Arotech (ARTX) 10-Q 11 Aug 15 2015 Q2 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Aug. 06, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	AROTECH CORPORATION
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		24,697,335
Amendment Flag	false
Entity Central Index Key	916,529
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Accelerated Filer
Entity Well-known Seasoned Issuer	No
Document Period End Date	Jun. 30, 2015
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q2

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Jun. 30, 2015	Dec. 31, 2014
CURRENT ASSETS:
Cash and cash equivalents	$ 12,084,458	$ 11,291,784
Restricted collateral deposits	239,303	236,428
Trade receivables	14,788,292	17,595,811
Unbilled receivables	12,632,064	15,937,060
Other accounts receivable and prepaid expenses	1,985,366	1,155,548
Inventories	9,926,450	9,811,783
Total current assets	51,655,933	56,028,414
LONG TERM ASSETS:
Severance pay fund	5,282,627	4,961,918
Other long term receivables	24,229	23,482
Property and equipment, net	6,593,235	6,462,949
Other intangible assets, net	10,274,098	11,840,365
Goodwill	45,609,459	45,422,219
Total long term assets	67,783,648	68,710,933
Total assets	119,439,581	124,739,347
CURRENT LIABILITIES:
Trade payables	4,523,321	6,772,082
Other accounts payable and accrued expenses	5,327,268	9,105,214
Current portion of long term debt	4,358,554	4,380,730
Short term bank credit	6,460,000	33,238
Deferred revenues	5,811,802	7,826,178
Total current liabilities	26,480,945	28,117,442
LONG TERM LIABILITIES:
Contractual and accrued Israeli statutory severance pay	7,465,656	7,051,630
Long term portion of debt	14,514,885	16,934,360
Deferred income tax liability	6,416,271	6,117,021
Other long term liabilities	214,081	163,446
Total long-term liabilities	28,610,893	30,266,457
Total liabilities	55,091,838	58,383,899
Share capital –
Common stock – $0.01 par value each; Authorized: 50,000,000 shares as of June 30, 2015 and December 31, 2014; Issued and outstanding: 24,697,335 shares and 24,533,121 shares as of June 30, 2015 and December 31, 2014, respectively	246,974	245,331
Preferred shares – $0.01 par value each; Authorized: 1,000,000 shares as of June 30, 2015 and December 31, 2014; No shares issued or outstanding as of June 30, 2015 and December 31, 2014	0	0
Additional paid-in capital	246,303,695	245,970,742
Accumulated deficit	(182,335,258)	(179,609,611)
Notes receivable from stockholders	(908,054)	(908,054)
Accumulated other comprehensive income	1,040,386	657,040
Total stockholders’ equity	64,347,743	66,355,448
Total liabilities and stockholders’ equity	$ 119,439,581	$ 124,739,347

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares	Jun. 30, 2015	Dec. 31, 2014
Common Stock - par value (in Dollars per share)	$ 0.01	$ 0.01
Common stock - authorized	50,000,000	50,000,000
Common stock- shares issued	24,697,335	24,533,121
Common stock - shares outstanding	24,697,335	24,533,121
Preferred shares - par value (in Dollars per share)	$ 0.01	$ 0.01
Preferred shares - shares authorized	1,000,000	1,000,000
Preferred shares - shares issued	0	0
Preferred shares -shares outstanding	0	0

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Revenues	$ 21,644,225	$ 27,829,186	$ 45,870,933	$ 50,211,986
Cost of revenues	15,426,613	17,863,150	32,750,960	32,906,461
Research and development expenses	1,250,550	936,445	2,344,814	1,931,958
Selling and marketing expenses	1,397,374	1,545,785	2,622,790	2,977,553
General and administrative expenses	4,527,476	4,267,593	9,076,501	7,806,266
Amortization of intangible assets	705,494	887,064	1,566,267	961,183
Total operating costs and expenses	23,307,507	25,500,037	48,361,332	46,583,421
Operating income (loss)	(1,663,282)	2,329,149	(2,490,399)	3,628,565
Other income	34,052	197,308	945,481	229,421
Financial expense, net	(243,397)	(563,647)	(571,005)	(682,648)
Total other income (expense)	(209,345)	(366,339)	374,476	(453,227)
Income (loss) before income tax expense	(1,872,627)	1,962,810	(2,115,923)	3,175,338
Income tax expense	370,343	180,125	609,724	378,561
Net income (loss)	(2,242,970)	1,782,685	(2,725,647)	2,796,777
Other comprehensive income, net of income tax:
Foreign currency translation adjustment	628,860	147,192	383,346	101,109
Comprehensive income (loss)	$ (1,614,110)	$ 1,929,877	$ (2,342,301)	$ 2,897,886
Basic net income (loss) per share (in Dollars per share)	$ (0.10)	$ 0.09	$ (0.12)	$ 0.14
Diluted net income (loss) per share (in Dollars per share)	$ (0.10)	$ 0.09	$ (0.12)	$ 0.14
Weighted average number of shares used in computing basic net income (loss) per share (in Shares)	23,599,230	20,311,830	23,451,687	19,892,242
Weighted average number of shares used in computing diluted net income (loss) per share (in Shares)	23,599,230	20,914,570	23,451,687	20,494,982

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ (2,725,647)	$ 2,796,777
Adjustments required to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation	916,218	694,342
Amortization of intangible assets	1,566,267	961,183
Loss on disposal of assets	57,840	0
Capital gain on sale of property and equipment	(895,000)	0
Stock based compensation	334,595	257,631
Deferred tax provision	299,250	298,544
Changes in operating assets and liabilities:
Trade receivables	2,807,519	2,142,182
Unbilled receivables	3,304,996	(2,564,763)
Other accounts receivable and prepaid expenses	(830,565)	(492,154)
Inventories	(114,667)	1,061,142
Severance pay, net	93,317	250,379
Trade payables	(2,248,761)	(3,694,029)
Other accounts payable and accrued expenses	(3,727,310)	(992,180)
Deferred revenues	(2,014,376)	(1,455,223)
Net cash used in operating activities	(3,176,324)	(736,169)
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase (decrease) in restricted collateral deposits	(2,875)	249,745
Purchase of property and equipment	(1,104,344)	(907,879)
Proceeds from sale of property and equipment	895,000	0
Acquisition of UEC	0	(29,113,655)
Additions to capitalized software	0	(61,710)
Net cash used in investing activities	(212,219)	(29,833,499)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long term debt	(2,441,651)	(642,804)
Change in short term bank credit	6,426,762	3,825,614
Proceeds from long term debt	0	22,500,000
Net cash provided by financing activities	3,985,111	25,682,810
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	596,568	(4,886,858)
CASH DIFFERENCES DUE TO EXCHANGE RATE CHANGES	196,106	37,863
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD	11,291,784	5,821,325
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD	12,084,458	972,330
SUPPLEMENTARY INFORMATION ON NON-CASH TRANSACTIONS:
Common stock issued in acquisition of UEC	0	4,216,000
SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid during the period	448,128	265,084
Taxes paid on income during the period	$ 483,147	$ 51,098

