-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CBpRyilFEsJSzEZVIe/CvJ3IPKoba5n5rHnhmSbYLEuY8U9aYri5iqvei3zg6hNJ ZdfJjsexr/4BxlZwFUw0Kg== 0000891554-00-001388.txt : 20000516 0000891554-00-001388.hdr.sgml : 20000516 ACCESSION NUMBER: 0000891554-00-001388 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ID SYSTEMS INC CENTRAL INDEX KEY: 0000049615 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 223270799 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 001-15087 FILM NUMBER: 636203 BUSINESS ADDRESS: STREET 1: ONE UNIVERSITY PLAZA CITY: HACKENSACK STATE: NJ ZIP: 07601 BUSINESS PHONE: 2016709000 MAIL ADDRESS: STREET 1: ID SYSTEMS INC STREET 2: ONE UNIVERSITY PLAZA CITY: HACKENSACK STATE: NJ ZIP: 07601 10QSB 1 FORM 10-QSB U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 2000 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________________ to ____________________ Commission File Number: 1-15087 I.D. SYSTEMS, INC. (Exact name of small business issuer as specified in its charter) Delaware 22-3270799 (State or other jurisdiction or (I.R.S. Employer Identification No) incorporation or organization) One University Plaza, Hackensack, New Jersey 07601 (Address of principal executive offices) (Zip Code) (201) 670-9000 (Issuer's telephone number) (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period) that the issuer was required to file such reports, and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ ___ APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDING DURING THE PRECEDING FIVE YEARS Check whether the issuer filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes ___ No ___ APPLICABLE ONLY TO CORPORATE ISSUERS: The number of shares outstanding of the Registrant's Common Stock, $0.01 par value, as of the close of business on May 10, 2000 was 5,720,625. INDEX I.D. Systems, Inc. PART I - FINANCIAL INFORMATION Item 1. Condensed Financial Statements. Page ---- Condensed Balance Sheets as of December 31, 1999 and March 31, 2000 (unaudited) 1 Condensed Statements of Operations (unaudited) for the three months ended March 31, 1999 and 2000 2 Condensed Statements of Cash Flows (unaudited) for the three months ended March 31, 1999 and 2000 3 Notes to Condensed Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 5 Part II - Other Information Item 6. Exhibits and Reports on Form 8-K 9 Signatures 9 PART I - FINANCIAL INFORMATION Item 1. Condensed Financial Statements I.D. Systems, Inc. Condensed Balance Sheets
December 31, 2000 March 31, 2000 (Unaudited) ----------------- --------------- Assets Cash and cash equivalents $ 7,021,000 $ 12,245,000 Investments 6,005,000 442,000 Accounts receivable 880,000 180,000 Unbilled receivables 962,000 879,000 Inventory 123,000 289,000 Deferred taxes 49,000 43,000 Prepaid expenses and other assets 152,000 172,000 ------------ ------------ Total current assets 15,192,000 14,250,000 Fixed assets, net 307,000 531,000 Other assets 324,000 218,000 ------------ ------------ $ 15,823,000 $ 14,999,000 ============ ============ Liabilities Accounts payable and accrued expenses $ 545,000 $ 270,000 Capital lease obligations 14,000 13,000 Income taxes payable 51,000 45,000 ------------ ------------ Total current liabilities 610,000 328,000 Capital lease obligations 32,000 29,000 Deferred rent 42,000 42,000 ------------ ------------ 684,000 399,000 ------------ ------------ Stockholders' equity Preferred Stock; authorized 5,000,000 shares, $0.01 par value; none issued -- -- Common Stock, authorized 15,000,000 shares, $0.01 par value; issued and outstanding 5,717,000 shares and 5,720,000 shares, respectively 57,000 57,000 Additional paid in capital 15,554,000 15,558,000 Accumulated deficit (472,000) (1,015,000) ------------ ------------ 15,139,000 14,600,000 ------------ ------------ $ 15,823,000 $ 14,999,000 ============ ============
See accompanying notes. 1 I.D. Systems, Inc. Condensed Statements of Operations (Unaudited)
Three months ended March 31, 1999 2000 -------------------- ------------------ Revenues $ 1,015,000 $ 306,000 Cost of Revenues 606,000 149,000 -------------------- ------------------ Gross Profit 409,000 157,000 Selling, general and administrative expenses 392,000 584,000 Research and development expenses -- 296,000 -------------------- ------------------ Income (loss) from operations 17,000 (723,000) Interest income 15,000 181,000 Interest expense (28,000) (1,000) -------------------- ------------------ Income (loss) before taxes 4,000 (543,000) Income tax provision 2,000 -- -------------------- ------------------ Net income (loss) $ 2,000 $ (543,000) ==================== ================== Net income (loss) per share - basic and diluted $ 0.00 $ (0.09) ==================== ================== Weighted average common shares outstanding- basic income per share 3,414,000 5,720,000 Effect of potential common shares from exercise of options 979,000 -- -------------------- ------------------ Weighted average common shares outstanding- diluted income per share 4,393,000 5,720,000 ==================== ==================
