Jeffrey Jagid – Chairman & CEO Ned Mavrommatis – CFO & Treasurer Darryl Miller – COO Ken Ehrman – President

Matthew Hoffman – Cowen Morris Ajzenman – Griffin Securities Walter Schenker – Mas Partners [ph]

Thank you. Welcome to I.D.

Systems fiscal 2010 second quarter conference all. Thank you for joining us today.

I’m Jeffrey Jagid, the Chairman and CEO of I.D. Systems.

With me is Ned Mavrommatis, our CFO. And Darryl Miller and Ken Ehrman, our Chief Operating Officer and President, respectively, are dialed in remotely.

I will provide a brief overview of the quarter. Ned will review our financials results.

Darryl will discuss the continued integration of our AI business unit, which we acquired in January of 2010 and Ken will talk about some of the other highlights of the quarter. We will then open the call to your questions.

Before we begin, let me reiterate the Safe Harbor statement under the Private Securities Litigation Reform Act of 1995. The following discussion contains forward-looking statements that are subject to risks and uncertainties, including, but not limited to, the impact of competitive products, product demand and market acceptance risks, fluctuations in operating results and other risks detailed from time-to-time in I.D.

Systems’ filings with the Securities and Exchange Commission. These risks could cause the Company’s actual results for the current fiscal year and beyond to differ materially from those expressed in any forward-looking statements made by or on behalf of the Company.

For the second quarter ended June 30th, 2010, I.D. Systems revenues were $6 million, including approximately $1.1 million per month in recurring service contract revenue from our Asset Intelligence business unit.

Net loss for the three-month period was $4 million, although our gross margin for the quarter remained strong at 60%. During the quarter, we continue to consolidate staff and to implement other cost-cutting measures pursuant to our acquisition of the Asset Intelligence business from General Electric in January.

Our initiatives have reduced the company’s the Company’s headcount by headcount by approximately 30% and will ultimately lower our consolidated operating expenses by approximately $8 million. We should begin to see the full effect of these measures in the third quarter.

We are also focused on strategies to grow revenues in this persistently difficult economic environment. To that end we continue to maintain our industry leadership by expanding our intellectual property portfolio and developing new products for both I.D.

Systems and Asset Intelligence applications. Darryl and Ken will discuss some of these products as well as detail some of the recent sales successes we’ve had.

Among the sales highlights of the second quarter were: The extension of our contract with Wal-Mart to continue providing our VeriWise over-the-road trailer management systems and services through 2012, which is valued at approximately $10 million over the term. The extension of our VeriWise trailer management deployment by Knight Transportation, which added more than 1500 additional trailers to our program.

The continued expansion of our AvRamp Wireless Vehicle Management System at Dallas Fort-Worth International Airport, by both American and American Eagle Airlines. Procter & Gamble’s selection of I.D.

Systems as its preferred global supplier of industrial vehicle management systems and concurrently P&G’s first deployment of our PowerFleet Wireless Vehicle Management System in North America. And finally, the execution of a marketing agreement with The Raymond Corporation, a leading global lift-truck manufacturer under which Raymond will sell our vehicle management solutions through their extensive dealer network.

We remain committed to growing revenues, controlling costs, and maintaining strong gross margins with the goal of making 2010 a year of progress. Thank you for your time today.

I look forward to reporting our – to continued reporting on our continuing progress. Now, let me turn the call over to Ned Mavrommatis, our CFO, to review the Company’s financial results.

Thank you, Jeff. And hello to everyone on the call today.

As Jeff noted, for the three months ended June 30th, 2010, I.D. Systems revenue was $6 million compared to $2.7 million for the three months ended June 30th, 2009, an increase of 124%.

The revenue increases were attributable primarily to the service contracts held by our Asset Intelligence business unit, which as Jeff pointed out, are generating approximately $1.1 million per month in recurring revenue. Our gross margin for the second quarter of 2010 was 60% compared to 55% for the second quarter of 2009.

The increase in gross margins are due to a larger percentage of our revenue coming from service contracts, which have higher margins than product revenue. Net loss for the quarter was $4 million or $0.36 per basic and diluted share compared to net loss of $2.3 million or $0.21 per basic and diluted share for the second quarter of 2009.

Excluding $439,000 in stock-based compensation expenses our non-GAAP net loss for the second quarter of 2010 was $3.6 million or $0.32 per basic and diluted share. Excluding the stock-based compensation expenses, operating expenses for the three months ended June 30, 2010 were $7.4 million.