NOTE 1_ BASIS OF PRESENTATION

NOTE 1: BASIS OF PRESENTATION	6 Months Ended
	Jun. 30, 2015
Accounting Policies [Abstract]
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block]	NOTE 1: BASIS OF PRESENTATION a. Company: Arotech Corporation (“Arotech”) and its wholly-owned subsidiaries (the “Company”) provide defense and security products for the military, law enforcement, emergency services and homeland security markets, including advanced zinc-air and lithium batteries and chargers, and multimedia interactive simulators/trainers. The Company operates primarily through its wholly-owned subsidiaries FAAC Incorporated, a Michigan corporation located in Ann Arbor, Michigan (Training and Simulation Division) with locations in Royal Oak, Michigan and Orlando, Florida; Epsilor-Electric Fuel Ltd. (“Epsilor-EFL”), an Israeli corporation located in Beit Shemesh, Israel (between Jerusalem and Tel-Aviv) and in Dimona, Israel (in Israel’s Negev desert area) (Power Systems Division); UEC Electronics, LLC (“UEC”), a South Carolina limited liability company located in Hanahan, South Carolina (Power Systems Division); and Electric Fuel Battery Corporation (“EFB”), a Delaware corporation that has, as of April 30, 2015, been relocated from Auburn, Alabama to UEC’s facilities in Hanahan, South Carolina (Power Systems Division). b. Basis of presentation: The accompanying interim condensed consolidated financial statements have been prepared by Arotech Corporation in accordance with generally accepted accounting principles for interim financial information, with the instructions to Form 10-Q and with Article 10 of Regulation S-X, and include the accounts of Arotech Corporation and its subsidiaries. Certain information and footnote disclosures, normally included in complete financial statements prepared in accordance with generally accepted accounting principles, have been condensed or omitted. In the opinion of the Company, the unaudited financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of its financial position at June 30, 2015, its operating results for the six- and three month periods ended June 30, 2015 and 2014, and its cash flows for the six month periods ended June 30, 2015 and 2014. The results of operations for the six and three months ended June 30, 2015 are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year ending December 31, 2015. The balance sheet at December 31, 2014 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. c. Reclassification: Certain comparative data in these financial statements may have been reclassified to conform to the current year’s presentation. d. Contingencies The Company is from time to time involved in legal proceedings and other claims. The Company is required to assess the likelihood of any adverse judgments or outcomes to these matters, as well as potential ranges of probable losses. The Company has not made any material changes in the accounting methodology used to establish its self-insured liabilities during the past three fiscal years. A determination of the amount of reserves required, if any, for any contingencies is made after careful analysis of each individual issue. The required reserves may change due to future developments in each matter or changes in approach, such as a change in the settlement strategy in dealing with any contingencies, which may result in higher net loss. e. Certain relationships and related transactions Officer loans Consulting agreement with Sampen Corporation Pursuant to the terms of the Company’s amended and restated agreement with Sampen, Sampen provides one of its employees to the Company for such employee to serve as the Company’s President and Chief Executive Officer. The Company pays Sampen $8,960 per month, plus an annual bonus, on a sliding scale, in an amount equal to a minimum of 25% of Sampen’s annual base compensation then in effect if the results the Company actually attains for the year in question are 100% or more of the amount the Company budgeted at the beginning of the year, up to a maximum of 75% of Sampen’s annual base compensation then in effect if the results the Company actually attains for the year in question are 110% or more of the amount the Company budgeted at the beginning of the year. The Company also pays Sampen, to cover the cost of the Company’s use of Sampen’s offices as an ancillary New York office and the attendant expenses and insurance costs, an amount equal to 16% of each monthly payment of base compensation. f. Accounting for stock-based compensation: For the six months ended June 30, 2015 and 2014 the compensation expense recorded related to restricted stock units and restricted shares was $335,000 and $258,000, respectively. The remaining total compensation cost related to share awards not yet recognized in the statements of comprehensive income as of June 30, 2015 was $558,000. The weighted average period over which this compensation cost is expected to be recognized is approximately one and one-half years. Income tax expense was not impacted since the Company is in a net operating loss position. There were no new options issued in the first six months of 2015 and there are no outstanding issued options. The Company’s directors received their annual restricted stock grants on April 1, 2015 in accordance with the terms of the directors’ stock compensation plan. g. Anti-dilutive shares for EPS calculation All contingent and non-vested restricted stock and non-vested restricted stock units have been excluded from the calculation of the basic earnings per common share because all such securities do not participate in losses for the periods presented and have been excluded from the calculation of diluted earnings per common share as the effect would be anti-dilutive. The Company has excluded any restricted stock or restricted stock units that will never vest under the current program. The total weighted average number of shares related to the outstanding options and warrants excluded from the calculations of basic and diluted net income per share for the six month periods ended June 30, 2015 and 2014 were 1,015,654 and 602,740, respectively.

NOTE 2_ FAIR VALUE MEASUREMENT

NOTE 2: FAIR VALUE MEASUREMENT	6 Months Ended
	Jun. 30, 2015
Fair Value Disclosures [Abstract]
Fair Value Disclosures [Text Block]	NOTE 2: FAIR VALUE MEASUREMENT The carrying value of short term assets and liabilities in the accompanying condensed consolidated balance sheets for cash and cash equivalents, restricted collateral deposits, trade receivables, unbilled receivables, inventories, prepaid and other assets, trade payables, accrued expenses, deferred revenues and other liabilities as of June 30, 2015 and December 31, 2014, approximate fair value because of the short maturity of these instruments. The carrying amounts of long term debt approximates the estimated fair values at June 30, 2015, based upon the Company’s ability to acquire similar debt at similar maturities.

NOTE 3_ INVENTORIES

NOTE 3: INVENTORIES	6 Months Ended
	Jun. 30, 2015
Inventory Disclosure [Abstract]
Inventory Disclosure [Text Block]	NOTE 3: INVENTORIES Inventories are stated at the lower of cost or market value. Cost is determined using the average cost method or the FIFO method. The Company periodically evaluates the quantities on hand relative to current and historical selling prices and historical and projected sales volume. Based on these evaluations, provisions are made in each period to write down inventory to its net realizable value. Inventory write-offs are provided to cover risks arising from slow-moving items, technological obsolescence, excess inventories, and for market prices lower than cost. From December 31, 2014, inventories in the Training and Simulation Division decreased $88,561 and increased $203,228 in the Power Systems Division: June 30, 2015 December 31, 2014 (Unaudited) Raw and packaging materials $ 7,888,557 $ 8,195,623 Work in progress 1,686,056 683,083 Finished products 351,837 933,077 Total: $ 9,926,450 $ 9,811,783

