Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 14, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | MICRONET ENERTEC TECHNOLOGIES, INC. | |
Entity Central Index Key | 854,800 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 6,170,151 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 1,969 | $ 2,361 |
Restricted cash | 4,541 | 4,135 |
Marketable securities | 3,852 | 5,643 |
Trade account receivables, net | 13,326 | 12,353 |
Inventories | 6,191 | 7,457 |
Other accounts receivable | 1,616 | 1,585 |
Total current assets | 31,495 | 33,534 |
Property and equipment, net | 1,691 | 1,816 |
Intangible assets and others, net | 2,674 | 3,297 |
Long term deposits | 32 | 30 |
Goodwill | 1,466 | 1,466 |
Total long term assets | 5,863 | 6,609 |
Total assets | 37,358 | 40,143 |
LIABILITIES AND EQUITY | ||
Short term bank credit and current portion of long term bank loans | 13,293 | 11,012 |
Short term credit from others and current portion of long term loans from others | 1,763 | 1,037 |
Trade accounts payable | 4,218 | 5,710 |
Other accounts payable | 1,830 | 2,484 |
Total current liabilities | 21,104 | 20,243 |
Long term loans from banks | 1,074 | 1,978 |
Long term notes | 200 | 375 |
Finance lease | 22 | |
Accrued severance pay, net | 104 | 52 |
Deferred tax liabilities | 9 | 17 |
Total long term liabilities | 1,387 | 2,444 |
Stockholders' Equity: | ||
Preferred stock; $.001 par value, 5,000,000 shares authorized, none issued and outstanding | ||
Common stock; $.001 par value, 25,000,000 shares authorized, 6,170,151 and 5,865,221 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively | 6 | 6 |
Additional paid in capital | 8,484 | 7,812 |
Accumulated other comprehensive income (loss) | 53 | (196) |
Retained earnings | 977 | 3,817 |
Micronet Enertec stockholders' equity | 9,520 | 11,439 |
Non-controlling interests | 5,347 | 6,017 |
Total equity | 14,867 | 17,456 |
Total long term liabilities and equity | $ 37,358 | $ 40,143 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 25,000,000 | 25,000,000 |
Common stock, shares issued | 6,170,151 | 5,865,221 |
Common stock, shares outstanding | 6,170,151 | 5,865,221 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Statement [Abstract] | ||||
Revenues | $ 5,354 | $ 5,556 | $ 18,557 | $ 16,982 |
Cost of revenues | 4,299 | 4,434 | 13,865 | 12,275 |
Gross profit | 1,055 | 1,122 | 4,692 | 4,707 |
Operating expenses: | ||||
Research and development | 476 | 485 | 1,859 | 1,951 |
Selling and marketing | 538 | 395 | 1,374 | 1,214 |
General and administrative | 1,323 | 1,169 | 3,977 | 3,407 |
Amortization of intangible assets | 234 | 282 | 694 | 889 |
Total operating expenses | 2,571 | 2,331 | 7,904 | 7,461 |
Loss from operations | (1,516) | (1,209) | (3,212) | (2,754) |
Financial expenses, net | 151 | 156 | 412 | 417 |
Loss before provision for income taxes | (1,667) | (1,365) | (3,624) | (3,171) |
Provision (benefit) for income taxes | (144) | 3 | (164) | (164) |
Net loss | (1,523) | (1,368) | (3,460) | (3,007) |
Net loss attributable to non-controlling interests | (240) | (105) | (619) | (450) |
Net loss attributable to Micronet Enertec Technologies, Inc. | $ (1,283) | $ (1,263) | $ (2,841) | $ (2,557) |
Loss per share attributable to Micronet Enertec Technologies, Inc. | ||||
Basic | $ (0.22) | $ (0.22) | $ (0.48) | $ (0.44) |
Weighted average common shares outstanding: | ||||
Basic | 5,902,074 | 5,865,221 | 5,882,529 | 5,838,873 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (1,523) | $ (1,368) | $ (3,460) | $ (3,007) |
Other comprehensive income (loss), net of tax: | ||||
Currency translation adjustment | 130 | (305) | 199 | (123) |
Total comprehensive loss | (1,393) | (1,673) | (3,261) | (3,130) |
Comprehensive income (loss) attributable to the non-controlling interests | (155) | (261) | (669) | 21 |
Comprehensive loss attributable to Micronet Enertec Technologies, Inc. | $ (1,238) | $ (1,412) | $ (2,592) | $ (3,151) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (3,460) | $ (3,007) |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 1,021 | 1,230 |
Marketable securities | (89) | 157 |
Change in fair value of derivatives, net | (37) | (8) |
Change in deferred taxes, net | (253) | (367) |
Accrued interest and exchange rate differences on loans | 579 | (125) |
Stock-based compensation | 292 | 254 |
Decrease (increase) in trade accounts receivable | (952) | 1,566 |
Decrease in inventories | 1,300 | 1,152 |
Increase in accrued severance pay, net | 52 | 20 |
Decrease (increase) in other accounts receivable | 157 | (42) |
Decrease in trade accounts payable | (1,492) | (3,441) |
Decrease in other accounts payable | (640) | (554) |
Net cash used in operating activities | (3,522) | (3,165) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (154) | (281) |
