* Revenues Up 72% Compared to First Nine Months of 2004 * Revenues
Up 120% Compared to Third Quarter of 2004 * Growth Related Mainly
to Contactless Payments Market in the US FORT LEE, N.J., Nov. 28
/PRNewswire-FirstCall/ -- On Track Innovations Ltd. (OTI) (Nasdaq:
OTIV; Prime Standard (Frankfurt): OT5), a global leader in
contactless microprocessor-based smart card solutions for homeland
security, payments, petroleum payments and other applications,
today announced its consolidated financial results for the nine
months ended September 30, 2005. * Revenues for the first nine
months increased by 72% to $26.4 million from $15.4 million for the
same period of last year. * Revenues for the third quarter
increased by 120% to $12.1 million from $5.5 million for the same
period of last year. * Strong balance sheet with cash, cash
equivalents and short term investments of more than $30 million
excluding more than $20 million raised earlier this month through a
private placement. * The Company incurred in the nine months ended
September 30, 2005 expenses of $1.8 million related to the
Company's extraordinary activity in the Far-East. * Cash used in
operating activities amounted to $1.1 M for the nine months ended
September 30, 2005. * Net loss for the first nine months of 2005
decreased by 4% to $(6.8) million, from $(7.1) million for the same
period in 2004. * Licensing and transaction fees for the first nine
months were up 107% to $2.2 million from $1.1 million for the same
period in 2004. * Gross margin for nine months decreased to 35%
from 42% for the same period in 2004. The decrease in our overall
gross margin is mainly due to the execution of the initial stages
of projects which are characterized by lower margins in their early
stages. Oded Bashan, President & CEO of OTI, commented: "We are
pleased with our results. We are starting to see the results of our
strategy, we are well positioned with strong and important
contracts in hand. The increase in revenues represents the rapid
advancements in the contactless market around the world, and
mainly, the contactless payments market in the US. Our financial
position at the end of nine month remains strong with more than $30
million in cash and cash equivalents and short term investments."
"The private placement for more then $20M we completed at the
beginning of fourth quarter will further assist us in continuing
with the restructuring and executing large contracts and
opportunities for the company. The investors in this transaction
were institutional investors from the US, Switzerland and United
Kingdom." "While revenues were up 72% for the nine months, compared
to the same period last year, our gross margin decreased to 35%,
mainly due to the execution of initial stages of projects which are
characterized by lower margins in their early stages." Mr. Bashan
continued, "The completion of a series of strategic acquisitions in
China that we announced earlier this year will assist us in
increasing these margins, we continue to implement our strategy of
capturing a leading position in the contactless market." Recent
Announcements * OTI will deliver contactless solutions for more
than ten million payment cards in 2005 in the US. *
STMicroelectronics, one of the world's leading semiconductor
manufacturers together with OTI, announced that their secure
contactless microcontroller solution is approved by Visa
International for use in its Visa Contactless program in the U.S.
volume shipments in the US are already underway. * OTI and a
government entity of a major Asian country establish a joint
venture for manufacturing and selling electronic travel document
inlays for that Asian government. Revenues from the program are
expected to reach low tens of millions of dollars starting FY 2007.
It is estimated that the delivery of initial quantities will
commence in the second half of 2006. * OTI grants BP a worldwide
license to enable expansion beyond Africa - OTI announced that BP
Africa, a division of BP p.l.c., has extended and expanded its
relationship with OTI. In addition, OTI has granted BP a worldwide
license for its petroleum payment solution. * OTI and Venue1
implement MasterCard PayPass(TM) with the Seattle Seahawks. OTI and
Venue1, a leader in technology solutions for sports and
entertainment venues, are providing contactless reader solutions
for the Seattle Seahawks to support its MasterCard PayPass(TM)
program. Company Developments * OTI completed a series of strategic
acquisitions in China, increasing manufacturing capacity to 1.5
million units per week by the second half of 2006. The transactions
will substantially increase OTI's capacity to manufacture smart
cards, inlays for smart cards & electronic passports, and
machinery for the fabrication of such products. We anticipate that
the increased capacity will enable us to meet the rollouts and
rapidly growing demand for our payments and ID products, As a
result, OTI expects to realize increase in gross margins. * OTI
completes $22.2 million private placement of new equity financing
with institutional investors from the US, Switzerland and England.
OTI intends to use the net proceeds from the placement to support
large- scale implementation of projects in the ID and payments
markets. * OTI Received 2005 company of the year award from Frost
& Sullivan, a global company offering business consulting,
market analysis and growth partnership services. OTI received the
award based on its technology leadership, significant revenue
expansion and its prominent position in the smart card contactless
solutions market, including OTI's excellent strategic moves and
ability to expand its market reach with providing its customers
with optimum solutions. * Following the approval of the General
shareholders' meeting, the Board of Directors of OTI applied for
the delisting of the Company's shares from the Frankfurt Stock
Exchange which has been approved. The last day of trading of the
shares on Frankfurt Stock Exchange will be December 20, 2005. The
Company's shares will be traded only on the NASDAQ stock exchange.
