OTI Reports FY 2006 Third Quarter and Nine Months Financial Results

FORT LEE, N.J., Nov. 20  /PRNewswire-FirstCall/ -- On Track Innovations Ltd. (OTI) (NASDAQ:OTIV), a global leader in contactless microprocessor-based smart card solutions for homeland security, payments, petroleum payments and other applications, today announced its consolidated financial results for the third quarter and nine months ended September 30, 2006.

  -- Revenues: $8.0 million for the three months ended September 30, 2006, a
     decrease of 34% compared to $12.1 million in the same period last year.
     Revenues for the first nine months of 2006 were $27.4 million, an
     increase of 4% compared to $26.4 million in the same period last year.
  -- Gross Margin: 43% compared to 35% in the third quarter of 2005. Gross
     margin for the first nine months of 2006 was 45% compared to 35% in the
     same period last year.
  -- GAAP Net Loss: $(2.4) million, an increase of 14% compared to
     $(2.1) million in the third quarter last year.  GAAP net loss for the
     first nine months of 2006 was $(6.3) million, a decrease of 7% compared
     to $(6.8) million in the same period last year.
  -- Non-GAAP Net Loss: $(1.7) million, a decrease of 19% compared to
     $(2.1) million in the third quarter last year. Non-GAAP net loss for
     the first nine months of 2006 was $(4.0) million, a 38% decrease
     compared to $(6.5) million in the same period last year.
  -- GAAP Loss per Share: $(0.16), compared to $(0.23) in the third quarter
     of 2005. GAAP loss per share for the first nine months of 2006 was
     $(0.47) compared to $(0.76) in the same period last year.
  -- Non-GAAP Loss per Share: $(0.11) for the third quarter, compared to
     $(0.22) for the same period last year. Non-GAAP net loss for the first
     nine months of 2006, was $(0.29), compared to $(0.73) in the same
     period last year.



Non-GAAP results for the third quarter and nine months of 2006 excludes the impact of SFAS 123(R) and amortization of intangible assets. Non-GAAP results for the third quarter and nine months of 2005 excludes amortization of intangible assets.  Please see the attached tables for a full reconciliation of GAAP to Non-GAAP results.

"We are making good progress in our overall business," said Oded Bashan, President and CEO of OTI. "While we continued to see the effects of the protracted evaluation and validation period in the U.S. contactless payment cards market in Q3, we see no change in the positive long term outlook for this market and continue to expect acceleration of orders during 2007. All other segments of our business are tracking well and we have a strong pipeline of projects in each of our vertical markets."

  Recent Developments
  -- OTI to Acquire most of SuperCom's Assets
  -- OTI and VeriFone demonstrated contactless reader solution at Cartes
     show in Paris
  -- OTI to provide USA Technologies next generation contactless payment
     readers with initial orders for 10,000 readers
  -- 'Yellow' Convenience Stores to distribute and add loading
     infrastructure for EasyPark
  -- Chevron selected OTI's EasyFuel as its petroleum payment and automated
     fuel management Solution
  -- OTI delivers Garanti Bank of Turkey contactless card solutions

  Conference call and Webcast Information


The Company has scheduled a conference call and simultaneous Web cast for Monday, November 20, 2006, which will be hosted by Oded Bashan, President and CEO, Guy Shafran, CFO, and Ohad Bashan, Chief Marketing Officer and President OTI America, for 9:00 AM EST to discuss operating results and future outlook. To participate, call: 1-800-418-6860 (U.S. toll free) 1-809-245-917 (Israel toll free) 0-800-180-8316 (Germany toll free) 1-973-935-8756 (standard international) ID Code: OTI Q3 Conference call. To attend the Web cast, use the following links: http://www.otiglobal.com/content.aspx?id=226

For those unable to participate, the teleconference will be available for replay until midnight November 26th, by calling U.S.: 877-519-4471 or International; 973-341-3080 and entering the PIN number # 8126495 or on the web at: http://www.otiglobal.com/content.aspx?id=226

Use of Non-GAAP Financial Information

In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, OTI uses non-GAAP measures of gross profit, net income and earnings per share, which are adjustments from results based on GAAP to exclude non-cash equity-based compensation charges in accordance with SFAS 123(R) and amortization of intangible assets. OTI management believes the non-GAAP financial information provided in this release provides meaningful supplemental information regarding our performance and enhances the understanding of the Company's on-going economic performance. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Management uses both GAAP and non-GAAP information in evaluating and operating the business and as such deemed it important to provide all this information to investors.

