Good day and welcome to the I.D. Systems, Inc. 2007 year end results conference call. As a reminder today’s conference is being recorded. At this time we would like to turn the conference over to your host, Mr. Jagid. Please go ahead.

Thank you very much for joining us today. I’m Jeffrey Jagid, the Chairman and CEO of I.D. Systems. Joining me today are Ned Mavrommatis, our CFO; Ken Ehrman, our President and Chief Operating Officer; and Peter Fausel, our Executive Vice President of Sales, Marketing and Customer Support. A Q&A period will follow our prepared remarks. 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 year ended December 31st, 2007 I.D. Systems’ revenues were $17.1 million compared to $24.7 million for 2006. GAAP net loss for the year was $7.3 million compared to GAAP net loss of $1.6 million for 2006. Taking into account the effective stock base compensation our non-GAAP net loss for 2007 was $4.1 million compared to non-GAAP net income of $1.4 million in 2006. We fell short of our revenue goals in 2007 primarily because we entered the year overly reliant on a narrow base of key customers. Most notably the United States Postal Service accounted for $15.1 million or 61% of our revenues in 2006. When postal revenues decreased to $6.2 million this year we did not have enough alternative revenue sources to make up for it. Consequently we have been focused on increasing our investment in our sales and…

As Jeff noted revenues for 2007 were $17.1 million compared to $24.7 million for 2006. The decrease was attributable to a decrease of $8.9 million of revenue from the United States Postal Service offset by an increasing revenue from other customers. GAAP net loss for 2007 was $7.3 million or $0.66 per basic and diluted share compared to GAAP net loss of $1.6 million or $0.15 per basic and diluted share for 2006. Non-GAAP net loss for 2007 was $4.1 million or $0.36 per basic and diluted share compared to non-GAAP net income of $1.4 million or $0.13 per basic share and $0.11 per diluted share for 2006. Non-GAAP results are calculated by adjusting GAAP net results for the impact of stock-based compensation which was $3.3 million in 2007 and $3 million in 2006. For the three month period ended December 31, 2007 revenues were $3.7 million compared to $3.9 million for the same three month period ended December 31, 2006. GAAP net loss for the quarter was $2.5 million or $0.22 per basic and diluted share compared to GAAP net loss of $2.6 million or $0.23 per basic and diluted share for the fourth quarter of 2006. Non-GAAP net loss for the quarter which excludes $853,000 in stock-based compensation was $1.6 million or $0.14 per basic and diluted share. Non-GAAP net loss for the corresponding quarter in 2006 which excludes $1.2 million in stock-based compensation was $1.4 million or $0.12 per basic and diluted share. For the fourth quarter SG&A expenses excluding $662,000 in stock-based compensation were $3.6 million. We expect quarterly non-GAAP SG&A expenses to increase slightly from these levels in 2008. R&D expenditures for the fourth quarter excluding $179,000 in stock-based compensation were $542,000. We also expect quarterly non-GAAP R&D to increase slightly from these levels in 2008. Gross margins for the three month period ended December 31, 2007 were 44% which includes a 38.3% gross margin on product revenue. This resulted from a one time $342,000 inventory write off. Excluding the write off gross margin on product revenues were 51.7% and overall gross margin for the fourth quarter was 53.2%. We expect gross margins in 2008 to be approximately 50% plus or minus a few points depending on the mix of product and service revenue. Our financial condition remains strong. As of December 31, 2007 we had $65 million in cash, cash equivalents and marketable securities which equates to $5.90 per share outstanding. Before I turn the call over to Pete Fausel I also want to give you an update on our stock buy back program. As of today we purchased approximately 647,000 shares for approximately $7 million at an average cost of $10.88 per share. With that let me turn the call over to Peter Fausel to give you a little more detail on our sales and marketing efforts.

