)		(4,042)		(327)		(6,733)
Bargain purchase - Movingdots	—		—		283		—
Other (expense)/income, net	(25)		1,674		(25)		1,050

Net loss before income taxes	(3,253)		(1,627)		(6,521)		(22,873)

Income tax expense	(295)		(256)		(289)		(1,309)

Net loss before non-controlling interest	(3,548)		(1,883)		(6,810)		(24,182)
Non-controlling interest	—		(5)		(6)		(18)

Net loss	(3,548)		(1,888)		(6,816)		(24,200)

Accretion of preferred stock	(1,834)		—		(3,606)		—
Preferred stock dividend	(1,128)		—		(2,257)		(25)

Net loss attributable to common stockholders	$	(6,510)	$	(1,888)	$	(12,679)	$	(24,225)


Net loss per share attributable to common stockholders - basic and diluted	$	(0.18)	$	(0.02)	$	(0.36)	$	(0.23)







Weighted average common shares outstanding - basic and diluted	35,653		107,532		35,629		107,335

See accompanying notes to condensed consolidated financial statements.

POWERFLEET, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Loss

(In thousands)

(Unaudited)


	Three Months Ended September 30,				Six Months Ended September 30,
	2023 (As Restated)		2024		2023		2024
Net loss attributable to common stockholders	$	(6,510)	$	(1,888)	$	(12,679)	$	(24,225)

Foreign currency translation adjustment	(906)		(797)		(806)		(379)

Total other comprehensive income	(906)		(797)		(806)		(379)

Comprehensive loss	$	(7,416)	$	(2,685)	$	(13,485)	$	(24,604)

See accompanying notes to condensed consolidated financial statements.

POWERFLEET, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Changes in Stockholders’ Equity

(In thousands)

(Unaudited)



	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income/(Loss)		Treasury Stock		Non-Controlling Interest		Total Stockholder’s Equity
	Number of Shares	Amount
Balance as of April 1, 2024	38,709	$	387	$	202,607	$	(154,796)	$	(985)	$	(8,682)	$	105	$	38,636



Net loss attributable to common stockholders	—	—		(25)		(22,312)		—		—		—		(22,337)
Net income attributable to non-controlling interest	—	—		—		—		—		—		13		13
Foreign currency translation adjustment	—	—		—		—		418		—		8		426




Issuance of restricted shares	54	1		(1)		—		—		—		—		—
Shares issued for transaction bonus	174	1		888		—		—		—		—		889
Shares issued in connection with MiX Combination	70,704	707		361,298		—		—		—		—		362,005
Acquired through MiX Combination	—	—		7,818		—		—		—		5		7,823

Shares withheld pursuant to vesting of restricted stock	—	—		—		—		—		(2,836)		—		(2,836)


Stock-based compensation	—	—		5,929		—		—		—		—		5,929
Balance as of June 30, 2024	109,641	$	1,096	$	578,514	$	(177,108)	$	(567)	$	(11,518)	$	131	$	390,548


Net loss attributable to common stockholders	—	—		—		(1,888)		—		—		—		(1,888)
Net income attributable to non-controlling interest	—	—		—		—		—		—		5		5
Foreign currency translation adjustment	—	—		—		—		(797)		—		20		(777)


Proceeds from private placement, net of costs to issue common stock	—	—		61,851		—		—		—		—		61,851



Exercise of stock options	243	—		—		—		—		—		—		—
Stock-based compensation	—	—		1,371		—		—		—		—		1,371
Balance as of September 30, 2024	109,884	1,096		641,736		(178,996)		(1,364)		(11,518)		156		451,110



	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income/(Loss)		Treasury Stock		Non-Controlling Interest		Total Stockholder’s Equity
	Number of Shares	Amount
Balance as of March 31, 2023 (As Restated)	37,621	$	376	$	218,473	$	(135,961)	$	(1,098)	$	(8,554)	$	66	$	73,302



Net loss attributable to common stockholders (As restated)	—	—		(2,902)		(3,269)		—		—		—		(6,171)
Net income attributable to non-controlling interest	—	—		—		—		—		—		6		6
Foreign currency translation adjustment	—	—		—		—		100		—		(9)		91




Issuance of restricted shares	162	1		(1)		—		—		—		—		—
Forfeiture of restricted shares	(82)	—		—		—		—		—		—		—



Exercise of stock options	16	—		36		—		—		—		—		36
Shares withheld pursuant to vesting of restricted stock	—	—		—		—		—		(4)		—		(4)


Stock-based compensation	—	—		852		—		—		—		—		852
Balance as of June 30, 2023 (As restated)	37,717	377		216,458		(139,230)		(998)		(8,558)		63		68,112


Net loss attributable to common stockholders (As restated)	—	—		(2,962)		(3,548)		—		—		—		(6,510)

Foreign currency translation adjustment	—	—		—		—		(906)		—		—		(906)
Issuance of restricted shares	982	10		(10)		—		—		—		—		—




Shares withheld pursuant to vesting of restricted stock	—	—		—		—		—		(90)		—		(90)
Stock-based compensation	—	—		1,101		—		—		—		—		1,101
Balance as of September 30, 2023 (As Restated)	38,699	$	387	$	214,587	$	(142,778)	$	(1,904)	$	(8,648)	$	63	$	61,707

See accompanying notes to condensed consolidated financial statements.