NOTE 4_ SEGMENT INFORMATION

NOTE 4: SEGMENT INFORMATION	6 Months Ended
	Jun. 30, 2015
Segment Reporting [Abstract]
Segment Reporting Disclosure [Text Block]	NOTE 4: SEGMENT INFORMATION a. The Company and its subsidiaries operate primarily in two continuing business segments and follow the requirements of FASB ASC 280-10. Additionally, the two segments are also treated by the Company as reporting units for goodwill impairment testing purposes under FASB ASC 350-20-35. The goodwill amounts associated with each of these reporting units was determined and valued when the specific businesses in the reportable segment were purchased. The Company’s reportable operating segments have been determined in accordance with the Company’s internal management structure, which is organized based on operating activities. The accounting policies of the operating segments are the same as those used by the Company in the preparation of its annual financial statements. The Company evaluates performance based upon two primary factors, one is the segment’s operating income and the other is the segment’s contribution to the Company’s future strategic growth. b. The following is information about reported segment revenues, income (losses) and total assets for the six and three months ended June 30, 2015 and 2014: Training and Simulation Division Power Systems Division Corporate Total Company Six months ended June 30, 2015 Revenues from outside customers $ 26,322,683 19,548,250 – 45,870,933 Depreciation and amortization expense (1) (415,021 ) (2,055,058 ) (12,406 ) (2,482,485 ) Direct expenses (2) (22,028,902 ) (20,746,239 ) (2,158,225 ) (44,933,366 ) Segment net income (loss) $ 3,878,760 (3,253,047 ) (2,170,631 ) (1,544,918 ) Financial income (expense) (24,841 ) 14,194 (560,358 ) (571,005 ) Income tax expense (178,476 ) – (431,248 ) (609,724 ) Net income (loss) $ 3,675,443 (3,238,853 ) (3,162,237 ) (2,725,647 ) Segment assets (3) $ 58,443,856 60,477,131 518,594 119,439,581 Additions to long-lived assets $ 398,114 701,728 4,502 1,104,344 Six months ended June 30, 2014 Revenues from outside customers $ 28,877,453 $ 21,334,533 $ – $ 50,211,986 Depreciation and amortization expense (1) (367,015 ) (1,278,072 ) (10,438 ) (1,655,525 ) Direct expenses (2) (22,739,239 ) (17,736,091 ) (4,223,145 ) (44,698,475 ) Segment net income (loss) $ 5,771,199 $ 2,320,370 $ (4,233,583 ) $ 3,857,986 Financial expense (17,445 ) (12,932 ) (652,271 ) (682,648 ) Income tax expense (65,511 ) (13,800 ) (299,250 ) (378,561 ) Net income (loss) $ 5,688,243 $ 2,293,638 $ (5,185,104 ) $ 2,796,777 Segment assets (3) $ 48,016,363 $ 69,050,430 $ 419,530 $ 117,486,323 Additions to long-lived assets $ 518,571 $ 29,664,064 $ 2,956 $ 30,185,591 Three months ended June 30, 2015 Revenues from outside customers $ 12,884,562 8,759,665 – 21,644,227 Depreciation and amortization expense (1) (207,845 ) (928,470 ) (5,937 ) (1,142,252 ) Direct expenses (2) (10,297,258 ) (10,187,624 ) (1,646,321 ) (22,131,202 ) Segment net income (loss) $ 2,379,459 (2,356,429 ) (1,652,258 ) (1,629,229 ) Financial income (expense) (13,226 ) 38,824 (268,995 ) (243,397 ) Income tax expense (151,220 ) – (219,124 ) (370,344 ) Net income (loss) $ 2,215,013 (2,317,606 ) (2,140,377 ) (2,242,970 ) Three months ended June 30, 2014 Revenues from outside customers $ 13,195,615 $ 14,633,571 $ – $ 27,829,186 Depreciation and amortization expense (1) (187,773 ) (1,085,878 ) (4,001 ) (1,277,652 ) Direct expenses (2) (10,055,402 ) (11,900,786 ) (2,068,889 ) (24,025,077 ) Segment net income (loss) $ 2,952,440 $ 1,646,907 $ (2,072,890 ) $ 2,526,457 Financial income (expense) (10,033 ) 48,787 (602,401 ) (563,647 ) Income tax expense (30,500 ) – (149,625 ) (180,125 ) Net income (loss) $ 2,911,907 $ 1,695,694 $ (2,824,916 ) $ 1,782,685 (1) Includes depreciation of property and equipment and amortization expenses of intangible assets. (2) Including, inter alia (3) Out of those amounts, goodwill in the Company’s Training and Simulation and Power Systems Divisions totaled $24,435,641 and $21,173,818, respectively, as of June 30, 2015 and $24,435,641 and $21,758,040, respectively, as of June 30, 2014.

NOTE 5_ BANK FINANCING

NOTE 5: BANK FINANCING	6 Months Ended
	Jun. 30, 2015
Debt Disclosure [Abstract]
Debt Disclosure [Text Block]	NOTE 5: BANK FINANCING The Company’s FAAC subsidiary has a $15.0 million line of credit (the “Line of Credit”) with Fifth Third Bank (the “Bank”) at a rate of LIBOR plus 3.75%, secured by the assets and receivables of FAAC and by the assets and receivables of the Company and of the Company’s U.S. subsidiaries. Additionally, the Company, UEC and EFB are guarantors of the Line of Credit. On April 1, 2014, pursuant to an Amended and Restated Credit Agreement (the “Amended Credit Agreement”), the parties to the original credit agreement (the “Original Credit Agreement”) agreed to amend the Line of Credit to add two term loans to it: an $18.0 million 61-month senior term loan at a 2014 interest rate of 3.75% over LIBOR, and a $4.5 million 61-month B term loan at a 2014 interest rate of 5.5% over LIBOR. Pursuant to a joinder agreement that took effect upon the Company’s acquisition of UEC (the “Joinder Agreement”), UEC became a party to the Amended Credit Agreement as a co-borrower with FAAC, and provided a guaranty and security substantially identical to that granted by the Company and EFB. The Company, FAAC and EFB also entered into a patent and trademark security agreement with the Bank; upon effectiveness of the Joinder Agreement, UEC executed a substantially identical agreement. Certain covenants contained in the Original Credit Agreement have been modified in the Amended Credit Agreement. Commencing with the fiscal quarter ending September 30, 2014, the Company’s “Fixed Charge Coverage Ratio,” determined on a combined basis with UEC and otherwise computed in the same manner as under the Original Credit Agreement, has been raised to 1.25 to 1 from 1.10 to 1. “Net Advances to Affiliates” as defined in the Original Credit Agreement are now defined with reference to FAAC or UEC, as the case may be, and may not increase by more than $5,500,000 on a combined basis for both borrowers in any calendar year over a “Base Amount” to be determined by mutual agreement of FAAC and the Bank. Effective at the end of the second quarter of 2015, the Bank eliminated the covenant that provided that UEC’s earnings before interest, taxes, depreciation and amortization with certain add-backs (“EBITDA”), may not be less than $4,500,000 for any trailing twelve-month period ending at the end of a fiscal quarter (“Test Period”). In addition, the Company also maintains a ratio of “Combined Funded Indebtedness” (defined as all indebtedness (a) in respect of money borrowed, (b) evidenced by a note, debenture or other like written obligation to pay money, (c) in respect of rent or hire of property under leases or lease arrangements which under GAAP are required to be capitalized or (d) in respect of obligations under conditional sales or other title retention agreements, all as determined on a combined basis for FAAC and UEC less (e) cash held on account with the Bank) to “Combined Adjusted EBITDA” (defined as EBITDA of FAAC and UEC computed on a combined basis) may not exceed (a) 2.25 to 1.0 for the Test Period ending September 30, 2014 or any Test Period ending as of the end of any fiscal quarter thereafter prior to the fiscal quarter ending March 31, 2015 or (b) 2.00 to 1.0 for the Test Period ending March 31, 2015 or any Test Period ending as of the end of any fiscal quarter thereafter. The Company was in compliance with all debt covenants as of June 30, 2015. Pursuant to the requirements of the Amended Credit Agreement, the Company was required to deliver an Interest Rate Swap agreement fixing the interest rate of 1.37% on approximately $9.0 million of the outstanding term loans associated with the acquisition of UEC. Accordingly, in April 2014, the Company entered into an interest rate swap for a notional amount of $9.0 million. The expiration date of this interest rate swap is April 1, 2019. The fair value of the interest rate swap liability is $58,000 at June 30, 2015. The liability is included in accrued expenses and is adjusted through financial expenses.

