UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): April 27, 2021 (April 21, 2021)
On Track Innovations Ltd.
(Exact Name of Registrant as Specified in Its Charter)
Israel
(State or Other Jurisdiction of Incorporation)
| 000-49877 | N/A | |
|
(Commission
File Number) |
(IRS Employer
Identification No.) |
|
Hatnufa
5, Yokneam Industrial Zone, Yokneam,
Israel |
2069200 | |
| (Address of Principal Executive Offices) | (Zip Code) |
011 972 4 6868000
(Registrant’s Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) |
Name of each exchange
on
which registered |
||
| None |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.01 Completion of Acquisition or Disposition of Assets.
On April 2, 2021, On Track Innovations Ltd., or the Company, reported that on March 29, 2021 it entered into an agreement, or the Sale Agreement, for the sale of 100% of the issued and outstanding share capital of the Company’s wholly owned Polish subsidiary, ASEC S.A., or ASEC, with Vector Software SP. Z O.O., or the Buyer. ASEC is headquartered in Krakow, Poland and has been conducting the Company’s Mass Transit Ticketing business in Poland. The consideration for the sale of ASEC was agreed to equal $3,000,000, of which approximately $2,100,000 were to be used to repay Polish bank loans, as mentioned in the Sale Agreement, and was expected to further be reduced by minor working capital adjustments. The transactions under the Sale Agreement closed on April 21, 2021 and as part of the closing the Company agreed to reduce the consideration by approximately $300,000 due to working capital adjustments.
As noted in Note 1 to the Company's 2020 consolidated financial statements included in its Annual Report on Form 10-K filed on March 31, 2021, the Company has determined that the sale of the Mass Transit Ticketing business qualifies as held for sale and as a discontinued operation as of December 31, 2020. Accordingly, the results and the cash flows of this operation for all reporting periods are presented in the statements of operations and in the statements of cash flows, respectively, as discontinued operations separately from continuing operations.
As a result, the Company has already included the results of this discontinued operation in the statement of operations for the years ended December 31, 2020 and 2019.
The pro forma adjustments to the December 31, 2020 balance sheet included in Exhibit 99.1 relate to the disposition as if the transaction occurred as December 31, 2020 that reflects the $600,000 net cash received for the disposition after repayment of Polish bank loans (that are part of Liabilities from discontinued operations - held for sale as of December 31, 2020) in the amount of approximately $2,100,000.
The foregoing description of the Sale Agreement is qualified by reference to the full text of the Sale Agreement, a copy of which was filed as Exhibit 10.1, to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(b) Pro Forma Financial Information
The following unaudited pro forma financial information and accompanying notes are filed herewith as Exhibit 99.1:
| ● | Pro forma condensed consolidated balance sheet as of December 31, 2020 |
| ● | Statements of operations for the years ended December 31, 2020 and 2019 |
The unaudited pro forma consolidated financial statements are not intended to represent or be indicative of the Company’s consolidated results of operations or financial position that would have been reported had the disposition been completed as of the dates presented, and should not be taken as representation of the Company’s future consolidated results of operations or financial condition. The pro forma adjustments are based on available information and certain assumptions that management believes are reasonable under the circumstances.