POWERFLEET, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Six Months Ended September 30,
	2023		2024
Cash flows from operating activities
Net loss	$	(6,816)	$	(24,200)
Adjustments to reconcile net loss to cash used in operating activities:


Non-controlling interest	6		18
Gain on bargain purchase	(283)		—
Inventory reserve	617		904
Stock based compensation expense	1,953		7,300
Depreciation and amortization	4,807		19,399
Right-of-use assets, non-cash lease expense	1,242		1,515
Derivative mark-to-market adjustment	—		(2,197)
Bad debts expense	933		4,369
Deferred income taxes	285		(283)
Shares issued for transaction bonuses	—		889
Lease termination and modification losses	—		184
Other non-cash items	126		1,522
Changes in operating assets and liabilities:
Accounts receivables	(3,866)		(12,553)
Inventories	(2,023)		955
Prepaid expenses and other current assets	51		(3,009)
Deferred costs	332		(3,619)
Deferred revenue	222		(99)
Accounts payable and accrued expenses	1,498		(71)
Lease liabilities	(1,247)		(1,856)
Accrued severance payable, net	91		40



Net cash used in operating activities	(2,072)		(10,792)

Cash flows from investing activities
Acquisition, net of cash assumed	—		27,531
Proceeds from sale of fixed assets	—		217
Capitalized software development costs	(2,047)		(4,676)
Capital expenditures	(1,441)		(10,454)
Repayment of loan advanced to external parties	—		294




Net cash (used in)/provided by investing activities	(3,488)		12,912

Cash flows from financing activities

Repayment of long-term debt	(2,656)		(978)
Short-term bank debt, net	4,996		9,955
Purchase of treasury stock upon vesting of restricted stock	(94)		(2,836)
Payment of preferred stock dividend and redemption of preferred stock	(2,257)		(90,298)
Proceeds from private placement, net	—		61,851


Proceeds from exercise of stock options, net	36		—
Cash paid on dividends to affiliates	—		(6)


Net cash from/(used in) financing activities	25		(22,312)

Effect of foreign exchange rate changes on cash and cash equivalents	53		(436)
Net decrease in cash and cash equivalents, and restricted cash	(5,482)		(20,628)
Cash and cash equivalents, and restricted cash at beginning of the period	25,089		109,664

Cash and cash equivalents, and restricted cash at end of the period	$	19,607	$	89,036

Reconciliation of cash and cash equivalents, and restricted cash, at beginning of the period
Cash and cash equivalents	24,780		24,354
Restricted cash	309		85,310
Cash and cash equivalents, and restricted cash, at beginning of the period	$	25,089	$	109,664

Reconciliation of cash and cash equivalents, and restricted cash, at end of the period
Cash and cash equivalents	19,297		25,962
Restricted cash	310		63,074
Cash and cash equivalents, and restricted cash, at end of the period	$	19,607	$	89,036

Supplemental disclosure of cash flow information:
Cash paid for:
Taxes	$	115	$	774
Interest	$	538	$	6,262

Noncash investing and financing activities:
Common stock issued for transaction bonus	$	—	$	9
Shares issued in connection with MiX Combination	$	—	$	362,005

See accompanying notes to condensed consolidated financial statements.

POWERFLEET, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 2024

In thousands (except per share data)

(Unaudited)

NOTE 1 - DESCRIPTION OF THE COMPANY AND BASIS OF PRESENTATION

Description of the Company

Powerfleet, Inc. (the “Company” or “Powerfleet”) is a global leader of Internet-of-Things (“IoT”) 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.

I.D. Systems, Inc. (“I.D. Systems”) was incorporated in the State of Delaware in 1993. Powerfleet was incorporated in the State of Delaware in February 2019 for the purpose of effectuating the transactions pursuant to which the Company acquired Pointer Telocation Ltd. (“Pointer”) and commenced operations on October 3, 2019. Upon the closing of such transactions, Powerfleet became the parent entity of I.D. Systems and Pointer.

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, 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 six months ended September 30, 2024 include the financial results of MiX Telematics and its subsidiaries from the Implementation Date. See Note 3 for additional information.