About OTI

Established in 1990, OTI (NASDAQ:OTIV) designs, develops and markets secure contactless microprocessor-based smart card technology to address the needs of a wide variety of markets.  Applications developed by OTI include product solutions for petroleum payment systems, homeland security solutions, electronic passports and IDs, payments, mass transit ticketing, parking and loyalty programs. OTI has a global network of regional offices to market and support its products. The company was awarded the Frost & Sullivan 2005 and 2006 Company of the Year Award in the field of smart cards. For more information on OTI, visit http://www.otiglobal.com/.

   OTI Contact:                             Media Relations
   Galit Mendelson                          Adam Handelsman
   Director of Corporate Communications     5W Public Relations
   201 944 5200 ext. 111                    212 999 5585
                         


                            (TABLES TO FOLLOW)

  Safe Harbor for Forward-Looking Statements:


This press release contains 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 "believe," "expect," "anticipate," "intend," "plan," "estimate" or similar expressions, we are making forward-looking statements.  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, performance or achievements of OTI could differ materially from those described in or implied by the statements in this press release.  For example, forward-looking statements include statements regarding our goals, beliefs, future growth strategies, objectives, plans or current expectations.  Forward-looking statements could be impacted by the effects of the protracted evaluation and validation period in the U.S. contactless payment cards market, the failure of the purchase of assets of SuperCom to close to due a failure to satisfy closing conditions, market acceptance of new and existing products and our ability to execute production on orders, as well as the other risk factors discussed in OTI's Annual Report on Form 20-F for the year ended December 31, 2005, which is on file with the Securities and Exchange Commission.   Although OTI believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be achieved.  OTI disclaims any intention or obligation to update or revise any forward-looking statements, which speak only as of the date hereof, whether as a result of new information, future events or circumstances or otherwise.

                         ON TRACK INNOVATIONS LTD
              CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
             (In thousands, except share and per share data)

                               Nine months ended        Three months ended
                                 September 30              September 30
                               2006         2005         2006        2005
                           (Unaudited)  (Unaudited)  (Unaudited) (Unaudited)

  Revenues
  Sales                       $24,754      $24,184       $7,381     $11,583
  Licensing and
   transaction fees             2,607        2,215          624         471
  Total revenues               27,361       26,399        8,005      12,054

  Cost of Revenues
  Cost of sales                14,960       17,207        4,576       7,824
  Total cost of revenues       14,960       17,207        4,576       7,824

  Gross profit                 12,401        9,192        3,429       4,230

  Operating Expenses
  Research and development      5,254        4,218        1,953       1,511
  Less - participation by the
   Office of the
   Chief Scientist                  -          651            -         146
  Research and development,
   net                          5,254        3,567        1,953       1,365
  Selling and marketing         5,120        4,809        1,831       1,457
  General and administrative    9,177        6,902        3,101       2,642
  Amortization of intangible
   assets                         557          285          189          89
  Expenses relating to raising
   of capital, exchange of
   subsidiary's employees equity
   interests in equity interest
   of the company and new
   acquisitions in the Far East*    -        1,768            -       1,768
  Gain from sale of subsidiaries (122)        (510)        (122)          -
  Total operating expenses     19,986       16,821        6,952       7,321

  Operating loss               (7,585)      (7,629)      (3,523)     (3,091)
  Financial income, net         1,278          562          542         666
  Other income, net                20           53            6          49
  Loss before taxes on
   income and minority
   interests                   (6,287)      (7,014)      (2,975)     (2,376)
  Taxes on income                 314         (177)         149        (133)
  Minority interests              593          (79)         479         (79)
  Equity in income (loss)
   of affiliate                  (969)           5          (63)          5
  Loss before extraordinary
   item                       $(6,349)     $(7,265)     $(2,410)    $(2,583)
  Extraordinary item                -          444            -         444
  Net loss                    $(6,349)     $(6,821)     $(2,410)    $(2,139)

  Basic and diluted net loss
   per ordinary share from:
  Loss before extraordinary
   item                       $ (0.47)     $ (0.81)     $ (0.16)    $ (0.27)
  Extraordinary item              $ -       $ 0.05          $ -      $ 0.04
  Net loss                    $ (0.47)     $ (0.76)     $ (0.16)     $(0.23)

