x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
Delaware
|
22-3270799
|
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
|
One
University Plaza, Hackensack, New Jersey
|
07601
|
|
(Address
of principal executive offices)
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(Zip
Code)
|
PART
I - FINANCIAL INFORMATION
|
||||
Item
1. Financial Statements.
|
Page
|
|||
Condensed
Balance Sheets as of December 31, 2005
|
||||
and
June 30, 2006 (unaudited)
|
1
|
|||
Condensed
Statement of Operations (unaudited)
|
||||
for
the three months and six months ended June 30, 2005 and
2006
|
2
|
|||
Condensed
Statement of Cash Flows (unaudited)
|
||||
for
the six months ended June 30, 2005 and 2006
|
3
|
|||
Notes
to Condensed Financial Statements
|
4
|
|||
Item
2. Management’s Discussion and Analysis of
|
||||
Financial
Condition and Results of Operations
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9
|
|||
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
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15
|
|||
Item
4. Controls and Procedures
|
15
|
|||
PART
II - OTHER INFORMATION
|
||||
Item
1a. Risk Factors
|
16
|
|||
Item
4. Submission of Matters to a Vote of Security
Holders
|
16
|
|||
Item
6. Exhibits
|
17
|
|||
Signatures
|
18
|
December
31, 2005
|
June
30, 2006
|
||||||
(Unaudited)
|
|||||||
ASSETS
|
|||||||
Cash
and cash equivalents
|
$
|
2,138,000
|
$
|
10,683,000
|
|||
Investments
available for sale
|
5,463,000
|
59,315,000
|
|||||
Accounts
receivable, net
|
6,068,000
|
4,514,000
|
|||||
Unbilled
receivables
|
1,293,000
|
3,072,000
|
|||||
Inventory
|
2,952,000
|
5,580,000
|
|||||
Investment
in sales type leases
|
34,000
|
14,000
|
|||||
Officer
loan
|
11,000
|
12,000
|
|||||
Prepaid
expenses and other current assets
|
140,000
|
163,000
|
|||||
Total
current assets
|
18,099,000
|
83,353,000
|
|||||
Fixed
assets, net
|
1,159,000
|
1,354,000
|
|||||
Investment
in sales type leases
|
433,000
|
--
|
|||||
Officer
loan
|
8,000
|
2,000
|
|||||
Deferred
contract costs
|
53,000
|
--
|
|||||
Other
assets
|
88,000
|
87,000
|
|||||
$
|
19,840,000
|
$
|
84,796,000
|
||||
LIABILITIES
|
|||||||
Accounts
payable and accrued expenses
|
$
|
3,881,000
|
$
|
3,137,000
|
|||
Long
term debt - current portion
|
209,000
|
215,000
|
|||||
Deferred
revenue
|
155,000
|
145,000
|
|||||
Total
current liabilities
|
4,245,000
|
3,497,000
|
|||||
Long
term debt
|
240,000
|
132,000
|
|||||
Deferred
revenue
|
90,000
|
191,000
|
|||||
Deferred
rent
|
99,000
|
88,000
|
|||||
Total
liabilities
|
4,674,000
|
3,908,000
|
|||||
STOCKHOLDERS'
EQUITY
|
|||||||
Preferred
stock; authorized 5,000,000 shares, $.01 par value; none
issued
|
--
|
--
|
|||||
Common
stock; authorized 50,000,000 shares, $.01 par value; issued and
outstanding 7,851,000 shares and 11,167,000 shares
|
79,000
|
111,000
|
|||||
Additional
paid-in capital
|
25,735,000
|
91,119,000
|
|||||
Accumulated
deficit
|
(10,535,000
|
)
|
(10,229,000
|
)
|
|||
15,279,000
|
81,001,000
|
||||||
Treasury
stock; 40,000 shares at cost
|
(113,000
|
)
|
(113,000
|
)
|
|||
Total
stockholders’ equity
|
15,166,000
|
80,888,000
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
19,840,000
|
$
|
84,796,000
|
Three
months ended
June
30,
|
Six
months ended
June
30,
|
||||||||||||
2005
|
2006
|
2005
|
2006
|
||||||||||
Revenues
|
$
|
4,198,000
|
$
|
6,363,000
|
$
|
7,231,000
|
$
|
12,753,000
|
|||||
Cost
of Revenues
|
2,081,000
|
3,473,000
|
3,587,000
|
6,676,000
|
|||||||||
Gross
Profit
|
2,117,000
|
