SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON D.C. 20549

                                   FORM 10-KSB

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2001    Commission file number:  1-15087

                               I.D. SYSTEMS, INC.
                 (Name of small business issuer in its charter)

Delaware                                                        22-3270799
(State or other jurisdiction                                 (I.R.S. Employer
of incorporation or organization)                            Identification No.)

One University Plaza, Hackensack, New Jersey                      07601
(Address of Principal Executive Offices)                       (Zip Code)

         Issuer's telephone number, including area code: (201) 670-9000

        Securities registered pursuant to Section 12(b) of the Act: None

        Securities registered pursuant to Section 12(g) of the Act: None

Check  whether  the Issuer  (1) has filed all  reports  required  to be filed by
Section 13 or 15(d) of the Securities  Exchange Act of 1934 during the preceding
12 months (or for such shorter  period that the  Registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes x No .

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-B is not contained  herein,  and will not be contained,  to the
best of Issuer's  knowledge,  in the definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. __

State issuer's revenues for its most recent fiscal year = $923,000.

The  aggregate  market  value of the Common Stock held by  nonaffiliates  of the
Issuer was  approximately  $43,477,000  based upon the last sales  price of such
stock on March 18, 2002, as disclosed on The NASDAQ Small Cap Market (IDSY).

The number of shares of common stock, par value $0.01 per share,  outstanding as
of March 18, 2002 was 6,709,521.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

<S>           <C>                                                                            <C>
PART I

     Item 1.  Description of Business..........................................................1
     Item 2.  Description of Properties........................................................6
     Item 3.  Legal Proceedings ...............................................................6
     Item 4.  Submission of Matters to a Vote of Security Holders..............................6

PART II

     Item 5.  Market For the Registrant's Common Equity
              and Related Stockholder Matters..................................................7
     Item 6.  Management's Discussion and Analysis.............................................7
     Item 7.  Financial Statements............................................................12
     Item 8.  Changes in and Disagreements With Accountants on
              Accounting and Financial Disclosure.............................................26

PART III

     Item 9.  Directors and Executive Officers of the Registrant..............................27
     Item 10. Executive Compensation..........................................................29
     Item 11. Security Ownership of Certain Beneficial Owners and Management..................32
     Item 12. Certain Relationships and Related Transactions..................................34
     Item 13. Exhibits, List and Reports on Form 8-K..........................................34

Exhibit Index ...............................................................................E-1

</TABLE>


                                       i

<PAGE>

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

     I.D. Systems, Inc. (the "Company"),  a Delaware corporation incorporated in
1993,  is a leading  provider  of  advanced  wireless  solutions  for  tracking,
managing,  and securing  enterprise  assets.  The  Company's  patented RF (radio
frequency)   technology   and   proprietary   software,   The   Wireless   Asset
Net(TM)System, enables real-time, automated, cost-effective monitoring, control,
and analysis of a broad range of  objects--including  vehicles,  materials,  and
people.  The Company's  solutions can benefit users by reducing operating costs,
increasing  security,   improving  safety,  enhancing  service,  and  increasing
profits. The Company's customers include British Airways, DaimlerChrysler, Deere
& Co., Ford,  General Motors,  Hallmark Cards, the U.S. Postal Service,  and the
U.S. Navy.

THE TECHNOLOGY

     The  primary  hardware  components  of the  Company's  system are  wireless
programmable  "Asset  Communicators"  installed  on each  asset  and one or more
fixed-position   "System  Monitors"  forming  a  coverage  area.  These  devices
communicate  with each  other via  low-power  RF  transmissions  with no ongoing
communication costs.

     Asset  Communicators  are  miniature  programmable  computers  that provide
significantly  more  functionality than conventional asset tracking "RFID tags".
For   example,   Asset   Communicators   can  control   access,   detect   asset
movement/location,  monitor asset  utilization,  provide two-way text messaging,
and store a large amount of dynamic,  configurable  asset data.  The firmware in
the devices can also be customized easily to meet specific customer needs.

     The system does not require a central or controlling  mainframe computer to
make decisions.  Asset  Communicators and System Monitors have the capability to
make decisions autonomously, which significantly reduces the overall system cost
and improves system reliability.  System Monitors incorporate a computer network
connection as well as a two-way RF  transceiver,  and are capable of linking the
mobile assets being monitored to management software on the network.

     The  Company  designs and  implements  software  as well as  hardware.  Its
modular software systems are user-friendly,  with a robust database platform,  a
Windows-style  or browser-based  graphical user interface,  and options for both
client-server and web-based delivery.

CURRENT TARGET MARKETS

     While there are diverse  applications  for its  technology,  the Company is
initially  focused on companies that need to monitor,  control,  and manage four
different types of mobile assets:

  >> Industrial vehicles

  >> Rental vehicle fleets


                                       1

<PAGE>

  >> Railcars

  >> Packages and letters

     In each of these applications,  the Company has delivered effective systems
to  high-profile  customers  and these  systems  have  demonstrated  significant
benefits.

     Industrial Vehicle Applications. The Company's Wireless Asset Net(TM) fleet
management  system is  designed  to address  the  material  handling  industry's
safety, security, and cost issues.

     To improve  fleet  safety and  security,  the system  provides (1) wireless
vehicle access control to ensure that only trained and authorized  personnel can
use equipment,  as required by the Occupational Safety and Health Administration
("OSHA"),  (2) electronic vehicle  inspection  checklists for paperless proof of
OSHA compliance and early detection of emerging  vehicle safety issues,  and (3)
impact sensing to assign responsibility for accidents.  With these capabilities,
the Company's system prevents  unqualified  personnel from operating  equipment,
optimizes  fleet health,  and  establishes  driver  accountability  for abuse of
equipment, eliminating anonymous accidents and reducing damage-related costs.

     To further  reduce fleet  maintenance  costs,  the Wireless  Asset Net also
automates and enforces  preventative  maintenance  scheduling by (1)  wirelessly
uploading true "drive-time" data from each individual vehicle, (2) automatically
prioritizing  maintenance events based on weighted  variables,  and (3) enabling
remote  lock-out  of  vehicles  overdue  for  maintenance.  The  system can also
interface seamlessly with existing maintenance databases.

     To generate perhaps the most  significant  impact on fleet operating costs,
the Wireless  Asset Net provides a set of tools to measure  vehicle  utilization
and  justify  fleet  reductions.  The system  automatically  records  the actual
usage-time  vs.  idle-time  of each  individual  vehicle/operator  to  benchmark
productivity,  compare performance,  and enable informed decisions about vehicle
allocation,  disposal,  and replacement.  The system also visually  monitors the
location of vehicles -- both in real time and  historically  -- to find vehicles
that are idle or due for maintenance,  take instant vehicle inventory, and track
vehicle  travel-paths to optimize labor  efficiencies.  In addition,  the system
communicates  work  instructions to vehicle operators via two-way text paging to
improve productivity.

     In addition,  the Company  believes its Wireless  Asset Net  technology can
have a  significant  impact on the  security of  airports  and  military  bases.
Aircraft ground support equipment includes aircraft tow tractors, cargo loaders,
baggage tractors,  fuel trucks,  and catering trucks. The Company believes there
are few systems that effectively  control and monitor the use of these vehicles.
In the absence of such controls, a perpetrator who gains access to the ramp area
at airports  could access ground  support  equipment  without  restriction.  The
Company's wireless solution prevents unauthorized use of aircraft ground support
equipment by linking vehicle ignition to a personal identification system and/or
biometrics.  The system  requires an  operator  to present an access  control ID
badge to the system's  intelligent  vehicle-mounted  hardware (and,  optionally,
enter a PIN code) prior to operating a vehicle that services aircraft.  A person
must be authorized and trained for a particular vehicle, in a particular area of
the  airport,  at a particular  time of day, in order to use the  vehicle.  This
driver tracking and control technology not only prevents the unauthorized use of
equipment, but it also allows equipment to be instantly and remotely deactivated
via radio frequency in the event of an emergency.

     To enhance its position in the material handling fleet market,  the Company
has developed strategic  relationships with vehicle  manufacturers and other key
companies in the industry. For example, the Company has an agreement with Curtis
Instruments,  Inc., the world's  largest  manufacturer  of  instrumentation  and
controls for  battery-powered  vehicles,  to develop wireless vehicle management
systems  integrated into dashboard  instrument  panels.  Once  developed,  these
systems  will be  marketed  to  original  equipment  manufacturers  ("OEMs")  of
material handling vehicles,  aircraft ground support equipment,  durable medical
devices,  and other  types of mobile  electric-powered  equipment.  Curtis  will
assume primary  responsibility  for manufacturing the systems and marketing them
to its  established  base of OEM customers,  while the Company will take primary
responsibility for providing supporting software, hardware, and services for the
equipment end-users.  Under the agreement, the Company will receive royalties on
OEM system  sales and be able to derive  ongoing  revenues  from its  supporting
products and services.

     The industrial vehicle market is the Company's most developed  application.
Customers  that have piloted  and/or  deployed the Company's  Wireless Asset Net
system include  British  Airways,  DaimlerChrysler,  Deere & Co., Ford,  General
Motors, Hallmark Cards, the U.S. Postal Service and the U.S. Navy.

                                       2
<PAGE>

     Rental Fleet  Applications.  The Company's  wireless  rental car monitoring
system  automatically  monitors mileage and fuel data from rental vehicles,  and
demonstrates  a  significant  impact on both rental  revenues and the quality of
customer service.

