on track innovations ltd. (otiv)
Annual reports submitted under sections 13 or 15 (d)
Securities Trading Act 31, transitional report for fiscal year 1934 under section 2016 or 15 (d)
The Securities Trading Act of 1934 to
49877 ONTRACK Innovation Limited(
The name of the registrant specified in the articles of association)IsraelN/A(
State or other jurisdiction registered or organized)(I. R. S.
Employer identity number)Z. H. R.
Industrial Zone. O.
Israel1200000 Rosh Pina 32 box (
Main executive office address)(ZipCode)
Registrant phone 972-4-
6868000 securities registered under section 12th (b)
Title of the act: each class name of each exchange registered for ordinary shares, with a face value of NIS 0.
Each shareNASDAQCapital market securities registered under section 12th (g)
The Bill: No. (Titleof class)
Check the mark if the registrant is a well
Well-known experienced issuers as defined in Rule 405 of the Securities Act.
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Yes. ☐No. ☒Check if the registrant (1)
All reports requested in Section 13 or 15 have been submitted (d)
In the past 12 months, the Securities Trading Act of 1934 (
Or for such a short period of time when the registrant is required to record the report), and (2)
This filing requirement has been bound for the last 90 days.
Yes. ☒No. ☐Indicby by check mark whether the registrant has been electronically submitted and posted on its company website (if any), each interaction that needs to be submitted and published, as per rule 05
12 months before T (
Or in such a short time that the registrant is required to submit and publish these documents).
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K is not included here and, to the knowledge of the registrant, will not be included in the explicit proxy or information statement referenced in Part 2 of this form 10
K or any amendments to this form 10K.
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Voting Ordinary Shares held by non-shareholders
Affiliates are calculated by reference to the price of the last sale of common stock, or by reference to the average bid and asking price of such common stock, as of the last business day of the second fiscal quarter recently completed by the registrant: $37,040,864, the number of shares of common stock issued by the registrant in March 14, 2017 was 41,079,376 shares.
List of Contents 1. BusinessItem1A.
Information disclosure on food safety
The registrant\'s common stock, related shareholder matters and the market for the purchase of equity securities by the issuer 23 items 6.
Management Discussion and Analysis of operational financial status and results
Quantitative and qualitative disclosure of market risks
32 financial statements and supplementary data 9.
Changes and differences with accountants in accounting and financial disclosure
Control and procedures.
Directors, executives and corporate governance
Security ownership of certain beneficial owners, management and related shareholders.
47 independent directors 14. relationship and related party transactions are determined.
Main accounting fees and service fees.
Schedule and schedule of financial statementsForm10-
K summarizes this annual report and all dollar amounts are expressed in US dollars unless otherwise stated.
In note 2A to our consolidated financial statements, we explain the exchange rate calculation method we use.
The terms \"we\", \"our\", \"company\" and \"OTI\" used in this annual report refer to Innovation Limited on the track
Unless otherwise stated, our subsidiaries and affiliates.
Annual Report on Form 10
K includes registered and unregistered trademarks of companies and others that are the property of their respective owners.
Notes on forwarding
View statements in this Annual Report on Form 10
K or annual report that is not a historical fact is \"forward --
The implications of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Such forward-
Forward-looking statements can be identified, among other things, by using forward-looking statements
Looks like terms like \"believe\", \"intend\", \"plan\", \"expected\", \"possible\", \"will\", \"should, \"or\" expected \"or its negation or other variants or similar terms on it, similar expressions are intended to identify forward-
Look at the report.
We remind readers,
It appears that the statement is only a prediction, and therefore is essentially influenced by uncertainty and other factors, involving known and unknown risks, these risks may lead to actual results, performance, level of activity or our achievements or significantly different from any actual future results, performance, level of activity or our achievements, or industry results, express or implied-
Look at the report. Such forward-
It appears that the statements may appear in item 1-\"business\" and Item 7-\"Management\'s Discussion and Analysis of the financial position and results of operations\", as well as other contents in this annual report, among other statements, statements regarding the following: ● about the near-
Communication in the market (NFC );
● Expected development and potential benefits of our existing or future products or intellectual property;
● Increase revenue from licensing, transaction fees and/or other arrangements;
● Future resources of revenue, continuous relationship with current and future business partners, distributors, suppliers, customers, end customers
Customer and dealer;
● We intend to generate additional recurring income, license and transaction costs;
● Future costs and expenses of capital resources and adequacy;
● We intend to continue to expand our market share through the global strategic partnership;
● We expect revenue from our business to grow in the next few years, as well as the expected reasons for the growth;
About our short tradeterm and long-
Requirements for regular capital;
We intend to continue to invest in R & D;
● Outlook for the next few months;
Information about any other plans and strategies of our business.
Factors discussed in this paper, including the risk factors described in project 1A-
\"Risk Factors\", and the risk factors that we express from time to time in press releases or in documents submitted to the Securities and Exchange Commission or SEC, it may lead to substantial differences between actual results and developments and those expressed or implied in these statements.
Readers are advised not to rely too much on these advances
Forward-looking statements, published and published only on the date of submission.
Our business and operations are at great risk, which increases the uncertainty inherent in the future.
Statements contained in this annual report.
Unless required by law, we are not obliged to publicly publish the results of any changes to these forwarding
Forward-looking statements that may be made to reflect events or circumstances after the date of this agreement or to reflect the occurrence of an accident. PARTIItem1. Business.
We are the pioneer and leading developer of cutting
Over the past 20 years, edge secure cashless payment solutions have provided innovative technologies to global businesses.
We operate in two main parts :(1)
Ticketing for retail and public transport; and (2)Petroleum.
