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): November 8, 2018

 

I.D. SYSTEMS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware 001-15087 22-3270799
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)

 

123 Tice Boulevard, Woodcliff Lake, New Jersey  07677
(Address of Principal Executive Offices)  (Zip Code)

 

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

 

 

 

(Former name or former address, if changed since last report)

 

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))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

 

Emerging growth company [  ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

 

 

   

 

 

Item 2.02. Results of Operations and Financial Condition.

 

On November 8, 2018, I.D. Systems, Inc. (the “Registrant”) issued a press release regarding financial results for the fiscal quarter ended September 30, 2018. A copy of the press release is being furnished as Exhibit 99.1 to this report.

 

The information in this report is being furnished pursuant to Item 2.02 of Form 8-K. In accordance with General Instruction B.2. of Form 8-K, the information in this report, 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 report, 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, potential contract values, accretion or other financial information; emerging new products; and plans, strategies, objectives and initiatives of management for future operations. 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 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, 2017. 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. Unless otherwise required by applicable law, 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.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits

 

As described above, the following exhibit is furnished as part of this report:

 

Exhibit 99.1 – Press release, dated November 8, 2018.

 

   

 

 

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: November 8, 2018

 

   

 

 

EXHIBIT INDEX

 

Exhibit Number   Description
99.1   Press release, dated November 8, 2018.

 

   

 

 

 

I.D. Systems Reports Third Quarter and Nine Month 2018 Results

 

Revenue Up 21% for the Quarter and Year-to-Date Revenues Surpass Total Revenue for 2017

 

Woodcliff Lake, NJ — November 8, 2018 — I.D. Systems, Inc. (NASDAQ: IDSY), a leading provider of enterprise asset management technology, reported results for the third quarter ended September 30, 2018.

 

Management Commentary

 

“The third quarter and first nine months of 2018 marked another period of top-line growth, solid gross margins and cash generation for our company,” said I.D. Systems CEO, Chris Wolfe. “In addition to the 21% year-over-year growth for the quarter, our topline for the first nine months exceeded the total revenue we reported in 2017, putting us on track to realize meaningful double-digit growth in 2018. We also shipped the remaining Avis units from our first order while beginning development efforts on several critical programs that will be covered under our next statement of work with Avis.

 

“Our improving financial performance is due, in part, to our improving product quality and new product innovation as well as our successful integration of the Keytroller acquisition. We also started field trials of our new Logistics Visibility telemetry platforms, a new sensor family as well as FreightCAM for cargo visibility and our voice-integrated deep learning platform Lucy. These platforms were announced at the American Trucking Association in October and exceeded our expectations in generating prospect and customer excitement.”

 

Third Quarter 2018 Financial Results

 

Revenue increased 21% to $13.4 million from $11.1 million in same year-ago period. The increase was primarily due to higher Connected Vehicle Solutions and Industrial Truck Management revenue.

 

Recurring revenue increased 5% to $5.0 million from $4.7 million in the same period a year ago.

 

Gross profit increased 21% to $6.8 million (50.8% of total revenue) from $5.6 million (50.8% of total revenue) in the same year-ago period.

 

Selling, general and administrative expenses were $5.9 million, compared to $5.1 million in the same year-ago period. The increase was primarily due to higher sales and marketing expenses related to the company’s introduction of new Logistics Visibility Solutions products.

 

Research and development expenses were $1.7 million, compared to $1.1 million in the same year-ago quarter. The increase in research and development expenses was primarily due to reallocation of internal product development resources to cost of services in 2017 for the development program for Avis Budget Group.

 

Excluding stock-based compensation, depreciation and amortization, foreign currency translation losses, and acquisition-related expenses, non-GAAP net income totaled $165,000 or $0.01 per basic and diluted share (based on 17.3 million weighted average shares outstanding), compared to non-GAAP net income of $287,000 or $0.02 per basic and diluted share (based on 16.2 million weighted average shares outstanding) in the same year-ago quarter.

 

   
   

 

Net loss totaled $897,000 or $(0.05) per basic and diluted share (based on 17.3 million weighted average shares outstanding), compared to net loss of $586,000 or $(0.04) per basic and diluted share in the same year-ago quarter (based on 16.2 million weighted average shares outstanding).

 

At quarter-end, the company had $16.3 million in cash, cash equivalents and marketable securities, an improvement from $13.1 million at the end of the prior quarter.

 

Nine Month 2018 Financial Results

 

Revenue increased 40% to a record $41.6 million from $29.8 million in same year-ago period. The increase was primarily due to higher Connected Vehicle Solutions and Industrial Truck Management revenue.

 

Recurring revenue increased 2% to $14.5 million from $14.3 million in the same period a year ago.

 

Gross profit increased 28% to $19.7 million (47.3% of total revenue) from $15.3 million (51.4% of total revenue) in the same year-ago period. The increase in gross profit was due to higher total revenue in the 2018 period. The decrease in gross margin was primarily due to deliveries of Connected Vehicle Solutions hardware, which have lower upfront margins, but grow over time making for high lifecycle profitability over the contract term.