As most of you probably know I started with I.D. Systems late in the first quarter of last year and was tasked with instituting significant changes to the company’s sales, marketing and service organization guided by five strategic elements. Number one, implement and execute a proven solution sales process backed up with appropriate technical resources and sales tools to achieve more consistent, predictable domestic revenue growth. Number two, focus on key vertical markets like aviation, automotive, the government and car rental industries. Number three, leverage value-added channel partners to accelerate our market penetration and expand our sales pipeline. Number four, improve and accelerate customer benefit achievement through introduction of an introduction of a new performance services team. And five, expand activities in Europe. I think we made substantial progress in each of these areas in a relatively short period and our efforts started to bear fruit in the second half of 2007. We expanded and reorganized our sales and marketing teams not only adding experienced sales personnel, but also bolstering our business development, our vertical market, customer service, international sales and marketing communications groups. As a result of these efforts, I.D. Systems added several significant new customers during the year including Kellogg’s, the world’s leading cereal producer; Deere & Company, the world’s leading manufacturer of farm and forestry equipment; 3M, a diversified technology company; FMC, a diversified chemical company; Nucor, a major steel manufacturer with more than 30 operating facilities in the US; the National Center for Manufacturing Sciences, a government funded organization that introduces innovative commercial technologies to the Department of Defense to generate operational benefits and cost savings; and San Francisco International Airport, which launched an initial pilot of our AvRamp system under a transportation security administration program. The last two wins I just mentioned were a direct…

I’d like to review our new applications market-specific product offerings some of which Pete alluded to which have helped us to increase penetration in our core accounts, diversify our customer base and help improve the predictability of our revenue stream. Adapting our Wireless Asset Net system hardware to comply with European regulatory requirements was an important aspect of winning the business for Alcoa’s new facility in Iceland. Our engineering team augmented our system in 2007 with a new electronic component configuration to meet European compliance and regulatory standards on wireless transmission and electromagnetic emissions known as [ETSE]. In addition we re-engineered our component level circuit boards to meet the new world standard on lead content in electronics known as RoHS. This successful internationalization of our system is an important step in the development of our business worldwide and particularly in Europe. Both in Europe and domestically the 2007 launch of our new AvRamp system, a version of the Wireless Asset Net branded and configured for managing aircraft ground support equipment at airports has generated a high level of interest. AvRamp is the culmination of almost $6 million invested jointly by the Transportation Security Administration and I.D. Systems and it is the only system of its kind both TSA tested and FAA approved for use at airports. In the fourth quarter of 2007 San Francisco International Airport became the first major airport to acquire the AvRamp branded system. The system is designed to optimize airport ground handling operations by minimizing the quantity of equipment needed in the airport operations area, helping ensure equipment is in the right place at the right time to minimize flight delays no matter what flight schedule changes occur, directing tasks to equipment operators with dynamic automated work allocation tools, reducing damage to airplanes and airport infrastructure…

That concludes the formal portion of our call. I would now like to open the call to questions from our listeners.

The question-and-answer session will be conducted electronically. (Operator Instructions) We’ll take our first question from Brian Ruttenbur with Morgan Keegan.

First question is about the guidance, the $24 million that you give in revenue guidance for 2008, can you give us some kind of breakdown that 20% is going to come from US Postal, or 40% is going to come from US Postal and Wal-Mart, some kind of confidence level?

If you look historically obviously the big three customers that attributed to revenue from a percentage standpoint was Postal, Wal-Mart and third was Ford. I think without giving actual percentages we expect that obviously those customers are going play a big part in the $24 million. However, one of the big pushers that we’re doing by building this sales force and the sales engine is to diversify our customer base so we should see additional revenue coming from new customers as well.

So do you think that those three customers will contribute more than a third, 40%, 50%? Is there any kind of number that you can give me on that, broad, between those three?

Like I said, without giving actual percentages, however, if you put them together I do believe they’re going to be more than a third.

And then maybe can you talk about what you have in backlog right now? Why you have confidence in that $24 million?

As you know we don’t disclose backlog, however, we do have a backlog that we’re delivering in the first quarter. Unfortunately, I would love to sit here and tell you that the backlog is $24 million and all we have to do is deliver it, there’s still a lot of work to be done. But what gave us comfort in giving guidance is that the pipeline is becoming a lot more real and there’s still work to be done but we feel comfortable with the $24 million, that’s why we’re giving at as the guidance number.

So do you think US Postal and Wal-Mart and Ford will be up from 07 levels in your 2008 guidance?