In addition to our two reportable market segments, certain products and other secure smart card solutions in the medical industry are classified as \"others\" in the breakdown analysis that appears in this annual report \". Ourfield-
The proven cashless payment solution suite is based on a broad portfolio of intellectual property rights, including globally registered patents and patent applications.
Since its inception in 1990, we have built an international reputation for reliability and innovation, deploying a large number of solutions for unattended retail, public transport, banking, medical and oil industries.
We operate a global network of regional offices, distributors and partners to support a wide range of solutions deployed globally.
We focus our efforts on our core business, which provides innovative cashless payment solutions based on our touchless near field communications or NFC technology.
To this end, based on our efforts to focus on our core business, in September2016, we completed operational sales including employees, as well as intellectual property rights directly related to our parking business.
We have stepped up our efforts to further develop existing and new products and solutions, including through the introduction of new products and solutions for the unattended payment market and the payment Internet of Things (IoPT), technology.
We have also increased our sales and marketing activities and resources.
Wewere was incorporated in February 15, 1990 in accordance with the laws of the state of Israel under the name De-
Bug Innovation Limited
Our name was changed to On Track Innovations Ltd.
July 8, 1991.
We are registered with an Israeli company registrar with registration number 52-004286-
Our common shares are traded in the name of OTIV in the NASDAQCapital Market (NASDAQ.
Our market provides cashless payment solutions for the three vertical markets: 1.
Retail and public transport ticketsSelf-Service(Unattended)
Retail, Internet payment (IoPT)
And tired elvesService(Unattended)Retail-
NFC and contactless technologies are widely used worldwide to create a retail environment without e-commerce.
A retail business in which customers accept payments using NFC and contactless, self-service in terms of products or services they wish to purchase.
Examples of business models that allow customers to self-
Services include vending machines, laundromat, kiosks kiosk, gambling, bank, public transport, self-help, etc. service (self-checkout).
As a pioneer in cashless payment technology, we have been working closely with companies in different industries and markets to design the industry
Tailor-made solutions that enable our customers to achieve their goals more efficiently.
Internet of payment (IoPT)
Wearable technology has become a modern trend.
Nowadays, it is very common to find wearable technologies such as wristbands or watches, which are not only fashionable clothes, but also connected to smartphones, which can measure a person\'s heartbeat and footsteps.
We believe that the next development of wearable devices will also allow cashless payments.
Our expertise in minimizing footprints on NFC payment devices enables us to provide manufacturers with a way to easily convert existing products into payment devices.
We refer to this unique capability as \"PayEnable\" and we intend to bring products including our technology to market and mark it as \"OTI PayEnabled \".
Our goal is
It will be cost to enable the product-
Effective and does not require the expertise or special tools of the consumer.
PayEnabled devices will support contactless payments similar to pre-
Payment card, debit card and credit card.
In addition, the paid products will also support public transportation ticketing, e-commerce
Coupons, loyalty programs and healthcare apps can also be used for close-up marketing (in-
Product Certification (brand anti-counterfeiting).
Wemanage is our cashless payment solution for the global retail market at our headquarters in Israel. b.
Public transport ticketing clicks to expand public transport ticketing-established and growing demand for public transport ticketing systems and services, and migration to Contactless Smart cars, as a major means of public transport payment, our wholly owned subsidiary has developed an unattended and manned public transport ticketing system.
Having a Polish subsidiaryA.
Originally ASEC for the Polish market.
The system consists of unattended and unattended points. of-
Sales or POS including vending machines and terminals, fully managed by the back officeOffice Solutions
ASEC provides system design, installation, management and online
System maintenance service on a complete terminalto-end turn-
Key service base.
Our solutions for the public transport ticketing market in Poland are managed by ASEC. 2.
Expanding fuel costs means more cost for all types of customers
It is conscious when it comes to refueling.
Commercial organizations with multiple cars are particularly sensitive to the impact of fuel costs on their profitability.
Our oil payment solution enables customers to control and manage refueling operations accurately and easily, including automatic payment to reduce downtime at gas stations, completion of remote transactions and fuel usage reports, track the working hours of ofodometer and/or engine.
Easy to deploy and seamlessly integrate with existing gas station infrastructure ourEasyFuel Plus®Solution isa wireless, cashless, cardless and paperless refueling tracking and payment solution to provide maximum flexibility and security for customers.
The solution to the oil market is by OTI PetroSmart (PTY)Ltd. (
Formerly known as OTI Africa (PTY)Ltd. )
OrOTI PetroSmart, a whole family
A subsidiary based in South Africa.
Our products below are the product details we provide for each of the above vertical markets.
OTIReaders-UNO TRIOWesupply NFC and contactless payment card reader products and solutions.
Our products and solutions are recognized by the American insurer lab.
Or UL, and America. S.
Federal Communications Commission (FCC) certified by MasterCard TQM)
Terminal quality management).
Our reliability and performance is based on more than 25 years of experience in NFC and contactless solutions.
Our readers are certified by leading card associations, including Visa, MasterCard, American Express, Discover Interac and EMV, and are compatible with a wide range of NFC mobile payment solutions such as Apple Pay™Android payment™Samsung Pay™MIFARE™Ferry card™And others.
Belowyou can find the description of our main OTI readers: OTIUno series-Uno-6, Uno-8, Uno-
A single interface and contactless reader package in an ultra-compact form-factor.
Unois is the ideal solution to meet the full requirements of the NFC cashless payment industry.
Support card readers used by major card associations, as well as wallets such as Apple Pay. ™Android payment™Samsung Pay™Designed specifically for unattended retail environments.
