On Track Innovations Ltd.
OTI REPORTS RECORD FY 2004 FOURTH QUARTER AND YEAR END FINANCIAL RESULTS

Ad hoc announcement §15 WpHG OTI REPORTS RECORD FY 2004 FOURTH QUARTER AND YEAR END FINANCIAL RESULTS Ad hoc announcement processed and transmitted by DGAP. The issuer is solely responsible for the content of this announcement. —————————————————————————— Fort Lee, NJ – March 29, 2005 – On Track Innovations Ltd. (OTI) (NASDAQ: OTIV; Prime Standard (Frankfurt): OT5), today announced its consolidated financial results for the fourth quarter and fiscal year ended December 31, 2004. Revenues for the year ended December 31, 2004 increased to $23.2 million from $19.6 million for the same period of last year. Revenues for the fourth quarter were up $7.8 million from $5.8 million in the same period last year. The increase was due to the growing implementation of contactless programs around the world. Gross Profit for the year ended December 31, 2004 was $10.4 million up from $10.1 million for the same period last year. The operating loss for FY 2004 increased by 281% to $8.8 million from $2.3 million in the same period in 2003, mainly due to $3.2 million one time expenses related to raising of capital and the exchange of subsidiary’s employees equity interest in equity interest of the Company, $1.6 million increase in marketing expenses related mainly to marketing efforts and due to the reduction of $459,000 in the participation of the Office of Chief Scientist. Net loss increased to $9.3 million, from $3.6 million for the same period in 2003. The increase is mainly due to the increase in the operating loss. During 2004, $15.1 million were raised resulting in total balance of cash and cash equivalents and short term investments of $28.5 million at December 31, 2004. On Track Innovations Ltd. Z.H.R. Idustrial Zone 12000 P.O. Box 32 Rosh Pina Israel ISIN: IL0010834682 WKN: 924895 Listed: Geregelter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin- Bremen, Düsseldorf, Hannover, München und Stuttgart End of ad hoc announcement (c)DGAP 29.03.2005 Issuer’s information/explanatory remarks concerning this ad hoc announcement: OTI REPORTS RECORD FY 2004 FOURTH QUARTER AND YEAR END FINANCIAL RESULTS. Fort Lee, NJ – March 29, 2005 – On Track Innovations Ltd. (OTI) (NASDAQ: OTIV; Prime Standard (Frankfurt): OT5), a global leader in contactless microprocessor-based smart card solutions for homeland security, micropayments, petroleum payments and other applications, today announced its consolidated financial results for the fourth quarter and fiscal year ended December 31, 2004. Business developments in 2004 include: * First commercial orders in support of MasterCard PayPass(TM) rollout have been delivered. * Initial commercial quantities of our contactless readers have been delivered to Hypercom Corporation to support contactless payment programs such as MasterCard PayPass(TM). * Approximately 18 million chips incorporating OTI’s technology delivered in 2004 to the China ID Project. * OTI America Inc., OTI’s U.S. subsidiary, has been granted a contract for the U.S. e-passport program. The contract is for the testing stage. One or more vendor(s) are expected to be selected for the production stage. * Sasol Oil, the largest oil company in South Africa, is in the process of implementing our petroleum payment solution. * Revenues for the year ended December 31, 2004 increased by 18% to $23.2 million from $19.6 million for the same period of last year. Revenues for the fourth quarter were up 35% to $7.8 million from $5.8 million in the same period last year. * Licensing and transaction fees for the year ended December 31, 2004 were up 177% to $2.2 million from $808,000 for the same time last year. * Gross Profit for the year ended December 31, 2004 was $10.4 million up from $10.1 million in 2003. * The operating loss for FY 2004 increased by 281% to $8.8 million from $2.3 million in the same period in 2003, mainly due to $3.2 million one time expenses related to raising of capital and restructuring and $1.6 million increase in marketing expenses related mainly to marketing efforts. * Operational Cash Flow was about breakeven, with $330,000 of cash used in operating activities. * OTI raised $15.1 million in private placement financing which strengthened our balance sheet and enabled us to support any size of project as a prime contractor. * OTI acquired ASEC S.A. of Poland to enable OTI to provide end-to-end solutions for the Emerging European markets. * OTI sold one of our German subsidiaries, InterCard KartenSysteme GmbH. Oded Bashan, President and CEO of OTI commented: “the coming years present a window of opportunities for OTI to become a leading player in the ID and payments markets. To succeed in capturing the leading position in these markets we raised capital, we invest more in management resources, and expenses related to Marketing & Sales, Research & Development and General & Administrative. In addition OTI signed strategic alliances and aligned our corporate structure with our strategy.” OTI is making progress with its business model with more projects reaching commercial deployment, generating more transaction and license fees revenues, such as with the programs of BP, China ID and EasyPark. Transaction and license fees revenues increased 177% to 10% from 4% in 2003. However, the financial model is not fully reflected in our gross profit due to first stage of implementations of additional projects in the payments and ID markets that are characterized by high customization cost and infrastructure.” “Financially, OTI had a record breaking quarter and year. Revenues have never been higher, generating $7.8 million with more revenues from our core businesses of payments, petroleum and ID. OTI is reaching operational breakeven from a cash perspective, and combined with the raise of capital the Company had $28.5 million in cash, cash equivalents and short term investments at the end of the year. “Our operating loss of $8.8 million for the year was mainly due to expenses related to the raising of capital and restructuring that resulted in $3.2 million as explained in our Operating and Financial Review and as shown in our P&L. The restructuring of our marketing support strategy has also added expenses and affected our results. For example, Marketing and Sales expenses for the year rose by 47% to $6.0 million from $4.1 million. As mentioned, we believe these activities will better position the company and contribute to a better stream of revenues in the future.” Financial Results Revenues for the year ended December 31, 2004 increased to $23.2 million from $19.6 million for the same period of last year. Revenues for the fourth quarter were up $7.8 million from $5.8 million in the same period last year. The increase was due to the growing implementation of contactless programs around the world. Gross Profit for the year ended December 31, 2004 was $10.4 million up from $10.1 million for the same period last year. The operating loss for FY 2004 increased by 281% to $8.8 million from $2.3 million in the same period in 2003, mainly due to $3.2 million one time expenses related to raising of capital and the exchange of subsidiary’s employees equity interest in equity interest of the Company, $1.6 million increase in marketing expenses related mainly to marketing efforts and due to the reduction of $459,000 in the participation of the Office of Chief Scientist. Net loss increased to $9.3 million, from $3.6 million for the same period in 2003. The increase is mainly due to the increase in the operating loss. During 2004, $15.1 million were raised resulting in total balance of cash and cash equivalents and short term investments of $28.5 million at December 31, 2004. End of message (c)DGAP 292133 Mär 05