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Share Name | Share Symbol | Market | Type |
---|---|---|---|
ICTS International NV (QB) | USOTC:ICTSF | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 5.02 | 4.62 | 5.93 | 0.00 | 13:37:13 |
☐ |
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b)
OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☒ |
SEMI-ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE SIX MONTHS ENDED JUNE
30, 2022 |
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ |
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Large
accelerated filer ☐ |
Accelerated
filer ☐ |
Non-accelerated
filer ☒ |
|
International
Financial Reporting Standards as issued |
|
U.S.
GAAP ☒ |
by
the International Accounting Standards Board ☐ |
Other
☐ |
Page
| |
4
| |
25
| |
29
|
ICTS INTERNATIONAL
N.V AND SUBSIDIARIES | ||||||||||
CONSOLIDATED
BALANCE SHEETS | ||||||||||
(US $ in thousands,
except share data) | ||||||||||
(Unaudited)
|
4 |
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) |
(US
$ in thousands, except share and per share data) |
(Unaudited)
|
5 |
Common Stock |
Additional Paid-In |
Accumulated |
Accumulated Other Comprehensive |
Non Controlling |
Total Shareholders' |
|||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
Income
(loss) |
Interest
|
Deficit
|
||||||||||||||||||||||
BALANCE AT
DECEMBER 31, 2020 |
37,433,333
|
$
|
19,186
|
$
|
26,706
|
$
|
(68,603
|
)
|
$
|
(6,259
|
)
|
$
|
(1,515
|
)
|
$
|
(30,485
|
)
| |||||||||||
Net income
|
- |
-
|
-
|
22,668
|
-
|
489
|
23,157
|
|||||||||||||||||||||
Translation
adjustment |
-
|
-
|
-
|
-
|
(474
|
)
|
(10
|
) |
(484
|
)
| ||||||||||||||||||
Change in terms of redeemable non controlling interests (see note 10) |
- | - |
(10,102 |
) | - | - | 951 |
(9,151 |
) | |||||||||||||||||||
BALANCE AT
JUNE 30, 2021 |
37,433,333
|
19,186
|
16,604
|
(45,935
|
)
|
(6,733
|
)
|
(85
|
)
|
(16,963
|
)
| |||||||||||||||||
Net income
(loss) |
-
|
-
|
-
|
12,139
|
-
|
(208
|
) |
11,931
|
||||||||||||||||||||
Translation
adjustment |
-
|
-
|
-
|
- |
(1,165
|
)
|
93
|
(1,072
|
) | |||||||||||||||||||
Unrealized gains on derivatives instruments |
- | - | - | - | 32 | - | 32 | |||||||||||||||||||||
Stock-based compensation - AU10TIX Technologies B.V. |
- | - | 240 | - | - | - | 240 | |||||||||||||||||||||
BALANCE AT
DECEMBER 31, 2021 |
37,433,333
|
19,186
|
16,844
|
(33,796
|
)
|
(7,866
|
)
|
(200
|
)
|
(5,832
|
)
| |||||||||||||||||
Net income
(loss) |
-
|
-
|
-
|
7
|
-
|
(13
|
) |
(6
|
) | |||||||||||||||||||
Translation
adjustment |
-
|
-
|
-
|
-
|
(155
|
)
|
-
|
(155
|
)
| |||||||||||||||||||
Unrealized gains (losses) on derivatives instruments | - | - | - | - | (352 | ) | - | (352 | ) | |||||||||||||||||||
BALANCE AT
JUNE 30, 2022 |
37,433,333
|
$ |
19,186
|
$ |
16,844
|
$ |
(33,789
|
)
|
$ |
(8,373
|
)
|
$ |
(213
|
)
|
$ |
(6,345
|
)
|
6 |
(US $ in thousands, except share and per share data)
ICTS International N.V. (“ICTS”)
was established by the Department of Justice in Amstelveen, Netherlands on October 9, 1992. ICTS and subsidiaries (collectively referred
to as, the “Company” or “ICTS”) operates in three reportable segments: (a) Corporate (b) Airport security and
other aviation services and (c) Authentication technology.
