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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
|
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
June 30, 2017
.
|
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)
|
Large accelerated filer:
£
|
Accelerated filer:
T
|
Non-accelerated filer:
£
(Do not check if a smaller reporting company)
|
Smaller reporting company:
£
|
Emerging growth company:
£
|
|
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
|
|
|
|
3
|
|
|
3
|
|
|
5
|
|
|
6
|
|
|
8
|
|
|
14
|
|
|
19
|
|
|
19
|
|
|
|
|
PART II - OTHER INFORMATION
|
|
|
|
20
|
|
|
|
|
|
21
|
|
June 30,
2017
|
December 31,
2016
|
||||||
|
(Unaudited)
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$
|
5,099,402
|
$
|
7,130,983
|
||||
Restricted collateral deposits
|
295,832
|
268,980
|
||||||
Trade receivables
|
15,431,615
|
16,821,737
|
||||||
Unbilled receivables
|
10,053,686
|
10,981,577
|
||||||
Other accounts receivable and prepaid expenses
|
2,701,332
|
2,156,896
|
||||||
Inventories
|
10,709,647
|
10,318,021
|
||||||
Total
current assets
|
44,291,514
|
47,678,194
|
||||||
LONG TERM ASSETS:
|
||||||||
Contractual and Israeli statutory severance pay fund
|
3,500,109
|
3,177,238
|
||||||
Other long term receivables
|
108,374
|
56,662
|
||||||
Property and equipment, net
|
8,335,773
|
5,915,240
|
||||||
Other intangible assets, net
|
5,732,060
|
6,823,346
|
||||||
Goodwill
|
46,083,315
|
45,489,517
|
||||||
Long term assets of discontinued operations
|
270,139
|
270,139
|
||||||
Total long term assets
|
64,029,770
|
61,732,142
|
||||||
Total assets
|
$
|
108,321,284
|
$
|
109,410,336
|
June 30,
2017
|
December 31,
2016
|
|||||||
(Unaudited)
|
||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Trade payables
|
$
|
4,441,883
|
$
|
4,362,804
|
||||
Other accounts payable and accrued expenses
|
4,778,372
|
5,597,558
|
||||||
Current portion of long term debt
|
2,252,741
|
1,828,840
|
||||||
Short term bank credit
|
3,830,875
|
2,973,032
|
||||||
Severance payable
|
–
|
2,577,472
|
||||||
Deferred revenues
|
4,945,282
|
6,421,271
|
||||||
Total current liabilities
|
20,249,153
|
23,760,977
|
||||||
LONG TERM LIABILITIES:
|
||||||||
Contractual and accrued Israeli statutory severance pay
|
4,441,206
|
3,891,710
|
||||||
Long term portion of debt
|
9,706,879
|
8,703,736
|
||||||
Deferred income tax liability
|
8,325,397
|
7,868,125
|
||||||
Other long term liabilities
|
97,437
|
100,742
|
||||||
Total long-term liabilities
|
22,570,919
|
20,564,313
|
||||||
Total liabilities
|
42,820,072
|
44,325,290
|
||||||
STOCKHOLDERS’ EQUITY:
|
||||||||
Share capital –
|
||||||||
Common stock – $0.01 par value each;
Authorized: 50,000,000 shares as of June 30, 2017 and December 31, 2016;
Issued and outstanding: 26,427,586 shares and 26,438,234 shares as of
June 30, 2017 and December 31, 2016, respectively
|
264,276
|
264,382
|
||||||
Preferred shares – $0.01 par value each;
Authorized: 1,000,000 shares as of June 30, 2017 and December 31, 2016;
No shares issued or outstanding as of June 30, 2017 and December 31, 2016
|
–
|
–
|
||||||
Additional paid-in capital
|
250,598,045
|
250,405,012
|
||||||
Accumulated deficit
|
(186,765,828
|
)
|
(185,402,893
|
)
|
||||
Notes receivable from stockholders
|
(908,054
|
)
|
(908,054
|
)
|
||||
Accumulated other comprehensive income
|
2,312,773
|
726,599
|
||||||
Total stockholders’ equity
|
65,501,212
|
