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 oti Reports Fourth Quarter and Full Year 2015 Financial Results
   Wednesday, March 23, 2016 8:31:22 AM ET

On Track Innovations Ltd. (oti) (OTIV ), a global provider of near field communication (NFC) and cashless payment solutions, reported financial results for the fourth quarter and fiscal year ended December 31, 2015.

Q4 2015 Operational Highlights

--  Introduced a new product lineup developed to support entry into new
    growth markets and industry verticals, including ATM, kiosk and
    gaming.


--  Outsourced manufacturing and production to third-party vendors,
    allowing for greater efficiency, reduced operating cost and higher
    margins.


--  Exhibited with Nidec Sankyo Corporation, a leading provider of card
    readers and unit of Nidec Corporation, at Money20/20, the world’s
    largest event focused on payments and financial services innovation.
    oti’s new Pay Capsule was well received by attendees, partners and
    prospective customers.



Q4 2015 Financial Details Total revenues increased 52% to $5.7 million from $3.8 million in the previous quarter and 5% from $5.5 million in the same year-ago period.

Gross profit increased 39% to $2.9 million (51% of revenue) from $2.1 million (55% of revenue) in the previous quarter and up 15% from $2.5 million (46% of revenue) in the same year-ago period.

Operating expenses totaled $4.1 million, declining 6% from $4.4 million in the previous quarter and down 19% from $5.0 million in the same year-ago period.

Net loss from continuing operations totaled $1.4 million or $(0.03) per share, an improvement from a net loss from continuing operations of $2.4 million or $(0.06) per share in the prior quarter, and a net loss from continuing operations of $2.6 million or $(0.08) per share in the same year-ago period.

Adjusted EBITDA loss from continuing operations improved to $789,000 from a loss of $1.2 million in the prior quarter, and from a loss of $1.6 million in the same year-ago period (see discussion about the presentation of adjusted EBITDA from continuing operations, a non-GAAP financial measure, below).

At quarter-end, cash and cash equivalents and short-term investments totaled $10.9 million, compared to $11.5 million at the end of the prior quarter.

Full Year 2015 Financial Details Total revenues decreased 14% to $19.9 million from $23.1 million in 2014.

Gross profit was $10.1 million (51% of revenue) compared to $11.1 million (48% of revenue) in 2014

Operating expenses were $17.4 million, a decrease of 15% from $20.6 million in 2014.

Net loss from continuing operations totaled $8.0 million or $(0.20) per share, compared to a net loss from continuing operations of $10.2 million or $(0.30) per share in 2014.

Adjusted EBITDA loss from continuing operations improved to $3.8 million from a loss of $5.8 million in 2014.

Management Commentary "2015 marked a transformational period in oti’s financial and operational development," said company CEO, Shlomi Cohen. "We implemented key strategic initiatives designed to optimize our manufacturing processes, accelerate growth and reduce costs.

"Our success in these endeavors was reflected in our improving financial performance, highlighted by topline growth in Q4, as well as dramatically lower operating expenses and improved gross margins in both the fourth quarter and full year. In fact, our total operating expenses for 2015 decreased 15% year-over-year, and we achieved a 53% year-over-year reduction in cash used by our operations.

"We reapportioned some of these cost savings to strengthen our sales organization in terms of both personnel and geographic reach. Our sales and marketing team has increased over the last six months, reflecting a transition to a more capable and expanded sales organization that can better capitalize on the strong growth and tailwinds in the cashless payment market.

"Our recent customer wins and new strategic partnerships demonstrate the effectiveness of our expanded sales capabilities and new go-to-market strategy. These wins also demonstrate the demand for our new products, which all together have allowed us to enter new verticals and geographic regions, including Spain, Portugal, Italy and the Czech Republic. oti’s solutions are now distributed in two of the top six vending markets in Europe, which account for approximately one million machines. Collectively, our Pan European distributor network represents an incremental two million vending machines opportunity for oti.

"Allowing us to more fully capitalize on these opportunities in Europe, we recently received the ’green light’ to support payment-processing services for vending and kiosk operators in the European Union. In collaboration with a multinational bank and a leading payment processor, we can now offer a greatly simplified setup and maintenance process as a ’one-stop-shop’ for operators that is unparalleled in our industry. In addition to expanding our market opportunity, it also adds another significant recurring revenue stream for oti.

"Along this line, a key measure of our success in 2016 will be our ability to establish and expand recurring revenue sources that will provide greater revenue visibility and predictability. We anticipate that our new partnership with Apriva will begin to contribute recurring revenue in the second half of the year.

