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)
|
(Zip
Code)
|
Page
|
||
Condensed
Balance Sheets as of December 31, 2006
and September 30, 2007 (unaudited)
|
1
|
|
Condensed
Statements of Operations (unaudited) -
for the three months and nine months ended September 30, 2006 and
2007
|
2
|
|
Condensed
Statement of Changes in Stockholders’ Equity (unaudited) -
for the nine months ended September 30, 2007
|
3
|
|
Condensed
Statements of Cash Flows (unaudited)-
for the nine months ended September 30, 2006 and 2007
|
4
|
|
Notes
to unaudited Condensed Financial Statements
|
5
|
|
Item
2. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
9
|
|
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
|
17
|
|
Item
4. Controls and Procedures
|
17
|
|
PART
II - OTHER INFORMATION
|
||
Item
1a. Risk Factors
|
18
|
|
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
|
18
|
|
Item
6. Exhibits
|
19
|
|
Signatures
|
20
|
December 31, 2006
|
September 30, 2007
|
||||||
(Unaudited)
|
|||||||
ASSETS
|
|||||||
Cash
and cash equivalents
|
$
|
9,644,000
|
$
|
3,681,000
|
|||
Marketable
securities
|
60,716,000
|
59,463,000
|
|||||
Accounts
receivable, net
|
5,101,000
|
6,653,000
|
|||||
Unbilled
receivables
|
1,042,000
|
131,000
|
|||||
Inventory
|
6,430,000
|
4,124,000
|
|||||
Officer
loan
|
8,000
|
—
|
|||||
Interest
receivable
|
179,000
|
101,000
|
|||||
Prepaid
expenses and other current assets
|
271,000
|
362,000
|
|||||
Total
current assets
|
83,391,000
|
74,515,000
|
|||||
Fixed
assets, net
|
1,394,000
|
1,361,000
|
|||||
Deferred
contract costs
|
33,000
|
8,000
|
|||||
Other
assets
|
87,000
|
87,000
|
|||||
$
|
84,905,000
|
$
|
75,971,000
|
||||
LIABILITIES
|
|||||||
Accounts
payable and accrued expenses
|
$
|
2,950,000
|
$
|
1,537,000
|
|||
Current
portion of long term debt
|
221,000
|
75,000
|
|||||
Deferred
revenue
|
221,000
|
310,000
|
|||||
Total
current liabilities
|
3,392,000
|
1,922,000
|
|||||
Long
term debt
|
19,000
|
—
|
|||||
Deferred
revenue
|
133,000
|
182,000
|
|||||
Deferred
rent
|
77,000
|
61,000
|
|||||
Total
liabilities
|
3,621,000
|
2,165,000
|
|||||
STOCKHOLDERS'
EQUITY
|
|||||||
Preferred
stock; authorized 5,000,000 shares, $.01 par value; none
issued
|
—
|
—
|
|||||
Common
stock; authorized 50,000,000 shares, $.01 par value; 11,337,000
and
11,549,000 issued at December 31, 2006 and September 30, 2007,
respectively, shares outstanding, 11,297,000 and 11,052,000 at
December
31, 2006 and September 30, 2007, respectively.