     Among the many  benefits  that car rental  companies  can realize  with the
Company's  solution,  two are most significant.  First, by accurately  reporting
fuel levels,  without human  intervention,  rental car companies can potentially
increase  fuel  revenues by an average of more than $2 per rental by  accurately
billing customers for fuel used. Second,  with the Company's system, the average
car return  transaction,  including customer wait time, can be reduced from more
than a minute per vehicle to less than 5 seconds.  This significant time savings
can allow the rental  company to reduce  staff and/or  devote more  attention to
vehicle  inspections,  to detect  damage that would  otherwise go unnoticed  and
uncharged.

     Railcar Industry Applications. The Company's wireless tracking solution has
the potential to revolutionize the rail industry's customer service capabilities
and fundamentally change the way freight railroads operate in North America.

     The Company  believes  that Class I railroads  and their  customers  have a
vested interest in finding a cost-effective way to track the location and status
of railcars in real time.  The Company's  real-time  location  system maps train
location  against the expected  routes and  schedules,  averts delays by rapidly
identifying unplanned stops, and ensures that the correct railcars are delivered
to the correct locations in a timely manner.  The Company believes that this can
translate  directly into both customer  satisfaction and increased  revenues for
the railroads.

     The Company's solution for real-time railcar tracking is a unique hybrid of
its patented RF communications  architecture,  GPS location tracking, a cellular
or satellite link, and proprietary  web-based graphical software.  The Company's
system  can  communicate  data from an entire  train of  railcars  with just one
cellular or  satellite  link.  Compared to other  systems that rely on satellite
transmitters  on every  railcar,  the  Company's  approach can save  millions of
dollars  in  ongoing  communications  fees.  Compared  to  systems  that rely on
fixed-location  reading devices,  the Company's system provides information from
any  location  at any  time,  eliminating  "black  holes"  between  readers.  In
addition, the Company believes its approach provides the ability to generate and
communicate significantly more information than the railroads' existing tracking
system.

     In the package and letter  tracking  market,  the Company has been  focused
primarily on the U.S. Postal Service (USPS). During 2000, the Company's solution
was deployed and began collecting data used to analyze the flow of mail. In this
application,  the  Company's  Asset  Communicator  is configured to fit inside a
standard business envelope and withstand the rigors of automated mail processing
machinery.  The  Company's  system  allows  the USPS,  for the first time in its
history,  to track test mail in real time and identify  bottlenecks  in the mail
delivery  chain.  The USPS chose the  Company's  technology  because it provided
virtually 100% detection and communication reliability in harsh environments.

     The USPS  maintains  approximately  500 major mail  processing  centers and
40,000 facilities overall in the United States.

MANUFACTURING

     The Company  outsources  its hardware  manufacturing  operations to leading
contract  manufacturers  including Flextronics  International Ltd. and NuVisions
Manufacturing  Inc.  This  strategy  enables  the  Company  to focus on its core
competency -- designing  hardware and software systems and delivering  solutions
to  customers  -- and to  avoid  investing  in  capital-intensive  manufacturing
infrastructure.  Outsourcing  also  provides  IDSY with the  ability  to ramp up
deliveries to meet increases in demand without  increasing  fixed expenses.  The
Company has not,  however,  entered into an agreement  providing for a long term
commitment with its subcontractors to manufacture the Company's products.

COMPETITION

     The market for wireless  tracking and  management of  enterprise  assets is
relatively new,  constantly


                                       3
<PAGE>

evolving,  and competitive.  Although the Company's  current  competitors do not
provide  the exact same  capabilities,  they do offer  subsets of the  Company's
system capabilities or alternate approaches to the issues the Company's products
resolve.  Those companies include both emerging companies with limited operating
histories,  such as  WhereNet  Corp.,  Remote  Equipment  Systems,  Inc.,  Media
Recovery,  Inc., and companies  with longer  operating  histories,  greater name
recognition  and/or  significantly  greater  financial,  technical and marketing
resources than the Company, such as Savi Technology, Symbol Technologies,  Inc.,
and  Intermec  Technology  Corp.  The  Company  expects  that  competition  will
intensify in the near future. There are, however,  significant barriers to entry
for the Company's potential competitors.

INTELLECTUAL PROPERTY

     The Company  currently  has one United  States  patent and  pending  patent
applications  relating to the Company's system  architecture and technology.  It
also has a  corresponding  patent and pending  patent  applications  in selected
foreign  countries.  The  patents  and patent  applications  may not provide the
Company  with any  competitive  advantage.  Many of the  Company's  current  and
potential competitors dedicate substantially greater resources to protection and
enforcement of intellectual property rights, especially patents.

     The Company attempts to avoid infringing known proprietary  rights of third
parties  in its  product  development  efforts.  However,  the  Company  has not
conducted  and does not  conduct  comprehensive  patent  searches  to  determine
whether it infringes patents or other proprietary  rights held by third parties.
In addition,  it is difficult  to proceed with  certainty in a rapidly  evolving
technological  environment  in which there may be numerous  patent  applications
pending,  many of which are  confidential  when  filed,  with  regard to similar
technologies.  If the  Company  were  to  discover  that  its  products  violate
third-party proprietary rights, the Company may not be able to:

          o    obtain  licenses  to  continue  offering  such  products  without
               substantial reengineering;

          o    reengineer   the  Company's   products   successfully   to  avoid
               infringement;

          o    obtain licenses on commercially reasonable terms, if at all; or

          o    litigate an alleged  infringement  successfully or settle without
               substantial expense and damage awards.

     Any claims against the Company  relating to the infringement of third-party
proprietary  rights,  even if without merit,  could result in the expenditure of
significant  financial and managerial resources or in injunctions  preventing us
from  distributing  certain  products.  Such claims could  materially  adversely
affect the Company's business, financial condition and results of operations.

     The Company's software products are susceptible to unauthorized copying and
uses that may go undetected, and policing such unauthorized use is difficult. In
general,  the  Company's  efforts to protect its  intellectual  property  rights
through patent, copyright,  trademark and trade secret laws may not be effective
to prevent misappropriation of the technology, or to prevent the development and
design by others of  products or  technologies  similar to or  competitive  with
those  developed by the Company.  The


                                       4
<PAGE>

Company's  failure  or  inability  to  protect  its  proprietary   rights  could
materially  adversely  affect the Company's  business,  financial  condition and
results of operations.

EMPLOYEES

     The Company currently has thirty-one full time employees,  of which ten are
engaged in product development, five in project management and customer support,
six in  operations  ,  four in  sales  and  marketing  and  six in  finance  and
administration.


                                       5
<PAGE>

ITEM 2.  DESCRIPTION OF PROPERTIES

     In November  1999,  the Company  entered into a lease that expires on March
31, 2010 for its new facility in Hackensack,  NJ, covering approximately 22,500
square  feet,  which the  Company  first  occupied  in March  2000.  The rent is
currently $31,060 per month and will increase to $34,835 per month from the 61st
month until the end of the lease.

ITEM 3.  LEGAL PROCEEDINGS

     None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.


                                       6
<PAGE>

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The Company  completed its initial  public  offering on June 30, 1999.  The
Company's  Common Stock is traded on The Nasdaq SmallCap Market under the symbol
IDSY. The following table sets forth,  for the periods  indicated,  the high and
low sales price for the  Company's  common  stock as reported on such  quotation
systems.

            QUARTER ENDING:                    HIGH         LOW
            ---------------                    ----         ---

            2000
            ----
            March 31, 2000                    $17.50      $5.625
            June 30, 2000                     $ 9.00      $3.500
            September 30, 2000                $ 7.62      $4.875
            December 31, 2000                 $ 4.31      $1.750

            2001
            ----
            March 31, 2001                    $ 5.00      $2.000
            June 30, 2001                     $ 6.70      $3.375
            September 30, 2001                $ 6.00      $3.700
            December 31, 2001                 $10.85      $4.450

            2002
            ----
            January 1, 2002 - March 4, 2002   $11.10      $6.650

     There were 42 registered holders and approximately  1,200 beneficial owners
of the Company's Common Stock of record as of March 4, 2002. The Company has not
declared  or paid  dividends  on its Common  Stock to date and intends to retain
future earnings, if any, for use in its business for the foreseeable future.

ITEM 6.   MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
          RESULTS OF OPERATIONS

     The following  discussion and analysis of the Company's financial condition
and  results of  operations  should be read in  conjunction  with its  financial
statements and notes thereto appearing elsewhere herein.


                                       7
<PAGE>

     RESULTS OF OPERATIONS

     The  following  table  sets  forth,  for  the  periods  indicated,  certain
operating information expressed as a percentage of revenue:

                                                              Year Ended
                                                             December 31,
                                                      --------------------------
                                                         2000          2001
                                                      --------------------------

Revenues                                                 100.0%        100.0%
Cost of revenues                                          76.4          59.4
                                                         -----         -----

Gross profit                                              23.6          40.6
Selling, general and administrative expenses             427.0         384.8
Research and development expenses                        185.3         112.5
                                                         -----         -----

Loss from operations                                    (588.7)       (456.7)
Interest income                                           75.6          33.6
Interest expense                                          (0.5)         (0.3)
                                                         -----         -----

Loss before income taxes                                (513.6)       (423.4)
Income tax benefit                                         3.6
                                                         -----         -----

Net loss                                                (510.0)       (423.4)
                                                        ======        ======

YEAR ENDED DECEMBER 31, 2001 COMPARED TO THE YEAR ENDED DECEMBER 31, 2000

REVENUES.  Revenues were $923,000 for the year ended  December 31, 2001 compared
to $945,000 in the year ended  December  31,  2000.  Revenues for the year ended
December  31, 2001 were derived  from the  delivery  and  implementation  of the
Company's  fleet  tracking  and  management  system  pursuant to on-going  pilot
programs.

