ON TRACK INNOVATIONS LTD.
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(Registrant)
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By: |
/s/ Ofer Tziperman
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Ofer Tziperman
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Chief Executive Officer
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Press Release
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Signed a definitive agreement to sell its SmartID division to SuperCom Ltd. Following a successful due diligence process by SuperCom, OTI will receive $10 million in secured cash after the closing, with an additional $12.5 million subject to performance-based milestones. Accordingly, SmartID results and cash flows for the third quarter ended September 30, 2013 are presented separately in the statement of operations and statement of cash flows as discontinued operations.
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Received follow-on orders for commercial quantities of EasyFuel Plus from Tokheim, a leading global provider of fuel dispensing and automation equipment. EasyFuel Plus equipment for Tokheim has been supplied to more than 250 locations, which includes more than 1,000 nozzles and 7,500 vehicles to date.
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U.S. District Court for the Southern District of New York denied T-Mobile USA’s request for reconsideration of the claim construction (Markman) decision in OTI’s patent infringement lawsuit alleging that NFC-enabled phones sold by T-Mobile USA infringe OTI’s U.S. Patent No. 6,045,043.
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Divested the operations of Parx France, a distributor of EasyPark electronic parking solutions in French speaking markets for OTI’s subsidiary, Parx Ltd. The divestiture is expected to reduce OTI’s operating expenses by more than $800,000 annually, while allowing Parx Ltd. to continue selling OTI’s patented EasyPark solutions through Parx France under new ownership in diverse European markets and the opportunity to share future profits.
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Shlomi Eytan was appointed to the new position of chief sales and marketing officer. Eytan is applying more than 15 years’ experience managing sales organizations to accelerate global sales of OTI’s contactless and NFC products.
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Several members of OTI’s board of directors purchased OTI common stock in the open market (per Rule 10b5-1 plans executed in June 2013 and/or during open trading windows per OTI’s insider trading policy). Including additional purchases made subsequent to the end of the third quarter, totaling approximately 985,152 shares as of November 19, 2013.
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Revenues in the third quarter of 2013 increased 27% to $6.8 million from $5.3 million in the same year-ago period. The increase was primarily driven by a 133% increase in payment products revenues from NFC readers sold to the U.S. market, as well as the expansion of company’s mass transit projects in Poland.
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Gross margin in the third quarter of 2013 was 46.5% compared to 53.5% in the third quarter of 2012.
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Operating expenses in the third quarter of 2013 totaled $733,000 compared to $5.5 million in the same year-ago period. Operating expenses in Q3 2013 were offset by $4.3 million other operating income mainly due to a write-off of provision for former employees termination following a settlement during the quarter. Excluding the other operating income, operating expenses declined $467,000 or 8.5% to $5.0 million, with the decrease primarily attributable to lower headcount and reduced management costs compared to the year-ago period.
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Net income from continuing operations in the third quarter of 2013 totaled $2.1 million or $0.06 per share versus a net loss of $2.6 million or $(0.08) per share in the same period last year. The improvement was due to the $4.3 million in other operating income, as well as increased revenues and reduced operating expenses.
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Adjusted EBITDA from continuing operations in the third quarter of 2013 totaled $3.0 million, an improvement from an adjusted EBITDA loss from continuing operations of $2.2 million in the third quarter of 2012 (see discussion about the presentation of adjusted EBITDA from continuing operations, a non-GAAP term, below).
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Cash and cash equivalents, and short-term investments at September 30, 2013 totaled $9.7 million.