Restricted cash | (406) | 111 |
Marketable securities | 1,880 | 710 |
Net cash provided by investing activities | 1,320 | 540 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Receipt of short term bank credit | 5,387 | 4,334 |
Receipt of proceeds from notes | 567 | (1,000) |
Repayment of short term loans | (3,583) | (2,187) |
Repayment of long term bank loan | (915) | (1,313) |
Receipt (repayment) of long term loans from others | (106) | 59 |
Issuance of shares, net | 380 | |
Net cash provided by (used in) financing activities | 1,730 | (107) |
NET CASH DECREASE IN CASH AND CASH EQUIVALENTS | (472) | (2,732) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 2,361 | 4,179 |
TRANSLATION ADJUSTMENT ON CASH AND CASH EQUIVALENTS | 80 | (122) |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ 1,969 | $ 1,325 |
Description of Business
Description of Business | 9 Months Ended |
Sep. 30, 2016 | |
Description of Business [Abstract] | |
DESCRIPTION OF BUSINESS | NOTE 1 - DESCRIPTION OF BUSINESS Overview A. Micronet Enertec Technologies, Inc., a U.S.-based Delaware corporation, was formed on January 31, 2002. On March 14, 2013, we changed our corporate name from Lapis Technologies, Inc. to Micronet Enertec Technologies, Inc., or we, Micronet Enertec or the Company. We operate through two Israel-based companies, Enertec Systems 2001 Ltd., or Enertec, our wholly-owned subsidiary, and Micronet Ltd., or Micronet, in which we held 62.9% as of September 30, 2016 and is controlled by us. Micronet is a publicly traded company on the Tel Aviv Stock Exchange and operates in the growing commercial Mobile Resource Management, or MRM, market. Micronet through both its Israeli and U.S. operational offices designs, develops, manufactures and sells rugged mobile computing devices that provide fleet operators and field workforces with computing solutions in challenging work environments. Micronet’s vehicle cabin installed and portable tablets increase workforce productivity and enhance corporate efficiency by offering computing power and communication capabilities that provide fleet operators with visibility into vehicle location, fuel usage, speed and mileage. Micronet’s customers consist primarily of application service providers and solution providers specializing in the MRM market. Enertec operates in the Defense and Aerospace markets and designs, develops, manufactures and supplies various customized military computer-based systems, simulators, automatic test equipment and electronic instruments. Enertec’s solutions and systems are designed according to major aerospace integrators’ requirements and are integrated by them into critical systems such as command and control, missile fire control, maintenance of military aircraft and missiles for use by the Israeli Air Force and Navy and by foreign defense entities. B. Standby Equity Distribution Agreement On June 30, 2016, we entered into a Standby Equity Distribution Agreement, or the SEDA, with YA II PV Ltd., or YA II, a Cayman Island exempt limited partnership and an affiliate of Yorkville Advisors Global, LLC, for the sale of up to $2.39 million of shares of the Company’s common stock, par value $0.001 per share, over a three-year commitment period. Under the terms of the SEDA, the Company may from time to time, in its discretion, sell newly-issued shares of its common stock to YA II at a discount to market of 1.5%. The Company expects to issue shares of common stock under the SEDA pursuant to its effective Registration Statement on Form S-3 (Registration No. 333-196760), or the Registration Statement. The Company is not obligated to utilize any of the funds available under the SEDA and there are no minimum commitments or minimum use penalties. The total amount of funds that ultimately can be raised under the SEDA over the three-year term will depend on the market price for the Company’s common stock and the number of shares actually sold. The SEDA does not impose any restrictions on the Company’s operating activities. During the term of the SEDA, YA II is prohibited from engaging in any short selling or hedging transactions related to the Company’s common stock. As of September 30, 2016, the Company sold YA II an aggregate of 291,430 shares of its common stock for an aggregate sale amount of $480 pursuant to the SEDA and under the Registration Statement. The aggregate issuance costs amounted to $100. C. Note Purchase Agreement On June 30, 2016, the Company and its wholly-owned subsidiary, Enertec Electronics Ltd., entered into a Note Purchase Agreement with YA II, or the Note Purchase Agreement, whereby YA II purchased $600 of notes from the Company, or the Notes. The Company