  Weighted average number
   of ordinary shares used
   in computing basic and
   diluted net loss per
   ordinary share          13,456,869    8,985,072   15,097,867   9,495,554
  * Consist of:
    Research and
     development                   $-          $78           $-         $78
    Selling and marketing           -          231            -         231
    General and administrative      -        1,459            -       1,459
                                   $-       $1,768           $-      $1,768



                         ON TRACK INNOVATIONS LTD
         CONDENSED NON-GAAP CONSOLIDATED STATEMENT OF OPERATIONS
             (In thousands, except share and per share data)

                              Nine months ended        Three months ended
                                September 30              September 30
                              2006         2005         2006         2005
                          (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)

  Revenues
  Sales                      $24,754      $24,184       $7,381      $11,583
  Licensing and
   transaction fees            2,607        2,215          624          471
  Total revenues              27,361       26,399        8,005       12,054

  Cost of Revenues
  Cost of sales               14,949       17,207        4,572        7,824
  Total cost of revenues      14,949       17,207        4,572        7,824

  Gross profit                12,412        9,192        3,433        4,230

  Operating Expenses
  Research and development     4,456        4,218        1,709        1,511
  Less - participation by the
   Office of the
   Chief Scientist                 -          651            -          146
  Research and development,
   net                         4,456        3,567        1,709        1,365
  Selling and marketing        5,022        4,809        1,804        1,457
  General and administrative   8,260        6,902        2,821        2,642
  Expenses relating to raising
   of capital, exchange of
   subsidiary's employees
   equity interests in equity

   interest of the company
   and new acquisitions in
   the Far East*                   -        1,768            -        1,768
  Gain from sale of
   subsidiaries                 (122)        (510)        (122)           -
  Total operating expenses    17,616       16,536        6,212        7,232

  Operating loss              (5,204)      (7,344)      (2,779)      (3,002)
  Financial income, net        1,278          562          542          666
  Other income, net               20           53            6           49
  Loss before taxes on income
   and minority interests     (3,906)      (6,729)      (2,231)      (2,287)
  Taxes on income                314         (177)         149         (133)
  Minority interests             593          (79)         479          (79)
  Equity in income (loss) of
   affiliate                    (969)           5          (63)           5
  Loss before extraordinary
   item                      $(3,968)     $(6,980)     $(1,666)     $(2,494)
  Extraordinary item               -          444            -          444
  Net loss                   $(3,968)     $(6,536)     $(1,666)     $(2,050)

  Basic and diluted net loss
   per ordinary share from:
  Loss before extraordinary
   item                      $ (0.29)     $ (0.78)     $ (0.11)     $ (0.26)
  Extraordinary item             $ -       $ 0.05          $ -        $0.04
  Net loss                   $ (0.29)     $ (0.73)     $ (0.11)     $ (0.22)

  Weighted average number
   of ordinary shares used
   in computing basic and
   diluted net loss per
   ordinary share         13,456,869    8,985,072   15,097,867    9,495,554
  * Consist of:
    Research and development      $-          $78           $-          $78
    Selling and marketing          -          231            -          231
    General and administrative     -        1,459            -        1,459
                                  $-       $1,768           $-       $1,768

  See next tables for full reconciliation of GAAP to Non-GAAP results.



                         ON TRACK INNOVATIONS LTD
                 RECONCILIATION BETWEEN GAAP TO NON-GAAP
                         STATEMENT OF OPERATIONS
             (In thousands, except share and per share data)

                                               Nine Months
                                                 Ended
                                            September 30, 2006
                                  GAAP         Adjustments      Non-GAAP
                               (unaudited)     (unaudited)     (unaudited)
  Revenues
  Sales                           $24,754              -        $24,754
  Licensing and transaction fees    2,607              -          2,607
  Total revenues                   27,361                        27,361

  Cost of Revenues
  Cost of sales                    14,960        (11) (a)        14,949
  Total cost of revenues           14,960            (11)        14,949