COST OF REVENUES. Cost of revenues decreased 24.1% to $548,000 in the year ended
December  31,  2001 from  $722,000 in the year ended  December  31,  2000.  As a
percentage  of revenues,  cost of revenues  decreased to 59.4% in the year ended
December 31, 2001 from 76.4% in the year ended December 31, 2000.  This decrease
is  attributable  to a $200,000  reserve on inventory  recorded  during the year
ended December 31, 2000.  Gross profit  increased  68.2% to $375,000 in the year
ended  December 31, 2001 from $223,000 in the year ended December 31, 2000. As a
percentage  of  revenues,  gross  profit  increased  to 40.6% in the year  ended
December 31, 2001 from 23.6% in the year ended December 31, 2000.

SELLING,   GENERAL   AND   ADMINISTRATIVE   EXPENSES.   Selling,   general   and
administrative expenses decreased 12.0% to $3,552,000 in the year ended December
31, 2001 from  $4,035,000 in the year ended  December 31, 2000. The decrease was
primarily  attributable  to a decrease in payroll  expenses


                                       8
<PAGE>

resulting from cost cutting efforts  instituted in the first quarter of 2001. As
a percentage of revenues, selling, general and administrative expenses decreased
to 384.8% in the year  ended  December  31,  2001 from  427.0% in the year ended
December 31, 2000.

RESEARCH AND DEVELOPMENT  EXPENSES.  Research and development expenses decreased
40.7% to $1,038,000 in the year ended  December 31, 2001 from  $1,751,000 in the
year ended December 31, 2000.  This decrease was  attributable to completing and
commercializing the new "universal system" of hardware and software for tracking
and managing fleets of industrial  vehicles during the first quarter of 2001. As
a percentage of revenues,  research and development expenses decreased to 112.5%
in the year ended  December 31, 2001 from 185.3% in the year ended  December 31,
2000.

NET INTEREST INCOME AND EXPENSE.  Interest income was $310,000 in the year ended
December  31, 2001 as compared to $714,000 in the year ended  December 31, 2000.
This decrease was  attributable  to larger average cash,  cash  equivalents  and
short-term investment balances in 2000 as compared to 2001.

Interest  expense was $3,000 in the year ended  December 31, 2001 as compared to
$5,000 in the year ended December 31, 2000.

INCOME TAXES. There was no income tax expense due in the year ended December 31,
2001.  In the year ended  December  31, 2000 there was an income tax benefit was
$34,000. The benefit in 2000 reflects a carryback of the Company's net operating
loss for federal purposes of $111,000 partially offset by a $49,000 reduction in
a deferred tax asset.

NET  LOSS.  Net loss was  $3,908,000  in the year  ended  December  31,  2001 as
compared to net loss of  $4,820,000  in the year ended  December 31, 2000.  This
decrease was due primarily to the reasons described above.


                                       9
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     As of  December  31,  2001,  the  Company had cash,  cash  equivalents  and
short-term  investments  of  $5,465,000  and working  capital of  $5,970,000  as
compared to $8,673,000 and $9,582,000, respectively at December 31, 2000.

     Net cash used in operating  activities  was  $3,185,000  for the year ended
December  31,  2001 as  compared  to net cash used in  operating  activities  of
$3,902,000  for the year ended  December  31,  2000.  Net cash used in operating
activities  in the year ended  December 31, 2001 was primarily due to a net loss
of $3,908,000,  a decrease in accounts  payable and accrued expenses of $125,000
and an  increase  in  inventory  of $96,000  partially  offset by a decrease  in
accounts and unbilled receivables of $412,000,  an increase of other liabilities
of $200,000 and a decrease in income taxes receivable of $111,000. Net cash used
in operating activities in the year ended December 31, 2000 was primarily due to
the net loss of $4,820,000, an increase in inventory of $625,000 and an increase
in income tax receivable of $111,000  partially offset by a decrease in accounts
and unbilled receivables of $1,196,000, a decrease in prepaid expenses and other
assets of $205,000 and an increase in accounts  payable and accrued  expenses of
$154,000.

     Net cash provided by investing  activities  for the year ended December 31,
2001 was  $2,478,000  as compared to cash used in investing  activities  for the
year  ended  December  31,  2000 of  $24,000.  The cash  provided  by  investing
activities in the year ended December 31, 2001 was primarily from  maturities of
short-term  investments  of  $12,000,000  partially  offset by the  purchase  of
investments  of $9,242,000 and  amortization  of debt discount on investments of
$209,000.  The use of cash in investing  activities  for the year ended December
31, 2000 reflects  purchase of investments of $10,140,000,  amortization of debt
discount on  investments  of $183,000  and  purchase of fixed assets of $441,000
offset by maturities of short-term investments of $10,740,000.

     Net cash provided by financing  activities  for the year ended December 31,
2001 was $48,000 as compared to net cash used in financing activities of $10,000
for the year  ended  December  31,  2000.  The net cash  provided  by  financing
activities  of $48,000  for the year ended  December  31,  2001,  resulted  from
$70,000 of proceeds received from exercise of employee stock options,  offset by
$22,000  paid  for  capital  lease  obligations.  The  cash  used  in  financing
activities for the year ended December 31, 2000 reflects  $14,000 for payment of
lease obligations  partially offset by $4,000 of proceeds received from exercise
of employee stock options.

     In January  2002,  the  Company  sold  821,250  shares of common  stock and
received proceeds of approximately $6,100,000.

     The Company  believes its operations  have not been and, in the foreseeable
future,  will not be  materially  adversely  affected by  inflation  or changing
prices.


                                       10
<PAGE>

INFLATION

     The impact of inflation of the Company's revenues and results of operations
has not been significant.

FORWARD LOOKING STATEMENTS

Certain  statements  in this Annual  Report on Form  10-KSB,  under the sections
"Management  Discussion  and  Analysis  of  Financial  Condition  and Results of
Operations,"  "Business" and elsewhere  relate to future events and expectations
and as such constitute  "forward-looking  statements"  within the meaning of the
Private  Securities  Litigation  Reform  Act  of  1995.  The  words  "believes,"
"anticipates,"  "plans,"  "expects,"  and similar  expressions  are  intended to
identify  forward-looking  statements.  Such forward-looking  statements involve
known and unknown  risks,  uncertainties,  and other factors which may cause the
actual  results,  performance  or  achievements  of the Company to be materially
different  from any future  results,  performance or  achievements  expressed or
implied  by  such  forward-looking  statements  and to vary  significantly  from
reporting  period to reporting  period.  These forward  looking  statements were
based  on  various  factors  and  were  derived  utilizing   numerous  important
assumptions  and  other  factors  that  could  cause  actual  results  to differ
materially  from those in the forward  looking  statements,  including,  but not
limited  to:  uncertainty  as to the  Company's  future  profitability  and  the
Company's ability to develop and implement  operational and financial systems to
manage rapidly  growing  operations,  competition in the Company's  existing and
potential  future  lines of  business,  and other  factors.  Other  factors  and
assumptions  not identified  above were also involved in the derivation of these
forward  looking  statements,  and the failure of such other  assumptions  to be
realized,  as well as other  factors,  may also cause  actual  results to differ
materially  from those  projected.  The Company  assumes no obligation to update
these  forward  looking  statements  to  reflect  actual  results,   changes  in
assumptions  or  changes  in  other  factors   affecting  such  forward  looking
statements.


                                       11
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS

  Independent auditors' report...............................................13

  Balance sheet as of December 31, 2001......................................14

  Statements of operations for the years ended
  December 31, 2000 and 2001.................................................15

  Statements of changes in stockholders' equity
  for the years ended December 31, 2000 and 2001.............................16

  Statements of cash flows for the years ended December 31, 2000 and 2001....17

  Notes to financial statements..............................................18


                                       12
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
I.D. Systems, Inc.
Hackensack, New Jersey

We have  audited the  accompanying  balance  sheet of I.D.  Systems,  Inc. as of
December  31,  2001  and  the  related  statements  of  operations,  changes  in
stockholders'  equity and cash flows for the years ended  December  31, 2000 and
2001.  These  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  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.  An audit also includes 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 enumerated above present fairly, in all
material respects,  the financial position of I.D. Systems,  Inc. as of December
31,  2001 and the  results  of its  operations  and its cash flows for the years
ended  December 31, 2000 and 2001,  in  conformity  with  accounting  principles
generally accepted in the United States of America.



