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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Arotech Corporation | NASDAQ:ARTX | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 2.995 | 2.99 | 3.00 | 0 | 01:00:00 |
OMB APPROVAL
|
OMB Number: 3235-0070
Expires: September 30, 2018
Estimated average burden
hours per response 187.43
|
T |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
September 30, 2016
.
|
Delaware
|
95-4302784
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
1229 Oak Valley Drive, Ann Arbor, Michigan
|
48108
|
(Address of principal executive offices)
|
(Zip Code)
|
(800) 281-0356
|
(Registrant’s telephone number, including area code)
|
|
(Former name, former address and former fiscal year, if changed since last report)
|
Potential persons who are to respond to the collection of
information contained in this form are not required to respond
unless the form displays a currently valid OMB control number.
|
Item
|
|
Page
|
PART I - FINANCIAL INFORMATION
|
|
|
|
|
|
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3
|
|
|
5
|
|
|
6
|
|
|
8
|
|
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14
|
|
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19
|
|
|
19
|
|
|
|
|
PART II - OTHER INFORMATION
|
|
|
|
20
|
|
|
|
|
|
21
|
|
September 30, 2016
|
December 31, 2015
|
||||||
|
(Unaudited)
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$
|
10,322,578
|
$
|
10,608,420
|
||||
Restricted collateral deposits
|
235,292
|
89,985
|
||||||
Trade receivables
|
17,226,850
|
17,401,479
|
||||||
Unbilled receivables
|
11,709,032
|
12,132,484
|
||||||
Other accounts receivable and prepaid expenses
|
2,403,509
|
1,007,358
|
||||||
Inventories
|
10,569,742
|
9,607,836
|
||||||
Current assets of discontinued operations
|
40,000
|
–
|
||||||
Total
current assets
|
52,507,003
|
50,847,562
|
||||||
LONG TERM ASSETS:
|
||||||||
Contractual and Israeli statutory severance pay fund
|
4,787,795
|
5,370,755
|
||||||
Other long term receivables
|
24,301
|
23,403
|
||||||
Property and equipment, net
|
6,010,908
|
6,385,238
|
||||||
Other intangible assets, net
|
7,197,744
|
9,334,730
|
||||||
Goodwill
|
45,627,221
|
45,463,027
|
||||||
Long term assets of discontinued operations
|
307,957
|
68,301
|
||||||
Total long term assets
|
63,955,926
|
66,645,454
|
||||||
Total assets
|
$
|
116,462,929
|
$
|
117,493,016
|
|
September 30, 2016
|
December 31, 2015
|
||||||
|
(Unaudited)
|
|||||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Trade payables
|
$
|
4,693,744
|
$
|
5,914,042
|
||||
Other accounts payable and accrued expenses
|
4,808,672
|
5,560,040
|
||||||
Current portion of long term debt
|
1,664,831
|
4,362,438
|
||||||
Short term bank credit
|
7,409,208
|
4,060,000
|
||||||
Deferred revenues
|
5,808,304
|
6,879,815
|
||||||
Current liabilities of discontinued operations
|
524,052
|
–
|
||||||
Total current liabilities
|
24,908,811
|
26,776,335
|
||||||
LONG TERM LIABILITIES:
|
||||||||
Contractual and accrued Israeli statutory severance pay
|
7,215,612
|
7,497,685
|
||||||
Long term portion of debt
|
9,164,244
|
11,856,522
|
||||||
Deferred income tax liability
