Arotech (ARTX) 10-Q 9 Aug 17 2017 Q2 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Aug. 05, 2017
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		26,427,586
Amendment Flag	false
Entity Central Index Key	916,529
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Well-known Seasoned Issuer	No
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q2

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Jun. 30, 2017		Dec. 31, 2016
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	[1],[2]	109,410,336
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	0		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
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	0		0
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
[1]	Cash balances previously reporting in the Training and Simulation Division in 2016 are now reported in Corporate in 2017.
[2]	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.

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares	Jun. 30, 2017	Dec. 31, 2016
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	26,427,586	26,438,234
Common stock - shares outstanding	26,427,586	26,438,234
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, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Revenues	$ 21,448,693	$ 21,779,877	$ 43,796,138	$ 47,186,358
Cost of revenues	15,466,496	14,784,721	31,333,994	32,496,895
Research and development expenses	764,416	779,035	1,759,850	1,615,117
Selling and marketing expenses	1,971,477	1,799,588	3,967,444	3,454,454
General and administrative expenses	2,839,370	3,734,374	5,856,588	8,026,787
Amortization of intangible assets	521,660	698,637	1,219,653	1,466,640
Total operating costs and expenses	21,563,419	21,796,355	44,137,529	47,059,893
Operating income (loss)	(114,726)	(16,478)	(341,391)	126,465
Other income, net	(1,894)	20,395	10,260	46,432
Financial expense, net	(215,187)	(204,196)	(549,044)	(541,854)
Total other expense	(217,081)	(183,801)	(538,784)	(495,422)
Loss from continuing operations before income tax expense	(331,807)	(200,279)	(880,175)	(368,957)
Income tax expense	262,820	368,827	482,760	582,280
Loss from continuing operations	(594,627)	(569,106)	(1,362,935)	(951,237)
Loss from discontinued operations	0	(230,839)	0	(492,485)
Net loss	(594,627)	(799,945)	(1,362,935)	(1,443,722)
Other comprehensive income (loss), net of income tax:
Foreign currency translation adjustment	671,142	(298,043)	1,586,174	62,055
Comprehensive income (loss)	$ 76,515	$ (1,097,988)	$ 223,239	$ (1,381,667)
Loss per share of common stock:
Basic – continuing operations (in Dollars per share)	$ (0.02)	$ (0.02)	$ (0.05)	$ (0.04)
Basic – discontinued operations (in Dollars per share)	0	(0.01)	0	(0.02)
Basic net loss per share (in Dollars per share)	(0.02)	(0.03)	(0.05)	(0.06)
Diluted – continuing operations (in Dollars per share)	(0.02)	(0.02)	(0.05)	(0.04)
Diluted – discontinued operations (in Dollars per share)	0	(0.01)	0	(0.02)
Diluted net loss per share (in Dollars per share)	$ (0.02)	$ (0.03)	$ (0.05)	$ (0.06)
Weighted average number of shares used in computing basic net loss per share (in Shares)	26,216,775	25,383,440	26,193,509	25,365,756
Weighted average number of shares used in computing diluted net loss per share (in Shares)	26,216,775	25,383,440	26,193,509	25,365,756

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)	6 Months Ended
	Jun. 30, 2017	Jun. 30, 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	0	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)
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	0	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

