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On Track Innovations: Oti Reports Third Quarter 2015 Financial Results

The following excerpt is from the company's SEC filing.

On Track Innovations Ltd.

(oti) (NASDAQ: OTIV),

a global provider of near field communication (NFC) and cashless payment solutions, reported financial results for the third quarter ended September 30, 2015.

Q3 2015 Operational Highlights

Appointed Shlomi Cohen as CEO, who brings more than 25 years of experience managing global organizations to advance the sales of oti's cashless payment solutions.

Implemented a new go-to-market strategy designed to advance the company's NFC market leadership and drive growth.

Filed patent in fringement lawsuits against AT&T and Verizon.

Q3 2015 Financial Details

Total revenues decreased 31% to $3.8 million from $5.4 million in the prior quarter and 29% from $5.3 million in the same year-ago period.

Gross profit declined 23% to $2.1 million (55% of revenue) from $2.7 million (50% of revenue) in the prior quarter and 21% from $2.6 million (50% of revenue) in the same year-ago period.

Operating expenses were $4.4 million, a decrease of 4% from $4.6 million in the prior quarter and 9% from $4.8 million in the same year-ago period.

Net loss from continuing operations totaled $2.4 million or $(0.06) per share, compared to a net loss from continuing operations of $2.3 million or $(0.07) per share in the same year-ago period.

Adjusted EBITDA loss from continuing operations totaled $1.2 million, an improvement from a loss of $1.5 million in the same year-ago period (see discussion about the presentation of adjusted EBITDA from continuing operations, a non-GAAP financial measure, below).

At quarter-end, cash and cash equivalents and short-term investments totaled $11.5 million.

Management Commentary

“During the third quarter, we made meaningful progress with new key initiatives designed to optimize our manufacturing processes, accelerate growth and reduce costs,” said Shlomi Cohen, CEO of oti. “These efforts resulted in lower operating expenses and improved gross margins, and an overall leaner, more efficient organization.

“While we experienced strong growth in our petroleum segment in Q3, our retail segment sales declined. The company over recent years has primarily focused on restructuring and R&D activity, and has not benefited as much as it could have from growth in the global NFC market. However, it is clear that our company has all the right elements in place, including industry leading technology and world-class R&D, to be a leader in the multi-billion dollar global cashless payments market.

“To take better advantage of these strengths, over the last few months we have begun to implement a new go-to-market strategy to transition oti into a more capable sales organization in order to capture greater market share in the NFC space. We have been actively recruiting new sales and marketing professionals to address emerging opportunities in Europe, Asia Pacific and North America.

“We recently introduced a new product lineup to support the success of our sales team, particularly as we enter new markets and industry growth verticals. One of the revolutionary new products we introduced at Money20/20 last month was the oti Pay Capsule, a wearable NFC payment device.

“Pay Capsule plays into The Internet of Things revolution, the emerging hyper-connected world that is transforming the way consumers interact and transact. Pay Capsule eliminates the boundaries of how we pay by delivering a secure digital payment experience using virtually any personal item, such as rings, fitness bands, car key fobs, and apparel. We plan to complete the rollout of Pay Capsule and other new product additions in 2016.

“Our operational progress in the third quarter along with our expanding product portfolio, sales pipeline and partner channels have set the stage for a better finish to the year and an even stronger 2016. While there is more work to be done, we are in a strong position to capitalize on the global growth in the cashless payment market.”

Conference Call

oti will hold a conference call today (November 12, 2015) at 10:30 a.m. Eastern time to discuss these results. oti’s CEO Shlomi Cohen and CFO Shay Tomer will host the presentation, followed by a question and answer period.

Date: Thursday, November 12, 2015

Time: 10:30 a.m. Eastern time

U.S. dial-in:...