See accompanying notes 2 I.D. Systems, Inc. Condensed Statements of Cash Flows (Unaudited)
Three months ended March 31, 1999 2000 ------------------- ------------------ Cash flows from operating activities: Net income (loss) $ 2,000 $ (543,000) Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: Depreciation and amortization 17,000 23,000 Amortization of debt discount 25,000 Deferred taxes 6,000 Deferred rent expense 1,000 Deferred revenue 494,000 Changes in: Accounts receivable 94,000 700,000 Unbilled receivables 83,000 Inventory (166,000) Prepaid expenses and other assets (103,000) 86,000 Income taxes payable (6,000) Accounts payable and accrued expenses (48,000) (275,000) ------------------- ------------------ Net cash provided by (used in) operating 482,000 (92,000) activities ------------------- ------------------ Cash flows from investing activities: Purchase of fixed assets (49,000) (247,000) Investments maturities 5,563,000 ------------------- ------------------ Net cash (used in) provided by investing activities (49,000) 5,316,000 ------------------- ------------------ Cash flows from financing activities: Payment of lease obligations (3,000) (4,000) Proceeds from exercise of stock options 4,000 Receipt of amount due from stockholders 23,000 Payment of notes payable - stockholders (106,000) Payment of deferred registration costs (45,000) ------------------- ------------------ Net cash (used in) provided by financing activities (131,000) -- ------------------- ------------------ Net increase in cash and cash equivalents 302,000 5,224,000 Cash and cash equivalents - beginning of period 1,130,000 7,021,000 ------------------- ------------------ Cash and cash equivalents - end of period $1,432,000 $12,245,000 =================== ==================
See accompanying notes. 3 I.D. Systems, Inc. Notes to Condensed Financial Statements March 31, 2000 NOTE A - Basis of Reporting The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the financial position of I.D. Systems, Inc. (the "Company") as of March 31, 2000, the results of its operations for the three-months periods ended March 31, 1999 and 2000 and cash flows for the three-months periods ended March 31, 1999 and 2000. The results of operations for the three-month period ended March 31, 2000 are not necessarily indicative of the operating results for the full year. It is suggested that these financial statements be read in conjunction with the financial statements and related disclosures for the year ended December 31, 1999 included in the Company's Annual Report. NOTE B - Net Income Per Share of Common Stock Basic income per share is based on the weighted average number of common shares of outstanding during each period. Diluted income per share reflects the potential dilution assuming common shares were issued upon the exercise of outstanding options and warrants and the proceeds thereof were used to purchase outstanding common shares. For the three-month period ended March 31, 2000 the basic and diluted weighted average shares outstanding are the same since the effect from the potential exercise of outstanding stock options would have been anti-dilutive. NOTE C - Concentration of Customers One customer accounted for approximately 100% and 53% of the Company's revenues during the three-month periods ended March 31, 1999 and 2000, respectively. 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of the financial condition and results of operations of I.D. Systems should be read in conjunction with I.D. Systems' financial statements and notes thereto appearing elsewhere herein. This Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve a number of risks and uncertainties. The following are among the factors that could cause actual results to differ materially from the forward-looking statements: business conditions and growth in the wireless tracking industries, general economic conditions, lower than expected customer orders or variations in customer order patterns, competitive factors including increased competition, changes in product and service mix, and resource constraints encountered in developing new products. The forward-looking statements contained in this MD&A regarding industry trends, product development and liquidity and future business activities should be considered in light of these factors. The Company was incorporated in August 1993 and began to derive revenues from its initial line of products in March 1995. Revenues are generated from design and engineering fees as well as sales of its system. The Company's revenues relate to the time expended and expertise involved in customizing its system to the needs of each individual customer and related material costs. In the future, the Company intends to generate additional revenues by selling software and hardware upgrades as well as on-going maintenance and support contracts to its existing customers. The Company's principal customers include DaimlerChrysler Corporation, Dana Commercial Credit Corporation, a wholly-owned subsidiary of Dana Corporation, Federal Express Corporation, Ford Motor Company, General Motors Corporation, Hallmark Cards, Inc., QVC Inc., Union Pacific Railroad, a subsidiary of Union Pacific Corporation and the United States Postal Service. Results of Operations The following table sets forth, for the periods indicated, certain operating information expressed as a percentage of revenue: 5