NOTE 1_ BASIS OF PRESENTATION

NOTE 1: BASIS OF PRESENTATION	6 Months Ended
	Jun. 30, 2017
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”) is a defense and security products and services company, engaged in two business areas: interactive simulation for military, law enforcement and commercial markets; and mobile power systems for the military, commercial and medical markets. The Company operates primarily through its wholly-owned subsidiaries FAAC Incorporated, a Michigan corporation located in Ann Arbor, Michigan (Training and Simulation Division) with a location in Orlando, Florida; Epsilor-Electric Fuel Ltd. (“Epsilor-EFL”), an Israeli corporation located in Beit Shemesh, Israel (between Jerusalem and Tel-Aviv) in Dimona, Israel (in Israel’s Negev desert area) and Sderot, Israel (near the Gaza Strip) (Power Systems Division); UEC Electronics, LLC (“UEC”), a South Carolina limited liability company located in Hanahan, South Carolina (Power Systems Division). b. Asset Held for Sale and Discontinued Operations: In August 2016, the Board approved a strategic shift to discontinue the Flow Battery segment (“the segment”) with an effective date of August 31, 2016. The principal activities of the Flow Battery segment were research and development related and were focused on developing a commercial application based upon the Iron Flow Storage concept. In connection with the discontinuance of the operations, management has developed a plan to sell the assets to a third party for future development. Management believes that the Company will be able to execute the plan in 2017. The amounts presented in the consolidated statements of comprehensive income as discontinued operations represent research and development and general and administrative expenses. As the Flow Battery segment is reported within the Epsilor-EFL legal entity and the legal entity has tax net operating loss carryforwards for which the Company has recorded a valuation allowance, there is no tax impact. The impact of the discontinued operations on operating and investing activities within the consolidated statements of cash flows for the six months ended June 30, 2016 was $475,565 and $152,972, respectively. There was no impact on the consolidated statements of cash flows for the six months ended June 30, 2017. The assets of the Flow Battery segment consist of property and equipment and are classified as held for sale. The carrying value of the assets as of June 30, 2017 and December 31, 2016, is $270,139. Unless otherwise indicated, discontinued operations are not included in the reported results. The Notes to the Consolidated Financial Statements relate to the Company’s continuing operations. c. 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, 2017, its operating results for the six and three-month periods ended June 30, 2017 and 2016, and its cash flows for the six-month periods ended June 30, 2017 and 2016. The results of operations for the six and three months ended June 30, 2017 are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year ending December 31, 2017. The balance sheet at December 31, 2016 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, 2016. d. Goodwill and other long-lived assets: Goodwill and indefinite-lived intangible assets are tested for impairment at least annually and between annual tests in certain circumstances, and written down when impaired. Goodwill is tested for impairment by comparing the fair value of the Company’s reporting units with the carrying value. The Training and Simulation and the Power Systems reporting units have goodwill. As of its last annual impairment test at December 31, 2016, the Company determined that the goodwill for both reporting units was not impaired. Consistent with previous interim reporting periods, the Company monitors qualitative and quantitative factors, including internal projections, periodic forecasts, and actual results of the reporting unit. Based upon this interim review, the Company does not believe that goodwill or its indefinite-lived intangible assets related to either reporting unit is impaired. e. Reclassification: Certain comparative data in these financial statements may have been reclassified to conform to the current year’s presentation. f. 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. g. Certain relationships and related transactions On February 2, 2016, the Company entered into a three-year consulting agreement with a business controlled by a member of the Board of Directors. In exchange, the Company pays an annual fee equal to the Board member in the amount of the difference between total accrued compensation of the Board member and $125,000. In December 2016, the Company and its former Chief Executive Officer (“former Executive”) agreed to terms whereby the Company and its former Executive agreed to early termination of the former Executive’s employment agreement. As of December 31, 2016, the amount due to the estate of the former Executive was approximately $2.6 million. The Company paid approximately $1.8 million to the estate of the former Executive in March 2017. The remainder of $800,000 payable to the local taxing authorities was remitted in April 2017. h. Accounting for stock-based compensation: For the three months ended June 30, 2017 and 2016 the compensation expense recorded related to restricted stock units and restricted shares was $86,093 and $156,680, respectively. For the six months ended June 30, 2017 and 2016 the compensation expense recorded related to restricted stock units and restricted shares was $192,926 and $273,486, respectively. The remaining total compensation cost related to share awards not yet recognized in the income statement as of June 30, 2017 was $366,614. The weighted average period over which this compensation cost is expected to be recognized is approximately one and one-half years. As the Company is in a net operating loss position, the Company has recorded a full valuation allowance on the deferred tax impact of its stock based compensation. On February 2, 2016, the Company and an investor (the “Investor”) entered into a Stock Purchase Agreement (the “Investment Agreement”) providing for the sale to the Investor of a total of 1,500,000 shares of the Company’s common stock at a price valued at $1.99 per share. As the Investor was also given the right to nominate a member of the Board of Directors pursuant to the terms of the Investment Agreement, and the shares were issued at a discount to the then market price, this resulted in additional stock compensation expense in the first six months of 2016 of $375,000. i. Basic and diluted net income per share: Basic net income per share is computed based on the weighted average number of shares of common stock and participating securities outstanding during each year. Diluted net income per share includes the dilutive effect of additional potential common stock issuable under our share-based compensation plans, using the “treasury stock” method. Unvested restricted stock issued to our employees and directors are “participating securities” and as such, are included, net of estimated forfeitures, in the total shares used to calculate the Company’s basic and diluted net income per share. In the event of a net loss, unvested restricted stock awards are excluded from the calculation of both basic and diluted net loss per share. The total weighted average number of shares related to the outstanding common stock equivalents excluded from the calculations of diluted net loss per share for the three and six month periods ended June 30, 2017 and 2016, were none and 602,740, respectively.