Basis of Preparation

The unaudited interim condensed 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 in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the consolidated financial position of the Company as of March 31, 2024 and September 30, 2024, the consolidated results of its operations for the three- and six-month periods ended September 30, 2023 and 2024, the consolidated change in stockholders’ equity for the three- and six-month periods ended September 30, 2023 and 2024, and the consolidated cash flows for the six-month periods ended September 30, 2023 and 2024. The results of operations for the three- and six-month periods ended September 30, 2024 are not necessarily indicative of the operating results for the full year. On May 8, 2024, the Company’s Board of Directors approved a change in our 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. These financial statements should be read in conjunction with the audited consolidated financial statements and related disclosures for the fiscal year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K for the year then ended, and the audited consolidated financial statements and related disclosures for the three-month transition period ended March 31, 2024 included in the Company’s Transition Report on Form 10-KT for the period then ended.

Restatement of Previously Issued Consolidated Financial Statements

In connection with the preparation of the Company’s audited consolidated financial statements for the year ended December 31, 2023, the Company determined that the accounting for the redemption premium associated with its Series A convertible preferred stock (“Series A Preferred Stock”) was understated resulting in an understatement of “net loss attributable to common stockholders” and “net loss per share attributable to common stockholders” for each period, an understatement of the value of the convertible redeemable preferred stock as of each balance sheet date, and an overstatement of the additional paid-in capital as of each balance sheet date. The required adjustments to correct the redemption value of the calculation of the Series A Preferred Stock and the related accretion of the value of the preferred stock in the consolidated statement of operations included the recording of a non-cash accretion which resulted in an increase in the net loss attributable to common stockholders, an increase in the “convertible redeemable preferred stock”, and a decrease of “additional paid-in capital” for the fiscal years ended December 31, 2021 and 2022 and each of the interim periods during the 2022 and 2023 fiscal years.

The correction of the error resulted in reporting the value of the convertible preferred stock including the accretion to the redemption value from the date of original issuance through each balance sheet date applying the interest method. The restatement to non-cash accretion resulted in an increase in the net loss attributable to common stockholders and a decrease in “additional paid-in capital” of $1,604 and $1,667 for the three-month period ended June 30, 2023 and three-month period ended September 30, 2023, respectively. The Company had determined that it was appropriate to restate the financial statements for the fiscal years ended December 31, 2021 and 2022 and each of the interim periods during the 2022 and 2023 fiscal years included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Annual Report”). In addition, the Company also corrected other unrelated immaterial errors that were previously either unrecorded or recorded as out-of-period adjustments. For additional information refer to Note 2 to the financial statements included in the 2023 Annual Report.

Going Concern

As of September 30, 2024, the Company had cash and cash equivalents and restricted cash of $89,036 and working capital of $81,209. The Company’s primary sources of cash are cash flows from sales of products and services, its holdings of cash, cash equivalents and proceeds from the sale of its capital stock and borrowings under its credit facilities. See Note 13 for additional information on the Company’s available credit facilities.

Management believes the Company’s cash, cash equivalents, and restricted cash of $89,036 as of September 30, 2024, in conjunction with cash expected to be generated from the execution of its strategic plan over the next 12 months, and proceeds from the Company’s credit facilities are sufficient to fund the projected operations for at least the next 12 months from the issuance date of these financial statements (November 12, 2024) and service the Company’s outstanding obligations. Such expectation is based, in part, on the achievement of a certain volume of assumed revenue and gross margin; however, there is no guarantee the Company will achieve this amount of revenue and gross margin during the assumed time period. Management assessed various additional operating cost reduction options that are available to the Company and would be implemented, if assumed levels of revenue and gross margin are not achieved and additional funding is not obtained.

NOTE 2 - USE OF ESTIMATES

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company continually evaluates estimates used in the preparation of the financial statements for reasonableness. The most significant estimates relate to 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, inventory reserves, standalone selling prices (“SSP”), valuation of the derivative asset, and market-based stock-based compensation costs. Actual results could differ from those estimates.

NOTE 3 - ACQUISITION

On April 2, 2024, the Company consummated the MiX Combination. On the Implementation Date, 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, Business Combinations (“ASC 805”), with the Company identified as the legal and the accounting acquirer.

The Company was determined to be the accounting acquirer under Accounting Standards Codification (“ASC”) 805, Business Combinations (“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 Board of Directors is comprised by Directors with prior affiliation to the Company. In addition the Company’s Board Chairperson continued in the role post the acquisition date;

•Post acquisition the majority of the senior management team, including the Chief Executive Officer, comprised of the Company’s senior management team who were already operating in that capacity for the Company prior to the acquisition date;

•While the voting rights of 65.5% in favor of MiX Telematics is an indicator that MiX Telematics is the acquirer, the Company believes that the weight of the indicator is 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 owns a large minority interest in the combined entity, the Company notes that the largest institutional investor post-transaction is an investor of legacy Powerfleet. Additionally, the Company also notes that, immediately following the closing of the Business Combination, 30% out 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% out of the approximately 65% of total shares held by shareholders of legacy MiX Telematics.

