Nasdaq-listed AI heavyweight Powerfleet, which is secondary listed on the JSE, says geopolitical conflicts is knocking its customers and suppliers.
Powerfleet, a provider in the Artificial Intelligence of Things (AIoT) Software-as-a-Service (SaaS), said in a US Securities and Exchange Commission on Friday, "Higher interest rates and lingering inflation, fluctuations in currency values, continued supply chain disruptions, and ongoing geopolitical conflicts, such as the wars between Russia and Ukraine and between Israel and Hamas, have resulted in significant economic disruption and adversely impacted the broader global economy, including our customers and suppliers.
“The ultimate extent of the effects of these developments remain highly uncertain, and such effects could exist for an extended period of time,” it said.
Powerfleet, which first announced the deal to buy South African-based MiX Telematics in October 2023 and in March attained a secondary listing on the JSE, said at the time that the MiX Telematics’ and Powerfleet's business models, markets, and operational strategies were expected to yield substantial value for shareholders, with a combined subscriber base of approximately 1.7 million.
Powerfleet said the success of the MiX Combination would depend, in part, on its ability to realise the anticipated benefits and cost savings from combining the two businesses.
It said its ability to realise these anticipated benefits and cost savings was subject to certain risks, including, among others the parties’ ability to successfully combine their respective businesses; the possibility that the aggregate consideration being paid for MiX Telematics was greater than the value it would derive from the MiX Combination and the possibility that the combined company would not achieve the unlevered free cash flow that the parties had projected.
Another risk was the incurrence of additional indebtedness in connection with the MiX Combination and the resulting limitations placed on the combined company’s operations; and the assumption of known and unknown liabilities of MiX Telematics, including potential tax and employee-related liabilities.
“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 may not be realised fully or may take longer to realise than expected, and the combined company may not perform as expected,” it said. A risk was that integrating its business and MiX Telematics’ business might be more difficult, time-consuming or costly than expected, it added.
Among other risks, it flagged that its subsidiaries Powerfleet Israel and Pointer operated in Israel, and its business and operations might be directly influenced by the political, economic and military conditions affecting Israel at any given time.
A change in the security and political situation in Israel could have a material adverse effect on its business, operating results and financial condition, it said.
“The Israel-Hamas war remains ongoing and the conflict has had an adverse impact on, and may continue to adversely impact, our supply chain, our ability to manufacture and deliver products in Israel to customers and the stability of our Israeli workforce.
“In addition, political uprisings and conflicts in various countries in the Middle East, including Syria and Iraq, are affecting the political stability of those countries.
“It is not clear how this instability will develop and how it will affect the political and security situation in the Middle East.
“Furthermore, several countries, principally in the Middle East, restrict doing business with Israel and Israeli companies, and additional countries may impose restrictions on doing business with Israel and Israeli companies if hostilities or political instability in the region continues or intensifies,” it said.
Powerfleet added that these restrictions might limit materially its ability to obtain raw materials from these countries or sell its products to companies in these countries.
“Any hostilities involving Israel or the interruption or curtailment of trade between Israel and its present trading partners could have a material adverse effect on our business, operating results and financial condition,” it said.
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