Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward - Looking Statements
The statements contained in this Quarterly Report on Form 10-Q, or Quarterly Report, that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as "believes", "intends", "plans", "expects", "may", "will", "should", or "anticipates" or the negative thereof or other variations thereon or comparable terminology, and similar expressions are intended to identify forward-looking statements. We remind readers that forward-looking statements are merely predictions and therefore are inherently subject to uncertainties and other factors and involve known and unknown risks that could cause the actual results, performance, levels of activity, or our achievements, or industry results, to be materially different from any actual future results, performance, levels of activity, or our achievements, or industry results, expressed or implied by such forward-looking statements. Such forward-looking statements may appear in this Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as elsewhere in this Quarterly Report and include, among other statements, statements regarding the following:
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the expected development and potential benefits from our existing or future products or our intellectual property, or IP;
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·
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generation of revenues from licensing, transaction fees and/or other arrangements;
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·
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future sources of revenue, ongoing relationships with current and future suppliers, customers, end-user customers and resellers;
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·
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future costs and expenses and adequacy of capital resources;
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·
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our intention to continue to expand our market presence via strategic partnerships around the globe;
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·
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our plans to increase our cash resources, such as by capitalizing on our patent portfolio, sales of assets or parts of our business or raising funds;
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·
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our plans to reduce our financial expenses;
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·
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our expectations regarding our short-term and long-term capital requirements;
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·
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our intention to continue to invest in research and development;
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·
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our outlook for the coming months; and
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·
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information with respect to any other plans and strategies for our business.
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The factors discussed herein, including those risk factors expressed from time to time in our press releases or filings with the Securities and Exchange Commission, or the SEC, could cause actual results and developments to be materially different from those expressed in or implied by such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak and are made only as of the date of this filing.
Our business and operations are subject to substantial risks, which increase the uncertainty inherent in the forward-looking statements contained in this Quarterly Report. Except as required by law, we undertake no obligation to release publicly the result of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Further information on potential factors that could affect our business is described among others under the heading “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 filed with SEC. Readers are also urged to carefully review and consider the various disclosures we have made in that report.
As used in this Quarterly Report, the terms "we", "us", "our", “the Company”, and "OTI" mean On Track Innovations Ltd. and our subsidiaries and affiliates, unless otherwise indicated or as otherwise required by the context.
All figures in this Quarterly Report are stated in United States dollars, unless otherwise specified in.
We are a pioneer and leading developer of cutting-edge secure cashless payment solutions, providing global enterprises with innovative technology for over two decades. We operate in three main segments: Petroleum, Retail and Mass Transit Ticketing and Parking. In addition to our three reportable segments, products of our MediSmart solutions and other secure smart card solutions are classified under “Other” in segment analyses appearing in this Quarterly Report.
Our field-proven suite of cashless payment solutions is based on an extensive IP portfolio boasting 26 patent families, including registered patents and patent applications worldwide. Since our incorporation in 1990, we have built an international reputation for reliability and innovation, deploying hundreds of solutions for banking, mobile network operators, vending, mass transit, petroleum and parking.
We operate a global network of regional offices, franchisees, distributors and partners to support various solutions deployed across the globe.
We focus our efforts on our core business of providing innovative cashless payment solutions based among other things on our contactless near field communications, or NFC, technology. To this end, and since 2013, we have divested businesses in the Company that are not within our core business scope. We have increased our efforts to further develop existing and new products and solutions, including among others by the introduction of our new telemetry and Internet of Things, or IoT, technology, and increased our sales and marketing activities and taskforce. We also focus on developing strategic channel partnerships around the globe to increase our revenues and on maximizing the value of our IP through licensing, customized technology solutions, strategic partnerships and enforcing our patent portfolio. Recently, we have significantly cut costs and reduced operating expenses, in part by outsourcing part of our manufacturing activities.
RESULTS OF OPERATIONS – THREE MONTHS ENDED MARCH 31, 2016 COMPARED TO THREE MONTHS ENDED MARCH 31, 2015
This discussion and analysis should be read in conjunction with our interim condensed consolidated financial statements and notes thereto contained in “Item 1.
Financial Statements” of this Quarterly Report.