 

Selling, general and administrative expenses were $17.6 million, compared to $14.8 million in the same year-ago period. The increase was primarily due to the inclusion of expenses from Keytroller, which were absent in the first half of 2017 and higher sales and marketing expenses related to the company’s introduction of new Logistics Visibility Solutions products.

 

Research and development expenses were $5.0 million, compared to $3.5 million in the same year-ago period. The increase in research and development expenses was primarily due to reallocation of internal product development resources to cost of services in 2017 for the development program for Avis Budget Group.

 

Excluding stock-based compensation, depreciation and amortization, foreign currency translation losses, and acquisition-related expenses, non-GAAP net income totaled $354,000 or $0.02 per basic and diluted share (based on 17.1 million weighted average shares outstanding), compared to non-GAAP net loss of $556,000 or $(0.04) per basic and diluted share (based on 14.3 million weighted average shares outstanding) in the same year-ago period.

 

Net loss totaled $3.0 million or $(0.18) per basic and diluted share (based on 17.1 million weighted average shares outstanding), compared to net loss of $3.0 million or $(0.21) per basic and diluted share in the same year-ago period (based on 14.3 million weighted average shares outstanding).

 

Investor Conference Call

 

I.D. Systems management will discuss the results of the company’s operations and business outlook on a conference call today (Thursday, November 8, 2018) at 4:45 p.m. Eastern time (1:45 p.m. Pacific time).

 

CEO Chris Wolfe and CFO Ned Mavrommatis will host the call, followed by a question and answer session where sell-side analysts and major institutional shareholders can ask questions.

 

U.S. dial-in: (877) 307-1379

International dial-in: (443) 877-4066

Conference ID: 8284779

 

   
   

 

The conference call will be broadcast simultaneously and available for replay in the investor section of the company’s website at www.id-systems.com.

 

If you have any difficulty connecting with the conference call, please contact I.D. Systems’ investor relations team at (949) 574-3860.

 

Non-GAAP Measures

 

To supplement its financial statements presented in accordance with Generally Accepted Accounting Principles (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. Because I.D. Systems’ method for calculating the non-GAAP measures may differ from other companies’ methods, the non-GAAP measures may not be comparable to similarly titled measures reported by other companies. Reconciliation of all non-GAAP measures included in this press release to the nearest GAAP measures can be found in the financial tables included in this press release.

 

About I.D. Systems

 

Headquartered in Woodcliff Lake, New Jersey, with subsidiaries in Texas, Florida, Germany, and the United Kingdom, I.D. Systems is a leading global provider of wireless M2M solutions for securing, controlling, tracking, and managing high-value enterprise assets such as industrial vehicles, rental cars, trailers, containers, and cargo. The Company’s patented technologies address the needs of organizations to monitor and analyze their assets to increase efficiency and productivity, reduce costs, and improve profitability. For more information, please visit www.id-systems.com.

 

Cautionary Note Regarding Forward-Looking Statements

 

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; potential contract values; market forecasts; projections of earnings, revenues, synergies, accretion or other financial information; emerging new products; and plans, strategies and objectives of management for future operations, including growing revenue, controlling operating costs, increasing production volumes, and expanding business with core customers. 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, 2017. 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. Unless otherwise required by applicable law, 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.

 

I.D. Systems Contact

Ned Mavrommatis, CFO

ned@id-systems.com

(201) 996-9000

 

Investor Contact

Matt Glover

Liolios

IDSY@liolios.com

(949) 574-3860

 

   
   

 

I.D. Systems, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations Data

(Unaudited)

 

   Three Months Ended   Nine Months Ended 
   September 30,   September 30, 
   2017   2018   2017   2018 
Revenue:                    
Products  $6,490,000   $9,044,000   $17,199,000   $29,726,000 
Services   4,596,000    4,341,000    12,592,000    11,847,000 
                     
    11,086,000    13,385,000    29,791,000    41,573,000 
Cost of revenue:                    
Cost of products   3,475,000    5,287,000    9,717,000    18,537,000 
Cost of services   1,984,000    1,301,000    4,756,000    3,362,000 
                     
    5,459,000    6,588,000    14,473,000    21,899,000 
                     
Gross profit   5,627,000    6,797,000    15,318,000    19,674,000 
                     
Operating expenses:                    
Selling, general and administrative expenses   5,063,000    5,921,000    14,762,000    17,610,000 
Research and development expenses   1,108,000    1,696,000    3,472,000    4,981,000 
                     
    6,171,000    7,617,000    18,234,000    22,591,000 
                     
Loss from operations   (544,000)   (820,000)   (2,916,000)   (2,917,000)
Interest income   59,000    66,000    169,000    217,000 
Interest expense   (100,000)   (34,000)   (248,000)   (150,000)
Other income, net   (1,000)   (109,000)   (1,000)   (153,000)
                     
Net loss  $(586,000)  $(897,000)  $(2,996,000)  $(3,003,000)
                     
Net loss per share - basic and diluted  $(0.04)  $(0.05)  $(0.21)  $(0.18)
                     
Weighted average common shares outstanding -basic and diluted   16,190,000    17,312,000    14,311,000    17,121,000 

 

   
   

 

I.D. Systems, Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Financial Measures