NOTE 6_ COMMON STOCK REPURCHASE

NOTE 6: COMMON STOCK REPURCHASE PROGRAM	6 Months Ended
	Jun. 30, 2015
Stock Repurchase Disclosure [Abstract]
Stock Repurchase Disclosure [Text Block]	NOTE 6: COMMON STOCK REPURCHASE PROGRAM In February 2009, the Company’s Board of Directors authorized the repurchase in the open market or in privately negotiated transactions of up to $1.0 million of the Company’s common stock. The repurchase program was extended in August 2014 for an additional year and the authorization expanded repurchase up to $2.0 million of the Company’s common stock. Through March 31, 2015, the Company repurchased 738,611 shares for a total of $1,084,060, net of commissions. There were no shares repurchased during the three months ended June 30, 2015. The repurchase program, which expires on August 10, 2016, is subject to management’s discretion.

NOTE 7_ PRO FORMA FINANCIAL INF

NOTE 7: PRO FORMA FINANCIAL INFORMATION	6 Months Ended
	Jun. 30, 2015
Business Combinations [Abstract]
Business Combination Disclosure [Text Block]	NOTE 7: PRO FORMA FINANCIAL INFORMATION In April 2014, the Company entered into a membership interest purchase agreement pursuant to the terms of which the Company purchased all of the outstanding membership interests of UEC from the seller of UEC, a company owned by UEC’s two top managers (the “Acquisition”). UEC develops and manufactures electronic components and subsystems primarily for military, aerospace and industrial customers. The Company’s management considered the purchase of UEC to be an accretive addition to the Power Systems Division. The Acquisition was accounted for under the acquisition method accounting. Accordingly, all assets and liabilities acquired, along with the potential $5.5 million earn out (with an estimated fair value of $4.5 million at the acquisition date) were recorded at their estimated fair market values as of the date of acquisition. The liability for the earn out was recorded in other accounts payable and accrued expenses ($2.2 million) and other long-term liabilities ($2.3 million) and then adjusted in the fourth quarter of 2014 to $2.5 million in accrued expenses and zero in long term liabilities since the 2014 earn-out was paid in April 2015 and the 2015 earn-out is no longer expected to be achieved. The fair value measurements were based on significant inputs that were not observable in the market which are Level 3 inputs in the fair value hierarchy. The results of UEC’s operations have been included in the consolidated financial statements commencing on the date of acquisition. Included in the Company’s Consolidated Statements of Comprehensive Income for the year ended December 31, 2014 were net sales of approximately $27.2 million and income before provision for income taxes of approximately $5.0 million since the April 1, 2014 acquisition of UEC. The total consideration of $37.9 million, after the net working capital adjustment, for the membership interests purchased consisted of (i) cash in the amount of $29,206,245, (ii) 775,000 shares of the Company’s common stock, valued at $4,216,000, and (iii) contingent consideration with an estimated fair value at April 1, 2014 of $4.5 million. It was determined during the first quarter of 2015 that the sellers had earned 100% of the contingent earn-out for 2014 and the sellers were paid $2.5 million in cash in April 2015. Based upon a valuation of tangible and intangible assets acquired, the Company has allocated the cost of the Acquisition to UEC’s net assets as follows (unaudited): Tangible assets acquired: Cash: $ 92,590 Accounts receivable and unbilled revenues 12,513,805 Other current assets 854,776 Property and equipment, net 1,010,321 Intangible assets Customer list 7,400,000 Contracts in place (backlog) 2,100,000 Technology 3,200,000 Covenant not to compete. 400,000 Goodwill (intangibles that did not qualify for separate recognition) 15,105,680 Total asset value 42,677,172 Less: liabilities assumed (4,754,927 ) Net fair value of assets acquired $ 37,922,245 These fair value measurements are provisional based on third-party valuations that are currently under review and are subject to refinement for up to one year after the acquisition date based on additional information that may be obtained by the Company that existed as of the acquisition date. Intangible assets in the amount of $13.1 million have a weighted-average useful life of approximately five years. Goodwill arising from acquisitions is not amortized. In lieu of amortization, the Company is required to perform an annual impairment test. If the Company determines, through the impairment review process, that goodwill has been impaired, it will record the impairment charge in its statement of comprehensive income. The Company will also assess the impairment of goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable. This goodwill is deductible for tax purposes. Pro forma financial information In April 2014, the Company acquired UEC (the “Acquisition”). The following summary pro forma information includes the effects of the Acquisition on the operating results of the Company through the first six months of 2014. The pro forma data for the first six months ended June 30, 2014 is presented as if the Acquisition had been completed on January 1, 2013. This pro forma financial information does not purport to be indicative of the results of operations that would have occurred had the Acquisition taken place on January 1, 2013, nor do they purport to be indicative of the results of operations that will be obtained in the future. Six-Months Ending June 30, 2014 Revenues $ 62,706,523 Income – before income tax $ 5,857,416 Net income $ 5,478,855 Basic net income per share $ 0.27 Diluted net income per share $ 0.26 Weighted average number of shares used in computing basic net income per share 20,667,242 Weighted average number of shares used in computing diluted net income per share 21,239,982 Pro forma results presented above reflect: (1) amortization relating to fair value estimates of intangible assets; (2) elimination of UEC expenses that were not part of the transaction; and (3) incremental interest expense on new long term debt incurred in connection with the transaction as though the transaction occurred as of January 1, 2013.

NOTE 8_ SALE OF BUILDING

NOTE 8: SALE OF BUILDING	6 Months Ended
	Jun. 30, 2015
Discontinued Operations and Disposal Groups [Abstract]
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]	NOTE 8: SALE OF BUILDING In March 2007, the Company purchased 16,700 square feet of space for the now-discontinued Armor Division in Auburn, Alabama for approximately $1.1 million pursuant to a seller-financed secured purchase money mortgage. Half of the mortgage was payable over ten years in equal monthly installments based on a 20-year amortization of the full principal amount, and the remaining half was payable at the end of ten years in a balloon payment. The building was leased to a third party and was listed for sale with a local real estate agent. Additionally, the carrying value of this property was written down to zero as part of the 2011 Armor Division impairment. On February 9, 2015, the Company sold the building to the current tenant for $925,000, resulting in a gain, net of fees, of $895,000 which was recorded in other income on the income statement. On that same date, the existing mortgage and existing building sub lease were terminated which ended any obligation the Company had for this property.

