6-K

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

F O R M  6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of May, 2006

POINTER TELOCATION LTD.

1 Korazin Street
Givatayim, 53583
Israel

Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.

Form 20-F x Form 40-F o

Indicate by check mark whether by furnishing the information contained in this
Form, the registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o No x

If “Yes” is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82-


For Immediate Release

Pointer Telocation Reports its Financial Results for Q1/2006
  — Net income breakeven after 11 quarters of net losses
  — Additional improvements in profitability

Givatayim, Israel - May 17th, 2006. Pointer Telocation Ltd. (Nasdaq Capital Markets: PNTR), a leading provider of services to insurance companies and car owners, including road-side assistance, towing and stolen vehicle retrieval services in Israel, Argentina and Mexico, reported its financial results for the first quarter of 2006.

Financial Highlights:

Revenues: Pointer’s revenues for the first quarter 2006 increased by 49%, to $9.7 million from $6.5 million, in the comparable period in 2005. The increase is mainly attributable to the fact that revenues in Q1 2005 included only one month of revenues derived from the acquisition of the road-side assistance and towing business of Shagrir Towing Services completed on February 28, 2005. Pointer’s revenues from services in Q1 2006 were 80% of total revenues, as compared with 64% in the same period in 2005.

Gross Profit: For the first quarter of 2006, gross profit increased 59% to $3.6 million from $2.3 million in Q1 2005. As a percentage of revenues, gross profit improved to 37.5% in Q1 2006, as compared to 35.2% in the same period in 2005.

Operating Profit (loss): Pointer reports a $978 thousand operating profit for the first quarter of 2006, compared to an operating loss of $1.4 million for the first quarter of 2005. The improvement in operating profits is the result of the increase in gross profits and a 27.5% reduction in operating expenses, which is attributable mainly to a decrease in G&A expenses, and to a lesser extent to reductions in selling and marketing expenses and amortizations of intangible assets. The reduction in G&A expenses is mainly due to non-recurrent charges in the first quarter of 2005 related to the acquisition of the road-side assistance and towing business of Shagrir Towing Services completed on February 28, 2005. Operating profit in the first quarter of 2006 accounted for 10.1% of revenues.

Net Profit: Pointer improved its bottom-line results recording a net profit of $21 thousand in the first quarter of 2006, as compared to a net loss of $1.9 million in the first quarter of 2005. During this quarter Pointer continued to consolidate 100% of the net profit of its Israeli subsidiary Shagrir Motor Vehicle Systems, although its current holding is 56.6%. Pointer’s management expects to consolidate Shagrir’s results based on actual holdings, from the second half of 2006.

EBITDA: Pointer’s EBITDA improved to $2.1 million in the first quarter of 2006, as compared to a negative EBITDA of $272 thousand in the first quarter of 2005.

Total Shareholder’s Equity increased during the first quarter of 2006 to $12.9 million, mainly as a result of exercise of warrants.

Danny Stern, CEO, said: “We are pleased with our financial results and with their continuous improvement. The $2.7 million recently raised provides the company with additional resources and flexibility in executing its growth programs that will ultimately contribute substantially to improving its results in the future. Pointer is currently focused on leveraging its businesses into new territories and services as well as expanding its operations in all of the markets in which it is competing.”

Conference Call Information:

Pointer’s management will host two conference calls with the investment community today, May 17st, in Hebrew at 15:00 Israel time and in English at 9:00 EST.

To listen to the conference calls, please dial:
From the US: 1-866-229-7198
From Israel: 03-9180609

A replay of the conference call will be available through May 18th, 2006 on the Company’s website at www.pointer.com.

About Pointer Telocation:

Pointer Telocation Ltd www.pointer.com provides range of services to insurance companies and automobile owners, including road-side assistance, vehicle towing, stolen vehicle retrieval, fleet management and other value added services. Pointer Telocation provides services, for the most part, in Israel, through its subsidiary Shagrir and in Argentina and Mexico through its local subsidiaries. Independent operators provide similar services in Russia and Venezuela utilizing Pointer’s technology and operational know-how.

Safe Harbor Statement

This press release contains forward-looking statements with respect to the business, financial condition and results of operations of Pointer and its affiliates. These forward-looking statements are based on the current expectations of the management of Pointer, only, and are subject to risk and uncertainties relating to changes in technology and market requirements, the company’s concentration on one industry in limited territories, decline in demand for the company’s products and those of its affiliates, inability to timely develop and introduce new technologies, products and applications, and loss of market share and pressure on pricing resulting from competition, which could cause the actual results or performance of the company to differ materially from those contemplated in such forward-looking statements. Pointer undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. For a more detailed description of the risks and uncertainties affecting the company, reference is made to the company’s reports filed from time to time with the Securities and Exchange Commission.