/s/ Richard A. Eisner & Company, LLP
New York, New York
February 7, 2002


                                       13
<PAGE>

I.D. SYSTEMS, INC.
BALANCE SHEET
DECEMBER 31, 2001

<TABLE>
<CAPTION>

ASSETS
<S>                                                                                <C>
Current assets:
  Cash and cash equivalents                                                        $  2,426,000
  Investments                                                                         3,039,000
  Accounts receivable                                                                   234,000
  Inventory                                                                             844,000
  Prepaid expenses and other current assets                                             111,000
                                                                                   ------------

     Total current assets                                                             6,654,000

Fixed assets, net                                                                       540,000
Other assets                                                                            117,000
                                                                                   ------------

                                                                                   $  7,311,000
                                                                                   ============
LIABILITIES
Current liabilities:
   Accounts payable and accrued expenses                                           $    574,000
   Capital lease obligations                                                             10,000
   Other current liabilities                                                            100,000
                                                                                   ------------

     Total current liabilities                                                          684,000

Deferred rent                                                                            42,000
Other liabilities                                                                       100,000
                                                                                   ------------

Commitments and other matters                                                           826,000
                                                                                   ------------
STOCKHOLDERS' EQUITY
Preferred stock; authorized 5,000,000 shares, $.01 par value; none issued Common
stock; authorized 15,000,000 shares, $.01 par value; issued and outstanding
   5,866,000 shares                                                                      59,000
Additional paid-in capital                                                           15,739,000
Treasury stock; 40,178 shares at cost                                                  (113,000)
Accumulated deficit                                                                  (9,200,000)
                                                                                   ------------

                                                                                      6,485,000
                                                                                   ------------

                                                                                   $  7,311,000
                                                                                   ============

</TABLE>

See notes to financial statements


                                       14
<PAGE>

I.D. Systems, Inc.
STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                          YEAR ENDED DECEMBER 31,
                                                                          -----------------------
                                                                           2000            2001
                                                                           ----            ----
<S>                                                                   <C>             <C>
Revenue                                                               $     945,000   $     923,000
Cost of revenue                                                             722,000         548,000
                                                                      -------------   -------------

Gross profit                                                                223,000         375,000
                                                                      -------------   -------------

Operating expenses:
   Selling, general and administrative expenses                           4,035,000       3,552,000
   Research and development expenses                                      1,751,000       1,038,000
                                                                      -------------   -------------

                                                                          5,786,000       4,590,000
                                                                      -------------   -------------

Loss from operations                                                     (5,563,000)     (4,215,000)
Interest income                                                             714,000         310,000
Interest expense                                                             (5,000)         (3,000)
                                                                      -------------   -------------

Loss before income taxes                                                 (4,854,000)     (3,908,000)
Income tax benefit                                                           34,000
                                                                      -------------   -------------

NET LOSS                                                              $  (4,820,000)  $  (3,908,000)
                                                                      =============   =============

NET LOSS PER SHARE - BASIC AND DILUTED                                   $(.84)           $(.67)
                                                                         =====            =====

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING -
   BASIC AND DILUTED LOSS PER SHARE                                       5,721,000       5,840,000
                                                                      =============   =============

</TABLE>

See notes to financial statements


                                       15
<PAGE>

I.D. SYSTEMS, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                               COMMON STOCK
                                         -----------------------     ADDITIONAL
                                         NUMBER OF                    PAID-IN       ACCUMULATED     TREASURY      STOCKHOLDERS'
                                          SHARES         AMOUNT       CAPITAL         DEFICIT         STOCK           EQUITY
                                         ---------       ------      ----------     -----------     --------      -------------
<S>                                       <C>          <C>         <C>             <C>             <C>            <C>
BALANCE - JANUARY 1, 2000                 5,717,000    $  57,000   $  15,554,000   $   (472,000)                  $  15,139,000
Shares issued pursuant to exercise
   of stock options                           4,000                        4,000                                          4,000
Net loss for the year ended
   December 31, 2000                                                                 (4,820,000)                     (4,820,000)
                                          ---------    ---------   -------------   ------------                   -------------

BALANCE - DECEMBER 31, 2000               5,721,000       57,000      15,558,000     (5,292,000)                     10,323,000
Shares issued pursuant to exercise
   of stock options                         145,000        2,000         181,000                                        183,000
Shares received as consideration
   for exercise of stock options                                                                   $ (113,000)         (113,000)
Net loss for the year ended
   December 31, 2001                                                                 (3,908,000)                     (3,908,000)
                                          ---------    ---------   -------------   ------------    ----------     -------------

BALANCE - DECEMBER 31, 2001               5,866,000    $  59,000   $  15,739,000   $ (9,200,000)   $ (113,000)    $   6,485,000
                                          =========    =========   =============   ============    ==========     =============

</TABLE>

See notes to financial statements


                                       16
<PAGE>

I.D. SYSTEMS, INC.
STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                 YEAR ENDED DECEMBER 31,
                                                                                 -----------------------
                                                                                 2000              2001
                                                                                 ----              ----
<S>                                                                         <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                                  $ (4,820,000)   $ (3,908,000)
  Adjustments to reconcile net loss to net cash used in
    operating activities:
       Depreciation and amortization                                             116,000         163,000
       Deferred taxes                                                             49,000
       Deferred rent expense                                                     (23,000)         23,000
       Changes in:
          Accounts receivable                                                    583,000          63,000
          Unbilled receivables                                                   613,000         349,000
          Inventory                                                             (625,000)        (96,000)
          Income tax receivable                                                 (111,000)        111,000
          Prepaid expenses and other assets                                      205,000          43,000
          Accounts payable and accrued expenses                                  154,000        (125,000)
          Taxes payable                                                          (43,000)         (8,000)
          Other liabilities                                                                      200,000
                                                                            ------------    ------------

            Net cash used in operating activities                             (3,902,000)     (3,185,000)
                                                                            ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of fixed assets                                                      (441,000)        (71,000)
  Purchases of investments                                                   (10,140,000)     (9,242,000)
  Maturities and sales of investments                                         10,740,000      12,000,000
  Amortization of discount on investments                                       (183,000)       (209,000)
                                                                            ------------    ------------

            Net cash (used in) provided by investing activities                  (24,000)      2,478,000
                                                                            ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Payment of lease obligations                                                   (14,000)        (22,000)
  Proceeds from exercise of stock options                                          4,000          70,000
                                                                            ------------    ------------

            Net cash (used in) provided by financing activities                  (10,000)         48,000
                                                                            ------------    ------------

NET DECREASE IN CASH AND CASH EQUIVALENTS                                     (3,936,000)       (659,000)
Cash and cash equivalents - January 1                                          7,021,000       3,085,000
                                                                            ------------    ------------

CASH AND CASH EQUIVALENTS - DECEMBER 31                                     $  3,085,000    $  2,426,000
                                                                            ============    ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid for:
    Interest                                                                $      5,000    $      3,000
    Income taxes                                                            $     58,000

SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING INFORMATION:
  Treasury shares received as consideration for exercise of stock options                   $    113,000

</TABLE>

See notes to financial statements


                                       17
<PAGE>

I.D. SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001

NOTE A - THE COMPANY

I.D.  Systems,  Inc. (the  "Company") is a provider of wireless  solutions.  The
Company  designs,  develops  and produces  innovative  wireless  monitoring  and
tracking  products  that utilize its patented  radio-frequency-based  system and
Internet-based data management  systems.  The Company's products are designed to
enable users to improve operating efficiencies and reduce costs. The Company was
incorporated in Delaware in 1993 and commenced operations in January 1994.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

[1]  USE OF ESTIMATES:

     The  preparation  of financial  statements  in conformity  with  accounting
     principles  generally  accepted  in the United  States of America  requires
     management  to make  estimates  and  assumptions  that affect the  reported
     amounts of assets and liabilities  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.

[2]  CASH AND CASH EQUIVALENTS:

     The Company  considers all highly liquid debt instruments  purchased with a
     maturity of three months or less to be cash equivalents.

[3]  INVENTORY:

     Inventory,  which  consists of components  for the Company's  products,  is
     stated at cost using the first-in first-out method.

[4]  FIXED ASSETS AND DEPRECIATION:

     Fixed assets are recorded at cost and depreciated  using the  straight-line
     method over the estimated useful lives of the assets which range from three
     to ten  years.  Equipment  under  capital  leases are  amortized  using the
     straight-line  method  over the terms of the  respective  leases,  or their
     estimated useful lives, whichever is shorter.

[5]  RESEARCH AND DEVELOPMENT:

     Research and development costs are charged to expense as incurred.

[6]  PATENT COSTS:

     Costs incurred in connection  with  acquiring  patent rights are charged to
     expense as incurred.


                                       18
<PAGE>

I.D. SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (CONTINUED)

[7]  REVENUE RECOGNITION:

     Sales are recognized when products are shipped and no future performance is
     required  by  the  Company.   Contract   revenue  is  recognized  based  on
     performance, in accordance with the terms of the related contracts.

[8]  BENEFIT PLAN:

     The  Company  maintains  a  retirement  plan  under  Section  401(k) of the
     Internal  Revenue  Code which covers all  eligible  employees.  The Company
     contributed  $36,000 and $0 to the plan during the years ended December 31,
     2000 and 2001, respectively.

[9]  RENT EXPENSE:

     Expense  related  to  the  Company's   facility  lease  is  recorded  on  a
     straight-line  basis  over the lease  term.  The  difference  between  rent
     expense  incurred  and the amount paid is recorded as deferred  rent and is
     amortized over the lease term.

[10] STOCK-BASED COMPENSATION:

     The Company accounts for stock-based employee compensation under Accounting
     Principles  Board ("APB")  Opinion No. 25,  "Accounting for Stock Issued to
     Employees",  and  related  interpretations.  The  Company  has  adopted the
     disclosure-only  provisions of Statement of Financial  Accounting Standards
     ("SFAS") No. 123, "Accounting for Stock- Based Compensation."