NOTE 9_ IMPACT OF RECENTLY ISSU

NOTE 9: IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS	6 Months Ended
	Jun. 30, 2015
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
New Accounting Pronouncements and Changes in Accounting Principles [Text Block]	NOTE 9: IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS In April 2015, the FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs” (Topic 835-30). ASU No. 2015-03 requires the presentation of debt issuance costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of such costs is reported as interest expense. This change conforms the presentation with that of debt discounts. The ASU is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2015; early adoption is permitted. The guidance is required to be applied retrospectively to all prior periods. The Company does not expect that the adoption of this standard will have a material effect on its financial statements. In July 2015, the FASB issued ASU No. 2015-11, “Simplifying the Measurement of Inventory” (Topic 330). ASU No. 2015-11 eliminates the notions of replacement cost and net realizable value less a normal profit margin. This change is intended to simplify the accounting for inventory. This ASU is effective for annual reporting periods beginning after December 15, 2016, and for interim periods within fiscal years beginning after December 15, 2017. Early adoption is permitted. The guidance is required to be applied prospectively and will be accounted for as a change in accounting principle. The Company does not expect that the adoption of this standard will have a material effect on its financial statements. For information about previous new accounting pronouncements and the potential impact on the Company’s Consolidated Financial Statements, see Note 2 of the Notes to Consolidated Financial Statements in the Company’s 2014 Form 10-K.

Accounting Policies, by Policy

Accounting Policies, by Policy (Policies)	6 Months Ended
	Jun. 30, 2015
Accounting Policies [Abstract]
Basis of Accounting, Policy [Policy Text Block]	b. Basis of presentation: The accompanying interim condensed consolidated financial statements have been prepared by Arotech Corporation in accordance with generally accepted accounting principles for interim financial information, with the instructions to Form 10-Q and with Article 10 of Regulation S-X, and include the accounts of Arotech Corporation and its subsidiaries. Certain information and footnote disclosures, normally included in complete financial statements prepared in accordance with generally accepted accounting principles, have been condensed or omitted. In the opinion of the Company, the unaudited financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of its financial position at June 30, 2015, its operating results for the six- and three month periods ended June 30, 2015 and 2014, and its cash flows for the six month periods ended June 30, 2015 and 2014. The results of operations for the six and three months ended June 30, 2015 are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year ending December 31, 2015. The balance sheet at December 31, 2014 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.
Reclassification, Policy [Policy Text Block]	c. Reclassification: Certain comparative data in these financial statements may have been reclassified to conform to the current year’s presentation.
Commitments and Contingencies, Policy [Policy Text Block]	d. Contingencies The Company is from time to time involved in legal proceedings and other claims. The Company is required to assess the likelihood of any adverse judgments or outcomes to these matters, as well as potential ranges of probable losses. The Company has not made any material changes in the accounting methodology used to establish its self-insured liabilities during the past three fiscal years. A determination of the amount of reserves required, if any, for any contingencies is made after careful analysis of each individual issue. The required reserves may change due to future developments in each matter or changes in approach, such as a change in the settlement strategy in dealing with any contingencies, which may result in higher net loss.
Related Party Policy [Policy Text Block]	e. Certain relationships and related transactions Officer loans Consulting agreement with Sampen Corporation Pursuant to the terms of the Company’s amended and restated agreement with Sampen, Sampen provides one of its employees to the Company for such employee to serve as the Company’s President and Chief Executive Officer. The Company pays Sampen $8,960 per month, plus an annual bonus, on a sliding scale, in an amount equal to a minimum of 25% of Sampen’s annual base compensation then in effect if the results the Company actually attains for the year in question are 100% or more of the amount the Company budgeted at the beginning of the year, up to a maximum of 75% of Sampen’s annual base compensation then in effect if the results the Company actually attains for the year in question are 110% or more of the amount the Company budgeted at the beginning of the year. The Company also pays Sampen, to cover the cost of the Company’s use of Sampen’s offices as an ancillary New York office and the attendant expenses and insurance costs, an amount equal to 16% of each monthly payment of base compensation.
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]	f. Accounting for stock-based compensation: For the six months ended June 30, 2015 and 2014 the compensation expense recorded related to restricted stock units and restricted shares was $335,000 and $258,000, respectively. The remaining total compensation cost related to share awards not yet recognized in the statements of comprehensive income as of June 30, 2015 was $558,000. The weighted average period over which this compensation cost is expected to be recognized is approximately one and one-half years. Income tax expense was not impacted since the Company is in a net operating loss position. There were no new options issued in the first six months of 2015 and there are no outstanding issued options. The Company’s directors received their annual restricted stock grants on April 1, 2015 in accordance with the terms of the directors’ stock compensation plan.
Earnings Per Share, Policy [Policy Text Block]	g. Anti-dilutive shares for EPS calculation All contingent and non-vested restricted stock and non-vested restricted stock units have been excluded from the calculation of the basic earnings per common share because all such securities do not participate in losses for the periods presented and have been excluded from the calculation of diluted earnings per common share as the effect would be anti-dilutive. The Company has excluded any restricted stock or restricted stock units that will never vest under the current program. The total weighted average number of shares related to the outstanding options and warrants excluded from the calculations of basic and diluted net income per share for the six month periods ended June 30, 2015 and 2014 were 1,015,654 and 602,740, respectively.

NOTE 3_ INVENTORIES (Tables)

NOTE 3: INVENTORIES (Tables)	6 Months Ended
	Jun. 30, 2015
Inventory Disclosure [Abstract]
Schedule of Inventory, Current [Table Text Block]	June 30, 2015 December 31, 2014 (Unaudited) Raw and packaging materials $ 7,888,557 $ 8,195,623 Work in progress 1,686,056 683,083 Finished products 351,837 933,077 Total: $ 9,926,450 $ 9,811,783