"We entered 2016 with a considerably expanded product portfolio along with a strong pipeline of new business -- key ingredients for our long-term success. Our strategic plan for 2016 involves accelerating our growth, generating recurring revenue, and reducing expenses. We are confident the successful execution of this plan will position oti as a growing technology leader in the revolutionary Internet of Things. While there is more work ahead, we are in an ideal position to capitalize on the global multi-billion dollar cashless payment market and deliver long-term growth in shareholder value."

Conference Call oti will hold a conference call today (March 23, 2016) at 10:30 a.m. Eastern time to discuss these results. oti CEO Shlomi Cohen and CFO Yishay Curelaru will host the presentation, followed by a question and answer period.

Date: Wednesday, March 23, 2016 Time: 10:30 a.m. Eastern time U.S. dial-in: 1-877-407-0784 International dial-in: 1-201-689-8560

Please call the conference telephone number 10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios at 949-574-3860.

A replay of the call will be available after 1:30 p.m. Eastern time through April 23, 2016.

U.S. replay dial-in: 1-877-870-5176 International replay dial-in: 1-858-384-5517 Replay ID: 13632167

Use of Non-GAAP Financial Information This press release contains certain non-GAAP measures, namely, adjusted EBITDA from continuing operations, or adjusted earnings from continuing operations before interest, income tax, depreciation and amortization. Adjusted EBITDA from continuing operations represents earnings before interest or financing expenses, income tax, depreciation and amortization, and further eliminates the effect of share-based compensation expense, patent litigation and maintenance expenses and other expenses. oti believes that adjusted EBITDA from continuing operations should be considered in evaluating the company’s operations since it provides a clearer indication of oti’s operating results. This measure should be considered in addition to results prepared in accordance with US GAAP, but should not be considered a substitute for the US GAAP results. The non-GAAP measures included in this press release have been reconciled to the US GAAP results in the tables below.


                         ON TRACK INNOVATIONS LTD.
                   RECONCILIATION OF NON-GAAP ADJUSTMENT
  The following tables reflect selected On Track Innovations Ltd, non-GAAP
                     results reconciled to GAAP results:
              (In thousands, except share and per share data)

                                      Year ended        Three months ended
                                      December 31           December 31
                                 --------------------  --------------------
                                    2015       2014       2015       2014
                                 ---------  ---------  ---------  ---------

Net loss                         $  (7,239) $  (9,882) $  (1,444) $  (2,339)

  Net (income) loss from
   discontinued operations            (757)      (315)        66       (274)
  Financial expenses, net              619        577         77        180
  Depreciation                       1,251      1,307        310        348
  Taxes on income                      122        110         84        (92)

                                 ---------  ---------  ---------  ---------
TOTAL EBITDA FROM CONTINUING
 OPERATIONS                      $  (6,004) $  (8,203) $    (907) $  (2,177)
                                 ---------  ---------  ---------  ---------

Patent litigation and
 maintenance                     $     858  $   1,543  $      28  $     330
Other expenses (income), net           914        (13)        (4)       (13)
Stock based compensation               463        875         94        233
                                 ---------  ---------  ---------  ---------
TOTAL ADJUSTED EBITDA FROM
 CONTINUING OPERATIONS           $  (3,769) $  (5,798) $    (789) $  (1,627)
                                 =========  =========  =========  =========


About oti On Track Innovations Ltd. (oti) is a leader in contactless and NFC applications based on its extensive patent and IP portfolio. oti’s field-proven innovations have been deployed around the world to address NFC and other cashless payment solutions, petroleum payment and management, cashless parking fee collection systems and mass transit ticketing. oti markets and supports its solutions through a global network of regional offices and alliances. For more information, visit www.otiglobal.com, the content of which is not part of this press release.

Safe Harbor for Forward-Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other Federal securities laws. Whenever words such as "believe," "expect," "anticipate," "intend," "plan," "estimate" or similar expressions are used, the company is making forward-looking statements. For example, forward-looking statements include statements regarding our intent to rollout new products and our position to capitalize on the cashless payment market. Because such statements deal with future events and are based on oti’s current expectations, they are subject to various risks and uncertainties and actual results, performance or achievements of oti could differ materially from those described in or implied by the statements in this press release. Forward-looking statements could be impacted by the effects of the protracted evaluation and validation periods in the U.S. and other markets for contactless payment cards, as well as oti’s new and existing products and our ability to execute production on orders, as well as other risks and uncertainties, including those discussed in the "Risk Factors" section and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2014, and in subsequent filings with the Securities and Exchange Commission. Although the company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can provide no assurance that expectations will be achieved. Except as otherwise required by law, 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 circumstances or otherwise.


