UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________

 

 

FORM 11-K

 

____________________________

 

 

 

ý

ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

 

For the fiscal year ended December 31, 2012

 

OR

 

¨

TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

 

For the transition period from                to               

 

Commission file number: 001-15087

____________________________

 

A.

Full title of the plan and address of the plan, if different from that of the issuer named below:

 

I.D. Systems, Inc. 401(k) Plan

 

B:

Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

 

I.D. Systems, Inc.

123 Tice Boulevard

Woodcliff Lake, New Jersey 07677

 

 

 

 

I.D. Systems, Inc. 401(K) PLAN

 

TABLE OF CONTENTS

 

	Page
Report of Independent Registered Accounting Firm	2
Financial Statements
Statements of Net Assets Available for Benefits	3
Statement of Changes in Net Assets Available for Benefits	4
Notes to Financial Statements	5-13
Supplementary Information
Schedule H, Line 4(i) – Schedule of Assets (Held at End of Year)	14
Signature	15
Exhibit Index	16

 

Other Schedules required by 29CFT2520.103.10 of the Department of Labor Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 ("ERISA") have been omitted because they are not applicable.

 

  

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

 

To the Participants and Administrator of the

I.D. Systems, Inc. 401(k) Plan

 

 

We have audited the accompanying statements of net assets available for benefits under the I.D. Systems, Inc. 401(k) Plan (the “Plan”) as of December 31, 2012 and 2011, and the related statement of changes in net assets available for benefits for the year ended December 31, 2012. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2012 and 2011, and the changes in net assets available for benefits for the year ended December 31, 2012, in conformity with accounting principles generally accepted in the United States of America.

Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental Schedule of Assets (Held at End of Year) is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

 

/s/ UHY LLP

New York, New York

June 28, 2013

 

 

 

 

I.D. SYSTEMS, INC. 401(k) PlaN

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

 

		December 31,
		2012				2011
ASSETS
INVESTMENTS
ID Systems, Inc. common stock		$	319,476			$	287,609
Mutual Funds			3,939,436				2,963,832
Self-directed brokerage accounts			215,441				184,291
Common/ Collective trusts			215,688				127,868
Total investments			4,690,041				3,563,600
RECEIVABLES
Participant contributions			14,628				14,081
Notes receivable from participants			181,378				211,166
Total receivables			196,006				225,247
NET ASSETS AVAILABLE FOR BENEFITS		$	4,886,047			$	3,788,847

 

See notes to financial statements.

 

 

I.D. SYSTEMS, INC. 401(k) PlaN

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

For the Year Ended December 31, 2012

 

ADDITIONS
Investment Income
Interest and Dividends		$	15,681
Net appreciation in fair value of investments			568,875
Total investment income			584,556
Contributions
Participants			635,329
Rollover			181,105
Total Contributions			816,434
Total Additions			1,400,990
DEDUCTIONS
Benefits paid to participants			301,611
Administrative and other expenses			2,179
Total deductions			303,790
Net increase			1,097,200
NET ASSETS AVAILABLE FOR BENEFIT, BEGINNING OF YEAR			3,788,847
NET ASSETS AVAILABLE FOR BENEFIT, END OF YEAR		$	4,886,047

 

See notes to financial statements. 

 

 

I.D. SYSTEMS, INC. 401(k) PlaN

NOTES TO FINANCIAL STATEMENTS

December 31, 2012 and 2011

 

NOTE 1 — DESCRIPTION OF THE PLAN

 

The following description of the I.D. Systems, Inc. 401(k) Plan (the “Plan”) provides only general information. Participants should refer to the plan agreement for a more complete description of the Plan’s provisions.

 

General

 

The Plan was originally established in 1998 for the purpose of providing retirement benefits for the employees for I.D. System, Inc. (the “Company”). The Plan was restated on August 23, 2010. The Plan is a defined contribution plan covering all employees of the Plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).

 

Contributions

 

Participants in the Plan may elect to defer and contribute from 1% to 100% of their annual eligible compensation, as defined by the Plan, not to exceed dollar limitations that are set by law. Participants age 50 or older may elect to defer and contribute additional amounts to the Plan up to a maximum that is set by law. Participants may also contribute (rollover) amounts representing distributions from other qualified defined benefit or qualified defined contribution plans.

 

Each year, the Company may contribute to the Plan a discretionary matching contribution. Matching contributions are subject to vesting requirements. For the plan years ended December 31, 2012 and 2011, the Plan did not declare any discretionary matching contribution.