Unique shape of Uno
Factors and features can be easily integrated and installed in an unattended self
Service payment stations including the oti uno series currently have 3 models: ● UNO-6 (
Saturn®6700 Orno)– EMV●UNO-8 (
-EMV FeliCa p2p ● uno-Plus (
-EMV FeliCa P2P displayotitriotitrio (
Saturn®6500 trio and Saturn®6500)
It is an NFC and contactless card reader specially designed for the unattended machine market (such as vending machines), providing fast and convenient support for cashless payment.
OTITRIOoffers convenient three-tierin-
One cashless payment card option: Magnetic stripe (swipe), contact (chip)
And non-contact (tap)
In a small and stylish package.
TheOTI TRIOis is a modular design that is easy to install and multiple connection options, ideal for vending machines, pay TVat-the-
Unattended payment service.
TheOTI TRIOis is optimized to read data from a variety of sources, including NFC phones that meet ISO/IEC 14443 Type A, all types of credit cards, contactless key fobs and smart stickers, MIFARE for B™.
The LCD display, led and buzzer of Thereader provide on-the-
On-site transaction confirmation, clear interactive feedback.
There are also some configurations for HeOTI TRIO, including: ● swipe lightly (
Non-contact magnetic stripe)●Tap+ Chip (
Chip and Pin)●Swipe+ Chip (
Chip and Pin)
OTIInternoTheOTI Interno (SCI 6100 OEM)
Global OEMs or OEM reader modules with integrated antennas are compact and cost-effective
An effective contactless card reader board designed for easy integration into public transport verifiers and terminals.
TheOTI interno is specially designed for the integration of OEMs and simple OEM, including the complete
Featured development environment, preloadedon-
Application for payment (
MasterCard PayPass, Visa PayWave, etc. )
And smart or transparent mode options.
In terms of performance, theOTI internosupport supports contactless payments and loyalty programs.
Payment Gateway and machineto-Machine (M2M)
Controller controllers and gateways are hardware devices that manage or guide the flow of data between two machines for \"controlling\" peripherals (e. g.
OTI has a range of controllers and gateways that provide secure and authenticated access to payment service providers, enabling acceptance, connectivity, and cloud-free payments-
Basic management of machines. OTITeleBox(Connect 3000)
-Telemetry M2M controller theoti TeleBoxis machineto-
Machine or M2M controller, designed to communicate between machines, especially vending machines, kiosks and meters, through a variety of optional communication methods, allowing operators to easily remotely manage specific machines or entire fleets, and be notified.
● Use the m2m connection of the cellular modem, Ethernet or WiFi;
● The host of the connected equipment such as card reader, pin board, camera, barcode reader, etc. ;
And ● use the main protocol being used by the unattended vending machines, kiosks and pulse machines industry to communicate to the vending machine controller.
TheOTI boxbox supports multiple configurations while supporting optional hardware such as spare battery, external memory extension using SD card, mini USB connection, on-
Motherboard Memory, etc. OTIGoBox-
Machinesotigobox\'s gateway, payment, and multimedia service enabler is a highly modular, powerful and scalable M2M cashless payment and telemetry gateway with advanced connectivity, processing power, and
OTI GoBoxis is designed for unattended retail machine operators who need a modular and powerful M2M gateway with sufficient processing power to transmit complete data
HD media running Linux or Android.
Gobox is the most versatile and simple-to-
Integrate the M2M gateway units available today.
OTI gobox can collect and transmit inputs from different components of the machine, such as: sensors, all types of serial payment acceptance devices, such as security devices such as readers, PIN pads, inventory event security and-
Vandalism Events, operational transaction events, and data collection devices like QR-
Code scanner, etc.
Payment and management solutions for vending machines, kiosks and coins
The vending machine telemetry solution is a modular cost-
Effective telemetry solution for smart vending machines also supports cashless payments.
A complete set of systems designed for the unmanned vending machine market.
Integration of telemetry, sales, operations, and marketing into an affordable all-in-one
An inclusive solution that makes any supplier intelligent and interactive with a real
Time online management functions and reminders.
Oti\'s sotimetric solution is a modular telemetry system that includes: ● cashless reader hardware-OTI unoroti trioreader ● mcontroller/Gateway-supportTeleBox/GoBox)●TMS(
Terminal Management System– a pre-
Integrated cloud service for Remote Terminal Management ● telemetry-cloud-
Software-based, providing all the data insights needed to transform the vending machine business into a smart supplier business, supporting the entire business lifecycle management, including: ● cash payment ● remote management of online terminals and vending machines ● alarm, route planning and business optimization otimetr provides a modular and scalable approach that supports easy ways to add and remove modules.
Another unique feature is that the system is based on an open platform that allows integrators to add their own modules to the system.
Checkout kiosk payment solutions otikioski cashless payment acceptance and remote management solutions for kiosks and kiosks
Otikiosk provides a simple and affordable integrated pre-for kiosk operators-
The certified EMV payment acceptance solution in their system includes remote management of kiosk hardware and software.
OtiKioskcombines integrates the following components into an integrated solution: ● cashless reader hardware-otiunooti trioreader ● based on otikoskclient-cashless reader that supports kiosk system integrator ● payment process and payment function of otikosktms (
Terminal Management System– a pre-
Integrated Cloud Service Coin pulse-Coin cashless payment solution for remote terminal management-
Operating the pulse machine is a modular cost-
Effective cashless payment solutions for pulse-operated machines, such as: ● laundromat ● games and prize machines ● air and vacuum machines ● lockers and restrooms ● car cleaning ● rides ● massage chairs
Otipulseadd adds cashless payment for coins-
Operate the machine. It turns coin-
Only Smart networking machines that can accept cashless payments.