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September 30
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December 31
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2013
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2012
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(Unaudited)
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(Audited)
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Assets
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Current assets
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Cash and cash equivalents
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$ | 7,038 | $ | 9,304 | ||||
Short-term investments
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2,661 | 8,712 | ||||||
Trade receivables (net of allowance for doubtful
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accounts of $431 as of September 30, 2013
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and December 31, 2012)
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5,528 | 7,516 | ||||||
Other receivables and prepaid expenses
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3,575 | 5,349 | ||||||
Short term restricted deposit for employees benefit
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- | 2,922 | ||||||
Inventories
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5,997 | 7,049 | ||||||
Assets from discontinued operation - held for sale
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415 | - | ||||||
Total current assets
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25,214 | 40,852 | ||||||
Long term restricted deposit for employees benefit
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631 | 1,099 | ||||||
Severance pay deposits
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710 | 836 | ||||||
Property, plant and equipment, net
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14,124 | 13,074 | ||||||
Intangible assets, net
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341 | 656 | ||||||
Goodwill
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485 | 485 | ||||||
Total Assets
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$ | 41,505 | $ | 57,002 |
September 30
2013
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December 31
2012
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(Unaudited)
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(Audited)
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Liabilities and Equity
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Current Liabilities
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Short-term bank credit and current maturities
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of long-term bank loans
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$ | 4,379 | $ | 7,368 | ||||
Trade payables
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9,301 | 10,696 | ||||||
Accrued severance pay
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- | 3,539 | ||||||
Other current liabilities
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4,865 | 10,971 | ||||||
Total current liabilities
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18,545 | 32,574 | ||||||
Long-Term Liabilities
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Long-term loans, net of current maturities
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3,663 | 2,224 | ||||||
Accrued severance pay
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1,880 | 2,032 | ||||||
Deferred tax liability
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- | 53 | ||||||
Total long-term liabilities
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5,543 | 4,309 | ||||||
Total Liabilities
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24,088 | 36,883 | ||||||
Equity
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Shareholders' Equity
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Ordinary shares of NIS 0.1 par value: Authorized –
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50,000,000 shares as of September 30, 2013 and
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December 31, 2012; issued: 33,873,796 and 32,938,011
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shares as of September 30, 2013 and December 31, 2012,
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respectively; outstanding: 32,695,097 and 31,759,312 shares
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as of September 30, 2013 and December 31, 2012, respectively
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845 | 820 | ||||||
Additional paid-in capital
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211,734 | 210,853 | ||||||
Treasury shares at cost - 1,178,699 shares as of September 30,
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2013 and December 31, 2012.
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(2,000 | ) | (2,000 | ) | ||||
Accumulated other comprehensive income (loss)
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(50 | ) | 36 | |||||
Accumulated deficit
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(192,661 | ) | (189,131 | ) | ||||
Total Shareholder’s equity
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17,868 | 20,578 | ||||||
Non-controlling interest
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(451 | ) | (459 | ) | ||||
Total Equity
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17,417 | 20,119 | ||||||
Total Liabilities and Equity
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$ | 41,505 | $ | 57,002 |
Nine months ended
September 30
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Three months ended
September 30
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2013
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2012
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2013
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2012
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(Unaudited)
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(Unaudited)
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(Unaudited)
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(Unaudited)
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Revenues
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Sales
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$ | 14,259 | $ | 12,835 | $ | 5,605 | $ | 4,119 | ||||||||
Licensing and transaction fees
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3,375 | 3,672 | 1,163 | 1,198 | ||||||||||||
Total revenues
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17,634 | 16,507 | 6,768 | 5,317 | ||||||||||||
Cost of revenues
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Cost of sales
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9,458 | 8,879 | 3,619 | 2,470 | ||||||||||||
Total cost of revenues
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9,458 | 8,879 | 3,619 | 2,470 | ||||||||||||
Gross profit
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8,176 | 7,628 | 3,149 | 2,847 | ||||||||||||
Operating expenses
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Research and development
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3,674 | 4,498 | 1,341 | 1,546 | ||||||||||||
Selling and marketing
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5,652 | 6,835 | 2,059 | 2,165 | ||||||||||||
General and administrative
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5,986 | 6,540 | 1,625 | 1,768 | ||||||||||||
Other operating income
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(4,307 | ) | - | (4,307 | ) | - | ||||||||||
Amortization of intangible assets
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68 | 72 | 15 | 28 | ||||||||||||
Total operating expenses
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11,073 | 17,945 | 733 | 5,507 | ||||||||||||
Operating income (loss) from continuing operations
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(2,897 | ) | (10,317 | ) | 2,416 | (2,660 | ) | |||||||||
Financial income (expense), net (*)
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(1,109 | ) | (275 | ) | (272 | ) | 71 | |||||||||
Income (Loss) from continuing operations before taxes on income
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(4,006 | ) | (10,592 | ) | 2,144 | (2,589 | ) | |||||||||
Taxes on income
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(1 | ) | (2 | ) | (1 | ) | (2 | ) | ||||||||