Results of Operations
Discontinued operations
. In December 2013, we completed the sale of certain assets, certain subsidiaries and IP directly related to our SmartID division. The results from such operations and the cash flows for the reporting periods are presented in the statements of operations and in the statements of cash flow, respectively, as discontinued operations separately from continuing operations. All the data in this Quarterly Report that are derived from our financial statements, unless otherwise specified, exclude the results of those discontinued operations.
Sources of Revenue
We have historically derived a substantial majority of our revenues from the sale of our products, including both complete systems and original equipment manufacturer components and also, less significantly, from engineering services, customer services and technical support. In addition, we generate revenues from licensing and transaction fees. During the three months ended March 31, 2016 and March 31, 2015, the revenues that we derived from sales and licensing and transaction fees were as follows (in thousands):
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Three months ended
March 31,
|
|
|
|
2016
|
|
|
2015
|
|
Sales
|
|
$
|
3,493
|
|
|
$
|
3,597
|
|
Licensing and transaction fees
|
|
$
|
1,384
|
|
|
$
|
1,378
|
|
Total revenues
|
|
$
|
4,877
|
|
|
$
|
4,975
|
|
Sales.
Sales decreased by $104,000, or 3%, in the three months ended March 31, 2016, compared to the three months ended March 31, 2015. The decrease is mainly attributed to a decrease in Retail and Mass Transit Ticketing segment sales in the United States, partially offset by an increase in sales of MediSmart products.
Licensing and transaction fees.
Licensing and transaction fees include single and periodic payments for distribution rights for our products as well as licensing our IP rights to third parties. Transaction fees are paid by customers based on the volume of transactions processed by systems that contain our products. Our licensing and transaction fees in the three months ended March 31, 2016, compared to the three months ended March 31, 2015, remained consistent.
We have historically derived revenues from different geographical areas. The following table sets forth our revenues, by dollar amount (in thousands) and as a percentage of quarterly revenues in different geographical areas, in the three months ended March 31, 2016 and March 31, 2015:
Three months ended March 31,
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Africa
|
|
|
Europe
|
|
|
Asia
|
|
|
Americas
|
|
2016
|
|
$
|
836
|
|
|
|
17
|
%
|
|
$
|
1,534
|
|
|
|
31
|
%
|
|
$
|
271
|
|
|
|
6
|
%
|
|
$
|
2,236
|
|
|
|
46
|
%
|
2015
|
|
$
|
869
|
|
|
|
17
|
%
|
|
$
|
1,480
|
|
|
|
30
|
%
|
|
$
|
377
|
|
|
|
8
|
%
|
|
$
|
2,249
|
|
|
|
45
|
%
|
Our revenues from sales in Africa decreased by $33,000, or 4%, in the three months ended March 31, 2016, compared to the three months ended March 31, 2015, mainly due to a decrease in sales of our Petroleum products due to fluctuation in the currency exchange rate for South African Rand versus the U.S. dollar, partially offset by an increase in sales of MediSmart products.
Our revenues from sales in Europe increased by $54,000, or 4%, in the three months ended March 31, 2016, compared to the three months ended March 31, 2015, mainly due to an increase in our Mass Transit Ticketing sales in Poland and from an increase in sales of our otiMetry solution, partially offset by a decrease in Parking products sales.
Our revenues from sales in Asia decreased by $106,000, or 28%, in the three months ended March 31, 2016, compared to the three months ended March 31, 2015, mainly due to a decrease in sales of our access control products.
Our revenues from sales in Americas decreased by $13,000, or 1%, in the three months ended March 31, 2016, compared to the three months ended March 31, 2015, mainly due to a decrease in sales of NFC readers to the U.S. market, partially offset by an increase in sales of Petroleum products to the South American market.
Our revenues derived from outside the United States, which are primarily received in currencies other than the U.S. dollar, will have a varying impact upon our total revenues, as a result of fluctuations in such currencies’ exchange rates versus the U.S. dollar.