NOTE 2_ FAIR VALUE MEASUREMENT

NOTE 2: FAIR VALUE MEASUREMENT	6 Months Ended
	Jun. 30, 2017
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, 2017 and December 31, 2016, 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, 2017, based upon the Company’s ability to acquire similar debt at similar maturities.

NOTE 3_ INVENTORIES

NOTE 3: INVENTORIES	6 Months Ended
	Jun. 30, 2017
Inventory Disclosure [Abstract]
Inventory Disclosure [Text Block]	NOTE 3: INVENTORIES Inventories are stated at net realizable 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. Inventories in the Training and Simulation Division increased $343,000 from December 31, 2016 to June 30, 2017 and increased $49,000 in the Power Systems Division in that same time period: 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

NOTE 4_ SEGMENT INFORMATION

NOTE 4: SEGMENT INFORMATION	6 Months Ended
	Jun. 30, 2017
Segment Reporting [Abstract]
Segment Reporting Disclosure [Text Block]	NOTE 4: SEGMENT INFORMATION a. The Company and its subsidiaries operate in two business segments. The two segments are also treated by the Company as reporting units for goodwill impairment evaluation purposes. The goodwill amounts associated with the Training and Simulation Division and the Power Systems Division were determined and valued when the specific businesses were purchased. The Company’s reportable 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 reportable segments are the same as those used by the Company in the preparation of its annual financial statements. The Company evaluates performance based on 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) from continuing operations, and total assets as of and for the periods ended June 30, 2017 and 2016: 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 (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.

NOTE 5_ BANK FINANCING

NOTE 5: BANK FINANCING	6 Months Ended
	Jun. 30, 2017
Debt Disclosure [Abstract]
Debt Disclosure [Text Block]	NOTE 5: BANK FINANCING The Company maintains credit facilities with JPMorgan Chase Bank, N.A. (“Chase”), whereby Chase provides (i) a $15,000,000 revolving credit facility (“Revolver”), (ii) a $10,000,000 Term Loan (“Term Loan A”), (iii) a $1,358,000 Mortgage Loan (“Term Loan B”) and (iv) a $1,730,895 Mortgage Loan (“Term Loan C”); collectively referred to as the “Credit Facilities.” The maturity of the Revolver is March 11, 2021. The Revolver maintains an interest rate on a scale ranging from LIBOR plus 1.75% up to LIBOR plus 3.00%. The effective interest rate for the revolver at June 30, 2017 was 4.25%. The balance at June 30, 2017 and December 31, 2016 was $3.8 million and $3.0 million, respectively. The maturity of the Term Loan is March 11, 2021. The Term Loan maintains an interest rate on a scale ranging from LIBOR plus 2.0% up to LIBOR plus 3.25%. The repayment of the Term Loan consists of 60 consecutive monthly payments of principal plus accrued interest based on annual principal reductions of 10% during the first year, 20% during the second through fourth years, and 30% during the fifth year. The effective interest rate for the Term Loan at June 30, 2017 was 4.5%. The balance at June 30, 2017 and December 31, 2016 was $8.7 million and $9.3 million, respectively. During the quarter ended June 30, 2017, the Company purchased land and a building previously leased by our Training and Simulation Division in Ann Arbor, Michigan. As a result, the Company now maintains two Mortgage Loans (“Term Loans B and C”). The maturities of Term Loans B and C are June 1, 2024 and maintain an interest rate on a scale identical to Term Loan A. The monthly payments on Term Loan B and Term Loan C are $7,212 and $5,660, respectively, in principal plus accrued interest, with balloon payments due on the maturity date. The effective interest rate for the Mortgage Loans at June 30, 2017 was 4.5%. The balance of both loans at June 30, 2017 and December 31, 2016 was $3.1 million and $967,000, respectively. The Credit Facilities maintain certain reporting requirements, conditions precedent, affirmative covenants and financial covenants. The Company is required to maintain certain financial covenants that include a Maximum Debt to EBITDA ratio of 3.00 to 1.00 and a Minimum Fixed Charge Coverage Ratio of 1.20 to 1.00. The Company was in compliance with its covenants at June 30, 2017. The Credit Facilities are secured by the Company’s assets and the assets of the Company’s domestic subsidiaries.

