FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1999
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 of (I.R.S. Employer
incorporation or organization) Identification Number)
90 William Street, Suite 402, New York, New York, 10038
(Address of principal executive offices)
(Zip Code)
(212) 677-3800
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 5,714,375 shares of $.01 par
value common stock as of August 10, 1999.
<PAGE>
I.D. SYSTEMS, INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements.
Condensed Balance Sheets as of December 31, 1998 and
June 30, 1999 (Unaudited) and June 30, 1999 pro forma
(Unaudited) 2
Condensed Statements of Operations (Unaudited) for the 3
Three Months and Six Months Ended June 30, 1998 and 1999
Condensed Statements of Cash Flows (Unaudited) for
the Six Months Ended June 30, 1998 and 1999 4
Notes to Condensed Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. 6
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders. 12
Item 6. Exhibits and Reports on Form 8-K. 12
SIGNATURES 13
EXHIBIT INDEX 14
<PAGE>
I.D. SYSTEMS, INC.
<TABLE>
<CAPTION>
CONDENSED BALANCE SHEETS
JUNE 30,
DECEMBER 31, JUNE 30, 1999
1998 1999 PRO FORMA
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $1,130,000 $ 1,028,000 $ 15,515,000
Accounts receivable 741,000 788,000 788,000
Due from stockholders 23,000
Deferred taxes 67,000 67,000 67,000
Deferred contract costs 184,000 184,000
Prepaid expenses and other current assets 21,000 31,000 31,000
--------------- ------------- --------------
Total current assets 1,982,000 2,098,000 16,585,000
Fixed assets - net 117,000 161,000 161,000
Deferred registration costs 310,000
Other assets 3,000 1,000 1,000
--------------- ------------- --------------
$2,102,000 $ 2,570,000 $ 16,747,000
=============== ============= ==============
LIABILITIES
Accounts payable and accrued expenses $329,000 $ 780,000 $ 712,000
Capital lease obligations 10,000 6,000 6,000
Deferred revenue 545,000 625,000 625,000
--------------- ------------- --------------
Total current liabilities 884,000 1,411,000 1,343,000
Capital lease obligations 16,000 14,000 14,000
Deferred rent 38,000 40,000 40,000
Notes payable - stockholders, less unamortized debt discount of
$44,000 and $14,000 156,000 80,000 80,000
--------------- ------------- --------------
1,094,000 1,545,000 1,477,000
--------------- ------------- --------------
STOCKHOLDERS' EQUITY
Common stock; authorized 15,000,000 shares, $.01 par value; issued and
outstanding 3,414,000 shares and 5,714,000 shares (pro forma) 34,000 34,000 57,000
Additional paid-in capital 1,653,000 1,653,000 15,875,000
Accumulated deficit (679,000) (662,000) (662,000)
--------------- ------------- --------------
1,008,000 1,025,000 15,270,000
--------------- ------------- --------------
$2,102,000 $ 2,570,000 $ 16,747,000
=============== ============= ==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
2
<PAGE>
<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- --------------------
1998 1999 1998 1999
<S> <C> <C> <C> <C>
Revenues $ 512,000 $ 1,494,000 $ 923,000 $ 2,509,000
Cost of revenues 175,000 997,000 285,000 1,603,000
------------- ------------- ------------ -------------
Gross profit 337,000 497,000 638,000 906,000
Selling, general and administrative expenses 202,000 419,000 421,000 811,000
Research and development expenses 19,000 56,000 24,000 56,000
------------- ------------- ------------ -------------
Income from operations 116,000 22,000 193,000 39,000
Interest income 5,000 13,000 8,000 28,000
Interest expense (8,000) (7,000) (17,000) (35,000)
------------- ------------- ------------ -------------
Income before taxes 113,000 28,000 184,000 32,000
Income tax provision 10,000 13,000 16,000 15,000
NET INCOME HISTORICAL $ 103,000 $ 15,000 $ 168,000 $ 17,000
============ ============= ============ =============
HISTORICAL NET INCOME PER SHARE BASIC AND DILUTED
NET INCOME HISTORICAL $ 103,000 $ 168,000
PRO FORMA INCOME TAXES 42,000 68,000
------------ ------------
PRO FORMA NET INCOME $ 61,000 $ 100,000
============ ============
PRO FORMA NET INCOME PER SHARE BASIC AND DILUTED $.02 $.00 $.03 $.00
==== ==== ==== ====
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
BASIC INCOME PER SHARE 3,414,000 3,414,000 3,414,000 3,414,000
EFFECT OF POTENTIAL COMMON SHARES FROM EXERCISE OF
OPTIONS 112,000 1,045,000 112,000 1,017,000
------------- ------------- ------------ -------------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
DILUTED INCOME PER SHARE 3,526,000 4,459,000 3,526,000 4,431,000
============ ============= ============ =============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
3
<PAGE>
<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited) SIX MONTHS ENDED
JUNE 30,
---------------------
1998 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 168,000 $ 17,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 17,000 34,000