The following table sets forth our revenues by dollar amount (in thousands) and as a percentage of revenues by segments, during the three months ended March 31, 2016 and March 31, 2015:
Three months ended March 31,
|
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Petroleum
|
|
|
Parking
|
|
|
Retail and Mass Transit Ticketing
|
|
|
Other
|
|
2016
|
|
$
|
1,109
|
|
|
|
23
|
%
|
|
$
|
305
|
|
|
|
6
|
%
|
|
$
|
2,899
|
|
|
|
59
|
%
|
|
$
|
564
|
|
|
|
12
|
%
|
2015
|
|
$
|
1,140
|
|
|
|
23
|
%
|
|
$
|
341
|
|
|
|
7
|
%
|
|
$
|
3,107
|
|
|
|
62
|
%
|
|
$
|
387
|
|
|
|
8
|
%
|
Our revenues in the three months ended March 31, 2016 from Petroleum decreased by $31,000, or 3%, compared to the three months ended March 31, 2015, mainly due to a decrease in sales in Africa due to fluctuation in the currency exchange rate for South African Rand versus the U.S. dollar, partially offset by an increase in sales of Petroleum products in South America.
Our revenues in the three months ended March 31, 2016 from the Parking segment decreased by $36,000, or 11%, compared to the three months ended March 31, 2015, mainly due to a decrease in revenues generated from the European market, partially offset by an increase in sales of our Parking solution in the United States.
Our revenues from Retail and Mass Transit Ticketing in the three months ended March 31, 2016 decreased by $208,000, or 7%, compared to the three months ended March 31, 2015, mainly due to a decrease in sales of NFC readers in the United States, partially offset by an increase in our Mass Transit Ticketing sales in Poland and from an increase in sales of our otiMetry solution in the European market.
Our revenues in the three months ended March 31, 2016, from our Other segment increased by $177,000, or 46%, compared to the three months ended March 31, 2015, mainly due to an increase in sales of MediSmart products in East Africa, partially offset by a decrease in access control products sales in Asia.
Cost of Revenues and Gross Margin
Our cost of revenues, presented by gross profit and gross margin percentage, in the three months ended March 31, 2016 and March 31, 2015, were as follows (dollar amounts in thousands):
Cost of revenues
|
|
Three months ended March 31,
|
|
|
|
2016
|
|
|
2015
|
|
Cost of sales
|
|
$
|
2,332
|
|
|
$
|
2,505
|
|
Gross profit
|
|
$
|
2,545
|
|
|
$
|
2,470
|
|
Gross margin percentage
|
|
|
52%
|
|
|
|
50%
|
|
Cost of sales.
Cost of sales consists primarily of materials, as well as salaries, fees to subcontractors and related costs of our technical staff that assemble our products. The decrease of $173,000, or 7%, in the three months ended March 31, 2016, compared to the three months ended March 31, 2015, resulted primarily from our strategic decision to cease in-house manufacturing activities and from a decrease in our revenues.
Gross margin.
The increase in gross margin in the three months ended March 31, 2016, compared to the three months ended March 31, 2015, is primarily attributed to a decrease in employment expenses due to our strategic decision to outsource all of our manufacturing and product assembly to third-party vendors.
Operating expenses
Our operating expenses in the three months ended March 31, 2016 and March 31, 2015, were as follows (in thousands):
Operating expenses
|
|
Three months ended March 31,
|
|
|
|
2016
|
|
|
2015
|
|
Research and development
|
|
$
|
751
|
|
|
$
|
968
|
|
Selling and marketing
|
|
$
|
1,586
|
|
|
$
|
1,886
|
|
General and administrative
|
|
$
|
938
|
|
|
$
|
1,241
|
|
Patent litigation and maintenance
|
|
$
|
17
|
|
|
$
|
176
|
|
Other expenses
|
|
$
|
-
|
|
|
$
|
77
|
|
Total operating expenses
|
|
$
|
3,292
|
|
|
$
|
4,348
|
|
Research and development.
Our research and development expenses consist primarily of the salaries and related expenses of our research and development staff, as well as subcontracting expenses. The decrease of $217,000, or 22%, in the three months ended March 31, 2016, compared to the three months ended March 31, 2015, is primarily attributed to a decrease in the number of research and development employees due to our cost cutting plan, and to a lesser extent, to a decrease in subcontractor expenses.
Selling and marketing.