The corporate segment does not generate revenue and contains primarily non-operational expenses. The airport security and other aviation services segment provide security and other services to airlines and airport authorities, predominantly in Europe and the United States of America. The authentication technology segment provides authentication services to financial and other institutions predominantly in the United States of America and Europe.
7 |
(US $ in thousands, except share and per share data)
June
30, |
December 31,
|
|||||||
2022
|
2021
|
|||||||
Receivable
from the Dutch tax authorities (1) |
$ |
1,042
|
$ |
9,091
|
||||
Dutch
governmental support - COVID 19 (2) |
1,751
|
2,614
|
||||||
Receivable
from the German authorities - COVID 19 (3) |
601
|
527
|
||||||
VAT receivable |
1,733 |
691 | ||||||
Prepaid insurance |
762 |
408 |
||||||
Prepaid uniforms |
509 |
366 |
||||||
Other
|
3,939
|
2,324
|
||||||
$ |
10,337
|
$ |
16,021
|
1. |
The Company is obligated to hold restricted
cash in the Netherlands, which is restricted for payments to the tax authorities. From time to time the Company is allowed to make a request
to release the money from the restricted account into the regular bank account. As part of the process the Company transfers the requested
amount to the Dutch tax authorities, who pay it back after a few weeks into the Company’s regular bank account.
|
2. |
In the Netherlands, the Company
was eligible for payroll support (see note 13). |
3. |
In Germany, the employees
were eligible for payroll support (see note 13). The Company paid to its German employees their full salary and the Company was reimbursed
by the German government for the payroll support amount. |
The Company evaluated the stock price of ATMS. The share price in the end of June, 2022 was relatively high for few weeks, including June 30, 2022 and then it declined. As ATMS share price is currently low, the number of shares that are being traded is limited, and as ATMS still does not have material revenue or profitable operations, the Company determined that the value of the investment is impaired and accordingly, valued the investment at zero.
8 |
(US $ in thousands, except share and per share data)
NOTE 4 – INVESTMENTS (CONTINUED)
9 |
(US $ in thousands, except share and per share data)
NOTE 4 – INVESTMENTS (CONTINUED)
Silver Circle One
Justt Fintech Ltd (previously Acrocharge Ltd)
Nilus OS Ltd
June 30,
|
December 31,
|
|||||||
2022
|
2021
|
|||||||
Office, equipment and
facilities |
$
|
7,711
|
$
|
8,602
|
||||
Internal-use software
|
3,172
|
2,085
|
||||||
Vehicles
|
1,722
|
1,617
|
||||||
Leasehold improvements
|
2,844
|
2,918
|
||||||
15,449
|
15,222
|
|||||||
Less: accumulated depreciation
and amortization |
9,319
|
9,512
|
||||||
Total property and equipment,
net |
$
|
6,130
|
$
|
5,710
|
Depreciation and amortization expense are $1,117 and $985 for the periods ended June 30, 2022 and 2021, respectively.
10 |
(US $ in thousands, except share and per share data)
The table below presents the effects on the amounts relating to the Company’s total lease cost:
Period ended, |
||||||||
June 30,
2022
|
June 30,
2021
|
|||||||
Operating
lease cost |
$
|
2,326
|
2,195
|
|||||
Short-term
lease cost |
712
|
883
|
||||||
Total
lease cost |
$
|
3,038
|
3,078
|
Supplemental balance sheet information related to operating leases was as follows:
June 30, 2022 |
December 31, 2021 |
|||||||
Operating lease ROU assets | $ | 10,270 | 10,938 | |||||
Other current liabilities | $ | 3,506 | 3,317 | |||||
Operating lease liabilities | 6,933 | 8,298 | ||||||
Total operating lease liabilities | $ | 10,439 | 11,615 |
Maturities of operating lease liabilities as of June 30, 2022 were as follows:
Year ending
December 31, |
||||
2022 (excluding
the six months ended June 30, 2022) |
$
|
2,114
|
||
2023
|
3,514
|
|||
2024
|
2,924
|
|||
2025
|
1,245
|
|||
2026
|
871
|
|||
Thereafter
|
865
|
|||
Total future
minimum lease payments |
11,533
|
|||
Less: imputed
interest |
1,094
|
|||
Total
|
$
|
10,439
|
United States of America
The Company’s U.S. subsidiary was a party to a credit facility with a commercial lender, which provided a maximum borrowing capacity up to $10,000, subject to a borrowing base limitation. The borrowing base limitation was equivalent to: (i) 85% of eligible accounts receivable, as defined, plus (ii) 80% of eligible unbilled receivables, as defined, plus (iii) 95% of a $500 standby letter of credit. Borrowings under the credit facility were secured by the U.S. subsidiary’s accounts receivable, unbilled receivables, equipment, cash and the $500 letter of credit that was provided to the lender by the Company.