You mean from an absolute dollar standpoint?

As the absolute dollar. I think you did $6.2 million from US Postal I think you said in 2007. Do you think you’re going to do more in 2008 than you did in 2007 in those three big customers?

Let me try to provide a little more granularity. I hear where you’re headed with the Q&A.

I’m just trying to understand what kind of confidence level that we can have in that $24 million.

I think it’s a great point and we are trying to be as transparent as possible in light of the circumstances, so there’s no question that without significant contribution from Wal-Mart and Postal it’s going to be difficult to get to the $24 million number. So those two accounts certainly, as Ned said, if you add them together, let’s say you don’t even include a company like Ford or any other new account or existing customer, I think Ned’s absolutely right that we anticipate that it would be over a third. Having said that, if we didn’t, and I think you’ve gotten to know us over time, it’s been always difficult to pin us down and that’s because of some of the lack of clarity and lack of certainty, we’re fairly bullish on Postal as well as Wal-Mart that the new level of attention that the product is getting within the US Postal Service that we hope we can use to transition into a smoother flow of task orders. If we were comfortable that it would be predictable, we would feel comfortable then giving quarterly guidance but we’re not there yet. So, we do feel confident in the $24 million. We do believe that with Pete’s efforts that a lot of that activity is starting to gain some traction. It’s certainly obviously taking time, but I think we expected it to take time.

Do you expect the year to start off small and then grow throughout or what we have seen Q3 the last couple years for whatever reason has kind of peaked and then dropped, how do you expect the quarters to shake out? I’m not looking for dollar amounts, but I’m just trying to figure out quarter to quarter, is it going to be a build, is it going to be what?

It’s certainly a great question. I would continue to anticipate on a quarterly basis some lumpiness but I would not say that the first half is 50% and the second half is 50%. I absolutely believe that there will be a ramp that materializes much more aggressively in the second half of the year. I’m hesitant to tie it to Q3 or Q4.

Can you tell us how much of that $24 million is rental car?

Yes. In our internal model we did not include revenue contribution from the car rental industry. However, and I hope you got this message through some of Ken’s remarks, and I know we continue to talk about car rental industry with not a lot of meat on the bones from a financial contribution standpoint, but I will tell you that if we didn’t feel somewhat confident in its ability in that application’s ability to contribute revenue, we would not continue to revert resources to it. There has been, and I’m hesitant to get into too many specifics on this call, but there has been some real nice activity within that industry that should lead to some revenue, but in light of the history we’ve had with that industry, we are hesitant to build it into the guidance numbers.

Are you guys continuing to hire on the SG&A line?

Like I said, we expect the SG&A to increase slightly. If you look at SG&A for the fourth quarter, if you back out stock-based compensation, it was $3.6 million. We’ll probably see an increase of that up to $3.7 million but should remain constant after that during the [inaudible].

So does that mean more personnel or just same personnel getting paid yearly bonuses and stuff?

No, there’s slight increases, there’s a couple of hires that we still need to fill in the sales and marketing area, but we’re pretty much done. There’s a couple more hires that would increase it slightly.

And then there’s two other questions, have you seen the acquisition, the GeoLogic acquisition?

Yes.

What’s your opinion on that and are you guys a good peer for them or is Wearnet that a better peer? Because I know that they are just acquired this week.

I think it’s early to tell what the implication would be on us. I think it has a little do with us. I do believe, however, that you do bring up an interesting sort of more global issue which is our philosophy on M&A activity and although we have been obviously very careful about spending the cash on the balance sheet, we are absolutely open to growing through inorganic means and we do activity look at specific companies. But I’d prefer not to comment specifically on the GeoLogic situation.

But you would say that Wearnet is a better comp to you than GeoLogic or who was the – I mean there’s been a couple acquisitions in the last 13 months and I’m just trying to figure out who you think, was @Road a better comp? I’m just trying to figure out.

If you look at the space, obviously they all play in our space, so they can all be viewed as comps. Once you start drilling down Wearnet would probably be a better comp than @Road and GeoLogic. But even Wearnet did not do exactly what we did. They all play in the same space and I would consider them as comps with Wearnet probably being the best out of the three.