2,890,000
|
3,644,000
|
6,077,000
|
|||||||||
Selling,
general and administrative expenses
|
1,451,000
|
2,910,000
|
3,304,000
|
5,658,000
|
|||||||||
Research
and development expenses
|
342,000
|
560,000
|
737,000
|
1,053,000
|
|||||||||
Income
(loss) from operations
|
324,000
|
(580,000
|
)
|
(397,000
|
)
|
(634,000
|
)
|
||||||
Interest
income
|
66,000
|
731,000
|
128,000
|
881,000
|
|||||||||
Interest
expense
|
(16,000
|
)
|
(8,000
|
)
|
(29,000
|
)
|
(17,000
|
)
|
|||||
Other
income
|
38,000
|
38,000
|
75,000
|
76,000
|
|||||||||
Net
income (loss)
|
$
|
412,000
|
$
|
181,000
|
$
|
(223,000
|
)
|
$
|
306,000
|
||||
Net
income (loss) per share - basic
|
$
|
0.05
|
$
|
0.02
|
$
|
(0.03
|
)
|
$
|
0.03
|
||||
Net
income (loss) per share - diluted
|
$
|
0.05
|
$
|
0.01
|
$
|
(0.03
|
)
|
$
|
0.03
|
||||
Weighted
average common shares outstanding - basic
|
7,732,000
|
11,099,000
|
7,718,000
|
9,748,000
|
|||||||||
Weighted
average common shares outstanding - diluted
|
9,143,000
|
12,826,000
|
7,718,000
|
11,542,000
|
Six
months ended
June
30,
|
|||||||
2005
|
2006
|
||||||
Cash
flows from operating activities:
|
|||||||
Net
income (loss)
|
$
|
(223,000
|
)
|
$
|
306,000
|
||
Adjustments
to reconcile net income (loss) to cash used in operating
activities:
|
|||||||
Accrued
interest income
|
(7,000
|
)
|
46,000
|
||||
Stock-based
compensation expense
|
--
|
998,000
|
|||||
Depreciation
and amortization
|
178,000
|
228,000
|
|||||
Deferred
rent expense
|
(2,000
|
)
|
(11,000
|
)
|
|||
Deferred
revenue
|
(47,000
|
)
|
91,000
|
||||
Deferred
contract costs
|
184,000
|
53,000
|
|||||
Changes
in:
|
|||||||
Accounts
receivable
|
(2,976,000
|
)
|
1,554,000
|
||||
Unbilled
receivables
|
402,000
|
(1,779,000
|
)
|
||||
Inventory
|
(308,000
|
)
|
(2,628,000
|
)
|
|||
Prepaid
expenses and other assets
|
196,000
|
(22,000
|
)
|
||||
Investment
in sales type leases
|
19,000
|
453,000
|
|||||
Accounts
payable and accrued expenses
|
(774,000
|
)
|
(744,000
|
)
|
|||
Net
cash used in operating activities
|
(3,358,000
|
)
|
(1,455,000
|
)
|
|||
Cash
flows from investing activities:
|
|||||||
Purchase
of fixed assets
|
(360,000
|
)
|
(423,000
|
)
|
|||
Purchase
of investments
|
(500,000
|
)
|
(54,238,000
|
)
|
|||
Maturities
of investments
|
1,170,000
|
340,000
|
|||||
Collection
of officer loan
|
5,000
|
5,000
|
|||||
Net
cash provided by (used in) investing activities
|
315,000
|
(54,316,000
|
)
|
||||
Cash
flows from financing activities:
|
|||||||
Repayment
of term loan
|
(99,000
|
)
|
(102,000
|
)
|
|||
Proceeds
from line of credit
|
500,000
|
--
|
|||||
Proceeds
from exercise of stock options
|
350,000
|
457,000
|
|||||
Net
proceeds from stock offering
|
--
|
63,961,000
|
|||||
Net
cash provided by financing activities
|
751,000
|
64,316,000
|
|||||
Net
(decrease) increase in cash and cash equivalents
|
(2,292,000
|
)
|
8,545,000
|
||||
Cash
and cash equivalents - beginning of period
|
8,440,000
|
2,138,000
|
|||||
Cash
and cash equivalents - end of period
|
$
|
6,148,000
|
$
|
10,683,000
|
|||
Supplemental
disclosure of cash flow information:
|
|||||||
Cash
paid for:
|
|||||||
Interest
|
$
|
29,000
|
$
|
17,000
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
||||||||||||
2005
|
2006
|
2005
|
2006
|
||||||||||
Basic
earnings (loss) per share
|
|||||||||||||
Net
income (loss)
|
$
|
412,000
|
$
|
181,000
|
$
|
(223,000
|
)
|
$
|
306,000
|
||||
Weighted
average shares outstanding
|
7,732,000
|
11,099,000
|
7,718,000
|
9,748,000
|
Basic
earnings (loss) per share