[11] INCOME TAXES:

     The Company uses the asset and liability  method of accounting for deferred
     income  taxes.  Deferred  income  taxes are  measured by  applying  enacted
     statutory rates to net operating loss  carryforwards and to the differences
     between the financial  reporting  and tax bases of assets and  liabilities.
     Deferred tax assets are reduced, if necessary, by a valuation allowance for
     any tax benefits which are not expected to be realized.


                                       19
<PAGE>

I.D. SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (CONTINUED)

[12] NET INCOME (LOSS) PER SHARE:

     The Company  calculates net income (loss) per share in accordance  with the
     provisions of SFAS No. 128,  "Earnings Per Share".  SFAS No. 128 requires a
     dual  presentation of "basic" and "diluted"  income (loss) per share on the
     face of the  statements  of  operations.  Basic income  (loss) per share is
     computed by dividing the net income (loss) by the weighted  average  number
     of shares of common stock  outstanding  during each period.  Diluted income
     (loss) per share includes the effect,  if any, from the potential  exercise
     or conversion  of  securities,  such as stock  options and warrants,  which
     would result in the issuance of incremental shares of common stock. For the
     years  ended  December  31,  2000 and 2001 the basic and  diluted  weighted
     average shares outstanding are the same since the effect from the potential
     exercise  of  outstanding  stock  options  and  warrants  would  have  been
     anti-dilutive (see Note F).

[13] FINANCIAL INSTRUMENTS:

     The  carrying  amounts  of cash  equivalents,  investments,  capital  lease
     obligations and other liabilities  approximate their fair values due to the
     short period to maturity of these instruments.

NOTE C - INVESTMENTS

The Company's investments at December 31, 2001 consist principally of short-term
commercial  paper which  mature  within one year and are  classified  as held to
maturity. Accordingly, investments are carried at amortized cost.

NOTE D - FIXED ASSETS

Fixed assets are stated at cost, less accumulated depreciation and amortization,
and at December 31, 2001, are summarized as follows:

     Equipment                                          $  183,000
     Computer software                                     127,000
     Computer hardware                                     180,000
     Furniture and fixtures                                114,000
     Leasehold improvements                                275,000
     Equipment under capital lease                          51,000
                                                        ----------

                                                           930,000
     Accumulated depreciation and amortization             390,000
                                                        ----------

                                                        $  540,000
                                                        ==========


                                       20
<PAGE>

I.D. SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001

NOTE E - EQUIPMENT LEASE OBLIGATIONS

The Company leases equipment under various  agreements with original terms of 36
to 60 months and accounts for these leases as capital leases. The net book value
of the equipment held under capital leases was approximately $11,000 at December
31, 2001.

At December  31,  2001  future  lease  payments  of  $11,000,  including  $1,000
representing interest are due in 2002.

NOTE F - STOCKHOLDERS' EQUITY

[1]  COMMON STOCK:

     In June 1999, the Company sold  2,300,000  shares of its common stock in an
     initial public offering. In connection therewith,  the Company received net
     proceeds of $13,921,000.

[2]  PREFERRED STOCK:

     The  Company  has  5,000,000  shares  of $.01  par  value  preferred  stock
     authorized.  The  Company's  Board of Directors  has the authority to issue
     shares of  preferred  stock and to  determine  the price and terms of those
     shares.


                                       21
<PAGE>

I.D. SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001

NOTE F - STOCKHOLDERS' EQUITY  (CONTINUED)

[3]  STOCK OPTIONS:

     The Company has adopted the 1995 Stock Option  Plan,  pursuant to which the
     Company  may grant  options to  purchase up to an  aggregate  of  1,250,000
     shares of common stock.  The Company has also adopted the 1999 Stock Option
     Plan and the 1999 Director  Option Plan,  pursuant to which the Company may
     grant options to purchase up to 1,812,500  (which was increased during 2001
     from 812,500) and 300,000 shares of common stock,  respectively.  The Plans
     are  administered  by the Board of  Directors,  which has the  authority to
     determine  the term during which an option may be exercised  (not more than
     10 years),  the exercise  price of an option and the rate at which  options
     may be exercised.

     A summary of the status of the Company's  stock option plans as of December
     31, 2000 and 2001 and changes  during the years  ended on those  dates,  is
     presented below:

<TABLE>
<CAPTION>

                                                          2000                              2001
                                           ----------------------------------  ----------------------------------
                                                                Weighted                            Weighted
                                                                 Average                            Average
                                               Shares        Exercise Price        Shares        Exercise Price
                                           --------------  ------------------  -------------   ------------------
<S>                                            <C>               <C>               <C>               <C>
Outstanding at beginning of year               1,479,000         $1.79             1,975,000         $2.76
Granted                                          590,000          5.59               664,000          4.64
Exercised                                         (4,000)         1.20              (145,000)         1.26
Forfeited                                        (90,000)         5.36              (272,000)         3.59
                                            ------------                        ------------

Outstanding at end of year                     1,975,000          2.76             2,222,000          3.32
                                            ============                        ============

Exercisable at end of year                       848,000          1.20               970,000          1.80
                                            ============                        ============

</TABLE>

As of December 31, 2001 there were 990,000 options available for grant under the
Company's stock option plans.

The following table summarizes  information  about stock options at December 31,
2001:

<TABLE>
<CAPTION>

                                     Options Outstanding                       Options Exercisable
                      ----------------------------------------------      -------------------------------
                        Number            Weighted                           Number
                      Outstanding         Average          Weighted        Exercisable          Weighted
                          at             Remaining         Average             at               Average
    Exercise          December 31,      Contractual        Exercise        December 31,         Exercise
     Prices              2001               Life            Price             2001               Price
    --------          ------------      -----------        ---------      ------------         --------
<S>                  <C>                  <C>                <C>             <C>                  <C>
 $0.80                 275,000            4 years           $0.80            275,000             $0.80
  1.20                 737,000            6 years            1.20            536,000              1.20
  2.00-3.63            337,000            9 years            2.87             30,000              3.41
  4.13-5.67            459,000            9 years            5.14             60,000              4.28
  6.00-8.00            414,000            9 years            7.12             69,000              7.57
                       -------                                               -------

                     2,222,000            7 years            3.32            970,000              1.80
                     =========                                               =======

</TABLE>


                                       22
<PAGE>

I.D. SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001

NOTE F - STOCKHOLDERS' EQUITY  (CONTINUED)

[3]  STOCK OPTIONS: (CONTINUED)

     The Company  applies APB  Opinion  No. 25 and  related  interpretations  in
     accounting  for  options.   Accordingly,  no  compensation  cost  has  been
     recognized  for employee  stock option grants.  Had  compensation  cost for
     employee stock option grants been determined based on the fair value at the
     grant  dates for awards  consistent  with the method of SFAS No.  123,  the
     Company's  net loss and net loss per share (basic and diluted) for the year
     ended December 31, 2000 would have been approximately $5,395,000, and $.94,
     respectively.  The  Company's  net loss and net loss per share  (basic  and
     diluted) for the year ended December 31, 2001 would have been approximately
     $4,504,000, and $.77, respectively.  The fair value of each option grant on
     the date of grant is estimated using the Black-Scholes option-pricing model
     with a  volatility  of 70% for  2000  and 93% for  2001,  expected  life of
     options of 5 years, risk free interest rate of approximately 6% in 2000 and
     5% in 2001 and a dividend  yield of 0%. The weighted  average fair value of
     options  granted  during the years  ended  December  31, 2000 and 2001 were
     $3.55 and $3.40, respectively.

[4]  Warrants:

     In connection  with the  Company's  initial  public  offering in June 1999,
     warrants  to  purchase  200,000  shares of common  stock were issued to the
     underwriter for nominal  consideration.  The warrants are exercisable for a
     period of four  years,  commencing  in June 2000,  at a price of $11.55 per
     share.

NOTE G - INCOME TAXES

The Company has a deferred tax asset of approximately $3,360,000 at December 31,
2001.  This  reflects  a  net  operating  loss   carryforward  of  approximately
$8,217,000 for federal income tax purposes,  substantially  all of which expires
in 2020 and 2021,  certain  state and local net  operating  losses  and  certain
timing differences  between financial and tax reporting.  Future stock issuances
may subject  the Company to annual  limitations  on the  utilization  of its net
operating  loss  carryforward.  The Company has provided a valuation  allowance,
which  increased  by  $1,508,000  during  2001,  against  the full amount of its
deferred tax asset, since the likelihood of realization cannot be determined.