The acquisition of MiX Telematics and its business will, among other things:

•create a mobile asset IoT SaaS organization with significant scale, serving all mobile asset types. The increased scale is expected to enable the combined entity to more efficiently serve its customers and create advantages to compete in an industry characterized by the need for high pace of development and innovation;

•enable the Company to maximize significant cross-sell and upsell opportunities within its large joint customer base due to the joint entity’s combined geographical footprint, deep vertical expertise and expanded software solution sets coupled with its extensive direct and indirect sales channel capabilities; and

•enable the combined organization to accelerate the delivery of top-class solutions with improved competitive advantage by integrating Powerfleet’s and MiX Telematics’ world-class engineering and technology teams.

The preliminary estimated fair value of the consideration transferred for MiX Telematics was $362,005 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 to be 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 preliminary consideration						369,823

* Powerfleet’s closing share price on April 2, 2024.

** The portion of the fair-value-based measure 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.

Preliminary Allocation of Purchase Price

The purchase price was allocated to the assets and liabilities assumed based on the estimated fair values at the date of acquisition. The excess of the purchase price over the fair value of the net assets acquired was allocated to goodwill. Goodwill is primarily attributed to the assembled workforce, expected synergies from future expected economic benefits, including enhanced revenue growth from expanded products and capabilities, as well as substantial cost savings from duplicative overheads, streamlined operations and enhanced efficiency. Goodwill is not deductible for tax purposes. Goodwill associated with the acquisition has not yet been assigned to the Company’s geographical regions pending finalization of the purchase accounting.

The preliminary 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 above fair values of assets acquired and liabilities assumed are preliminary and are based on the information that was available as of the reporting date. The Company’s allocation of the preliminary 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 April 2, 2024 becomes available and final valuation and analysis are completed. During the three-month period ended September 30, 2024, the Company recognized an adjustment of $425 against goodwill. In addition, the Company is still in the process of determining the fair value of acquired assets and assumed liabilities, which may also result in adjustments of the provisional amounts recorded. The fair values of the assets acquired and liabilities assumed, including the identifiable assets acquired, have been preliminarily determined using the income and cost approach, and are partially based on inputs that are unobservable. The Company used discounted cash flow (“DCF”) analyses, which represent Level 3 fair value measurements, to assess certain components of its purchase price allocation as a result of the acquisition. The fair value of the customer relationships was determined using the multi-period excess earnings method. The fair value of the tradename and developed technology was determined using an income approach based on the relief from royalty method.

For the fair value estimates, the Company used (i) forecasted future cash flows, (ii) historical and projected financial information, (iii) synergies including cost savings, (iv) revenue growth rates, (v) customer attrition rates, (vi) royalty rates, and (vii) discount rates, as relevant, that market participants would consider when estimating fair values. These estimates require judgment and are subject to change. Differences between the preliminary estimates and final accounting may occur, and those could be material.

The Company believes that the information provides a reasonable basis for estimating the fair values of the acquired assets and assumed liabilities, but the potential for measurement period adjustments exists based on the Company’s continuing review of matters related to the acquisition. Adjustments to initial preliminary fair value of the assets acquired and assumed liabilities during the measurement period until April 2, 2025, will be recorded during the period in which the adjustments are determined, including the effect on earnings of any amounts we would have recorded in previous periods if the accounting had been completed (i.e. the historical reported financial statements will not be retrospectively adjusted).

The provisional amounts for assets acquired and liabilities assumed include:

•The fair value of accounts receivable and other receivables which may be subject to adjustment for reassessment of collectability as of the date of acquisition, collections and other adjustment subsequent to the acquisition;

•Property, and equipment, for which the preliminary estimates are subject to revision for finalization of preliminary appraisals;

•Right-of-use assets and lease liabilities, which will be subject to adjustment upon completion of the review of the inputs, including sublease assumptions, for the calculations;

•Acquired inventory, which values are still being assessed on an individual basis;

•Prepaid expenses, accounts payable and accrued expenses, which will be subject to adjustment based upon completion of working capital clean up and assessment of other factors;

•The recognition and measurement of contract assets and contract liabilities acquired in accordance with ASC 606 will be subject to adjustment upon completion of assessment;

•Acquired intangible assets will be subject to adjustment as additional assets are identified, estimates and forecasts are refined and disaggregated, useful lives are finalized, and other factors deemed relevant are considered;

•Deferred income taxes will be subject to adjustment based upon the completion of the review of the book and tax bases of assets acquired and liabilities assumed, applicable tax rates and the impact of the revisions of estimates for the items described above; and

•Goodwill will be subject to adjustment for the impact of the revisions of estimates for the items described above.