  Gross profit                     12,401             11         12,412

  Operating Expenses
  Research and development          5,254       (798) (a)         4,456
  Selling and marketing             5,120        (98) (a)         5,022
  General and administrative        9,177       (917) (a)         8,260
  Amortization of intangible assets   557       (557) (b)             -
  Gain from sale of subsidiaries     (122)             -           (122)
  Total operating expenses         19,986          2,370         17,616

  Operating loss                   (7,585)         2,381         (5,204)
  Financial income, net             1,278              -          1,278
  Other income, net                    20              -             20
  Loss before taxes on income and
   minority interests              (6,287)         2,381         (3,906)
  Taxes on income                     314              -            314
  Minority interests                  593              -            593
  Equity in loss of affiliate        (969)             -           (969)
  Net loss                        $(6,349)        $2,381       $ (3,968)


  Basic and diluted net loss
  per ordinary share               $(0.47)         $0.18         $(0.29)
  Weighted average number of
   ordinary shares used in
   computing basic and
   diluted net loss per
   ordinary share              13,456,869                    13,456,869

  (a)  The effect of stock-based compensation. The Company adopted the
       provisions of Statement of Financial Accounting Standards No. 123(R),
       "Share-Based Payment" on January 1, 2006 using the modified-
       prospective transition method.

  (b)  The effect of amortization of intangible assets.



                         ON TRACK INNOVATIONS LTD
                 RECONCILIATION BETWEEN GAAP TO NON-GAAP
                         STATEMENT OF OPERATIONS
             (In thousands, except share and per share data)

                                              Three Months
                                                 Ended
                                            September 30, 2006
                                  GAAP         Adjustments      Non-GAAP
                               (unaudited)     (unaudited)     (unaudited)
  Revenues
  Sales                            $7,381              -        $7,381
  Licensing and transaction fees      624              -           624
  Total revenues                    8,005                        8,005

  Cost of Revenues
  Cost of sales                     4,576         (4) (a)        4,572
  Total cost of revenues            4,576             (4)        4,572

  Gross profit                      3,429              4         3,433

  Operating Expenses
  Research and development          1,953       (244) (a)        1,709
  Selling and marketing             1,831        (27) (a)        1,804
  General and administrative        3,101       (280) (a)        2,821
  Amortization of intangible assets   189       (189) (b)            -
  Gain from sale of subsidiaries     (122)             -          (122)
  Total operating expenses          6,952            740         6,212

  Operating loss                   (3,523)           744        (2,779)
  Financial income, net               542              -           542
  Other income, net                     6              -             6
  Loss before taxes on income
   and minority interests          (2,975)           744        (2,231)
  Taxes on income                     149              -           149
  Minority interests                  479              -           479
  Equity in loss of affiliate         (63)             -           (63)
  Net loss                        $(2,410)          $744       $(1,666)


  Basic and diluted net loss
  per ordinary share               $(0.16)         $0.05        $(0.11)
  Weighted average number of
   ordinary shares used in
   computing basic and
   diluted net loss per
   ordinary share              15,097,867                   15,097,867

  (a)  The effect of stock-based compensation. The Company adopted the
       provisions of Statement of Financial Accounting Standards No. 123(R),
       "Share-Based Payment" on January 1, 2006 using the modified-
       prospective transition method.

  (b)  The effect of amortization of intangible assets.



                         ON TRACK INNOVATIONS LTD
                 RECONCILIATION BETWEEN GAAP TO NON-GAAP
                         STATEMENT OF OPERATIONS
             (In thousands, except share and per share data)

                                             Nine Months Ended
                                             September 30, 2005
                                   GAAP         Adjustments     Non-GAAP
                                (unaudited)     (unaudited)    (unaudited)
  Revenues
  Sales                           $24,184               -       $24,184
  Licensing and transaction fees    2,215               -         2,215
  Total revenues                   26,399               -        26,399

  Cost of Revenues
  Cost of sales                    17,207               -        17,207
  Total cost of revenues           17,207               -        17,207

  Gross profit                      9,192               -         9,192

  Operating Expenses
  Research and development          4,218               -         4,218
  Less - participation by
   the Office of the
   Chief Scientist                    651               -           651
  Research and development, net     3,567               -         3,567
  Selling and marketing             4,809               -         4,809
  General and administrative        6,902               -         6,902
  Amortization of intangible
   assets                             285        (285) (b)            -
  Expenses relating to raising
   of capital, exchange of
   subsidiary's employees equity
   interests in equity interest
   of the company and new
   acquisitions in the Far East*    1,768               -         1,768
  Gain from sale of subsidiaries     (510)              -          (510)
  Total operating expenses         16,821             285        16,536

