x
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
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Delaware
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22-3270799
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|
(State
or other jurisdiction of incorporation or organization)
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(I.R.S.
Employer Identification No.)
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One
University Plaza, Hackensack, New Jersey
|
|
07601
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(Address
of principal executive offices)
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(Zip
Code)
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Page
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||
PART
I - FINANCIAL INFORMATION
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||
Item 1.
|
Condensed
Financial Statements
|
|
Condensed
Balance Sheets as of December 31, 2007
and
March 31, 2008 (unaudited)
|
1
|
|
Condensed
Statements of Operations (unaudited) -
|
||
for
the three months ended March 31, 2007 and 2008
|
2
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Condensed
Statement of Changes in Stockholders’ Equity (unaudited) -
|
||
for
the three months ended March 31, 2008
|
3
|
|
Condensed
Statements of Cash Flows (unaudited) -
|
|
|
for
the three months ended March 31, 2007 and 2008
|
4
|
|
Notes
to unaudited Condensed Financial Statements
|
5
|
|
Item 2.
|
Management’s
Discussion and Analysis of
|
|
Financial
Condition and Results of Operations
|
12
|
|
|
||
Item 3. |
Quantitative
and Qualitative Disclosures About Market Risk
|
18
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|
||
Item 4. |
Controls
and Procedures
|
19
|
|
||
Part
II - OTHER INFORMATION
|
|
|
|
||
Item 1a. |
Risk
Factors
|
19
|
|
||
Item 2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
19
|
|
||
Item 6. |
Exhibits
|
21
|
|
||
Signatures |
22
|
December 31, 2007
|
March 31, 2008
|
||||||
(Unaudited)
|
|||||||
ASSETS
|
|||||||
Cash
and cash equivalents
|
$
|
5,103,000
|
$
|
16,502,000
|
|||
Marketable
securities – short term
|
21,385,000
|
11,548,000
|
|||||
Accounts
receivable, net
|
2,875,000
|
3,398,000
|
|||||
Unbilled
receivables
|
580,000
|
1,851,000
|
|||||
Inventory
|
4,420,000
|
3,589,000
|
|||||
Interest
receivable
|
142,000
|
74,000
|
|||||
Prepaid
expenses and other current assets
|
291,000
|
204,000
|
|||||
Total
current assets
|
34,796,000
|
37,166,000
|
|||||
Marketable
securities – long term
|
38,515,000
|
30,020,000
|
|||||
Fixed
assets, net
|
1,398,000
|
1,298,000
|
|||||
Other
assets
|
87,000
|
87,000
|
|||||
$
|
74,796,000
|
$
|
68,571,000
|
||||
LIABILITIES
|
|||||||
Accounts
payable and accrued expenses
|
$
|
2,594,000
|
$
|
1,029,000
|
|||
Current
portion of long term debt
|
19,000
|
—
|
|||||
Deferred
revenue
|
291,000
|
257,000
|
|||||
Total
current liabilities
|
2,904,000
|
1,286,000
|
|||||
Deferred
revenue
|
167,000
|
151,000
|
|||||
Deferred
rent
|
55,000
|
50,000
|
|||||
Total
liabilities
|
3,126,000
|
1,487,000
|
|||||
STOCKHOLDERS'
EQUITY
|
|||||||
Preferred
stock; authorized 5,000,000 shares, $.01 par value; none
issued
|
—
|
—
|
|||||
Common
stock; authorized 50,000,000 shares, $.01 par value; 11,561,000 and
11,578,000 shares issued at December 31, 2007 and March 31, 2008,
respectively, shares outstanding, 11,015,000 and 10,737,000 at December
31, 2007 and March 31, 2008, respectively.