Borrowings made under the credit facility bore interest, which was payable monthly, at LIBOR plus 3% per annum.
11 |
(US $ in thousands, except share and per share data)
NOTE 7 – NOTES PAYABLE – BANKS (CONTINUED)
United States of America (continued)
As of June 30, 2021, the Company had no outstanding balances under the line of credit arrangement. The credit facility expired on October 2021.
The Company had a credit arrangement with a commercial bank, to provide it with up to €12,000 in borrowings which was renewed in May 2020 through March 2021. Borrowings under the line of credit bore interest at one-month EURIBOR plus 4.8% with a minimum of 4.8% per annum. The Company was also subject to unused line fee of 0.75% per annum, which was payable quarterly. The line of credit was secured by accounts receivable of ten of the Company’s European subsidiaries, tangible fixed assets and a bank guarantee of €2,000 provided by the parent company, ICTS International N.V. The line of credit could not exceed 70% of the borrowing base. The line of credit included certain financial covenants. The line of credit expired in March 2021.
In addition to the line of credit arrangement, a guarantee facility of €2,500 ($2,841 as of December 31, 2021) was provided to the Company by the same commercial bank, which was renewed until March 2022, with an interest of 2.5% per annum and an unused line fee of 0.75% per annum which was payable quarterly. As of December 31, 2021, the Company had €1,022 ($1,161 as of December 31, 2021) of outstanding guarantees under the guarantee facility, which related to leases and performance guarantees for contracts. The guarantee facility expired in March 2022.
The Company has an additional credit arrangement in Sweden to provide it with up to 4,000 SEK ($389 as of June 30, 2022) in borrowings. Borrowings under the line of credit bear annual interest of 2.8% and subject to annual extension by the financial institution. The line of credit is secured by accounts receivable of the Swedish subsidiary. As of June 30, 2022, and December 31, 2021, the Company had 1,715 SEK and 1800 SEK ($167 and $199 as of June 30, 2022 and December 31, 2021) respectively, in outstanding borrowings under the line of credit facility.
June 30,
|
December 31,
|
|||||||
2022 | 2021 | |||||||
Accrued payroll
and related costs |
$
|
21,063
|
$
|
23,864
|
||||
Accrued vacation
|
8,968
|
7,152
|
||||||
Accrued commissions | 469 | 1,371 | ||||||
Labor union
contribution |
147
|
925
|
||||||
Deferred
revenue |
2,634
|
2,239
|
||||||
Accrued Legal expenses
|
1,416
|
2,019
|
||||||
Currency hedging costs | 475 | - | ||||||
Other
|
2,431
|
2,264
|
||||||
Total accrued
expenses and other current liabilities |
$
|
37,603
|
$
|
39,834
|
12 |
(US $ in thousands, except share and per share data)
As of June 30, 2022, and December 31, 2021 the convertible notes payable to this related party consist of $1,128 and $1,192, respectively.
