According to a 2003 report by Ward's Communication, an independent provider of automobile industry research, approximately 55 million vehicles were sold globally in 2002, and according to a United Nations survey of crime trends covering the period 2001 to 2002, approximately 3.1 million vehicles were stolen globally during the same period. According to a March 2005 report by the Insurance Information Institute, in the United States alone.

According to a 2004 report, Frost & Sullivan, an independent market research firm, estimates that in mid-2003 there were over 50 million commercial vehicles in North America, of which only 1.0% to 2.0% were equipped with telematics systems. According to the same report by Frost & Sullivan, the total North American commercial vehicle telematics market was valued at approximately $705.0 million in 2003. In addition, they estimate that telematics-related hardware revenues are projected to grow from $239.0 million in 2003 to $1.8 billion in 2012, representing a compounded annual growth rate of 25.3%, while related service revenues are projected to grow from $466.0 million in 2003 to $4.8 billion in 2012, representing a compounded annual growth rate of 29.7%.

Demand for Automatic meter reading, or AMR, systems in the United States is driven by the approximate five- to seven-year replacement cycle for existing water meters, the trend towards automatic meter readers versus legacy meters and the increase in the number of customers as a result of increased levels of housing starts since 2001. According to a 2003 report by Frost & Sullivan, the annual AMR revenues and unit shipments in North America are forecasted to increase from 2002 levels of $580.5 million and 8.9 million units, respectively, to $690.9 million and 12.1 million, respectively, in 2010.

The Company is among the few companies that offer their customers the use of a comprehensive application for fleet management both by using an Internet site and workstations. The Company’s systems allow its customers 24-hour access to information on their fleets through active control center and also provide alerts on vehicle temperature and driver emergencies.

The Company’s services allow consumers to protect valuable merchandise and equipment, as well as to track individuals. Currently, the Company provides its PAL services in Israel only. The PAL device is a two-way pager that helps the Company to determine the location of the relevant equipment or person being tracked. The Company’s PAL services, which are based on terrestrial network triangulation, have numerous applications, including location of patients with amnesia, portable distress buttons for the elderly and children, theft protection for valuable equipment and merchandise and other assets, such as computer equipment and beehives.

Through a call center, the Company provides 24-hour on-demand navigation guidance, information and assistance to its customers. Such services include the provision of traffic reports, help with directions and information on the location of gas stations, car repair shops, post offices, hospitals and other facilities. The Company provides its concierge services to subscribers in Israel and has recently begun offering such services in Argentina and in Brazil.

The Company’s wireless communications products are used for various applications in the AVL, AMR, and Radio frequency identification, or RFID, markets. The Company’s AVL products enable the location and tracking of vehicles and are used in providing the SVR and fleet management services. The Company’s AMR products enable the remote reading of water meters. The Company’s RFID products enable communication between mobile transponders and roadside readers and are primarily used for electronic toll collection systems.

Total cost of revenues increased from $18.6 million in the six months ended June 30, 2004 to $23.7 million in the six months ended June 30, 2005.

Research and development expenses increased from $1.0 million in the six months ended June 30, 2004 to $1.6 million in the six months ended June 30, 2005.

Total operating income increased from $8.9 million in the six months ended June 30, 2004 to $9.4 million in the six months ended June 30, 2005.

Financing expenses, net, decreased from $1.4 million in the six months ended June 30, 2004 to almost $0.0 million in the six months ended June 30, 2005.