|
115,000
|
115,000
|
|||||
Additional
paid-in capital
|
97,076,000
|
97,868,000
|
|||||
Accumulated
deficit
|
(19,492,000
|
)
|
(21,526,000
|
)
|
|||
Accumulated
other comprehensive income/(loss)
|
11,000
|
(1,023,000
|
)
|
||||
77,710,000
|
75,434,000
|
||||||
Treasury
stock; 546,000 shares and 841,000 shares at cost at December 31,
2007 and
March 31, 2008, respectively
|
(6,040,000
|
)
|
(8,350,000
|
)
|
|||
Total
stockholders’ equity
|
71,670,000
|
67,084,000
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
74,796,000
|
$
|
68,571,000
|
Three months ended
|
|||||||
March 31,
|
|||||||
2007
|
2008
|
||||||
Revenue:
|
|||||||
Products
|
$
|
2,310,000
|
$
|
3,253,000
|
|||
Services
|
2,311,000
|
1,075,000
|
|||||
4,621,000
|
4,328,000
|
||||||
Cost
of Revenue:
|
|||||||
Cost
of products
|
1,146,000
|
1,536,000
|
|||||
Cost
of services
|
1,233,000
|
680,000
|
|||||
2,379,000
|
2,216,000
|
||||||
Gross
Profit
|
2,242,000
|
2,112,000
|
|||||
Selling,
general and administrative expenses
|
3,824,000
|
4,261,000
|
|||||
Research
and development expenses
|
706,000
|
711,000
|
|||||
Loss
from operations
|
(2,288,000
|
)
|
(2,860,000
|
)
|
|||
Interest
income
|
792,000
|
826,000
|
|||||
Interest
expense
|
(4,000
|
)
|
—
|
||||
Other
income
|
38,000
|
—
|
|||||
Net
loss
|
$
|
(1,462,000
|
)
|
$
|
(2,034,000
|
)
|
|
Net
loss per share – basic and diluted
|
$
|
(0.13
|
)
|
$
|
(0.19
|
)
|
|
Weighted
average common shares outstanding- basic
and diluted
|
11,346,000
|
10,881,000
|
Accumulated
|
||||||||||||||||||||||
Common Stock
|
Additional
|
Other
|
||||||||||||||||||||
Number of
Shares
|
Amount
|
Paid-in
Capital
|
Accumulated
Deficit
|
Comprehensive
Income /(loss)
|
Treasury
Stock
|
Stockholders'
Equity
|
||||||||||||||||
Balance
at December 31, 2007
|
11,561,000
|
$
|
115,000
|
$
|
97,076,000
|
$
|
(19,492,000
|
)
|
$
|
11,000
|
$
|
(6,040,000
|
)
|
$
|
71,670,000
|
|||||||
Net
loss
|
(2,034,000
|
)
|
(2,034,000
|
)
|
||||||||||||||||||
Comprehensive
loss - unrealized loss on investments
|
(1,034,000
|
)
|
_(1,034,000
|
)
|
||||||||||||||||||
Total
comprehensive loss
|
(3,068,000
|
)
|
||||||||||||||||||||
Shares
issued pursuant to exercise of stock options
|
1,000
|
—
|
7,000
|
7,000
|
||||||||||||||||||
Shares
repurchased
|
(2,310,000
|
)
|
(2,310,000
|
)
|
||||||||||||||||||
Issuance
of restricted stock
|
16,000
|
|||||||||||||||||||||
Stock
based compensation – restricted stock
|
209,000
|
209,000
|
||||||||||||||||||||
Stock
based compensation - options
|
|
|
576,000
|
|
|
|
576,,000
|
|||||||||||||||
Balance
at March 31, 2008
|
11,578,000
|
$
|
115,000
|
$
|
97,868,000
|
$
|
(21,526,000
|
)
|
$
|
(1,023,000
|
)
|
$
|
(8,350,000
|
)
|
$
|
67,084,000
|
Three
months ended
March
31,
|
|||||||
2007
|
2008
|
||||||
Cash
flows from operating activities:
|
|||||||
Net
loss
|
$
|
(1,462,000
|
)
|
$
|
(2,034,000
|
)
|
|
Adjustments
to reconcile net loss to cash provided by (used in) operating
activities:
|
|||||||
Inventory
reserve
|
75,000
|
—
|
|||||
Accrued
interest (expense) income
|
(16,000
|
)
|
24,000
|
||||
Stock-based
compensation expense
|
767,000
|
785,000
|
|||||
Depreciation
and amortization
|
133,000
|
140,000
|
|||||
Deferred
rent expense
|
(5,000
|
)
|
(5,000
|
)
|
|||
Deferred
revenue
|
76,000
|
(50,000
|
)
|
||||
Deferred
contract costs
|
8,000
|
—
|
|||||
Changes
in:
|
|||||||
Accounts
receivable
|
1,257,000
|
(523,000
|
)
|
||||
Unbilled
receivables
|
297,000
|
(1,271,000
|
)
|
||||
Inventory
|
444,000
|
831,000
|
|||||
Prepaid
expenses and other assets
|
62,000
|
87,000
|
|||||
Accounts
payable and accrued expenses
|
(1,291,000
|
)
|
(1,565,000
|
)
|
|||
Net
cash provided by (used in) operating activities
|
345,000
|
(3,581,000
|
)
|
||||
Cash
flows from investing activities:
|
|||||||
Purchase
of fixed assets
|
(76,000
|
)
|
(40,000
|
)
|
|||
Purchase
of investments
|
(3,811,000
|
)
|
(2,350,000
|
)
|
|||
Maturities
of investments
|
5,578,000
|
19,692,000
|
|||||
Collection
of officer loan
|
3,000
|
—
|
|||||
Net
cash provided by investing activities
|
1,694,000
|
17,302,000
|
|||||
Cash
flows from financing activities:
|
|||||||
Repayment