The Company expects to complete the purchase price allocation as soon as practicable, but 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 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 $20,443 of acquisition-related costs in the consolidated statement of operations related to the MiX Combination, of which $152 was expensed in the three-month period ended September 30, 2024 and $14,643 was expensed in the six-month period ended September 30, 2024.

Unaudited Pro Forma Financial Information

The business acquired in the MiX Combination contributed revenue of $43,825 and a net profit of $2,007, after amortization of identified intangibles, for the three-month period ended September 30, 2024 and revenue of $87,514 and a net loss of $4,925 for the six-month period ended September 30, 2024.

NOTE 4 - CASH AND CASH EQUIVALENTS

The Company considers all highly liquid debt instruments with an original maturity of three months or less when purchased to be cash equivalents unless they are legally or contractually restricted. The Company’s cash and cash equivalent balances exceed Federal Deposit Insurance Corporation (“FDIC”) and other local jurisdictional limits. Restricted cash at March 31, 2024 consisted of escrow amounts of $85,000 for a facilities agreement (the “Facilities Agreement”) with FirstRand Bank Limited (acting through its Rand Merchant Bank division) (“RMB”) deposited in escrow for the MiX Combination and cash of $310 held in escrow for purchases from a vendor. Restricted cash at September 30, 2024 consists of cash of $311 held in escrow for purchases from a vendor, cash of $856 held by MiX Telematics Enterprise BEE Trust (a VIE which is consolidated) to be used solely for the benefit of its beneficiaries, cash securing guarantees of $56 issued in respect of property lease agreements entered into by MiX Telematics Australasia, and $61,850 held by the Company in accordance with the terms of the Subscription Agreement, dated as of September 18, 2024 (the “Subscription Agreement”), 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 agreed to issue to such Investors, an aggregate of 20,000,000 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”). The Private Placement was consummated on October 1, 2024. See Note 24 - Subsequent Events for additional information on the Private Placement and related transactions.

NOTE 5 - REVENUE RECOGNITION

The Company and its subsidiaries generate revenue from sales of systems and products and from customer SaaS and hosting infrastructure fees. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. Sales, value add, and other taxes the Company collects concurrently with revenue-producing activities are excluded from revenue. Incidental items that are immaterial in the context of the contract are recognized as an expense. The expected costs associated with the Company’s base warranties continue to be recognized as an expense when the products are sold (see Note 14).

Revenue is recognized when performance obligations under the terms of a contract with the customer are satisfied. Product sales are recognized at a point in time when title transfers, when the products are shipped, or when control of the system is transferred to the customer, which usually is upon delivery of the system and when contractual performance obligations have been satisfied. The Company utilizes significant judgment to determine whether control of the hardware has transferred to the customer (i.e. distinct to the customer separate from SaaS services provided). For products which are not distinct to the customer separate from the SaaS services provided, the Company considers both hardware and SaaS services a bundled performance obligation.

Under the applicable accounting guidance, all of the Company’s billings for future services are deferred and classified as a current and long-term liability. The deferred revenue is recognized over the service contract life, ranging from one to five years, beginning at the time that a customer acknowledges acceptance of the equipment and service. Payment terms are generally 30 days after invoice date.

The Company recognizes revenue for remotely hosted SaaS agreements and post-contract maintenance and support agreements beyond its standard warranties over the life of the contract. Revenue is recognized ratably over the service periods and the cost of providing these services is expensed as incurred. Amounts invoiced to customers which are not recognized as revenue are classified as deferred revenue and classified as current or long-term based upon the terms of future services to be delivered. Deferred revenue also includes prepayment of extended maintenance, hosting and support contracts.

The Company earns other service revenues from installation services, training and technical support services which are short-term in nature and revenue for these services is recognized at the time of performance when the service is provided.

The Company also derives revenue from leasing arrangements. Such arrangements provide for monthly payments covering product or system sale, maintenance, support and interest. These arrangements meet the criteria to be accounted for as operating or sales-type leases. Accordingly, for sales-type leases an asset is established for the “sales-type lease receivable” at the present value of the expected lease payments and revenue is deferred and recognized over the service contract, as described above. Maintenance revenues and interest income are recognized monthly over the lease term.

The Company’s contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative SSP. Judgment is required to determine the SSP for each distinct performance obligation. The Company generally determines standalone selling prices based on observable prices charged to customers. Significant pricing practices taken into consideration include the Company’s discounting practices, the size and volume of its transactions, the customer demographic, price lists, its go-to-market strategy and historical and current

sales and contract prices. As the Company’s go-to-market strategies evolve, it may modify its pricing practices in the future, which could result in changes to SSP.