The OtiPulsesystem components include: ● cashless reader hardware-controller-support for connection and communication (TeleBox)
● Control Cable-compatible with pulse machine operation activity ● tms (
Terminal Management System– a pre-
Integrated Cloud Services for Remote terminal management support entire business lifecycle management and provide real-time
Including: ● records and reports of cash and cashless sales ● Online Management of payment terminals (e. g. , Price update)
● Eliminate unnecessary visits and service times ● optimize site staff productivity ● Reduce machine downtimetime (i. e.
, Power status reminder)
Remote configuration of system parameters (
Price, pulse duration, etc. )
PayEnable™Craft-PayCapsule and PayCapsule-Flex-
PayEnable technology can be applied to a wide range of products.
We offer two ways to add our technology to the product: PayCapsule-PayEnable solution for casting/solid products with advanced application support.
Paycapsul is an IoPT contactless payment device based on security elements that supports multiple applications and intelligence
The small shape of this capsule
Factors allow it to be included in consumer goods and are ideal for turning wearable devices into payment devices. PayCapsule-
Flex-PayEnable solutions for wearable devices and flexible or flexible products. ThePayCapsule-
Flex is a thin and flexible secure payment device that can produce various shapes. ThePayCapsule-
Flexis heating and water-resistant (i. e.
And the design can be bent and twisted, which makes it an ideal payment device for wearable devices such as clothing and fashion accessories.
● Carry the loading of public transportation electronic contactless cards such as season tickets and District tickets. (
City transportation, buses, subways, railways, etc. )
● Selling paper tickets ● loading electronic parking fees on contactless vehicles ● loading pre-loading
Paid mobile phone card ● advertise on tvm\'s screen and machine ● other possible functions include issuing city resident cards, travel cards and social welfare cards ● loading electronic contactless cards for public transportation (
Season tickets, area tickets, one-
Time tickets, etc. )
● Loading electronic parking fees on contactless vehicles ● service city resident cards, travel cards, social welfare cards and other oil management markets®Our oil payment solution enables customers, large and small, to easily control and manage refueling operations, including automatic payments to reduce downtime at gas stations, complete remote transactions and fuel usage reports, tracking of odometer and/or engine working hours.
Easy to deploy and seamless integration with existing gas station infrastructure, ourEasyFuel Plus®Solution is a wireless, cashless, card-free, paperless refueling tracking and payment Solution that provides customers with maximum flexibility and security.
Easyfuelplu is a modular and scalable fuel management solution Perfect for: ● commercial and home base ● retail petroleum ● industrial and mining ● buildings ● Mobile refueling operations ● Company fleet®OurMediSmart®The solution is the information management and claim submission system of the medical department.
Medismart securely processes and manages medical information using biometrics to validate patients.
MediSmart cards provides information to doctors, hospital administrators and pharmacies about patient identity, medical and prescription history, coverage and payment history.
MediSmarthas is deployed in about 3,500 service points in four East African countries and is currently issuing about 800,000 cards.
Recent regulations and credit card counter
For Fraud legislation, the use of contactless payment technology has become a fundamental requirement for consumers and retailers.
Various market departments have begun to adopt contactless payment on a large scale and are constantly looking for ways to make it as convenient as possible for businesses and customers to adopt such payment methods.
Leading financial institutions issue millions of contactless debit and credit cards to various consumers each year, and merchants want to install contactless payment readers that can easily be integrated into existing unattended point of sale.
The world\'s leading smartphone manufacturer is or is expected to include NFC support in the upcoming handset installation tier, which will enhance the lifecycle of technology adoption.
Whether it\'s a standard contactless travel card, EMV contactlesscard, or an NFC phone, the main motivation is to provide a fast and efficient payment solution.
Leading smartphone manufacturers have also launched their own contactless payment solutions, such as Apple Pay. ™Android payment™Samsung Pay™, All of which require a contactless reader on the merchant\'s countertop.
As the second and third generation iterative products enter the market, the iopt wearable device market is expected to continue to grow rapidly.
These new devices will build on the hardware and software of their predecessors and answer some of the shortcomings and concerns of potential customers today.
With the growth of the apparel market, many product and garment manufacturers are looking for ways to keep the product up to date and attractive.
Increasing cash payment technology is an interesting and cost-effective way to achieve this, and OTI\'s payable technology is taking the lead in leveraging the current wearable boom.
Strategy your goal is to maintain our position as a leading developer of NFC and cashless payment technologies and our reputation as a manufacturer of high-quality products with the highest certification standards.
We see the growing potential of our payenabletechnology and we are working to position ourselves as an innovative market leader in retail.
Our strategic elements to achieve this include: ● expanding our global market.
We sell our products through a network of global subsidiaries in the US, Europe, Africa and our headquarters in Israel.
We are using these entities to strengthen our presence in existing markets, penetrate new markets, provide local customer service and technical support, and adapt our products to the specific needs of local customers.
We will continue to expand our market globally.
Increase our focus on creating high value
Profit, regular income.
Most of our current income comes from
Pay time for our products and technologies.
We want to generate additional recurring revenue by charging service fees and transaction fees for ongoing customer service from our customers.
We also seek access to the payment ecosystem by providing complementary services to our paid products.
Improve our technical position.
In order to develop new technologies, expand the functionality of our products and services, and provide innovative products and services to our customers, we intend to continue to invest in R & D.
Customer service and technical support we provide training and installation to our customers through our network of global subsidiaries, distributors and local service providers, including staff located in Rosh Pina, our company headquarters, Israel, and our staff in subsidiaries in Europe, South Africa and the United States.
Our customer service team at Rosh Pina provides core services to our global network.
In turn, our subsidiaries, distributors and local providers provide customer service and technical support over the phone and by email, and charge an ongoing fee. On-
Provide on-site technical support to customers and terminalsUser charges.
