On Track Innovations Ltd. Reports Third Quarter 2021 Financial Results

PR Newswire

YOKNEAM, Israel, Nov. 15, 2021

YOKNEAM, Israel, Nov. 15, 2021 /PRNewswire/ -- On Track Innovations Ltd. (OTCQX: OTIVF) (the "Company" or "OTI"), a global provider of near field communication (NFC) and cashless payment solutions, today provided a business update and announced financial results for the third quarter ended September 30, 2021.

Management Comments

Mr. Amir Eilam, OTI's new Chief Executive Officer (CEO), commented, "We are pleased with our results -- particularly the revenue growth, which has shown solid recovery and is up 69% year-over-year and up 77% sequentially . We see strong traction in our target regions, particularly in the United States, bringing a number of new customers in the quarter, all with potential for long-term recurring revenue growth."

Mr. Holtzman, OTI's CEO until November 3rd, commented, "I was brought to OTI two years ago to bring about a turnaround in the business. With our shift towards a recurring, software-as-a-service, revenue model, I believe I leave OTI well positioned. I welcome Amir Eilam as the new CEO, a long-time OTI employee. I believe he will be a strong CEO and bring OTI to the next level."

Third Quarter 2021 Financial Results Summary([1])

   -- Revenue in the quarter was $5.0 million, compared to $3.0 million in the 
      third quarter of 2020, an increase of 69%. These amounts include 
      Software-as-a-Service (SaaS) revenues, which are recurring by nature, and 
      amounted to $407 thousand in the quarter of 2021, compared to $362 
      thousand in the third quarter of last year, an increase of 12%. 
   -- Gross profit in the quarter was $1.3 million, or 26% of revenues, 
      compared to $1.2 million, or 39% of revenues, in the third quarter of 
      last year. 
   -- Operating expenses totaled $2.4 million in the quarter, compared to 
      operating expenses of $2.4 million in the third quarter of last year. 
   -- Operating loss from continuing operations was $1.1 million, compared to 
      an operating loss from continuing operations of $1.3 million in the third 
      quarter of last year. 
   -- Net loss was $1.5 million, or loss of $0.02 per share, compared to a net 
      loss of $1.6 million, or loss of $0.03 per share, in the third quarter of 
      last year. 
   -- Adjusted EBITDA loss from continuing operations was $1.0 million in the 
      quarter, compared to adjusted EBITDA loss of $1.1 million in the third 
      quarter of last year. 
   -- As of September 30, 2021, the Company had cash and cash equivalents of 
      $1.3 million. 

As a result of the uncertainty regarding the likelihood that the Company will be required to repay its loan agreement on the extended maturity date, OTI management has added a going concern note in the third quarter of 2021 financial results. The Company is negotiating the terms of a loan agreement with its controlling shareholder that would address its cash needs.

Conference Call

Management will host a live investor conference call at 9:00 a.m. ET today, November 15, 2021, to discuss OTI's financial results, provide a corporate update, and conclude with a Q&A session taking live questions from participants as well as answering many of the previously submitted questions by investors.

To participate, please use the following information:

U.S. Dial-in: 1 888 723 3164

International Dial-in: +972 3 918 0691

Webcast: https://Veidan.activetrail.biz/otiq3-2021

Please dial in a few minutes before the start of the call and request to join the "On Track Innovations Q3 2021 Earnings Conference Call" to ensure timely participation.

A replay of the conference call will be available via the investor relations section of the Company's website, the content of which does not form a part of this press release.

About On Track Innovations Ltd

On Track Innovations (OTI) is a global leader in the design, manufacture, and sale of secure cashless payment solutions using contactless NFC technology. OTI's field-proven innovations have been deployed around the world to address cashless payment, automated retail and petroleum markets. OTI distributes and supports its solutions through a global network of regional offices and alliances. For more information, visit www.otiglobal.com.

