Quarterly report pursuant to Section 13 or 15(d)

NOTE 4: SEGMENT INFORMATION

v3.5.0.2
NOTE 4: SEGMENT INFORMATION
6 Months Ended
Jun. 30, 2016
Segment Reporting [Abstract]  
Segment Reporting Disclosure [Text Block]
NOTE 4:                      SEGMENT INFORMATION

a.           The Company and its subsidiaries operate primarily in three business segments and follow the requirements of FASB ASC 280-10. Additionally, the three segments are also treated by the Company as reporting units for goodwill impairment evaluation purposes under FASB ASC 350-20-35. The goodwill amounts associated with the Training and Simulation Division and the Power Systems Division was determined and valued when the specific businesses in the reportable segment were purchased.

Subsequent to December 31, 2015, the Company reassessed its reportable segments and established a third reportable segment herein referred to as the Flow Battery Division. The Flow Battery Division is a research and development operating segment with the purpose of developing an iron flow battery for power grid storage. The Flow Battery Division was previously accounted within the Power Systems Division. No goodwill has been allocated to this reportable segment as the relative fair value was determined to be zero.

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 or loss 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, 2016 and 2015:

 
 
Training and
Simulation
Division
   
Power Systems
Division
   
Flow Battery Division
   
Corporate
Expenses
   
Total
Company
 
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
)
   
(492,485
)
   
(3,490,364
)
   
(45,171,280
)
Segment net income (loss)
 
$
3,675,394
   
$
(1,876
)
 
$
(492,485
)
 
$
(3,500,621
)
 
$
(319,588
)
Financial income (expense)
   
(14,811
)
   
(35,027
)
   
     
(492,016
)
   
(541,854
)
Income tax expense
   
(93,630
)
   
(109,361
)
   
     
(379,289
)
   
(582,280
)
Net income (loss)
 
$
3,566,953
   
$
(146,264
)
 
$
(492,485
)
 
$
(4,371,926
)
 
$
(1,443,722
)
Segment assets(3)
 
$
43,752,823
   
$
59,158,134
   
$
   
$
8,450,523
   
$
111,361,480
 
Additions to long-lived assets
 
$
165,066
   
$
666,329
   
$
   
$
   
$
831,395
 
Six months ended June 30, 2015
                                       
Revenues from outside customers
 
$
26,322,683
   
$
19,548,250
   
$
   
$
   
$
45,870,933
 
Depreciation, amortization and impairment expenses(1)
   
(415,021
)
   
(2,055,058
)
   
     
(12,406
)
   
(2,482,485
)
Direct expenses(2)
   
(22,028,902
)
   
(20,418,131
)
   
(328,108
)
   
(2,158,225
)
   
(44,933,366
)
Segment net income (loss)
 
$
3,878,760
   
$
(2,924,939
)
 
$
(328,108
)
 
$
(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
   
$
(2,910,745
)
 
$
(328,108
)
 
$
(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
 
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
)
   
(230,839
)
   
(1,457,244
)
   
(20,847,171
)
Segment net income (loss)
 
$
1,574,946
   
$
(105,015
)
 
$
(230,839
)
 
$
(1,466,014
)
 
$
(226,922
)
Financial income (expense)
   
(3,750
)
   
(5,973
)
   
     
(194,473
)
   
(204,196
)
Income tax expense
   
(30,830
)
   
(109,361
)
   
     
(228,636
)
   
(368,827
)
Net income (loss)
 
$
1,540,366
   
$
(220,349
)
 
$
(230,839
)
 
$
(1,889,123
)
 
$
(799,945
)
Three months ended June 30, 2015
                                       
Revenues from outside customers
 
$
12,884,561
   
$
8,759,664
   
$
   
$
   
$
21,644,225
 
Depreciation, amortization and impairment expenses(1)
   
(207,845
)
   
(928,470
)
   
     
(5,937
)
   
(1,142,252
)
Direct expenses(2)
   
(10,297,257
)
   
(10,040,544
)
   
(147,081
)
   
(1,646,321
)
   
(22,131,203
)
Segment net income (loss)
 
$
2,379,459
   
$
(2,209,350
)
 
$
(147,081
)
 
$
(1,652,258
)
 
$
(1,629,230
)
Financial income (expense)
   
(13,226
)
   
38,824
     
     
(268,995
)
   
(243,397
)
Income tax expense
   
(151,219
)
   
     
     
(219,124
)
   
(370,343
)
Net income (loss)
 
$
2,215,014
   
$
(2,170,526
)
 
$
(147,081
)
 
$
(2,140,377
)
 
$
(2,242,970
)

(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 $21,052,329, respectively, as of June 30, 2016 and $24,435,641 and $21,173,818, respectively, as of June 30, 2015. There was no goodwill as of either date in the Flow Battery Division.