Powerfleet Inc

Current report

We may not realize the anticipated benefits and cost savings of the MiX Combination and FC Acquisition.

Current report

The success of the MiX Combination and the FC Acquisition will depend, in part, on our ability to realize the anticipated benefits and cost savings from combining the businesses. Our ability to realize these anticipated benefits and cost savings is subject to certain risks, including, among others:

Current report

•the parties’ ability to successfully combine their respective businesses;

Current report

•the risk that the combined businesses will not perform as expected;

Current report

•the extent to which the parties will be able to realize the expected synergies, which include realizing potential savings from re-assessing priority assets and aligning investments, eliminating duplication and redundancy, adopting an optimized operating model between the companies and leveraging scale, and creating value resulting from the combination of the three businesses;

Current report

•the possibility that the aggregate consideration being paid for MiX Telematics and Fleet Complete is greater than the value we will derive from the MiX Combination and the FC Acquisition;

Current report

•the possibility that the combined company will not achieve the unlevered free cash flow that the parties have projected;

Current report

•the incurrence of additional indebtedness in connection with the MiX Combination and the FC Acquisition and the resulting limitations placed on the combined company’s operations; and

Current report

•the assumption of known and unknown liabilities of MiX Telematics and Fleet Complete, including potential tax and employee-related liabilities.

Current report

If we are not able to successfully integrate the businesses within the anticipated time frame, or at all, the anticipated cost savings, synergies operational efficiencies and other benefits of the MiX Combination and the FC Acquisition may not be realized fully or may take longer to realize than expected, and the combined company may not perform as expected.

Current report

Integrating our, MiX Telematics’ and Fleet Complete’s businesses may be more difficult, time-consuming or costly than expected.

Current report

We and MiX Telematics operated independently prior to completion of the MiX Combination on April 2, 2024, and we, together with MiX Telematics, and Fleet Complete operated independently prior to completion of the FC Acquisition on October 1, 2024. There can be no assurances that our businesses can be integrated successfully. It is possible that the integration process could result in the loss of key employees, the disruption of our company’s ongoing business or unexpected integration issues, such as higher than expected integration costs and an overall post-completion integration process that takes longer than originally anticipated. Specifically, issues that must be addressed in integrating the operations of our company, MiX Telematics and Fleet Complete in order to realize the anticipated benefits of the transactions so that the combined business performs as expected include, among others:

Current report

•integrating the companies’ technologies, products and services;

Current report

•addressing possible differences in corporate cultures and management philosophies;

Current report

•attracting and recruiting prospective employees;

Current report

•coordinating sales, distribution and marketing efforts;

Current report

•maintaining existing agreements with customers and vendors and avoiding delays in entering into new agreements with prospective customers and vendors;

Current report

•coordinating geographically dispersed organizations; and

Current report

In addition, at times, the attention of certain members of our management and our resources may be focused on the integration of the businesses and diverted from day-to-day business operations, which may disrupt our ongoing business and, consequently, the business of the combined company.

Current report

The market price for shares of our common stock may decline as a result of the MiX Combination and the FC Acquisition, including as a result of some of our stockholders adjusting their portfolios.

Current report

The market value of our common stock at the time of consummation of each of the MiX Combination and the FC Acquisition varied significantly from the prices of our common stock before the date the respective transaction agreements were executed and the respective closing dates of the transactions. The market price of our common stock may decline if, among other things, the operational cost savings estimates in connection with the integration of our, MiX Telematics’ and Fleet Complete’s business are not realized, or if the costs related to the MiX Combination and FC Acquisition are greater than expected. The market price also may decline if we do not achieve the perceived benefits of the MiX Combination and FC Acquisition as rapidly or to the extent anticipated by financial or industry analysts or if the effect of the MiX Combination and FC Acquisition on our financial position, results of operations or cash flows is not consistent with the expectations of financial or industry analysts.

Current report

In addition, sales of our common stock by our stockholders after the completion of the MiX Combination and FC Acquisition may cause the market price of our common stock to decrease. Existing shareholders may decide to sell their shares of our common stock. Certain of our other stockholders, such as funds with limitations on their permitted holdings of stock in individual issuers, may be required to sell shares of our common stock. Such sales of our common stock could have the effect of depressing the market price for our common stock.