Sales and marketing in addition to selling our products through distributors, we also sell and market our products directly through our network of global subsidiaries.
We also hire consultants to promote and sell our products in the Asian market. Pacific region.
We are in the Americas through our US market and sellour productsS. -
Through our subsidiary in South Africa, OTI PetroSmart, a subsidiary in Africa, OTI America, and through our Polish subsidiary, ASEC, a subsidiary in Europe.
In Israel and in areas where we do not have a local subsidiary or representative, we sell and sell through our headquarters in Rosh Pina.
Our marketing and sales staff implement marketing programs to promote our products and services to enhance our global brand awareness.
Our current marketing efforts include, among other things, participation in trade shows and meetings, press releases, our website, face-to-faceto-
Face advertising in industry publications.
We also hold technical workshops from time to introduce the benefits of our products and technologies to customers, distributors, business partners and other industry participants.
Some of our customers who sell our products are also distributors of our products.
We have granted exclusive sales rights to some of our customers and local distributors in specific countries or regions.
We usually only guarantee exclusivity based on certain minimum quantity commitments or other business conditions determined according to specific circumstances.
We outsource all manufacturing and product assembly to third partiesparty vendors.
As far as possible, our policy is to use more than one supplier and manufacturing subcontractor in each part of the production process to limit reliance on any one manufacturer or supplier.
Strict internal and external quality control process.
We own and maintain ISO 9001: 2008 certification for our Israeli headquarters and our subsidiary OTI America.
We require our suppliers, manufacturing and assembly suppliers to own and maintain iso 9001: 2008 certification.
ISO 9001: 2008 refers to the quality assurance model established by the International Standards Organization (ISO) for companies that design, produce, install, inspect and test products.
Most of our products are subject to local restrictions. EMC)
/Radio regulations, such as radiation, conduction emission and immunity, and safety regulations such as fire and electrical hazards, governed by the low pressure standards of our ordinary readers and the hazardous area standards of our petroleum products are relevant to the countries in which they are used.
In the United States, EMC/radio testing and certification of such products is conducted by the Federal Communications Commission (FCC)
Part 15 although safety testing and certification belongs to the standards established by UL, LLC, the public safety and testing certification organization (UL).
Elsewhere in the world where FCC and UL rules do not apply, we follow various local standards for EMC/radio and security.
Ensure compliance with these standards by testing and certifying our products at various accredited laboratories and/or notification agencies in Israel and other countries (e. g.
USA, Germany, South Africa, India, China, Brazil, etc).
Our products meet the above requirements.
We believe that our future success depends, among other things, on our ability to maintain technology leadership, enhance existing products and develop new product technologies and solutions.
Therefore, we intend to continue to invest significant resources in research and development.
The table below describes the expenditures we have received from R & D activities each year over the past three years: our R & D activities are mainly concentrated in two main areas: ● development of new related to the cashless payment solution market
In addition, we have improved the functionality of the components and expanded the product range to serve the new market.
Our main R & D facility is located at the headquarters of Rosh Pina, Israel.
We believe that our success is based on our team of experienced senior engineers and technicians who have extensive experience in their respective fields.
Our R & D facility has been certified as ISO 9001: 2008.
The success and competitive ability of autonomous technology and intellectual property rights depends to a large extent on the protection of our proprietary technology and intellectual property rights.
We rely on the combination of patents, trademarks, copyright and trade secrets and intellectual property rights.
How to enter into confidential agreements and other contractual relationships with our employees, affiliates, agents, consultants, distributors and others.
We have a broad portfolio of intellectual property rights, including numerous patents issued in different jurisdictions on our technology, as well as some pending patent applications, trademarks and NFC, manufacturing technology and other fields including product applications, software and hardware platforms, system and product architecture, product concepts, etc, contacts, payments and oil solutions.
While we continue to seek new patents and support pending applications, as part of our efficiency plan, we have reduced the number
Core patents and registrations.
The expiry date of the patent we have granted is from December 30-20, 2017 to April 9.
The due date of the temporary application is not
Temporary filing of patents, issuance of patents and adjustment of patent term.
We cannot be sure that any of our pending or future patent applications will be patented.
In addition, we do not know whether any issued patent can be enforced against the alleged infringer, or if its validity is challenged, it will be maintained.
We generally enter Africa.
Enter into a disclosure agreement with our customers, partners, employees, consultants, suppliers, subcontractors, and generally control access to the distribution of our products, documents and other proprietary information.
Competing our competitors are technical suppliers that offer cashless payment solutions products and technologies: ● In the retail market competition including ID Tech, Nayax, Ingenico, Televend and veri
Our wearables and IoPT competitors include suppliers of wearable payment devices and telemetry controllers such as Vendon Datavend, MEI, VeoVend, bPay and Kerv
In addition, we believe that Apple, LG and Samsung are the main competitors in the field of wearable devices.
● In the oil market we compete with fuel and fleet managementto-
Terminal solutions vendors such as Orpak and Rozman Engineering.
Because of the high barriers to entry in this field, the competition in this field is limited.
Employee tracking is the number of employees per year of our past three years: we operate in accordance with applicable laws and the provisions of the General extension order applicable to Israeli labor relations.
These provisions relate primarily to the length of the working day, the minimum wage of the employee, contributions to pension fund or manager Insurance, contributions to work injury insurance, rehabilitation, travel expenses, holidays and other conditions of employment.
We provide employees with benefits and working conditions above the minimum requirements, and we believe that these benefits and working conditions are competitive with the benefits and working conditions provided by similar companies in our Israeli industry.
There is no union representative for our employees.
We have signed a written employment agreement with all of our employees.
The competition for qualified personnel in our industry is very fierce and it is difficult to attract or maintain qualified personnel to our office.