And final question, I’m sorry for all the questions, is there pressure by the Board given your last 18 months of performance to make either management changes or sell the company?

No and no and I think that’s because the Board understands the business. I think that the Board realizes that the changes that were made in the early part of 07 were not going to result in flicking the switch and having the orders fly in, that it was going to take a significant amount of time. We’re committed to that strategy. There’s no indication at this point that the strategy is not working but obviously the pressure is on. As time goes by ultimately that momentum that we talk about and the traction has to be reflected in the financial performance, otherwise there will absolutely be management changes. So there’s no question that the technology is unique, very compelling and some of the largest companies in the world are deriving economic benefit from its use. So there’s no reason why we should not be expected to take those very powerful selling tools, build around them and have that result in the financials which they certainly weren’t in the 07 numbers. As far as selling the company is concerned, there is no doubt that could argue that our product may make more sense for it to be part of a portfolio of products. Obviously if we are part of a larger company it would accelerate some of the activity but it’s certainly not something that we’re actively pursuing nor is the Board pressuring us to pursue that at these valuations.

We’ll take our next question from John Bright with Avondale Partners. Tom Casera – Avondale Partners, LLC: Tom Casera for John Bright. First following up on a question asked earlier in terms of the guidance, could you maybe answer where you expect Postal to move directionally in 2008?

I’m sorry, can you clarify the question? When you say directionally, do you mean from a revenue standpoint? Tom Casera – Avondale Partners, LLC: Right, from revenues versus 2007 in terms of up, down or relatively steady.

From an absolute dollar standpoint, we would expect that to achieve the $24 million number that Postal would increase from 07. Tom Casera – Avondale Partners, LLC: And also how important do you expect Europe to be in 2008?

Certainly from an opportunity profile, Europe is one of the bigger opportunities we have out there. The opportunities are tremendous but again what we’ve built into the model is to penetrate the market at a similar pace that we’re penetrating here where our sites tend to start with a pilot site. So we’re very bullish on the activity there but it’s also not largely in the model for 2008. Tom Casera – Avondale Partners, LLC: And then a question in terms of the cash breakdown, I see that some cash was moved to long term assets, does this reflect a re-categorization or did you maybe move some cash around and maybe you could describe the kinds of securities the cash is in right now?

We continue to invest the cash, we’re invested in different types of instruments and whatever matures over a year we classify it as long term. We’re invested in Federal agencies, money markets, corporate bonds, auction rate certificates. We have an investment policy, all our investments are AAA rated and they’re very well diversified. Tom Casera – Avondale Partners, LLC: And what kind of interest income maybe could we expect? What kind of interest rate for 2008, given that rates are coming down?

Rates are coming down, we would definitely see interest income decline year-over-year. Obviously we’ll see where the rates go but I think 3 to 3.5% is probably where we’re going to wind up as an interest rate. Tom Casera – Avondale Partners, LLC: And last question, Ned, you also mention there’s an inventory write down, could you maybe talk a little more about that?

We continue to evaluate our inventory for obsoleteness. During the fourth quarter we took a one time write off of $342,000 and it affected the gross margins and I spoke a little bit about that in my prepared remarks. If you exclude that $342,000 write off you see that our gross margins were very healthy in the fourth quarter, over the 50% level. Tom Casera – Avondale Partners, LLC: I guess I’m wondering more in terms of does this represent products related to the Wireless Asset Net, is that sort of constantly evolving or what, I guess what exactly is becoming obsolete periodically in your [inaudible]?

In this case there were some finished goods which were of an older version that are being used mostly to keep customers that purchased the product over the last couple of years to RMAs and other small reorders. We did have from a quantity standpoint more than we thought we would need over the next year so we took a write down. We did not dispose of the equipment so obviously if needed, we would be able to utilize it but based on our analysis, we felt that we had more than we needed of that type of equipment so we wrote it down.

We’ll move to next to Matthew Hoffman with Cowen. Matthew Hoffman – Cowen & Co.: Couple of questions on the balance sheet, you said you wrote down the inventory, I think I caught most of the dialog there, could you just take us through the mechanics of the balance sheet, exactly where the write down, which line it occurred?

