SecProbe.io

CORRESP
1
filename1.htm

July
1, 2019

VIA
EDGAR AND ELECTRONIC MAIL

Kathleen
Krebs, Esq.

Special
Counsel

United
States Securities and Exchange Commission

Division
of Corporation Finance

Office
of Telecommunications

Mail
Stop 3628

100
F Street, N.E.

Washington,
D.C. 20549

    Re:
    PowerFleet,
    Inc.

    Registration
    Statement on Form S-4

    Filed
    on May 24, 2019

    File
    no. 333-231725

Dear
Ms. Krebs:

We
acknowledge receipt of the letter of comment dated June 20, 2019 (the “Comment Letter”) from the staff (the “Staff”)
of the Securities and Exchange Commission (the “Commission”) with regard to the above-referenced matter. We have reviewed
the Comment Letter with I.D. Systems, Inc. (“I.D. Systems”) and PowerFleet, Inc. (“Parent”) and provide
the following responses on their behalf. Unless otherwise indicated, the page references below are to the marked version of the
enclosed copy of Amendment No. 1 to the Registration Statement on Form S-4 filed on the date hereof by Parent (the “Form
S-4”). Capitalized terms used herein and not separately defined have the meanings given to them in the Form S-4. To facilitate
the Staff’s review, we have reproduced the text of the Staff’s comments in italics below, and our responses appear
immediately below each comment.

Form
S-4 filed May 24, 2019

Prospectus
Cover Page / Letter to Shareholders, page 1

    1.
    Please
    disclose the total number of PowerFleet common shares to be issued to I.D. Systems and Pointer Telocation shareholders and
    the total amount of cash to be paid to Pointer Telocation shareholders in connection with the combination of the two companies.

The
applicable disclosure in the Form S-4 has been revised in response to the Staff’s comment. Please see the Prospectus
Cover Page of the Form S-4.

    July 1, 2019

Page 2

How
will the parties to voting agreements with I.D. Systems and Pointer vote on the proposals?, page 20

    2.
    Please
    revise to indicate the percentage under each agreement committed to voting in favor of the merger.

The
applicable disclosure in the Form S-4 has been revised in response to the Staff’s comment. Please see page 11 of
the Form S-4.

What
are the U.S. federal income tax consequences of the Transactions?, page 23

    3.
    We
    note that you express an opinion with respect to the tax free consequences of the transactions for U.S. federal income tax
    purposes to I.D. Systems shareholders; however there is no tax opinion of counsel filed as an exhibit to your registration
    statement. Please advise or revise. Refer to Item 601(b)(8) of Regulation S-K and and [sic] Sections III.A.2 and III.D.2 and
    3 of CF Staff Legal Bulletin No. 19.

    A
    form of tax opinion of counsel has been filed as Exhibit 8.1 to the Form S-4.

Company
Structure—Diagrams, page 28

    4.
    Please
    revise to indicate the percentage ownership post-closing to be held by I.D. Systems stockholders, Pointer stockholders, and
    the Preferred Stockholders. Please similarly revise at page 84.

The
applicable disclosure in the Form S-4 has been revised in response to the Staff’s comment. Please see pages 19 and
75 of the Form S-4.

Conditions
to I.D. Systems’ and Parent’s Obligations, page 35

    5.
    We
    note the ability of either party to waive conditions to the transactions. Please specifically identify which conditions can
    be waived. Furthermore, disclose whether the receipt of a tax opinion regarding the tax-free nature of the transactions by
    I.D. Systems is a condition to the transactions, and if so, whether it is a waivable condition. Disclose whether it is the
    board of directors’ intent to re-solicit stockholder approval if any party waives a material condition, including the
    receipt of tax opinions. We believe that re- solicitation is generally required when parties waive material conditions to
    a merger, such as receipt of an opinion that a merger is not taxable to stockholders, and such changes in terms of the merger
    render the disclosure that you previously provided to shareholders materially misleading. As appropriate, also revise the
    related risk factor on page 48 entitled, “I.D. Systems or Pointer may waive one or more of the closing conditions to
    the Transactions without re-soliciting stockholder approval.”

We
acknowledge the Staff’s comment. The applicable disclosure in the Form S-4 has been revised in response to the Staff’s
comment. Please see pages 26 and 160 of the Form S-4.

    July 1, 2019

Page 3

Risk
Factors, page 43

    6.
    Please
    consider the addition of a risk factor addressing the potential loss of corporate opportunities to the combined company if
    I.D. Systems Proposal 6 is approved by shareholders. Please also address, as you do at page 180, how adoption of the proposal
    would be consistent with the board’s fiduciary duties, and Delaware Corporation Law.