In certain cases, the Company is able to establish SSP based on observable prices of products or services sold separately in comparable circumstances to similar customers. The Company uses a single amount to estimate SSP when it has observable prices. If SSP is not directly observable, for example when pricing is highly variable, the Company uses a range of SSP. The Company determines the SSP range using information that may include pricing practices or other observable inputs. The Company typically has more than one SSP for individual products and services due to the stratification of those products and services by customer size.

The Company recognizes an asset for the incremental costs of obtaining the contract arising from the sales commissions to distributors and employees because the Company expects to recover those costs through future fees from the customers. The Company amortizes the asset over one to five years because the asset relates to the services transferred to the customer during the contract term of one to five years.

The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which the Company recognizes revenue at the amount to which the Company has the right to invoice for services performed.

The following table presents the Company’s revenues disaggregated by revenue source for the three and six months ended September 30, 2023 and 2024 (in thousands):


	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2024		2023		2024

Products	$	13,233	$	20,293	$	24,317	$	39,031
Services	21,010		56,725		42,018		113,417

	$	34,243	$	77,018	$	66,335	$	152,448

The balances of contract assets and contract liabilities from contracts with customers are as follows as of March 31, 2024 and September 30, 2024 (in thousands):


	March 31, 2024		September 30, 2024

Contract Assets:
Deferred contract cost (1)	$	2,632	$	7,408
Deferred costs - current	$	42	$	13

Contract Liabilities
Deferred revenue – services (2)	$	10,674	$	14,153
Deferred revenue – products (2)	60		968

	10,734		15,121
Less: Deferred revenue – current	(5,842)		(10,447)

Deferred revenue – less current portion	$	4,892	$	4,674

(1) Deferred Contract costs are included in Other assets on the condensed consolidated balance sheets.

(2) The Company records deferred revenues when cash payments are received or due in advance of the Company’s performance. For the three-month periods ended September 30, 2023 and 2024, the Company recognized revenue of $1,416 and $2,499, respectively, which was included in the deferred revenue balance at the beginning of each reporting period. For the six-month periods ended September 30, 2023 and 2024, the Company recognized revenue of $3,190 and $5,486, 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 2029, when it transfers those goods and services and, therefore, satisfies its performance obligation to the customers.

NOTE 6 - ALLOWANCE FOR CREDIT 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.

An analysis of the allowance for credit losses for the periods ended September 30, 2023 and 2024 is as follows (in thousands):


	Six Months Ended September 30,
	2023		2024
Allowance for credit losses, March 31	$	2,328	$	3,197



Current period provision for expected credit losses	933		4,369
Write-offs charged against the allowance	(617)		(2,688)


Foreign currency translation	33		443
Allowance for credit losses, September 30	$	2,677	$	5,321

NOTE 7 - PREPAID EXPENSES AND OTHER ASSETS

Prepaid expenses and other current assets comprise the following (in thousands):


	March 31, 2024		September 30, 2024

Sales-type lease receivables, current	$	1,100	$	1,135
Prepaid expenses*	2,817		8,021
Contract assets	1,162		—
Tax receivables	125		716
VAT receivable	—		4,303
Sundry debtors	—		3,531
Other current assets	2,887		279


	$	8,091	$	17,985

*This includes the prepaid portion of total deferred contract assets.

NOTE 8 - INVENTORY

Inventory, which primarily consists of finished goods and components used in the Company’s products, is stated at the lower of cost or net realizable value using the “moving average” cost method or the first-in first-out (FIFO) method. Inventory is shown net of a valuation reserve of $538 at March 31, 2024 and $1,330 at September 30, 2024.

Inventories consist of the following (in thousands):


	March 31, 2024		September 30, 2024

Components	$	9,403	$	11,133
Work in process	49		82
Finished goods, net	12,206		12,273

	$	21,658	$	23,488

NOTE 9 - FIXED ASSETS

Fixed assets are stated at cost, less accumulated depreciation and amortization, and are summarized as follows (in thousands):


	March 31, 2024		September 30, 2024

Installed and uninstalled products	$	11,030	$	50,322
Computer software	11,496		13,042
Computer and electronic equipment	6,179		7,166
Furniture and fixtures	2,361		4,039
Leasehold improvements	1,498		1,447
Plant and equipment	—		365

Assets in progress	—		98
	32,564		76,479
Accumulated depreciation and amortization	(19,845)		(24,551)
	$	12,719	$	51,928

Depreciation and amortization expense for the three- and six-month periods ended September 30, 2023 was $671 and $1,638, respectively, and for the three- and six- month periods ended September 30, 2024 was $5,227 and $9,976, respectively.

NOTE 10 - 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.