received a total of $600 on July 1, 2016. The outstanding principal balance of the Notes bears interest at 7% per annum. On a quarterly basis, which commenced on October 10, 2016, the Company will make payments of $150 of principal, plus accrued interest. All amounts payable are due on July 10, 2017. Upon the occurrence of an Event of Default under the Notes, all amounts payable may be due immediately. In connection with the Note Purchase Agreement, the Company granted to YA II a five-year warrant, or the Warrant, to purchase 66,000 shares of the Company’s common stock at an exercise price of $4.30 per share, which was amended on October 28, 2016 to $3.00 per share. The Company recorded a discount amount of $33 based on the fair value of the warrant on the grant date. |
Basis of Presentation and Conso
Basis of Presentation and Consolidation | 9 Months Ended |
Sep. 30, 2016 | |
Basis of Presentation and Consolidation [Abstract] | |
BASIS OF PRESENTATION AND CONSOLIDATION | NOTE 2 - BASIS OF PRESENTATION AND CONSOLIDATION Basis of Presentation The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP, for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the U.S. Securities and Exchange Commission, or SEC. Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of September 30, 2016 and the results of operations and cash flows for the periods presented. The results of operations for the periods ended September 30, 2016 are not necessarily indicative of the operating results for the full fiscal year or any future period. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. The Company’s accounting policies are described in the Notes to Consolidated Financial Statements in its Annual Report on Form 10-K for the year ended December 31, 2015, and updated, as necessary, in this Quarterly Report on Form 10-Q. All the amounts included in the notes are denominated in thousand US Dollars. Use of Estimates The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. Principles of consolidation The consolidated financial statements comprise the results and position of the Company and its subsidiaries. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its operating activities. In assessing control, legal and contractual rights are taken into account. The consolidated financial statements of subsidiaries are included in the consolidated financial statements from the date that control is achieved until the date that control is ceased. Intercompany transactions and balances are eliminated upon consolidation. Recent Accounting Pronouncements In January 2016, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Update, or ASU, No. 2016-01, Financial Instruments – Overall (Subtopic 825-10)or ASU 2016-01, which updates certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 will be effective for the Company beginning in its first quarter of 2019. The company is currently assessing the potential impact of this ASU on the consolidated financial position and results of operations. In February 2016, the FASB issued ASU No. 2016-02, which supersedes the lease accounting guidance in ASC 840, Leases. The new guidance requires lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases with the exception of short-term leases. For lessees, leases will continue to be classified as either operating or finance leases in the income statement. Lessor accounting is similar to the current model but updated to align with certain changes to the lessee model. The guidance is effective for reporting periods (interim and annual) beginning after December 15, 2018, for public companies, with early adoption permitted. The new guidance must be adopted using a modified retrospective approach. The Company is currently assessing the potential impact of this ASU on the consolidated financial position and results of operations. In March 2016, the FASB issued ASU No. 2016-09, which revises the guidance in ASC 718, Compensation - Stock Compensation, and will change how companies account for certain aspects of share-based payments to employees, including the income tax impact, classification on the statement of cash flows and forfeitures. The guidance is effective for reporting periods (interim and annual) beginning after December 15, 2017, for public companies. Early adoption is permitted. The Company is currently assessing the potential impact of this ASU on the consolidated financial position and results of operations. In June 2016, the FASB issued a new standard to replace the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For trade and other receivables, we will be required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable. Credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. The new standard will be