On Track Innovations Ltd.
OTI REPORTS FY 2004 SIX MONTH FINANCIAL RESULTS
Corporate-news announcement sent by DGAP.
The sender is solely responsible for the contents of this announcement.
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OTI REPORTS FY 2004 SIX MONTH FINANCIAL RESULTS
Cupertino, CA- August 26, 2004 – 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 six months ended June 30, 2004.
Business developments in the first half include:
– OTI and Atmel receive first commercial order to support MasterCard(R)
PayPass(TM). OTI also anticipates orders for its card readers that will be used
in conjunction with the PayPass card later this year.
– China starts to launch electronic ID cards — incorporating OTI’s contactless
technology.
– OTI Africa signed an agreement with Sasol Oil, South Africa’s largest oil
company, to create a network of sites equipped with OTI’s petroleum payment
solution to service both the oil company- contracted and bank-contracted fleet
market and the private motorist sector. OTI has already a wide installed base
with BP in South Africa.
– Revenues for the first six months of 2004 were up $167,000 to $9.9 million
compared to the same period last year.
– Cash flow from operating activity for 2004 six-month period was $193,000
compared to a negative cash flow of ($1.4) million in the same period 2003.
– Revenues from licensing and transaction fees combined with customer service
and technical support were up 65% in the first six months compared to the same
period last year.
– $15.1 million were raised during the second quarter. Total cash and cash
equivalents at June 30, 2004 was $29 million.
– OTI is relocating its U.S. subsidiary to the East Coast to provide better
support of our existing clients in the payments and SmartID markets and ensure
easier access to our investor base. The new offices are located in Fort Lee, New
Jersey.
Oded Bashan, President and CEO of OTI commented: “In the second quarter, we
strengthened our position by raising additional capital and signing new
strategic alliances. The company is now better positioned to advance in our main
vertical markets – the SmartID, Payments and Petroleum payment solutions.
MasterCard’s PayPass represents a great advancement in contactless technology
acceptance. After being involved with the project from its inception, we are
starting to see the fruits of our labor with commercial orders of contactless
microprocessor. We anticipate orders for the Saturn 5000 contactless reader
later this year. Expenses related to the raising of capital resulted in $2.1
million, shown in our P&L. The restructuring of our marketing support strategy
has also added expenses and affected our results. We believe these activities
will better position the company and contribute to a better stream of revenues
in the future. Despite delays in the implementation of some projects in the
petroleum and payments markets, for reasons not dependent on OTI, revenues for
the first six months were slightly up. As a result of such delays, our revenue
mix for the first six months has changed and impacted our gross profit
accordingly. In the last few weeks we began receiving orders from the petroleum
and payments markets that were expected in the second quarter.”
Mr. Bashan added that: “Relocating OTI America’s offices to the East Coast will
bring OTI closer to the investor base and clients in the ID and Financial
markets. This will enable us to better support payment programs such as PayPass
and SmartID projects. ”
Financial Results
Revenues for the first six months increased to $9.9 million from $9.7 million
for the same period of last year. Revenues for the second quarter were down to
$4.6 million from $5 million in the same period last year. The decrease was due
to the slower-than-expected implementation of several key projects in the
petroleum and payment markets for reasons not dependent on OTI. In the last few
weeks we are receiving orders that were expected in the second quarter. Gross
Profit for first six months was down $1.32M to $4.0 million from $5.3 million in
the first six months last year. The decrease is due to projects with relatively
lower margins. The operating loss for the six months ended June 30, 2004
increased to $5.7 million from $1.1 million in the same period in 2003, mainly
due to $2.1 million one time expenses related to raising of capital, $1.3
million decrease in gross profit and $613,000 increase in marketing expenses
related mainly to marketing and advertising efforts as a result of our attempts
to increase our presence mainly in China and another country in the Far-East and
in relation to our efforts to promote major projects in the US. Net loss
increased to $5.9 million, from $1.9 million for the same period in 2003. The
increase is mainly due to the increase in the operating loss. Cash from
operating activities for the six months period ending June 30, 2004 was $193,000
compared to a negative cash flow of $1.4 million for the same period last year.
During the second quarter, $15.1 million were raised resulting in total balance
of cash and cash equivalents of $29 million at June 30, 2004.
Recent business developments that advanced OTI towards its goal of becoming a
leading provider of contactless microprocessor-based smart card solutions
include the following:
– OTI and SST signed VAR agreement to deploy OTI’s contactless payment readers
in sports venues and retailers as part of SST’s PowerPay solution. “PowerPay”
solution is a contactless payment and coalition marketing system targeted at
merchants and sports teams.
– OTI entered the U.S. healthcare market with MediSmartTM solution. OTI signed a
distribution agreement with J4 Technologies, leading healthcare VAR.
– In China, OTI sold its 50% stake in the e-Smart System Inc. joint venture to
its partner, who is expected continue to distribute OTI’s micropayments and
other products. The sale of OTI’s interest in the e-Smart System joint venture
is expected to result in multiple strong marketing channels for OTI’s products
in the Asian market by enabling OTI to focus on directly selling its SmartID
products while e-Smart continues to distribute OTI’s micropayments and other
products on a non-exclusive basis.
– OTI EasyFuel(TM) expanded its presence in Latin America. OTI signed an
agreement with a Guatemalan based distributor following a successful field test.
Fuelomaster, a Guatemalan company, will distribute EasyFuel throughout the
country. Fuelomaster will target gas stations for fleets, as well as the retail
gas station market.
– OTI Africa signed an agreement with Sasol Oil, South Africa’s largest oil
company, to create a network of on-road retail convenience centers and sites
equipped with OTI’s petroleum payment solution to service both the oil-company
contracted and bank-contracted fleet market and the private motorist sector.
– OTI and Hypercom Corporation will deliver world-leading “contactless”
electronic card payment programs that add convenience, speed check-out and
increase security.
– China starts to launch electronic ID cards – incorporating OTI’s contactless
technology. Xinhua News Agency, the state and worldwide news agency in China,
reported in April that “Within the first half of this year, 200,000 residents of
Shanghai’s Jiading and Chongming districts will be issued new ID cards.”
end of message, (c)DGAP 26.08.2004
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WKN: 924895; ISIN: IL0010834682; Index:
Listed: Geregelter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin-
Bremen, Düsseldorf, Hannover, München und Stuttgart
261610 Aug 04
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