Our selling and marketing expenses consist primarily of salaries and substantially all of the expenses of our sales and marketing subsidiaries and offices in the United States, South Africa and Europe, as well as expenses related to advertising, professional expenses and participation in exhibitions and tradeshows. The decrease of $300,000, or 16%, in the three months ended March 31, 2016, compared to the three months ended March 31, 2015, is primarily attributed to a decrease in employment expenses of selling and marketing employees who left the Company by the end of 2015, and to a lesser extent to a decrease in exhibitions and advertising expenses and to a decrease in professional expenses. Our selling and marketing expenses may increase in the future as we continue to expand our local sales and marketing efforts, open new offices and in the event that we hire additional personnel.
General and administrative.
Our general and administrative expenses consist primarily of salaries and related expenses of our executive management and financial and administrative staff. These expenses also include costs of our professional advisors (such as lawyers and accountants), office expenses, insurance and provision for doubtful accounts. The decrease of $303,000, or 24%, in the three months ended March 31, 2016, compared to the three months ended March 31, 2015, is primarily attributed to a decrease in professional consulting expenses and to a decrease in stock-based compensation related to options granted to employees.
Patent litigation and maintenance expenses
. Our patent litigation and maintenance expenses consist primarily of professional advisors related to our patents and other IP, such as lawyers or other consultants, as part of the Company's plan to maximize the value of our IP, and also consist of salaries and related expenses of our team of employees executing this strategy. The decrease of $159,000, or 90%, in the three months ended March 31, 2016, compared to the three months ended March 31, 2015, is primarily attributed to a decrease in employment expenses related to the termination of employment of one of our former directors as chief executive officer of our U.S. subsidiary, who led the Company's efforts to maximize the value of our patents portfolio until August 2015.
Other expenses.
Our other expenses in the three months ended March 31, 2015 consist of partial compensation expenses provision related to the termination of employment of our former Chief Executive Officer, or CEO, Mr. Ofer Tziperman, according to his employment terms, following his resignation from the Company and its subsidiaries on February 10, 2015. No other expenses were recorded in the three months ended March 31, 2016.
Financing expenses, net
Our financing expenses, net, in the three months ended March 31, 2016 and March 31, 2015, were as follows (in thousands):
|
|
Three months ended March 31,
|
|
|
|
2016
|
|
|
2015
|
|
Financing income
|
|
$
|
23
|
|
|
$
|
48
|
|
Financing expenses
|
|
$
|
(127
|
)
|
|
$
|
(273
|
)
|
Financing expenses, net
|
|
$
|
(104
|
)
|
|
$
|
(225
|
)
|
Financing expenses consist primarily of interest payable on bank loans, bank commissions and foreign exchange losses. Financing income consists primarily of foreign exchange gains and from interest earned on investments in short-term deposits. The decrease in financing income in the three months ended March 31, 2016, compared to the three months ended March 31, 2015, of $25,000, or 52%, is mainly due to exchange rate differentials and a decrease in interest income from deposits. The decrease in financing expenses in the three months ended March 31, 2016, compared to the three months ended March 31, 2015, of $146,000, or 53%, is mainly due to decreased foreign exchange losses from exchange rate differentials of the U.S. dollar against the South African Rand.
Net loss from continuing operations
Our net loss
from continuing operations in the three months ended March 31, 2016 and March 31, 2015, was as follows (in thousands):
|
|
Three months ended March 31,
|
|
|
|
2016
|
|
|
2015
|
|
Net loss from continuing operations
|
|
$
|
(867
|
)
|
|
$
|
(2,122
|
)
|
The decrease of $1.3 million, or 59%, in the three months ended March 31, 2016, compared to the three months ended March 31, 2015, is primarily due to an increase in our gross profit, a decrease in our operating expenses and a decrease in financing expenses, net, as described above.
Net profit (loss) from discontinued operations
Our net
profit (loss) from discontinued operations in the three months ended March 31, 2016 and March 31, 2015, was as follows (in thousands):
|
|
Three months ended March 31,
|
|
|
|
2016
|
|
|
2015
|
|
Net profit (loss) from discontinued operations
|
|
$
|
(61
|
)
|
|
$
|
362
|
|
In December 2013, we completed the sale of certain assets, certain subsidiaries and IP assets directly related to our SmartID division.
The results from these operations for the reporting periods are presented in the statements of operations as discontinued operations separately from continuing operations.