NOTE 6_ IMPACT OF RECENTLY ISSU

NOTE 6: IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS	6 Months Ended
	Jun. 30, 2017
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
New Accounting Pronouncements and Changes in Accounting Principles [Text Block]	NOTE 6: IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, as a new Topic, Accounting Standards Codification (“ASC”) Topic 606. The new revenue recognition standard relates to revenue from contracts with customers, which, along with amendments issued in 2015 and 2016, will supersede nearly all current U.S. GAAP guidance on this topic and eliminate industry-specific guidance. The underlying principle is to use a five-step analysis of transactions to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The Company has formed a task force to review material contracts from our respective business segments. The task force is currently evaluating those contracts to determine the impact on the Company’s consolidated financial position or results of operations. The standard, as amended, will be effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. The Company expects to adopt the standard on a modified retrospective basis in 2018. In February 2016, the FASB issued ASU No. 2016-02, Leases. The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. Upon adoption, the Company expects that the ROU asset and lease liability will be recognized in the balance sheets in amounts that will be material. In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The new standard introduces targeted amendments intended to simplify the accounting for stock compensation. Among other things, the ASU requires all excess tax benefits and tax deficiencies to be recognized as income tax expense or benefit in the income statement. The amendments are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The adoption of this new standard was not material to the consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15 (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The amendments provide guidance on eight specific cash flow issues for which the current accounting framework does not provide specific guidance. The amendments are effective for annual periods beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of its pending adoption of the new standard on its consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The new standard simplifies the subsequent measurement of goodwill and eliminates Step 2 from the goodwill impairment test and requires businesses to perform its annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The amendments are effective for annual periods beginning after December 15, 2019 with early adoption permitted for goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact of its pending adoption of the new standard on its consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The amendments provide a more robust framework to use in determining when a set of assets and activities is a business. The amendments are effective for annual periods beginning after December 15, 2017 with a limited scope of early adoption. The Company is currently evaluating the impact of its pending adoption of the new standard on its consolidated 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 2016 Form 10-K.