NOTE 4_ SEGMENT INFORMATION (Ta

NOTE 4: SEGMENT INFORMATION (Tables)	6 Months Ended
	Jun. 30, 2015
Segment Reporting [Abstract]
Schedule of Segment Reporting Information, by Segment [Table Text Block]	The following is information about reported segment revenues, income (losses) and total assets for the six and three months ended June 30, 2015 and 2014: Training and Simulation Division Power Systems Division Corporate Total Company Six months ended June 30, 2015 Revenues from outside customers $ 26,322,683 19,548,250 – 45,870,933 Depreciation and amortization expense (1) (415,021 ) (2,055,058 ) (12,406 ) (2,482,485 ) Direct expenses (2) (22,028,902 ) (20,746,239 ) (2,158,225 ) (44,933,366 ) Segment net income (loss) $ 3,878,760 (3,253,047 ) (2,170,631 ) (1,544,918 ) Financial income (expense) (24,841 ) 14,194 (560,358 ) (571,005 ) Income tax expense (178,476 ) – (431,248 ) (609,724 ) Net income (loss) $ 3,675,443 (3,238,853 ) (3,162,237 ) (2,725,647 ) Segment assets (3) $ 58,443,856 60,477,131 518,594 119,439,581 Additions to long-lived assets $ 398,114 701,728 4,502 1,104,344 Six months ended June 30, 2014 Revenues from outside customers $ 28,877,453 $ 21,334,533 $ – $ 50,211,986 Depreciation and amortization expense (1) (367,015 ) (1,278,072 ) (10,438 ) (1,655,525 ) Direct expenses (2) (22,739,239 ) (17,736,091 ) (4,223,145 ) (44,698,475 ) Segment net income (loss) $ 5,771,199 $ 2,320,370 $ (4,233,583 ) $ 3,857,986 Financial expense (17,445 ) (12,932 ) (652,271 ) (682,648 ) Income tax expense (65,511 ) (13,800 ) (299,250 ) (378,561 ) Net income (loss) $ 5,688,243 $ 2,293,638 $ (5,185,104 ) $ 2,796,777 Segment assets (3) $ 48,016,363 $ 69,050,430 $ 419,530 $ 117,486,323 Additions to long-lived assets $ 518,571 $ 29,664,064 $ 2,956 $ 30,185,591 Three months ended June 30, 2015 Revenues from outside customers $ 12,884,562 8,759,665 – 21,644,227 Depreciation and amortization expense (1) (207,845 ) (928,470 ) (5,937 ) (1,142,252 ) Direct expenses (2) (10,297,258 ) (10,187,624 ) (1,646,321 ) (22,131,202 ) Segment net income (loss) $ 2,379,459 (2,356,429 ) (1,652,258 ) (1,629,229 ) Financial income (expense) (13,226 ) 38,824 (268,995 ) (243,397 ) Income tax expense (151,220 ) – (219,124 ) (370,344 ) Net income (loss) $ 2,215,013 (2,317,606 ) (2,140,377 ) (2,242,970 ) Three months ended June 30, 2014 Revenues from outside customers $ 13,195,615 $ 14,633,571 $ – $ 27,829,186 Depreciation and amortization expense (1) (187,773 ) (1,085,878 ) (4,001 ) (1,277,652 ) Direct expenses (2) (10,055,402 ) (11,900,786 ) (2,068,889 ) (24,025,077 ) Segment net income (loss) $ 2,952,440 $ 1,646,907 $ (2,072,890 ) $ 2,526,457 Financial income (expense) (10,033 ) 48,787 (602,401 ) (563,647 ) Income tax expense (30,500 ) – (149,625 ) (180,125 ) Net income (loss) $ 2,911,907 $ 1,695,694 $ (2,824,916 ) $ 1,782,685 (1) Includes depreciation of property and equipment and amortization expenses of intangible assets. (2) Including, inter alia (3) Out of those amounts, goodwill in the Company’s Training and Simulation and Power Systems Divisions totaled $24,435,641 and $21,173,818, respectively, as of June 30, 2015 and $24,435,641 and $21,758,040, respectively, as of June 30, 2014.

NOTE 7_ PRO FORMA FINANCIAL I18

NOTE 7: PRO FORMA FINANCIAL INFORMATION (Tables)	6 Months Ended
	Jun. 30, 2015
Business Combinations [Abstract]
Schedule of Business Acquisitions, by Acquisition [Table Text Block]	Based upon a valuation of tangible and intangible assets acquired, the Company has allocated the cost of the Acquisition to UEC’s net assets as follows (unaudited): Tangible assets acquired: Cash: $ 92,590 Accounts receivable and unbilled revenues 12,513,805 Other current assets 854,776 Property and equipment, net 1,010,321 Intangible assets Customer list 7,400,000 Contracts in place (backlog) 2,100,000 Technology 3,200,000 Covenant not to compete. 400,000 Goodwill (intangibles that did not qualify for separate recognition) 15,105,680 Total asset value 42,677,172 Less: liabilities assumed (4,754,927 ) Net fair value of assets acquired $ 37,922,245
Business Acquisition, Pro Forma Information [Table Text Block]	In April 2014, the Company acquired UEC (the “Acquisition”). The following summary pro forma information includes the effects of the Acquisition on the operating results of the Company through the first six months of 2014. The pro forma data for the first six months ended June 30, 2014 is presented as if the Acquisition had been completed on January 1, 2013. This pro forma financial information does not purport to be indicative of the results of operations that would have occurred had the Acquisition taken place on January 1, 2013, nor do they purport to be indicative of the results of operations that will be obtained in the future. Six-Months Ending June 30, 2014 Revenues $ 62,706,523 Income – before income tax $ 5,857,416 Net income $ 5,478,855 Basic net income per share $ 0.27 Diluted net income per share $ 0.26 Weighted average number of shares used in computing basic net income per share 20,667,242 Weighted average number of shares used in computing diluted net income per share 21,239,982

NOTE 1_ BASIS OF PRESENTATION (

NOTE 1: BASIS OF PRESENTATION (Details) - USD ($)	Feb. 09, 2009	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
NOTE 1: BASIS OF PRESENTATION (Details) [Line Items]
Receivable from Shareholders or Affiliates for Issuance of Capital Stock		$ 908,054		$ 908,054
Share-based Compensation		334,595	$ 257,631
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized		$ 558,000
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in Shares)		1,015,654	602,740
Chief Executive Officer [Member]
NOTE 1: BASIS OF PRESENTATION (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period (in Shares)	9,404
Debt Instrument, Maturity Date, Description	due in 2025
Debt Instrument, Face Amount	$ 329,163
Debt Instrument, Interest Rate Terms	1% over the then-current federal funds rate announced from time to time by the Wall Street Journal
Debt Instrument, Collateral	secured by the shares of the Company’s common stock acquired through the exercise of the options and certain compensation due to this officer upon termination
Officer [Member]
NOTE 1: BASIS OF PRESENTATION (Details) [Line Items]
Receivable from Shareholders or Affiliates for Issuance of Capital Stock		$ 452,995		$ 452,995
Former Employee [Member]
NOTE 1: BASIS OF PRESENTATION (Details) [Line Items]
Receivable from Shareholders or Affiliates for Issuance of Capital Stock		$ 455,059
Immediate Family Member of Management or Principal Owner [Member]
NOTE 1: BASIS OF PRESENTATION (Details) [Line Items]
Related Party Transaction, Description of Transaction		$8,960 per month, plus an annual bonus, on a sliding scale, in an amount equal to a minimum of 25% of Sampen’s annual base compensation then in effect if the results the Company actually attains for the year in question are 100% or more of the amount the Company budgeted at the beginning of the year, up to a maximum of 75% of Sampen’s annual base compensation then in effect if the results the Company actually attains for the year in question are 110% or more of the amount the Company budgeted at the beginning of the year.