The decrease in net profit (loss) from discontinued operations of $423,000 in the three months ended March 31, 2016, compared to the three months ended March 31, 2015, is due to a decrease of $387,000 profit we recorded in 2015 from contingent consideration according to an earn out mechanism as part of our SmartID divestiture. The loss of $61,000 in 2016 resulted from legal expenses related to the SmartID divestiture.
Net loss
Our net loss in the three months ended March 31, 2016 and March 31, 2015, was as follows (in thousands):
|
|
Three months ended March 31,
|
|
|
|
2016
|
|
|
2015
|
|
Net loss
|
|
$
|
(928
|
)
|
|
$
|
(1,760
|
)
|
The decrease in net loss of $832,000, or 47%, in the three months ended March 31, 2016, compared to the three months ended March 31, 2015, is primarily due to an increase in our gross profit, a decrease in our operating expenses and a decrease in financing expenses, net, partially offset by a decrease in net profit from discontinued operations, as described above.
Liquidity and Capital Resources
Our principal sources of liquidity since our inception have been sales of equity securities, borrowings from banks, cash from the exercise of options and warrants and proceeds from divestitures of parts of our businesses. We had cash, cash equivalents and short-term investments representing bank deposits of $9.6 million (of which an amount of $2.3 million has been pledged as a security in respect of performance guarantees granted to third parties and guarantees to secure customer advances, loans and credit lines received from a bank) as of March 31, 2016, and $10.9 million as of December 31, 2015 (of which an amount of $2.3 million had then been pledged as a security in respect of performance guarantees granted to third parties and guarantees to secure customer advances, loans and credit lines received from a bank). In addition, on May 2, 2016, we received $2.05 million pursuant to a settlement of litigation with SuperCom Ltd., or SuperCom, as described further under Part II, Item 1, of this Quarterly Report on Form 10-Q. This amount is not reflected in the financial statements as of March 31, 2016. We believe that we have sufficient capital resources to fund our operations in the next 12 months.
We adhere to an investment policy which is intended to enable the Company to avoid being classified as a “passive foreign investment company,” or PFIC, under U.S. law. That said, we cannot provide complete assurance that PFIC status will be avoided in the future. In addition, our investment policy requires investment in high-quality investment-grade securities.
As of March 31, 2016, the bank loans are denominated in the following currencies: U.S. dollars ($328,000, with maturity dates ranging from 2016 through 2019), NIS ($333,000, with maturity dates ranging from 2016 through 2019), South African Rand ($644,000, with maturity dates ranging from 2016 through 2023) and Polish Zloty ($2.0 million, with maturity dates ranging from 2016 through 2019). As of March 31, 2016 these loans bear interest at rates ranging from 3.15%-9.75% per annum. Our composition of long-term loans as of March 31, 2016, was as follows (in thousands):
|
|
March 31, 2016
|
|
Long-term loans
|
|
$
|
3,259
|
|
Less - current maturities
|
|
|
1,067
|
|
|
|
$
|
2,192
|
|
Our composition of short-term loans, bank credit and current maturities of long-term loans as of March 31, 2016 was as follows (in thousands):
|
|
March 31, 2016
|
|
|
|
Interest rate
|
|
|
|
|
In NIS
|
|
|
4.35
|
%
|
|
$
|
767
|
|
In U.S. dollars
|
|
|
4.92
|
%
|
|
|
1,549
|
|
In Polish Zloty
|
|
|
3.15
|
%
|
|
|
782
|
|
|
|
|
|
|
|
|
3,098
|
|
Current maturities of long-term loans
|
|
|
|
|
|
|
1,067
|
|
|
|
|
|
|
|
$
|
4,165
|
|
On November 4, 2014, the Company signed a financial and restrictive covenant with Bank Leumi in order to secure bank services and obtain bank credit and loans. Under the covenant, we are obligated to meet the following: (i) our total liquid deposits will not be less than $6.0 million at any time; (ii) beginning January 1, 2015, our annual operational profit on an Earnings Before Interest, Taxes, Depreciation and Amortization, or EBITDA, basis will not be less than $1.0 million; (iii) our annual revenues will not be less than $20.0 million; and (iv) for 2015, equity is required to be at a level of 28% of the total assets and equity sum of no less than $10.5 million; for 2016 and onwards, equity is required to be at a level of 30% of the total assets and equity sum of no less than $11.0 million. As of December 31, 2015, the Company has not been in compliance with the covenants regarding annual operational profit on an EBITDA basis and annual revenues. On December 31, 2015, the bank issued a waiver waiving its right to demand prepayment of the Company’s liabilities. The bank’s waiver was conditioned on our compliance with the covenants in our 2016 annual financial statements to be submitted to the bank by March 31, 2017. We believe it is reasonably possible that no covenant violation will occur that will require prepayment of our liabilities.