Accounting Policies, by Policy

Accounting Policies, by Policy (Policies)	6 Months Ended
	Jun. 30, 2017
Accounting Policies [Abstract]
Discontinued Operations, Policy [Policy Text Block]	Asset Held for Sale and Discontinued Operations: In August 2016, the Board approved a strategic shift to discontinue the Flow Battery segment (“the segment”) with an effective date of August 31, 2016. The principal activities of the Flow Battery segment were research and development related and were focused on developing a commercial application based upon the Iron Flow Storage concept. In connection with the discontinuance of the operations, management has developed a plan to sell the assets to a third party for future development. Management believes that the Company will be able to execute the plan in 2017. The amounts presented in the consolidated statements of comprehensive income as discontinued operations represent research and development and general and administrative expenses. As the Flow Battery segment is reported within the Epsilor-EFL legal entity and the legal entity has tax net operating loss carryforwards for which the Company has recorded a valuation allowance, there is no tax impact. The impact of the discontinued operations on operating and investing activities within the consolidated statements of cash flows for the six months ended June 30, 2016 was $475,565 and $152,972, respectively. There was no impact on the consolidated statements of cash flows for the six months ended June 30, 2017. The assets of the Flow Battery segment consist of property and equipment and are classified as held for sale. The carrying value of the assets as of June 30, 2017 and December 31, 2016, is $270,139. Unless otherwise indicated, discontinued operations are not included in the reported results. The Notes to the Consolidated Financial Statements relate to the Company’s continuing operations.
Basis of Accounting, Policy [Policy Text Block]	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, 2017, its operating results for the six and three-month periods ended June 30, 2017 and 2016, and its cash flows for the six-month periods ended June 30, 2017 and 2016. The results of operations for the six and three months ended June 30, 2017 are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year ending December 31, 2017. The balance sheet at December 31, 2016 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, 2016.
Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]	Goodwill and other long-lived assets: Goodwill and indefinite-lived intangible assets are tested for impairment at least annually and between annual tests in certain circumstances, and written down when impaired. Goodwill is tested for impairment by comparing the fair value of the Company’s reporting units with the carrying value. The Training and Simulation and the Power Systems reporting units have goodwill. As of its last annual impairment test at December 31, 2016, the Company determined that the goodwill for both reporting units was not impaired. Consistent with previous interim reporting periods, the Company monitors qualitative and quantitative factors, including internal projections, periodic forecasts, and actual results of the reporting unit. Based upon this interim review, the Company does not believe that goodwill or its indefinite-lived intangible assets related to either reporting unit is impaired.
Reclassification, Policy [Policy Text Block]	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]	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]	Certain relationships and related transactions On February 2, 2016, the Company entered into a three-year consulting agreement with a business controlled by a member of the Board of Directors. In exchange, the Company pays an annual fee equal to the Board member in the amount of the difference between total accrued compensation of the Board member and $125,000. In December 2016, the Company and its former Chief Executive Officer (“former Executive”) agreed to terms whereby the Company and its former Executive agreed to early termination of the former Executive’s employment agreement. As of December 31, 2016, the amount due to the estate of the former Executive was approximately $2.6 million. The Company paid approximately $1.8 million to the estate of the former Executive in March 2017. The remainder of $800,000 payable to the local taxing authorities was remitted in April 2017.
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]	Accounting for stock-based compensation: For the three months ended June 30, 2017 and 2016 the compensation expense recorded related to restricted stock units and restricted shares was $86,093 and $156,680, respectively. For the six months ended June 30, 2017 and 2016 the compensation expense recorded related to restricted stock units and restricted shares was $192,926 and $273,486, respectively. The remaining total compensation cost related to share awards not yet recognized in the income statement as of June 30, 2017 was $366,614. The weighted average period over which this compensation cost is expected to be recognized is approximately one and one-half years. As the Company is in a net operating loss position, the Company has recorded a full valuation allowance on the deferred tax impact of its stock based compensation. On February 2, 2016, the Company and an investor (the “Investor”) entered into a Stock Purchase Agreement (the “Investment Agreement”) providing for the sale to the Investor of a total of 1,500,000 shares of the Company’s common stock at a price valued at $1.99 per share. As the Investor was also given the right to nominate a member of the Board of Directors pursuant to the terms of the Investment Agreement, and the shares were issued at a discount to the then market price, this resulted in additional stock compensation expense in the first six months of 2016 of $375,000.
Earnings Per Share, Policy [Policy Text Block]	Basic and diluted net income per share: Basic net income per share is computed based on the weighted average number of shares of common stock and participating securities outstanding during each year. Diluted net income per share includes the dilutive effect of additional potential common stock issuable under our share-based compensation plans, using the “treasury stock” method. Unvested restricted stock issued to our employees and directors are “participating securities” and as such, are included, net of estimated forfeitures, in the total shares used to calculate the Company’s basic and diluted net income per share. In the event of a net loss, unvested restricted stock awards are excluded from the calculation of both basic and diluted net loss per share. The total weighted average number of shares related to the outstanding common stock equivalents excluded from the calculations of diluted net loss per share for the three and six month periods ended June 30, 2017 and 2016, were none and 602,740, respectively.