Due to cost management initiatives, including staff consolidations related to the integration following the acquisition of Asset Intelligence, we expect operating expenses in the third quarter to be approximately $6 million. Our balance sheet remains strong.

As of June 30th, excluding the $1.2 million line of credit, we have $27.1 million in cash, cash equivalents and marketable securities, which equates to $2.41 per share outstanding at June 30th. We continue to focus our capital resources on opportunities for growth, both organic and inorganic.

And we remain optimistic about our future. I look forward to sharing our results with you as we continue to make progress.

With that I will like to turn the call over to Darryl Miller, our COO, to discuss recent highlights of our Asset Intelligence business and review some of our product development initiatives.

Thanks, Ned, and thanks to everyone joining us on the call today. The most significant news of the quarter for our Asset Intelligence business unit was that Wal-Mart extended its contract for our VeriWise over-the-road trailer management systems through 2012.

As Jeff mentioned, this contract is worth about $10 million over its term. With Wal-Mart also a major user of I.D.

Systems industrial vehicle management systems, this transaction reflects our ongoing close relationship with Wal-Mart and the significant value that they continue to derive from our company solutions. Knight Transportation, another key Asset Intelligence customer expanded its deployment of VeriWise trailer management systems during the second quarter to more than 1500 additional trailers.

Knight is one of North America’s largest and best-run truck load carriers. And the additional assets we’ll be monitoring include a significant number of refrigerated trailers, or reefers, which is the first time they’ve deployed our system on this type of asset.

So, this represents a nice new opportunity for growth for us. Knight derives significant ROI VeriWise as they locate available trailers more quickly to minimize the time drivers spend searching for trailers and maximizing time they spend productively on the road.

For Knight’s reefers, VeriWise also assures the quality of temperature-sensitive freight and helps monitor and reduce fuel consumption. To further expand our sales opportunity in the remote asset tracking space, we completed the development of a new addition to the VeriWise product line during the second quarter, which we announced to the marketplace in July, 2010.

This product is called VeriWise Track & Trace. It’s an affordable, effective, easy-to-deploy location tracking system designed for quick, flexible installation on a wide range of cargo-carrying assets, everything from dry vans and flat beds to intermodal containers, chassis, and storage containers.

This product will help organizations with basic asset tracking needs, quickly drive out cost and efficiency out of the trailer and container fleet operations as well as increase the security of those assets. We are pleased that Ford Air, a current Asset Intelligence customer, has agreed to upgrade to VeriWise Track & Trace from their current one-way device for their fleet of trailers.

They have seen substantial benefits during the pilot of this solution and believe that it will help position our company for substantial while minimizing their number of assets. Another enhancement we are deploying for our suite of asset management solutions is a more powerful business analytics offering.

We are working with Teradata, one of the world’s leading providers of enterprise data warehousing on a new enterprise analytics service, which we will think will help freight carriers see deeper into their operations and react more quickly to real-time development, resulting in fewer operational blind spots and higher fleet productivity. On the vehicle management side of the business, we announced in the second quarter that we entered into an agreement with Garmin, the global leader in navigation and communication devices to distribute a new product to the airport vehicle market, SafeNav Powered by Garmin.

SafeNav is an on-vehicle, GPS-based navigation and alert system designed to provide airport vehicle operators with real-time situation awareness with a goal of avoiding accidental runway incursions. This product is geared to address the concerns of the National Transportation Safety Board and the Federal Aviation Administration, which have made avoiding runway incursions among their highest priorities for improving U.S.

transportation safety. We think SafeNav will not only assist experienced vehicle operators at night and during periods of low visibility, it will also service as an important safety tool for new or transient vehicle operator who are unfamiliar with airports’ taxiways, and runways.

SafeNav will be available both as a standalone safety device and as a complementary extension of our AvRamp Wireless Vehicle Management System, which provides safety controls, maintenance monitoring, and utilization analysis for fleets of airport vehicles. Also in the second quarter, we packaged a new version of our vehicle management technology called PowerBox, which is an out-of-the-box I.D.

Systems hosted solution designed to simply systems acquisition, deployment achievement for customers with a small to medium fleets, or larger fleets with basic vehicle management requirements. Ken will describe this further in a moment.

Thank you for your time and attention today. I look forward to bringing you further updates on I.D.

