8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):  March 10, 2010

I.D. SYSTEMS, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	001-15087	22-3270799
(State or Other	(Commission	(IRS Employer
Jurisdiction of	File Number)	Identification No.)
Incorporation)
One University Plaza, Hackensack, New Jersey		07601
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code   (201) 996-9000

Check the  appropriate  box below if the Form 8-K filing is intended to simultaneously  satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.  Results of Operations and Financial Condition.

On March 10, 2010, I.D. Systems, Inc. (the “Registrant”) issued a press release regarding results for the fourth quarter and year ended December 31, 2009.  A copy of the press release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this report is being furnished pursuant to Item 2.02 of Form 8-K, insofar as it discloses historical information regarding the Registrant’s results of operations and financial condition as of, and for, the fourth quarter and year ended December 31, 2009.  In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as may be expressly set forth by specific reference in such a filing.

Forward-Looking Statements

This Current Report on Form 8-K, including Exhibit 99.1 furnished herewith, contains forward-looking statements within the meaning of the federal securities laws.  Forward-looking statements typically are identified by use of terms such as “may,” “will,” “should,” “plan,” “expect,” “anticipate,” “estimate” and similar words, and the opposites of such words, although some forward-looking statements are expressed differently.  Forward-looking statements involve known and unknown risks and uncertainties that exist in the Registrant’s operations and business environment, which may be beyond the Registrant’s control, and which may cause actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.  All statements other than statements of historical fact are statements that could be forward-looking statements.  For example, forward-looking statements include, without limitation:  statements regarding prospects for additional customers; market forecasts; projections of earnings, revenues, synergies, accretion or other financial information; and plans, strategies and objectives of management for future operations, including integration plans in connection with acquisitions.  The risks and uncertainties referred to above include, but are not limited to, future economic and business conditions, the loss of key customers or reduction in the purchase of products by any such customers, the failure of the market for the Registrant’s products to continue to develop, the possibility that the Registrant may not be able to integrate successfully the business, operations and employees of acquired businesses, the inability to protect the Registrant’s intellectual property, the inability to manage growth, the effects of competition from a variety of local, regional, national and other providers of wireless solutions, and other risks detailed from time to time in the Registrant’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2008.  These risks could cause actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Registrant.  Forward-looking statements represent the judgment of management of the Registrant regarding future events.  Although the Registrant believes that the expectations reflected in such forward-looking statements are reasonable at the time that they are made, the Registrant can give no assurance that such expectations will prove to be correct.  The Registrant assumes no obligation to update any forward-looking statements, and expressly disclaims any obligation to do so, whether as a result of new information, future events or otherwise.

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Item 9.01.  Financial Statements and Exhibits.

(d)           Exhibits

As described above, the following exhibit is furnished as part of this Current Report on Form 8-K:

Exhibit 99.1 – Press release, dated March 10, 2010.

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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 hereunto duly authorized.

I.D. SYSTEMS, INC.
By:	/s/ Ned Mavrommatis
	Name:  Ned Mavrommatis
	Title:   Chief Financial Officer

Date:    March 10, 2010

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EXHIBIT INDEX

Exhibit Number	Description
99.1	Press release, dated March 10, 2010.

EX-99.1

EXHIBIT 99.1

 

Expanding the range of wireless solutions

 

FOR IMMEDIATE RELEASE

CONTACT:      Ned Mavrommatis, Chief Financial Officer  ned@id-systems.com; 201-996-9000; fax 201-996-9144

I.D. Systems Reports Financial Results for Fourth Quarter andFiscal Year2009

Hackensack, NJ, March 10, 2010—I.D. Systems, Inc. (Nasdaq: IDSY) today announced its financial results for the fourth quarter and year ended December 31, 2009.

For the three-month period ended December 31, 2009, revenues were $2.9 million, compared to $7.9 million for the three months ended December 31, 2008.  Net loss for the fourth quarter of 2009 was $4.8 million, or ($0.43) per basic and diluted share, compared to net loss of $1.2 million, or ($0.11) per basic and diluted share, for the fourth quarter of 2008.  The fourth quarter loss was impacted by $1.3 million in acquisition costs, a charge of $621,000 for inventory obsolescence, and $540,000 in stock-based compensation.  Excluding these expenses, non-GAAP net loss for the fourth quarter of 2009 was $2.3 million, or ($0.21) per basic and diluted share.  Gross margin for the fourth quarter of 2009 was 28%.  Excluding the inventory reserve charge, gross margin for the period was 50%.

