Annual report pursuant to Section 13 and 15(d)

NOTE 10: - COMMITMENTS AND CONTINGENT LIABILITIES

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NOTE 10: - COMMITMENTS AND CONTINGENT LIABILITIES
12 Months Ended
Dec. 31, 2016
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Disclosure [Text Block]
NOTE 10:–                      COMMITMENTS AND CONTINGENT LIABILITIES

a.           Royalty commitments:

Under Epsilor-EFL’s research and development agreements with the Office of the Chief Scientist (“OCS”), and pursuant to applicable laws, Epsilor-EFL is required to pay royalties at the rate of 3%-3.5% of net sales of products developed with funds provided by the OCS, up to an amount equal to 100% of research and development grants received from the OCS. Amounts due in respect of projects approved after 1999 also bear interest at the LIBOR rate. Epsilor-EFL is obligated to pay royalties only on sales of products in respect of which OCS participated in their development. Should the project fail, Epsilor-EFL will not be obligated to pay any royalties or refund the grants. During 2016, 2015 and 2014, Epsilor-EFL received grants in the total amount of $612,249, $322,820, and $177,918, respectively. 

No royalties were expensed for 2016, 2015 and 2014, respectively.

b.           Lease commitments:

The Company rents its facilities under various operating lease agreements, which expire on various dates through 2019. The minimum rental payments under non-cancelable operating leases are as follows:

December 31
 
Minimum rental payments
 
2017
 
$
1,060,954
 
2018
   
648,202
 
2019
   
382,296
 
2020
   
 
2021
   
 
Thereafter
   
 
Total
 
$
2,091,452
 

Total rent expense for the years ended December 31, 2016, 2015, and 2014 were $1,418,136, $1,404,183 and $1,366,192, respectively.

c.           Guarantees:

The Company obtained bank guarantees in the amount of $649,260 in connection with (i) obligations of one of the Company’s subsidiaries to the Israeli customs authorities, and (ii) the obligation of one of the Company’s subsidiaries to secure the return of products loaned to the Company from one of its customers.

d.           Liens:

As security for compliance with the terms related to the investment grants from the State of Israel, Epsilor-EFL has registered floating liens (that is, liens that apply not only to assets owned at the time but also to after-acquired assets) on all of its assets, in favor of the State of Israel.

The Company does not have any credit liens collateralized by the assets of the Company and guaranteed by the Company.

Epsilor-EFL has recorded a lien on all of its assets in favor of its banks to secure overdraft protection. In addition Epsilor-EFL has a specific pledge on assets in respect of which government guaranteed loans were given.

e.           Litigation and other claims:

As of the date of this filing, there were no material pending legal proceedings against the Company.