|
$
|
0.05
|
$
|
0.02
|
$
|
(0.03
|
)
|
$
|
0.03
|
||||
Diluted
earnings (loss) per share
|
|||||||||||||
Net
income (loss)
|
$
|
412,000
|
$
|
181,000
|
$
|
(223,000
|
)
|
$
|
306,000
|
||||
Weighted
average shares outstanding
|
7,732,000
|
11,099,000
|
7,718,000
|
9,748,000
|
|||||||||
Dilutive
effect of stock options
|
1,411,000
|
1,727,000
|
0
|
1,794,000
|
|||||||||
Weighted
average shares outstanding, diluted
|
9,143,000
|
12,826,000
|
7,718,000
|
11,542,000
|
|||||||||
Diluted
earnings (loss) per share
|
$
|
0.05
|
$
|
0.01
|
$
|
(0.03
|
)
|
$
|
0.03
|
Three
Months Ended
June
30, 2005
|
Six
Months Ended
June
30, 2005
|
||||||
Reported
net income (loss)
|
$
|
412,000
|
$
|
(223,000
|
)
|
||
Stock-based
employee compensation determined under the
|
|||||||
fair
value based method, net of related tax effects
|
(392,000
|
)
|
(772,000
|
)
|
|||
Pro
forma net income (loss)
|
$
|
20,000
|
$
|
(995,000
|
)
|
||
Income
(loss) per share - basic:
|
|||||||
As
reported
|
$
|
0.05
|
$
|
(0.03
|
)
|
||
Pro
forma
|
$
|
0.00
|
$
|
(0.13
|
)
|
||
Income
(loss) per share - diluted:
|
|||||||
As
reported
|
$
|
0.05
|
$
|
(0.03
|
)
|
||
Pro
forma
|
$
|
0.00
|
$
|
(0.13
|
)
|
Weighted
|
|||||||||||||
Weighted
|
Average
|
||||||||||||
Average
|
Remaining
|
Aggregate
|
|||||||||||
Exercise
|
Contractual
|
Intrinsic
|
|||||||||||
Options
|
Price
|
Term
|
Value
|
||||||||||
Outstanding
at beginning of year
|
2,730,000
|
$
|
6.94
|
||||||||||
Granted
|
280,000
|
21.76
|
|||||||||||
Exercised
|
(68,000
|
)
|
6.87
|
||||||||||
Forfeited
|
(109,000
|
)
|
10.49
|
||||||||||
Outstanding
at end of period
|
2,833,000
|
$
|
8.27
|
6
years
|
$
|
26,800,000
|
|||||||
Exercisable
at end of period
|
1,567,000
|
$
|
4.90
|
5
years
|
$
|
20,105,000
|
2005
|
2006
|
|
Volatility
|
63%
|
51%
|
Expected
life of options
|
5
years
|
5
years
|
Risk
free interest rate
|
3%
|
5%
|
Dividend
yield
|
0%
|
0%
|
Period
ending June 30,
|
||||
2007
|
$
|
215,000
|
||
2008
|
132,000
|
|||
$
|
347,000
|
Three
months ended
June
30,
|
Six
months ended
June
30,
|
||||||||||||
2005
|
2006
|
2005
|
2006
|
||||||||||
Revenues
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
|||||
Cost
of Revenues
|
49.6
|
54.6
|
49.6
|
52.3
|
|||||||||
Gross
Profit
|
50.4
|
45.4
|
50.4
|
47.7
|
|||||||||
Selling,
general and administrative expenses
|
34.6
|
45.7
|
45.7
|
44.4
|
|||||||||
Research
and development expenses
|
8.1
|
8.8
|
10.2
|
8.3
|
|||||||||
Income
(loss) from operations
|
7.7
|
(9.1
|
)
|
(5.5
|
)
|
(5.0
|
)
|
||||||
Net
interest income
|
1.2
|
11.4
|
1.4
|
6.8
|
|||||||||
Other
income
|
0.9
|
0.6
|
1.0
|
0.6
|
|||||||||
Net
income (loss)
|
9.8
|
%
|
2.9
|
%
|
(3.1
|
)%
|
2.4
|
%
|
Name
|
Votes
For
|
Votes
Withheld
|
Jeffrey
Jagid
|
7,506,159
|
81,468
|
Kenneth
S. Ehrman
|
8,199,807
|
387,820
|
Beatrice
Yormark
|
8,202,595
|
385,032
|
Lawrence
Burstein
|
8,206,285
|
381,342
|
Michael
Monaco
|
8,512,307
|
75,320
|
31.1
|
Certification
of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
31.2
|
Certification
of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
32
|
Certification
of Chief Executive Officer and Chief Financial Officer Pursuant to
Section
906 of the Sarbanes-Oxley Act of
2002.
|
I.D.
Systems, Inc.
|
|
Dated:August
9, 2006
|
By:
/s/
Jeffrey M. Jagid
|
Jeffrey
M. Jagid
|
|
Chief
Executive Officer
|
|
(Principal
Executive Officer)
|
|
Dated:August
9, 2006
|
By:
/s/
Ned Mavrommatis
|
Ned
Mavrommatis
|
|
Chief
Financial Officer
|
|
(Principal
Financial Officer)
|