OTI has concluded its acquisition of ASEC, a software company that provides complementary solutions to OTI in the form of software and back office systems for mass transit ticketing and Payment solutions. The acquisition of ASEC from Nextel S.A. concluded with the receipt of an order from a Polish mass transit system for 1,000 contactless readers.
Fort Lee, New Jersey- November 15, 2004 – On Track Innovations Ltd. (OTI) (NASDAQ: OTIV; Prime Standard (Frankfurt): OT5), a global leader in contactless microprocessor-based smart card solutions for homeland security, micropayments, petroleum payments and other applications, announced today its entry into the emerging European countries market with the completion of its acquisition of ASEC S.A. In exchange for all of the outstanding shares of the capital stock of ASEC, OTI will issue to Nextel S.A. OTI ordinary shares having an aggregate market value of between $1.6 million and $1.95 million. The exact amount will depend upon the level of EBITDA achieved by ASEC during 2004 and 2005. OTI has undertaken to register the shares it will issue to Nextel S.A. under the U.S. Securities Act of 1933. The acquisition was conditioned upon ASEC’s receiving an order to supply 1,000 units of contactless reader solutions for micropayments.
The order, which has been received, is for a Polish mass transit system. OTI believes that it will be followed by introduction to other payment sectors in the future. In this application, commuters will be able to load funds onto their commuter cards using a contactless reader integrated into Verifone’s Omni 3750 terminals located at one of the largest kiosk chains across Poland. With this new system, customers will be able to pay for their mass transit tickets and other small ticket-items. The value of this order exceeds $500,000.
Poland, with a population of about 40 million, recently joined the European Union and has a strong need to modernize and ramp-up to the Western European standards, especially with respect to financial and payment systems. Today, there are about 80,000 Point-of-Sale terminals and 7,200 ATM machines located across the country, a small number compared to the size of the country and its growing economy. Thus, OTI believes, there is a tremendous opportunity for OTI, whose solution is well suited for stores, hypermarkets and other commercial locations.
The acquisition of ASEC whose software and back office systems for mass transit ticketing and payment solutions complement OTI’s product offering, enables OTI to provide end-to-end solutions with local technical support and maintain its focus on higher margin products in the growing European emerging markets.
Oded Bashan, President & CEO of OTI said, “We firmly believe that the acquisition of ASEC, a profitable company with higher margins and recurring revenue businesses, will improve OTI’s long-term profitability. Our entry into the European emerging countries market with its vast commercial potential, is something we have been working on for a long while and is in line with our global marketing strategy of providing complete solutions to the three vertical markets of Payment, Petroleum and SmartID.”
Jerzy Fulara, ASEC senior executive commented, “Given our great experience in working with OTI, we are excited about becoming part of this rapidly growing enterprise. Together we look forward to great synergies and achievements across the European emerging countries market.”