65,085,046
|
||||||
Total liabilities and stockholders’ equity
|
$
|
108,321,284
|
$
|
109,410,336
|
|
Six months ended June 30,
|
Three months ended June 30,
|
||||||||||||||
|
2017
|
2016
|
2017
|
2016
|
||||||||||||
Revenues
|
$
|
43,796,138
|
$
|
47,186,358
|
$
|
21,448,693
|
$
|
21,779,877
|
||||||||
|
||||||||||||||||
Cost of revenues
|
31,333,994
|
32,496,895
|
15,466,496
|
14,784,721
|
||||||||||||
Research and development expenses
|
1,759,850
|
1,615,117
|
764,416
|
779,035
|
||||||||||||
Selling and marketing expenses
|
3,967,444
|
3,454,454
|
1,971,477
|
1,799,588
|
||||||||||||
General and administrative expenses
|
5,856,588
|
8,026,787
|
2,839,370
|
3,734,374
|
||||||||||||
Amortization of intangible assets
|
1,219,653
|
1,466,640
|
521,660
|
698,637
|
||||||||||||
Total operating costs and expenses
|
44,137,529
|
47,059,893
|
21,563,419
|
21,796,355
|
||||||||||||
|
||||||||||||||||
Operating income (loss)
|
(341,391
|
)
|
126,465
|
(114,726
|
)
|
(16,478
|
)
|
|||||||||
|
||||||||||||||||
Other income, net
|
10,260
|
46,432
|
(1,894
|
)
|
20,395
|
|||||||||||
Financial expense, net
|
(549,044
|
)
|
(541,854
|
)
|
(215,187
|
)
|
(204,196
|
)
|
||||||||
Total other expense
|
(538,784
|
)
|
(495,422
|
)
|
(217,081
|
)
|
(183,801
|
)
|
||||||||
Loss from continuing operations before income tax expense
|
(880,175
|
)
|
(368,957
|
)
|
(331,807
|
)
|
(200,279
|
)
|
||||||||
|
||||||||||||||||
Income tax expense
|
482,760
|
582,280
|
262,820
|
368,827
|
||||||||||||
Loss from continuing operations
|
(1,362,935
|
)
|
(951,237
|
)
|
(594,627
|
)
|
(569,106
|
)
|
||||||||
Loss from discontinued operations
|
–
|
(492,485
|
)
|
–
|
(230,839
|
)
|
||||||||||
Net loss
|
(1,362,935
|
)
|
(1,443,722
|
)
|
(594,627
|
)
|
(799,945
|
)
|
||||||||
|
||||||||||||||||
Other comprehensive income (loss), net of income tax:
|
||||||||||||||||
Foreign currency translation adjustment
|
1,586,174
|
62,055
|
671,142
|
(298,043
|
)
|
|||||||||||
Comprehensive income (loss)
|
$
|
223,239
|
$
|
(1,381,667
|
)
|
$
|
76,515
|
$
|
(1,097,988
|
)
|
||||||
|
||||||||||||||||
Loss per share of common stock:
|
||||||||||||||||
Basic – continuing operations
|
$
|
(0.05
|
)
|
$
|
(0.04
|
)
|
$
|
(0.02
|
)
|
$
|
(0.02
|
)
|
||||
Basic – discontinued operations
|
$
|
–
|
$
|
(0.02
|
)
|
$
|
–
|
$
|
(0.01
|
)
|
||||||
Basic net loss per share
|
$
|
(0.05
|
)
|
$
|
(0.06
|
)
|
$
|
(0.02
|
)
|
$
|
(0.03
|
)
|
||||
|
||||||||||||||||
Diluted – continuing operations
|
$
|
(0.05
|
)
|
$
|
(0.04
|
)
|
$
|
(0.02
|
)
|
$
|
(0.02
|
)
|
||||
Diluted – discontinued operations
|
$
|
–
|
$
|
(0.02
|
)
|
$
|
–
|
$
|
(0.01
|
)
|
||||||
Diluted net loss per share
|
$
|
(0.05
|
)
|
$
|
(0.06
|
)
|
$
|
(0.02
|
)
|
$
|
(0.03
|
)
|
||||
|
||||||||||||||||
Weighted average number of shares used in computing basic net loss per share
|
26,193,509
|
25,365,756
|
26,216,775
|
25,383,440
|
||||||||||||
Weighted average number of shares used in computing diluted net loss per share
|
26,193,509
|
25,365,756
|
26,216,775
|
25,383,440
|
Six months ended June 30,
|
||||||||
2017
|
2016
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net loss
|
$
|
(1,362,935
|
)
|
$
|
(1,443,722
|
)
|
||
Adjustments required to reconcile net loss to net cash provided by (used in) operating activities:
|
||||||||
Depreciation
|
862,555
|
868,026
|
||||||
Amortization of intangible assets
|
1,219,653
|
1,466,640
|
||||||