We use a lot of resources for employee retention and have never experienced a shutdown and we believe we have a good relationship with our employees.
We have three organizational structures.
Subsidiary: ASEC (
A Polish company), OTI America (
Companies in Delaware)
And OTI PetroSmart (
African Company). ●ASECS. A. (Spolka Akcyjna), our wholly-
A Polish subsidiary headquartered in Krakow, Poland.
ASEC provides marketing, distribution and customer support for our products in Europe.
We have the right to appoint all members of its board of directors. ● OTIAmerica Inc. , our wholly-owned U. S.
A subsidiary based in Isling, New Jersey, registered in Delaware.
OTI America provides marketing and customer support for our products in the Americas.
We have the right to appoint all members of its board of directors. ● OTIPetroSmart (Pty)Ltd. (
Formerly known as OTI Africa (PTY)Ltd. ), our wholly-
With a South African subsidiary, headquartered in Cape Town, South Africa, we provide marketing, distribution and customer support for our products in Africa.
We have the right to appoint all members of its board of directors. Item1A. Risk Factors.
Among other factors, the following risk factors may affect our actual operating results in the future and may lead to significant differences in our actual results from those expressed in the forward direction
We make statements in this annual report, press release, SECfilings or elsewhere.
Before you decide to purchase, hold or sell our common stock, in addition to other information in this annual report, you should also carefully consider the risks described below.
The following risk factors are not the only risk factors facing our company.
Additional risks and uncertainties that we do not currently know or which we currently consider unimportant may also affect our business.
If any of the events behind these risks or uncertainties do occur, our business, financial position and results of operations may be severely compromised.
In this case, the market price of our ordinary shares may drop and you may lose all or part of your investment.
Risks related to our business we have a history of losing money and we may continue to suffer full losses
Losses in 2016 and subsequent years.
Since we started operating in 1990, we have suffered losses every year.
We reported a net loss of $9 to shareholders.
It was $9 million in 2014.
It was $2 million in 2015 and $828,000 in 2016.
We may continue to suffer full year losses in 2017 and beyond as we invest in expanding our global sales and marketing network to lower our product prices based on the volume of transactions in the systems that contain our products, in exchange for future transaction costs, investment may generate fixed assets that generate slower-than-expected revenue, enhancing R & D capabilities for existing products and new products.
We want to exit certain product lines or businesses or restructure our operations, but this may not be a success.
Our board of directors has been identifying and evaluating possible alternative strategies to maximize value for our shareholders.
Such a process may result in a decision to divest certain product lines and businesses, or to restructure our current corporate structure or operations, including but not limited to the sale of some assets to third parties through the contribution of assets to the joint venture.
However, our ability to successfully exit product lines and businesses, or close or consolidate operations, or successfully sell some of our assets, depends on many factors, many of which we cannot control.
For example, if we are looking for buyers for a particular line of business, there may be no buyers. Alternatively, we may not be able to successfully negotiate satisfactory terms with potential buyers, or buyers may not be able to meet their obligations under the applicable purchase agreement.
If we are unable to withdraw from the product line or business in an appropriate or timely manner, or are unable to restructure our current corporate structure or operations in a manner that we consider advantageous, or force the buyer to perform its contractual obligations, this can have a significant adverse impact on our business, the financial situation and results of the operation.
Among other things, even if the withdrawal is successful, we may face compensation and other liability claims from the acquirer or other parties.
We rely on a small number of big customers, and the loss of one or more big customers will reduce our income.
Our customer base is concentrated in a limited number of large customers.
Our revenue may continue to depend on a limited number of major customers.
We believe that the main customers are our customers, and the percentage of each major customer as a percentage of our income varies from time to time.
In 2014, 2015 and 2016, our largest customers in North America provided 25%, 16% and 17% of our total revenue for these periods, respectively.
In addition, another client related to public transport in Poland accounted for 16%, 16% and 15% of our total revenue, 2014, 2015 and 2016 respectively.
If we lose any of our major clients, or any of our clients is having trouble fulfilling their financial obligations to us for any reason, our financial position and results will be adversely affected.
If the market for our products does not grow, the sales of our products may not grow or even decline.
The success of our products depends on the continued adoption of cashless payment solutions in a wide range of industries including unattended retail, public transport and refueling.
The continued adoption of cashless payment solutions and technologies also depends on the promulgation and implementation of regulations and industry standards on safe cashless payment.
If these industries do not adopt cashless payment technology or solutions, or have experienced any economic downturn, or if the regulatory authorities do not support these solutions, the market for our products may not grow and will not really
In addition, potential customers in developed countries such as the United States may have installed systems based on different technologies from ours, so they are less willing to bear the capital expenditures required to install or upgrade our products.
Therefore, we cannot guarantee that there will be enough market opportunities for our products.
New payment technologies that are different from us may also be adopted by the market and may exceed the demand for our payment solutions.
We are facing fierce competition.
If we fail to compete successfully, our business prospects will be compromised.
We are faced with fierce competition from the developers of contact and contactless payment products using similar technologies and other technologies.
We compete based on a range of competitive factors, including prices, compatibility with other manufacturers\' products, and the ability to support new industry standards and introduce new and reliable technologies.
Many of our competitors have greater market awareness, greater customer base, and greater financial, technical, marketing, distribution, and other resources than we have.
Therefore, they may be able to launch new products faster than we can, respond to customer requirements and adapt to evolving industry standards.
From time to time, we or one or more of our current or future competitors may announce new or enhanced products or technologies that may replace or shorten the lives of our existing products
The release of new or enhanced products may cause customers to postpone or change their purchase decisions when they expect these products, and new products developed by competitors may make our products obsolete, or get more market acceptance than our products.