NOTE 3_ INVENTORIES (Details)

NOTE 3: INVENTORIES (Details) - USD ($)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
NOTE 3: INVENTORIES (Details) [Line Items]
Increase (Decrease) in Inventories	$ 114,667	$ (1,061,142)
Training and Simulation Division [Member]
NOTE 3: INVENTORIES (Details) [Line Items]
Increase (Decrease) in Inventories	(88,561)
Battery and Power Systems Division [Member]
NOTE 3: INVENTORIES (Details) [Line Items]
Increase (Decrease) in Inventories	$ (203,228)

NOTE 3_ INVENTORIES (Details) -

NOTE 3: INVENTORIES (Details) - Schedule of Inventory - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Schedule of Inventory [Abstract]
Raw and packaging materials	$ 7,888,557	$ 8,195,623
Work in progress	1,686,056	683,083
Finished products	351,837	933,077
Total:	$ 9,926,450	$ 9,811,783

NOTE 4_ SEGMENT INFORMATION (De

NOTE 4: SEGMENT INFORMATION (Details)	6 Months Ended
	Jun. 30, 2015USD ($)	Dec. 31, 2014USD ($)	Jun. 30, 2014USD ($)
NOTE 4: SEGMENT INFORMATION (Details) [Line Items]
Number of Operating Segments	2
Goodwill	$ 45,609,459	$ 45,422,219
Training and Simulation Division [Member]
NOTE 4: SEGMENT INFORMATION (Details) [Line Items]
Goodwill	24,435,641		$ 24,435,641
Power Systems Division [Member]
NOTE 4: SEGMENT INFORMATION (Details) [Line Items]
Goodwill	$ 21,173,818		$ 21,758,040

NOTE 4_ SEGMENT INFORMATION (23

NOTE 4: SEGMENT INFORMATION (Details) - Schedule of Segment Reporting Information - USD ($)		3 Months Ended		6 Months Ended
		Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Segment Reporting Information [Line Items]
Revenues from outside customers		$ 21,644,225	$ 27,829,186	$ 45,870,933	$ 50,211,986
Financial income (expense)		(243,397)	(563,647)	(571,005)	(682,648)
Income tax expense		(370,343)	(180,125)	(609,724)	(378,561)
Net income (loss)		(2,242,970)	1,782,685	(2,725,647)	2,796,777
Three months ended June 30, 2014
Segment assets(3)		119,439,581		119,439,581		$ 124,739,347
Training and Simulation Division [Member]
Segment Reporting Information [Line Items]
Revenues from outside customers		12,884,562	13,195,615	26,322,683	28,877,453
Depreciation and amortization expense(1)	[1]	(207,845)	(187,773)	(415,021)	(367,015)
Direct expenses(2)	[2]	(10,297,258)	(10,055,402)	(22,028,902)	(22,739,239)
Segment net income (loss)		2,379,459	2,952,440	3,878,760	5,771,199
Financial income (expense)		(13,226)	(10,033)	(24,841)	(17,445)
Income tax expense		(151,220)	(30,500)	(178,476)	(65,511)
Net income (loss)		2,215,013	2,911,907	3,675,443	5,688,243
Three months ended June 30, 2014
Segment assets(3)	[3]	58,443,856	48,016,363	58,443,856	48,016,363
Additions to long-lived assets				398,114	518,571
Power Systems Division [Member]
Segment Reporting Information [Line Items]
Revenues from outside customers		8,759,665	14,633,571	19,548,250	21,334,533
Depreciation and amortization expense(1)	[1]	(928,470)	(1,085,878)	(2,055,058)	(1,278,072)
Direct expenses(2)	[2]	(10,187,624)	(11,900,786)	(20,746,239)	(17,736,091)
Segment net income (loss)		(2,356,429)	1,646,907	(3,253,047)	2,320,370
Financial income (expense)		38,824	48,787	14,194	(12,932)
Income tax expense				0	(13,800)
Net income (loss)		(2,317,606)	1,695,694	(3,238,853)	2,293,638
Three months ended June 30, 2014
Segment assets(3)	[3]	60,477,131	69,050,430	60,477,131	69,050,430
Additions to long-lived assets				701,728	29,664,064
Corporate Segment [Member]
Segment Reporting Information [Line Items]
Revenues from outside customers			0		0
Depreciation and amortization expense(1)	[1]	(5,937)	(4,001)	(12,406)	(10,438)
Direct expenses(2)	[2]	(1,646,321)	(2,068,889)	(2,158,225)	(4,223,145)
Segment net income (loss)		(1,652,258)	(2,072,890)	(2,170,631)	(4,233,583)
Financial income (expense)		(268,995)	(602,401)	(560,358)	(652,271)
Income tax expense		(219,124)	(149,625)	(431,248)	(299,250)
Net income (loss)		(2,140,377)	(2,824,916)	(3,162,237)	(5,185,104)
Three months ended June 30, 2014
Segment assets(3)	[3]	518,594	419,530	518,594	419,530
Additions to long-lived assets				4,502	2,956
Discontinued Operations [Member]
Segment Reporting Information [Line Items]
Revenues from outside customers		21,644,227	27,829,186	45,870,933	50,211,986
Depreciation and amortization expense(1)	[1]	(1,142,252)	(1,277,652)	(2,482,485)	(1,655,525)
Direct expenses(2)	[2]	(22,131,202)	(24,025,077)	(44,933,366)	(44,698,475)
Segment net income (loss)		(1,629,229)	2,526,457	(1,544,918)	3,857,986
Financial income (expense)		(243,397)	(563,647)	(571,005)	(682,648)
Income tax expense		(370,344)	(180,125)	(609,724)	(378,561)
Net income (loss)		(2,242,970)	1,782,685	(2,725,647)	2,796,777
Three months ended June 30, 2014
Segment assets(3)	[3]	$ 119,439,581	$ 117,486,323	119,439,581	117,486,323
Additions to long-lived assets				$ 1,104,344	$ 30,185,591
[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 $21,173,818, respectively, as of June 30, 2015 and $24,435,641 and $21,758,040, respectively, as of June 30, 2014.

NOTE 5_ BANK FINANCING (Details

NOTE 5: BANK FINANCING (Details) - USD ($)	Apr. 01, 2014	Jun. 30, 2015
Senior Notes [Member]
NOTE 5: BANK FINANCING (Details) [Line Items]
Debt Instrument, Face Amount	$ 18,000,000
Debt Instrument, Term	61 months
Senior Notes [Member] | London Interbank Offered Rate (LIBOR) [Member]
NOTE 5: BANK FINANCING (Details) [Line Items]
Debt Instrument, Basis Spread on Variable Rate	3.75%
Line of Credit [Member]
NOTE 5: BANK FINANCING (Details) [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity		$ 15,000,000
Line of Credit Facility, Covenant Terms		Certain covenants contained in the Original Credit Agreement have been modified in the Amended Credit Agreement. Commencing with the fiscal quarter ending September 30, 2014, the Company’s “Fixed Charge Coverage Ratio,” determined on a combined basis with UEC and otherwise computed in the same manner as under the Original Credit Agreement, has been raised to 1.25 to 1 from 1.10 to 1. “Net Advances to Affiliates” as defined in the Original Credit Agreement are now defined with reference to FAAC or UEC, as the case may be, and may not increase by more than $5,500,000 on a combined basis for both borrowers in any calendar year over a “Base Amount” to be determined by mutual agreement of FAAC and the Bank. Effective at the end of the second quarter of 2015, the Bank eliminated the covenant that provided that UEC’s earnings before interest, taxes, depreciation and amortization with certain add-backs (“EBITDA”), may not be less than $4,500,000 for any trailing twelve-month period ending at the end of a fiscal quarter (“Test Period”).In addition, the Company also maintains a ratio of “Combined Funded Indebtedness” (defined as all indebtedness (a) in respect of money borrowed, (b) evidenced by a note, debenture or other like written obligation to pay money, (c) in respect of rent or hire of property under leases or lease arrangements which under GAAP are required to be capitalized or (d) in respect of obligations under conditional sales or other title retention agreements, all as determined on a combined basis for FAAC and UEC less (e) cash held on account with the Bank) to “Combined Adjusted EBITDA” (defined as EBITDA of FAAC and UEC computed on a combined basis) may not exceed (a) 2.25 to 1.0 for the Test Period ending September 30, 2014 or any Test Period ending as of the end of any fiscal quarter thereafter prior to the fiscal quarter ending March 31, 2015 or (b) 2.00 to 1.0 for the Test Period ending March 31, 2015 or any Test Period ending as of the end of any fiscal quarter thereafter. The Company was in compliance with all debt covenants as of June 30, 2015.
Derivative, Swaption Interest Rate		1.37%
Long-term Line of Credit		$ 9,000,000
Amortization of Financing Costs		$ 58,000
Line of Credit [Member] | London Interbank Offered Rate (LIBOR) [Member]
NOTE 5: BANK FINANCING (Details) [Line Items]
Debt Instrument, Basis Spread on Variable Rate		3.75%
B Term Loan [Member] | Loans Payable [Member]
NOTE 5: BANK FINANCING (Details) [Line Items]
Debt Instrument, Face Amount	$ 4,500,000
Debt Instrument, Term	61 months
B Term Loan [Member] | Loans Payable [Member] | London Interbank Offered Rate (LIBOR) [Member]
NOTE 5: BANK FINANCING (Details) [Line Items]
Debt Instrument, Basis Spread on Variable Rate	5.50%

