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 September, 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 Q2/2006
  — Net income increased to $665 thousand
  — EBITDA improved to $3.0 million

Givatayim, Israel - September 5th, 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 second quarter of 2006.

Financial Highlights:

Revenues: Pointer’s revenues for the second quarter of 2006 were $10.1 million compared to $10.2 million, in the comparable period in 2005. Revenues for the first six months of 2006 increased 18.9% to $19.8 million, compared with $16.7 million in the same period of 2005. The increase in revenues in the first six months of 2006 as compared to the comparable period in 2005 is mainly attributable to the fact that revenues in the first six months of 2005 included only four months 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 Q2 2006 and the first six months of 2006 were 78.5% and 79.1%, respectively, of total revenues, as compared with 79.2% and 73.3%, respectively, in the comparable periods in 2005.

Gross Profit: For the second quarter of 2006, gross profit was $3.6 million as compared to $3.7 million in Q2 2005. For the first six months of 2006, gross profit improved 21.0% to $7.3 million as compared to $6.0 million in the same period in 2005. As a percentage of revenues, gross margins was 35.9% and 36.7%, respectively, in Q2 2006 and the first six months of 2006, as compared to 36.6% and 36.0% in the comparable periods in 2005.

Operating Profit (loss): Pointer’s operating profit increased 232% to $1.7 million in Q2 2006, compared to $508 thousand for the same quarter of 2005. In the first six months of 2006 Pointer recorded a $2.7 million operating profit, compared to an operating loss of $863 thousand for the comparable period of 2005. The improvement in operating profits includes a one time net income of $1.3 million associated with an agreement signed with a Latin American customer, offset by a $350 thousand impairment of long-lived assets.

Net Profit: Pointer improved its bottom-line results recording a net profit of $665 thousand or $0.22 per share in the second quarter of 2006, as compared to a net loss of $476 thousand or $(0.19) per share in the second quarter of 2005. For the first six months of 2006 Pointer recorded a net profit of $686 thousand or $0.24 per share as compared to a net loss of $2.4 million or $(1.07) per share in the comparable period 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 fourth quarter of 2006.

EBITDA: Pointer’s EBITDA improved to $3.0 million in the second quarter of 2006, as compared to $2.2 million in the second quarter of 2005. In the first six months of 2006 EBITDA improved to $5.2 million as compared to $1.9 million in the same period in 2005.

Total Shareholder’s Equity increased during the quarter of 2006 to $14.8 million, which included additional exercise of warrants.

Danny Stern, CEO, said: “We are pleased with our financial results, reflecting the strength of our business model. We continue to intensify business development, marketing and product development. During the second quarter we introduced to our international markets a range of services, based on cellular applications. This will allow us to provide nationwide coverage as well as to provide additional mobile resources management (MRM) services in the countries we operate in”

Conference Call Information:

Pointer’s management will host two conference calls with the investment community today, September 5th, in Hebrew at 15:30 Israel time and in English at 9:30 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 Sep 6th, 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

June 30,
2006
 December 31,
2005
Unaudited
 
    ASSETS            
   
CURRENT ASSETS:  
  Cash and cash equivalents   $ 3,486   $ 1,696  
  Trade receivables    7,417    6,576  
  Other accounts receivable and prepaid expenses    713    505  
  Inventories    1,413    1,389  
   
Total current assets    13,029    10,166  
   
LONG-TERM ASSETS:  
  Long-term accounts receivable    196    219  
  Severance pay fund    3,324    2,989  
  Property and equipment, net    6,565    7,319  
  Goodwill    38,059    36,924  
  Other intangible assets, net    8,986    9,597  
   
Total long-term assets    57,130    57,048  
   
Total assets   $ 70,159   $ 67,214  

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES
 
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share and per share data)

June 30,
2006
 December 31,
2005
Unaudited
 
    LIABILITIES AND SHAREHOLDERS' EQUITY            
   
CURRENT LIABILITIES:  
  Short-term bank credit and current maturities of long-term loans   $ 10,630   $ 9,949  
  Trade payables    4,349    3,904  
  Deferred revenues and customer advances    7,995    6,477  
  Other accounts payable and accrued expenses    3,669    3,835  
   
Total current liabilities    26,643    24,165  
   
LONG-TERM LIABILITIES:  
  Long-term loans from banks    15,062    16,211  
  Long-term loans from shareholders and others    9,389    12,082  
  Accrued severance pay    4,290    3,951  
   
Total long-term liabilities    28,741    32,244  
   
SHAREHOLDERS' EQUITY:  
  Share capital -  
    Ordinary shares of NIS 3 par value:  
      Authorized :8,000,000 shares at June 30, 2006 and December 31,  
      2005; Issued and outstanding: 3,095,124 and 2,479,020 shares at  
      June 30, 2006 and December 31, 2005, respectively    2,076    1,680  
  Additional paid-in capital    103,091    100,707  
  Deferred stock-based compensation    -    (1 )
  Accumulated other comprehensive loss    (635 )  (1,138 )
  Accumulated deficit    (89,757 )  (90,443 )
   