If we cannot successfully compete with existing and future competitors, we may experience a decline in sales, a decline in prices, loss of revenue, a decline in gross margin and a decline in market share.
If we cannot develop new products or adapt existing products to adapt to new markets, our revenue growth may be hindered and we may suffer significant losses.
Although we are investing a lot of resources in developing new products and adapting existing products to new markets such as cashless payment solutions, public transportation ticketing solutions and petroleum solutions, if we cannot develop new products and adapt existing products to existing or new markets, we may not be able to recover the expenses paid for this and our revenue growth may be hindered, we may suffer great losses.
If we are unable to maintain our existing, new strategic relationships, our revenue growth may be compromised.
The market for our products is usually highly specialized and sometimes requires us to build strategic relationships to facilitate or accelerate our penetration into existing or new markets.
When we integrate our technology into some products of our business partners, or engage with dealers who have an important position in a specific market, we believe that the relationship is strategic.
Our strategic partners fail to meet their commitments in new market penetration in a satisfactory manner, or terminate any of our strategic relationships, or we fail to develop additional relationships in the future, it may limit our ability to expand our product deployment market or sell a specific product.
We may acquire other companies or new or complementary products, technologies and businesses, which may damage our performance, may disrupt our business and may result in unexpected accounting costs
In the future, we will acquire other companies or new or complementary products, technologies and businesses.
The risks posed by the acquisition for our business may lead to significant and adverse differences between our results and our expected or expected results.
These risks include the possible disruption to the continued expansion of our product line, potential changes in our customer base, and changes in the total available market for our existing products, the impact on reduced demand for our products, the impact of any such acquisition on our financial performance, the customer\'s negative response to any such acquisition, and our ability to successfully integrate the operations of the acquired company with our operations.
The acquisition poses additional risks to our business, which may lead to significant and adverse differences between our results and our expected or expected results.
These risks include: difficulties in integrating the operations, systems, technologies, products and personnel of the acquired company, especially those with large-scale and extensive operations and/or complex products;
Shifting management\'s attention from the normal day-to-day operations of the business, as well as managing the challenges of larger operations arising from acquisitions;
The continuous expansion of our product line may be disturbed;
Potential changes in our customer base and changes in the total available market for our products;
Reduce demand for our existing products;
The use of most of our cash resources and the occurrence of large amounts of debt;
Our interest expenditure, leverage and debt servicing requirements have increased significantly due to the creation of debt;
The impact of any such acquisition on our financial performance;
Internal controls may become more complex and more resources may be needed to ensure they remain effective;
Customer\'s negative response to any such acquisition;
Assume the responsibility of the acquired company;
If we make these acquisitions in exchange for our shares, we will dilute our shareholders.
The terms of some of our agreements may limit our ability to take action that we deem desirable.
Certain agreements we enter into with dealers provide exclusivity for different time periods, ranging from months to years, or for specific regions and/or products.
For example, in some markets, we sell our products through dealers, and in the event that the specified minimum quantity commitment is met, dealers have exclusive distribution rights in some cases in that market or in some regions.
If the performance of these partners is not satisfactory, the above situation may have a significant adverse impact on our business, operational results and financial situation.
Our products may have a long development and sales cycle, and we may spend a lot of resources on specific projects without realizing any revenue.
The development and sales cycle of our products varies from project to project.
Usually, the projects we participate in are complex and require us to customize our products according to the needs and specifications of our customers.
We then carry out evaluation, testing, implementation and acceptance procedures, and sometimes we need to perform a long certification process for our products.
Only after these procedures and certifications have been successfully completed can the customer place an order for our products on the commercial quantity.
In addition, our sales contracts sometimes do not include minimum purchase commitments.
We don\'t always make sure that product development leads to commercial sales.
Our average development cycle is usually between 6 and 18 months of initial contact with potential customers until we deliver the commercial volume to our customers and confirm significant revenue.
So before we confirm revenue (if any), we may spend finance, management and other resources to develop customer relationships.
Fluctuations in our quarterly financial performance may cause fluctuations in our stock market prices and may make it difficult for us to predict future performance.
In the past, our quarterly income and operating results have been very different and may continue to change in the future.
These fluctuations may be driven by various factors that we cannot control, which are difficult to predict and may not meet the expectations of analysts and investors.
Therefore, our earnings and operating performance in any quarter do not indicate our future performance, and it is difficult to assess our prospects.
Delaying or stopping the supply of components or manufacturing and assembling our products may hinder our ability to produce products in a timely manner and lead to shortages
Some of the components used in our products are provided by third-party suppliers and manufacturers.
Some of these suppliers are manufacturers of a single source.
Terminate the manufacture, service or support of a product (
Often referred to as \"the end of life \")
, The distribution due to high demand or delay or shortage may interrupt and delay the supply of our products to our customers, and may cause the order of our products to be canceled.
Again, we are not always
Our supplier undertakes to provide us with regular supply contracts for components at fixed or specified prices.
Suppliers may sometimes significantly increase the price of components without prior warning, or may stop the manufacture or supply of components used in our products.
In addition, third-party suppliers may face other challenges in fulfilling their contractual obligations with us, which are beyond our control.
Although we strive to identify and retain second-source manufacturers and suppliers, we may not always be able to develop alternative sources of supply and services.
Even if we can identify these alternative sources, we may need to modify our products to make them compatible with other components.
This can lead to delays in the delivery of products, increased manufacturing costs, and increased product prices.
Some of our suppliers and suppliers are located in different countries, so we may encounter logistics difficulties in the supply chain, including long lead times and shipping delays in receiving products or components.
In addition, our subcontractors may sometimes feel the impact of potential economic or political instability in their area, which may affect their ability to provide components to our products in a timely manner.
