* Revenues of $9.3 million                    * Gross margin increased to 46%        * Non-GAAP net loss decreased by 46% compared to Q1 2008 

FORT LEE, N.J., May 27, 2009 (GLOBE NEWSWIRE) -- 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 first quarter ended March 31, 2009.

    * Total revenues for the first quarter were $9.3 million, similar to    the first quarter of 2008.   * Gross margin for the first quarter increased to 46% compared to 32%    in the same quarter last year.   * Strong balance sheet with $25.8 million in cash, cash equivalents    and short term investments.   * Non-GAAP operating expenses for the first quarter were    $7.2 million, compared to $7.3 million in the same quarter last    year. Operating expenses for the first quarter on a GAAP basis were    $8.4 million, a 10% decrease compared to $9.3 million in the first    quarter of 2008.   * Non-GAAP operating loss for the first quarter was $2.8 million,    a 34% decrease compared to $4.3 million in the same quarter last    year. Operating loss for the first quarter on a GAAP basis was    $4.1 million, a 36% decrease compared to $6.3 million in same    quarter last year.   * Non-GAAP net loss for the quarter was $2.6 million, a 46% decrease    compared to $4.8 million in the first quarter of 2008. GAAP net    loss for the first quarter was $3.8 million, a 44% decrease    compared to $6.9 million in the first quarter of 2008. 

Oded Bashan, Chairman and Chief Executive Officer of OTI, said: "Our first quarter results are in line with OTI's strategy to focus on improved margins, reduction in operating expenses, specifically in R&D and G&A, and the continued focus on marketing and sales, all resulting in further decrease in the operating loss and in the level of cash burn. Our target is to further reduce operating expenses on a non-GAAP basis to reach $25 million annually."

Following the disclosure made by the company in its 2008 annual results filed with the Securities and Exchange Commission on March 24, 2009, on Form 6-K that the company may recognize an impairment charge against its goodwill and other intangible assets (amounting to $28.1 million), the company recently completed impairment testing as of December 31, 2008, according to which OTI will record a $25.6 million impairment charge, of which $24.2 million and $1.4 million for goodwill and intangible assets, respectively. The goodwill impairment charge was driven by the decline in OTI's stock price and the deteriorating global economy. The impairment charges are noncash accounting adjustment to the Company's balance sheet and profit and loss report, that do not affect cash flow, liquidity or OTI's non-GAAP results. The impairment charges will be reflected in OTI's audited GAAP financial consolidated results as of December 31, 2008 attached to Form 20-F to be filed with the U.S. Securities Exchange Commission and are reflected in the reports attached below.

Further to the disclosure made by the company in December 2008 regarding the share repurchase program, the Israeli District court approved the repurchase by the Company of its ordinary shares in a total amount of up to $2 million. OTI's Board of Directors will further discuss the program details, conditions and scope, all subject to regulatory requirements. However, as reported previously, the Company is not obligated to acquire any specific number of shares, and the program may be suspended or discontinued at any time.

Conference Call and Webcast Information

The Company has scheduled a conference call and simultaneous Web cast for Wednesday, May 27, 2009, at 9:00 AM EDT to discuss operating results and future outlook. To participate, call: 1-888-723-3165 (U.S. toll free), 1-800-227-297 (Israel toll free). To listen to the Web cast, use the following link: http://www.otiglobal.com/content.aspx?id=226 For those unable to participate, the teleconference will be available for replay until midnight June 3rd, by calling U.S.: 1-888-782-4291, 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 EITF 96-18, 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, loyalty programs and secure campuses. 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 www.otiglobal.com, the content of which is not part of this press release.

The On Track Innovations Ltd. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5736

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 such as those statements regarding the steps we take to reduce operating costs and maintain, improve and enhance financial performance as well, or our statement regarding our target to further reduce operating expenses on a non-GAAP basis to reach $25 million annually. Forward-looking statements could be impacted by the effects of the protracted evaluation and validation period in the U.S. contactless payment cards market ,market acceptance of new and existing products and our ability to execute production on orders, as well as the other risk factors discussed in our Annual Report on Form 20-F for the year ended December 31, 2007, which is on file with the Securities and Exchange Commission. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance our 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.