(Unaudited)

 

  

Three Months Ended

September 30,

  

Nine Months Ended

September 30,

 
   2017   2018   2017   2018 
                 
Net loss attributable to common stockholders  $(586,000)  $(897,000)  $(2,996,000)  $(3,003,000)
Depreciation and amortization   349,000    392,000    742,000    1,174,000 
Stock-based compensation   556,000    569,000    1,853,000    1,658,000 
Foreign currency translation   (133,000)   50,000    (406,000)   146,000 
                     
Acquisition related fees   101,000    51,000    251,000    379,000 
                     
Non-GAAP (loss) income  $287,000   $165,000   $(556,000)  $354,000 
                     
Non-GAAP net (loss) income per share - basic and diluted  $0.02   $0.01   $(0.04)  $0.02 

 

   
   

 

I.D. Systems, Inc. and Subsidiaries

Condensed Consolidated Balance Sheet Data

 

  

December 31,

2017*

  

September 30,

2018

 
       (Unaudited) 
ASSETS          
Current assets:          
Cash and cash equivalents  $5,097,000   $11,528,000 
Restricted cash   306,000    306,000 
Investments - short term   1,201,000    197,000 
Accounts receivable, net   8,746,000    9,544,000 
Financing receivables - current, net   1,295,000    1,048,000 
Inventory, net   4,586,000    3,954,000 
Deferred costs - current   4,296,000    3,976,000 
Prepaid expenses and other current assets   3,627,000    4,781,000 
           
Total current assets   29,154,000    35,334,000 
           
Investments - long term   10,278,000    4,246,000 
Financing receivables - less current portion   1,557,000    1,293,000 
Deferred costs - less current portion   4,302,000    4,639,000 
Fixed assets, net   2,747,000    2,262,000 
Goodwill   7,318,000    7,318,000 
Intangible assets, net   5,417,000    4,883,000 
Other assets   159,000    157,000 
   $60,932,000   $60,132,000 
           
LIABILITIES          
Current liabilities:          
Accounts payable and accrued expenses  $7,440,000   $8,608,000 
Deferred revenue - current   9,711,000    8,319,000 
Acquisition related contingent consideration - current   1,923,000    923,000 
           
Total current liabilities   19,074,000    17,850,000 
           
Deferred revenue - less current portion   7,738,000    8,563,000 
Acquisition related contingent consideration - less current portion   854,000    - 
Deferred rent   295,000    230,000 
           
    27,961,000    26,643,000 
           
STOCKHOLDERS’ EQUITY          
Preferred stock   -    - 
Common stock   183,000    191,000 
Additional paid-in capital   133,569,000    137,829,000 
Accumulated deficit   (95,368,000)   (98,371,000)
Accumulated other comprehensive loss   (578,000)   (455,000)
Treasury stock   (4,835,000)   (5,705,000)
           
Total stockholders’ equity   32,971,000    33,489,000 
Total liabilities and stockholders’ equity  $60,932,000   $60,132,000 

 

* Derived from audited balance sheet as of December 31, 2017.

 

   
   

 

I.D. Systems, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flow Data

(Unaudited)

 

   Nine Months Ended September 30, 
   2017   2018 
Cash flows from operating activities:          
           
Net loss  $(2,996,000)  $(3,003,000)
Adjustments to reconcile net loss to cash used in operating activities:          
Bad debt expense   141,000    15,000 
Stock-based compensation expense   1,853,000    1,658,000 
Depreciation and amortization   742,000    1,174,000 
Inventory reserve   256,000    260,000 
Change in contingent consideration   -    146,000 
Other non-cash items   (49,000)   93,000 
Changes in:          
Accounts receivable   967,000    (835,000)
Financing receivables   1,050,000    511,000 
Inventory   7,000    372,000 
Prepaid expenses and other assets   (306,000)   (1,152,000)
Deferred costs   1,153,000    (17,000)
Deferred revenue   939,000    (567,000)
Accounts payable and accrued expenses   134,000    1,168,000 
Net cash provided by (used in) operating activities   3,891,000    (177,000)
Cash flows from investing activities:          
Acquisition   (7,098,000)   - 
Capital expenditures   (197,000)   (155,000)
Purchase of investments   (10,618,000)   (2,415,000)
Proceeds from the sale and maturities of investments   678,000    9,308,000 
Net cash (used in) provided by investing activities   (17,235,000)   6,738,000 
Cash flows from financing activities:          
Proceeds from underwritten public offering   16,065,000    - 
Borrowings under revolving credit facility   11,655,000    - 
Repayments under revolving credit facility   (14,648,000)   - 
Proceeds from exercise of stock options   1,254,000    361,000 
Common stock repurchased   -    (621,000)
Net cash provided by used in financing activities   14,326,000    (260,000)
Effect of foreign exchange rate changes on cash and cash equivalents   (408,000)   130,000 
Net increase (decrease) in cash, cash equivalents and restricted cash   574,000    6,431,000)
Cash, cash equivalents and restricted cash - beginning of period   5,277,000    5,403,000 
Cash, cash equivalents and restricted cash - end of period  $5,851,000   $11,834,000