The
applicable disclosure in the Form S-4 has been revised in response to the Staff’s comment. Please see page 47 of
the Form S-4.

I.D.
Systems, Pointer and Parent will incur significant transaction and merger-related transaction costs in connection with the Transactions,
page 52

    7.
    To
    the extent possible, please quantify the significant non-recurring costs you discuss in the risk factor, in addition to the
    termination fees you quantify.

 The
Form S-4 has been revised to include an estimate of the non-recurring costs expected to be incurred in connection with consummating
the Transactions. Please see page 43 of the Form S-4. I.D. Systems has advised that it is not practicable to quantify other non-recurring
costs at this time, including in connection with the integration of the operations of the companies post-closing and the retention
of key employees.

Pro
Forma Condensed Statements of Comprehensive Income (Loss) for the Year Ended December 31, 2018

Pro Forma Condensed Statement of Comprehensive Income
(Loss) for the Three Months Ended March 31, 2019, page 62

    8.
    Please
    include pro forma income statement adjustments to give effect to the depreciation and amortization associated with acquired
    tangible and intangible assets of Pointer. This should be based upon your best estimate of the fair value of the different
    classes of assets to be acquired and the associated useful life of each class of asset.

In
response to the Staff’s comment, the Form S-4 has been revised accordingly to include the adjustments of depreciation and
amortization based on the preliminary purchase price allocation. Please see pro forma adjustment k) in footnote 4 on page 58 .

Notes
to Unaudited Pro Forma Combined Financial Information

Note
3. Purchase Price Allocation, page 65

    9.
    We
    note that you have not completed the detailed valuations necessary to estimate the fair value of the assets acquired and the
    liabilities assumed and the related allocations of the purchase price. Please note for pro forma purposes, it is not necessary
    to have a final determination of the fair value of assets acquired and liabilities assumed. Please revise your pro forma information
    to reflect management’s best estimate of the value of the assets to be acquired and the liabilities to be assumed and
    the related allocations of the purchase price. In your preliminary purchase price allocation, you should identify the significant
    liabilities and significant tangible and intangible assets likely to be recognized. Also, in the accompanying disclosure,
    you should indicate the purchase price allocation is preliminary and highlight any uncertainties regarding the valuations
    and the effects of amortization periods assigned to the assets.

    July 1, 2019

Page 4

In
response to the Staff’s comment, the Form S-4 has been revised to reflect the preliminary purchase price allocation based
on available information and best estimate of the value of the acquired assets and assumed liabilities and to include the additional
disclosure requested by the Staff. Please see footnote 3 on page 56 .

    10.
    Please
    expand the sensitivity analysis for the range of possible outcomes in Note 3 to present each of the pro forma income statement
    line-items that should appear below pro forma net income before income taxes, so the the [sic] impact of the estimated amortization
    on net (loss)/income attributable to common shareholders is transparent.

In
response to the Staff’s comment, the Form S-4 has been revised to reflect the preliminary purchase price allocation in response
to Comment 9. Therefore, I.D. Systems considers that the sensitivity analysis is not necessary and it has accordingly been deleted.

Note
4. Pro Forma Adjustments, page 66

    11.
    Please
    reflect a pro forma adjustment for the $750,000 of bonuses payable to the three Pointer Telocation executives per their employment
    agreements contingent upon closing the merger transaction in your unaudited pro forma balance sheet at March 31, 2019. Refer
    to Article 11 of Regulation S-X.

In
response to the Staff’s comment, the Form S-4 has been revised to reflect the bonus adjustment in the unaudited pro forma
balance sheet at March 31, 2019. Please see pro forma adjustment 7) in footnote 4 on page 57 .

    12.
    We
    note the treatment of Pointer share-based plans disclosed on page 138. In a separate footnote, please disclose how you will
    be accounting for the treatment of the Pointer share-based plans in the merger and advise us. Disclose the total estimated
    value of the consideration to be paid in the form of options to purchase Parent common stock, Pointer merger consideration,
    and restricted stock units in the Parent common stock. In addition, please give pro forma balance sheet and pro forma income
    statement effect to the treatment of Pointer share-based plans.

In
response to the Staff’s comment, the disclosure in footnote 4 has been revised to disclose the accounting treatment of the
Pointer share-based plans in the merger and in footnote 3 has been revised to disclose the estimated value of the consideration
to be paid. Please see page 56 . I.D. Systems evaluated and believes that Pointer’s share-based awards and Parent’s
replacement awards are substantially identical in terms and conditions. The exchange ratio for the replacement awards is effectively
the same as the exchange ratio for Pointer’s ordinary shares, which was determined using the 20-day VWAP of I.D. Systems
of $6.68 as of March 11, 2019, ending two days before the signing of the Merger Agreement , plus $8.50 in cash consideration .
I.D. Systems does not expect a material change in the estimated fair values at the acquisition date based on the current stock
price.