There was no income tax expense  (benefit) for the year ended December 31, 2001.
The  components of the income tax expense  (benefit) for the year ended December
31, 2000 are approximately as follows:

Current:
  Federal                                         $(113,000)
  State and local                                    30,000
                                                  ---------

                                                    (83,000)
Deferred:
  Local                                              49,000
                                                  ---------

                                                  $ (34,000)
                                                  =========


                                       23
<PAGE>

I.D. SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001

NOTE G - INCOME TAXES  (CONTINUED)

The difference between income taxes at the statutory federal income tax rate and
income taxes reported in the statements of operations  are  attributable  to the
following:

<TABLE>
<CAPTION>

                                                                             Year Ended December 31,
                                                                        ----------------------------------
                                                                              2000              2001
                                                                        ---------------    ---------------
<S>                                                                     <C>                <C>
     Income tax benefit at the federal statutory rate                   $   (1,650,000)    $   (1,329,000)
     State and local income taxes, net of effect on federal taxes             (293,000)          (193,000)
     Increase in valuation allowance                                         1,852,000          1,508,000
     Nondeductible expenses                                                     12,000              7,000
     Other                                                                      45,000              7,000
                                                                        --------------     --------------

                                                                        $      (34,000)    $            0
                                                                        ==============     ==============

</TABLE>

The deferred tax asset and liability at December 31, 2001 are as follows:

<TABLE>

<S>                                                                      <C>
     Net operating loss carryforward                                     $   3,288,000
     Allowance for inventory obsolescence                                       80,000
                                                                         -------------

                                                                             3,368,000
     Fixed assets                                                               (8,000)
                                                                         -------------

                                                                             3,360,000
     Valuation allowance                                                    (3,360,000)
                                                                         -------------

                                                                         $           0
                                                                         =============

</TABLE>

NOTE H - COMMITMENTS AND OTHER MATTERS

[1]  OPERATING LEASES:

     The Company is obligated under operating leases for its facility,  which it
     occupied in March 2000,  and for  furniture  and  fixtures.  The  Company's
     operating leases provide for minimum annual rental payments as follows:

                                             Furniture
           Year Ending                          and
           December 31,      Facility         Fixtures         Total
           ------------      --------         --------         -----

         2002             $     373,000    $   124,000     $     497,000
         2003                   373,000         10,000           383,000
         2004                   373,000                          373,000
         2005                   410,000                          410,000
         2006                   410,000                          410,000
         Thereafter           1,435,000                        1,435,000
                          -------------    -----------     -------------

                          $   3,374,000    $   134,000     $   3,508,000
                          =============    ===========     ==============


                                       24
<PAGE>

I.D. SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001

NOTE H - COMMITMENTS AND OTHER MATTERS  (CONTINUED)

[1]  OPERATING LEASES: (CONTINUED)

     The office  lease,  which expires in 2010,  also  provides for  escalations
     relating to increases in real estate taxes and certain operating  expenses.
     Expenses relating to operating leases aggregated approximately $479,000 and
     $580,000 for the years ended December 31, 2000 and 2001, respectively.

     When the  Company  vacated  its former  premises,  it  recorded a charge to
     operations of $21,000 in connection with being released from the lease.

[2]  EMPLOYMENT AGREEMENTS:

     The Company has employment  agreements with three  executives which provide
     for aggregate annual compensation of $312,000 and entitle the executives to
     salary  increases,  bonuses and stock options to be determined by the Board
     of  Directors.  The  agreements,  which  expire in June 2002,  provide  for
     severance  payments  equal  to the  greater  of one  year's  salary  or the
     remaining amount due through the end of the agreements.

[3]  CONCENTRATION OF CUSTOMERS:

     Four customers  accounted for 67% of the Company's  revenue during the year
     ended  December 31, 2000 (each  accounting for between 13% and 21%). One of
     those  customers  accounted  for 15% and  sales  of  inventory  to a vendor
     accounted for 11% of the Company's  revenue  during the year ended December
     31, 2001.

     One customer  accounted  for 59% of the  Company's  accounts  receivable at
     December 31, 2001.

[4]  OTHER LIABILITIES:

     In December 2001, the Company settled a claim in connection with a contract
     and  recorded  a charge of  $250,000,  which is  included  in  general  and
     administrative expenses in the accompanying financial statements.  Pursuant
     to the terms of the  settlement  agreement,  the  Company  paid  $50,000 in
     December  2001 and will pay $50,000 every six months from June 2002 through
     December  2003.  Accordingly,   $100,000  is  reflected  as  other  current
     liabilities and $100,000 as other liabilities in the accompanying financial
     statements.

NOTE I - SUBSEQUENT EVENT

In January  2002,  the Company sold 821,250  shares of common stock and received
net proceeds of approximately $6,100,000.

Warrants to purchase 107,125 shares of common stock were issued to the placement
agent and a finder.  The  warrants are  exercisable  for a period of five years,
commencing in January 2002 at a price of $9.58 per share.


                                       25
<PAGE>

ITEM 8.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
         FINANCIAL DISCLOSURE

     None.


                                       26
<PAGE>

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, COMPLIANCE
        WITH SECTION 16(A) OF THE EXCHANGE ACT

DIRECTORS AND EXECUTIVE OFFICERS

The  following  table lists the names,  ages,  and  positions  of the  Executive
Officers and Directors of the Company.

NAME                           AGE       POSITION
----                           ---       --------
Jeffrey M. Jagid               33        Chairman of the Board, Chief Executive
                                         Officer, and Director
Kenneth S. Ehrman              32        President, Chief Operating Officer and
                                         Director
Michael L. Ehrman              29        Executive Vice President of Engineering
Ned Mavrommatis                31        Chief Financial Officer and Treasurer
Beatrice Yormark (1)           57        Director
Martin G. Rosansky (1)         63        Director
Lawrence Burstein (1)          59        Director
N. Bert Loosmore               32        Director

----------
(1)  Member of the Compensation and Audit Committees

JEFFREY M.  JAGID has been  Chairman  of the Board  since June 1, 2001 and Chief
Executive  Officer  since  June 1,  2000.  Prior to that,  he had  served as the
Company's  Chief  Operating  Officer.  Since he joined the Company in 1995,  Mr.
Jagid has served as a Director of the Company,  as well as its General  Counsel.
Mr. Jagid received a Bachelor of Business  Administration  from Emory University
in 1991 and a Juris Doctor degree from the Benjamin N. Cardozo  School of Law in
1994.  Prior to  joining  the  Company,  Mr.  Jagid was a  corporate  litigation
associate at the law firm of Tannenbaum  Helpern  Syracuse & Hirschtritt LLP, in
New York  City.  He is a  member  of the Bar of the  States  of New York and New
Jersey.

KENNETH S. EHRMAN is a founder of the  Company and has been its Chief  Operating
Officer since June 1, 2000.  Mr. Ehrman has been President and a Director of the
Company since  inception.  He graduated from Stanford  University in 1991 with a
Bachelor  of Science in  Industrial  Engineering,  where he studied  Management,
Production  and Finance.  Upon his  graduation,  and until the  inception of the
Company  in 1993,  Mr.  Ehrman  worked as a  production  manager  with a Echelon
Corporation,  the world leader in  networking  every day devices.  Mr. Ehrman is
Michael L. Ehrman's brother.

MICHAEL L.  EHRMAN has  served as the  Company's  Executive  Vice  President  of
Engineering  since August 1999.  Prior to that, he served as its Executive  Vice
President  of  Software  Development  since he joined the  Company in 1995.  Mr.
Ehrman  graduated  from Stanford  University in 1994 with a Master of Science in


                                       27
<PAGE>

Engineering  Economics  Systems  as well as a Bachelor  of  Science in  Computer
Systems  Engineering.  Upon his graduation in 1994, Mr. Ehrman was employed as a
Consultant  for  Andersen  Consulting  in New York.  Mr.  Ehrman is  Kenneth  S.
Ehrman's brother.

NED  MAVROMMATIS  has served as the Chief  Financial  Officer  since joining the
Company in August 1999 and as Treasurer since June 1, 2001. Prior to joining the
Company,  he was a Senior Manager at the accounting  firm of Richard A. Eisner &
Company  L.L.P.  He was a member of Eisner's New  Media/Technology  Group in the
public  company  practice.  Mr.  Mavrommatis  received  a Bachelor  of  Business
Administration degree from Bernard M. Baruch College, The City University of New
York in 1993. He is a member of The New York State  Society of Certified  Public
Accountants and The American Institute of Certified Public Accountants.

BEATRICE YORMARK has served as a director of the Company since June of 2001. Ms.
Yormark is the President and Chief Operating Officer of Echelon Corporation, the
world leader in networking every day devices.  Ms. Yormark has been with Echelon
since 1990.  Prior to becoming the President  and COO in September of 2001,  she
held the position of Vice  President of Worldwide  Marketing  and Sales.  Before
joining Echelon she was the chief operating officer of Connect, Inc., an on-line
information services company. Before joining Connect, Ms. Yormark held a variety
of positions,  including executive director of systems engineering for Telaction
Corporation,  director  in the  role of  partner  at  Coopers  &  Lybrand,  vice
president  of  sales at  INTERACTIVE  Systems  Corporation,  and  various  staff
positions at the Rand Corporation.  Ms. Yormark spent one year teaching computer
science  at Purdue  University,  following  the  completion  of her MS degree in
computer  science.  In addition to her  graduate  degree,  Ms.  Yormark has a BS
degree in mathematics from City College of New York.

MARTIN G.  ROSANSKY is a founder of the Company and has served as its  Secretary
and as a Director since  inception.  In March 1991, Mr. Rosansky  co-founded and
served as the Vice Chairman of Ultralife Batteries,  Inc. Prior to Ultralife, in
1970, Mr. Rosansky  co-founded Power Conversion,  Inc., where he was Chairman of
the Board,  Secretary and  Treasurer  from 1970 to January  1986.  Mr.  Rosansky
earned  a  Bachelor  of  Science  in  Mechanical  Engineering  from  Polytechnic
Institute of Brooklyn in 1960.

     LAWRENCE  BURSTEIN  has served as a Director of the  Company  since June of
1999.  Since March 1996,  Mr.  Burstein has served as President  and director of
Unity Venture  Capital  Associates,  Ltd., a private  investment  company.  From
January  1982 to March  1996,  Mr.  Burstein  was  Chairman  of the  Board and a
principal  stockholder  of Trinity  Capital  Corporation,  a private  investment
company.  Mr. Burstein is a director of THQ, Inc.,  Brazil Fast Food Corp.,  CAS
Medical  Systems,  Inc.,  Traffix,  Inc. and Gender  Sciences Inc. Mr.  Burstein
received a Bachelor of Arts in Economics  from the University of Wisconsin and a
Bachelor of Law from Columbia Law School.