effective beginning January 1, 2020, with early adoption permitted beginning January 1, 2019. The amendments will be applied through a cumulative-effect adjustment to retained earnings as of the effective date. The Company is currently evaluating the impact of this standard on the consolidated financial statements. In August 2016, the FASB issued ASU 2016-15. This update addresses whether to present certain specific cash flow items as operating, investing or financing activities. The amendments in this update are effective as of the first quarter of 2018; however, early adoption is permitted. The Company is currently evaluating the impact that this will have on the consolidated financial statements. In October 2016, the FASB issued ASU 2016-16. This update removes the current exception in U.S GAAP prohibiting entities from recognizing current and deferred income tax expenses or benefits. related to transfer of assets, other than inventory, within the consolidated entity. The current exception to defer the recognition of any tax impact on the transfer of inventory within the consolidated entity until it is sold to a third party remains unaffected. The amendments in this update are effective as of the first quarter of 2018. Early adoption is permitted and should be in the first interim period if an entity issues interim financial statements. The amendments in this ASU should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company is currently evaluating the impact of this ASU on the consolidated financial statements. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Measurements [Abstract] | |
FAIR VALUE MEASUREMENTS | NOTE 3 - FAIR VALUE MEASUREMENTS The accounting guidance establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1 – Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date. Level 2 – Observable inputs such as quoted prices for similar instruments and quoted prices in markets that are not active, and inputs that are directly observable or can be corroborated by observable market data. The types of assets and liabilities included in Level 2 are typically either comparable to actively traded securities or contracts, such as treasury securities with pricing interpolated from recent trades of similar securities, or priced with models using highly observable inputs, such as commodity options priced using observable forward prices and volatilities. Level 3 – Significant inputs to pricing that have little or no observability as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as the complex and subjective models and forecasts used to determine the fair value of financial instruments. Items carried at fair value as of September 30, 2016 and December 31, 2015,are summarized below: Fair value measurements using input type Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 1,969 $ - $ - $ 1,969 Restricted cash 4,541 - - 4,541 Marketable securities 3,852 - - 3,852 Derivative assets - 84 - 84 Derivative liabilities - Phantom option - (4 ) - (4 ) $ 10,362 $ 80 $ - $ 10,442 Fair value measurements using input type Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 2,361 $ - $ - $ 2,361 Restricted cash 4,135 - - 4,135 Marketable securities 5,643 - - 5,643 Derivative liabilities - Phantom option - (41 ) - (41 ) $ 12,139 $ (41 ) $ - $ 12,098 |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2016 | |
Inventories [Abstract] | |
INVENTORIES | NOTE 4 - INVENTORIES Inventories are stated at the lower of cost or market, computed using the first-in, first-out method. Inventories consist of the following: September 30, 2016 December 31, 2015 Raw materials $ 5,242 $ 6,303 Work in process 949 1,154 $ 6,191 $ 7,457 |
Segments
Segments | 9 Months Ended |
Sep. 30, 2016 | |
Segments [Abstract] | |
SEGMENTS | NOTE 5 - SEGMENTS Operating segments are based upon our internal organization structure, the manner in which our operations are managed and the availability of separate financial information. We have two operating segments: a defense and aerospace segment operated by Enertec and a mobile resource management segment operated by Micronet. The following table summarizes the financial performance of our operating segments: Nine months ended September 30, 2016 Defense Mobile resource management Consolidated Revenues from external customers $ 6,556 $ 12,001 $ 18,557 Segment operating income (loss) (705 ) ) (1) (2,326 ) Non allocated expenses (886 ) Finance expenses and other (412 ) Consolidated loss before provision for income taxes $ (3,624 ) Nine months ended September 30, 2015 Defense Mobile resource management Consolidated Revenues from external customers $ 5,673 $ 11,309 $ 16,982 Segment operating loss (714 ) ) (2) (2,084 ) Non allocated expenses (670 ) Finance expenses (417 ) Consolidated loss before provision for income taxes $ (3,171 ) (1) Includes $694 of intangible assets amortization, derived from acquisitions. (2) Includes $889 of intangible assets amortization, derived from acquisitions. