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This morning, On Track Innovations (NASDAQ:OTIV) announced that it signed a five year agreement with Wright Express (WXS) that appoints OTIV as a reseller in Africa, and an exclusive reseller in South Africa of Wright Expresses Quantum+ Solutions. So what? In my opinion, this is just another meaningless press release from OTIV, one which has no teeth, and one which will not lead to revenue in the near future, and revenue and profitability are surely lacking with this company.

The press release today concerns OTIV's Easy Fuel subsidiary. The last revenue producing contract for Easy Fuel was July 26, 2010, two years ago. Today's press release means that OTI can use the WXS product if there is a need. With a sales and/or marketing team that can't generate consistent Easy Fuel sales, I surely am not excited about this announcement.

Speaking of the sales and marketing efforts of OTIV, let me review the two sales announcements that have recently occurred in Q2 2012 (which ended of June 30, 2012). First, OTIV announced an EasyPark Solution contract for the city of Austin, Texas.

EasyPark was first introduced in Israel over 10 years ago, and currently provides OTIV yearly revenue of $2.5M (approximately). With a population in Austin that is 9% of Israel's population, perhaps we will see future revenue from this program of $250,000 a year. One must remember that it took OTIV 10 years to achieve their reported revenue from EasyPark Israel.

The second Q2 revenue announcement was for the sale of 30000 NFC readers to an unnamed party in the United States. I estimate revenue from this sale to be $0.8M, with a low profit margin and this revenue will be booked in late 2012.

I believe that there is a clear lack of sales leadership within OTIV's management team. I recently reviewed Q2's sales announcements from OTIV's two major competitors, Gemalto and Verifone (NYSE:PAY). Both companies were more successful in winning contractless payment contracts in Q2 2012. The responsiblity for OTIV's sales rest with company CEO, Oded Bashan, and his son, company president Ohad Bashan.

This management team has not been able to exhibit sustained revenue growth and they have never lead the company to profitability in it's 20 year lifetime. If this team can't generate consistent new sales, one may wonder how they will be able to monetize the company's intellectual property, which I believe is the core of NFC technology. It is my opinion, that this company should be sold, or the management team replaced.

Source: On Track Innovations' Meaningless New Press Release