|
113,000
|
115,000
|
|||||
Additional
paid-in capital
|
93,423,000
|
96,157,000
|
|||||
Accumulated
deficit
|
(12,151,000
|
)
|
(17,047,000
|
)
|
|||
Accumulated
other comprehensive income
|
12,000
|
6,000
|
|||||
81,397,000
|
79,231,000
|
||||||
Treasury
stock; 40,000 shares and 497,000 shares at cost
|
(113,000
|
)
|
(5,425,000
|
)
|
|||
Total
stockholders’ equity
|
81,284,000
|
73,806,000
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
84,905,000
|
$
|
75,971,000
|
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
||||||||||||
2006
|
2007
|
2006
|
2007
|
||||||||||
Revenue:
|
|||||||||||||
Products
|
$
|
5,751,000
|
$
|
5,466,000
|
$
|
14,465,000
|
$
|
8,481,000
|
|||||
Services
|
2,323,000
|
1,052,000
|
6,361,000
|
4,881,000
|
|||||||||
8,074,000
|
6,518,000
|
20,826,000
|
13,362,000
|
||||||||||
Cost
of Revenue:
|
|||||||||||||
Cost
of products
|
2,995,000
|
2,725,000
|
7,245,000
|
4,282,000
|
|||||||||
Cost
of services
|
1,504,000
|
546,000
|
3,930,000
|
2,564,000
|
|||||||||
4,499,000
|
3,271,000
|
11,175,000
|
6,846,000
|
||||||||||
Gross
Profit
|
3,575,000
|
3,247,000
|
9,651,000
|
6,516,000
|
|||||||||
Selling,
general and administrative expenses
|
3,162,000
|
4,004,000
|
8,820,000
|
11,708,000
|
|||||||||
Research
and development expenses
|
673,000
|
828,000
|
1,726,000
|
2,128,000
|
|||||||||
Loss
from operations
|
(260,000
|
)
|
(1,585,000
|
)
|
(895,000
|
)
|
(7,320,000
|
)
|
|||||
Interest
income
|
860,000
|
784,000
|
1,741,000
|
2,344,000
|
|||||||||
Interest
expense
|
(6,000
|
)
|
(2,000
|
)
|
(23,000
|
)
|
(9,000
|
)
|
|||||
Other
income
|
38,000
|
13,000
|
115,000
|
89,000
|
|||||||||
Net
income (loss)
|
$
|
632,000
|
$
|
(790,000
|
)
|
$
|
938,000
|
$
|
(4,896,000
|
)
|
|||
Net
income (loss) per share – basic
|
$
|
0.06
|
$
|
(0.07
|
)
|
$
|
0.09
|
$
|
(0.43
|
)
|
|||
Net
income (loss) per share – diluted
|
$
|
0.05
|
$
|
(0.07
|
)
|
$
|
0.08
|
$
|
(0.43
|
)
|
|||
Weighted
average common shares outstanding – basic
|
11,202,000
|
11,150,000
|
10,238,000
|
11,265,000
|
|||||||||
Weighted
average common shares outstanding – diluted
|
12,871,000
|
11,150,000
|
11,991,000
|
11,265,000
|
Accumulated
|
||||||||||||||||||||||
Common
Stock
|
Additional
|
Other
|
||||||||||||||||||||
Number
of
|
Paid-in
|
Accumulated
|
Comprehensive
|
Treasury
|
Stockholders'
|
|||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
Income
|
Stock
|
Equity
|
||||||||||||||||
Balance
at December 31, 2006
|
11,337,000
|
$
|
113,000
|
$
|
93,423,000
|
$
|
(12,151,000
|
)
|
$
|
12,000
|
$
|
(113,000
|
)
|
$
|
81,284,000
|
|||||||
Net
loss
|
(4,896,000
|
)
|
(4,896,000
|
)
|
||||||||||||||||||
Comprehensive
loss - unrealized loss on investments
|
(6,000
|
)
|
(6,000
|
)
|
||||||||||||||||||
Total
comprehensive loss
|
(4,902,000
|
)
|
||||||||||||||||||||
Shares
issued pursuant to exercise of stock options
|
193,000
|
2,000
|
299,000
|
301,000
|
||||||||||||||||||
Shares
repurchased
|
(4,968,000
|
)
|
(4,968,000
|
)
|
||||||||||||||||||
Shares
withheld pursuant to stock issuances
|
(344,000
|
)
|
(344,000
|
)
|
||||||||||||||||||
Issuance
of restricted stock
|
19,000
|