  Operating loss                   (7,629)            285        (7,344)
  Financial income, net               562               -           562
  Other income, net                    53               -            53
  Loss before taxes on income
   and minority interests          (7,014)            285        (6,729)
  Taxes on income                    (177)              -          (177)
  Minority interests                  (79)              -           (79)
  Equity in income of affiliate         5               -             5
  Loss before extraordinary item   (7,265)              -        (6,980)
  Extraordinary item                  444               -           444
  Net loss                        $(6,821)           $285       $(6,536)


  Basic and diluted net loss
   per ordinary share
  Loss before extraordinary item  $(0.81)           $0.03        $(0.78)
  Extraordinary item               $0.05                -         $0.05
  Net loss                        $(0.76)           $0.03        $(0.73)


  Weighted average number of
   ordinary shares used in
   computing basic and
   diluted net loss per
   ordinary share              8,985,072                      8,985,072
  * Consist of:
    Research and development         $78
    Selling and marketing            231
    General and administrative     1,459
                                  $1,768

 (b)  The effect of amortization of intangible assets.



                         ON TRACK INNOVATIONS LTD
                 RECONCILIATION BETWEEN GAAP TO NON-GAAP
                         STATEMENT OF OPERATIONS
             (In thousands, except share and per share data)

                                            Three Months Ended
                                             September 30, 2005
                                   GAAP         Adjustments     Non-GAAP
                                (unaudited)     (unaudited)    (unaudited)
  Revenues
  Sales                           $11,583               -       $11,583
  Licensing and transaction fees      471               -           471
  Total revenues                   12,054               -        12,054

  Cost of Revenues
  Cost of sales                     7,824               -         7,824
  Total cost of revenues            7,824               -         7,824

  Gross profit                      4,230               -         4,230

  Operating Expenses
  Research and development          1,511               -         1,511
  Less - participation by the
   Office of the Chief Scientist      146               -           146
  Research and development, net     1,365               -         1,365
  Selling and marketing             1,457               -         1,457
  General and administrative        2,642               -         2,642
  Amortization of intangible
   assets                              89         (89) (b)            -
  Expenses relating to raising
   of capital, exchange of
   subsidiary's employees equity
   interests in equity interest
   of the company and new
   acquisitions in the Far East*    1,768                         1,768
  Total operating expenses          7,321              89         7,232

  Operating loss                   (3,091)             89        (3,002)
  Financial income, net               666               -           666
  Other income, net                    49                            49
  Loss before taxes on income
   and minority interests          (2,376)             89        (2,287)
  Taxes on income                    (133)              -          (133)
  Minority interests                  (79)              -           (79)
  Equity income of affiliate            5               -             5
  Loss before extraordinary item   (2,583)              -        (2,494)
  Extraordinary item                  444               -           444
  Net loss                        $(2,139)            $89       $(2,050)


  Basic and diluted net loss
   per ordinary share
  Loss before extraordinary item   $(0.27)          $0.01        $(0.26)
  Extraordinary item                $0.04               -         $0.04
  Net loss                         $(0.23)          $0.01        $(0.22)


  Weighted average number of
   ordinary shares used in
   computing basic and diluted
   net loss per ordinary share  9,495,554                     9,495,554
  * Consist of:
    Research and development          $78
    Selling and marketing             231
    General and administrative      1,459
                                   $1,768

  (b)  The effect of amortization of intangible assets.



                         ON TRACK INNOVATIONS LTD
                   CONDENSED CONSOLIDATED BALANCE SHEET
             (In thousands, except share and per share data)

                                                September 30    December 31
                                                    2006             2005
                                                 (Unaudited)      (Audited)

  Assets

  Current Assets
  Cash and cash equivalents                        $40,144        $29,657
  Short-term investments                            10,017         20,004
  Trade receivables (net of allowance for
   doubtful accounts of $296 and $785
   as of September 30, 2006 and
   December 31, 2005, respectively)                  7,740          8,350
  Other receivables and prepaid expenses             4,055          3,156
  Inventories                                        8,752          6,747