Three months ended March 31, 1999 2000 -------------------- -------------- Revenues 100.0% 100.0% Cost of Revenues 59.7 48.7 -------------------- -------------- Gross Profit 40.3 51.3 Selling, general and administrative expenses 38.6 190.8 Research and development expenses -- 96.7 -------------------- -------------- Income (loss) from operations 1.7 (236.2) Net interest (expense) income (1.3) 58.8 -------------------- -------------- Income (loss) before income tax provision 0.4 (177.4) Income tax expense 0.2 -- -------------------- -------------- Net income (loss) 0.2% (177.4)% ==================== ==============
Three Months Ended March 31, 2000 Compared to Three Months Ended March 31, 1999 REVENUES. Revenues were $306,000 in the three months ended March 31, 2000 as compared to $1,015,000 in the three months ended March 31, 1999. This decrease was attributable to the completion, during January 2000, of the $7.6 million contract with the United States Postal Service (the "USPS mail tracking contract"). The USPS mail tracking contract provided for the wireless monitoring and tracking of mail in approximately 300 postal facilities. The United States Postal Service accounted for approximately 53% of the Company's revenues during the three months ended March 31, 2000. The USPS mail tracking contract accounted for approximately 14% of the Company's revenue, and new business for the sale to postal facilities of integrated tracking and monitoring systems for forklift trucks and other similar vehicles accounted for 39% of the Company's revenue during the three months ended March 31, 2000. During the three months ended March 31, 1999 the USPS mail tracking contract accounted for 100% of the Company's revenue. COST OF REVENUES. Cost of revenues were $149,000 in the three months ended March 31, 2000 as compared to $606,000 in the three months ended March 31, 1999. As a percentage of revenues, cost of revenues were 48.7% in the three months ended March 31, 2000 as compared to 59.7% in the three months ended March 31, 1999. This decrease was primarily attributable to an increase in the portion of revenues derived from sources other than the USPS mail tracking contract. Under the USPS mail tracking contract, revenues attributable to materials have lower margins than revenues related to labor. During the three months ended March 31, 1999, approximately 60% of the revenues derived from the USPS mail tracking contract were for materials. Gross profit was $157,000 in the three months ended March 31, 2000 compared to $409,000 in the three months ended March 31, 1999. As a percentage of revenues, gross profit increased to 51.3% in the three months ended March 31, 2000 from 40.3% in the three months ended March 31, 1999. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses were $584,000 in the three months ended March 31, 2000 as compared to $392,000 in the three months ended March 31, 1999. This increase was attributable to an increase in payroll expense resulting from an 6 increase in personnel hired to accommodate the Company's growth and an increase in occupancy costs due to the Company's relocation to its new headquarters and research and development laboratories during March 2000. As a percentage of revenues, selling, general and administrative expenses increased to 190.8% in the three months ended March 31, 2000 from 38.6% in the three months ended March 31, 1999. RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses were $296,000 in the three months ended March 31, 2000 as compared to $0 in the three months ended March 31, 1999. This increase was attributable to research and development costs related to developing new applications for the Company's products and expanding functionality of existing systems. As a percentage of revenues, research and development expenses increased to 96.7% in the three months ended March 31, 2000 from 0% in the three months ended March 31, 1999. NET INTEREST (EXPENSE) INCOME. Interest income was $181,000 in the three months ended March 31, 2000 as compared to $15,000 in the three months ended March 31, 1999. This increase was attributable to larger average cash, cash equivalents and short-term investment balances in the three months ended March 31, 2000 as compared to the three months ended March 31, 1999 as