Investor Relations Contact:

Ehud Helft

GK Investor & Public Relations

+1 212 378 8040

oti@gkir.com

Safe Harbor / Forward-Looking Statements

This press release contains express or implied forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other Federal securities laws. Whenever we use words such as "will," "look forward," "expect," "anticipate," "intend," "plan," "estimate," "believe," "should," "can" or similar expressions, we are making forward-looking statements. For example, we are using forward-looking statements when we discuss, among others: the Company's strategy, potential of new customers, growing business with existing customers and the potential for long-term recurring revenues, the Company's expected growth,scarcity of electronic parts and extended delivery dates, the Company's cash needs and the potential to secure additional funding resources, whether in the form of a loan or otherwise and the success of OTI's new CEO. 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, including those as a result of the current COVID-19 pandemic. Performance or achievements of OTI could differ materially from those described in or implied by the statements in this press release. Factors that could cause actual results to differ materially from those anticipated by our forward-looking statements are stated under the captions "Risk Factors" in our most recent Annual Report (Form 10-K) and other known and unknown uncertainties and risk factors including those detailed from time to time in the Company's filings with the Securities and Exchange Commission. Forward-looking statements are made as of the date of this release, and we expressly disclaim any obligation or undertaking to update forward-looking statements. The reader is cautioned not to place undue reliance on forward-looking statements.

Use of Non-GAAP Financial Information

This press release contains certain non-GAAP measures, namely, adjusted EBITDA loss from continuing operations, or adjusted earnings from continuing operations before interest, income tax, depreciation and amortization. Adjusted EBITDA loss from continuing operations represents earnings before interest or financing expenses, income tax, depreciation and amortization, and further eliminates the effect of stock-based compensation expense. OTI believes that adjusted EBITDA loss from continuing operations should be considered in evaluating the Company's operations since it provides a clear indication of the Company's operating results. This measure should be considered in addition to results prepared in accordance with U.S. GAAP, but should not be considered a substitute for the U.S. GAAP results. The non-GAAP measures included in this press release have been reconciled to the U.S. GAAP results in the table below.

([1]) Following OTI's sale of its Polish subsidiary, ASEC, in Poland, the financial results of ASEC were included as discontinued operations and all the prior periods' information has been reclassified to conform with the current period's presentation.

ON TRACK INNOVATIONS LTD. 
RECONCILIATION OF NON-GAAP ADJUSTMENT 
The following table reflects selected On Track Innovations Ltd. 
non-GAAP results reconciled to GAAP results: 
(US dollars in thousands) 
                Three months ended September 
                30,                             Six months ended September 30, 
                2021            (*)2020         2021            (*)2020 
                (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited) 
Net loss        $   (1,515)     $     (1,621)   $   (7,398)     $     (3,413) 
Net (income) 
 loss from 
 discontinued 
 operations     (29)            306             1,586           594 
Financial 
 expenses, 
 net            457             72              2,558           5 
Depreciation 
 and 
 amortization   91              101             290             314 
Income tax 
 (benefits) 
 expenses, 
 net            -               (8)             (13)            9 
Total EBITDA 
 FROM 
 CONTINUING     $     (996)     $     (1,150)   $    (2,977)    $    (2,491) 
OPERATIONS 
Stock-based 
 compensation   15              13              44              41 
Total adjusted 
 EBITDA FROM 
 CONTINUING     $     (981)     $     (1,137)   $    (2,933)    $    (2,450) 
OPERATIONS 
(*)   Reclassified to conform with the current period 
 presentation. 
ON TRACK INNOVATION LTD. 
INTERIM UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET 
(US dollars in thousands) 
                                           September 30,  December 31, 
                                           2021           2020 
Assets 
Current assets 
Cash and cash equivalents                  $  1,253       $   1,377 
Short-term investments                     -              105 
Trade receivables (net of allowance for 
doubtful 
 accounts of $610 and $620 as of 
 September 30, 2021 
 and December 31, 2020, respectively)      3,839          1,148 
Other receivables and prepaid expenses     1,142          695 
Inventories                                3,223          2,479 
Assets from discontinued operations - 
 held for sale                             -              6,358 
Total current assets                       9,457          12,162 
Non-current assets 
Restricted bank deposit                    105            - 
Long-term restricted deposit for 
 employee benefits                         509            511 
Severance pay deposits                     410            411 
Property, plant and equipment, net         702            752