June 30, | December 31, | |||||||
2022
|
2021
|
|||||||
Severance
pay |
$
|
1,603
|
$
|
1,631
|
||||
Deferred
VAT |
12,060
|
14,703
|
||||||
Deferred
wage tax |
17,730
|
22,534
|
||||||
Deferred revenue |
647 | 1,030 | ||||||
Other
|
807
|
969
|
||||||
Total other
liabilities |
$
|
32,847
|
$
|
40,867
|
Deferred VAT and deferred wage tax relates to
measurements taken by the Dutch government, on which they postponed all VAT payable for the years 2021 and 2020 and all wage tax and social
security payable for the months March – December 2021 to be paid in 60 installments starting March 2023, except for VAT payments
starting October 2022. |
13 |
(US $ in thousands, except share and per share data)
On July 3, 2019, AU10TIX entered into a Series A Preferred Subscription Agreement (the "Agreement") with TPG Lux 2018 SC I, S.a.r.l ("TPG"), according to which AU10TIX issued 3,000,000 Series A Preferred Shares ("Series A Shares") to TPG for a subscription price of US$60,000 in cash representing approximately 24% of the outstanding share capital of AU10TIX and 23.077% of the fully-diluted share capital of AU10TIX (see note 15). Transaction costs totaled $4,540 and were deducted from the redeemable non-controlling interests balance.
On November 7, 2019, AU10TIX entered into a Series A and Series A-1 Preferred Subscription Agreement with Oak HC/FT Partners II, L.P. ("Oak"), according to which AU10TIX issued 1,000,000 Series A Preferred Shares and 23,622 Series A-1 Preferred Shares ("Series A-1 Shares" and together with Series A Shares – "the Preferred Shares") to Oak for a subscription price of US$20,000 in cash representing approximately 7.401% of the outstanding share capital of AU10TIX and 7.143% of the fully-diluted share capital of AU10TIX. For accounting purposes, the investment was allocated to the Series A and Series A-1 Preferred Shares on a relative fair value basis: $19,537 and $461, respectively. Transaction costs totaled $1,513 and were deducted from the respective investment amounts.
The Preferred Shares Rights
Liquidation Preference: The holders of Series A Shares (“Series A Holders”) are entitled to a liquidation preference upon the occurrence of a sale, initial public offering (“IPO”), merger, consolidation, reorganization, winding-up, dissolution or liquidation of AU10TIX, pursuant to which the Series A Holders are entitled, on the occurrence of such event and in priority to the ordinary shares, to receive the greater of: (a) an amount equal to the initial subscription price for the Series A Shares, plus all accrued but unpaid dividends in respect of the Series A Shares, less all dividends previously paid on the Series A Shares, and (b) the proceeds distributable in respect of the Series A Shares had they been converted into ordinary shares. The initial subscription price for the Series A Shares (and calculations derived therefrom) are subject to customary adjustments as set forth in the agreements executed in connection with the Sale.
14 |
(US $ in thousands, except share and per share data)
15 |
(US $ in thousands, except share and per share data)
16 |
(US $ in thousands, except share and per share data)
17 |
(US $ in thousands, except share and per share data)
NOTE 11 – REDEEMABLE NON-CONTROLLING INTERESTS (CONTINUED)
The Preferred Shares Rights (Continued)
Period
Ended |
||||||||
June
30,
2022
|
December 31,
2021
|
|||||||
Balance as of the beginning
of the year |
$
|
90,478
|
$
|
75,322
|
||||
Net Income (Loss)
|
(38
|
) |
|
6,200 | ||||
Other Comprehensive Income
- Translation adjustment |
(160
|
)
|
(211
|
) | ||||
Conversion of AU10TIX
shares A-1 into new series A |