Revenues for the year ended December 31, 2009, were $10.3 million, compared to $27.0 million for 2008, and net loss for 2009 was $13.2 million, or ($1.20) per basic and diluted share, compared to net loss of $4.2 million, or ($0.38) per basic and diluted share, for 2008.  Excluding the aforementioned acquisition costs, inventory reserve charge, and $2.2 million in stock-based compensation, non-GAAP net loss for the year was $9.1 million, or ($0.83) per basic and diluted share.  Gross margin for the year was 46%.  Excluding the inventory reserve charge, gross margin for 2009 was 52%.

Jeffrey Jagid, I.D. Systems’ chairman and CEO, said, “Our short term results did not meet our goals, as the global recession impacted technology spending across industrial markets.  However, we established over 20 new customers in 2009, including global leaders in the automotive, aviation, food, and consumer packaged goods industries.  This expansion of our customer base is a continuing testament to the economic value of our wireless technology and reflects our strategy of diversifying sources of revenue and transitioning initial system deployments into enterprise-scale implementations to drive long-term growth.

“I.D. Systems also achieved a significant milestone in the rental fleet management market in 2009, executing a multi-year contract with a leading U.S. rental car company to deploy our latest rental fleet management solutions in 2010.

“In addition,” continued Mr. Jagid, “we made two strategic acquisitions, most notably the Asset Intelligence business unit of General Electric, as announced in January, 2010.  This is a transformational event for I.D. Systems, positioning us to become a preeminent provider of wireless technology for managing high-value corporate assets.  Integrating Asset Intelligence into our business expands our range of asset tracking solutions, provides a recurring revenue stream that should help reduce quarterly revenue volatility, gives us immediate access to new customers, and enables operational efficiencies that should reduce our consolidated expenses by an estimated $8 million in 2010.  With these revenue and cost synergies, we expect I.D. Systems to continue achieving strong gross margins and achieve profitability in 2011.

“Our balance sheet remains strong,” concluded Mr. Jagid.  “As of December 31, 2009, before we closed on the acquisition of Asset Intelligence, I.D. Systems had cash, cash equivalents and investments of $48.5 million, excluding the Company’s $11.6 million line of credit, and more than $47 million of working capital.”

While maintaining investments in growth opportunities, I.D. Systems’ management continued to focus on cost controls in 2009.

Selling, general and administrative (SG&A) expenses for the fourth quarter and year ended December 31, 2009, were $4.9 million and $16.5 million, respectively, which included $1.3 million in acquisition costs.  Excluding acquisition and stock-based compensation costs, SG&A expenses were $3.2 million for the quarter and $13.5 million for the year, 6% lower than the comparable figure for the year ended December 31, 2008. 

Expanding the range of wireless solutions

Research and development (R&D) expenditures for the three months ended December 31, 2009, were $582,000.  R&D expenses for the year were $2.6 million, 10% lower than the comparable figure in 2008.

Investor Conference Call

I.D. Systems will host a conference call for investors and analysts at 4:45 p.m. Eastern Standard Time on March 10, 2010.  Jeffrey Jagid, I.D. Systems’ chairman and CEO, will lead a discussion on the year’s results and highlights.  After opening remarks, there will be a question and answer period.  The conference call will be broadcast live over the Internet via the Investors section of I.D. Systems’ web site at www.id-systems.com.  To listen to the live call, go to the website at least 10 minutes early to download and install any necessary audio software.

Non-GAAP Measures

To supplement its consolidated financial statements presented in accordance with GAAP, I.D. Systems provides certain non-GAAP measures of financial performance.  These non-GAAP measures include non-GAAP net income/loss and non-GAAP net income/loss per basic and diluted share.  Reference to these non-GAAP measures should be considered in addition to results prepared under current accounting standards, but are not a substitute for, or superior to, GAAP results.  These non-GAAP measures are provided to enhance investors’ overall understanding of I.D. Systems’ current financial performance.  Specifically, I.D. Systems believes the non-GAAP measures provide useful information to both management and investors by excluding certain expenses, gains and losses that may not be indicative of its core operating results and business outlook.  All non-GAAP measures included in this press release are accompanied by information for a reconciliation to the nearest GAAP measures.

