EX-99.1 2 ea150634ex99-1_ontrack.htm PRESS RELEASE DATED NOVEMBER 15, 2021

Exhibit 99.1

 

 

 

On Track Innovations Ltd. Reports

Third Quarter 2021 Financial Results

 

Yokneam, Israel – November 15, 2021 – 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 Summary1

 

●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.

 

 

1Following 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.

 

 

 

 

 

 

●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

  

 

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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.

 

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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,		   Nine 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 OPERATIONS  $(996)  $(1,150)  $(2,977)  $(2,491)
                     
Stock-based compensation   15    13    44    41 
Total adjusted EBITDA FROM CONTINUING OPERATIONS  $(981)  $(1,137)  $(2,933)  $(2,450)

 

(*)Reclassified to conform with the current period presentation.

 

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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 
Intangible assets, net   171    247 
Right-of-use assets due to operating leases   2,304    2,903 
Total non-current assets   4,201    4,824 
           
Total Assets  $13,658   $16,986 

 

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ON TRACK INNOVATION LTD.

INTERIM UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET

(US dollars in thousands)

 

   September 30,   December 31, 
   2021   2020 
Liabilities and Equity        
         
Current Liabilities        
Short-term bank credit and loans and current maturities of long-term bank loans  $1,863   $542 
Convertible short-term loan from shareholders, including a controlling shareholder   422    625 
Trade payables   3,410    1,667 
Other current liabilities   2,519    2,283 
Liabilities from discontinued operations - held for sale   -    5,829 
           
Total current liabilities   8,214    10,946 
           
Long-Term Liabilities          
Long-term loans, net of current maturities   24    14 
Long-term liabilities due to operating leases, net of current maturities   1,708    2,343 
Accrued severance pay   993    977 
Total long-term liabilities   2,725    3,334 
           
Total Liabilities   10,939    14,280 
           
Commitments and Contingencies          
           
Equity          
Shareholders' Equity          
Ordinary shares of NIS 0.1 par value: Authorized – 100,000,000 shares as of September 30, 2021 and December 31, 2020; issued: 73,968,592 and 55,003,076 shares as of September 30, 2021 and December 31, 2020, respectively; outstanding: 72,789,893 and 53,824,377 shares as of September 30, 2021, and December 31, 2020, respectively   2,008    1,423 
Additional paid-in capital   233,406    227,209 
Treasury shares at cost - 1,178,699 shares as of September 30, 2021 and December 31, 2020   (2,000)   (2,000)
Accumulated other comprehensive loss   (332)   (961)
Accumulated deficit   (230,363)   (222,965)
Total Equity   2,719    2,706 
           
Total Liabilities and Equity  $13,658   $16,986 

 

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ON TRACK INNOVATION LTD.

INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(US dollars in thousands, except share and per share data)

 

   Three months ended
September 30,		   Nine months ended
September 30,		 
   2021   (*) 2020   2021   (*) 2020 
                 
Revenues                
Sales  $4,632   $2,624   $9,465   $9,718 
Software as a Service (“SaaS”)   407    362    1,194    972 
                     
Total revenues   5,039    2,986    10,659    10,690 
                     
Cost of revenues                    
Cost of sales   3,715    1,834    6,955    6,213 
Total cost of revenues   3,715    1,834    6,955    6,213 
                     
Gross profit   1,324    1,152    3,704    4,477 
Operating expenses                    
Research and development   946    839    2,684    2,635 
Selling and marketing   701    765    2,042    2,348 
General and administrative   764    799    2,245    2,299 
                     
Total operating expenses   2,411    2,403    6,971    7,282 
                     
Operating loss from continuing operations   (1,087)   (1,251)   (3,267)   (2,805)
Financial expenses derived from convertible short-term loan from shareholders   (345)   -    (2,398)   - 
Other financial expenses, net   (112)   (72)   (160)   (5)
Financial expenses, net   (457)   (72)   (2,558)   (5)
                     
Loss from continuing operations before taxes on income   (1,544)   (1,323)   (5,825)   (2,810)
                     
Income tax benefits (expenses)   -    8    13    (9)
                     
Loss from continuing operations   (1,544)   (1,315)   (5,812)   (2,819)
(Loss) income from discontinued operations   29    (306)   (1,586)   (594)
                     
Net loss  $(1,515)  $(1,621)  $(7,398)  $(3,413)
Basic and diluted net loss attributable to shareholders per ordinary share                    
From continuing operations   (0.02)   (0.02)   (0.09)   (0.05)
From discontinued operations   

(**)

    (0.01)   (0.03)   (0.01)
                     
   $(0.02)  $(0.03)  $(0.12)  $(0.06)
                     
Weighted average number of ordinary shares used in computing basic and diluted net loss per  ordinary share   72,789,893    

(***)57,470,208		    63,133,458    

(***)55,059,647		 

 

(*)Reclassified to conform with the current period presentation.
(**)Less than $0.01 per ordinary share.
(***)Basic and diluted net losses attributable to shareholders per ordinary share for previous reporting periods were retroactively adjusted due to the completion of rights offering.

 

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   Nine months ended
September 30,		 
   2021   (*) 2020 
Cash flows from continuing operating activities        
Net loss from continuing operations  $(5,812)  $(2,819)
Adjustments required to reconcile net loss to net cash used in by continuing operating activities:          
Stock-based compensation related to options and shares issued   to employees and others   44    41 
Accrued interest and linkage differences, net   (110)   (102)
Financial expenses derive from convertible short-term loan from shareholders   2,398    - 
Depreciation and amortization   290    314 
Deferred tax (benefits) expenses, net   (13)   9 
           
Changes in operating assets and liabilities:          
Change in accrued severance pay, net   17    21 
Increase in trade receivables, net   (2,848)   (432)
(Increase) decrease in other receivables and prepaid expenses   (420)   306 
(Increase) decrease in inventories   (750)   253 
Increase in trade payables   1,739    1,087 
Increase (decrease) in other current liabilities   58    (305)
Net cash used in continuing operating activities   (5,407)   (1,627)
           
Cash flows from continuing investing activities          
           
Purchase of property and equipment and intangible assets   (206)   (336)
Change in short-term investments, net   -    1,715 
Net cash (used in) provided by continuing investing activities   (206)   1,379 
           
Cash flows from continuing financing activities          
(Decrease) increase in short-term bank credit, net   (406)   70 
Convertible short-term loan received from shareholders, net of transaction expenses   923    - 
Long-term loan received   18    - 
Repayment of long-term loans   (4)   (8)
Proceeds from issuance of shares, net of issuance costs   3,209    1,369 
Net cash provided by continuing financing activities   3,740    1,431 
           
Cash flows from discontinued operations          
Net cash used in discontinued operating activities   (1,724)   (1,335)
Net cash provided by (used in) discontinued investing activities   2,926    (658)
Net cash (used in) provided by discontinued financing activities   (380)   890 
Total net cash provided by (used in) discontinued operations   822    (1,103)
           
Effect of exchange rate changes on cash and cash equivalents   (90)   (45)
           
(Decrease) increase in cash, cash equivalents and restricted cash   (1,141)   35 
           
Cash, cash equivalents and restricted cash - beginning of the period   (**) 2,499    (**) 2,648 
           
Cash, cash equivalents and restricted cash - end of the period  $1,358   $(**) 2,683 

 

(*)Reclassified to conform with the current period presentation.
(**)Including cash and cash equivalents from discontinued operations held for sale.

 

 

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