Note 7 - Investments - Related Parties

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Business Combination Disclosure [Text Block]

N

OTE

7

:

INVESTMENTS – RELATED PARTIES

Avalanche International Corporation (AVLP)

Investments in AVLP at

December

31,

2016

consist of:

Balance at January 1, 2016	$	-
Investment in convertible promissory notes of AVLP - Gross		997
Original issue discount		(47	)
Accretion of discount		2
Investment in convertible promissory note of AVLP - Net		952
Investment in common stock of AVLP		84
Balance at December 31, 2016	$	1,036

During the last quarter of

2016

, the Company made certain strategic investments in AVLP, a related party controlled by Philou, an existing majority stockholder. The Company’s investments in AVLP consist of convertible promissory notes bearing interest of

12%

per annum purchased at a

5%

discount and shares of common stock of AVLP

.

On

October

5,

2016

and

November

30,

2016,

the Company entered into

two

12%

Convertible Promissory Note agreements ("Notes Receivable") in the principal amount of

$525

each, net of a

5%

original issue discount

(

$25

each) with interest payable at

12%

per annum. All principal and accrued interest shall be due for payment on or before

two

years from the origination dates of each note. At any time after

six

months, the Company has the right, at its option, to convert all or any portion of the principal and accrued interest into shares of common stock of AVLP at

$0.74536

per share, subject to adjustment. The principal amount of each note is convertible into

704,357

shares common stock of AVLP.

During the last quarter of

2016,

the Company invested

$950

pursuant to Notes Receivable and remaining balance of

$50

was invested on

February

17,

2017

.

.

The original issue discount of

$50

on the Notes Receivable is being amortized as interest income through the maturity date using the interest rate method. The original issue discount on the Note Receivable is amortized as interest income through the maturity date using the interest method, the Company recorded

$2

interest income for the discount accretion.

As of

December

31,

2016

the Company recorded contractual interest receivables of

$13.

On

February

22,

2017,

subsequent to year-end, AVLP issued the Company a

third

$525

12%

Convertible Promissory Note (the “Third Note”) with original issue discount of

5%.

During the period from

February

22,

2017

to

April

5,

2017,

the Company funded

$457

pursuant to this Third Note.

The Company has classified the all the above noted Notes

, it holds in AVLP

, as Available-for-Sale securities, subject to the guidance in ASC

320.

The Convertible Promissory Notes qualify for application of the Fair Value Option Subsections of Subtopic

320

-

10

and

825

-

10.

At

December

31,

2016,

the closing market price of AVLP’s common Stock was

$0.45.

Subsequent to year-end, the closing market price of AVLP’s common stock was in the range of

$0.25

and

$0.45

and due to the illiquidity and significant volatility of AVLP’s common stock, the Company has determined that its cost basis in AVLP common stock approximates the current fair value.

The Company has concluded that indicators of impairment, including those described in ASC

320

-

10

-

35

-

27,

do not currently exist for the Company’s investment in AVLP’s Notes.

In addition the Company purchased at the market

250

,900

shares of Avalanche at total cost of

$84

. The investment is accounted under the fair value -method in accordance with ASC

32

0

-

1

0.

Based upon the closing market price at

December

31,

2016,

and most recently at

March

30,

2017

($0.30),

the Company has concluded that its investment in shares of AVLP common stock is not impaired.

Telkoor Telecom Ltd. (Telkoor)

Investment in Telkoor at

December

31,

2016

and

2015

consists of:

	2016			2015
Balance at January 1, 2016	$	90		$	207
Impaired		-			(110	)
Exchange rate		-			(7	)
Disposed/(sold)		(90	)		-
Balance at December 31, 2016	$	-		$	90

On

June

16,

2011,

the Company acquired

1,136,666

shares of Telkoor, the Company's major shareholder at the time, and an Israeli company listed in the Tel Aviv stock exchange (at such time) for

$1,000,

which represented

8.8%

of the outstanding shares of Telkoor. As a result of this transaction, an existing manufacturing agreement between the Company and Telkoor was updated and extended.

The Company recorded an impairment of its investment in Telkoor of

$0

and

$110

for the years ended

December

31

2016

and

2015,

respectively. On

September

5,

2016,

the Company entered into a Securities Purchase Agreement (the “Agreement”) with Philou

, and Telkoor pursuant to which the Philou purchased all of the Telkoor

2,714,610

shares of the common stock invested in the Company, constituting approximately

40.06%

of the Company’s then outstanding shares of common stock for a consideration of

$1.5

million to Telkoor

.

Pursuant to the Agreement, the Company entered into a Rescission Agreement with the Telkoor in order to resolve all financial issues between the parties, including the repurchase by the Seller of

1,136,666

shares of common stock in Seller beneficially owned by the Company for their book value.

The closing of the transactions under the Agreement and the Rescission Agreement occurred on

September

22,

2016.

Equity securities that do not have readily determinable fair values (i.e. non-marketable equity securities) and are not required to be accounted for under the equity method are typically carried at cost (i.e., cost method investments), as described in ASC

325

-

20.

The Company carried its investment in Telkoor's shares at historical cost, net of impairment charges in accordance with ASC

325

-

20

"Investments in Other".