Disclosures

Arotech Corporation

I, Mike Crawford , certify that this report reflects my personal beliefs about this company and that no portion of my compensation was, is or will be directly or indirectly related to the specific recommendations or views discussed in this report.

Disclosure

  • B. Riley & Co., LLC does and seeks to do business with companies covered in its research reports.
  • A portion of this analyst’s compensation is based on the sales, trading and investment banking activities of B. Riley & Co., LLC.
  • B. Riley & Co., LLC makes a market in the securities of the company covered in this report.
  • This analyst, or a member of this analyst's household who is financially dependent on this analyst or vice versa, holds a long stock position in the security covered in this report.
Disclosure Chart

Initiated Coverage on 10/02/2013 with a Buy Rating and Price Target of $3.70

Ratings Distribution as of May 23, 2017
Rating Number of Companies Percent of Total Number of Companies with
Investment Banking Relationships
Percent of Total
Buy 157 69.8% 21 9.3%
Neutral 67 29.8% 1 0.4%
Sell 1 0.4% 0 0.0%
Total 225 100% 22 9.8%

Explanation of B. Riley & Co. LLC's Rating System

  • Buy: We generally expect "Buy" rated stocks to materially outperform both the S&P 500 and Russell 2000 as well as other stocks in their sector. Further, we believe that the potential reward relative to the potential risk is particularly attractive.
  • Neutral: We generally believe "Neutral" rated stocks will perform roughly in line with the S&P 500 and Russell 2000 over the intermediate and long term.
  • Sell: We generally expect "Sell" rated stocks to materially underperform both the S&P 500 and Russell 2000 as well as other stocks in their sector. Further, we believe that the potential reward relative to the potential risk is particularly unattractive.

Risks and Considerations

  • Acquisition/Integration - The Company actively evaluates potential acquisitions as part of its growth strategy. Acquisitions pursued by the Company could be dilutive to financial results and result in a difficult, dilutive or expensive integration.
  • Competition - The industry is highly competitive and many of the Company's competitors have greater resources.
  • Cyclical Nature of the Company's Business - Revenue from the Company's businesses have historically correlated positively with both US and world GDP. A cyclical downturn in GDP growth domestically and/or abroad may lead to a material deterioration in the Company's results.
  • Economy - Macro-economic issues such as increasing oil and gas prices and a possible drop in consumer spending could have a negative impact on the Company's business.
  • Financial Results - The Company has a history of operating losses. Although the Company is focused on achieving profitability, there are no assurances that the Company will meet its goals or be able to sustain profitability in future periods.
  • Financial Results - The Company has raised money via public offerings several times in the past and may need to do so again if it can not sustain positive cash flow.
  • General Industry - The Company could miss our estimates and/or their financial guidance.
  • Further Potential Risks - See the Company's SEC filings, particularly its 10-K filing, for a discussion of further potential risks.

Additional Risks and Considerations

    • Safety Risk - Some of the components of the company's products contain elements that are known to pose potential safety risks. Any accident, whether occasioned by the use of all or any part of our products or technology or by our manufacturing operations, could adversely affect commercial acceptance of the products and could result in significant production delays or claims for damages resulting from injuries. Any of these occurrences would materially adversely affect the company's operations and financial condition.
    • Financial Results – The Company’s earnings may decline if it writes off additional goodwill and other intangible assets.
    • Indebtedness – The Company’s indebtedness may adversely affect its ability to obtain additional funds and may increase its vulnerability to economic or business downturns.
    • International Operations – Sales to international customers may be subject to political and economic risks, including political instability, currency controls, exchange rate fluctuations, foreign taxes, longer payment cycles and changes in import/export regulations and tariff rates.
    • Proprietary Rights – The business is dependent on proprietary rights that may be difficult to protect and, if legally challenged, could adversely affect Arotech’s competitive position.