On Track Innovations Ltd. (OTIV)

[midastouch017]

Regulation FD Disclosure


Item 7.01 Regulation FD Disclosure.
On March 2, 2017, On Track Innovations Ltd., or the Company, became aware of a claim filed in the U.S. District Court, Eastern District of Pennsylvania, on March 1, 2017, against the Company and its subsidiary, OTI America Inc., by USA Technologies, Inc., or USAT. The claim asserts, among other things, that products sold by the Company to USAT's manufacturing subcontractor, Masterwork Electronics, Inc., or Masterwork, fail to conform to promised specifications in that they do not include Apple Value Added Services, or VAS, an add-on software feature to Apple Pay which is not yet offered on the Company's products. USAT seeks payment of $4,912,600 plus interest and costs, comprised of $728,800 to cover payment for alternative products, and $4,183,800 to cover costs of replacing the allegedly non-conforming products already installed. The Company denies the allegations in the complaint and intends to defend the complaint vigorously.

On March 3, 2017, the Company filed a claim in the United States District Court, Northern District of California, San Francisco Division, against Masterwork. The Company seeks payment of $2,518,000 plus interest and costs as a result of Masterwork's refusal to perform its obligations in connection with a purchase order supplied by Masterwork to the Company, based on Masterwork's allegations that its customer, USAT, had apparently claimed that the products do not include the VAS feature requested by USAT, though such feature is currently not offered by the Company and was not specified in the purchase order. The products subject to USAT's litigation mentioned above include the products subject to the purchase order referred to in the Company's claim against Masterwork.