x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
¨
|
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)
|
|
Yes
x
|
|
No
¨
|
|
Large
accelerated filer ¨
|
Accelerated
filer x
|
Non-accelerated
filer ¨
|
Yes
¨
|
|
No
x
|
|
Item
1. Financial Statements.
|
Page
|
|||
Condensed
Balance Sheets as of December 31, 2005
|
||||
– and
March 31, 2006 (unaudited)
|
1
|
|||
Condensed
Statement of Operations (unaudited) –
|
||||
for
the three months ended March 31, 2005 and 2006
|
2
|
|||
Condensed
Statement of Cash Flows (unaudited) –
|
||||
for
the three months ended March 31, 2005 and 2006
|
3
|
|||
Notes
to Condensed Financial Statements
|
4
|
|||
Item
2. Management’s Discussion and Analysis of
|
||||
Financial
Condition and Results of Operations
|
8
|
|||
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
|
12
|
|||
Item
4. Controls and Procedures
|
12
|
|||
PART
II – OTHER INFORMATION
|
||||
Item
1a. Risk Factors
|
13
|
|||
Item
6. Exhibits
|
13
|
|||
Signatures
|
14
|
December
31, 2005
|
March
31, 2006
|
||||||
(Unaudited)
|
|||||||
ASSETS
|
|||||||
Cash
and cash equivalents
|
$
|
2,138,000
|
$
|
46,720,000
|
|||
Investments
available for sale
|
5,463,000
|
24,266,000
|
|||||
Accounts
receivable, net
|
6,068,000
|
6,477,000
|
|||||
Unbilled
receivables
|
1,293,000
|
1,821,000
|
|||||
Inventory
|
2,952,000
|
3,852,000
|
|||||
Investment
in sales type leases
|
34,000
|
24,000
|
|||||
Officer
loan
|
11,000
|
12,000
|
|||||
Prepaid
expenses and other current assets
|
140,000
|
128,000
|
|||||
Total
current assets
|
18,099,000
|
83,300,000
|
|||||
Fixed
assets, net
|
1,159,000
|
1,401,000
|
|||||
Investment
in sales type leases
|
433,000
|
240,000
|
|||||
Officer
loan
|
8,000
|
5,000
|
|||||
Deferred
contract costs
|
53,000
|
--
|
|||||
Other
assets
|
88,000
|
87,000
|
|||||
$
|
19,840,000
|
$
|
85,033,000
|
||||
LIABILITIES
|
|||||||
Accounts
payable and accrued expenses
|
$
|
3,881,000
|
$
|
4,081,000
|
|||
Long
term debt - current portion
|
209,000
|
212,000
|
|||||
Deferred
revenue
|
155,000
|
373,000
|
|||||
Total
current liabilities
|
4,245,000
|
4,666,000
|
|||||
Long
term debt
|
240,000
|
186,000
|
|||||
Deferred
revenue
|
90,000
|
66,000
|
|||||
Deferred
rent
|
99,000
|
94,000
|
|||||
Total
liabilities
|
4,674,000
|
5,012,000
|
|||||
STOCKHOLDERS'
EQUITY
|
|||||||
Preferred
stock; authorized 5,000,000 shares, $.01 par value; none
issued
|
--
|
--
|
|||||
Common
stock; authorized 15,000,000 shares, $.01 par value; issued and
outstanding 7,851,000 shares and 11,065,000 shares
|
79,000
|
111,000
|
|||||
Additional
paid-in capital
|
25,735,000
|
90,433,000
|
|||||
Accumulated
deficit
|
(10,535,000
|
)
|
(10,410,000
|
)
|
|||
15,279,000
|
80,134,000
|
||||||
Treasury
stock; 40,000 shares at cost
|
(113,000
|
)
|
(113,000
|
)
|
|||
Total
stockholders’ equity
|
15,166,000
|
80,021,000
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
19,840,000
|
$
|
85,033,000
|
Three
months ended
|
|||||||
March
31,
|
|||||||
2005
|
2006
|
||||||
Revenues
|
$
|
3,033,000
|
$
|
6,390,000
|
|||
Cost
of Revenues
|
1,506,000
|
3,203,000
|
|||||
Gross
Profit
|
1,527,000
|
3,187,000
|
|||||
Selling,
general and administrative expenses
|
1,853,000
|
2,748,000
|
|||||
Research
and development expenses
|
395,000
|
493,000
|
|||||
Loss
from operations
|
(721,000
|
)
|
(54,000
|
)
|
|||
Interest
income
|
62,000
|
150,000
|
|||||
Interest
expense
|
(13,000
|
)
|
(9,000
|
)
|
|||
Other
income
|
37,000
|
38,000
|
|||||
Net
income (loss)
|
$
|
(635,000
|
)
|
$
|
125,000
|
||
Net
income (loss) per share - basic and diluted
|
$
|
(0.08
|
)
|
$
|
0.01
|
||
Weighted
average common shares outstanding- basic
|
7,719,000
|
8,382,000
|
|||||
Weighted
average common shares outstanding- diluted
|
7,719,000
|
10,227,000
|
Three
months ended
March
31,
|
|||||||
2005
|
2006
|
||||||
Cash
flows from operating activities:
|
|||||||
Net
income (loss)
|
$
|
(635,000
|
)
|
$
|
125,000
|
||
Adjustments
to reconcile net income (loss) to cash used in operating
activities:
|
|||||||
Accrued
interest income
|
(18,000
|
)
|
4,000
|
||||
Stock-based
compensation expense
|
--
|
383,000
|
|||||
Depreciation
and amortization