 

Participant Accounts

 

Each participant account is credited with the participant’s share of any employer contributions, any contributions made by the participant, and the participants share of any investment earnings and increases in the value of investments. All reasonable costs and expenses incurred by the Administrator and the Trustee in administering the Plan are charged against the accounts of all participants unless the Company elects to pay such expenses. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

 

Vesting

 

Participants are immediately vested in their contributions plus actual earnings thereon. Participants vest in the Plan’s discretionary match portion of their accounts as follows:

 

Years of Vesting
Service		Percentage Vested
Less than 1 years			0	%
1 but less than 2 years			20	%
2 but less than 3 years			40	%
3 but less than 4 years			60	%
4 but less than 5 years			80	%
5 or more years			100	%

 

 

I.D. SYSTEMS, INC. 401(k) PlaN

NOTES TO FINANCIAL STATEMENTS

December 31, 2012 and 2011

 

NOTE 1 — DESCRIPTION OF THE PLAN (Continued)

 

Notes Receivable from Participants

 

The Plan permits participants to borrow from their vested account balance. A participant is permitted to borrow up to 50% of his or her vested account balance, not to exceed $50,000. The minimum loan a participant may take is $1,000. All loans must be repaid in level payments on at least a quarterly basis over a five-year period unless the loan is for the purchase of a principal residence in which case the loan may be repaid within a reasonable period of time determined at the time the loan is made. The loans are secured by the balance of the participant’s vested account and bear interest at a rate commensurate with market rates.

 

Payment of Benefits

 

A participant’s vested account balance is payable upon retirement, disability, death or other termination of employment. Distributions are payable in a lump sum or in installments over a period not exceeding the participant’s life expectancy. However, if the value of a participant’s vested account is $5,000 or less, it is only payable in a lump sum.

 

A participant may withdraw all or a portion of his or her vested account during employment if he or she has reached age 59-1/2. A participant may withdraw his or her own contributions (but not earnings on those contributions) during employment for certain hardship reasons.

 

Upon the death of an active participating employee, such employee’s beneficiary is entitled to the total amount of the employee’s account without penalty plus an allocation of any Company contribution relating to the year in which the death occurred.

 

Separated participants with vested account balances exceeding $5,000 may delay the timing of the receipt of benefits subject to minimum distribution rules required by law. Participants with a balance of $5,000 or less may be paid out without the participant’s consent in a single-sum payment or by direct rollover to an individual retirement account (“IRA”) or other eligible retirement plan as soon as reasonably practicable following the date of employment termination.

  

Forfeited Accounts

 

If a participant terminates employment with the Company at a time when the participant does not have a fully vested account, the nonvested employer contributions and actual earnings thereon are forfeited. Forfeitures may be used to reduce future discretionary employer matching contribution or cover future administrative expenses. No amounts were used during the years ended December 31, 2012 and 2011 to pay for the Plan’s expenses. Forfeitures available at December 31, 2012 and 2011 totaled $1,384 and $767, respectively.

 

 

I.D. SYSTEMS, INC. 401(k) PlaN

NOTES TO FINANCIAL STATEMENTS

December 31, 2012 and 2011

 

NOTE 1 — DESCRIPTION OF THE PLAN (Continued)

 

Plan Termination

 

Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and/or to terminate the Plan subject to the provisions of ERISA. In the event of plan termination, participants would become fully vested with all rights to any amounts in their respective accounts.

 

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Accounting

 

The financial statements of the Plan are prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America.

 

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes there in, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Investment Valuation and Income Recognition

 

Investments are participant directed and reported at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

 

Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis and dividends are recorded on the ex-dividend date. Net appreciation (depreciation) includes the Plan’s gains and losses on investments bought and sold as well as held during the year.

 

Notes Receivable from Participants

 

Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest. Delinquent notes receivable are recorded as distributions based upon the terms of the Plan document.

 

Benefit Payments

 

Benefits are recorded when paid.

 

 

I.D. SYSTEMS, INC. 401(k) PlaN

NOTES TO FINANCIAL STATEMENTS

December 31, 2012 and 2011

 

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Administrative Expenses

 

Administrative expenses, including the Hartford Life’s custodial and administrative fees, are paid by the Plan. Administrative expenses for loans and distributions are paid by the participant. Certain other expenses such as audit and accounting fees are paid by the Company.

 

Subsequent Events

 

The Plan has evaluated subsequent events through June 28, 2013, the date the financial statements were available to be issued.

 

NOTE 3 — INVESTMENTS

 

Investments at December 31, 2012 and 2011 consist of mutual funds, self-directed brokerage accounts, common/ collective trusts and the Company’s common stock that is traded in the NASDAQ Global Market under the symbol “IDSY”. The following presents investments that represent 5% or more of the Plan’s net assets at December 31:

 

		2012				2011
Janus Forty		$	681,688			$	507,413
Alger MC Growth Inst			403,420				278,413
PIMCO Total Return			394,043				257,010
Janus Overseas			364,267				285,780
I.D. Systems, Inc. Common stock			319,476				287,609
American Funds Balanced American			314,888				271,283
Hartford Total Return Bond			271,661				*
Hartford Money Market			*				194,436

 

* Represents less than 5% of the Plan’s net assets available for benefits.

