Arotech Gets Battery-Supply Deal For $1.6M Military contractor Arotech Corp. announced on Jan 3 that one of its units received new orders worth more than $1.6 million to supply rechargeable batteries to Israeli and European customers. The use of the batteries will be to power military applications.
Arotech Corporation provides quality defense and security products for the military, law enforcement and security markets, including advanced zinc-air and lithium batteries and chargers, multimedia interactive simulators/trainers and vehicle, aviation, marine and personal armoring. Arotech was incorporated in 1990 and began operations in 1991. In 1994 Arotech engaged in an initial public offering. The company is also involved in electric vehicles. Arotech’s Electric Fuel's all-electric bus, powered by zinc-air fuel cell technology, has demonstrated a 127-mile range. According to Arotech, Electric Fuel's revolutionary zinc-air fuel cell technology has been demonstrated in tens of thousands of kilometers of on-road driving in vehicles ranging in size up to 4.8 ton delivery vans in the service of European postal systems and its Electric Vehicle Division intends to bring aboutthe deployment of commercial numbers of zero-emission zinc-air electric buses in fleets of transit systems and school districts, providing zero-emission transportation at reasonable costs. Revenues made an impressive increase from the year before from $29 million to $40 million for the nine month period ended September 30, 2007 and the net loss decreased substantially from $13.4 million to $3.9 million. Cash flow continued to be negative with large capital expenditures of $2.35 million for the nine month period. Operations have historically been funded from the issuance of equity and debt securites. As stated in its SEC filings Arotech has incurred significant net losses since its inception and specifically stated that “there can be no assurance that we will ever be able to achieve or maintain profitability consistently.” Although Arotech Corporation has state of the art technology they are operating at losses with substantial negative cash flow. In addition the funding of operations if these losses continue will need to be made through the issuance of more debt and equity. Arotech’s current stock price of $2.45 seems quite lofty for a company with no earnings, negative cash flow and huge capital expenditures: usually components of a speculative stock. A price in the range of $1.25 may be more appropriate for the risk incurred in owning it.Under the present conditions this military contractor appears to be losing the war on the financial front.