Total shareholders' equity    14,775    10,805  
   
Total liabilities and shareholders' equity   $ 70,159   $ 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)

Six months ended
June 30,
 Three months ended
June 30,
 Year ended
December 31,
2005
2006
 2005
 2006
 2005
Unaudited
 
Revenues:                        
  Products   $ 4,132   $ 4,447   $ 2,180   $ 2,109   $ 8,856  
  Services    15,662    12,206    7,937    8,051    28,108  
   
Total revenues    19,794    16,653    10,117    10,160    36,964  
   
Cost of revenues:  
  Products    2,482    3,076    1,210    1,304    5,727  
  Services    10,051    7,578    5,273    5,140    17,587  
   
Total cost of revenues    12,533    10,654    6,483    6,444    23,314  
   
Gross profit    7,261    5,999    3,634    3,716    13,650  
   
Operating expenses:  
  Research and development, net    544    439    288    232    892  
  Selling and marketing    1,789    1,930    978    971    3,693  
  General and administrative    2,275    3,173    1,152    1,248    5,644  
  Amortization of intangible assets    930    1,320    471    757    2,462  
   
Total operating expenses    5,538    6,862    2,889    3,208    12,691  
   
Other income, net    (1,292 )  -    (1,292 )  -    -  
Impairment of long-lived assets    350    -    350    -    -  
   
Operating income (loss)    2,665    (863 )  1,687    508    959  
Financial expenses, net    1,581    1,592    803    1,091    4,027  
Other income (expenses), net    (5 )  94    (11 )  107    341  
   
Income (loss) before taxes on  
  income    1,079    (2,361 )  873    (476 )  (2,727 )
Taxes on income    393    -    208    -    -  
   
Net income (loss )   $ 686   $ (2,361 ) $ 665   $ (476 ) $ (2,727 )
   
Basic and diluted net earnings  
  (loss) per share   $ 0.24   $ (1.07 ) $ 0.22   $ (0.19 ) $ (1.17 )

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES
 
CONDENSED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollars in thousands (except share data)

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
 
Balance as of January 1, 2005      1,704,505   $ 1,145   $ 94,127   $ (117 ) $ (353 ) $ (87,716 )      $ 7,086  
  Issuance of shares and warrants, net    722,587    500    6,391    -    -    -         214  
  Deferred stock-based compensation    -    -    10    (10 )  -    -         -  
  Amortization of deferred stock-based compensation    -    -    -    126    -    -         126  
  Exercise of warrants and stock options    51,928    35    179    -    -    -         6,891  
  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    -    -    69    -    -    -         69  
  Exercise of warrants and options    616,104    396    2,316    -    -    -         2,712  
  Comprehensive income:  
    Foreign currency translation adjustments    -    -    -    -    503    -   $ 503    503  
    Net income    -    -    -    -    -    686    686    686  
  Total comprehensive income                                 $ 1,189       
Balance as of June 30, 2006 (unaudited)    3,095,124   $ 2,076   $ 103,091   $-   $ (635 ) $ (89,757 )      $ 14,775  
   
Balance as of January 1, 2005    1,704,505   $ 1,145   $ 94,127   $ (117 ) $ (353 ) $ (87,716 )      $ 7,086  
  Issuance of shares, warrants and options, net    722,587    500    6,391    -    -    -         6,891  
  Deferred stock-based compensation    -    -    10    (10 )  -    -         -  
  Amortization of deferred stock-based compensation    -    -    -    114    -    -         114  
  Exercise of warrants    31,818    22    118    -    -    -         140  
  Comprehensive loss:  
    Foreign currency translation adjustments    -    -    -    -    (870 )      $ (870 )  (870 )
    Net loss    -    -    -    -    -    (2,361 )  (2,361 )  (2,361 )
  Total comprehensive loss                                 $ (3,231 )     
Balance as of June 30, 2005 (unaudited)    2,458,910   $ 1,667   $ 100,646   $ (13 ) $ (1,223 ) $ (90,077 )      $ 11,000  

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES
 
CONDENSED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollars in thousands (except share data)

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
 
Balance as of April 1, 2006 (unaudited)      2,969,938   $ 1,995   $ 102,587   $ -   $ (1,284 ) $ (90,422 )      $ 12,876  
  Amortization of deferred stock-based compensation    -    -    34    -    -    -         34  
  Exercise of warrants    125,186    81    470    -    -    -         551  
  Comprehensive income:  
    Foreign currency translation adjustments    -    -    -    -    649    -   $ 649    649  
    Net income    -    -    -    -    -    665    665    665  
  Total comprehensive income                                 $ 1,314       
Balance as of June 30, 2006 (unaudited)    3,095,124   $ 2,076   $ 103,091   $ -   $ (635 ) $ (89,757 )      $ 14,775  
   