  Total current assets                              70,708         67,914

  Severance Pay Deposits Fund                          585            583
  Long-Term Receivables                                615            878
  Investment in an affiliated company                1,733          2,607
  Property, Plant and Equipment, Net                10,732          7,009
  Intangible Assets, Net                             3,948          1,921
  Goodwill                                           5,766          4,146
  Total Assets                                     $94,087        $85,058


  Liabilities and Shareholders' Equity

  Current Liabilities
  Short-term bank credit and current maturities
   of long-term bank loans                          $1,703          $ 760
  Trade payables                                     5,871          4,245
  Other current liabilities                          4,326          5,771
  Total current liabilities                         11,900         10,776

  Long-Term Liabilities
  Long-term loans, net of current maturities         1,333          1,535
  Accrued severance pay                              3,162          1,909
  Deferred tax liabilities                           1,070            293
  Total long-term liabilities                        5,565          3,737

  Total liabilities                                 17,465         14,513

  Minority interests                                   530            310
  Shareholders' equity
  Ordinary shares of NIS 0.1 par value:
   authorized - 50,000,000 shares as of
   September 30, 2006 and 30,000,000 as of
   December 31, 2005; issued 15,556,008 and
   11,932,074 shares as of September 30, 2006
   and December 31, 2005, respectively;
   outstanding 15,164,893 and 11,932,074
   shares as of September 30, 2006 and
   December 31, 2005, respectively                     358            274
  Additional paid-in capital                       140,024        128,761
  Deferred compensation                                  -           (833)
  Accumulated other comprehensive income               258            232
  Accumulated deficit                              (64,548)       (58,199)

  Total shareholders' equity                        76,092         70,235
  Total Liabilities and Shareholders' Equity       $94,087        $85,058



                         ON TRACK INNOVATIONS LTD
              CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
             (In thousands, except share and per share data)

                                              Nine months ended September 30
                                                   2006           2005
                                                (Unaudited)    (Unaudited)

  Cash flows from operating activities
  Net loss                                        $(6,349)       $(6,821)
  Adjustments required to reconcile net loss
   to net cash used by operating activities:
  Stock-based compensation related to options
   and shares issued to employees and others        2,922          7,137
  Gain from sale of subsidiaries                     (122)          (510)
  Equity in loss (income) of affiliate                969             (5)
  Extraordinary gain in business combination            -           (444)
  Amortization of intangible assets                   557            424
  Depreciation                                      1,218            595
  Minority share in income (loss) of subsidiaries    (593)            79
  Accrued severance pay, net                        1,251            519
  Increase (decrease) in deferred tax liabilities     (52)             4
  Decrease (increase) in trade receivables            366         (1,761)
  Decrease (increase) in other receivables and
   prepaid expenses                                   389            (46)
  Decrease in inventories                          (1,946)        (1,402)
  Increase in trade payables                        1,528            417
  Increase (decrease) in other current liabilities (1,043)           800
  Other, net                                         (374)           (37)
  Net cash used in operating activities            (1,279)        (1,051)

  Cash flows from investing activities
  Acquisition of consolidated subsidiaries,
   net of cash acquired                               (23)            80
  Proceeds from maturity of available -
   for sale securities                             19,079          6,603
  Purchase of available-for sale securities        (8,863)       (16,642)
  Purchase of property and equipment               (3,502)        (1,384)
  Receipts on account of loans and receivables        261            876
  Other, net                                         (102)            22
  Net cash provided by (used in) investing
   activities                                       6,850        (10,445)

  Cash flows from financing activities
  Increase in short-term bank credit, net           1,024             66
  Exercise of options and warrants                  3,246          4,387
  Repayment of long-term bank loans                  (430)          (600)
  Proceeds from minority in subsidiary              1,036              -
  Net cash provided by financing activities         4,876          3,853
  Effect of exchange rate changes on cash              40            (99)

  Increase (decrease) in cash and
   cash equivalents                                10,487         (7,742)
  Cash and cash equivalents at the beginning
   of the period                                   29,657         23,917
  Cash and cash equivalents at the end
   of the period                                  $40,144        $16,175


DATASOURCE: On Track Innovations Ltd.



CONTACT:  Galit Mendelson, Director of Corporate Communications of OTI,

[phone] ext. 111, ; or Media Relations, Adam

Handelsman of 5W Public Relations, [phone], 



Web site:  http://www.otiglobal.com/ 

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