    July 1, 2019

Page 5

I.D.
Systems advises that it expects to account for the replacement awards in connection with the Pointer Merger as a modification
event under the guidance in Accounting Standards Codification (ASC) 805 Business Combinations at the acquisition date. ASC 805-30-30
paragraph 9 provides that the exchange of stock awards in conjunction with a business combination is considered a modification
under ASC 718 Compensation-Stock Compensation. If the acquirer is obligated to replace the acquiree’s awards, ASC 805-30-30,
paragraphs 11-13 clarify that the portion of the incremental fair value of the replacement award over the cancelled
award attributable to pre-combination service is considered purchase price while the portion of the incremental fair value
of the replacement award that is attributable to post-combination service is recognized as compensation expense over the post-combination
service period. The issuance of new awards or modifications to existing awards for the benefit of the acquirer are recognized
as post-combination compensation expense.

There
are two main types of stock awards as indicated “Treatment of Pointer Share-Based Plans” on page 1 29 :

1.
Pointer stock options and restricted stock units that are outstanding and vested immediately prior to the effective time of the
Pointer Merger (the “Vested Stock Awards”) will be cancelled in exchange for the holders receiving merger consideration.
These Vested Stock Awards do not require post-combination services and all requisite services for Pointer stock options and restricted
stock units were rendered as of the acquisition date. The value of the merger consideration associated with vested Pointer stock
options and restricted stock units at the acquisition date will be included in purchase price.

2.
Pointer stock options and restricted stock units that are outstanding and unvested prior to the effective
time of the Pointer Merger (the “Unvested Stock Awards”) will be exchanged for stock awards under the I.D. Systems
2018 Equity Incentive Plan on the same material terms and conditions, except that (i) the number of shares of Parent Common Stock
underlying the replacement option or restricted stock unit will equal the product of the number of the shares underlying the Pointer
award multiplied by 2.544, and the per-share exercise price of the replacement options will equal the quotient obtained by dividing
the exercise price of the Pointer stock option by 2.544. There are no changes to the requisite service period and vesting terms.
Consistent with ASC 805-30-55, paragraphs 21 and 22, since the Unvested Stock Awards require post-combination service, I.D. Systems
will recognize the incremental fair value of the replacement award over the Unvested Stock Awards as compensation expense over
the post-combination service period.

I.D. Systems estimated
the fair values of the replacement awards and the Unvested Stock Awards for purposes of the pro forma financial statements using
a Black-Scholes option pricing model and determined the estimated incremental fair value of the replacement awards to be immaterial.
Therefore, I.D. Systems did not include or disclose the estimated incremental compensation expense in the pro forma financial statements
included in the Form S-4 as the amount is immaterial.

    July 1, 2019

Page 6

Comparative
Per Share Information, page 67

    13.
    Disclose
    Pointer equivalent pro forma per share date pursuant to Item 3(f) of Form S-4 Part 1A.

The
Form S-4 has been revised to disclose Pointer equivalent pro forma per share data. Please see page 59 .

    14.
    Please
    revise the Unaudited Pro Forma Combined per Parent Common Share Data to reflect the pro forma income statements that give
    effect to all significant adjustments based upon management’s best estimate of the valuation of acquired assets and
    assumed liabilities, and the related estimated amortization and depreciation.

In
response to the Staff’s comment, as addressed in the foregoing responses to the Staff’s comments, the Form S-4 has
been revised to reflect the preliminary purchase price allocation based on available information and best estimate of the value
of the acquired assets and assumed liabilities as well as the related estimated amortization and depreciation. Please see page
56 .

    15.
    Please
    clarify the explanation provided in footnote (3) to the comparative per share information.

The
following language in footnote (3) has been revised in response to the Staff’s comment:

“(3)
See Note 5 Earnings Per Share to the “Unaudited Pro Forma Combined Financial Information” on page 58 .”

    July 1, 2019

Page 7

Conditions
to the Investment Agreement, page 168

    16.
    Please
    advise as to the nature of the legal opinion referenced in the eight bullet point.

The
legal opinion that is a condition to the Investors’ obligations under the Investment Agreement relates to the following
matters with respect to Parent: (i) due organization, valid existence and good standing; (ii) the authorization, execution and
delivery of, and the validity, binding effect and enforceability of, the Investment Docume