NOTE 3_ INVENTORIES (Tables)

NOTE 3: INVENTORIES (Tables)	6 Months Ended
	Jun. 30, 2017
Inventory Disclosure [Abstract]
Schedule of Inventory, Current [Table Text Block]	Inventories in the Training and Simulation Division increased $343,000 from December 31, 2016 to June 30, 2017 and increased $49,000 in the Power Systems Division in that same time period: 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

NOTE 4_ SEGMENT INFORMATION (Ta

NOTE 4: SEGMENT INFORMATION (Tables)	6 Months Ended
	Jun. 30, 2017
Segment Reporting [Abstract]
Schedule of Segment Reporting Information, by Segment [Table Text Block]	The following is information about reported segment revenues, income (losses) from continuing operations, and total assets as of and for the periods ended June 30, 2017 and 2016: 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 (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.

NOTE 1_ BASIS OF PRESENTATION (

NOTE 1: BASIS OF PRESENTATION (Details)	Feb. 02, 2016USD ($)$ / sharesshares	Jun. 30, 2017USD ($)	Mar. 31, 2017USD ($)	Jun. 30, 2016USD ($)shares	Jun. 30, 2017USD ($)	Jun. 30, 2016USD ($)shares	Apr. 30, 2017USD ($)	Dec. 31, 2016USD ($)
NOTE 1: BASIS OF PRESENTATION (Details) [Line Items]
Number of Operating Segments					2
Cash Provided by (Used in) Operating Activities, Discontinued Operations						$ 475,565
Cash Provided by (Used in) Investing Activities, Discontinued Operations						152,972
Disposal Group, Including Discontinued Operation, Assets, Noncurrent		$ 270,139			$ 270,139			$ 270,139
Share-based Compensation		86,093		$ 156,680	192,926	648,487
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized		$ 366,614			$ 366,614
Stock Issued During Period, Shares, New Issues (in Shares) | shares	1,500,000
Sale of Stock, Price Per Share (in Dollars per share) | $ / shares	$ 1.99
Allocated Share-based Compensation Expense						$ 375,000
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in Shares) | shares				602,740		602,740
Restricted Stock [Member]
NOTE 1: BASIS OF PRESENTATION (Details) [Line Items]
Share-based Compensation						$ 273,486
Affiliated Entity [Member]
NOTE 1: BASIS OF PRESENTATION (Details) [Line Items]
Related Party Transaction, Description of Transaction	On February 2, 2016, the Company entered into a three-year consulting agreement with a business controlled by a member of the Board of Directors. In exchange, the Company pays an annual fee equal to the Board member in the amount of the difference between total accrued compensation of the Board member and $125,000.
Related Party Transaction, Amounts of Transaction	$ 125,000
Former Chief Executive Officer [Member]
NOTE 1: BASIS OF PRESENTATION (Details) [Line Items]
Due to Related Parties								$ 2,600,000
Repayments of Related Party Debt			$ 1,800,000
Accrued Payroll Taxes							$ 800,000

NOTE 3_ INVENTORIES (Details)

NOTE 3: INVENTORIES (Details) - USD ($)	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
NOTE 3: INVENTORIES (Details) [Line Items]
Increase (Decrease) in Inventories	$ (20,873)	$ 18,417
Training and Simulation Division [Member]
NOTE 3: INVENTORIES (Details) [Line Items]
Increase (Decrease) in Inventories	343,000
Power Systems Division [Member]
NOTE 3: INVENTORIES (Details) [Line Items]
Increase (Decrease) in Inventories	$ 49,000

NOTE 3_ IN

NOTE 3: INVENTORIES (Details) - Schedule of Inventory - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Schedule of Inventory [Abstract]
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