|
84,000
|
113,000
|
|||||
Deferred
rent expense
|
4,000
|
(5,000
|
)
|
||||
Deferred
revenue
|
(23,000
|
)
|
194,000
|
||||
Deferred
contract costs
|
90,000
|
53,000
|
|||||
Changes
in:
|
|||||||
Accounts
receivable
|
(2,177,000
|
)
|
(408,000
|
)
|
|||
Unbilled
receivables
|
402,000
|
(528,000
|
)
|
||||
Inventory
|
(582,000
|
)
|
(900,000
|
)
|
|||
Prepaid
expenses and other assets
|
144,000
|
13,000
|
|||||
Investment
in sales type leases
|
9,000
|
203,000
|
|||||
Accounts
payable and accrued expenses
|
(742,000
|
)
|
200,000
|
||||
Net
cash used in operating activities
|
(3,444,000
|
)
|
(553,000
|
)
|
|||
Cash
flows from investing activities:
|
|||||||
Purchase
of fixed assets
|
(169,000
|
)
|
(355,000
|
)
|
|||
Purchase
of investments
|
(500,000
|
)
|
(19,147,000
|
)
|
|||
Increase
in interest receivable
|
(2,000
|
)
|
--
|
||||
Maturities
of investments
|
225,000
|
340,000
|
|||||
Collection
of officer loan
|
2,000
|
2,000
|
|||||
Net
cash used in investing activities
|
(444,000
|
)
|
(19,160,000
|
)
|
|||
Cash
flows from financing activities:
|
|||||||
Repayment
of term loan
|
(49,000
|
)
|
(51,000
|
)
|
|||
Proceeds
from line of credit
|
500,000
|
--
|
|||||
Proceeds
from exercise of stock options
|
70,000
|
321,000
|
|||||
Net
proceeds from stock offering
|
--
|
64,025,000
|
|||||
Net
cash provided by financing activities
|
521,000
|
64,295,000
|
|||||
Net
increase (decrease) in cash and cash equivalents
|
(3,367,000
|
)
|
44,582,000
|
||||
Cash
and cash equivalents - beginning of period
|
8,440,000
|
2,138,000
|
|||||
Cash
and cash equivalents - end of period
|
$
|
5,073,000
|
$
|
46,720,000
|
|||
Supplemental
disclosure of cash flow information:
|
|||||||
Cash
paid for:
|
|||||||
Interest
|
$
|
13,000
|
$
|
9,000
|
Three
Months Ended
March
31,
|
|||||||
2005
|
2006
|
||||||
Basic
earnings per share
|
|||||||
Net
income (loss)
|
$
|
(635,000
|
)
|
$
|
125,000
|
||
Weighted
average shares outstanding
|
7,719,000
|
8,382,000
|
|||||
Basic
income (loss) per share
|
$
|
(0.08
|
)
|
$
|
0.01
|
||
Diluted
earnings per share
|
|||||||
Net
income (loss)
|
$
|
(635,000
|
)
|
$
|
125,000
|
||
Weighted
average shares outstanding
|
7,719,000
|
8,382,000
|
|||||
Dilutive
effect of stock options
|
--
|
1,845,000
|
|||||
Weighted
average shares outstanding, diluted
|
7,719,000
|
10,227,000
|
|||||
Diluted
income (loss) per share
|
$
|
(0.08
|
)
|
$
|
0.01
|
Three
Months Ended
March
31, 2005
|
||||
Reported
net (loss)
|
$
|
(635,000
|
)
|
|
Stock-based
employee compensation determined under the
|
||||
fair
value based method, net of related tax effects
|
(380,000
|
)
|
||
Pro
forma net loss
|
$
|
(1,015,000
|
)
|
|
(Loss)
per share (basic and diluted):
|
||||
As
reported
|
$
|
(0.08
|
)
|
|
Pro
forma
|
$
|
(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
|
163,000
|
21.97
|
|||||||||||
Exercised
|
(51,000
|
)
|
6.43
|
||||||||||
Forfeited
|
(73,000
|
)
|
8.38
|
||||||||||
Outstanding
at end of period
|
2,769,000
|
$
|
7.80
|
6
years
|
$
|
47,635,000
|
|||||||
Exercisable
at end of period
|
1,552,000
|
$
|
4.80
|
5 years
|
$
|
31,350,000
|
2006
|
2005
|
||||||
Volatility
|
45%
|
|
|
52%
|
|
||
Expected
life of options
|
|
|
5
years
|
|
|
5
years
|
|
Risk
free interest rate
|
|
|
5%
|
|
|
3%
|
|
Dividend
yield
|
|
|
0%
|
|
|
0%
|
Period
ending March 31,
|
||||||
2007
-
|
$
|
212,000
|
||||
2008
-
|
186,000
|
|||||
$
|
398,000
|
Three
months ended
March
31,
|
|||||||
2005
|
2006
|
||||||
Revenues
|
100.0
|
%
|
100.0
|
%
|
|||
Cost
of Revenues
|
49.6
|
50.1
|
|||||
Gross
Profit
|
50.4
|
49.9
|
|||||
Selling,
general and administrative expenses
|
61.1
|
43.0
|
|||||
Research
and development expenses
|
13.0
|
7.7
|
|||||
Loss
from operations
|
(23.7
|
)
|
(0.8
|
)
|
|||
Net
interest income
|
1.6
|
2.2
|
|||||
Other
income
|
1.2
|
0.6
|
|||||
Net
income (loss)
|
(20.9
|
)%
|
2.0
|
%
|
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 10, 2006 | By: | /s/ Jeffrey M. Jagid |
Jeffrey
M. Jagid
Chief
Executive Officer
(Principal
Executive Officer)
|
||
|
|
|
Dated: May 10, 2006 | By: | /s/ Ned Mavrommatis |
Ned
Mavrommatis
Chief
Financial Officer
(Principal
Financial Officer)
|
||