|
7,639,489
|
7,031,564
|
||||||
Other long term liabilities
|
93,914
|
264,244
|
||||||
Long term liabilities of discontinued operations
|
55,678
|
19,295
|
||||||
Total long-term liabilities
|
24,168,937
|
26,669,310
|
||||||
Total liabilities
|
49,077,748
|
53,445,645
|
||||||
STOCKHOLDERS' EQUITY:
|
||||||||
Share capital –
|
||||||||
Common stock – $0.01 par value each;
Authorized: 50,000,000 shares as of September 30, 2016 and December 31, 2015;
Issued and outstanding: 26,438,224 shares and 24,697,335 shares as of
September 30, 2016 and December 31, 2015, respectively
|
264,382
|
246,973
|
||||||
Preferred shares – $0.01 par value each;
Authorized: 1,000,000 shares as of September 30, 2016 and December 31, 2015;
No shares issued or outstanding as of September 30, 2016 and December 31, 2015
|
–
|
–
|
||||||
Additional paid-in capital
|
250,312,743
|
246,591,415
|
||||||
Accumulated deficit
|
(183,362,456
|
)
|
(182,554,637
|
)
|
||||
Notes receivable from stockholders
|
(908,054
|
)
|
(908,054
|
)
|
||||
Accumulated other comprehensive income
|
1,078,566
|
671,674
|
||||||
Total stockholders' equity
|
67,385,181
|
64,047,371
|
||||||
Total liabilities and stockholders' equity
|
$
|
116,462,929
|
$
|
117,493,016
|
|
Nine Months ended September 30,
|
Three months ended September 30,
|
||||||||||||||
|
2016
|
2015
|
2016
|
2015
|
||||||||||||
Revenues
|
$
|
71,486,478
|
$
|
69,160,381
|
$
|
24,300,120
|
$
|
23,289,448
|
||||||||
|
||||||||||||||||
Cost of revenues
|
48,933,171
|
49,005,379
|
16,436,276
|
16,254,419
|
||||||||||||
Research and development expenses
|
2,367,964
|
2,697,121
|
752,847
|
680,414
|
||||||||||||
Selling and marketing expenses
|
4,913,076
|
3,810,662
|
1,458,622
|
1,187,872
|
||||||||||||
General and administrative expenses
|
11,149,640
|
12,270,493
|
3,122,853
|
4,089,442
|
||||||||||||
Amortization of intangible assets
|
2,164,937
|
2,286,384
|
698,297
|
720,117
|
||||||||||||
Total operating costs and expenses
|
69,528,788
|
70,070,039
|
22,468,895
|
22,932,264
|
||||||||||||
|
||||||||||||||||
Operating income (loss)
|
1,957,690
|
(909,658
|
)
|
1,831,225
|
357,184
|
|||||||||||
|
||||||||||||||||
Other income (expense)
|
49,913
|
(55,678
|
)
|
3,481
|
(105,709
|
)
|
||||||||||
Financial expense, net
|
(769,328
|
)
|
(887,771
|
)
|
(227,474
|
)
|
(316,766
|
)
|
||||||||
Total other expense
|
(719,415
|
)
|
(943,449
|
)
|
(223,993
|
)
|
(422,475
|
)
|
||||||||
Income (loss) from continuing operations before income tax expense
|
1,238,275
|
(1,853,107
|
)
|
1,607,232
|
(65,291
|
)
|
||||||||||
|
||||||||||||||||
Income tax expense
|
684,272
|
899,629
|
101,992
|
289,905
|
||||||||||||
Income (loss) from continuing operations
|
554,003
|
(2,752,736
|
)
|
1,505,240
|
(355,196
|
)
|
||||||||||
Loss from discontinued operations
|
(1,361,787
|
)
|
(590,882
|
)
|
(869,302
|
)
|
(262,775
|
)
|
||||||||
Net income (loss)
|
(807,784
|
)
|
(3,343,618
|
)
|
635,938
|
(617,971
|
)
|
|||||||||
Other comprehensive income (loss), net of income tax:
|
||||||||||||||||
Foreign currency translation adjustment
|
406,892
|
(106,019
|
)
|
344,837
|
(489,365
|
)
|
||||||||||
Comprehensive income (loss)