NOTE 4_ SEGMENT INFORMATION (De

NOTE 4: SEGMENT INFORMATION (Details)	6 Months Ended
	Jun. 30, 2017USD ($)	Dec. 31, 2016USD ($)	Jun. 30, 2016USD ($)
NOTE 4: SEGMENT INFORMATION (Details) [Line Items]
Number of Operating Segments	2
Goodwill	$ 46,083,315	$ 45,489,517
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	$ 21,647,674		$ 21,052,329

NOTE 4_ SE

NOTE 4: SEGMENT INFORMATION (Details) - Schedule of Segment Reporting Information - USD ($)		3 Months Ended				6 Months Ended
		Jun. 30, 2017		Jun. 30, 2016		Jun. 30, 2017		Jun. 30, 2016		Dec. 31, 2016
Segment Reporting Information [Line Items]
Revenues from outside customers		$ 21,448,693		$ 21,779,877		$ 43,796,138		$ 47,186,358
Depreciation and amortization expense(1)	[1]	(964,745)		(1,159,628)		(2,082,208)		(2,334,666)
Direct expenses(2)	[2]	(20,600,568)		(20,616,332)		(42,045,061)		(44,678,795)
Segment net income (loss)		(116,620)		3,917		(331,131)		172,897
Financial income (expense)		(215,187)		(204,196)		(549,044)		(541,854)
Income tax expense		(262,820)		(368,827)		(482,760)		(582,280)
Income (loss) from continuing operations		(594,627)		(569,106)		(1,362,935)		(951,237)
Segment assets(3) (4)		108,321,284	[3],[4]	111,361,480	[3],[4]	108,321,284	[3],[4]	111,361,480	[3],[4]	$ 109,410,336
Additions to long-lived assets						3,283,670		831,395
Training and Simulation Division [Member]
Segment Reporting Information [Line Items]
Revenues from outside customers		10,191,814		11,346,295		20,543,003		24,647,137
Depreciation and amortization expense(1)	[1]	(277,461)		(276,367)		(548,125)		(549,027)
Direct expenses(2)	[2]	(8,672,907)		(9,494,982)		(18,050,604)		(20,422,716)
Segment net income (loss)		1,241,446		1,574,946		1,944,274		3,675,394
Financial income (expense)		(24,602)		(3,750)		(37,270)		(14,811)
Income tax expense		(35,000)		(30,830)		(70,000)		(93,630)
Income (loss) from continuing operations		1,181,844		1,540,366		1,837,004		3,566,953
Segment assets(3) (4)	[3],[4]	45,133,954		43,752,823		45,133,954		43,752,823
Additions to long-lived assets						2,356,724		165,066
Power Systems Division [Member]
Segment Reporting Information [Line Items]
Revenues from outside customers		11,256,879		10,433,582		23,253,135		22,539,221
Depreciation and amortization expense(1)	[1]	(686,100)		(874,491)		(1,531,811)		(1,775,382)
Direct expenses(2)	[2]	(11,064,098)		(9,664,106)		(22,155,430)		(20,765,715)
Segment net income (loss)		(493,319)		(105,015)		(434,106)		(1,876)
Financial income (expense)		(27,601)		(5,973)		(177,748)		(35,027)
Income tax expense		816		(109,361)		44,512		(109,361)
Income (loss) from continuing operations		(520,104)		(220,349)		(567,342)		(146,264)
Segment assets(3) (4)	[3],[4]	59,898,807		59,158,134		59,898,807		59,158,134
Additions to long-lived assets						926,946		666,329
Corporate Segment [Member]
Segment Reporting Information [Line Items]
Revenues from outside customers		0		0		0		0
Depreciation and amortization expense(1)	[1]	(1,184)		(8,770)		(2,272)		(10,257)
Direct expenses(2)	[2]	(863,563)		(1,457,244)		(1,839,027)		(3,490,364)
Segment net income (loss)		(864,747)		(1,466,014)		(1,841,299)		(3,500,621)
Financial income (expense)		(162,984)		(194,473)		(334,026)		(492,016)
Income tax expense		(228,636)		(228,636)		(457,272)		(379,289)
Income (loss) from continuing operations		(1,256,367)		(1,889,123)		(2,632,597)		(4,371,926)
Segment assets(3) (4)	[3],[4]	$ 3,288,523		$ 8,450,523		3,288,523		8,450,523
Additions to long-lived assets						$ 0		$ 0
[1]	Includes depreciation of property and equipment and amortization expenses of intangible assets.
[2]	Including, inter alia, sales and marketing, general and administrative.
[3]	Cash balances previously reporting in the Training and Simulation Division in 2016 are now reported in Corporate in 2017.
[4]	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.