About I.D. Systems

Based in Hackensack, New Jersey, with subsidiaries in Texas, Germany, and the United Kingdom, I.D. Systems is a leading provider of wireless solutions for securing, controlling, tracking, and managing high-value enterprise assets, including vehicles, powered equipment, trailers, containers, baggage, and cargo.  The Company’s patented technologies address the needs of organizations to monitor and analyze their assets to improve safety, security, efficiency, and productivity.  For more information, visit www.id-systems.com.

“Safe Harbor” statement:

This press release contains forward looking statements within the meaning of federal securities laws. Forward-looking statements include statements with respect to I.D. Systems’ beliefs, plans, goals, objectives, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond I.D. Systems’ control, and which may cause its actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.  All statements other than statements of historical fact are statements that could be forward-looking statements.  For example, forward-looking statements include: statements regarding prospects for additional customers; market forecasts; projections of earnings, revenues, synergies, accretion or other financial information; and plans, strategies and objectives of management for future operations, including integration plans in connection with acquisitions.  The risks and uncertainties referred to above include, but are not limited to, future economic and business conditions, the loss of key customers or reduction in the purchase of products by any such customers, the failure of the market for I.D. Systems’ products to continue to develop, the possibility that I.D. Systems may not be able to integrate successfully the business, operations and employees of acquired businesses, the inability to protect I.D. Systems’ intellectual property, the inability to manage growth, the effects of competition from a variety of local, regional, national and other providers of wireless solutions, and other risks detailed from time to time in I.D. Systems’ filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2008. These risks could cause actual results to differ materially from those expressed in any forward looking statements made by, or on behalf of, I.D. Systems.  I.D. Systems assumes no obligation to update the information contained in this press release, and expressly disclaims any obligation to do so, whether as a result of new information, future events or otherwise.

-- Tables to Follow --

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I.D. Systems, Inc.and Subsidiaries

Statement of Operations Data

	Three Months Ended						Twelve Months Ended
	December 31, (Unaudited)						December 31,
	2008			2009			2008			2009
Revenues:
Product revenues	$	5,988,000		$	2,103,000		$	20,072,000		$	6,470,000
Service revenues		1,933,000			754,000			6,974,000			3,846,000
		7,921,000			2,857,000			27,046,000			10,316,000
Cost of revenues:
Cost of products		3,160,000			1,591,000			9,996,000			3,882,000
Cost of services		925,000			463,000			3,470,000			1,672,000
		4,085,000			2,054,000			13,466,000			5,554,000
Gross profit		3,836,000			803,000			13,580,000			4,762,000
Selling, general and administrative expenses		4,311,000			4,924,000			16,760,000			16,543,000
Research and development expenses		792,000			582,000			2,883,000			2,604,000
Loss from operations		(1,267,000	)		(4,703,000	)		(6,063,000	)		(14,385,000	)
Interest income		373,000			19,000			2,226,000			933,000
Interest expense		—			(43,000	)		—			(130,000	)
Other income (loss)		(338,000	)		(32,000	)		(338,000	)		390,000
Net loss	$	(1,232,000	)	$	(4,759,000	)	$	(4,175,000	)	$	(13,192,000	)
Net loss per share – basic and diluted	$	(0.11	)	$	(0.43	)	$	(0.38	)	$	(1.20	)
Weighted average common shares outstanding – basic and diluted		10,896,000			11,075,000			10,887,000			10,991,000

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I.D. Systems, Inc.and Subsidiaries