Amortization of debt discount 7,000 30,000
Deferred taxes 16,000
Deferred rent expense 19,000 2,000
Deferred revenue 20,000 80,000
Changes in:
Accounts receivable (225,000) (47,000)
Inventory 23,000
Deferred contract costs (184,000)
Prepaid expenses and other current assets (10,000)
Accounts payable and accrued expenses 59,000 383,000
------------ -------------
Net cash provided by operating activities 104,000 305,000
------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (42,000) (76,000)
------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of lease obligations (3,000) (6,000)
Receipt of amount due from stockholders 23,000
Payment of notes payable stockholders (106,000)
Payment of deferred registration costs (242,000)
------------ -------------
Net cash used in financing activities (3,000) (331,000)
------------ -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 59,000 (102,000)
Cash and cash equivalents beginning of period 406,000 1,130,000
------------ -------------
CASH AND CASH EQUIVALENTS END OF PERIOD $ 465,000 $ 1,028,000
============ =============
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING INFORMATION:
Deferred registration costs accrued $ 68,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE>
I.D. SYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1999
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 June 30, 1999,
and the results of its operations and cash flows for the six-month and
three-month periods ended June 30, 1998 and 1999. The results of operations for
the six-month and three-month periods ended June 30, 1999 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, 1998 included in the
Prospectus of I.D. Systems, Inc. dated June 30, 1999.
NOTE B - NET INCOME PER SHARE OF COMMON STOCK
Basic income per share is based on the weighted average number of common shares
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.
NOTE C - CONCENTRATION OF CUSTOMERS
One customer accounted for approximately 97% and 93% of the Company's revenues
during the six-month periods ended June 30, 1998 and 1999, respectively.
NOTE D - PRO FORMA (UNAUDITED)
A pro forma balance sheet is presented to reflect the Company's initial public
offering of its common stock, which closed in July 1999 and August 1999
(overallotment). The offering provided net proceeds to the Company of
approximately $14,245,000 from the sale of 2,300,000 shares at $7.00 per share.
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction
with the 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 economies,
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 the MD&A regarding industry trends,
product development and liquidity and future business activities should be
considered in light of these factors.
We were incorporated in August 1993 and began to derive revenues from our
initial line of products in March 1995. Revenues are generated from design and
engineering fees as well as sales of our system. Our fees relate to the time
expended and expertise involved in customizing our system to the needs of each
individual customer. In the future, we intend to generate additional revenues by
selling software and hardware upgrades as well as on-going maintenance and
support contracts to our existing customers. We anticipate that a greater
portion of future revenues will be comprised of sales of our system.
Our initial contract was entered into with the U.S. Postal Service to develop
and install a pilot system in approximately 40 postal facilities in the
Washington D.C. metropolitan area. In 1997, we entered into a follow-on
agreement with the U.S. Postal Service which provides for the wireless
monitoring and tracking of mail in approximately 300 postal facilities. The
revenues expected from this agreement are approximately $6.7 million of which
approximately $6 million had been recognized as of June 30, 1999. In April 1999,
we entered into a contract with Federal Express Corporation and we obtained
orders from other companies for an integrated tracking and monitoring system for
forklift trucks and other similar vehicles. We also entered into an agreement
with Avis Rent A Car System, Inc., which provides for the pilot sale of a system
which automates the car rental and return process.
The U.S. Postal Service accounted for approximately 97% and 93% of our revenues
during the six-month periods ended June 30, 1998 and 1999. These contracts
provide for revenue relating to labor, materials and delivery of goods. Our
policy is to recognize revenues when time and material charges are incurred,
services are performed or goods are delivered in accordance with conditions of
related contracts. Amounts billed to customers that do not meet the conditions
of our revenue recognition policy are recorded as deferred revenue until such
conditions are met.