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands

March 31,
2006
 December 31,
2005
  Unaudited
 
    ASSETS            
   
CURRENT ASSETS:  
  Cash and cash equivalents   $ 2,629   $ 1,696  
  Trade receivables (net of allowance for doubtful accounts of $ 354 at  
    March 31, 2006 and $ 363 at December 31, 2005)    8,478    6,576  
  Other accounts receivable and prepaid expenses    939    505  
  Inventories    1,154    1,389  
   
Total current assets    13,200    10,166  
   
LONG-TERM ASSETS:  
  Long-term accounts receivable    209    219  
  Severance pay fund    3,006    2,989  
  Property and equipment, net    6,840    7,319  
  Goodwill    36,248    36,924  
  Other intangible assets, net    9,010    9,597  
   
Total long-term assets    55,313    57,048  
   
Total assets    $ 68,513   $ 67,214  

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share and per share data)

March 31,
2006
 December 31,
2005
Unaudited
 
    LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)            
   
CURRENT LIABILITIES:  
  Short-term bank credit and current maturities of long-term loans   $ 11,627   $ 9,949  
  Trade payables    4,091    3,904  
  Deferred revenues and customer advances    8,156    6,477  
  Other accounts payable and accrued expenses    3,428    3,835  
   
Total current liabilities     27,302    24,165  
   
LONG-TERM LIABILITIES:  
  Long-term loans from banks    15,184    16,211  
  Long-term loans from shareholders and others    9,295    12,082  
  Accrued severance pay    3,856    3,951  
   
     28,335    32,244  
SHAREHOLDERS' EQUITY:  
  Share capital -  
    Ordinary shares of NIS 0.3 par value:  
      Authorized :8,000,000 shares at March 31, 2006 and December 31,  
      2005; Issued and outstanding: 2,969,938 and 2,479,020 shares at  
      March 31, 2006 and December 31, 2005, respectively    1,995    1,680  
  Additional paid-in capital    102,587    100,707  
  Deferred stock-based compensation    -    (1 )
  Accumulated other comprehensive loss    (1,284 )  (1,138 )
  Accumulated deficit    (90,422 )  (90,443 )
   
Total shareholders' equity     12,876    10,805  
   
Total liabilities and shareholders' equity    $ 68,513   $ 67,214  

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)

Three months ended
March 31,
 Year ended
December 31,
2006
 2005
 2005
Unaudited
 
Revenues:                
  Products   $ 1,952   $ 2,338   $ 8,856  
  Services    7,725    4,155    28,108  
   
Total revenues     9,677    6,493    36,964  
   
Cost of revenues:  
  Products    1,272    1,772    5,727  
  Services    4,778    2,438    17,587  
   
Total cost of revenues     6,050    4,210    23,314  
   
Gross profit    3,627    2,283    13,650  
   
Operating expenses:  
  Research and development, net    256    207    892  
  Selling and marketing    811    959    3,693  
  General and administrative    1,123    1,925    5,644  
  Amortization of intangible assets    459    563    2,462  
   
Total operating expenses     2,649    3,654    12,691  
   
Operating income (loss)    978    (1,371 )  959  
Financial expenses, net    778    501    4,027  
Other income (expenses), net    6    (13 )  341  
   
Profit (loss) before taxes on income    206    (1,885 )  (2,727 )
Taxes on income    185    -    -  
   
Net income (loss)   $ 21   $ (1,885 ) $ (2,727 )
   
Basic and diluted loss per share   $ 0.01   $ (0.96 ) $ (1.17 )

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

CONDENSED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollars in thousands

Number of
shares
 Share
capital
 Additional
paid-in
capital
 Deferred
stock-based
compensation
 Accumulated
other
comprehensive
loss
 Accumulated
deficit
 Total
comprehensive
income
(loss)
 Total
shareholders'
equity
(deficiency)
Balance as of December 12, 2004      1,704,505   $ 1,145   $ 94,127   $ (117 ) $ (353 ) $ (87,716 )      $ 7,086  
  Issuance of shares and warrants,  
   net    722,587    500    6,391    -    -    -         6,891  
  Deferred stock-based compensation    -    -    10    (10 )  -    -         -  
  Amortization of deferred  
   stock-based compensation    -    -    -    126    -    -         126  
  Exercise of warrants and stock  
   options    51,928    35    179    -    -    -         214  
  Comprehensive loss:  
    Foreign currency translation  
     adjustments    -    -    -    -    (785 )  -   $ (785 )  (785 )
    Net loss    -    -    -    -    -    (2,727 )  (2,727 )  (2,727 )
  Total comprehensive loss                                 $ (3,512 )     
   
Balance as of December 31, 2005    2,479,020    1,680    100,707    (1 )  (1,138 )  (90,443 )       10,805  
   
  Deferred stock-based compensation    -    -    (1 )  1    -    -    -    -  
  Amortization of deferred  
   stock-based compensation    -    -    35    -    -    -    -    35  
  Exercise of warrants & options    490,918    315    1,846    -    -    -    -    2,161  
  Comprehensive loss:  
  Other comprehensive income -  
   foreign currency translation  
   adjustments    -    -    -    -    (146 )  -    (146 )  (146 )
Net loss    -    -    -    -    -    21    21    21  
Total comprehensive loss                                 $ 125       
   
Balance as of March 31, 2006  
  (unaudited)    2,969,938   $ 1,995   $ 102,587 $-   $ (1,284 ) $ (90,422 )      $ 12,876  
   
