Quarterly report pursuant to Section 13 or 15(d)

NOTE 4: SEGMENT INFORMATION

v3.7.0.1
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, sales and marketing, general and administrative.

(3)
Out of those amounts, goodwill in the Company’s Training and Simulation and Power Systems Divisions totaled $24,435,641 and $21,647,674, respectively, as of June 30, 2017 and $24,435,641 and $21,052,329, respectively, as of June 30, 2016.

(4)
Cash balances previously reporting in the Training and Simulation Division in 2016 are now reported in Corporate in 2017.