Stock based compensation
|
192,926
|
648,487
|
||||||
Deferred tax provision
|
457,272
|
379,289
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Trade receivables
|
1,922,996
|
1,279,533
|
||||||
Unbilled receivables
|
954,274
|
4,151,347
|
||||||
Other accounts receivable and prepaid expenses
|
(506,040
|
)
|
(1,064,293
|
)
|
||||
Inventories
|
20,873
|
(18,417
|
)
|
|||||
Severance pay, net
|
(1,954,264
|
)
|
112,116
|
|||||
Trade payables
|
194,400
|
(2,820,561
|
)
|
|||||
Other accounts payable and accrued expenses
|
(676,302
|
)
|
(163,487
|
)
|
||||
Deferred revenues
|
(1,475,989
|
)
|
(1,133,853
|
)
|
||||
Net cash provided by (used in) operating activities
|
(150,581
|
)
|
2,261,105
|
|||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Decrease in restricted collateral deposits
|
–
|
25,813
|
||||||
Purchase of property and equipment
|
(3,155,303
|
)
|
(803,444
|
)
|
||||
Additions to capitalized software
|
(128,367
|
)
|
(27,951
|
)
|
||||
Net cash used in investing activities
|
$
|
(3,283,670
|
)
|
$
|
(805,582
|
)
|
Six months ended June 30,
|
||||||||
2017
|
2016
|
|||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Proceeds from long term debt
|
$
|
2,150,000
|
$
|
11,000,000
|
||||
Repayment of long term debt
|
(701,211
|
)
|
(16,175,141
|
)
|
||||
Proceeds from the issuance of common stock
|
–
|
2,952,999
|
||||||
Change in short term bank credit
|
857,843
|
266,083
|
||||||
Net cash provided by (used in) financing activities
|
2,306,632
|
(1,956,059
|
)
|
|||||
DECREASE IN CASH AND CASH EQUIVALENTS
|
(1,127,619
|
)
|
(500,536
|
)
|
||||
CASH DIFFERENCES DUE TO EXCHANGE RATE DIFFERENCES
|
(903,962
|
)
|
(211,332
|
)
|
||||
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD
|
7,130,983
|
10,608,420
|
||||||
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
|
$
|
5,099,402
|
$
|
9,896,552
|
||||
SUPPLEMENTARY CASH FLOW INFORMATION:
|
||||||||
Interest paid during the period
|
$
|
339,058
|
$
|
381,609
|
||||
Taxes paid on income during the period
|
$
|
112,822
|
$
|
60,331
|
|
June 30, 2017
|
December 31, 2016
|
||||||
|
(Unaudited)
|
|||||||
Raw and packaging materials
|
$
|
8,951,309
|
$
|
8,512,006
|
||||
Work in progress
|
1,175,420
|
917,582
|
||||||
Finished products
|
582,918
|
888,433
|
||||||
Total:
|
$
|
10,709,647
|
$
|
10,318,021
|
|
Training and
Simulation
Division
|
Power Systems
Division
|
Corporate
Expenses
|
Total
Company
|
||||||||||||
Six months ended June 30, 2017
|
||||||||||||||||
Revenues from outside customers
|
$
|
20,543,003
|
$
|
23,253,135
|
$
|
–
|
$
|
43,796,138
|
||||||||
Depreciation, amortization and impairment expenses
(1)
|
(548,125
|
)
|
(1,531,811
|
)
|
(2,272
|
)
|
(2,082,208
|
)
|
||||||||
Direct expenses
(2)
|
(18,050,604
|
)
|
(22,155,430
|
)
|
(1,839,027
|
)
|
(42,045,061
|
)
|
||||||||
Segment operating income (loss)
|
$
|
1,944,274
|
$
|
(434,106
|
)
|
$
|
(1,841,299
|
)
|
$
|
(331,131
|
)
|
|||||
Financial income (expense)
|
(37,270
|
)
|
(177,748
|
)
|
(334,026
|
)
|
(549,044
|
)
|
||||||||
Income tax expense
|
(70,000
|
)
|
44,512
|
(457,272
|
)
|
(482,760
|
)
|
|||||||||
Income (loss) from continuing operations
|
$
|
1,837,004
|
$
|
(567,342
|
)
|
$
|
(2,632,597
|
)
|
$
|
(1,362,935
|
)
|
|||||
Segment assets
(3) (4)
|
$
|
45,133,954
|
$
|
59,898,807
|
$
|
3,288,523
|
$
|
108,321,284
|
||||||||
Additions to long-lived assets
|
$
|
2,356,724
|
$
|
926,946
|
$
|
–
|
$
|
3,283,670
|