 

 

I.D. SYSTEMS, INC. 401(k) PlaN

NOTES TO FINANCIAL STATEMENTS

December 31, 2012 and 2011

 

NOTE 4 — FAIR VALUE MEASUREMENTS

 

Financial Accounting Standards Board Accounting Standards Codification (“Codification”), Fair Value Measurements and Disclosures, provides the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under the Codification are as follows:

 

Level 1

Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the plan has the ability to access.

 

Level 2

Inputs to the valuation methodology include:

·

Quoted prices for similar assets or liabilities in active markets;

·

Quoted prices for identical or similar assets or liabilities in inactive markets;

·

Inputs other than quoted prices that are observable for asset or liability;

·

Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

 

If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

 

Level 3

Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

 

The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

 

The following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2012 and 2011.

 

Common stocks, corporate bonds, and US government securities: Valued at closing price reported on active market on which the securities are traded.

 

Mutual funds: Valued at the net asset value (NAV) of shares held by the Plan at year end.

 

Common/ Collective trusts: The fair value of the investment in the common collective trust is determined by the fund trustee based on the fair value of the underlying securities within the fund, which represent the net asset value of the shares held by the Plan at year end.

 

 

I.D. SYSTEMS, INC. 401(k) PlaN

NOTES TO FINANCIAL STATEMENTS

December 31, 2012 and 2011

 

NOTE 4 — FAIR VALUE MEASUREMENTS (Continued)

 

The preceding methods described may produce a fair value calculation that may not be indicative of the net realizable value or reflective of future fair values. Furthermore, although the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

 

The following table presents the fair value hierarchy for the Plan’s investments at fair value as of December 31, 2012 and 2011:

 

		Investments at Fair Value as of December 31, 2012
		Level 1				Level 2				Level 3				Total
Common Stock		$	319,476			$	-			$	-			$	319,476
Mutual Funds			3,939,436				-				-				3,939,436
Self-directed brokerage accounts			215,441				-				-				215,441
Common collective trusts			-				-				215,688				215,688
Total investments at fair value		$	4,474,353			$	-			$	215,688			$	4,690,041

 

		Investments at Fair Value as of December 31, 2011
		Level 1				Level 2				Level 3				Total
Common Stock		$	287,609			$	-			$	-			$	287,609
Mutual Funds			2,963,832				-				-				2,963,832
Self-directed brokerage accounts			184,291				-				-				184,291
Common collective trusts			-				-				127,868				127,868
Total investments at fair value		$	3,435,732			$	-			$	127,868			$	3,563,600

 

 

I.D. SYSTEMS, INC. 401(k) PlaN

NOTES TO FINANCIAL STATEMENTS

December 31, 2012 and 2011

 

NOTE 4 — FAIR VALUE MEASUREMENTS (Continued)

 

Below is the activity of investments having unobservable inputs (Level 3) of the common/ collective trusts for the years ended December 31, 2012 and 2011:

 

Beginning balance, January 1, 2011		$	112,700
Total gains or losses included in changes in net assets available for benefits			1,112
Purchases, sales, and settlements
Purchases			22,450
Sales			(8,394	)
Ending balance, December 31, 2011		$	127,868
Beginning balance, January 1, 2012		$	127,868
Total gains or losses included in changes in net assets available for benefits			27,758
Purchases, sales, and settlements
Purchases			73,509
Sales			(13,447	)
Ending balance, December 31, 2012		$	215,688

 

The following table summarizes investments measured at fair value based on NAV per share as of December 31, 2012 and 2011, respectively.

 

						Unfunded		Redemption		Redemption
December 31, 2012		Fair Value				Commitments		Frequency		Notice Period
Common collective trusts- SSgA S&P 500 Flagship Fund		$	215,688			n/a		Daily		30 days

 

						Unfunded		Redemption		Redemption
December 31, 2011		Fair Value				Commitments		Frequency		Notice Period
Common collective trusts- SSgA S&P 500 Flagship Fund		$	127,868			n/a		Daily		30 days

 

NOTE 5 — RELATED PARTY TRANSACTIONS

 

The Plan allows for transactions with certain parties who may perform services or have fiduciary responsibilities to the plan, including the Company. Certain plan investments are shares of various mutual funds that are owned and managed by the Hartford Life Insurance Company, who has been designated as the custodian and recordkeeper. The Plan invests in common stock of the Company and issues loans to participants. These transactions qualify as party-in-interest transactions.