|
$
|
(400,892
|
)
|
$
|
(3,449,637
|
)
|
$
|
980,775
|
$
|
(1,107,336
|
)
|
|||||
|
||||||||||||||||
Income (loss) per share of common stock:
|
||||||||||||||||
Basic – continuing operations
|
$
|
0.02
|
$
|
(0.12
|
)
|
$
|
0.06
|
$
|
(0.02
|
)
|
||||||
Basic – discontinued operations
|
$
|
(0.05
|
)
|
$
|
(0.02
|
)
|
$
|
(0.04
|
)
|
$
|
(0.01
|
)
|
||||
Basic net income (loss) per share
|
$
|
(0.03
|
)
|
$
|
(0.14
|
)
|
$
|
0.02
|
$
|
(0.03
|
)
|
|||||
|
||||||||||||||||
Diluted – continuing operations
|
$
|
0.02
|
$
|
(0.12
|
)
|
$
|
0.06
|
$
|
(0.02
|
)
|
||||||
Diluted – discontinued operations
|
$
|
(0.05
|
)
|
$
|
(0.02
|
)
|
$
|
(0.04
|
)
|
$
|
(0.01
|
)
|
||||
Diluted net income (loss) per share
|
$
|
(0.03
|
)
|
$
|
(0.14
|
)
|
$
|
0.02
|
$
|
(0.03
|
)
|
|||||
Weighted average number of shares used in computing basic net income (loss) per share
|
26,125,819
|
23,452,773
|
26,215,049
|
23,684,904
|
||||||||||||
Weighted average number of shares used in computing diluted net income (loss) per share
|
26,125,819
|
23,452,773
|
26,215,049
|
23,684,904
|
|
Nine months ended September 30,
|
|||||||
|
2016
|
2015
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net loss
|
$
|
(807,784
|
)
|
$
|
(3,343,618
|
)
|
||
Adjustments required to reconcile net loss to net cash used in operating activities:
|
||||||||
Amortization of intangible assets
|
2,164,937
|
2,286,384
|
||||||
Depreciation
|
1,322,595
|
1,376,036
|
||||||
Deferred tax provision
|
607,925
|
685,907
|
||||||
Stock based compensation
|
785,738
|
475,330
|
||||||
(Gain) on dispositions, net
|
–
|
(782,659
|
)
|
|||||
Changes in operating assets and liabilities:
|
||||||||
Unbilled receivables
|
433,010
|
5,235,597
|
||||||
Trade receivables
|
372,779
|
1,422,092
|
||||||
Severance payable
|
436,682
|
83,639
|
||||||
Inventories
|
(819,411
|
)
|
(162,571
|
)
|
||||
Other accounts receivable and prepaid expenses
|
(1,420,274
|
)
|
(368,649
|
)
|
||||
Trade payables
|
(1,166,222
|
)
|
(1,938,581
|
)
|
||||
Deferred revenues
|
(1,071,511
|
)
|
(2,621,311
|
)
|
||||
Other accounts payable and accrued expenses
|
(341,418
|
)
|
(3,935,623
|
)
|
||||
Net cash provided by (used in) operating activities
|
497,046
|
(1,588,027
|
)
|
|||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Proceeds from sale of property and equipment
|
–
|
895,000
|
||||||
Increase (decrease) in restricted collateral deposits
|
(139,192
|
)
|
783
|
|||||
Purchase of property and equipment
|
(1,108,356
|
)
|
(1,352,805
|
)
|
||||
Additions to capitalized software
|
(27,951
|
)
|
(350,942
|
)
|
||||
Net cash used in investing activities
|
(1,275,499
|
)
|
(807,964
|
)
|
|
Nine months ended September 30,
|
|||||||
|
2016
|
2015
|
||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Repayment of long term debt
|
$
|
(16,380,225
|
)
|
$
|
(3,542,154
|
)
|
||
Change in short term bank credit
|
3,349,208
|
5,726,762
|
||||||
Proceeds from long term debt
|
11,000,000
|
–
|
||||||
Proceeds from the issuance of common stock
|
2,952,999
|
–
|
||||||
Net cash provided by financing activities
|
921,982
|
2,184,608
|
||||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