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 6 - SUBSEQUENT EVENTS On October 28, 2016, the Company and its wholly owned subsidiary, Enertec Electronics Ltd., entered into a Note Purchase Agreement, or the Subsequent Note Purchase Agreement, with YA II, whereby YA II agreed to lend an additional $500 to the Company pursuant to a secured promissory note, or the Subsequent Note. The outstanding principal balance of the Subsequent Note bears interest at 7% per annum. Commencing on March 20, 2017, the Company will make four equal quarterly payments of principal plus accrued interest on a quarterly basis. On November 4, 2016, the Company entered into a Settlement and Mutual Release Agreement, or the Settlement Agreement, with regard to the complaint filed by Novatel Wireless, Inc., the Seller, on May 3, 2016 in the Superior District Court of the State of Delaware relating to the Asset Purchase Agreement between Novatel Wireless, Inc. and the Company, dated February 18, 2016. According to the terms of the Settlement Agreement, the Company will pay the Seller a sum of $150 for the full release, settlement and discharge of the allegations made in the complaint. As a result of the Settlement Agreement, the Company has deducted $100 from the $250 provision previously made in the financial statements. |
Basis of Presentation and Con13
Basis of Presentation and Consolidation (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Basis of Presentation and Consolidation [Abstract] | |
Basis of Presentation | Basis of Presentation The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP, for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the U.S. Securities and Exchange Commission, or SEC. Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of September 30, 2016 and the results of operations and cash flows for the periods presented. The results of operations for the periods ended September 30, 2016 are not necessarily indicative of the operating results for the full fiscal year or any future period. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. The Company’s accounting policies are described in the Notes to Consolidated Financial Statements in its Annual Report on Form 10-K for the year ended December 31, 2015, and updated, as necessary, in this Quarterly Report on Form 10-Q. All the amounts included in the notes are denominated in thousand US Dollars. |
Use of Estimates | Use of Estimates The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. |
Principles of consolidation | Principles of consolidation The consolidated financial statements comprise the results and position of the Company and its subsidiaries. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its operating activities. In assessing control, legal and contractual rights are taken into account. The consolidated financial statements of subsidiaries are included in the consolidated financial statements from the date that control is achieved until the date that control is ceased. Intercompany transactions and balances are eliminated upon consolidation. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In January 2016, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Update, or ASU, No. 2016-01, Financial Instruments – Overall (Subtopic 825-10)or ASU 2016-01, which updates certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 will be effective for the Company beginning in its first quarter of 2019. The company is currently assessing the potential impact of this ASU on the consolidated financial position and results of operations. In February 2016, the FASB issued ASU No. 2016-02, which supersedes the lease accounting guidance in ASC 840, Leases. The new guidance requires lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases with the exception of short-term leases. For lessees, leases will continue to be classified as either operating or finance leases in the income statement. Lessor accounting is similar to the current model but updated to align with certain changes to the lessee model. The guidance is effective for reporting periods (interim and annual) beginning after December 15, 2018, for public companies, with early adoption permitted. The new guidance must be adopted using a modified retrospective approach. The Company is currently assessing the potential impact of this ASU on the consolidated financial position and results of operations. In March 2016, the FASB issued ASU No. 2016-09, which revises the guidance in ASC 718, Compensation - Stock