Current report

Any of these events may make it more difficult for us to sell equity or equity-related securities and have an adverse impact on the price of our common stock.

Current report

The MiX Combination and the FC Acquisition may not be accretive, and may be dilutive, to the combined company’s earnings per share, which may negatively affect the market price of shares of our common stock.

Current report

We currently believe the MiX Combination and the FC Acquisition will result in a number of benefits, including cost savings, operating efficiencies, and stronger demand for our products and services, and that the MiX Combination and FC Acquisition will be accretive to our earnings. This belief is based, in part, on preliminary current estimates that may materially change. In addition, future events and conditions, including adverse changes in market conditions, additional transaction and integration-related costs and other factors such as the failure to realize some or all of the anticipated benefits of the MiX Combination and FC Acquisition, could decrease or delay the accretion that is currently anticipated or could result in dilution. Any dilution of, or decrease in or delay of any accretion to, the combined company’s earnings per share could cause the price of shares of our common stock to decline or grow at a reduced rate.

Current report

In connection with the MiX Combination and the FC Acquisition, we have incurred significant additional indebtedness to finance the redemption of our Series A preferred stock and the acquisition of Fleet Complete.

Current report

The closing of debt and/or equity financing in an amount sufficient to provide for the redemption in full in cash of all outstanding shares of the Series A Preferred Stock was a condition to closing the MiX Combination. On March 7, 2024, we, together with certain of our wholly owned subsidiaries, entered into the Facilities Agreement with RMB, pursuant to which RMB agreed to provide us with the RMB Facilities in an aggregate principal amount of $85 million, the proceeds of which may be used to redeem all the outstanding shares of the Series A Preferred Stock and for general corporate purposes. On March 13, 2024, we drew down all $85 million available under such facilities. On April 2, 2024, concurrently with the closing of the MiX Combination, we used the net proceeds received from RMB and from incremental borrowing capacity as a result of the refinancing of Hapoalim Credit Facilities to redeem in full all of the outstanding shares of the Series A Preferred Stock.

Current report

Additionally, on September 27, 2024, we entered into the Facility Agreement with RMB, pursuant to which RMB agreed to provide us with the New RMB Term Facility in an aggregate principal amount of $125 million. On October 1, 2024, we drew down the full amount of the New RMB Term Facility and used the proceeds to pay a portion of the Purchase Price in the FC Acquisition.

Current report

The indebtedness we incurred in connection with the MiX Combination and FC Acquisition will have the effect of, among other things, reducing our flexibility to respond to changing business and economic conditions, will increase our borrowing costs and, to the extent that such indebtedness is subject to floating interest rates, may increase our vulnerability to fluctuations in market interest rates. The increased levels of indebtedness could also reduce funds available to fund efforts to combine our, MiX Telematics’ and Fleet Complete’s businesses and realize expected benefits of the MiX Combination and the FC Acquisition and/or engage in investments in product development, capital expenditures and other activities and may create competitive disadvantages for the combined company relative to other companies with lower debt levels.

Current report

Fleet Complete derives a significant portion of its revenues from two major customers, the loss of one or more of which could have a materially adverse effect on our business.

Current report

We strive to maintain a diverse customer base; however, a significant portion of Fleet Complete’s operating revenues is generated from two major North American telecommunications companies, the loss of one or more of which could have a material adverse effect on our business. Approximately 42% and 44% of Fleet Complete’s revenues during the years ended September 30, 2023 and 2022, respectively, were derived from these two major customers. Loss of business from these customers could have an adverse effect on our business, financial condition and operating results. There is no assurance any of

Current report

our customers, including these two customers, will continue to utilize our services, renew our existing contracts, or continue to

Current report

purchase our products and services at the same volume levels.

Current report

During the quarterly period ended September 30, 2024, no shares were repurchased by the Company.

Previous report

The following table provides information regarding our share repurchase activity for each month of the quarterly period ended June 30, 2024 (in thousands, except per share data). These shares were withheld to satisfy minimum tax withholding obligations in connection with the vesting of restricted stock.

Previous report

(1) Represents shares of common stock withheld to satisfy minimum tax withholding obligations in connection with the vesting of restricted stock