It increased our inventory reserve which reduced the inventory by $342,000 in the fourth quarter and on the income statement it hit the cost of sales products. Matthew Hoffman – Cowen & Co.: So the inventory went up – I’m just doing a quick entry of numbers and I could have these wrong, but it looks like inventory went up to $4.4 million and that’s after it was written down?

No, it went down. Inventory last year was $6.4 million and it went down to $4.4 million. Matthew Hoffman – Cowen & Co.: Okay, but sequentially, in September it was $4.1 million and then it went up to $4.4 million. Is that correct or do I have my –

I don’t have the September number in front of me, but it could be. Matthew Hoffman – Cowen & Co.: So it looked like inventory built a little bit in the fourth quarter, is that a function of sales that were less than expected or should we view it as a forward indicator for first half 08 sales?

Some of that small build relates to products that we either shipped or we expect to ship in the first half of this year. Matthew Hoffman – Cowen & Co.: Last question from me, you mentioned something about auction rate investments and I noticed that you’ve got the long term investments kicking up, are there any liquidity issues with your cash portfolio?

We do have approximately $20 million of these auction rate certificates, they’re all, like I said before, AAA rated. They’re also all short or long receivables so we don’t have any mortgage type of securities, they’re all short and long receivables. You’ve probably been reading about some of these auctions failing. When they fail obviously you get the new market rate of interest which is higher, also all the securities we have are secured by the Federal Family Loan Education program so we don’t feel that there is any sort of concern from a valuation standpoint. Actually that’s one of the areas that our orders dug in and the valuation is still at 100%. Matthew Hoffman – Cowen & Co.: I guess the question I’m really asking here is you made a pretty big of $38 million, is the auction rate product, has it been put now into long term investments? Is that part of what you moved out of investments for sale –

That’s correct. - into the long term investments line?

Only approximately $20 million like I said, the rest are just regular, whether they’re Federal agencies or corporate bonds, they just mature over a year.

We’ll move now to Chris Ryder with Lucrum Capital. Chris Ryder – Lucrum Capital: Pete, in the body of your presentation you mentioned that you were going to have expedited sales with Postal and that there would be a national contract announcement soon, can you discuss that a little bit?

The Postal Service has been really the number one customer for I.D. Systems for many, many years and continues to be. As we operate together over the last three years, we’re looking at better ways to really roll out the sites and I can tell you that there was a lot of work put in on both sides to try to optimize the process and I think that some of the enhancements and changes that we’ve worked on and put in place now will result in a smoother process that we’ve talked about and also better visibility into really the activity that’s out there. So that’s regarding the actual flow of orders. The other point on the contract, we actually have received a contract extension. I don’t know if you’re aware but the first contract that we signed with Postal for the three-year agreement expired at the end of last year. We actually renewed that agreement until the end of this month and the reason we did that was there was a lot of activity we wanted to be able to have a purchasing vehicle, if you will, while we were finishing negotiating the longer term contract. I can’t provide much more detail than that other than to expect to see some announcements on that shortly. Chris Ryder – Lucrum Capital: Just to understand, there was a three-year contract that expired in December of 07.

Correct. Chris Ryder – Lucrum Capital: There was very little Postal revenue then it got extended until March on the old contract?

What they’ve done is they’re extending the contract so it’s not really an old contract. So they actually extended the terms on the initial contract to the end of March. We are in the process and have been in the process of discussing new terms for the other extension which will begin April 1st. So on April 1st we will then really extend the original contract for a longer period of time and that contract will be based on some new terms that we’ve been in discussions with them on. Chris Ryder – Lucrum Capital: You mean longer than three months or do you mean longer than the three years?

It’ll be longer than the three months and, as I understand it and again I’ll also look it up, I think it’s a one-year extension with options for years two and three. So, in essence, a three-year extension. Chris Ryder – Lucrum Capital: And is this contract necessary to get any new task orders from the Postal contract?