143,529
|
(211,383
|
)
|
|||||
CASH DIFFERENCES DUE TO EXCHANGE RATE CHANGES
|
(429,371
|
)
|
(55,050
|
)
|
||||
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD
|
10,608,420
|
11,291,784
|
||||||
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
|
$
|
10,322,578
|
$
|
11,025,351
|
||||
SUPPLEMENTARY CASH FLOW INFORMATION:
|
||||||||
Interest paid during the period
|
$
|
574,547
|
$
|
746,681
|
||||
Taxes paid on income during the period
|
111,441
|
594,652
|
September 30, 2016
|
December 31, 2015
|
|||||||
|
(Unaudited)
|
|||||||
ASSETS
|
||||||||
Current Assets
|
$
|
40,000
|
$
|
–
|
||||
Property and equipment, net
|
262,317
|
55,032
|
||||||
Long-term assets
|
45,640
|
13,269
|
||||||
Total assets
|
$
|
347,957
|
$
|
68,301
|
||||
LIABILITIES
|
||||||||
Other accounts payable and accrued expenses
|
$
|
524,052
|
$
|
–
|
||||
Long term liabilities
|
55,678
|
19,295
|
||||||
Total liabilities
|
$
|
579,730
|
$
|
19,295
|
|
September 30, 2016
|
December 31, 2015
|
||||||
|
(Unaudited)
|
|||||||
Raw and packaging materials
|
$
|
9,255,796
|
$
|
8,184,476
|
||||
Work in progress
|
665,412
|
760,585
|
||||||
Finished products
|
648,534
|
662,775
|
||||||
Total:
|
$
|
10,569,742
|
$
|
9,607,836
|
|
Training and
Simulation
Division
|
Power Systems
Division
|
Corporate
Expenses
|
Total
Company
|
||||||||||||
Nine Months ended September 30, 2016
|
||||||||||||||||
Revenues from outside customers
|
$
|
36,519,124
|
$
|
34,967,354
|
$
|
–
|
$
|
71,486,478
|
||||||||
Depreciation, amortization and impairment expenses
(1)
|
(825,178
|
)
|
(2,649,545
|
)
|
(12,809
|
)
|
(3,487,532
|
)
|
||||||||
Direct expenses
(2)
|
(29,218,054
|
)
|
(32,217,155
|
)
|
(4,556,134
|
)
|
(65,991,343
|
)
|
||||||||
Segment operating income (loss)
|
$
|
6,475,892
|
$
|
100,654
|
$
|
(4,568,943
|
)
|
$
|
2,007,603
|
|||||||
Financial expense
|
(29,593
|
)
|
(58,858
|
)
|
(680,877
|
)
|
(769,328
|
)
|
||||||||
Income tax benefit (expense)
|
51,285
|
(127,632
|
)
|
(607,925
|
)
|
(684,272
|
)
|
|||||||||
Income (loss) from continuing operations
|
$
|
6,497,584
|
$
|
(85,836
|
)
|
$
|
(5,857,745
|
)
|
$
|
554,003
|
||||||
Segment assets
(3)
|
$
|
46,650,797
|
$
|
61,131,101
|
$
|
8,681,031
|
$
|
116,462,929
|
||||||||
Additions to long-lived assets
|
$
|
236,866
|
$
|
668,854
|
$
|
–
|
$
|
905,720
|
||||||||
Nine Months ended September 30, 2015
|
||||||||||||||||
Revenues from outside customers
|
$
|
40,160,933
|
$
|
28,999,448
|
$
|
–
|
$
|
69,160,381
|
||||||||
Depreciation, amortization and impairment expenses
(1)
|
(640,842
|
)
|
(3,002,255
|
)
|
(19,323
|
)
|
(3,662,420
|
)
|
||||||||
Direct expenses
(2)
|
(32,671,082
|
)
|
(30,334,284
|
)
|
(3,457,931
|
)
|
(66,463,297
|
)
|
||||||||
Segment operating income (loss)
|
$
|
6,849,009
|
$
|
(4,337,091
|
)
|
$
|
(3,477,254
|
)
|
$
|
(965,336
|
)
|
|||||
Financial income (expense)
|
(42,851
|
)
|
33,955
|
(878,875
|
)
|
(887,771
|
)
|
|||||||||
Income tax expense
|
(200,425
|
)
|
–
|
(699,204
|
)
|
(899,629
|
)
|
|||||||||
Income (loss) from continuing operations
|
$
|
6,605,733
|
$
|
(4,303,136
|
)
|
$
|
(5,055,333
|
)
|
$
|
(2,752,736
|
)
|
|||||
Segment assets