|||||||||||||||||||||
Stock
based compensation – restricted stock
|
695,000
|
695,000
|
||||||||||||||||||||
Stock
based compensation - options
|
|
|
1,740,000
|
|
|
|
1,740,000
|
|||||||||||||||
Balance
at September 30, 2007
|
11,549,000
|
$
|
115,000
|
$
|
96,157,000
|
$
|
(17,047,000
|
)
|
$
|
6,000
|
$
|
(5,425,000
|
)
|
$
|
73,806,000
|
Nine months ended
September 30, |
|||||||
2006
|
2007
|
||||||
Cash
flows from operating activities:
|
|||||||
Net
income (loss)
|
$
|
938,000
|
$
|
(4,896,000
|
)
|
||
Adjustments
to reconcile net income (loss) to cash used in operating
activities:
|
|||||||
Inventory
reserve
|
—
|
175,000
|
|||||
Accrued
interest income
|
(41,000
|
)
|
120,000
|
||||
Stock-based
compensation expense
|
1,783,000
|
2,435,000
|
|||||
Depreciation
and amortization expense
|
344,000
|
401,000
|
|||||
Deferred
rent expense
|
(16,000
|
)
|
(16,000
|
)
|
|||
Deferred
revenue
|
83,000
|
138,000
|
|||||
Deferred
contract costs
|
53,000
|
25,000
|
|||||
Changes
in:
|
|||||||
Accounts
receivable
|
(1,461,000
|
)
|
(1,552,000
|
)
|
|||
Unbilled
receivables
|
(898,000
|
)
|
911,000
|
||||
Inventory
|
(2,172,000
|
)
|
2,131,000
|
||||
Prepaid
expenses and other assets
|
(243,000
|
)
|
(91,000
|
)
|
|||
Investment
in sales type leases
|
467,000
|
—
|
|||||
Accounts
payable and accrued expenses
|
(1,041,000
|
)
|
(1,757,000
|
)
|
|||
Net
cash used in operating activities
|
(2,204,000
|
)
|
(1,976,000
|
)
|
|||
Cash
flows from investing activities:
|
|||||||
Purchase
of fixed assets
|
(553,000
|
)
|
(368,000
|
)
|
|||
Purchase
of investments
|
(58,103,000
|
)
|
(10,940,000
|
)
|
|||
Maturities
of investments
|
3,364,000
|
12,145,000
|
|||||
Net
cash (used in) provided by investing activities
|
(55,292,000
|
)
|
837,000
|
||||
Cash
flows from financing activities:
|
|||||||
Repayment
of term loan
|
(156,000
|
)
|
(165,000
|
)
|
|||
Proceeds
from exercise of stock options
|
718,000
|
301,000
|
|||||
Purchase
of treasury shares
|
—
|
(4,968,000
|
)
|
||||
Collection
of officer loan
|
8,000
|
8,000
|
|||||
Net
proceeds from stock offering
|
63,961,000
|
—
|
|||||
Net
cash provided by (used in) financing activities
|
64,531,000
|
(4,824,000
|
)
|
||||
Net
increase (decrease) in cash and cash equivalents
|
7,035,000
|
(5,963,000
|
)
|
||||
Cash
and cash equivalents - beginning of period
|
2,138,000
|
9,644,000
|
|||||
Cash
and cash equivalents - end of period
|
$
|
9,173,000
|
$
|
3,681,000
|
|||
Supplemental
disclosure of cash flow information:
|
|||||||
Cash
paid for:
|
|||||||
Interest
|
$
|
23,000
|
$
|
9,000
|
|||
Non-cash
financing activity:
|
|||||||
Shares
withheld pursuant to stock issuances
|
$
|
-
|
$
|
344,000
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
2006
|
2007
|
2006
|
2007
|
||||||||||
Basic
earnings (loss) per share
|
|||||||||||||
Net
income (loss)
|
$
|
632,000
|
$
|
(790,000
|
)
|
$
|
938,000
|
$
|
(4,896,000
|
)
|
|||
Weighted
average shares outstanding
|
11,202,000
|
11,150,000
|
10,238,000
|
11,265,000
|
|||||||||
Basic
earnings (loss) per share
|
$
|
0.06
|
$
|
(0.07
|
)
|
$
|
0.09
|
$
|
(0.43
|
)
|
|||
Diluted
earnings (loss) per share
|
|||||||||||||
Net