Systems’ accomplishments in 2010 and beyond. With that I would like t turn the call over to Ken Ehrman, our President.

Thank you, Darryl, and thanks again to everyone joining us on the call today. Just to expand on the new PowerBox product concept, this is modeled like a Software-as-as-Service or SaaS, with system hardware pre-configured out of the box and software remotely hosted by I.D.

Systems, with a system data package for different stake holders and delivered automatically by email. This approach is designed to simplify system acquisition and deployment, basically taking the customer’s IT organization out of the equation, circumventing some of the most time-consuming aspects of a typical capital acquisition process and making it simper to extract core value from the I.D.

Systems solution. PowerBox is targeted at small- to-medium sized fleets, or larger fleets with very basic vehicle management requirements.

In response to increasing customer interest in solutions that are self-contained and independent of the customers’ IT network and support resources. With hosted versions of our technology operating successfully in the field since 2009, we expect a smooth launch of the new PowerBox hosted system package in the third quarter of 2010.

At the same time we are continuing to promote our best-in-class full function vehicle management system, PowerFleet, for material handling equipment and AvRamp for airport vehicles, which provide many unique capabilities and the industry’s most flexible configuration option to precisely address customers’ complex fleet management requirements. We had a number of notable successes with PowerFleet and AvRamp during the second quarter of 2010.

Existing customers that expanded their deployments of our technology included, Procter & Gamble, which deployed its first PowerFleet system in North America, following the successful implementation in Germany in 2009, and which also concurrently named I.D. Systems as Procter & Gamble’s preferred supplier of industry vehicle management systems worldwide.

American Airlines and American Eagle Airlines, which expanded both the number of and types of vehicles at Dallas Fort-Worth Airport as well as Chicago O’Hare and have begun the process at Miami. Continental Tire, which expanded its PowerFleet deployment to a larger fleet of industrial vehicles at a facility in Illinois, and Ford Europe, which implemented PowerFleet at a plant in Romania, following the successful initial deployment in Spain.

We also had several new PowerFleet deployments in the second quarter, which include Armstrong World Industries, a global leader in flooring, ceiling, and cabinetry products; Campbell Soup Company, an international leader in soups and sauces and a major producer of other foods and beverages; and General Mills, also one of the world’s leading food producers with many household name brands. A portion of our business is generated by channel partners and during the second quarter of 2010 we formally added an important new partner, The Raymond Corporation, which is a leading manufacturer of lift trucks and provider of material-handling solutions.

We entered into a marketing agreement with Raymond under which they will sell our PowerFleet Vehicle Management System in connection with their iWarehouse Fleet Optimization solution. At the same time, Raymond certified our on-vehicle computer who track real-time data directly from their vehicle controllers, which streamlines the hardware installation process and enables unique command and control capabilities from our joint fleet management software.

So this is a strong partnership that we expect to continue growing successfully. On that note I would like to turn the call back over to Jeff to open for questions.

Thank you, Ken. That concludes that formal portion of our conference call.

At this time, we would be happy to respond to whatever questions you may have.

Hey, good afternoon, guys. Couple of questions, first will start with a housekeeper for you.

I guess we will give it to Ned. So, how many subscribers do you have on VeriWise at the end of June approximately?

Darryl, you want to take that?

Yes, as we look at the number of subscribers, I think for the most part, Matt, we are really driving from a revenue standpoint to really drive more of an analytics platform in order so we are driving revenue, but when you look at our pure subscribers, our new customer adds and our customer subscriptions were at 130,000 assets.

Okay. So, that grew may be – it’s grown may be 8000 or so since the beginning of the year?

Yes.

Okay. Well, it’s good growth.

And I guess another – I will go ahead and shift gears here. So, ASPs on your services to Wal-Mart, as you extended it, Darryl, were you able to keep that pretty consistent.

Yes, very consistent from what we had in the past. Wal-Mart is growing with us as well and they are looking for future analytics to develop more ROI for them.

So as we look at the future revenue plans for Wal-Mart that continues to change. But we work very closely with Wal-Mart through the transition and likewise.

I mean from a customer standpoint very similar to what we had in the past and continue to offer those services and prices as we go forward.

All right. Not sure if this one is for you also, Darryl, but expenses (inaudible) you had on for a second looks like they came in higher than you thought they would come in or it was guided at the end of last quarter, certainly higher than what we had, so what’s going on with – what happened with expenses in 2Q, what was the surprise especially on the SG&A front?