Net income (loss) from continuing operations
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(4,007 | ) | (10,594 | ) | 2,143 | (2,591 | ) | |||||||||
Net income (loss) from discontinued operations
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486 | 1,158 | (320 | ) | 578 | |||||||||||
Net income (loss)
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(3,521 | ) | (9,436 | ) | 1,823 | (2,013 | ) | |||||||||
Net loss (income) attributable to noncontrolling interest
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(9 | ) | 58 | (73 | ) | 22 | ||||||||||
Net loss (income) attributable to shareholders
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$ | (3,530 | ) | $ | (9,378 | ) | $ | 1,750 | $ | (1,991 | ) | |||||
Basic and diluted net profit (loss) attributable to
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shareholders per ordinary share
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From continuing operations
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$ | (0.12 | ) | $ | (0.33 | ) | $ | 0.06 | $ | (0.08 | ) | |||||
From discontinued operations
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$ | 0.01 | $ | 0.04 | $ | (0.01 | ) | $ | 0.02 | |||||||
$ | (0.11 | ) | $ | (0.29 | ) | $ | 0.05 | $ | (0.06 | ) | ||||||
Weighted average number of ordinary shares used in computing basic net profit (loss) per ordinary share
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32,574,280 | 32,120,021 | 32,787,077 | 32,221,618 | ||||||||||||
Weighted average number of ordinary shares used in computing diluted net profit (loss) per ordinary share
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32,574,280 | 32,120,021 | 33,804,074 | 32,221,618 |
Nine months ended
September 30
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Three months ended
September 30
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2013
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2012
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2013
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2012
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(Unaudited)
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(Unaudited)
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(Unaudited)
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(Unaudited)
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Net income (loss) from continuing operations
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$ | (4,007 | ) | $ | (10,594 | ) | $ | 2,143 | $ | (2,591 | ) | |||||
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Financial expenses
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1,109 | 275 | 272 | (71 | ) | |||||||||||
Depreciation
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1,113 | 938 | 439 | 310 | ||||||||||||
Taxes on income
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1 | 2 | 1 | 2 | ||||||||||||
Amortization expenses
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68 | 72 | 15 | 28 | ||||||||||||
Total EBITDA from continuing operations
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$ | (1,716 | ) | $ | (9,307 | ) | $ | 2,870 | $ | (2,322 | ) | |||||
Stock based compensation
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$ | 219 | $ | 651 | $ | 107 | $ | 80 | ||||||||
Total ADJUSTED EBITDA from continuing operations
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$ | (1,497 | ) | $ | (8,656 | ) | $ | 2,977 | $ | (2,242 | ) |
Nine months ended September 30
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2013
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2012
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(Unaudited)
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(Unaudited)
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Cash flows from operating activities
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Net loss
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$ | (4,007 | ) | $ | (10,594 | ) | ||
Adjustments required to reconcile net loss to
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net cash used in operating activities:
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Stock-based compensation related to options and shares issued
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to employees and others
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219 | 651 | ||||||
Amortization of intangible assets
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68 | 72 | ||||||
Depreciation
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1,113 | 938 | ||||||
Loss on sale of fixed assets
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79 | - | ||||||
loss from disposal of a subsidiary
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189 | - | ||||||
Changes in operating assets and liabilities:
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Accrued severance pay, net
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(2,991 | ) | 893 | |||||
Accrued interest and linkage differences
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(106 | ) | 23 | |||||
Decrease in deferred tax liability
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(7 | ) | (9 | ) | ||||
Decrease in trade receivables, net
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1,912 | 3,923 | ||||||
Decrease (Increase) in other receivables and prepaid expenses
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1,127 | (412 | ) | |||||
Decrease in inventories
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605 | 256 | ||||||
Decrease in trade payables
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(1,178 | ) | (619 | ) | ||||
Decrease in other current liabilities
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(6,036 | ) | (464 | ) | ||||
Net cash used in continuing operating activities
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(9,013 | ) | (5,342 | ) | ||||
Cash flows from investing activities
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Purchase of property and equipment
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(2,699 | ) | (630 | ) | ||||
Purchase of short term investments and long term restricted deposit
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(325 | ) | (8,066 | ) | ||||
Acquisition of business operations
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- | (100 | ) | |||||
Proceeds from restricted deposit for employee benefit
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3,390 | - | ||||||
Proceeds from maturity and sale of short term investments
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6,447 | 13,184 | ||||||
Proceeds from sale of fixed assets
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168 | - | ||||||
Net cash provided by investing activities
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6,981 | 4,388 | ||||||
Cash flows from financing activities
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Increase (decrease) in short-term bank credit, net
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(2,131 | ) | 1,824 | |||||
Proceeds from long-term bank loans
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2,794 | 290 | ||||||
Repayment of long-term bank loans
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(2,198 | ) | (2,850 | ) | ||||
Proceeds from exercise of options and warrants, net
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647 | 9 | ||||||
Net cash used in financing activities
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(888 | ) | (727 | ) | ||||
Cash flows from discontinued operations
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Net cash provided by discontinued operating activities
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678 | 1,485 | ||||||
Total net cash provided by discontinued operations
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678 | 1,485 | ||||||
Effect of exchange rate changes on cash
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(24 | ) | 176 | |||||
Decrease in cash and cash equivalents
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(2,266 | ) | (20 | ) | ||||
Cash and cash equivalents at the beginning of the period
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9,304 | 12,517 | ||||||
Cash and cash equivalents at the end of the period
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$ | 7,038 | $ | 12,497 |