OTI Reports FY 2008 First Half and Second Quarter Financial Results

On Track Innovations Ltd. (OTI) , 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 half and second quarter ended June 30, 2008. Revenues for the first half were $20.3 million, compared to $20.6 million during the first half of 2007. Second quarter revenues increased by 18% to $11 million compared to $9.3 million in the first quarter of 2008. Gross margin for the first half was 36%, compared to 41% for the first half of 2007. Second quarter gross margin increased to 39% from 32% in the first quarter of 2008.First half net loss on a GAAP basis was $12.5 million. Net loss on a Non-GAAP basis for the first half was $8 million. Net loss on a GAAP basis for the second quarter decreased by 17% to $5.7 million compared to $6.8 million in the first quarter of 2008.

On a non-GAAP basis, net loss significantly decreased by 35% in the second quarter to $3.1 million from $4.8 million in the preceding quarter. See below for a reconciliation of GAAP to non-GAAP information."These results are due to a shift in the revenue mix in the payment sector from components intended for the US contactless card payments market to greater sales of readers, solutions for the mass transit market, EasyPark and more, as well as contactless payments in non-US markets," said Oded Bashan, OTI Chairman and CEO.

Mr. Bashan continued: "We continue to focus on controlling and reducing our operating expenses to the most efficient and effective level required to carry out our current and pending pipeline of projects for 09' and 10'. While we have steadily reduced headcount, the resultant savings take two to three quarters to show up in the P& L. We continue to shift our focus toward high margin projects with recurring revenues combined with commercial rollouts. We believe our actions will pave a clear path to profitability for OTI.

We continue to have a strong and healthy balance sheet with $110 Million in total assets and $34.3 Million in cash, cash equivalents, and short term investments.""As we've indicated before, it is our belief that most of the significant delays are behind us and we are confident about the Company's growth," said Mr. Bashan. "We still believe that 2008 will be a turning point for OTI in terms of showing a clear path to profitability and will reflect revenue growth of about 10% over 2007, with most of the growth expected in the fourth quarter of the year."

Cabcharge Australia Orders 20,000 VeriFone Vx 810 Systems with Contactless Payment for Taxis

VeriFone Holdings, Inc. today announced it has been awarded a multimillion dollar contract to supply 20,000 units of the VeriFone Vx 810 full-function PIN entry system with contactless payment module. Cabcharge Australia Limited (ASX: CAB) selected the VeriFone system to provide drivers and passengers with improved convenience, security and speed. The Cabcharge non-cash fare management system is offered in approximately 96 percent of all taxis in Australia, as well as in other transport systems such as limousines and water taxis. About 400 taxi companies accept Cabcharge facilities across Australia, representing around 18,000 taxis.

The investment we are making in this next generation technology maintains our leadership position internationally and provides a more convenient, faster and safer service for consumers,” said Cabcharge Chairman and CEO Reginald Kermode. VeriFone’s Vx 810 will be an integral part of Cabcharge’s next-generation fare management system, featuring Chip and PIN, Pen and PIN and contactless, and will also support payments initiated from mobile phones using the emerging Near Field Communications (or NFC) standard. The roll out of the new system will commence in October 2008 and be completed by December 2009 in taxis that use the Cabcharge system.

“Cabcharge is recognized internationally for its use of technology combined with industry expertise to deliver gains in revenue and operating efficiencies,” said William C. Nichols, VeriFone senior vice president and general manager, Asia-Pacific. “With VeriFone payment solutions revolutionizing taxi payment acceptance around the world, from Sydney to New York, we’re delighted to team up with a like-minded innovator.” The Vx 810 is an ultra-sleek, fully programmable PIN entry system combining the smallest footprint with the largest user interface. Its ergonomic design with ATM-style interface, large keypad and high resolution display is highly suited to handing over to consumers for card activation. The system supports a broad range of payment and value-added applications and meets the latest security standards, including PCI PED as well as EMV Level 1 and 2.

Infineon licenses U.S. technology for tamper-proof chips

LONDON — Infineon Technologies AG (Munich, Germany) has agreed to license security technology for tamper-resistant semiconductors from Cryptography Research Inc. (San Francisco, Calif.).

Infineon said it would license CRI's patents for countermeasures to differential power analysis (DPA) and technology and patents related to CRI's CryptoFirewall. Infineon is expected to integrate CryptoFirewall into select products of one of Infineon's secure microcontroller platforms.

DPA is a type of attack that involves monitoring variations in a device's electrical power consumption. It then uses statistical methods to extract secret cryptographic keys. Many security applications and leading certification standards such as Common Criteria require side-channel attack countermeasures. Security-certified products are used in banking, conditional access, mass transit, identification, telecommunications and other applications.
"Infineon is recognized internationally for their leadership position in developing security chips for the smart card industry," said Paul Kocher, president and chief scientist at CRI, in a statement issued by Infineon.

"Along with energy efficiency and communication, security is one of the three focus areas of Infineon," said Helmut Gassel, manager of the Chip Card and Security ICs Business Unit at Infineon, in the same statement.