Financial Results Revenues for the first nine months increased to
$26.4 million from $15.4 million for the same period of last year.
Revenues for the third quarter of 2005 were up to $12.1 million
from $5.5 million in the third quarter of 2005. The increase is
mainly due to sales in the payments market. Gross margin for the
first nine months of 2005 decreased to 35% from 42% for the same
period in 2004. The decrease in our overall gross margin is mainly
due to the execution of the initial stages of projects which are
characterized by lower margins in their early stages. Operating
loss for the nine months ended September 30, 2005 increased by 12%
to $(7.6) million from $(6.8) million in the same period in 2004.
Net loss for the nine months ended September 30, 2005 decreased by
4% to $(6.8) million, from $(7.1) million for the same period in
2004. Cash and cash equivalents and short term investments were at
$30.8 million compared to $27.7 million on September 30, 2004, and
$28.5 million on December 31, 2004. The Company has scheduled a
conference call and simultaneous Web cast for Monday, November 28,
2005, which will be hosted by Oded Bashan, President and CEO, Guy
Shafran, CFO, and Ohad Bashan, Chief Marketing Officer and
President OTI America, for 10:00 AM EST to discuss operating
results and future outlook. To participate, call: 1-800-963-8290
(U.S. toll free), 1-800-931-5196 (Israel toll free), 0-800-182-1463
(Germany toll free), or 1-973-409-9260 (standard international) ID
Code: OTI. To attend the Web cast, use the following links:
http://www.otiglobal.com/content.aspx?id=226 For those unable to
participate, the teleconference will be available for replay until
midnight December 7th, by calling U.S: 877-519-4471 or
International; 973-341-3080 and entering the PIN number # 6725998,
or on the web at: http://www.otiglobal.com/content.aspx?id=226.
About OTI Established in 1990, OTI
(NASDAQ:OTIVNASDAQ:PrimeNASDAQ:Standard:NASDAQ:OT5) designs,
develops and markets secure contactless microprocessor-based smart
card technology to address the needs of a wide variety of markets.
Applications developed by OTI include product solutions for
petroleum payment systems, homeland security solutions, electronic
passports and IDs, micropayments, mass transit ticketing, parking,
loyalty programs and secure campuses. OTI has a global network of
regional offices to market and support its products. The company
was awarded the prestigious Frost & Sullivan 2005 Company of
the Year Award in the field of smart cards. For more information on
OTI, visit http://www.otiglobal.com/. This press release contains
forward-looking statements. These statements can be identified by
their use of the words "will," "anticipates" and "expects" and
other similar expressions, as well as by such phrases as "starting
to see" and "we believe". Each of these statements is subject to
certain risks and uncertainties, such as market acceptance of new
products and our ability to execute production on orders, which
could cause actual results to differ materially from those in the
statements included in this press release. Although OTI believes
that the expectations reflected in such forward-looking statements
are based on reasonable assumptions, it can give no assurance that
its expectations will be achieved. OTI disclaims any intention or
obligation to update or revise any forward-looking statements,
which speak only as of the date hereof, whether as a result of new
information, future events or otherwise. Results could differ
materially from expected results. OTI Contact: Media Relations IR
Contact: Galit Mendelson Adam Handelsman David Pasquale/Denise
Roche Director of Corporate 5W Public Relations The Ruth Group
Communications 212 999 5585 646 536 7006/8 201 944 5200 ext. 111 ON
TRACK INNOVATIONS LTD. INTERIM CONSOLIDATED BALANCE SHEETS US
dollars in thousands, except per share data On Track Innovations
Ltd. and its subsidiaries September 30 September 30 December 31
2005 2004 2004 (Unaudited) (Unaudited) (Audited) Assets Current
Assets Cash and cash equivalents $16,175 $27,615 $23,917 Short-term
investments 14,553 - 4,559 Short-term deposit 46 44 - Trade
receivables (net of allowance for doubtful accounts of $ 565, $ 285
and $ 329 as of September 30, 2005 and 2004 and December 31, 2004,
respectively) 9,524 2,965 3,477 Other receivables and prepaid