(3)(4)
|
$
|
58,050,229
|
$
|
57,992,723
|
$
|
386,112
|
$
|
116,429,064
|
||||||||
Additions to long-lived assets
|
$
|
891,849
|
$
|
785,321
|
$
|
4,502
|
$
|
1,681,672
|
Three months ended September 30, 2016
|
||||||||||||||||
Revenues from outside customers
|
$
|
11,871,987
|
$
|
12,428,133
|
$
|
–
|
$
|
24,300,120
|
||||||||
Depreciation, amortization and impairment expenses
(1)
|
(276,151
|
)
|
(874,163
|
)
|
(2,552
|
)
|
(1,152,866
|
)
|
||||||||
Direct expenses
(2)
|
(8,795,338
|
)
|
(11,451,439
|
)
|
(1,065,771
|
)
|
(21,312,548
|
)
|
||||||||
Segment operating income (loss)
|
$
|
2,800,498
|
$
|
102,531
|
$
|
(1,068,323
|
)
|
$
|
1,834,706
|
|||||||
Financial expense
|
(14,782
|
)
|
(23,830
|
)
|
(188,862
|
)
|
(227,474
|
)
|
||||||||
Income tax benefit (expense)
|
144,915
|
(18,271
|
)
|
(228,636
|
)
|
(101,992
|
)
|
|||||||||
Income (loss) from continuing operations
|
$
|
2,930,631
|
$
|
60,430
|
$
|
(1,485,821
|
)
|
$
|
1,505,240
|
|||||||
Three months ended September 30, 2015
|
||||||||||||||||
Revenues from outside customers
|
$
|
13,838,250
|
$
|
9,451,198
|
$
|
–
|
$
|
23,289,448
|
||||||||
Depreciation, amortization and impairment expenses
(1)
|
(225,820
|
)
|
(947,199
|
)
|
(6,917
|
)
|
(1,179,936
|
)
|
||||||||
Direct expenses
(2)
|
(10,642,181
|
)
|
(9,916,151
|
)
|
(1,299,705
|
)
|
(21,858,037
|
)
|
||||||||
Segment operating income (loss)
|
$
|
2,970,249
|
$
|
(1,412,152
|
)
|
$
|
(1,306,622
|
)
|
$
|
251,475
|
||||||
Financial income (expense)
|
(18,010
|
)
|
19,761
|
(318,517
|
)
|
(316,766
|
)
|
|||||||||
Income tax expense
|
(21,949
|
)
|
–
|
(267,956
|
)
|
(289,905
|
)
|
|||||||||
Income (loss) from continuing operations
|
$
|
2,930,290
|
$
|
(1,392,391
|
)
|
$
|
(1,893,095
|
)
|
$
|
(355,196
|
)
|
(1)
|
Includes depreciation of property and equipment and amortization expenses of intangible assets.
|
(2)
|
Including,
inter alia
, sales and marketing, general and administrative.
|
(3)
|
Out of those amounts, goodwill in the Company’s Training and Simulation and Power Systems Divisions totaled $24,435,641 and $21,191,580, respectively, as of September 30, 2016 and $24,435,641 and $20,935,609, respectively, as of September 30, 2015.
|
(4)
|
Includes segment assets from continuing operations.
|
|
|
Nine Months ended September 30,
|
|
|||||
Type of Revenue
|
|
2016
|
|
|
2015
|
|
||
Sale of products
|
|
|
95.3
|
%
|
|
|
93.5
|
%
|
Maintenance and support agreements
|
|
|
4.4
|
%
|
|
|
5.5
|
%
|
Long term research and development contracts
|
|
|
0.3
|
%
|
|
|
1.0
|
%
|
Total
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
Exhibit Number
|
|
Description
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
32.2
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
AROTECH CORPORATION
|
|
|
|
|
|
|
By:
|
/s/ Steven Esses
|
|
|
|
Name:
|
Steven Esses
|
|
|
Title:
|
President and CEO
|
|
|
|
(Principal Executive Officer)
|
|
By:
|
/s/ Thomas J. Paup
|
|
|
|
Name:
|
Thomas J. Paup
|
|
|
Title:
|
Senior Vice President – Finance and CFO
|
|
|
|
(Principal Financial Officer)
|
1 Year Arotech Chart |
1 Month Arotech Chart |
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