For the three months ended March 31, 2016, we had a negative cash flow from continuing operations of $1.3 million. We may continue to suffer from negative cash flow from operations. We are looking for ways to increase our cash resources, such as capitalizing on our patent portfolio, sales of assets or parts of our business or raising funds. Accordingly, as noted above, we recently received $2.05 million pursuant to a settlement of litigation with SuperCom. In addition, we are looking for ways to reduce our financial expenses, including repayment of debt instruments and reduction in operating expenses.
We have an effective Form S-3 registration statement, filed under the Securities Act of 1933, as amended, with the SEC using a “shelf” registration process. Under this shelf registration process, we may, from time to time, sell ordinary shares, warrants to purchase ordinary shares, and units of such securities in one or more offerings up to a total dollar amount of $50,000,000.
Operating activities related to continuing operations
For the three months ended March 31, 2016, net cash used in continuing operating activity was $1.3 million primarily due to a $1.4 million increase in trade receivables, a $867,000 net loss from continuing operations, a $139,000 decrease in other current liabilities, a $109,000 decrease in accrued severance pay, and a $7,000 decrease in accrued interest partially offset by a $506,000 increase in trade payables, a $377,000 decrease in inventory, $308,000 of depreciation, a $16,000 increase in deferred tax, a $27,000 expense due to stock based compensation issued to employees and a $3,000 decrease in other receivables and prepaid expenses.
For the three months ended March 31, 2015, net cash used in continuing operating activity was $168,000 primarily due to a $2.1 million net loss from continuing operations, a $288,000 decrease in trade payables, a $148,000 decrease in other current liabilities, a $20,000 decrease in accrued severance pay and a $2,000 decrease in accrued interest partially offset by a $1.4 million decrease in trade receivables, a $501,000 decrease in inventory, $298,000 of depreciation, a $180,000 expense due to stock based compensation issued to employees and others, a $31,000 decrease in other receivables and prepaid expenses and a $19,000 increase in deferred tax.
Operating activities related to discontinued operations
We had no cash flows provided by or used in discontinued operating
activities in the three months ended March 31, 2016.
For the three months ended March 31, 2015, net cash used in discontinued operating
activities was $25,000, related to the SmartID division.
Investing and financing activities related to continuing operations
For the three months ended March 31, 2016, net cash provided by continuing investing activities was $764,000, mainly due to a $901,000 decrease in short-term investments, net, partially offset by $83,000 of purchases of property and equipment and a $54,000 investment in capitalized product costs.
For the three months ended March 31, 2015, net cash provided by continuing investing activities was $699,000, mainly due to $816,000 in proceeds from the maturity and sale of short-term investments, $111,000 of purchases of property and equipment and a $6,000 investment in capitalized product costs.
For the three months ended March 31, 2016, net cash provided by continuing financing activities was $50,000, mainly due to a $286,000 increase in short-term bank credit, net and $27,000 of proceeds from long-term bank loans, partially offset by $263,000 repayment of long-term bank loans.
For the three months ended March 31, 2015, net cash used in continuing financing activities was $121,000, mainly due to a $229,000 repayment of long-term bank loans, partially offset by a $108,000 increase in short-term bank credit, net.
Investing and financing activities related to discontinued operations
For the three months ended March 31, 2016, net cash used in discontinued investing activities was $61,000, related to the SmartID division.
We had no cash flows provided by or used in discontinued investing activities in the three months ended March 31, 2015.
We had no cash flows provided by or used in discontinued financing
activities
in the three months ended March 31, 2016 and March 31, 2015.
Off Balance Sheet Arrangements
As of March 31, 2016, we had no off balance sheet arrangements that have had or that we expect would be reasonably likely to have a future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.