Hey, Matt, it’s Ned. If you look at the expenses in the first quarter, if you exclude stock-based compensation, they were $7.2 million.

And what we said is that number should go down slightly in Q2 and then we should see it significantly go down in Q3. In the second quarter it was up by a couple of hundred thousands.

So, if you exclude stock-based compensation, SG&A expenses were $7.4 million and the reason for that is we received some (inaudible) from GE for the transition – the agreement that we had with them. That ended during the second quarter and that – those expenses were a little bit higher than we expected.

We expect operating expenses, if you exclude the stock-based compensation to go down to $6 million in the third quarter.

Okay. So, those one-time items from GE, they won't be replicated?

That is correct. We ended the transition services agreement with them, it was up June 30th, so it’ been finalized and some of the expenses were a little bit higher than we anticipated.

All right. Trend it back into a little bit of the revenue model here, looks like PowerFleet may have been – just using rough number here – may have been down a little bit, 1% or so sequentially I am getting about $2 million for the legacy or for the well let’s call it the old PowerFleet products, is that about right?

I know you are not going to give us a split (inaudible) services, but could you just bracket that?

Which are you comparing to, to what period, in the first quarter you are comparing to?

Well, yes, in the first quarter we ended up with a number that was around 2.2 and we have it about 2, is that – our basis of comparison completely wrong, but both what was PowerFleet in 2Q?

It was very similar in the second quarter. If you look at our second quarter revenue, $2.2 million came from PowerFleet and $3.8 million came from our AI product.

All right. So, what’s the – I am trying to come up with a deferral on the hardware line.

Can you help me with that?

Sure. Deferred revenues during the first quarter was $3.1 million and during the end of the second quarter it was $3.3 million.

So, it went up by $200,000.

And that’s all AI hardware, correct?

Correct.

All right, good. Alright, well that’s the end of the questions from me.

I am sure there is somebody else out there with question. May be I will hop back and if I have to (inaudible).Thanks guys.

Thanks, Matt.

Hey, guys. My question is more of a macro question and let’s kind of look at what’s happening out there.

Your product basically helps the productivity of your customer by tracking their – lifts, trucks, et cetera in a much more effective manner. So, therefore, CapEx spend that has been on the pressure for a while, this sort of spending, my best understanding increased productivity has stepped up by – many companies in the – across the spectrum.

However, looking at the legacy business we just touched on, we continue to have difficulty in gaining any traction. Revenues are still at the low end of a level that has been through this downturn now without any – having any sort of improvement.

So, my question is – you won all these customers for the last couple of years, and still not having enough of the step-up, how long are you going to take before we start showing – particularly in the legacy business some sort of improvement, some traction, where you are going to start seeing some – meaningful growth on the top line.

Morris, I appreciate the remarks and the question. This is Jeff.

We have seen from a macro standpoint, we’ve seen in other businesses – we have seen and I agree with you that there has been some improvement in the spending environment for productivity improvement tools. Specifically in our business and in our markets, quite candidly we haven’t seen it.

So, what that essentially translates to is we are not losing business to competition. It’s not like someone out there is selling more effectively than we are or has a solution that’ better than ours.

We are not losing because our technology doesn’t work; our customer base continues to derive economic benefit from the use of our product. They are just in the most simple – simply stated terms, they are just not buying.

So, we’ve managed to add some new customers. We’ve managed to diversify the sources of revenue, but as Matt pointed out, and as you sort of highlighted, the revenue in the core fleet management business has been flat for several quarters.

It’s not something we are satisfied with. We are also disappointed and frustrated by it.

But the good new is that the market is large, our product is unique. It’s – the economic benefit is fairly compelling.

And now I think it’s a function of thing turning around from an economic standpoint, continue to have – we – as time goes by, we are obviously also as a result of this we are burning cash, which is also something that is unacceptable to us. So, we are going to continue to take steps to conserve the cash while we kind of ride out the difficult climate and as you’ve seen, we let go of our head of sales, so we are going to revamp the sales effort and we believe that these action as well as many others that the board is considering will bear fruit and will result in a stock price that goes up and a company that has some growth on the top line.

Do you have any visibility into the second half as far as this continuing, these current trends.

We are taking a very conservative look at the second half of the year. And we are making, proactively making decisions as a result of our conservative view.