No, it’s necessary after April 1st, yes. And that’s why we chose – and it was really a process issue as we went through the discussions to extend the contract, it became clear that we wouldn’t complete those in time and we have a lot of activity with Postal so we chose to extend the original terms from the original agreement until the end of this quarter. Chris Ryder – Lucrum Capital: And how did the inability to execute an annual contract affect your ability to get orders and what does that suggest about sort of pent up distribution centers that need to be deployed?

I think the new contract discussions have had zero impact on our ability to get new sites and new orders. It really has been more of a side discussion to get the contract renewed and honestly the priority has been on focusing on the sites that we’ve deployed in terms of launching, roll out, service and support and then really helping the new sites that have raised their hand and say they’re interested in deploying our product and solutions and getting those guys started. So the contract has had really zero impact. I think the comment that Jeff made earlier was there is a lot of momentum in the account and that’s largely as a result of the efforts that have gone in on both sides to really use this tool to drive productivity. Productivity is a huge initiative within the Postal Service and they view our solution as a key element in really helping them achieve their commitments related to productivity. And so as such it’s getting a lot of visibility in the company now at very senior levels. That’s causing this activity. Chris Ryder – Lucrum Capital: And what will be the role of service in the renewal of the contract?

When you say service can you be more specific? Chris Ryder – Lucrum Capital: In some of the older deployments didn’t have a service component. I was wondering if the new contract will incorporate more service in the distribution centers that have already been deployed? And in that context, what’s the rule of competitive bidding going to be going forward as Postal mix for just orders with your technology?

The service is really a separate issue and we absolutely include service on every transaction. I don’t think these systems will go in without our services and we’re also in discussions with Postal to make sure we have a contractual document in place to continue to support the systems in the field and to get the benefit out of the system. So there are absolutely services in everything we do and so I know that maybe in the past you’re pointing to a situation where maybe there wasn’t services but to my knowledge we very openly talked to them about what services are required to deploy the systems, launch the systems and support the systems and the United States Postal Service is aware of all of those requirements and we’re in negotiations and discussions on all of that.

We’ll move now to Seth Potter with Merriman Curhan Ford.

Just a follow up on that question, Pete, you mentioned that you’re in the process now of completing new terms for the Postal Service contract. I know the prior contract you had originally, were utilizing Unisys to install the product. Can we expect to see some alteration in that arrangement, better pricing and maybe can you give a little bit more detail on what you mean by new terms? Besides just like a new contract in place.

Since it is an extension it does allow us an opportunity to review costs for the services. Obviously the original negotiation was three years ago, we’ve had some items that have through manufacturing efficiencies gone down in price, some that have gone up in price and so it’s really an open opportunity to review all of the components and negotiate a new rate structure, if you will. Regarding Unisys, they are a part of the original contract but we really utilize other contractors as well as Postal and I.D. Systems’ resources to deploy the system so we really have that no impact on the agreement with anything related to Unisys.

And is there a chance that margins could improve depending on what the terms are or, again, kind of in the mix that Ned had talked about in terms of the 50% plus or minus range as a corporation?

Yeah, it’s in the mix.

And then another question, you gave the Postal revenues for the year at $6.2 million. It looks like it backs into about $2 million for the fourth quarter, can you give a breakdown of other large customers I guess besides Postal?

Are you asking for the year or for the quarter or both?

I’ll take both.

For the year Postal was $6.2 million or 37%. Wal-Mart was $5.5 million or 32% and Ford was $1.8 million or 10%. Those were the top three. For the three-month period, Postal Service was $2 million or 54%, Ford was 10% or $374,000 and Wal-Mart was 6% followed by 3M and a couple others at 5%.

We’ll move now to Michael Ciarmoli with Boenning & Scattergood, Inc. Michael Ciarmoli - Boenning & Scattergood, Inc.: Just on the guidance, in 2007 you guys did roughly $24 million in revenue and were able to turn a non-GAAP profit of $0.10. Can you give us any indication as to whether you expect to see profitability on that guidance for this year?