-
|
9,057
|
||||||
Stock-based compensation |
-
|
110
|
||||||
Balance as of the end of the year |
$ |
90,280
|
$ |
90,478
|
Period ended June 30,
|
||||||||
2022
|
2021
|
|||||||
Airport Security and
Other Aviation Services |
$
|
131,191
|
114,001
|
|||||
Authentication Technology
|
24,820
|
40,418
|
||||||
Total revenues
|
$
|
156,011
|
$
|
154,419
|
19 |
(US $ in thousands, except share and per share data)
NOTE 12 - REVENUE RECOGNITION (CONTINUED)
Revenue Recognition (continued)
Period
ended June 30, |
||||||||||||||||
2022
|
2021
|
|||||||||||||||
Germany
|
$
|
57,064
|
36.6
|
%
|
$
|
56,026
|
36.3
|
%
| ||||||||
United
States |
42,843
|
27.5
|
%
|
49,418
|
32.0
|
%
| ||||||||||
The Netherlands |
28,383
|
18.2
|
%
|
22,698
|
14.7
|
%
| ||||||||||
Spain | 17,300 | 11.1 | % | 14,205 | 9.2 | % | ||||||||||
Other
countries |
10,421
|
6.7
|
%
|
12,072
|
7.8
|
%
| ||||||||||
Total
revenues |
$
|
156,011
|
100.0
|
%
|
$
|
154,419
|
100.0
|
%
|
Airport Security and Other Aviation Services Segment
20 |
(US $ in thousands, except share and per share data)
NOTE 12 - REVENUE RECOGNITION (CONTINUED)
Airport Security and Other Aviation Services Segment (continued)
Other Airport Services
21 |
(US $ in thousands, except share and per share data)
Authentication Technology Segment
In the Netherlands wage tax, social security and VAT payments for the period March 2020 until September 2021 were postponed and will have to be paid in 60 installments, starting October 2022. As of June 30, 2022, and December 31, 2021, the Company accumulated debt of €33,456 and €33,456 ($34,794 and $38,018 as of June 30, 2022 and December 31, 2021), respectively, to the Dutch tax authorities for those postponed payments.
22 |
(US $ in thousands, except share and per share data)
23 |
(US $ in thousands, except share and per share data)
Airport
Security |
||||||||||||||||
and
Other |
Authentication |
|||||||||||||||
Corporate
|
Aviation Services
|
Technology
|
Total
|
|||||||||||||
Six months ended June
30, 2022: |
||||||||||||||||
Revenue
|
$
|
-
|
$
|
131,191
|
$
|
24,820
|
$
|
156,011
|
||||||||
Depreciation and amortization
|
41
|
466
|
610
|
1,117
|
||||||||||||
Net income (loss)
|
(1,198
|
)
|
1,276
|
(123
|
) |
(45
|
) | |||||||||
Total assets
|
$
|
10,108
|
$
|
105,906
|
$
|
70,459
|
$
|
186,473
|
||||||||
Six months ended June
30, 2021: |
||||||||||||||||
Revenue
|
$
|
-
|
$
|
114,001
|
$
|
40,418
|
$
|
154,419
|
||||||||
Depreciation and amortization
|
37
|
698
|
250
|
985
|
||||||||||||
Net income (loss)
|
(760
|
)
|
9,241
|
|
20,460
|
28,941
|
| |||||||||
Total assets
|
$
|
10,739
|
$
|
107,368
|
$
|
66,067
|
$
|
184,174
|
Six
months ended June 30, |
||||||||
2022
|
2021
|
|||||||
Germany
|
$
|
57,063
|
$
|
56,026
|
||||
United States of America
|
42,842
|
49,418
|
||||||
The Netherlands
|
28,385
|
22,698
|
||||||
Spain
|
17,300
|
14,205
|
||||||
Other
|
10,421
|
12,072
|
||||||
Total
|
$
|
156,011
|
$
|
154,419
|
The following table sets forth, for the periods indicated, property and equipment, net of accumulated depreciation and amortization by country:
June
30, |
December
31, |
|||||||
2022
|
2021
|
|||||||
Germany
|
$
|
356
|
$
|
361
|
||||
United States of America
|
701
|
422
|
||||||
The Netherlands
|
452
|
624
|
||||||
Spain
|
113
|
118
|
||||||
Other
|
4,508
|
4,185
|
||||||
Total
|
$
|
6,130
|
$
|
5,710
|
Property and equipment, net, in other countries include $4,227 and $3,956 property and equipment in Israel as of June 30, 2022 and December 31, 2021.
1 Year ICTS International NV (QB) Chart |
1 Month ICTS International NV (QB) Chart |
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