of term loan
|
(54,000
|
)
|
(19,000
|
)
|
|||
Proceeds
from exercise of stock options
|
52,000
|
7,000
|
|||||
Purchase
of treasury shares
|
—
|
(2,310,000
|
)
|
||||
Net
cash used in financing activities
|
(2,000
|
)
|
(2,322,000
|
)
|
|||
Net
increase in cash and cash equivalents
|
2,037,000
|
11,399,000
|
|||||
Cash
and cash equivalents - beginning of period
|
9,644,000
|
5,103,000
|
|||||
Cash
and cash equivalents - end of period
|
$
|
11,681,000
|
$
|
16,502,000
|
|||
Supplemental
disclosure of cash flow information:
|
|||||||
Cash
paid for:
|
|||||||
Interest
|
$
|
4,000
|
$
|
—
|
|||
Noncash
activities:
|
|||||||
Unrealized
loss on investments
|
$
|
(9,000
|
)
|
$
|
(1,034,000
|
)
|
Three Months Ended
March 31,
|
|||||||
2007
|
2008
|
||||||
Basic
and diluted earnings per share
|
|||||||
Net
loss
|
$
|
(1,462,000
|
)
|
$
|
(2,034,000
|
)
|
|
Weighted
average shares outstanding
|
11,346,000
|
10,881,000
|
|||||
Basic
and diluted net loss per share
|
$
|
(0.13
|
)
|
$
|
(0.19
|
)
|
Weighted
|
|||||||||||||
Weighted
|
Average
|
||||||||||||
Average
|
Remaining
|
Aggregate
|
|||||||||||
Exercise
|
Contractual
|
Intrinsic
|
|||||||||||
Options
|
Price
|
Term
|
Value
|
||||||||||
Outstanding
at beginning of year
|
2,761,000
|
$
|
9.57
|
||||||||||
Granted
|
149,000
|
8.33
|
|||||||||||
Exercised
|
(1,000
|
)
|
6.65
|
||||||||||
Forfeited
|
(52,000
|
)
|
12.27
|
||||||||||
Outstanding
at end of period
|
2,857,000
|
$
|
9.46
|
6
years
|
$
|
3,679,000
|
|||||||
Exercisable
at end of period
|
1,954,000
|
$
|
7.53
|
8
years
|
$
|
3,589,000
|
2007
|
2008
|
||||||
Volatility
|
53%
|
|
74%
|
|
|||
Expected
life of options
|
5
years
|
5
years
|
|||||
Risk
free interest rate
|
5%
|
|
3%
|
|
|||
Dividend
yield
|
0%
|
|
0%
|
|
§
|
Level
1: Unadjusted quoted prices in active markets for identical assets
or
liabilities.
|
§
|
Level
2: Inputs other than quoted prices that are observable for the asset
or
liability, either directly or indirectly. These include quoted prices
for
similar assets or liabilities in active markets and quoted prices
for
identical or similar assets or liabilities in markets that are not
active.
|
§
|
Level
3: Unobservable inputs that reflect the reporting entity’s own
assumptions.
|
|
Balance at
March 31,
|
|
Basis of Fair Value Measurements
|
|
|||||||||
($ in millions)
|
|
2008
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
||||
Assets:
|
|||||||||||||
Marketable
securities – short term
|
$
|
11.5
|
$
|
11.5
|
$
|
—
|
$
|
—
|
|||||
Marketable
securities – long term
|
30.0
|
10.7
|
—
|
19.3
|
|||||||||
|
$
|
41.5
|
$
|
22.2
|
$
|
—
|
$
|
19.3
|
Three
months ended
March
31,
|
|||||||
2007
|
2008
|
||||||
Revenue:
|
|||||||
Products
|
50.0
|
%
|
75.2
|
%
|
|||
Services
|
50.0
|
24.8
|
|||||
100.0
|
100.0
|
||||||
Cost
of Revenues:
|
|||||||
Cost
of products
|
24.8
|
35.5
|
|||||
Cost
of services
|
26.7
|
15.7
|
|||||
Gross
Profit
|
48.5
|
48.8
|
|||||
Selling,
general and administrative expenses
|
82.8
|
98.5
|
|||||
Research
and development expenses
|
15.3
|
16.4
|
|||||
Loss
from operations
|
(49.6
|
)
|
(66.1
|
)
|
|||
Net
interest income
|
17.1
|
19.1
|
|||||
Other
income
|
0.7
|
—
|
|||||
Net
loss
|
(31.6
|
)%
|
(47.0
|
)%
|
Period
|
Total number of
shares (or unit)
purchased
|
Average price
paid per share (or
unit)
|
Total number of
shares (or units)
purchased as part of
publicly announced
plans or programs
|
Maximum number (or
approximate dollar
value) of shares (or
units) that may yet be
purchased under the
plans or programs
|
|||||||||
1/1/08
through 1/31/08
|
79,048
|
$
|
10.03
|
79,048
|
$
|
3,624,640
|
|||||||
2/1/08
through 2/29/08
|
94,776
|
$
|
7.78
|
94,776
|
$
|
2,887,546
|
|||||||
3/1/08
through 3/31/08
|
121,418
|
$
|
6.42
|
121,418
|
$
|
2,107,762
|
|||||||
Total
|
295,242
|
$
|
7.82
|
295,242
|
$
|
2,107,762
|
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:
May 12, 2008
|
By:
|
/s/
Jeffrey M. Jagid
|
Jeffrey
M. Jagid
|
||
Chief
Executive Officer
|
||
(Principal
Executive Officer)
|
||
Dated:
May 12, 2008
|
By:
|
/s/
Ned Mavrommatis
|
Ned
Mavrommatis
|
||
Chief
Financial Officer
|
||
(Principal
Financial Officer)
|