• Positive Operating Cash Flow of $482,000
• Revenues of $12.6 Million
• Strong Balance Sheet with $27.8 Million in Cash, Cash Equivalents and Short Term Investments

ISELIN, NJ, – May 31, 2012 – On Track Innovations Ltd. (“OTI”) (NASDAQ GM: OTIV), a global leader in contactless technology, that designs, develops and markets secure identification, payment and transaction processing technologies and solutions for use in secure ID, NFC, payment, petroleum and loyalty applications based on its extensive patent and IP portfolio, today announced its results for the quarter ended March 31, 2012.

Financial Highlights:

• Operating cash flow increased to $0.5 million from ($0.8) million for the first quarter of 2011
• Total revenues increased by 5% to $12.6 million from $12.0 million for the first quarter of 2011
• Licensing and transaction fees revenue increased by 9% to $1.3 million from $1.2 million for the first quarter of 2011
• Gross margin was 50% compared to 53% for the first quarter of 2011
• Operating expenses increased by 11% to $7.7 million from $7.0 million for the first quarter of 2011
• Net loss attributable to shareholders was $1.6 million, from $0.6 million last year.
• Adjusted EBITDA loss of $0.7 million from a profit of $0.4 million for the first quarter of 2011
• Cash, cash equivalents and short-term investments of $27.8 million as of March 31, 2012

Operational Highlights:

• U.S. patent received for adding contactless capability to existing mobile handsets through contactless smart SIM technology and concept.
• Patent infringement lawsuit filed against T-Mobile
• Received a $6.9 million contract to supply an electronic immigration control system in Panama
• EasyPark™ solution introduced to the U.S. market with initial projects in Austin, TX and the University of California Davis
• PARX launched new EasyPark patented integrated information and payment system

Oded Bashan, Chairman and Chief Executive Officer of OTI, commented, “We are investing in the introduction of products to markets specifically EasyPark and NFC solutions in the U.S., France and elsewhere. We believe that these investments will drive the company’s new business pipeline and ultimately increase customer adoption of our solutions that generate recurring revenues.”

Mr. Bashan continued: “We have embarked on an IP enforcement strategy through legal proceedings via a patent infringement lawsuit against T-Mobile USA, for a patent that covers a design critical for implementing NFC in mobile phones. We believe in the strength and value of our intellectual property and have the resources to protect it. This lawsuit is another step in OTI’s strategy to leverage its IP assets, following the technology license agreement with a multi-billion dollar corporation, and the issuance in January this year of OTI’s U.S. Patent entitled ‘Contactless Smart SIM’.”Mr. Bashan continued: “As previously mentioned, the fall 2011 flooding in Thailand had an ongoing negative impact on our business, including the shutdown of our subcontractor’s facility which increased our cost of sales. I am pleased to state that today we are back into normal production capacity. However, the consequential impact of this event is not fully visible yet, and we may still face delays in projects execution and some customer order disruption.” Mr. Bashan concluded: “We are making progress in implementing our strategy and expanding our customer base. As such, the Company is maintaining its revenue guidance for 2012, with revenues of approximately $50 million and gross margin of 50-52%. The Company also now expects operating expenses to be approximately $28 million for the year. The revenue guidance reflects some uncertainty the Company has regarding the ongoing impact of the Thailand flooding.” Adoption of IFRS

Effective as of January 1, 2012, the Company adopted International Financial Reporting Standards (“IFRS”) as published by the International Accounting Standards Board (“IASB”), replacing the previous reporting standard of US GAAP. The comparative information for the first quarter of 2011 and as of December 31, 2011 provided herein has been restated to reflect the retrospective application of IFRS from the beginning of 2011. An explanation of how the transition from US GAAP to IFRS has affected the Company’s financial results is set out in the Appendix attached hereto.Use of Non-IFRS Financial Information

This press release contains certain non-IFRS measures, namely, Adjusted Earnings Before Interest, Income Tax, Depreciation and Amortization ("Adjusted EBITDA”).

Adjusted EBITDA represents earnings before interest, income tax, depreciation and amortization, and further eliminates the effect of share-based compensation expense.

The Company believes that Adjusted EBITDA should be considered in evaluating the Company's operations since they provide a clearer indication of the Company's operating results.

This measure should be considered in addition to results prepared in accordance with IFRS, but should not be considered a substitute for the IFRS results. The non-IFRS measures included in this press release have been reconciled to the IFRS results in the tables below.Conference Call and Webcast Information

OTI will host a conference call and simultaneous Webcast today at 9:00 AM ET to discuss its operating results and the company’s outlook. Details are as follows: Dial in #: Toll Free 1-888-407-2553 (U.S.) or 1-800-227-297 (Israel)

Live Webcast/Replay: http://www.otiglobal.com/Investors_Introduction

Telephone Replay: 1-877-456-0009 (U.S. toll free) until midnight June 7, 2012About On Track Innovations Ltd. (www.otiglobal.com)

On Track Innovations Ltd. ("OTI") designs, develops and markets secure identification, payment and transaction processing technologies and solutions for use in secure ID, payment and loyalty applications based on its extensive patent and IP portfolio. OTI combines state-of-the-art, contactless microprocessor-based technologies and enabling hardware with proprietary software applications to deliver high performance, end-to-end solutions that are secure, robust and scalable. OTI solutions have been deployed around the world to address homeland security, national ID, medical ID, Near Field communications (“NFC”), contactless payment and loyalty applications, petroleum payment, parking and mass transit ticketing. OTI markets and supports its solutions through a global network of regional offices and alliances.OTI Contacts:

Galit Mendelson Jay M. Meier

VP, Corporate Relations SVP, Business Development &

Investor Relations

732 429 1900 ext. 111 OTI America, Inc.

galit@otiglobal.com 732 429 1900 ext. 104

jaym@otiglobal.com