The following table summarizes identifiable intangible assets of the Company as of March 31, 2024 and September 30, 2024 (in thousands):


September 30, 2024	Useful Lives (In Years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortized:
Customer relationships	9 - 13	$	132,264	$	(13,171)	$	119,093
Trademark and tradename	3 - 15	17,553		(4,625)		12,928
Patents	7 - 11	628		(508)		120
Technology	5 - 7	43,745		(13,912)		29,833
Software to be sold or leased	3 - 6	6,416		(1,235)		5,181
		200,606		(33,451)		167,155

Unamortized:
Customer list		104		—		104
Trademark and tradename		61		—		61

		165		—		165

Total		$	200,771	$	(33,451)	$	167,320


March 31, 2024	Useful Lives (In Years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortized:
Customer relationships	9 - 12	$	19,264	$	(8,012)	$	11,252
Trademark and tradename	3 - 15	7,553		(3,877)		3,676
Patents	7 - 11	628		(464)		164
Technology	7	10,911		(10,911)		—
Software to be sold or leased	3	5,159		(764)		4,395
		43,515		(24,028)		19,487

Unamortized:
Customer list		104		—		104
Trademark and tradename		61		—		61

		165		—		165

Total		$	43,680	$	(24,028)	$	19,652

At September 30, 2024, the weighted-average amortization periods for customer relationships, trademarks and tradenames, patents, technology, and capitalized software to be sold or leased were 12.8, 12.1, 7.0, 5.0, and 3.0 years, respectively.

Amortization expense for the three- and six-month periods ended September 30, 2023 was $1,813 and $3,169, respectively, and for the three- and six-month periods ended September 30, 2024 was $3,837 and $9,423, respectively.

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


2025 (remaining)	$	9,504
2026	22,144
2027	20,630
2028	18,127
2029	14,741
Thereafter	82,009
	$	167,155

Refer to Note 3 for the change in the carrying amount of goodwill from April 1, 2024 to September 30, 2024 as a result of the MiX Combination.

For the six-month period ended September 30, 2024, the Company did not identify any indicators of impairment.

NOTE 11 - STOCK-BASED COMPENSATION

During the three-month period ended June 30, 2024, the Company granted options to purchase 375 shares of common stock with time-based vesting conditions.

During the three-month period ended September 30, 2024, the Company did not grant any options to purchase shares of common stock with time-based vesting conditions.

[A] Stock Options:

The following table summarizes the activity relating to the Company’s market-based stock options for the six-month period ended September 30, 2024:


	Options	Weighted- Average Exercise Price	Weighted Average Contractual Remaining Term (years)	Aggregate Intrinsic Values (in thousands)
Outstanding as of April 1, 2024	5,445	13.39	—	—
Granted	—	—	—	—
Exercised	—	—	—	—

Forfeited	(50)	3.13	—	—
Outstanding as of September 30, 2024	5,395	13.48	7.46	$	2,293


Vested as of September 30, 2024	—	—	—	$	—

The following table summarizes the activity relating to the Company’s stock options, excluding the market-based stock options, for the six-month period ended September 30, 2024:


	Options	Weighted- Average Exercise Price	Weighted Average Contractual Remaining Term (years)	Aggregate Intrinsic Values (in thousands)
Outstanding as of April 1, 2024	1,979	4.68	—	—
Granted	375	4.31	—	—
Exercised	—	—	—	—

Forfeited	(45)	5.96	—	—
Outstanding as of September 30, 2024	2,309	4.59	6.82	$	1,600


Vested as of September 30, 2024	1,972	4.64	6.33	$	1,370

The fair value of each option grant on the date of grant is estimated using the Black-Scholes option-pricing model reflecting the following weighted-average assumptions:


	September 30, 2023		September 30, 2024
Expected volatility	55.6	%	60.2	%
Expected life of options	6.1		6.5
Risk free interest rate	3.87	%	4.23	%

Dividend yield	—		—
Weighted-average fair value of options granted during the year	$1.66		$2.66

Expected volatility is based on historical volatility of the Company’s common stock and the expected life of options is based on historical data with respect to employee exercise periods.

The Company recorded stock-based compensation expense of $781 and $1,366 for the three- and six-month periods ended September 30, 2023, respectively, and $627 and $2,444 for the three- and six-month periods ended September 30, 2024, respectively, in connection with awards made under the stock option plans. The increase in the recognized expense is due to the approved acceleration of vesting of unvested restricted stock and stock option awards with time-based vesting conditions that were outstanding under the Powerfleet equity plans (including any inducement awards with time-based vesting) in connection with the closing of the MiX Combination. The accelerated vesting of the Company’s equity awards is not part of what was acquired in the MiX Combination, nor what was paid for in the MiX Combination, because it was for the benefit of the Company’s employees rather than for the benefit of MiX Telematics’ employees. Therefore, the acceleration of the equity awards was treated as a separate transaction from the MiX Combination and the acceleration of vesting was accounted for immediately upon closing of the MiX Combination on April 2, 2024.