Balance as of April 1, 2005 (unaudited)    2,450,609   $ 1,661   $ 100,573   $ (67 ) $ (501 ) $ (89,601 )      $ 12,065  
  Issuance of shares, warrants and options, net    8,301    6    63    -    -    -         69  
  Deferred stock compensation    -    -    10    (10 )  -    -         -  
  Amortization of deferred stock-based compensation    -    -    -    64    -    -         64  
  Comprehensive loss:  
    Foreign currency translation adjustments    -    -    -    -    (722 )  -   $ (722 )  (722 )
    Net loss    -    -    -    -    -    (476 )  (476 )  (476 )
  Total comprehensive loss                                 $ (1,198 )     
Balance as of June 30, 2005 (unaudited)    2,458,910   $ 1,667   $ 100,646   $ (13 ) $ (1,223 ) $ (90,077 )      $ 11,000  

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES
 
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands

Six months ended
June 30,
 Three months ended
June 30,
 Year ended
December 31,
2005
2006
 2005
 2006
 2005
Unaudited
 
Cash flows from operating activities:                        
Net income (loss)   $ 686   $ (2,361 ) $ 665   $ (476 ) $ (2,727 )
Adjustments to reconcile net income (loss) to  
   net cash provided by operating activities:  
   Depreciation and amortization    2,351    2,568    1,070    1,645    4,997  
   Accrued interest and exchange rate  
     changes of convertible debenture and  
     long-term loans    382    712    212    464    1,961  
   Accrued severance pay, net    (23 )  599    79    65    484  
   Loss (gain) from sale of property and  
     equipment, net    74    (117 )  212    (109 )  (299 )
   Gain from realization of investment in  
     subsidiary, net    -    -    -    -    (359 )
   Amortization of deferred stock-based  
     compensation    69    114    34    64    126  
   Decrease (increase) in trade receivables,  
     net    (609 )  3,915    1,375    2,254    2,581  
   Decrease (increase) in other accounts  
     receivable and prepaid expenses    (152 )  (232 )  287    (505 )  2,301  
   Decrease (increase) in inventories    55    (83 )  (265 )  (225 )  (144 )
   Write-off of inventories    69    169    69    22    199  
   Decrease (increase) in other long-term  
     accounts receivable    51    (34 )  42    55    (20 )
   Increase (decrease) in trade payables    285    242    53    (426 )  (359 )
   Increase (decrease) in other accounts  
     payable and accrued expenses    1,003    (1,623 )  (405 )  411    (2,962 )
   
Net cash provided by operating activities    4,241    3,869    3,428    3,239    5,779  
   
Cash flows from investing activities:   
Purchase of property and equipment    (874 )  (1,131 )  (438 )  (1,078 )  (2,020 )
Proceeds from short-term bank deposits    -    15    -    15    15  
Proceeds from sale of property and equipment    426    194    210    148    519  
Proceeds form realization of investment in  
   subsidiary    -    -    -    -    6,241  
Acquisition of activities and assets of  
   Shagrir Towing Services Ltd. and Shagrir  
   (1985) Ltd. (a)    -    (43,498 )  -    -    (43,847 )
   
Net cash used in investing activities    (448 )  (44,420 )  (228 )  (915 )  (39,092 )
   
Cash flows from financing activities:   
Receipt of long-term loans from banks    -    16,066    -    -    16,066  
Repayment of long-term loans from banks    (1,227 )  (273 )  (833 )  (54 )  (2,035 )
Receipt of long-term loans from shareholders  
   and others    131    20,938    36    57    21,136  
Repayment of long-term loans from others    (2,997 )  -    (2,476 )  -    (6,241 )
Proceeds from issuance of shares and exercise  
   of options and warrants, net    2,712    6,104    551    70    6,176  
Short-term bank credit, net    (592 )  (368 )  434    (2,040 )  (401 )
   
Net cash provided by (used in) financing  
   activities    (1,973 )  42,467    (2,288 )  (1,967 )  34,701  
   
Effect of exchange rate on cash and cash  
   equivalents    (30 )  52    (55 )  42    233  
   
Increase in cash and cash equivalents    1,790    1,968    857    399    1,621  
Cash and cash equivalents at beginning of  
   period    1,696    75    2,629    1,644    75  
   
Cash and cash equivalents at end of period   $ 3,486   $ 2,043   $ 3,486   $ 2,043   $ 1,696  
   
Supplemental disclosure of cash flow transaction:   
Cash paid during the year for interest   $ 1,448   $ 663   $ 810   $ 497   $ 1,200  

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES
 
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands

Six months ended
June 30,
 Three months ended
June 30,
 Year ended
December 31,
2005
2006
 2005
 2006
 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   $-   $ 4,917   $ - $-   $ 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  
   
         -    (44,142 )  -    -    (44,491 )
    Fair value of shares, options and  
       warrants issued    -    644    -    -    644  
   
    $-   $ (43,498 ) $ - $-   $ (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: September 6, 2006