6
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain operating
information expressed as a percentage of revenue:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ----------------
1998 1999 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0%
Cost of revenues 34.2 66.7 30.9 63.9
-------- --------- -------- --------
Gross profit 65.8 33.3 69.1 36.1
Selling, general and administrative expenses 39.5 28.1 45.6 32.3
Research and development expenses 3.7 3.7 2.6 2.2
-------- --------- -------- --------
Income from operations 22.6 1.5 20.9 1.6
Net interest (expense) income (0.6) 0.4 (1.0) (0.3)
-------- --------- -------- --------
Income before income tax provision 22.0 1.9 19.9 1.3
Income tax expense 1.9 0.9 1.7 0.6
-------- --------- -------- --------
Net Income - historical 20.1 1.0 18.2 0.7
Pro forma income taxes 8.2 - 7.4 -
======== ========= ======== ========
Pro forma net income 11.9% 1.0% 10.8% 0.7%
======== ========= ======== ========
</TABLE>
THREE MONTHS ENDED JUNE 30, 1999 COMPARED TO THREE MONTHS ENDED JUNE 30, 1998
REVENUES. Revenues increased 192% to $1,494,000 in the three months ended June
30, 1999 from $512,000 in the three months ended June 30, 1998. This increase
was primarily attributable to an increase in the amount of work that was
performed by us under our contract with the U.S. Postal Service and work
performed under a new contract with Federal Express Corporation entered in April
of 1999.
COST OF REVENUES. Cost of revenues increased to $997,000 in the three months
ended June 30, 1999 from $175,000 in the three months ended June 30, 1998. As a
percentage of revenues, cost of revenues increased to 66.7% in the three months
ended June 30, 1999 from 34.2% in the three months ended June 30, 1998. This
increase was primarily attributable to an increase in the portion of revenues
under the U.S. Postal Service contract attributable to materials in the three
months ended June 30, 1999 as compared to the three months ended June 30, 1998
which typically have lower margins than revenues related to labor. Gross profit
increased to $497,000 in the three months ended June 30, 1999 from $337,000 in
the three months ended June 30, 1998. As a percentage of revenues, gross profit
decreased to 33.3% in the three months ended June 30, 1999 from 65.8% in the
three months ended June 30, 1998.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased to $419,000 in the three months ended June 30,
1999 from $202,000 in the three months ended June 30, 1998. The increase was
primarily attributable to an increase in salaries and recruiting fees resulting
from an increase in personnel hired to accommodate our growth. As a percentage
of revenues, selling, general and administrative expenses decreased to 28.1% in
the three months ended June 30, 1999 from 39.5% in the three months ended June
30, 1998 due to operating efficiencies.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses increased
to $56,000 in the three months ended June 30, 1999 from $19,000 in the three
months ended June 30, 1998. The increase was attributable to labor costs and
purchase of materials used for the enhancement of the product and development of
new applications for our products, which were not related to customer projects.
NET INTEREST (EXPENSE) INCOME. Interest income increased to $13,000 in the three
months ended June 30, 1999 from $5,000 in the three months ended June 30, 1998.
This increase was attributable to larger average cash balances in 1999 as
compared to 1998.
7
<PAGE>
Interest expense was $7,000 in the three months ended June 30, 1999 as compared
to $8,000 in the three months ended June 30, 1998.
INCOME TAXES. Income tax expense was $13,000 in the three months ended June 30,
1999 as compared to $10,000 in the three months ended June 30, 1998. Beginning
January 1, 1999, we became subject to federal and state income taxes as a C
corporation. Prior to January 1, 1999 we were an S corporation for federal and
state tax purposes and were only subject to local taxes. Pro forma net income in
the accompanying statements of operations include pro forma adjustments for
federal and state income taxes which would have been recognized had the S
corporation election not been in effect.
NET INCOME. Net income was $15,000 in the three months ended June 30, 1999 as
compared to $103,000 in the three month period ended June 30, 1998. This
decrease was due primarily to the reasons described above.
SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO SIX MONTHS ENDED JUNE 30, 1998
REVENUES. Revenues increased 172% to $2,509,000 in the six months ended June 30,
1999 from $923,000 in the six months ended June 30, 1998. This increase was
primarily attributable to an increase in the amount of work that was performed
by us under our contract with the United States Postal Service and work
performed under a new contract with Federal Express entered in April of 1999.