If we are not able to hire, train and retain qualified R & D personnel, our ability to improve existing products, develop new products and compete successfully can be significantly adversely affected.
Our success depends to a certain extent on our ability to hire and train qualified R & D personnel.
There are very few people with expertise in R & D in our industry.
The competition for these people is very fierce, especially in Israel.
Therefore, it is time-consuming and expensive to hire, train and retain these personnel.
In addition, it may be difficult to attract qualified personnel to Rosh Pina, located in northern Israel.
If we cannot hire, train and retain employees with R & D skills, we may not be able to upgrade existing products or develop new products.
If we cannot protect or maintain our intellectual property rights, the results of our business and operations may be compromised.
Our success and ability to compete depends to a large extent on the use of our intellectual property and exclusive rights to protect our technology and products.
We rely on patents, trademarks, designs, copyright and trade secrets laws, NDA and other contractual relationships with our employees, customers, affiliates, distributors, suppliers and others.
Although all of our employees are basically
Competition agreements, which may be difficult to enforce due to Israeli law that limits the scope of employees
We also note that the Supreme Court of Israel states that,
In a motto)
In 2012, in the absence of any decisive decision, employees who have contributed to an invention during their work may be allowed to seek compensation from the employer, even if the employee\'s employment contract expressly provides for other rights, and the employee has transferred all intellectual property rights to the employer.
The Israeli Supreme Court held that the contract to revoke the employee\'s royalties and compensation rights did not necessarily cancel the employee\'s right to claim royalties.
Therefore, even if the company does not believe that any of its employees have any rights to obtain any intellectual property rights or royalties of the company, it is not clear whether and to what extent, our employees can claim compensation for our future earnings.
Therefore, if such claims are successful, or additional royalties are incurred, we may receive less revenue from future products, which in turn may affect our future profitability.
Our patent portfolio includes registered and pending patent applications worldwide, including product applications, systems and product architectures, and product concepts.
We cannot be sure that the patent will be issued against any of our pending or future patent applications, or the scope of our existing patents, or any future patents, will provide enough protection for our technology and products.
Others may question our patent or patent application, as well as our registered trademarks and other intellectual property rights.
We don\'t know if any of them are valid or if they can be enforced against the alleged infringers.
Therefore, we do not know whether they will enable us to prevent or hinder the development of competitive products or technologies.
In addition, the patent only provides legal protection in the registered country, and the degree of protection granted by the patent varies from country to country.
The measures we take to protect our technologies and products may not be sufficient to prevent third parties from embezzling these technologies and products, or to prevent others from independently developing similar technologies or products.
If our patents and other intellectual property rights do not adequately protect our technology, it may be easier for competitors to offer products similar to our products.
Our competitors may also develop competitive technologies by designing around our patents and then manufacturing and selling products that compete directly with us, which will damage our business, financial position and operations
In order to protect our technology and products and enforce our patents and other proprietary rights, we may need to file a lawsuit, prosecution or defense lawsuit and other lawsuit in the courts and patent and trademark offices of multiple countries.
Substantial resources may be required to support such litigation.
Security breaches and system failures can hold us accountable, compromise our business, or lead to customer churn.
Keep sensitive data on our network, including intellectual property, books and personal identity information.
For our business strategy, it is critical that the infrastructure and other infrastructure we use to host the solution remain secure, there will be no system failures, and customers and partners will consider it safe
Although we have taken security measures, the infrastructure and third-party infrastructure we use to host solutions may be vulnerable to hacking or other disruptive issues.
Any security breach or system failure can compromise the information stored on our network.
This happens to negatively affect our reputation as a trusted provider of affected solutions.
If we do not comply with the regulations and safety standards set by the credit card network, or our products are not certified, or do not comply with these regulations and safety standards (
Such as payment card industry standards. )
Or the failure of ifour customers to take appropriate protective measures and take responsibility for the consequences may adversely affect the results of our operations.
Some of our products are designed to collect, store and route certain personally identifiable information from customers and/or terminals
Users, as well as dealing with such customers and/or terminals-
Users make payments using payment information.
In addition, we collected this information on the server.
Some of our clients require us to meet the payment system standard setting organizations (such as EMV), credit card associations (such as Visa, MasterCard, discovery and other credit card associations and standard setting organizations, such as the Payment Card Industry Security Standards Committee, pci ssc and other local organizations.
In addition, some of our products are subject to the Payment Card Industry Data Security Standard (pci dss), a multi-faceted security standard designed to protect credit cards and personal information as required by the Payment Card Industry entity.
Although we try to protect our company through contracts with customers, our supervision or control over the behavior and practices of customers and other third parties is limited
Third-party service providers.
New standards are constantly being adopted or proposed due to anti-corruption worldwide
Fraud initiatives, encryption of cardholder or personal information, increasing demand for system compatibility, and technological developments such as wireless, fiber-optic infrastructure, telecom, virtual private networks or VPN, VPN infrastructure, etc, satellite communications and other wired IP communications.
We cannot ensure that we are able to design solutions (if any) in a timely manner that meet future standards or regulations ).
Compliance with these standards may increase the cost of developing or producing our products, not
Compliance can damage our reputation or lead to claims from customers and customers.
New products designed to meet any new standards need to be introduced into the market, and usually need to be certified by the credit card association and our customers before purchasing.
The certification process is both expensive and time consuming, increasing the time and resources required to sell our products, as well as increasing the time and cost of the product development cycle.
Sales of non-products
Compliance may impose a fine on us or our customers and we may pay a fine.
After selling and/or installing systems or products, the customer is responsible for any operational aspects of such systems or products to ensure that they do not crash unexpectedly.