Balance Sheet Data

	As of December 31,
	2008			2009
ASSETS
Current assets:
Cash and cash equivalents	$	12,558,000		$	19,481,000
Restricted cash		230,000
Investments – short term		8,550,000			33,909,000
Accounts receivable, net of allowance for doubtful accounts of $239,000  and  $106,000 in 2008 and 2009, respectively		8,245,000			3,252,000
Unbilled receivables		168,000			-
Inventory, net		3,273,000			4,487,000
Interest receivable		217,000			97,000
Prepaid expenses and other current assets		261,000			686,000
Total current assets		33,502,000			61,912,000
Investments –long term		34,911,000			6,752,000
Fixed assets, net		1,050,000			917,000
Goodwill		200,000			619,000
Intangible assets, net		178,000			375,000
Other assets		107,000
	$	69,948,000		$	70,575,000
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses	$	2,175,000		$	2,094,000
Line of credit		—			11,638,000
Deferred revenue		424,000			501,000
Total current liabilities		2,599,000			14,233,000
Deferred rent		33,000			---
Deferred revenue		231,000			461,000
		2,863,000			14,694,000
Commitments and Contingencies (Note J)
STOCKHOLDERS' EQUITY
Preferred stock; authorized 5,000,000 shares, $0.01 par value; none issued		—			—
Common stock; authorized 50,000,000 shares, $0.01 par value; 12,082,000 and 12,284,000 shares issued at December 31, 2008 and 2009, respectively; 10,893,000 and 11,075,000 shares outstanding at December 31, 2008 and 2009, respectively		120,000			120,000
Additional paid-in capital		101,437,000			103,596,000
Accumulated deficit		(23,667,000	)		(36,859,000	)
Accumulated other comprehensive income		46,000			(60,000	)
		77,936,000			66,797,000
Treasury stock; 1,189,000 shares and 1,209,000 shares at cost at December 31, 2008 and 2009, respectively		(10,851,000	)		(10,916,000	)
Total stockholders’ equity		67,085,000			55,881,000
Total liabilities and stockholders’ equity	$	69,948,000		$	70,575,000

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Statement of Cash Flows Data

	Year Ended December 31,
	2007			2008			2009
Cash flows from operating activities:
Net loss	$	(7,341,000	)	$	(4,175,000	)	$	(13,192,000	)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Inventory reserve		517,000			126,000			621,000
Accrued interest income		20,000			(75,000	)		120,000
Stock based compensation		3,288,000			2,989,000			2,157,000
Depreciation and amortization		544,000			540,000			533,000
Deferred rent expense		(22,000	)		(22,000	)		(22,000	)
Deferred revenue		104,000			197,000			307,000
Change in fair value of investments	—			338,000				(338,000	)
Deferred contract costs		33,000			—			—
Changes in:
Restricted cash		—			(230,000	)		230,000
Accounts receivable		2,226,000			(5,370,000	)		5,049,000
Unbilled receivables		462,000			412,000			168,000
Inventory		1,493,000			1,212,000			(1,815,000	)
Prepaid expenses and other assets		(20,000	)		10,000	)		(320,000	)
Accounts payable and accrued expenses		(700,000	)		(843,000	)		(369,000	)
Net cash provided by (used in) operating activities		604,000			(4,891,000	)		(6,871,000	)
Cash flows from investing activities:
Purchase of fixed assets		(548,000	)		(188,000	)		(358,000	)
Business acquisition		—			(573,000	)		(518,000	)
Purchase of investments		(15,691,000	)		(28,513,000	)		(59,408,000	)
Maturities of investments		16,523,000			44,649,000			62,439,000
Net cash provided by investing activities		284,000			15,375,000			2,155,000
Cash flows from financing activities:
Repayment of term loan		(221,000	)		(19,000	)		—
Proceeds from exercise of stock options		367,000			1,377,000			2,000
Collection of officer loan		8,000			—			—
Borrowings on line of credit		—			—			12,900,000
Principal payments on line of credit		—			—			(1,262,000	)
Purchase of treasury shares		(5,583,000	)		(4,387,000	)
Net cash (used in) provided by financing activities		(5,429,000	)		(3,029,000	)		11,640,000
Effect of foreign exchange rate changes on cash and cash equivalents		—			—			(1,000	)
Net (decrease) increase in cash and cash equivalents		(4,541,000	)		7,455,000			6,923,000
Cash and cash equivalents - beginning of period		9,644,000			5,103,000			12,558,000
Cash and cash equivalents  -   end of period	$	5,103,000		$	12,558,000		$	19,481,000

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