Obviously I gave all the expenses so you can sort of put the model together. The key here is our goal is to maintain the expenses constant obviously with the slight increase as I mentioned and as revenue ramps up as we get later in the year, we could see quarters that are profitable. For the year we’re not going to be profitable at $24 million. Michael Ciarmoli - Boenning & Scattergood, Inc.: If you could just comment I guess, Peter, on your sales pipeline, I guess what it’s looking like. I know you said you’re pretty encouraged by it, but in light of the current conditions in the US economy are you seeing any changes with your pipeline or are customers planning on pushing back their current deployments, is it tougher to get a hold of current customers? Can you give us some sense as to what’s happening there?

That’s a very interesting question, Mike. What’s interesting is our tool, actually when the economy turns actually can be used to achieve the improvements that companies are demanding. So when our customers say, hey the economy is getting worse, we’re being asked to do more with less, our tool is a perfect solution to allow them to be able to do more with less and so I can honestly tell you I haven’t had a single prospect or customer indicate that they were not planning on moving forward with evaluating the technology and eventually investing in the technology as a result of the economy to this point. I guess I’m not naïve enough to think that that will not happen at some point in the future but up to this point it’s been really zero impact and again that’s largely because we promote our tool as a tool that can help provide visibility to things that will allow them to become more productive and it’s the kind of investments you need to be making in this market right now. Michael Ciarmoli - Boenning & Scattergood, Inc.: Relating to the DOD, the one pilot project you have there, obviously there’s a lot of question marks about future Defense spending with the potential White House party change, the war in Iraq coming to an end, do you guys have line item funding for this yet? I mean is it still, where would you be getting future dollars to go forward with a more expanded deployment of this product?

Great question. This trial that we’re doing, if you will, at Sierra is very important and very strategic and in fact a lot of what I’ve just mentioned about driving the efficiencies is also true within the Department of Defense and so there’s tremendous maintenance savings and productivity savings that are available to them. So this trial, although there’s no line item funding, is being monitored and watched by multiple agencies and our intention is at the end of the pilot that they’re performing, we have a lot of visibility on the achievement and if we achieve the objectives that we feel like we can achieve, there will be multiple opportunities that will present themselves. Maybe I’ll let Ken Ehrman, who also has been very involved add to those comments.

The only thing I would add to it is right now it’s being funded by the Department of Defense maintenance organization out of the Pentagon and the line items that would fund beyond this pilot will come right out of the maintenance budget that I referenced during my call. So the associated decreases that you would achieve through the use of our system would really be funding the continued expansion. This isn’t really an earmark or a favor that [Lattenberg] has gotten into, any kind of a bill. This is really directly affecting or as a direct result of the Administration’s request for funding for maintenance. Michael Ciarmoli - Boenning & Scattergood, Inc.: And then just one more question about another market, in terms of the San Francisco Airport pilot, are you seeing any given airlines profitability conditions, maybe there’s potential commercial up cycle coming to an end, is it getting – do you foresee that being a challenge to more widespread deployment of the solution at some of the major US airports?

I’m glad someone asked that question around the ground support equipment because that’s a market that I’m quite excited about. It’s very early stage in that market, those of us that fly if you look out the airplane window it’s very rare you’re going to see any motorized vehicle with any system on it that’s managing access and providing any safety and security enhancements, and I believe that the market is ripe for the solution, there’s a business pain that they suffer is exactly the same in many cases with an added security element to it that there is in our core markets. Through really the focus by bringing in focused resource on this space the branding and building a product and a solution for this market, getting much more exposure in trade shows and trade magazines and really now starting to get traction in the market is really tremendous activity out there. It’s an interesting market and that is not totally bound by the airlines. Airlines themselves, as mentioned previously, are also looking for technology that will drive productivity but there’s also ground support equipment suppliers, there’s many elements and many benefactors of the technology and so I’m very bullish on the opportunities although I’m not naïve enough to think that they’re going to translate to major dollars in day one. But the market size is there, we’ve proven that there’s an interest and a need for technology and again I haven’t seen the economy be an inhibitor right now in pursuing that market. Michael Ciarmoli - Boenning & Scattergood, Inc.: Then just one last quick one, Peter, you’re obviously intimately familiar with LXE, do you think I.D. Systems would make for a good fit operating under that umbrella?