Compensation, and will change how companies account for certain aspects of share-based payments to employees, including the income tax impact, classification on the statement of cash flows and forfeitures. The guidance is effective for reporting periods (interim and annual) beginning after December 15, 2017, for public companies. Early adoption is permitted. The Company is currently assessing the potential impact of this ASU on the consolidated financial position and results of operations. In June 2016, the FASB issued a new standard to replace the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For trade and other receivables, we will be required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable. Credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. The new standard will be effective beginning January 1, 2020, with early adoption permitted beginning January 1, 2019. The amendments will be applied through a cumulative-effect adjustment to retained earnings as of the effective date. The Company is currently evaluating the impact of this standard on the consolidated financial statements. In August 2016, the FASB issued ASU 2016-15. This update addresses whether to present certain specific cash flow items as operating, investing or financing activities. The amendments in this update are effective as of the first quarter of 2018; however, early adoption is permitted. The Company is currently evaluating the impact that this will have on the consolidated financial statements. In October 2016, the FASB issued ASU 2016-16. This update removes the current exception in U.S GAAP prohibiting entities from recognizing current and deferred income tax expenses or benefits. related to transfer of assets, other than inventory, within the consolidated entity. The current exception to defer the recognition of any tax impact on the transfer of inventory within the consolidated entity until it is sold to a third party remains unaffected. The amendments in this update are effective as of the first quarter of 2018. Early adoption is permitted and should be in the first interim period if an entity issues interim financial statements. The amendments in this ASU should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company is currently evaluating the impact of this ASU on the consolidated financial statements. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Measurements [Abstract] | |
Schedule of fair value measurements | Fair value measurements using input type Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 1,969 $ - $ - $ 1,969 Restricted cash 4,541 - - 4,541 Marketable securities 3,852 - - 3,852 Derivative assets - 84 - 84 Derivative liabilities - Phantom option - (4 ) - (4 ) $ 10,362 $ 80 $ - $ 10,442 Fair value measurements using input type Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 2,361 $ - $ - $ 2,361 Restricted cash 4,135 - - 4,135 Marketable securities 5,643 - - 5,643 Derivative liabilities - Phantom option - (41 ) - (41 ) $ 12,139 $ (41 ) $ - $ 12,098 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Inventories [Abstract] | |
Schedule of Inventories | September 30, 2016 December 31, 2015 Raw materials $ 5,242 $ 6,303 Work in process 949 1,154 $ 6,191 $ 7,457 |
Segments (Tables)
Segments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Segments [Abstract] | |
Schedule of operating segments | Nine months ended September 30, 2016 Defense Mobile resource management Consolidated Revenues from external customers $ 6,556 $ 12,001 $ 18,557 Segment operating income (loss) (705 ) ) (1) (2,326 ) Non allocated expenses (886 ) Finance expenses and other (412 ) Consolidated loss before provision for income taxes $ (3,624 ) Nine months ended September 30, 2015 Defense Mobile resource management Consolidated Revenues from external customers $ 5,673 $ 11,309 $ 16,982 Segment operating loss (714 ) ) (2) (2,084 ) Non allocated expenses (670 ) Finance expenses (417 ) Consolidated loss before provision for income taxes $ (3,171 ) (1) Includes $694 of intangible assets amortization, derived from acquisitions. (2) Includes $889 of intangible assets amortization, derived from acquisitions. |
Description of Business (Detail
Description of Business (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 9 Months Ended | ||
Jun. 30, 2016 | Sep. 30, 2016 | Oct. 28, 2016 | Dec. 31, 2015 | |
Description of Business (Textual) | ||||
Common stock, par value | $ 0.001 | $ 0.001 | ||
Standby Equity Distribution Agreement [Member] | ||||
Description of Business (Textual) | ||||
Common stock sale to YA II PV Ltd. | $ 2,390 | $ 480 | ||
Common stock, par value | $ 0.001 | |||
Commitment period | 3 years | |||
Discount rate | 1.50% | |||
Common stock shares issued | 291,430 | |||