||||||||
Six months ended June 30, 2016
|
||||||||||||||||
Revenues from outside customers
|
$
|
24,647,137
|
$
|
22,539,221
|
$
|
–
|
$
|
47,186,358
|
||||||||
Depreciation, amortization and impairment expenses
(1)
|
(549,027
|
)
|
(1,775,382
|
)
|
(10,257
|
)
|
(2,334,666
|
)
|
||||||||
Direct expenses
(2)
|
(20,422,716
|
)
|
(20,765,715
|
)
|
(3,490,364
|
)
|
(44,678,795
|
)
|
||||||||
Segment operating income (loss)
|
$
|
3,675,394
|
$
|
(1,876
|
)
|
$
|
(3,500,621
|
)
|
$
|
172,897
|
||||||
Financial income (expense)
|
(14,811
|
)
|
(35,027
|
)
|
(492,016
|
)
|
(541,854
|
)
|
||||||||
Income tax expense
|
(93,630
|
)
|
(109,361
|
)
|
(379,289
|
)
|
(582,280
|
)
|
||||||||
Income (loss) from continuing operations
|
$
|
3,566,953
|
$
|
(146,264
|
)
|
$
|
(4,371,926
|
)
|
$
|
(951,237
|
)
|
|||||
Segment assets
(3) (4)
|
$
|
43,752,823
|
$
|
59,158,134
|
$
|
8,450,523
|
$
|
111,361,480
|
||||||||
Additions to long-lived assets
|
$
|
165,066
|
$
|
666,329
|
$
|
–
|
$
|
831,395
|
||||||||
Three months ended June 30, 2017
|
||||||||||||||||
Revenues from outside customers
|
$
|
10,191,814
|
$
|
11,256,879
|
$
|
–
|
$
|
21,448,693
|
||||||||
Depreciation, amortization and impairment expenses
(1)
|
(277,461
|
)
|
(686,100
|
)
|
(1,184
|
)
|
(964,745
|
)
|
||||||||
Direct expenses
(2)
|
(8,672,907
|
)
|
(11,064,098
|
)
|
(863,563
|
)
|
(20,600,568
|
)
|
||||||||
Segment operating income (loss)
|
$
|
1,241,446
|
$
|
(493,319
|
)
|
$
|
(864,747
|
)
|
$
|
(116,620
|
)
|
|||||
Financial income (expense)
|
(24,602
|
)
|
(27,601
|
)
|
(162,984
|
)
|
(215,187
|
)
|
||||||||
Income tax expense
|
(35,000
|
)
|
816
|
(228,636
|
)
|
(262,820
|
)
|
|||||||||
Income (loss) from continuing operations
|
$
|
1,181,844
|
$
|
(520,104
|
)
|
$
|
(1,256,367
|
)
|
$
|
(594,627
|
)
|
|||||
Three months ended June 30, 2016
|
||||||||||||||||
Revenues from outside customers
|
$
|
11,346,295
|
$
|
10,433,582
|
$
|
–
|
$
|
21,779,877
|
||||||||
Depreciation, amortization and impairment expenses
(1)
|
(276,367
|
)
|
(874,491
|
)
|
(8,770
|
)
|
(1,159,628
|
)
|
||||||||
Direct expenses
(2)
|
(9,494,982
|
)
|
(9,664,106
|
)
|
(1,457,244
|
)
|
(20,616,332
|
)
|
||||||||
Segment operating income (loss)
|
$
|
1,574,946
|
$
|
(105,015
|
)
|
$
|
(1,466,014
|
)
|
$
|
3,917
|
||||||
Financial income (expense)
|
(3,750
|
)
|
(5,973
|
)
|
(194,473
|
)
|
(204,196
|
)
|
||||||||
Income tax expense
|
(30,830
|
)
|
(109,361
|
)
|
(228,636
|
)
|
(368,827
|
)
|
||||||||
Income (loss) from continuing operations
|
$
|
1,540,366
|
$
|
(220,349
|
)
|
$
|
(1,889,123
|
)
|
$
|
(569,106
|
)
|
(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 $21,647,674, respectively, as of June 30, 2017 and $24,435,641 and $21,052,329, respectively, as of June 30, 2016.
|
(4) |
Cash balances previously reporting in the Training and Simulation Division in 2016 are now reported in Corporate in 2017.
|
|
|
Six months ended June 30,
|
|
|||||
Type of Revenue
|
|
2017
|
|
|
2016
|
|
||
Sale of products
|
|
|
96.2
|
%
|
|
|
94.7
|
%
|
Maintenance and support agreements
|
|
|
3.8
|
%
|
|
|
4.8
|
%
|
Long term research and development contracts
|
|
|
–
|
|
|
0.5
|
%
|
|
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/ Dean M. Krutty
|
|
|
|
|
Name:
|
Dean M. Krutty
|
|
|
|
Title:
|
Executive Vice President and acting 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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