Disclosures

ID Systems Inc.

We, Josh Nichols and Mike Crawford , certify that this report reflects our personal beliefs about this company and that no portion of our compensation was, is or will be directly or indirectly related to the specific recommendations or views discussed in this report.

Disclosure

  • B. Riley & Co., LLC does and seeks to do business with companies covered in its research reports.
  • A portion of this analyst’s compensation is based on the sales, trading and investment banking activities of B. Riley & Co., LLC.
  • B. Riley & Co., LLC makes a market in the securities of the company covered in this report.
  • This report may be distributed by FBR Capital Markets & Co., an affiliate of B. Riley & Co., LLC and as such constitutes third party research. For additional information, please visit http://www.fbr.com/disclosures.
Disclosure Chart

Initiated Coverage on 09/17/2014 with Buy Rating and Price Target of $9.00

Ratings Distribution as of June 23, 2017 % with Investment Banking Relationships
Rating Number of Companies Percent of Total
Buy 148 73.3%
Neutral 53 26.2%
Sell 1 0.5%
Total 202 100%
Ratings Distribution as of October 4, 2016 % with Investment Banking Relationships
Rating Number of Companies Percent of Total
Buy 21 95.5%
Neutral 1 4.5%
Sell 0 0.0%
Total 22 100%

Explanation of B. Riley & Co. LLC's Rating System

  • Buy: We generally expect "Buy" rated stocks to materially outperform both the S&P 500 and Russell 2000 as well as other stocks in their sector. Further, we believe that the potential reward relative to the potential risk is particularly attractive.
  • Neutral: We generally believe "Neutral" rated stocks will perform roughly in line with the S&P 500 and Russell 2000 over the intermediate and long term.
  • Sell: We generally expect "Sell" rated stocks to materially underperform both the S&P 500 and Russell 2000 as well as other stocks in their sector. Further, we believe that the potential reward relative to the potential risk is particularly unattractive.

Risks and Considerations

  • Competition - The industry is highly competitive and many of the Company's competitors have greater resources.
  • Distribution/Sales Dependency - The Company relies heavily on its indirect sales channel for much of its sales. A loss of a major distributor or changes in a distributor's payment practices could prove to be detrimental to future sales growth.
  • Economy - Macro-economic issues such as increasing oil and gas prices and a possible drop in consumer spending could have a negative impact on the Company's business.
  • Financial Results - Due to the Company's relatively small revenue base and fixed operating cost structure, the loss or delay of one large license deal or services contract could significantly impact the bottom line.
  • Financial Results - The Company has a history of operating losses. Although the Company is focused on achieving profitability, there are no assurances that the Company will meet its goals or be able to sustain profitability in future periods.
  • Financial Results - Unpredictable timing of customer orders.
  • Growth Plan - There are many factors that may impact the company's ability to achieve its stated growth objectives.
  • Industry Change - The industry is subject to rapid technological change.
  • Intellectual Property - The Company's business is dependent upon the licensing of its intellectual property (IP) to customers. Should the Company fail to maintain its IP or should the Company infringe upon another vendor's IP, financial results could be negatively impacted.
  • Litigation - The Company is at risk of patent lawsuits, although we believe its patent portfolio provides adequate protection.
  • Loss of Key Personnel - In our opinion, the current management team will be instrumental in executing the Company's growth strategy. The resignation of a key member of management would have a negative impact on the Company.
  • Pricing Pressure - The Company's business could be affected by pricing pressure within the market.
  • General Industry - The Company could miss our estimates and/or their financial guidance.
  • Sales Cycle - The Company's sales cycle could lengthen beyond what is normal.
  • Further Potential Risks - See the Company's SEC filings, particularly its 10-K filing, for a discussion of further potential risks.

Additional Risks and Considerations

    • A few customers account for a large percentage of sales.
    • The company may incur additional charges for excess and obsolete inventory.
    • The company relies on a limited number of suppliers for several significant components and raw materials used in the company's products.
    • The company has an existing shelf registration to raise up to an aggregate of $60MM which could result in dilution.