expenses 3,278 1,815 2,705 Inventories 7,162 4,480 4,765 Total
current assets 50,738 36,919 39,423 Severance Pay Deposits Fund 583
597 595 Deferred tax assets 71 - - Long-Term Receivables 856 -
1,077 Property, Plant and Equipment, Net 6,763 5,622 5,324
Investments in affiliated companies 8 - - Other Intangible Assets,
Net 2,197 184 1,438 Goodwill 4,146 5,383 4,146 Total Assets $65,362
$48,705 $52,003 Liabilities and Shareholders' Equity Current
Liabilities Short-term bank credit and current maturities of
long-term bank loans $1,520 $2,495 $1,641 Trade payables 5,781
3,307 4,305 Other current liabilities 5,589 2,473 3,824 Total
current liabilities 12,890 8,275 9,770 Long-Term Liabilities
Long-term loans, net of current maturities 1,595 2,556 2,018
Accrued severance pay 1,868 1,295 1,361 Deferred tax liabilities
307 - 162 Total long-term liabilities 3,770 3,851 3,541 Total
liabilities 16,660 12,126 13,311 Minority interest 370 - -
Shareholders' Equity Ordinary shares of NIS 0.1 par value:
authorized - 30,000,000 as of September 30, 2005 and 2004 and
December 31, 2004 Issued and outstanding - 9,731,554, 7,830,396 and
8,422,175 shares as of September 30, 2005 and 2004 and December 31,
2004, respectively 225 186 199 Additional paid-in capital 105,914
83,855 90,779 Deferred compensation (2,168) (808) (3,553)
Accumulated other comprehensive income 268 263 353 Accumulated
deficit (55,907) (46,917) (49,086) Total shareholder's equity
48,332 36,579 38,692 Total Liabilities and Shareholders' Equity
$65,362 $48,705 $52,003 ON TRACK INNOVATIONS LTD. INTERIM
CONSOLIDATED STATEMENTS OF OPERATIONS US dollars in thousands,
except per share data On Track Innovations Ltd. and its
subsidiaries Nine months ended Three months ended Year ended
September 30 September 30 December 31 2005 2004 2005 2004 2004
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) Revenues
Products $23,049 $12,907 $11,374 $4,356 $19,120 Non-recurring
engineering 477 363 54 246 433 Licensing and transaction fees 2,215
1,069 471 540 2,237 Customer service and technical support 658
1,039 155 330 1,362 Total revenues 26,399 15,378 12,054 5,472
23,152 Cost of Revenues Products 16,521 8,114 7,677 2,606 11,853
Non-recurring engineering 181 178 22 136 183 Customer service and
technical support 505 570 125 198 763 Total cost of revenues 17,207
8,862 7,824 2,940 12,799 Gross profit 9,192 6,516 4,230 2,532
10,353 Operating Expenses Research and development 4,218 2,549
1,511 893 3,544 Less - participation by the Office of the Chief
Scientist 651 383 146 46 394 Research and development, net 3,567
2,166 1,365 847 3,150 Selling and marketing 4,809 4,231 1,457 1,471
6,010 General and administrative 6,902 4,648 2,642 1,293 6,549
Amortization of intangible assets 285 141 89 47 261 Other expenses*
1,768 2115 1,768 - 3227 Gain from sale of a subsidiary (510) - - -
- Total operating expenses 16,821 13,301 7,321 3,658 19,197
Operating loss (7,629) (6,785) (3,091) (1,126) (8,844) Financial
income (expenses), net 562 (174) 666 (66) (287) Other income, net
53 24 49 2 29 Loss before income taxes (7,014) (6,935) (2,376)
(1,190) (9,102) Taxes on income (177) (171) (133) 18 (173) Minority
share in income of subsidiaries (79) - (79) - - Equity in income of
affiliates 5 - 5 - - Loss before extraordinary item (7,265) (7,106)
(2,583) (1,172) (9,275) Extraordinary item 444 - 444 - - Net loss
$(6,821) $(7,106) $(2,139) $(1,172) $(9,275) Basic and diluted loss
per ordinary share from: Loss before extraordinary item $(0.81)
$(1.08) $(0.27) $(0.15) $(1.33) Extraordinary item $(0.05) $-
$(0.05) $- $- Net loss $(0.76) $(1.08) $(0.23) $(0.15) $(1.33)
Weighted average number of ordinary shares used in computing basic
and diluted loss per ordinary share 8,985,072 6,595,012 9,495,554
7,723,728 6,972,878 * Consist of: Research and development $78 $137
$78 $- $335 Selling and marketing 231 400 231 - 511 General and
administrative 1,459 1,578 1,459 - 2,381 $1,768 $2,115 $1,768 $-
$3,227 DATASOURCE: On Track Innovations Ltd. CONTACT: Galit
Mendelson, OTI, Director of Corporate Communications, +1-
201-944-5200 ext. 111, ; Media Relations, Adam Handelsman, 5W
Public Relations, +1-212-999-5585, ; IR Contact, David Pasquale,
+1-646-536-7006, , Denise Roche, +1-646- 536-7008, , both of The
Ruth Group Web site: http://www.otiglobal.com/
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