(d) Exhibits
| 99.1 | Pro Forma Financial Information relating to the Sale Agreement. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| On Track Innovations Ltd. | ||
| Date: April 27, 2021 | By: | /s/ Assaf Cohen |
| Name: | Assaf Cohen | |
| Title: | Chief Financial Officer | |
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Exhibit 99.1
ON TRACK INNOVATION LTD.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(US dollars in thousands)
|
December 31,
2020 |
Pro Forma
Adjustments |
December 31,
Adjusted |
||||||||||
| Assets | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | $ | 1,377 | $ | 600 | $ | 1,977 | ||||||
| Short-term investments | 105 | - | 105 | |||||||||
| Trade receivables (net of allowance for doubtful accounts of $620) | 1,148 | - | 1,148 | |||||||||
| Other receivables and prepaid expenses | 695 | - | 695 | |||||||||
| Inventories | 2,479 | - | 2,479 | |||||||||
| Assets from discontinued operations - held for sale | 6,358 | (6,358 | ) | - | ||||||||
| Total current assets | 12,162 | (5,758 | ) | 6,404 | ||||||||
| Non-current assets | ||||||||||||
| Long term restricted deposit for employee benefits | 511 | - | 511 | |||||||||
| Severance pay deposits | 411 | - | 411 | |||||||||
| Property, plant and equipment, net | 752 | - | 752 | |||||||||
| Intangible assets, net | 247 | - | 247 | |||||||||
| Right-of-use assets due to operating leases | 2,903 | - | 2,903 | |||||||||
|
Total non-current assets
|
4,824 | - | 4,824 | |||||||||
| Total Assets | $ | 16,986 | $ | (5,758 | ) | $ | 11,228 | |||||
ON TRACK INNOVATION LTD.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(US dollars in thousands)
|
December 31,
2020 |
Pro forma
Adjustments |
December 31,
2020 Adjusted |
||||||||||
| Liabilities and Equity | ||||||||||||
| Current Liabilities | ||||||||||||
| Short-term bank credit and current maturities of long-term bank loans | $ | 542 | - | $ | 542 | |||||||
| Convertible short-term loan from a controlling shareholder | 625 | - | 625 | |||||||||
| Trade payables | 1,667 | - | 1,667 | |||||||||
| Other current liabilities | 2,283 | - | 2,283 | |||||||||
| Liabilities from discontinued operations - held for sale | 5,829 | (5,829 | ) | - | ||||||||
| Total current liabilities | 10,946 | (5,829 | ) | 5,117 | ||||||||
| Long-Term Liabilities | ||||||||||||
| Long-term loans, net of current maturities | 14 | - | 14 | |||||||||
| Long-term liabilities due to operating leases, net of current maturities | 2,343 | - | 2,343 | |||||||||
| Accrued severance pay | 977 | - | 977 | |||||||||
| Total long-term liabilities | 3,334 | - | 3,334 | |||||||||
| Total Liabilities | 14,280 | (5,829 | ) | 8,451 | ||||||||
| Commitments and Contingencies | ||||||||||||
| Equity | ||||||||||||
| Shareholders' Equity | ||||||||||||
| Ordinary shares of NIS 0.1 par value: Authorized 100,000,000, issued 55,073,076, outstanding 52,824,377 shares | 1,423 | - | 1,423 | |||||||||
| Additional paid-in capital | 227,209 | - | 227,209 | |||||||||
| Treasury shares at cost - 1,178,699 shares | (2,000 | ) | - | (2,000 | ) | |||||||
| Accumulated other comprehensive loss | (961 | ) | - | (961 | ) | |||||||
| Accumulated deficit | (222,965 | ) | 71 | (220,594 | ) | |||||||
| Total Equity | 2,706 | 71 | 2,777 | |||||||||
| Total Liabilities and Equity | $ | 16,986 | $ | (5,758 | ) | $ | 11,228 | |||||
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ON TRACK INNOVATIONS LTD.
CONSOLIDATED STATEMENT OF OPERATIONS
(US dollars in thousands)
| Year ended December 31 | ||||||||
| 2020 | 2019 | |||||||
| Revenues | ||||||||
| Sales | $ | 11,191 | $ | 9,144 | ||||
| Licensing and transaction fees | 1,551 | 1,505 | ||||||
| Total revenues | 12,742 | 10,649 | ||||||
| Cost of revenues | ||||||||
| Total cost of revenues | 7,641 | 6,402 | ||||||
| Gross profit | 5,101 | 4,247 | ||||||
| Operating expenses | ||||||||
| Research and development | 3,531 | 3,287 | ||||||
| Selling and marketing | 3,233 | 2,934 | ||||||
| General and administrative | 3,028 | 3,449 | ||||||
| Other (income) expenses, net | (11 | ) | (326 | ) | ||||
| Total operating expenses | 9,781 | 9,344 | ||||||
| Operating loss from continuing operations | (4,680 | ) | (5,097 | ) | ||||
| Financial expense, net | (370 | ) | (353 | ) | ||||
| Loss from continuing operations before taxes on income | (5,050 | ) | (5,450 | ) | ||||
| Income tax benefit, net | 10 | 106 | ||||||
| Net loss from continuing operations | $ | (5,040 | ) | $ | (5,344 | ) | ||
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