N. BERT LOOSMORE, a founder of the Company, served as its Executive Vice
President of Technology from August 1999 until December 2000. Prior to that, he
served as the Company's Executive Vice President of Engineering. Mr. Loosmore
has been a Director of the Company since inception. He graduated from Stanford
University in 1991 with a Bachelor of Science in Electrical Engineering, where
he concentrated on computer hardware and software, including microprocessor
design. From 1991 to 1992, he worked at International Business Machines, Inc. as
a Design and Test Engineer and later as a Production Engineer. From 1992 until
the


                                       28
<PAGE>

Company's inception,  Mr. Loosmore was a Production Engineer at a Silicon Valley
networking company.

All  directors   currently   hold  office  until  the  next  annual  meeting  of
stockholders  and until their  successors  are duly elected and  qualified.  The
Company's  executive  officers serve at the discretion of the Board of Directors
and until their successors are duly elected and qualified.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING REQUIREMENTS

     Section  16(a) of the Exchange Act of 1934, as amended  ("Section  16(a)"),
requires the Company's  directors and officers and persons who own more than 10%
of the Company's  Common Stock  (collectively,  "Insiders"),  to file reports of
ownership and changes in ownership with the  Securities and Exchange  Commission
(the "Commission").  Insiders are required by Commission  regulations to furnish
the Company with copies of all Section 16(a) forms they file.

     Based solely upon a review of copies of such forms received by the Company,
the Company  believes that its Insiders have complied with all Section 16 filing
requirements  applicable to them with respect to the Company's fiscal year ended
December 31, 2001.

ITEM 10.  EXECUTIVE COMPENSATION

     The following table sets forth the  compensation  paid or accrued,  for the
fiscal years ended December 31, 2001 and 2000 and 1999, for the Company's  Chief
Executive Officer and four most highly compensated executive officers other than
its Chief Executive  Officer,  whose salary and bonus were in excess of $100,000
(the "Named Officers") who were employed by the Company on December 31, 2001.


                                       29
<PAGE>

                           Summary Compensation Table

<TABLE>
<CAPTION>

                 Name and                                 Annual Compensation
            Principal Position                   Year           Salary           Bonus
------------------------------------------------------------------------------------------
<S>                                              <C>            <C>             <C>
Jeffrey M. Jagid                                 2001           $120,000          ---
Chief Executive Officer                          2000           $119,500          ---
and General Counsel                              1999           $114,500        $12,000

Kenneth S. Ehrman                                2001           $120,000          ---
President and Chief Operating Officer            2000           $119,500          ---
                                                 1999           $114,500        $12,000

Michael L. Ehrman                                2001           $108,000          ---
Executive Vice President                         2000           $107,500          ---
                                                 1999           $109,000        $24,000

Ned Mavrommatis                                  2001           $100,000          ---
Chief Financial Officer and Treasurer            2000           $100,000          ---
                                                 1999(1)         $34,000          ---

</TABLE>

----------
(1)  Mr. Mavrommatis joined the Company in August 1999. His annualized salary in
1999 would have been $100,000.

OPTION GRANTS IN 2000

     During the year ended December 31, 2001,  options to purchase shares of the
Company's  common stock were granted  under the Company's  1999  Employee  Stock
Option Plan to the below named  officers and directors in the amounts and at the
per share exercise  price set forth  opposite  their names.  All options vest in
equal  installments  over a five year period commencing on the first anniversary
of the date of grant.


                                       30
<PAGE>

                          Number of       Percent of
                          Securities    Total Options
                          Underlying      Granted to    Exercise
                           Options       Employees in     Price       Expiration
                           Granted       Fiscal 2001    ($/Share)        Date
  ------------------------------------------------------------------------------
  Jeffrey M. Jagid          65,000           11.2%        $5.67        11/1/11
  Michael L. Ehrman         60,000           10.4%        $5.67        11/1/11
  Ned Mavrommatis           55,000            9.5%        $5.67        11/1/11
  Kenneth S. Ehrman         45,000            7.8%        $5.67        11/1/11

OPTION VALUES

     The  following  table  sets  forth  the  number  and  value  of  securities
underlying  unexercised options that are held by the named executive officers as
of December 31, 2001. The value of unexercised  in-the-money options is based on
the fair market  value of our common  stock on December  31, 2001 of $10.59,  as
quoted on the Nasdaq SmallCap Market,  minus the actual exercise price.  None of
the named  executive  officers  exercised  options  during the fiscal year ended
December 31, 2001.

                 Number of Securities Underlying    Value of Unexercised In-the-
                     Unexercised Options at          Money Options at December
                       December 31, 2001                    31, 2001 ($)
                 -------------------------------    ----------------------------
                  Exercisable   Unexercisable       Exercisable   Unexercisable
                 -------------  ---------------     ------------   -------------
Jeffrey M. Jagid     236,875        181,250           2,128,811      1,029,608
Michael L. Ehrman    236,875        176,250           2,163,856      1,005,188
Ned Mavrommatis       30,000        135,000             185,823        755,292
Kenneth S. Ehrman    143,750        107,500           1,327,091        617,385

EMPLOYMENT AGREEMENTS

     In June 1999 the Company entered into three-year employment agreements with
Kenneth Ehrman,  Jeffrey Jagid and Michael  Ehrman.  Pursuant to the agreements,
Messrs.  Kenneth Ehrman and Jagid are each entitled to base salaries of $108,000
and Mr. Michael Ehrman is entitled to a base salary of $96,000.  Each employment
agreement  also  provides that the employee is entitled to a bonus as determined
by the board of  directors,  from time to time,  and options under the Company's
1999 Stock Option Plan. Each employment  agreement  provides for a term of three
years and is renewable upon mutual consent.

     The employment  agreements may be terminated for cause and, in the event of
change in  control of the  Company,  each  employee  is  entitled  to a lump sum
payment  equal to the  greater  of one  year's  salary  or the base  salary  and
benefits  that would  have been  received  by the  employee  if he had  remained
employed by the Company the remainder of the three year term.


                                       31
<PAGE>

     The employment agreements also contain  confidentiality and non-competition
provisions  prohibiting  the  employee  from  competing  against the Company and
disclosing trade secrets and other proprietary information.

DIRECTOR COMPENSATION

     The  Company  reimburses  its  directors  for  reasonable  travel  expenses
incurred in connection  with their  activities on behalf of the Company but does
not pay its directors any fees for board participation.

     Non-employee  directors  are entitled to  participate  in the 1999 Director
Option Plan. This plan was adopted by the board of directors and approved by the
stockholders in April 1999. This plan has a term of ten years, unless terminated
sooner  by the  board.  A total of  300,000  shares of  common  stock  have been
reserved for issuance under this plan.

     This plan provides for the automatic grant of 15,000 shares of common stock
to each  non-employee  director  at the time he or she is first  elected  to the
board of directors.  He or she will automatically be granted a subsequent option
to purchase  5,000  shares on the first day of each fiscal  quarter,  if on such
date he or she has  served on the board for at least  six  months.  Each  option
grant under this plan will have a term of 10 years and will vest on a cumulative
monthly basis over a four-year period. The exercise price of all options will be
equal to the fair market value of the common stock on the date of grant.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  following  table  sets forth  information  with  respect to the  beneficial
ownership of shares of common stock as of December 31, 2001:

     o    each person or entity who is known by the Company to beneficially owns
          five percent or more of the common stock;

     o    each director and executive officer of the Company; and

     o    all directors and executive officers of the Company as a group.

        NAME OF BENEFICIAL OWNER(1)             NUMBER OF SHARES   PERCENTAGE(2)
-------------------------------------------------------------------------------
Jeffrey M. Jagid                                   489,125(3)          8.00%

Kenneth S. Ehrman                                  635,213(4)         10.56%

Michael L. Ehrman                                  333,400(5)          5.45%

Ned Mavrommatis                                     36,500(6)          0.62%


                                       32
<PAGE>

N. Bert Loosmore                                   567,114(7)          9.66%

Martin Rosansky                                    603,913(8)         10.13%

Lawrence Burstein                                   21,500(9)          0.37%

Beatrice Yormark                                     2,708(10)         0.05%

CQ Capital, LLC                                    538,200(11)         9.19%

Jack Silver                                        423,700(12)         7.20%

Adage Capital Partners, L.P.                       375,000(13)         6.40%

All Directors and Executive Officers as a group
(8 persons)                                      2,689,473(14)          40.28%

----------

(1) Unless  otherwise  indicated,  the address for each named individual or
group  is in  care  of the  Company,  Inc.,  One  University  Plaza,  6th  Floor
Hackensack, NJ 07601.

(2) Unless otherwise  indicated,  the Company believes that all persons named in
the table have sole voting and  investment  power with  respect to all shares of
common stock beneficially owned by them. A person is deemed to be the beneficial
owner of  securities  that can be acquired  by such person  within 60 days after
December  31,  2001  upon the  exercise  of  options,  warrants  or  convertible
securities (in any case, the "Currently Exercisable  Options").  Each beneficial
owner's  percentage  ownership  is  determined  by assuming  that the  Currently
Exercisable  Options  that are held by such  person  (but not those  held by any
other person) have been exercised and converted.