COST OF REVENUES. Cost of revenues increased to $1,603,000 in the six months
ended June 30, 1999 from $285,000 in the six months ended June 30, 1998. As a
percentage of revenues, cost of revenues increased to 63.9% in the six months
ended June 30, 1999 from 30.9% in the six months ended June 30, 1998. This
increase was primarily attributable to an increase in the portion of revenues
under the U.S. Postal Service contract attributable to materials in the six
months ended June 30, 1999 as compared to the six months ended June 30, 1998
which typically have lower margins than revenues related to labor. Gross profit
increased to $906,000 in the six months ended June 30, 1999 from $638,000 in the
six months ended June 30, 1998. As a percentage of revenues, gross profit
decreased to 36.1% in the six months ended June 30, 1999 from 69.1% in the six
months ended June 30, 1998.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased to $811,000 in the six months ended June 30,
1999 from $421,000 in the six months ended June 30, 1998. This increase was
principally due to the growth in our operations, including, an increase in
salaries and recruiting fees resulting from an increase in personnel hired
during the year to accommodate our growth. As a percentage of revenues, selling,
general and administrative expenses decreased from 45.6% in the six months ended
June 30, 1998 to 32.3% in the six months ended June 30, 1999 due to operating
efficiencies.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses increased
to $56,000 in the six months ended June 30, 1999 from $24,000 in the six months
ended June 30, 1998. This increase was attributable to labor costs and purchase
of materials used for the enhancement of the product and development of new
applications for our products which were not related to customer projects
NET INTEREST (EXPENSE) INCOME. Interest income increased to $28,000 in the six
months ended June 30, 1999 from $8,000 in the six months ended June 30, 1998.
This increase was attributable to larger average cash balances in 1999 as
compared to 1998. Interest expense was $35,000 in the six months ended June 30,
1999 as compared to $17,000 in the six months ended June 30, 1998. This increase
was attributable to larger average balances of stockholder notes and capital
leases in 1999 as compared to 1998.
INCOME TAXES. Income tax expense was $15,000 in the six months ended June 30,
1999 as compared to $16,000 in the six months ended June 30, 1998. Beginning
January 1, 1999 we became subject to federal and state income taxes as a C
corporation. Prior to January 1, 1999 we were an S corporation for federal and
state tax purposes and we were only subject to local taxes. Pro forma net income
in the accompanying statements of operations include pro forma adjustments for
federal and state income taxes which would have been recognized had the S
corporation election not been in effect.
NET INCOME. Net income decreased to $17,000 in the six months ended June 30,
1999 from $168,000 in the six months ended June 30, 1998. This decrease was due
primarily to the reasons described above.
8
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1999, we had $1,028,000 of cash and cash equivalents and $687,000
of working capital as compared to $1,130,000 and $1,098,000, respectively at
December 31, 1998.
Net cash provided by operating activities was $305,000 for the six months ended
June 30, 1999 as compared to $104,000 for the six months ended June 30, 1998.
Net cash provided by operating activities in the six months ended June 30, 1999
was primarily due to an increase in accounts payable and accrued expenses of
$383,000 and an increase in deferred revenue of $80,000, partially offset by an
increase in deferred contract costs of $184,000. Net cash provided by operating
activities in the six months ended June 30, 1998 was primarily from net income.
Cash used in investing activities in the six months ended June 30, 1999 was
$76,000 as compared to $42,000 in the six months ended June 30, 1998. The use of
cash reflected capital expenditures for fixed assets.
Net cash used in financing activities was $331,000 in the six months ended June
30,1999 as compared to $3,000 in the six months ended June 30, 1998. Cash used
in financing activities in the three months ended June 30, 1999 resulted
primarily from a $106,000 repayment of notes payable to stockholders and payment
of $242,000 of deferred registration costs.
We completed our initial public offering of our common stock, which closed in
July 1999 and August 1999 (overallotment). The offering provided net proceeds to
us of approximately $14,245,000 from the sale of 2,300,000 shares at $7.00 per
share.
We believe our operations have not been and, in the foreseeable future, will not
be materially adversely affected by inflation or changing prices.
RECENTLY ISSUED FINANCIAL STANDARDS
We believe that recently issued financial standards will not have a significant
impact on our results of operations, financial position or cash flows.
YEAR 2000 RISK
Many currently installed computer systems and software products are coded to
accept or recognize only two digit entries in the date code field. These systems
and software products will need to accept four digit entries to distinguish 21st
century dates from 20th century dates. As a result, computer systems and/or
software used by many companies and governmental agencies may need to be
upgraded to comply with such Year 2000 requirements or risk system failure or
miscalculations causing disruptions of normal business activities.
9
<PAGE>
STATE OF READINESS
We have made a preliminary assessment of the Year 2000 readiness of our
products and operating, financial and administrative systems, including the
hardware and software that comprise our system. Our assessment plan consists of:
o assessing non-information technology such as material
hardware, software and services that are both directly and
indirectly related to the delivery of our system to our users;
o assessing information technology such as operating, financial
and administrative systems;
o assessing repair or replacement requirements;
o implementing repair or replacement; and
o creating contingency plans in the event of Year 2000 failures.