The fair value of options vested during the six-month periods ended September 30, 2023 and 2024 was $42 and $1,552, respectively. There were no option exercises that occurred during the six-month periods ended September 30, 2023 and 2024.

As of September 30, 2024, there was $883 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 1.21 years.

As of September 30, 2024, there was $3,021 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 2.23 years.

The Company estimates forfeitures at the time of valuation and reduces expenses ratably over the vesting period. This estimate is adjusted periodically based on the extent to which actual forfeitures differ, or are expected to differ, from the previous estimate.

[B] Restricted Stock Awards:

The Company grants restricted stock to employees, whereby the employees are contractually restricted from transferring the shares until they are vested. The stock is unvested at the time of grant, and, upon vesting, there are no legal restrictions on the stock. Some participants have the option to have their shares withheld for their taxes upon vesting. Shares withheld for taxes are treated as a purchase of treasury stock. The fair value of each share is based on the Company’s closing stock price on the date of the grant. A summary of all unvested restricted stock for the six-month period ended September 30, 2024 is as follows:


	Number of Unvested Shares	Weighted- Average Grant Date Fair Value
Unvested, March 31, 2024	1,370	2.68
Granted	54	5.45
Vested	(1,370)	2.68
Forfeited or expired	—	—
Unvested, September 30, 2024	54	5.45

The Company recorded stock-based compensation expenses of $320 and $587 for the three- and six-month periods ended September 30, 2023, respectively, and $125 and $3,220 for the three- and six-month periods ended September 30, 2024, respectively, in connection with restricted stock grants. As of September 30, 2024, there was $183 of total unrecognized compensation cost related to unvested shares. That cost is expected to be recognized over a weighted-average period of 0.62 years. The increase in the recognized expense is due to the approved acceleration of vesting of unvested restricted stock and stock option awards with time-based vesting conditions that are outstanding under the Powerfleet equity plans (including any inducement awards with time-based vesting) in connection with the closing of the MiX Combination. The accelerated vesting of the Company’s equity awards is not part of what was acquired in the MiX Combination, nor what was paid for in the MiX Combination because it was for the benefit of the Company’s employees rather than for the benefit of MiX Telematics’ employees. Therefore, the acceleration of the equity awards was treated as a separate transaction from the MiX Combination and the acceleration of vesting was accounted for immediately upon closing of the MiX Combination on April 2, 2024.

[C] Stock Appreciation Rights:

In connection with the closing of the MiX Combination, the Company assumed each of MiX Telematics’ share plans. MiX Telematics issued equity-classified share incentives under the MiX Telematics Long-Term Incentive Plan (“LTIP”) to directors and certain key employees within the Company.

The LTIP provides for three types of grants to be issued, namely performance shares, restricted share units and stock appreciation rights (“SARs”). On the Implementation Date, the only issued and outstanding equity awards under the LTIP were SARs, and the Company assumed the outstanding SARs in issue. No additional performance shares or restricted share units will be issued or assumed by the Company.

The replacement of MiX Telematics’ share-based payment awards has been treated as a modification under ASC 718, Compensation—Stock Compensation as of the Implementation Date. The fair value of the replacement SARs issued was allocated between pre-combination and post-combination service based on the vesting period. The fair value related to pre-combination service is included as part of the fair value of the consideration in the MiX Combination (see Note 3), and the fair value related to post-combination service is to be recognized as an expense over the remaining vesting period.

The total stock-based compensation expense recognized during the three- and six-month periods ended September 30, 2024 was $637 and $1,600, respectively.

The following table summarizes the activities for the outstanding SARs:


	Number of SARs	Weighted- Average Exercise Price	Weighted Average Contractual Remaining Term (years)	Aggregate Intrinsic Values (in thousands)
Outstanding as of April 1, 2024	—	—
Acquired through MiX Combination	5,740	2.61
Granted	—	—
Exercised	(677)	2.97

Forfeited	(491)	2.42
Outstanding as of September 30, 2024	4,572	2.57	3.16


Vested as of September 30, 2024	1,420	3.08	1.41	$	2,710

As of September 30, 2024, there was $6,848 of unrecognized compensation cost related to unvested SARs. This amount is expected to be recognized over a weighted-average period of 3.05 years.

NOTE 12 - NET LOSS PER SHARE

Net loss per share for the three- and six-month periods ended September 30, 2023 and 2024 are as follows:


	Three Months Ended September 30,			Six Months Ended September 30,
	2023		2024	2023	2024
Basic and diluted loss per share
Net loss attributable to common stockholders	$	(