NOTE 6_ COMMON STOCK REPURCHA25

NOTE 6: COMMON STOCK REPURCHASE PROGRAM (Details) - USD ($)	1 Months Ended	6 Months Ended	74 Months Ended
	Feb. 28, 2009	Jun. 30, 2015	Mar. 31, 2015	Aug. 31, 2004
Stock Repurchase Disclosure [Abstract]
Stock Repurchase Program, Authorized Amount	$ 1,000,000			$ 2,000,000
Stock Repurchased During Period, Shares (in Shares)		0	738,611
Stock Repurchased During Period, Value			$ 1,084,060
Stock Repurchase Program Expiration Date	Aug. 10, 2016

NOTE 7_ PRO FORMA FINANCIAL I26

NOTE 7: PRO FORMA FINANCIAL INFORMATION (Details) - USD ($)	1 Months Ended		3 Months Ended			6 Months Ended		9 Months Ended
	Apr. 30, 2015	Apr. 30, 2014	Jun. 30, 2015	Mar. 31, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
NOTE 7: PRO FORMA FINANCIAL INFORMATION (Details) [Line Items]
Revenues			$ 21,644,225		$ 27,829,186	$ 45,870,933	$ 50,211,986
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest			$ (1,872,627)		$ 1,962,810	(2,115,923)	3,175,338
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable						$ 0	$ 4,216,000
UEC Electronics, LLC Acquisition [Member]
NOTE 7: PRO FORMA FINANCIAL INFORMATION (Details) [Line Items]
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High		$ 5,500,000
Business Combination, Assets and Liabilities Arising from Contingencies, Amount Recognized, Net		4,500,000
Business Combination, Contingent Consideration, Liability, Current		2,200,000						$ 2,500,000
Business Combination, Contingent Consideration, Liability, Noncurrent		2,300,000						0
Revenues								27,200,000
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest								$ 5,000,000
Business Combination, Consideration Transferred		37,900,000
Payments to Acquire Businesses, Gross		$ 29,206,245
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares (in Shares)		775,000
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable		$ 4,216,000
Business Combination, Contingent Consideration, Liability		4,500,000
Business Combination, Contingent Consideration, Earn-Out Percentage				100.00%
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill		$ 13,100,000
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life		5 years
UEC Electronics, LLC Acquisition [Member] | Subsequent Event [Member]
NOTE 7: PRO FORMA FINANCIAL INFORMATION (Details) [Line Items]
Payments to Acquire Businesses, Gross	$ 2,500,000

NOTE 7_ PRO FORMA FINANCIAL I27

NOTE 7: PRO FORMA FINANCIAL INFORMATION (Details) - Schedule of Business Acquisitions, by Acquisition - USD ($)	Jun. 30, 2015	Dec. 31, 2014	Apr. 30, 2014
Intangible assets
Goodwill (intangibles that did not qualify for separate recognition)	$ 45,609,459	$ 45,422,219
UEC Electronics, LLC Acquisition [Member]
Tangible assets acquired:
Cash:			$ 92,590
Accounts receivable and unbilled revenues			12,513,805
Other current assets			854,776
Property and equipment, net			1,010,321
Intangible assets
Goodwill (intangibles that did not qualify for separate recognition)			15,105,680
Total asset value			42,677,172
Less: liabilities assumed			(4,754,927)
Net fair value of assets acquired			37,922,245
Customer Relationships [Member] | UEC Electronics, LLC Acquisition [Member]
Intangible assets
Intangible assets			7,400,000
Contract-Based Intangible Assets [Member] | UEC Electronics, LLC Acquisition [Member]
Intangible assets
Intangible assets			2,100,000
Technology-Based Intangible Assets [Member] | UEC Electronics, LLC Acquisition [Member]
Intangible assets
Intangible assets			3,200,000
Noncompete Agreements [Member] | UEC Electronics, LLC Acquisition [Member]
Intangible assets
Intangible assets			$ 400,000

NOTE 7_ PRO FORMA FINANCIAL I28

NOTE 7: PRO FORMA FINANCIAL INFORMATION (Details) - Business Acquisition, Pro Forma Information - 6 months ended Jun. 30, 2014 - USD ($)	Total
Business Acquisition, Pro Forma Information [Abstract]
Revenues	$ 62,706,523
Income – before income tax	5,857,416
Net income	$ 5,478,855
Basic net income per share (in Dollars per share)	$ 0.27
Diluted net income per share (in Dollars per share)	$ 0.26
Weighted average number of shares used in computing basic net income per share (in Shares)	20,667,242
Weighted average number of shares used in computing diluted net income per share (in Shares)	21,239,982

NOTE 8_ SALE OF BUILDING (Detai

NOTE 8: SALE OF BUILDING (Details)	Feb. 09, 2015USD ($)	Mar. 31, 2007USD ($)ft²	Jun. 30, 2015USD ($)	Jun. 30, 2014USD ($)	Mar. 31, 2011USD ($)
NOTE 8: SALE OF BUILDING (Details) [Line Items]
Proceeds from Sale of Property, Plant, and Equipment			$ 895,000	$ 0
Gain (Loss) on Disposition of Property Plant Equipment	$ 895,000		$ 895,000	$ 0
Building [Member]
NOTE 8: SALE OF BUILDING (Details) [Line Items]
Area of Real Estate Property (in Square Feet) | ft²		16,700
Payments to Acquire Property, Plant, and Equipment		$ 1,100,000
Debt Instrument, Payment Terms		Half of the mortgage was payable over ten years in equal monthly installments based on a 20-year amortization of the full principal amount, and the remaining half was payable at the end of ten years in a balloon payment.
Property, Plant and Equipment, Gross					$ 0
Proceeds from Sale of Property, Plant, and Equipment	$ 925,000