The software which has been developed, tested and currently comprises
our system and which is characterized as non-information technology systems is
Year 2000 compliant. Our Year 2000 compliance process is complete with respect
to systems which have been developed. We are conducting testing procedures for
all other information and non-information software and systems which we are in
the process of developing and which we believe might be affected by Year 2000
issues. Since third parties developed and currently support many of the
operating, financial and administrative systems that we use, which are
characterized as information technology systems, steps will be taken to ensure
that these third-party systems are Year 2000 compliant. We will also take steps
to ensure that our sub-contractors are Year 2000 compliant. We plan to confirm
this compliance through a combination of the representation by these third
parties of their products' Year 2000 compliance, as well as specific testing of
these systems. We plan to complete this process prior to the end of the third
quarter of fiscal 1999. Until such testing is completed we will not be able to
completely evaluate whether our systems will need to be revised or replaced. We
have the ability to use numerous third party system developers and supporters
and numerous sub-contractors and our developers, supporters and sub-contractors
may be replaced without a material adverse effect on our operations.
Accordingly, we do not consider any particular third party relationships to be
material to our operations.
COSTS
To date, we have incurred immaterial costs on Year 2000 compliance
issues. Most of our expenses are related to, and are expected to continue to be
related to, the operating costs associated with time spent by employees in the
evaluation process and Year 2000 compliance matters generally. We anticipate
that our expenses shall continue to be immaterial. Such expenses, if higher than
anticipated, could have a material adverse effect on our business, results of
operations and financial condition.
RISKS
10
<PAGE>
We are not currently aware of any Year 2000 compliance problems
relating to our system that would have a material adverse effect on our
business, results of operations and financial condition. There can be no
assurance that we will not discover Year 2000 compliance problems in our system
that will require substantial revision. In addition there can be no assurance
that third-party software, hardware or services on which our system will operate
will not need to be revised or replaced, all of which could be time-consuming
and expensive. Our failure to fix or replace our internally developed propriety
software or third-party software, hardware or services on a timely basis could,
in the worst case scenario, result in lost revenues, increased operating costs
or the loss of customers and other business interruptions, such as delays in
delivering products to our customers due to our sub-contractors' delay in
supplying us with components, any of which could have a material adverse effect
on our business, financial condition and results of operations. Moreover, the
failure of our customers to fix or replace their software or hardware on a
timely basis could result in an indirect adverse effect on our business,
financial condition and results of operation.
We do not as of yet have a contingency plan for Year 2000 issues but
plan to create one prior to the end of the third quarter of fiscal 1999 if we
determine pursuant to our evaluations that such plan is necessary. We may
consider contracting with other system developers, supporters and
sub-contractors which are Year 2000 compliant if we determine that our existing
developers, supporters and sub-contractors are not compliant.
In addition, there can be no assurance that governmental agencies,
utility companies, third-party service providers and others outside of our
control will be Year 2000 compliant. The failure by such entities to be Year
2000 compliant could result in a systematic failure beyond our control such as a
transportation systems, telecommunications or electrical failure, which could
also prevent us from delivering our system to our customers or decrease the
commercial activity of our customers, which could have a material adverse effect
on our business, financial condition and results of operations.
11
<PAGE>
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:
No reports on Form 8-K were filed.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
I.D. SYSTEMS, INC.
DATED: August 13, 1999 By: /s/ Kenneth S. Ehrman
---------------------------
Kenneth S. Ehrman
President
By: /s/ Jeffrey M. Jagid
---------------------------
Jeffrey M. Jagid
Chief Operating Officer
and General Counsel
13
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000049615
<NAME> I.D. Systems
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 1,028,000
<SECURITIES> 0
<RECEIVABLES> 788,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,098,000
<PP&E> 263,000
<DEPRECIATION> 102,000
<TOTAL-ASSETS> 2,570,000
<CURRENT-LIABILITIES> 1,411,000
<BONDS> 0
0
0
<COMMON> 34,000
<OTHER-SE> 991,000
<TOTAL-LIABILITY-AND-EQUITY> 2,570,000
<SALES> 2,509,000
<TOTAL-REVENUES> 2,509,000
<CGS> 1,603,000
<TOTAL-COSTS> 2,470,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,000
<INCOME-PRETAX> 32,000
<INCOME-TAX> 15,000
<INCOME-CONTINUING> 17,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,000
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