the Company received the proceeds from its initial public offering in July and August of 1999. Interest expense was $1,000 in the three months ended March 31, 2000 as compared to $28,000 in the three months ended March 31, 1999. This decrease is attributable to the repayment of stockholder loans during 1999. NET INCOME (LOSS). Net loss was $543,000 in the three months ended March 31, 2000 as compared to net income of $2,000 in the three-month period ended March 31, 1999. This was due primarily to the reasons described above. Liquidity and Capital Resources As of March 31, 2000, the Company had $12,687,000 of cash, cash equivalents and short-term investments and $13,922,000 of working capital as compared to $13,026,000 and $14,582,000, respectively, at December 31, 1999. Net cash used in operating activities was $92,000 for the three months ended March 31, 2000 as compared to net cash provided by operating activities of $482,000 for the three months ended March 31, 1999. Net cash used in operating activities in the three months ended March 31, 2000 was primarily due to the net loss of $543,000, an increase in inventory of $166,000 and a decrease in accounts payable and accrued expenses of $275,000, offset by a decrease in accounts and unbilled receivables of $783,000 and a decrease of prepaid expenses and other assets of $86,000. Net cash provided by operating activities for the three months ended March 31, 1999 was from an increase in deferred revenue of $494,000 and a decrease in accounts receivable of $94,000, partially offset by an increase in prepaid expenses and other assets of $103,000, and a decrease in accounts payable and accrued expenses of $48,000. Net cash provided by investing activities for the three months ended March 31, 2000 was $5,316,000 as compared to cash used in investing activities of $49,000 for the three months ended March 31, 1999. The cash provided by investing activities was from maturities of short-term investments of $5,563,000 offset by use of cash of $247,000 for the purchase of fixed assets. The use of cash of $49,000 for the three months ended March 31, 1999 reflected capital expenditures for fixed assets. The net cash used in financing activities of $131,000 for the three months ended March 31, 1999, resulted primarily from a $106,000 repayment of notes payable to stockholders. 7 The Company believes its operations have not been and, in the foreseeable future, will not be materially adversely affected by inflation or changing prices. Recently Issued Financial Standards The Company believes that recently issued financial standards will not have a significant impact on our results of operations, financial position or cash flows. Impact of Year 2000 In late 1999, the Company completed its remediation and testing of systems in order to become Year 2000 ready. As a result of its planning and implementation efforts, the Company experienced no significant disruptions in mission critical information technology and non-information technology systems and believes those systems successfully responded to the Year 2000 date change. The Company is not aware of any material problems resulting from Year 2000 issues, either with its products, its internal systems, or the products and services of third parties. The Company expensed immaterial amounts during 1999 in connection with remediating its systems. During 2000, the Company expects to remediate certain non-critical systems at an immaterial cost that will be funded through operating cash flows. The Company will continue to monitor its mission critical computer applications and those of its suppliers and vendors throughout the year 2000 to ensure that any latent Year 2000 matters that may arise are addressed promptly. 8 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: 27. Financial Data Schedule (b) Reports on Form 8-K: There were no reports on Form 8-K filed during the quarter ended March 31, 2000. Signature Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. I.D. Systems, Inc. Dated: May 15, 2000 By: /s/ Kenneth S. Ehrman --------------------- Kenneth S. Ehrman President (Principal Executive Officer) Dated: May 15, 2000 By: /s/ Ned Mavrommatis ------------------- Ned Mavrommatis Chief Financial Officer (Principal Accounting Officer) 9 EX-27 2 FDS --
5 THIS SCHEDULE CONTAINS UNAUDITED SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED FINANCIAL STATEMENTS AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS THEN ENDED. THIS INFORMATION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONDENSED FINANCIAL STATEMENTS 0000049615 I.D. SYSTEMS, INC. 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 12,245,000 442,000 1,059,000 0 289,000 14,250,000 701,000 170,000 14,999,000 328,000 0 0 0 57,000 14,543,000 14,999,000 306,000 306,000 149,000 1,029,000 0 0 1,000 (543,000) 0 (543,000) 0 0 0 (543,000) (0.09) (0.09)
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