                          ON TRACK INNOVATION LTD.
                    CONDENSED CONSOLIDATED BALANCE SHEET
               (In thousands, except share and per share data)


                                                            December 31
                                                      ----------------------
                                                         2015        2014
                                                      ----------  ----------
Assets

Current assets
Cash and cash equivalents                             $    5,450  $    5,351
Short-term investments                                     5,454      11,048
Trade receivables (net of allowance for doubtful
 accounts of $778 and $671 as of December 31, 2015
 and December 31, 2014, respectively)                      2,418       4,299
Other receivables and prepaid expenses                     2,183       2,530
Inventories                                                3,330       3,703
                                                      ----------  ----------

Total current assets                                      18,835      26,931
                                                      ----------  ----------


Long term restricted deposit for employees benefit           524         555

Severance pay deposits                                       455         614

Property, plant and equipment, net                         8,668       9,234

Intangible assets, net                                       180           -

Deferred tax asset                                             -          47


                                                      ----------  ----------

Total Assets                                          $   28,662  $   37,381
                                                      ==========  ==========



                          ON TRACK INNOVATION LTD.
                    CONDENSED CONSOLIDATED BALANCE SHEET
              (In thousands, except share and per share data)


                                                            December 31
                                                       --------------------
                                                          2015       2014
                                                       ---------  ---------

Liabilities and Equity

Current Liabilities
Short-term bank credit and current maturities of long-
 term bank loans                                       $   3,815  $   3,617
Trade payables                                             5,441      7,306
Other current liabilities                                  2,724      2,656
                                                       ---------  ---------
Total current liabilities                                 11,980     13,579
                                                       ---------  ---------

Long-Term Liabilities
Long-term loans, net of current maturities                 2,359      2,161
Accrued severance pay                                      1,148      1,456
Deferred tax liability                                       352        302
                                                       ---------  ---------
Total long-term liabilities                                3,859      3,919
                                                       ---------  ---------

Total Liabilities                                         15,839     17,498
                                                       ---------  ---------


Commitments and Contingencies

Equity
Shareholders’ Equity
Ordinary shares of NIS 0.1 par value: Authorized -
 50,000,000 shares as of December 31, 2015 and 2014;
 issued: 42,014,673 and 41,996,602 shares as of
 December 31, 2015 and 2014, respectively;
 outstanding: 40,835,974 and 40,817,903 shares as of
 December 31, 2015 and 2014, respectively                  1,055      1,055
Additional paid-in capital                               225,925    224,234
Treasury shares at cost - 1,178,699 shares as of
 December 31, 2015 and 2014.                              (2,000)    (2,000)
Accumulated other comprehensive loss                      (1,084)      (800)
Accumulated deficit                                     (209,254)  (202,103)
                                                       ---------  ---------
Total Shareholder’s equity                                14,642     20,386
                                                       ---------  ---------
Non-controlling interest                                  (1,819)      (503)
                                                       ---------  ---------

Total Equity                                              12,823     19,883
                                                       ---------  ---------

Total Liabilities and Equity                           $  28,662  $  37,381
                                                       =========  =========




                         ON TRACK INNOVATIONS LTD.
               CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
              (In thousands, except share and per share data)


                                                      Three months ended
                          Year ended December 31          December 31
                         ------------------------  ------------------------
                             2015         2014         2015         2014
                         -----------  -----------  -----------  -----------

                         -----------  -----------  -----------  -----------
Revenues
Sales                    $    13,123  $    17,286  $     3,108  $     3,905
Licensing and
 transaction fees              6,738        5,776        2,607        1,550
                         -----------  -----------  -----------  -----------
Total revenues                19,861       23,062        5,715        5,455
                         -----------  -----------  -----------  -----------

Cost of revenues
Cost of sales                  9,396       12,006        2,500        2,940
Cost of licensing and
 transaction fees                325            -          325            -
                         -----------  -----------  -----------  -----------
Total cost of revenues         9,721       12,006        2,825        2,940
                         -----------  -----------  -----------  -----------

Gross profit                  10,140       11,056        2,890        2,515
                         -----------  -----------  -----------  -----------
Operating expenses
Research and development       3,648        4,664          936        1,002
Selling and marketing          7,246        8,230        1,858        2,070
General and
 administrative                4,729        6,142        1,289        1,651
Patent litigation and
 maintenance                     858        1,543           28          330
Other expenses (income),
 net                             914          (13)          (4)         (13)

                         -----------  -----------  -----------  -----------

Total operating expenses      17,395       20,566        4,107        5,040
                         -----------  -----------  -----------  -----------

Operating loss from
 continuing operations        (7,255)      (9,510)      (1,217)      (2,525)
Financial expense, net          (619)        (577)         (77)        (180)
                         -----------  -----------  -----------  -----------