Balance as of December 12, 2004    1,704,505   $ 1,145   $ 94,127   $ (117 ) $ (353 ) $ (87,716 )      $ 7,086  
  Issuance of shares and warrants,  
   net    714,286    494    6,328    -    -    -         6,822  
  Deferred stock-based compensation    -    -    -    -    -    -         -  
  Amortization of deferred  
   stock-based compensation    -    -    -    50    -    -         50  
  Exercise of warrants and stock  
   options    31,818    22    118    -    -    -         140  
  Comprehensive loss:  
    Foreign currency translation  
     adjustments    -    -    -    -    (148 )  -   $ (148 )  (148 )
    Net loss    -    -    -    -    -    (1,885 )  (1,885 )  (1,885 )
  Total comprehensive loss
   (unaudited)		                                 $ (2,033 )     
   
Balance as of March 31, 2005    2,450,609   $ 1,661   $ 100,573   $ (67 ) $ (501 ) $ (89,601 )      $ 12,065  

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands

Three months ended
March 31,
 Year ended
December 31,
2006
 2005
 2005
Unaudited
 
Cash flows from operating activities:                
  Net (loss) income   $ 21   $ (1,885 ) $ (2,727 )
  Adjustments required to reconcile net income (loss) to  
    net cash provided by (used in) operating activities:  
    Depreciation and amortization    1,281    1,728    4,997  
    Accrued interest and exchange rate changes of  
      convertible debenture and long-term loans    170    -    1,961  
    Accrued severance pay, net    (102 )  664    484  
    Loss (gain) from sale of property and equipment, net    (138 )  (6 )  (299 )
    Gain from realization of investment in subsidiary,  
      net    -    -    (359 )
    Amortization of deferred stock-based compensation    35    50    126  
    Decrease (increase) in trade receivables, net    (1,984 )  1,729    2,581  
    Decrease in other accounts receivable and prepaid  
      expenses    (439 )  (786 )  2,301  
    Decrease (increase) in inventories    320    446    (144 )
    Write-off of inventories    -    (147 )  199  
    Increase in other long-term accounts receivable    9    21    (20 )
    Increase (decrease) in trade payables    232    668    (359 )
    Decrease in other accounts payable and accrued  
      expenses    1,408    (2,034 )  (2,962 )
   
Net cash provided by operating activities    813    448    5,779  
   
Cash flows from investing activities:   
  Purchase of property and equipment    (436 )  (48 )  (2,020 )
  Proceeds from short-term bank deposits    -    -    15  
  Proceeds from sale of property and equipment    216    41    519  
  Proceeds from realization of investment in subsidiary    -    -    6,241  
  Acquisition of activities and assets of Shagrir Towing  
    Services Ltd. and Shagrir (1985) Ltd. (a)    -    (43,758 )  (43,847 )
   
Net cash used in investing activities    (220 )  (43,765 )  (39,092 )
   
Cash flows from financing activities:   
  Receipt of long-term loans from banks    -    15,970    16,066  
  Repayment of long-term loans from banks    (394 )  (219 )  (2,035 )
  Receipt of long-term loans from shareholders and others    95    20,915    21,136  
  Repayment of long-term loans from others    (521 )  -    (6,241 )
  Proceeds from issuance of shares and exercise of options  
    and warrants, net    2,161    6,319    6,176  
  Short-term bank credit, net    (1,026 )  1,883    (401 )
   
Net cash provided by financing activities    315    44,868    34,701  
   
Effect of exchange rate on cash and cash equivalents    25    18    233  
   
Increase in cash and cash equivalents    933    1,569    1,621  
Cash and cash equivalents at the beginning of the period    1,696    75    75  
   
Cash and cash equivalents at the end of the period   $ 2,629   $ 1,644   $ 1,696  
   
Supplemental disclosure of cash flow transaction:   
  Cash paid during the year for interest   $ 638   $ 120   $ 1,200  

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands

Three months ended
March 31,
 Year ended
December 31,
2006
 2005
 2005
Unaudited
 
(a) Acquisition of activities and assets of Shagrir                
  Towing Services Ltd. and Shagrir (1985) Ltd.:   
         
Fair value of assets acquired and liabilities  
  assumed at date of acquisition:  
         
         
Working capital   $-   $ 4,657   $ 4,568  
Property and equipment    -    (5,760 )  (5,760 )
Customer list    -    (8,558 )  (8,558 )
Brand name    -    (1,920 )  (1,920 )
Goodwill    -    (31,652 )  (31,652 )
Long-term loan    -    (1,175 )  (1,175 )
Accrued severance pay, net    -    6    6  
         
     -    (44,402 )  (44,491 )
Fair value of shares, options and warrants issued    -    644    644  
         
    $-   $ (43,758 ) $ (43,847 )

Pursuant to the requirements 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.

POINTER TELOCATION LTD.


BY: /s/ Yossi Ben Shalom
——————————————
Yossi Ben Shalom
Chairman of the Board of Directors

Date: May 18, 2006