OTI releases first quarter results, with 356% increase in gross profit

    ROSH PINA, ISRAEL (ots) - OTI (Neuer Markt: OT5), the global provider of contactless smart card technology and product solutions, today announced financial results for the quarter ended 31 March 2001 with significant increases in both revenue and gross profit.

    - Revenues for the quarter are up 297% to US $4.07 million (1Q2000: US $1.025 million).

    - Gross profit ahead 356% to $1.94 million (1Q2000: US $0.425 million).

    - Operating expenses remain at a consistent level of $5.11 million according to the company's corporate strategy and level of operations and thus the operating loss for the three months ended March 31, 2001 were $3.171 million.

    - Net loss of $3.219 million (1Q2000: US $3 million) in line with company expectations as a result of operating expenses and the inclusion of e-Smart's operating loss of $0.642 million. Given the current economic situation and OTI's conservative financial approach, the company has taken an additional provision for bad debt in the amount of $0.5 million for customers who have not paid within 180 days and who the company believes might not have adequate securities

    - These results are in line with the company's expectations to break even and reach profitability for the fourth quarter of 2001.

    "We are continuing to grow and meet projections," said Oded Bashan, President and CEO of OTI. "Our revenues have almost quadrupled, and we have strengthened our global operations and marketing network. We have launched additional products that strengthen our position as the technology leader in our marketplace."

Financial Review:

    OTI has initiated an expansion strategy in 2000 that has revolved around investing in R&D, expanding marketing infrastructure and increasing the global operations. As a result of such expansion, the company has reached a strategic level of operation that incurs operating expenses of approximately. $5 million per quarter.

    Revenues for the quarter ended 31 March 2001 were $4.07 million, an increase of 297% compared with US$1.02 million for 1Q2000.  The gross profit for the quarter grew by 356% to $1.94 million compared with $0.42 million in 1Q2000.

    Operating Expense:

    Research & development expenses increased by 82% to $1.4 million from $0.79 million in 1Q2000. Marketing expenses rose by 66% to $2.306 million from $1.392 million in the same period, while general and administrative expenses increased by 70% to $1.089 million compared with $0.64 million in 1Q2000.

    The net loss for 1Q2001 was $3.219 million (1Q2000: US$3 million) up from $2.993 million in the previous quarter. The increase in net loss was strongly related to the investments made in marketing, infrastructure, and global expansion including acquisitions, and research & development. These are planned expenses and are in line with OTI's expansion strategy. In addition, given the current economic situation and OTI's conservative financial outlook, the company has taken an additional provision for bad debt in the amount of $0.5 million for customers who have not paid within 180 days and who the company believes might not have adequate securities.

    Reflecting the company's strategy, the operating expenses remain at the same level as in 4Q2000. The company ended 1Q2001 with operating expenses of $5.11 million and operating losses of $3.17 million. Including e-Smart's loss of $0.642 million OTI finished 1Q2001 with a net loss of $3.219 million.

    OTI ended 1Q2001 with cash, cash equivalents, and short-term investments of $15.5 million and total assets of $41.3 million.

    Major Developments:

    Some of the major developments during the first quarter include:

    - Xerox Connect and OTI are providing payment and information solutions for the U.S. campus market. The relationship provides end-to-end solutions for universities and corporate campuses.

    - City of Tel Aviv will equip two additional country clubs with OTI's contactless smart card campus solution.

    - OTI and P-Card System will jointly launch the first Europe-wide currency-independent contact/contactless smart card solution to issuers throughout Europe.

    - OTI acquired the remaining 49 percent of leading European smart card system integrator InterCard Kartensysteme GmbH and electronic smart card hardware manufacturer InterCard System Electronic GmbH.

    - e-Smart System will commence a field test for OTI's smart card and readers for use in an automated fare collection service in CKI's toll bridge in Panyu, Guandong province of China.

    - MediKredit Integrated Healthcare Solutions (Pty) Ltd and OTI Africa began a pilot project for the introduction of OTI's Medical Management Application.

    - The Israel Postal Authorities are to market and distribute EasyPark electronic parking cards nationwide.

    - OTI launched its Saturn Reader, the first fully integrated smart card reader to accept both ISO 7816 contact cards and ISO 14443 Type A, B, and D contactless cards.

    - OTI will provide the first contactless smart card supporting public-key infrastructure (PKI) encryption, used for digital certificates in such secure environments as Internet transactions and in government agencies.

    - Hindustan Petroleum Corporation Ltd. (HPCL) is launching a multi-application contactless smart card program throughout India offering a payment and loyalty solution for use at HPCL's retail petroleum stations.

    About OTI

    Established in 1990, OTI (On Track Innovations) designs and develops contactless microprocessor-based smart card technology to address the needs of a wide variety of markets. Applications developed by OTI include product solutions for mass transit, parking, gas management systems, loyalty schemes, ID and secure campuses.  OTI has regional offices in the US, Europe, Asia Pacific, and Africa to market and support its products. The company was awarded the prestigious ESCAT Award for smart card innovation in both 1998 and 2000.

    Visit OTI on the Internet at www.oti.co.il.

ots Originaltext: OTI (On Track Innovations)
Internet: www.newsaktuell.ch

Frank Schwarz
Kirchhoff Consult AG
Phone +49 69 7474 8615
Mobile +49 17 5221 1108
E-mail: frank.schwarz@kirchhoff.de

    This press release contains forward-looking statements, which
reflect management's best judgment based on factors currently known.
Such statements are subject to certain risks and uncertainties, which
could cause actual results to differ materially from those in the
statements included in this press release. Readers are cautioned not
to place undue reliance on these forward-looking statements, which
speak only as of the date hereof. OTI disclaims any intention or
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.


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