Loss from continuing
 operations before taxes
 on income                    (7,874)     (10,087)      (1,294)      (2,705)
Taxes on income                 (122)        (110)         (84)          92
                         -----------  -----------  -----------  -----------

Net loss from continuing
 operations                   (7,996)     (10,197)      (1,378)      (2,613)
Total income (loss) from
 discontinued operations         757          315          (66)         274
                         -----------  -----------  -----------  -----------
Net loss                      (7,239)      (9,882)      (1,444)      (2,339)

Net loss (income)
 attributable to
 noncontrolling interest          88          (42)          85           (5)
                         -----------  -----------  -----------  -----------
Net loss attributable to
 shareholders            $    (7,151) $    (9,924) $    (1,359) $    (2,344)
                         ===========  ===========  ===========  ===========


Basic and diluted net
 profit (loss)
 attributable to
 shareholders per
 ordinary share
From continuing
 operations              $     (0.20) $     (0.30) $     (0.03) $     (0.08)
From discontinued
 operations              $      0.02  $      0.01  $     (0.01) $      0.01
                         -----------  -----------  -----------  -----------
                         $     (0.18) $     (0.29) $     (0.04) $     (0.07)
                         ===========  ===========  ===========  ===========
Weighted average number
 of ordinary shares used
 in computing basic and
 diluted net profit
 (loss) per ordinary
 share                    40,869,820   34,013,870   40,874,474   34,290,198
                         ===========  ===========  ===========  ===========



                          ON TRACK INNOVATION LTD.
               CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
              (In thousands, except share and per share data)

                                                     Year ended December 31
                                                     ----------------------
                                                        2015        2014
                                                     ----------  ----------
Cash flows from continuing operating activities
Net loss from continuing operations                  $   (7,996) $  (10,197)
Adjustments required to reconcile net loss to net
 cash used in continuing operating activities:
Stock-based compensation related to options and
 shares issued to employees and others                      463         875
Gain on sale of property and equipment                       (4)        (10)

Gain from sale and shut down of subsidiaries                  -          (3)
Accrued interest and linkage differences                     27          87
Depreciation                                              1,251       1,307

Changes in operating assets and liabilities:
Accrued severance pay, net                                 (149)       (126)
Deferred tax, net                                           122         108
Decrease in trade receivables, net                        2,212         432
Decrease in other receivables and prepaid expenses          393         132
Decrease (increase) in inventories                          254        (334)
Decrease in trade payables                               (1,290)       (630)
Increase (decrease) in other current liabilities            223      (1,263)
                                                     ----------  ----------
Net cash used in continuing operating activities         (4,494)     (9,622)
                                                     ----------  ----------

Cash flows from continuing investing activities

Purchase of property and equipment                       (1,515)     (1,573)
Purchase of short term investments                       (4,181)    (11,433)
Proceeds from restricted deposit for employees
 benefit                                                    144           -
Proceeds from maturity or sale of short term
 investments                                              9,779       2,967
Investment in capitalized product costs                    (200)          -
Investment in restricted deposit for employees
 benefit                                                   (281)          -
Proceeds from sale of property and equipment                 38          14
                                                     ----------  ----------
Net cash provided by (used in) continuing investing
 activities                                               3,784     (10,025)
                                                     ----------  ----------

Cash flows from continuing financing activities
Decrease in short-term bank credit, net                    (422)        (25)
Proceeds from long-term bank loans                        1,480          52
Repayment of long-term bank loans                          (747)     (1,019)
Proceeds from issuance of shares, net of issuance
 expenses                                                     -      10,444
Proceeds from exercise of options and warrants               (*)        965
                                                     ----------  ----------
Net cash provided by continuing financing activities        311      10,417
                                                     ----------  ----------

Cash flows from discontinued operations
Net cash used in discontinued operating activities          (45)     (1,430)
Net cash provided by discontinued investing
 activities                                                 795       1,708
Net cash used in discontinued financing activities            -        (154)
                                                     ----------  ----------
Total net cash provided by discontinued operations          750         124
                                                     ----------  ----------

                                                     ----------  ----------
Effect of exchange rate changes on cash and cash
 equivalents                                               (252)       (505)
                                                     ----------  ----------

Increase (decrease) in cash and cash equivalents             99      (9,611)
Cash and cash equivalents at the beginning of the
 year                                                     5,351      14,962
                                                     ----------  ----------

Cash and cash equivalents at the end of the year     $    5,450  $    5,351
                                                     ==========  ==========
(*)Less than $1.


Investor Contact:
Scott Liolios or Matt Glover
Liolios Group, Inc.
949-574-3860
Email Contact

Press Contact:
Nir (Neil) Barr
oti Marketing Director
+972-4-686-8004
Email Contact


SOURCE: On Track Innovations Ltd.




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