(3) Includes  251,875 shares of common stock  underlying  Currently  Exercisable
Options  granted to Mr.  Jagid,  pursuant to the Company's  1995 Employee  Stock
Option Plan and 1999 Stock Option Plan.

(4) Includes  151,250 shares of common stock  underlying  Currently  Exercisable
Options  granted to Mr.  Ehrman  pursuant to the Company's  1995 Employee  Stock
Option Plan and 1999 Stock Option Plan.

(5) Includes  251,875 shares of common stock  underlying  Currently  Exercisable
Options  granted to Mr.  Ehrman  pursuant to the Company's  1995 Employee  Stock
Option Plan and 1999 Stock Option Plan.

(6) Includes  34,000  shares of common stock  underlying  Currently  Exercisable
Options to Mr. Mavrommatis pursuant to the Company's 1999 Stock Option Plan.


                                       33
<PAGE>

(7)  Includes  4,167  shares of common stock  underlying  Currently  Exercisable
Options granted to Mr.  Loosmore  pursuant to the Company's 1999 Director Option
Plan.

(8) Includes  93,375  shares of common stock  underlying  Currently  Exercisable
Options  granted to Mr.  Rosansky  pursuant to the Company's 1995 Employee Stock
Option Plan and its 1999 Director Option Plan.

(9) Includes  21,500  shares of common stock  underlying  currently  exercisable
options granted to Mr.  Burstein  pursuant to the Company's 1999 Director Option
Plan.

(10)  Includes  2,708 shares of common stock  underlying  currently  exercisable
options  granted to Ms. Yormark  pursuant to the Company's 1999 Director  Option
Plan.

(11) Principal office is 65 Locust Avenue, Second Floor, New Canaan, Connecticut
06840.  Includes 70,900 beneficially owned by E. Turner Baur, Managing Member of
CQ Partners, LLC.

(12) His address is 660 Madison Avenue, 15th Floor, New York, New York 10021.

(13) Principal office is 200 Clarendon Street, 52nd Floor, Boston, Massachusetts
02116.

(14) Includes  810,750 shares of common stock underlying  Currently  Exercisable
Options  granted to such  individuals  pursuant to the  Company's  1995 Employee
Stock Option Plan, 1999 Stock Option Plan and 1999 Directors Option Plan.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     None.

ITEM 13.  EXHIBITS, LISTS AND REPORTS ON FORM 8-K

     (a)  EXHIBITS

          The following  exhibits are filed herewith or are incorporated  herein
          by reference, as indicated.

NUMBER            DESCRIPTION
------            -----------

3.1               Amended  and  Restated  Certificate  of  Incorporation  of the
                  Company  (incorporated  herein by reference  to the  Company's
                  Form SB-2 filed with the Commission on June 30, 1999).

3.2               Amended  and  Restated  By-Laws of the  Company  (incorporated
                  herein by Reference to the Company's  Form SB-2 filed with the
                  Commission on June 30, 1999).


                                       34
<PAGE>

4.1               Specimen   Certificate   of   the   Company's   Common   Stock
                  (incorporated  herein by reference to the Company's  Form SB-2
                  filed with the Commission on June 30, 1999).

4.2               Form of  Underwriter's  Warrant  Agreement,  including Form of
                  Warrant Certificate  (incorporated  herein by reference to the
                  Company's  Form SB-2  filed  with the  Commission  on June 30,
                  1999).

10.1              Agreement  between the Registrant and the United States Postal
                  Service:  Offer and Award  Standard  dated August 22, 1997, as
                  modified on May 12, 1998, September 8, 1998, and March 5, 1999
                  (incorporated  herein by reference to the Company's  Form SB-2
                  filed with the Commission on June 30, 1999).

10.2              Federal Supply Service  Information  Technology schedule Award
                  effective April 16, 1999 through April 15, 2004  (incorporated
                  herein by reference to the Company's  Form SB-2 filed with the
                  Commission on June 30, 1999).

10.3              Form of  Employment  Agreement  between  the  Company  and its
                  executive  officers  (incorporated  herein by reference to the
                  Company's  Form SB-2  filed  with the  Commission  on June 30,
                  1999).

10.4              1995 Non-Qualified  Stock Option Plan (incorporated  herein by
                  reference to the Company's Form SB-2 filed with the Commission
                  on June 30, 1999).

10.5              1999 Stock  Option Plan  (incorporated  herein by reference to
                  the Company's  Form SB-2 filed with the Commission on June 30,
                  1999).

10.6              Form of  Indemnification  Agreement  (incorporated  herein  by
                  reference to the Company's Form SB-2 filed with the Commission
                  on June 30, 1999).

10.7              1999 Director Option Plan (incorporated herein by reference to
                  the Company's  Form SB-2 filed with the Commission on June 30,
                  1999).

10.8              Office  Lease dated  November 4, 1999  between the Company and
                  Venture  Hackensack  Holding,   Inc.(incorporated   herein  by
                  reference to the  Company's  Annual  Report on Form 10-KSB for
                  the  fiscal  year  ended  December  31,  1999  filed  with the
                  Commission on March 29, 2000)

23.1              Consent of Richard A. Eisner & Company, LLP

(b)   REPORTS ON FORM 8-K

     None.


                                       35
<PAGE>

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.

Date:  March 26, 2002

                                        I.D. SYSTEMS, INC.


                                        By: /s/ Jeffrey M. Jagid
                                           -------------------------------------
                                           Jeffrey M. Jagid
                                           Chief Executive Officer
                                           (Principal Executive Officer)

                                        By: /s/ Ned Mavrommatis
                                           -------------------------------------
                                           Ned Mavrommatis
                                           Chief Financial Officer
                                           (Principal Accounting Officer)

     Pursuant to the  requirements  of the Securities  Act of 1934,  this Annual
Report on Form 10-KSB is signed below by the following  persons on behalf of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>

SIGNATURE                                     TITLE                            DATE
<S>                                           <C>                              <C>

 /s/ Jeffrey M. Jagid                         Chief Executive Officer          March 26, 2002
----------------------------------            and Director
Jeffrey M. Jagid


 /s/ Kenneth S. Ehrman                        Chief Operating Officer          March 26, 2002
----------------------------------            and Director
Kenneth S. Ehrman


 /s/ Beatrice Yormark                         Director                         March 26, 2002
----------------------------------
Beatrice Yormark


 /s/ Martin G. Rosansky                       Director                         March 26, 2002
----------------------------------
Martin G. Rosansky


/s/ Lawrence Burstein                         Director                         March 26, 2002
----------------------------------
Lawrence Burstein


 /s/ N. Bert Loosmore                         Director                         March 25, 2002
----------------------------------
N. Bert Loosmore

</TABLE>


                                       36
<PAGE>

                                  EXHIBIT INDEX

NUMBER            DESCRIPTION
------            -----------

3.1               Amended  and  Restated  Certificate  of  Incorporation  of the
                  Company  (incorporated  herein by reference  to the  Company's
                  Form SB-2 filed with the Commission on June 30, 1999).

3.2               Amended  and  Restated  By-Laws of the  Company  (incorporated
                  herein by Reference to the Company's  Form SB-2 filed with the
                  Commission on June 30, 1999).

4.1               Specimen   Certificate   of   the   Company's   Common   Stock
                  (incorporated  herein by reference to the Company's  Form SB-2
                  filed with the Commission on June 30, 1999).

4.2               Form of  Underwriter's  Warrant  Agreement,  including Form of
                  Warrant Certificate  (incorporated  herein by reference to the
                  Company's  Form SB-2  filed  with the  Commission  on June 30,
                  1999).

10.1              Agreement  between the Registrant and the United States Postal
                  Service:  Offer and Award  Standard  dated August 22, 1997, as
                  modified on May 12, 1998, September 8, 1998, and March 5, 1999
                  (incorporated  herein by reference to the Company's  Form SB-2
                  filed with the Commission on June 30, 1999).

10.2              Federal Supply Service  Information  Technology schedule Award
                  effective April 16, 1999 through April 15, 2004  (incorporated
                  herein by reference to the Company's  Form SB-2 filed with the
                  Commission on June 30, 1999).

10.3              Form of  Employment  Agreement  between  the  Company  and its
                  executive  officers  (incorporated  herein by reference to the
                  Company's  Form SB-2  filed  with the  Commission  on June 30,
                  1999).

10.4              1995 Non-Qualified  Stock Option Plan (incorporated  herein by
                  reference to the Company's Form SB-2 filed with the Commission
                  on June 30, 1999).

10.5              1999 Stock  Option Plan  (incorporated  herein by reference to
                  the Company's  Form SB-2 filed with the Commission on June 30,
                  1999).

10.6              Form of  Indemnification  Agreement  (incorporated  herein  by
                  reference to the Company's Form SB-2 filed with the Commission
                  on June 30, 1999).

10.7              1999 Director Option Plan (incorporated herein by reference to
                  the Company's  Form SB-2 filed with the Commission on June 30,
                  1999).


                                      E-1

<PAGE>

10.8              Office  Lease dated  November 4, 1999  between the Company and
                  Venture  Hackensack  Holding,   Inc.(incorporated   herein  by
                  reference to the  Company's  Annual  Report on Form 10-KSB for
                  the  fiscal  year  ended  December  31,  1999  filed  with the
                  Commission on March 29, 2000)

23.1              Consent of Richard A. Eisner & Company, LLP


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