 

 

I.D. SYSTEMS, INC. 401(k) PlaN

NOTES TO FINANCIAL STATEMENTS

December 31, 2012 and 2011

 

NOTE 6 — TAX STATUS

 

The Plan is based on a “volume submitter” plan document. The sponsor of the volume submitter document has received a favorable determination letter from the Internal Revenue Service (IRS) dated January 31, 2006, stating that the form of the Plan is qualified under Section 401 of the Internal Revenue Code (the “Code”), and therefore, the related trust is tax exempt. In accordance with Revenue Procedure 2005-16, the Company has chosen to rely on the IRS determination letter issued to the sponsor of the volume submitter document as evidence that the form of the Plan is tax-qualified. The Plan is also required to be operated in conformity with the Code to maintain its tax-qualified status. The Plan administrator believes that the Plan, which has been amended since the date of the determination letter, continues to be tax-qualified in both form and operation.

 

Accounting principles generally accepted in the United States of America require Plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2012, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.

 

NOTE 7 — RISK AND UNCERTAINTIES

 

The Plan invests in various investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of the investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits.

 

 

I.D. SYSTEMS, INC. 401(k) PlaN

NOTES TO FINANCIAL STATEMENTS

December 31, 2012 and 2011

 

NOTE 8 — RECONCILIATION OF CERTAIN FINANCIAL STATEMENT AMOUNTS TO AMOUNTS IN FORM 5500

 

The Plan prepares its Form 5500 on a cash basis. The following is a reconciliation of net assets available for benefits from Form 5500 to the financial statements as of December 31:

 

		2012				2011
Net assets available for benefits per Form 5500		$	4,871,419			$	3,774,766
Add: Participants contribution receivable - employee			14,628				14,081
Net assets available for benefits per the financial statements		$	4,886,047			$	3,788,847

 

The following is a reconciliation of net increase in net assets available for benefit from Form 5500 to the financial statements as of December 31:

 

		2012
Net increase in net assets available for benefit per Form 5500		$	1,096,653
Add: Participant contribution receivable - employee			14,628
Less: Prior year participant contribution receivable - employee			(14,081	)
Net increase in net assets available for benefit per financial statements		$	1,097,200

 

The following is a reconciliation of participant contributions from Form 5500 to the financial statements as of December 31:

 

		2012
Participant contributions per Form 5500		$	815,887
Add: Current year participant contribution receivable - employee			14,628
Less: Prior year participant contribution receivable - employee			(14,081	)
Participant contributions per the financial statements		$	816,434

  

 

I.D. SYSTEMS, INC. 401(k) PlaN

SCHEDULE H, LINE 4(i) – SCHEDULE OF ASSETS (HELD AT END OF YEAR)

EIN 22-3270799 PLAN #001

December 31, 2012

 

(a)

(b)

(c)

(d)

(e)

Identity of Issue

Description of Investment, Including

Borrower, Lessor or

Maturity Date, Rate of Interest, Par

Current

Similar Party

or Maturity Value

Cost**

Value

*

Hartford Mutual Funds

Hartford Money Market

$

190,623

*

Hartford Mutual Funds

Hartford Total Return Bond

271,661

PIMCO

PIMCO Total Return

394,043

BlackRock

BlackRock Lifepath 2020

72,458

BlackRock

BlackRock Lifepath 2030

37,071

BlackRock

BlackRock Lifepath 2040

53,756

BlackRock

BlackRock Lifepath Retirement

47,601

Invesco

Invesco Small Cap Equity

196,541

Alger

Alger MC Growth Inst

403,420

Pioneer Investments

Pioneer Mid Cap Value

68,278

American Funds

AF Growth Fund of America

218,777

Janus Capital Management

Janus Forty

681,688

American Funds

AF Europacific Growth

170,438

Davis Funds

Davis New York Venture Fund

89,945

Charles Schwab

Schwab Self-Directed Brokerage Account

215,441

Janus Capital Management

Janus Overseas

364,267

American Funds

American Funds Balanced American

314,888

Putnam Investments

Putnam Investors

54,914

State Street Global Advisors

SSgA S&P 500 Flagship Fund Common

215,688

Collective Trusts

*

ID Systems Inc.

Common Stock

319,476

Putnam Investments

Putnam Multi-cap Growth Fund

217,503

Invesco

Invesco Van Kampen Value

91,564

*

Participant Loans

Interest rate of 9%

181,378

$

4,871,419

 

* Indicates party-in-interest to the Plan.

** Cost omitted for participant directed investment

 

  

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Administrator of the I.D. Systems, Inc. 401(k) Plan has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	I.D. Systems Inc. 401(k) Plan
	/s/ Ned Mavrommatis
	Ned Mavrommatis
	Chief Financial Officer and Treasurer
	June 28, 2013
	Date

 

 

EXHIBIT INDEX

 

Exhibit No.	Description
23.1	Consent of Independent Registered Public Accounting Firm