I have a personal opinion, I think the business model is quite a bit different and we’re a full service solution provider, they are a hardware manufacturer that is an element of a solution. Certainly you can make a case I guess for anything but the business model is quite a bit different.

(Operator Instructions) We’ll move now to Charlie Anderson with Dougherty & Company. Charlie Anderson – Dougherty & Company: I want to start out with kind of seasonality we’ve seen in the last two years as it was mentioned before. You guys kind of drop off in Q4, seems to be some issues there with people just really not wanting you in their shop as they’re kind of wrapping up the year, especially on the retail front. I wonder if – you guys talk about a ramp into the back half of the year, do you still see that same dynamic being there or you just think it’s a strong pipeline and that the back half that we won’t see that?

I would not characterize the issues we have in the fourth quarter as seasonality at this point, I think they’re more of an indication of or a symptom of the problem we have with reliance on too few accounts. So when it comes to, for example, Postal and Wal-Mart, it’s a great point and Wal-Mart certainly doesn’t want us to – you know that’s their busy season, they don’t want to place orders, they don’t want us in their facilities, but I think the issue we have and the way to deal with that is really in large part focused on revenue diversification and less reliance on too few accounts. So you’re right if you look at last year and the prior year, I think there was some lumpiness in the fourth quarter, but I don’t think that that’s because of seasonality. I think it has much more to do with leaving both of those periods with continued reliance on those accounts. Charlie Anderson – Dougherty & Company: And then I want to talk about the guidance here, the $24 million number, you guys obviously probably had the best predictability with Postal and Wal-Mart some of the accounts you know well. Just trying to figure out where the levers are, where you see the upside? Is it in the organic growth looking at existing accounts and what they can do expanding their number of facilities or is it going out there bringing in new accounts, any particular verticals? Just where you see the lever going from $17 million plus to $24 million?

I think it’s all of that. One of the strategies we embarked on last year was to really go back to our installed customers to make sure through our performance services team to make sure that they were obtaining the maximum benefit the could from the system and then making sure that that benefit was well known within the organization. So certainly as we build up $24 million if you look at our customer list beyond the two we’ve talked a lot about, there’s a lot of opportunity to continue expanding those systems and we made the investments in both the performance services team and in the sales effort to position ourselves well for business this year. In addition to that, there is new name business that we’re working through, either brought to us through marketing efforts we’re performing, partner relationships we’re building, focused on certain verticals like the ground support equipment and aviation I mentioned or certain markets like in Europe and all of those activities can generate upside and all of those are factored into the number to get to the $24 million. Charlie Anderson – Dougherty & Company: I just wanted to ask then about the expenses, you guys talked about being relatively flat in 2008. Do you see those being kind of a pause year in 2008 where you would go back and invest again if you’re successful or do you feel like you’ve kind of got the organization where you want it right now and kind of be kind of flattish growth from here on out?

At this level we are coming down to, at least from an expense side and from an organization standpoint, we are coming down where we want to. When Pete started, he put together a plan and he had an org chart with a lot of boxes. We filled those boxes, we’re incurring the expense so now it’s time for the revenue to come behind it. Obviously, as we continue to grow we will re-evaluate and see how we want to grow the company and from the expense side. But at least at these levels we feel very comfortable with the exception of the few hires that I mentioned before. We are in good shape from a headcount standpoint. Charlie Anderson – Dougherty & Company: And then just one quick last question, Ned, do you have sort of a fully diluted share count?

11 million shares is what’s outstanding as of December 31 and obviously as we have a profit and you have to calculate fully diluted, I would go around 12 to 12.5 million shares.

We’ll take a follow up question from Mr. Michael Ciarmoli with Boenning & Scattergood. Michael Ciarmoli - Boenning & Scattergood, Inc.: Do you have a stock comp outlook for 2008?

Yeah, Mike, it should be around $850,000 per quarter, $660,000 in SG&A, $180,000 in engineering and about $10,000 in cost of sales.

Mr. Jagid, it appears there are no further questions at this time. I’d like to turn the conference over to you for any additional or closing remarks.

Thank you everyone for participating in today’s call. We look forward to continuing to keep you updated on the progress of the company. Thank you very much.