So, we are not extraordinarily optimistic about the second half, but we are optimistic about the technology, our ability to – we spoke a lot about cost-cutting and integration of the businesses, but what we haven’t done yet, and I think it’s a little early and we have a great plan to do it, is also take advantage of cross-selling opportunities between AI and I.D. Systems, which I think will result in some growth as well, and we’ve begun that effort obviously.

Last question and I’ll let someone ask a question, gross margin is 60% in the second quarter. Is that sustainable the next couple of quarters?

Over the next couple of quarters, yes. As we move beyond that, because we are going to continue to amortize the products revenue into the revenue, we should gross margins move closer to the historical levels of 50% to 55%.

Thank you.

Welcome.

Hi, Jeff, Ned, a couple of questions, but let me start off with a loaded question. Jeff, how do you interpret in a world of accountability the vote – the shareholder vote in which less than 1% more shareholders voted to a management, you, and the board then withheld their votes and under 1% total shares outstanding voted more for you than for everybody else.

I can’t remember a company I am involved with in which virtually 50% of the shareholders I mean they are going to hold their vote – voted against the board management without an active proxy contest.

The question is how do I feel about that?

No, no, no, how do you interpret it as a – you know, since there is – as accountability to shareholders, what can we do different or what may be we have done that – it’s a general question on how do you look at that.

Right, so it’s a very good observation. My – I am very upset about it.

I obviously no one who has voting shares can possibly be more frustrated than I am. And my opinion of it is that the stock is down.

Revenue is obviously a little light. We are burning cash and in very crude term we are pissed off as a result.

There are not possibly – can possibly be more aggravated than our board and more aggravated than me. We are going to correct it.

Mostly importantly looking forward the way to correct is by taking action that will ultimately translate into stock price that goes up. I think people were – again it’s not as important to me as the past, while the future is a little more important than the past I should say, but when the stock was up management team at the helm, people were voting unanimously, floor management of the board very happy now the stock is up [ph], our performance is down.

We need to take action to improve it. We are doing that.

It will bear fruit, I am confident of that. The stock will go up.

And the votes – shareholder votes will reflect that. And I am hoping that our shareholder has the patience to allow the management team to execute on the plan but shareholders obviously have rights.

So, I am very, very respectful of it. I pay attention to it.

And I don’t take it lightly

Okay. A couple of fundamental questions.

If expenses were $7.2 million in the first quarter and management indicated that they expect to reduce those expenses, must have misunderstood it, by $8 million, and we are only going to be at $6 million in the third quarter, where does the incremental $0.75 million come from beyond what are you doing in the third quarter, per quarter, that is, well then – someone said did the math wrong?

Yes, the math is a little bit off. What we said is on an annual run rate, we expect to reduce the operating expenses by $8 million, to save $2 million per quarter, and then we are going to start seeing then in the third quarter of 2010.

We fully put all the cost-cut in place during July, during the third quarter, so that’s why we expect the expenses to go down to $6 million from $7.4 million in the second quarter, $7.2 million in the first quarter.

So, the $2 million per quarter, $8 million annual rate was not against what at the time was $7.2 million, which was the public figure at the time? So, that number wasn’t supposed to go to $5.2 million?

No, I think it eventually will go to $5.2 million with a full quarter. (inaudible) during the last quarter that we should see the expenses fully found [ph] in the third quarter, there is a partial month that we had some expenses (inaudible) and then it should be fully baked into the fourth quarter.

That makes sense.

Okay. So the fourth quarter should be under $5.5 million to get you into that range?

At $5.5 million approximately.

Okay. And –

That excludes CapEx [ph] contribution. So (inaudible)

And the other question, I will get off, is you make that if you make that number, are you still standing by your earlier indication, hope I know is the right word, I won't call it a forecast of being cash flow neutral by the end of the year?

No. I am actually glad you brought that up.

I was going to mention it in my closing remarks there is another item that we had mentioned as a goal and I did commented on it during our annual meeting of shareholders as it being a goal, but we certainly in light of the run rate with the core business we are not as optimistic about our ability to enter 2011 at cash flow breakeven. So, obviously it is a function of the top line and it is somewhat lumpy, it has been down, so we are not changing that goal so to speak, but I do not believe that we are in position now to exit 2010 at cash flow positive.

Okay, thank you, Jeff.

Thank you.

I would just like to thank everyone for their time today. And I look forward to continuing to report on the progress as we move forward.

Thank you very much, everyone.