NOTE 5_ BANK FINANCING (Details

NOTE 5: BANK FINANCING (Details) - USD ($)	6 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
NOTE 5: BANK FINANCING (Details) [Line Items]
Short-term Debt	$ 3,830,875	$ 2,973,032
Revolving Credit Facility [Member]
NOTE 5: BANK FINANCING (Details) [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 15,000,000
Line of Credit Facility, Expiration Date	Mar. 11, 2021
Line of Credit Facility, Interest Rate at Period End	4.25%
Line of Credit Facility, Covenant Terms	The Credit Facilities maintain certain reporting requirements, conditions precedent, affirmative covenants and financial covenants. The Company is required to maintain certain financial covenants that include a Maximum Debt to EBITDA ratio of 3.00 to 1.00 and a Minimum Fixed Charge Coverage Ratio of 1.20 to 1.00.
Line of Credit Facility, Collateral	The Credit Facilities are secured by the Company’s assets and the assets of the Company’s domestic subsidiaries.
Minimum [Member] | Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member]
NOTE 5: BANK FINANCING (Details) [Line Items]
Debt Instrument, Basis Spread on Variable Rate	1.75%
Maximum [Member] | Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member]
NOTE 5: BANK FINANCING (Details) [Line Items]
Debt Instrument, Basis Spread on Variable Rate	3.00%
Notes Payable to Banks [Member]
NOTE 5: BANK FINANCING (Details) [Line Items]
Debt Instrument, Face Amount	$ 10,000,000
Debt Instrument, Maturity Date	Mar. 11, 2021
Debt Instrument, Payment Terms	The repayment of the Term Loan consists of 60 consecutive monthly payments of principal plus accrued interest based on annual principal reductions of 10% during the first year, 20% during the second through fourth years, and 30% during the fifth year.
Debt Instrument, Interest Rate, Effective Percentage	4.50%
Other Long-term Debt, Noncurrent	$ 8,700,000	9,300,000
Notes Payable to Banks [Member] | Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member]
NOTE 5: BANK FINANCING (Details) [Line Items]
Debt Instrument, Basis Spread on Variable Rate	2.00%
Notes Payable to Banks [Member] | Maximum [Member] | London Interbank Offered Rate (LIBOR) [Member]
NOTE 5: BANK FINANCING (Details) [Line Items]
Debt Instrument, Basis Spread on Variable Rate	3.25%
Mortgages [Member]
NOTE 5: BANK FINANCING (Details) [Line Items]
Debt Instrument, Maturity Date	Jun. 1, 2024
Debt Instrument, Payment Terms	The monthly payments on Term Loan B and Term Loan C are $7,212 and $5,660, respectively, in principal plus accrued interest, with balloon payments due on the maturity date.
Debt Instrument, Interest Rate, Effective Percentage	4.50%
Other Long-term Debt, Noncurrent	$ 3,100,000	$ 967,000
Number of Loans	2
Mortgages [Member] | Term Loan B [Member]
NOTE 5: BANK FINANCING (Details) [Line Items]
Debt Instrument, Face Amount	$ 1,358,000
Debt Instrument, Periodic Payment	7,212
Mortgages [Member] | Term Loan C [Member]
NOTE 5: BANK FINANCING (Details) [Line Items]
Debt Instrument, Face Amount	1,730,895
Debt Instrument, Periodic Payment	$ 5,660