income (loss)
|
$
|
632,000
|
$
|
(790,000
|
)
|
$
|
938,000
|
$
|
(4,896,000
|
)
|
|||
Weighted
average shares outstanding
|
11,202,000
|
11,150,000
|
10,238,000
|
11,265,000
|
|||||||||
Dilutive
effect of stock options
|
1,669,000
|
—
|
1,753,000
|
—
|
|||||||||
Weighted
average shares outstanding, diluted
|
12,871,000
|
11,150,000
|
11,991,000
|
11,265,000
|
|||||||||
Diluted
earnings (loss) per share
|
$
|
0.05
|
$
|
(0.07
|
)
|
$
|
0.08
|
$
|
(0.43
|
)
|
Weighted
|
|||||||||||||
Weighted
|
Average
|
||||||||||||
Average
|
Remaining
|
Aggregate
|
|||||||||||
Exercise
|
Contractual
|
Intrinsic
|
|||||||||||
Options
|
Price
|
Term
|
Value
|
||||||||||
Outstanding
at beginning of year
|
2,784,000
|
$
|
8.97
|
||||||||||
Granted
|
283,000
|
13.48
|
|||||||||||
Exercised
|
(193,000
|
)
|
1.56
|
||||||||||
Forfeited
|
(112,000
|
)
|
18.32
|
||||||||||
|
|||||||||||||
Outstanding
at end of period
|
2,762,000
|
$
|
9.57
|
6
years
|
$
|
11,510,000
|
|||||||
|
|||||||||||||
Exercisable
at end of period
|
1,663,000
|
$
|
6.99
|
5
years
|
$
|
9,759,000
|
2006
|
2007
|
||||||
Volatility
|
60
|
%
|
50
|
%
|
|||
Expected
life of options
|
5
years
|
5
years
|
|||||
Risk
free interest rate
|
5
|
%
|
5
|
%
|
|||
Dividend
yield
|
0
|
%
|
0
|
%
|
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
||||||||||||
2006
|
2007
|
2006
|
2007
|
||||||||||
Revenue:
|
|||||||||||||
Products
|
71.2
|
%
|
83.9
|
%
|
69.5
|
%
|
63.5
|
%
|
|||||
Services
|
28.8
|
16.1
|
30.5
|
36.5
|
|||||||||
100.0
|
100.0
|
100.0
|
100.0
|
||||||||||
Cost
of Revenues:
|
|||||||||||||
Cost
of products
|
52.1
|
49.9
|
50.1
|
50.5
|
|||||||||
Cost
of services
|
64.7
|
51.9
|
61.8
|
52.5
|
|||||||||
Total
Gross Profit
|
44.3
|
49.8
|
46.3
|
48.8
|
|||||||||
Selling,
general and administrative expenses
|
39.2
|
61.4
|
42.4
|
87.6
|
|||||||||
Research
and development expenses
|
8.3
|
12.7
|
8.3
|
15.9
|
|||||||||
Loss
from operations
|
(3.2
|
)
|
(24.3
|
)
|
(4.4
|
)
|
(54.7
|
)
|
|||||
Net
interest income
|
10.6
|
12.0
|
8.2
|
17.5
|
|||||||||
Other
income
|
0.4
|
0.2
|
0.7
|
0.6
|
|||||||||
Net
income (loss)
|
7.8
|
%
|
(12.1
|
)%
|
4.5
|
%
|
(36.6
|
)%
|
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 |
|||
7/1/07
through 7/31/07
|
125,140
|
$
|
11.55
|
125,140
|
$
|
7,287,418
|
|||||||
8/1/07
through 8/31/07
|
151,294
|
$
|
9.91
|
151,294
|
$
|
5,787,872
|
|||||||
9/1/07
through 9/30/07
|
63,294
|
$
|
11.95
|
63,294
|
$
|
5,031,784
|
|||||||
Total
|
339,728
|
$
|
10.90
|
339,728
|
$
|
5,031,784
|
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:
November
8, 2007
|
By:
|
/s/
Jeffrey M. Jagid
|
|
Jeffrey
M. Jagid
|
|||
Chief
Executive Officer
|
|||
(Principal
Executive Officer)
|
|||
Dated:
November
8, 2007
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By:
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/s/
Ned Mavrommatis
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Ned
Mavrommatis
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Chief
Financial Officer
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(Principal
Financial Officer)
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