• Revenues of $51.3M  with Gross Margin of 51%
• Revenues from Licensing and Transaction Fees up 199% to $12.1M
• Strong Balance Sheet with $28.5M in Cash, Cash Equivalents and Short Term Investments

ISELIN, NJ, – March 7, 2012 – On TrackInnovations Ltd. (“OTI”) (NASDAQ GM: OTIV), designs, develops and marketssecure identification, payment and transaction processing technologies andsolutions for use in secure ID, NFC , payment, petroleum and loyaltyapplications based on its extensive patent and IP portfolio, today announced itsresults for the fourth quarter and FY 2011 ended December 31, 2011.

The following are various financial figures thatcompare FY 2011 to FY 2010, unless noted otherwise.

2011Highlights:

• Total revenues of $51.3M decreased 4% vs. $53.6M last year. Revenues for Q4 2011 were $16.0M, up 60% compared to $10.0M in Q4 2010.
• Revenues from Licensing and Transaction Fees increased by 199% to $12.1M vs. $4.0M last year.

• Gross margin was 51% for 2011.

• GAAP operating expenses increased by 9% to $32.7M vs. $30.1M last year. Non-GAAP operating expenses increased by 16% to $30.3M compared to $26.1M last year.

• GAAP operating loss was $6.4M, compared to GAAP operating loss of $1.2M last year. Non-GAAP operating loss was $4.0M, compared to non-GAAP operating profit of $2.8M last year.

• Q4 GAAP operating profit was $634,000, compared to GAAP operating loss of $2.6M last year. Q4 non-GAAP operating profit was $1.1M, compared to non-GAAP operating loss of $1.8M last year.

• GAAP net loss attributable to shareholders was $6.9M, a 12% increase compared to $6.2M last year.

• Strong balance sheet with cash, cash equivalents and short-term investments of $28.5M at December 31, 2011.

Oded Bashan, Chairman and Chief Executive Officer of OTI, commented,“In 2011 there was a significant increase in our licensing and transactionfees revenues with expansion of our customer base. We had revenues coming froma larger number of new programs and existing projects expanding and progressingto commercial deployment.”

Mr. Bashan continued: “we are launching a cost cutting programthat we believe will streamline our operations by the end of the year andincludes amongst other, some workforce reduction, consolidation and reductionin low margin operations, outsourcing and partnerships with third parties.”

Mr. Bashan concluded: “Revenues for 2012 areexpected to be about $50M with gross margin of 50-52% and we expect to be ableto reduce our operating expenses level to $26M for the year (excluding stockoptions compensation and amortization of intangible assets expenses)”.

Use of Non-GAAPFinancial Information

In addition to reportingfinancial results in accordance with generally accepted accounting principles,or GAAP, OTI uses non-GAAP measures of operating expenses, operating income,net income and earnings per share, which are adjustments from results based onGAAP to exclude non-cash stock-based compensation expenses related to employeesand non employees in accordance with the requirements of Accounting StandardsCodification (“ASC”) Topic 718 (originally issued as SFAS No. 123(R)) and ASCSubtopic 505-50 - Equity-Based Payments to Non-Employees (formerly EITF 96-18);amortization of intangible assets; and results from discontinued operations.OTI management believes the non-GAAP financial information provided in thisrelease provides meaningful supplemental information regarding our performanceand enhances the understanding of the Company’s on-going economic performance.The presentation of this non-GAAP financial information is not intended to beconsidered in isolation or as a substitute for results prepared in accordancewith GAAP. Management uses both GAAP and non-GAAP information in evaluating andoperating the business and as such deemed it important to provide all thisinformation to investors. Reconciliations between GAAP measures and non-GAAPmeasures are provided later in this press release.

Conference Call and Webcast Information

OTI will host a conference call and simultaneous Webcast todayat 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:               1-888-295-2634 (U.S. toll free) untilmidnight 3/14/12

About On Track Innovations Ltd.(www.otiglobal.com)

On Track Innovations Ltd. ("OTI") designs,develops and markets secure identification, payment and transaction processingtechnologies and solutions for use in secure ID, payment and loyaltyapplications based on its extensive patent and IP portfolio. OTI combinesstate-of-the-art, contactless microprocessor-based technologies and enablinghardware with proprietary software applications to deliver high performance,end-to-end solutions that are secure, robust and scalable. OTI solutions havebeen deployed around the world to address homeland security, national ID,medical ID, NFC, contactless payment and loyalty applications, petroleumpayment, parking and mass transit ticketing. OTI markets and supports itssolutions through a global network of regional offices and alliances.

OTI Contacts:                                                                                   

Galit Mendelson                  Jay M.Meier                                         

VP,Corporate Relations      SVP,Business Development & Investor Relations

732429 1900 ext. 111         OTIAmerica, Inc.                                 

galit@otiglobal.com             732 4291900 ext. 104                          

                                             jaym@otiglobal.com                             

Safe Harbor for Forward-LookingStatements: 

This press release containsforward-looking statements within the meaning of the Private Securities LitigationReform Act of 1995 and other Federal securities laws.  Whenever we use words such as “believe,”“expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions, weare making forward-looking statements. Because such statements deal with future events and are based on OTI’scurrent expectations, they are subject to various risks and uncertainties andactual results, performance or achievements of OTI could differ materially fromthose described in or implied by the statements in this press release.  Forward-looking statements include statementsregarding our goals, beliefs, future growth strategies, objectives, products,plans, and future results of operations or current expectations. Forward-looking statements could beimpacted by the effects of the protracted evaluation and validation periods inthe U.S. and other markets for contactless payment cards, market acceptance ofnew and existing products and our ability to execute production on orders, aswell as other risks and uncertainties, including those discussed in the “RiskFactors” section and elsewhere in our Annual Report on Form 20-F for the yearended December 31, 2010, and in subsequent filings with the Securities andExchange Commission.   Although webelieve that the expectations reflected in such forward-looking statements arebased on reasonable assumptions, we can give no assurance that our expectationswill be achieved.  Except as otherwiserequired by law, OTI disclaims any intention or obligation to update or reviseany forward-looking statements, which speak only as of the date hereof, whetheras a result of new information, future events or circumstances or otherwise.

The content of websites orwebsite links mentioned or provided herein are not part of this press release.

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