Common stock issuance amount | $ 100 | |||
Note Purchase Agreement [Member] | ||||
Description of Business (Textual) | ||||
YA II purchases of notes from the Borrowers | $ 600 | |||
Interest rate of outstanding principal balance | 7.00% | |||
Received amount from YA II | $ 600 | |||
Deposit liabilities, Description | On a quarterly basis commencing on October 10, 2016, the Borrowers shall make payments of $150 of principal plus accrued interest. | |||
Grant to YA II warrant to purchase shares of the common stock | 66,000 | |||
Warrants exercise price | $ 4.30 | |||
Note Purchase Agreement [Member] | Subsequent Event [Member] | ||||
Description of Business (Textual) | ||||
Grant to YA II warrant to purchase shares of the common stock | 66,000 | |||
Warrants exercise price | $ 3 | |||
Micronet Limited [Member] | ||||
Description of Business (Textual) | ||||
Ownership percentage | 62.90% |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | $ 1,969 | $ 2,361 |
Restricted cash | 4,541 | 4,135 |
Marketable securities | 3,852 | 5,643 |
Derivative assets | 84 | |
Derivative liabilities - Phantom option | (4) | (41) |
Financial assets and liabilities measured at fair value | 10,442 | 12,098 |
Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 1,969 | 2,361 |
Restricted cash | 4,541 | 4,135 |
Marketable securities | 3,852 | 5,643 |
Derivative assets | ||
Derivative liabilities - Phantom option | ||
Financial assets and liabilities measured at fair value | 10,362 | 12,139 |
Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | ||
Restricted cash | ||
Marketable securities | ||
Derivative assets | 84 | |
Derivative liabilities - Phantom option | (4) | (41) |
Financial assets and liabilities measured at fair value | 80 | (41) |
Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | ||
Restricted cash | ||
Marketable securities | ||
Derivative assets | ||
Derivative liabilities - Phantom option | ||
Financial assets and liabilities measured at fair value |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Inventories [Abstract] | ||
Raw materials | $ 5,242 | $ 6,303 |
Work in process | 949 | 1,154 |
Inventories | $ 6,191 | $ 7,457 |
Segments (Details)
Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |||
Segment Reporting Information [Line Items] | ||||||
Revenues from external customers | $ 5,354 | $ 5,556 | $ 18,557 | $ 16,982 | ||
Finance expenses | (151) | (156) | (412) | (417) | ||
Consolidated loss before provision for income taxes | $ (1,667) | $ (1,365) | (3,624) | (3,171) | ||
Defense and aerospace [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues from external customers | 6,556 | 5,673 | ||||
Segment operating income (loss) | (705) | (714) | ||||
Mobile resource management [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues from external customers | 12,001 | 11,309 | ||||
Segment operating income (loss) | (1,621) | [1] | (1,370) | [2] | ||
Consolidated [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues from external customers | 18,557 | 16,982 | ||||
Segment operating income (loss) | (2,326) | (2,084) | ||||
Non allocated expenses | (886) | (670) | ||||
Finance expenses | (412) | (417) | ||||
Consolidated loss before provision for income taxes | $ 3,624 | $ (3,171) | ||||
[1] | Includes $694 of intangible assets amortization, derived from acquisitions. | |||||
[2] | Includes $889 of intangible assets amortization, derived from acquisitions. |
Segments (Details Textual)
Segments (Details Textual) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)Segments | Sep. 30, 2015USD ($) | |
Segment (Textual) | ||||
Number of operating segments | Segments | 2 | |||
Amortization of intangible assets | $ | $ 234 | $ 282 | $ 694 | $ 889 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Thousands | Nov. 04, 2016 | Oct. 28, 2016 | Jun. 30, 2016 |
Note Purchase Agreement [Member] | |||
Subsequent Events (Textual) | |||
Grant to YA II warrant to purchase shares of the common stock | 66,000 | ||
Warrants exercise price | $ 4.30 | ||
Subsequent Event [Member] | |||
Subsequent Events (Textual) | |||
Subsequent event, description | According to the terms of the Settlement Agreement, the Company will pay the Seller a sum of $150 for the full release, settlement and discharge of the allegations made in the complaint. As a result of the Settlement Agreement, the Company has deducted $ 100 from the $ 250 provision previously made in the financial statements. | ||
Subsequent Event [Member] | Note Purchase Agreement [Member] | |||
Subsequent Events (Textual) | |||
Grant to YA II warrant to purchase shares of the common stock | 66,000 | ||
Warrants exercise price | $ 3 | ||
Debt instrument agreed amount | $ 500 | ||
Note bears interest rate | 7.00% |