☐ | 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, 2023 |
☐ | 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 |
Alon Raich, Tel: +31-20-3471077
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 | |
17 | |
20 |
ITEM 1. FINANCIAL STATEMENTS | ||||||||||
ICTS INTERNATIONAL N.V AND SUBSIDIARIES | ||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||
(US $ in thousands, except share data) | ||||||||||
(Unaudited) |
June 30, |
December 31, | |||||||
2023 |
2022 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents |
$ |
45,153 |
$ |
50,937 | ||||
Restricted cash |
8,038 |
15,867 | ||||||
Bank deposits |
25,123 |
24,568 | ||||||
Accounts receivable, net |
68,085 |
54,306 | ||||||
Prepaid expenses and other current assets |
11,672 |
9,805 | ||||||
Total current assets |
158,071 |
155,483 | ||||||
Deferred tax assets, net |
1,587 |
1,518 | ||||||
Investments |
249 |
326 | ||||||
Deposits |
4,714 |
4,545 | ||||||
Restricted cash |
4,600 |
4,590 | ||||||
Property and equipment, net |
5,877 |
6,276 | ||||||
Operating lease right of use assets |
8,868 |
10,201 | ||||||
Goodwill |
660 |
646 | ||||||
Other assets |
950 |
1,048 | ||||||
Total assets |
$ |
185,576 |
$ |
184,633 | ||||
LIABILITIES AND SHAREHOLDERS' DEFICIT | ||||||||
CURRENT LIABILITIES: | ||||||||
Notes payable - banks |
$ |
175 |
$ |
122 | ||||
Accounts payable |
6,080 |
8,720 | ||||||
Accrued expenses and other current liabilities |
51,248 |
41,707 | ||||||
Value added tax (VAT) payable |
8,999 |
7,703 | ||||||
Income taxes payable |
5,038 |
6,105 | ||||||
Convertible note payable to a related party |
1,112 |
- | ||||||
Operating lease liabilities, current |
3,982 |
3,969 | ||||||
Total current liabilities |
76,634 |
68,326 | ||||||
Convertible note payable to a related party |
- |
1,104 | ||||||
Operating lease liabilities, non current |
4,865 |
6,375 | ||||||
Other liabilities |
25,574 |
29,214 | ||||||
Total liabilities |
107,073 |
105,019 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
REDEEMABLE NON-CONTROLLING INTERESTS |
90,869 |
89,974 | ||||||
SHAREHOLDERS' DEFICIT: | ||||||||
Common stock, 0.45 Euro par value; | ||||||||
150,000,000 shares authorized as of June 30, 2023 and December 31, 2022; | ||||||||
37,433,333 shares issued and outstanding as of June 30, 2023 and | ||||||||
December 31, 2022 |
19,186 |
19,186 | ||||||
Additional paid-in capital |
16,604 |
16,604 | ||||||
Accumulated deficit |
(40,861 |
) |
(38,521 |
) | ||||
Accumulated other comprehensive loss |
(8,370 |
) |
(8,186 |
) | ||||
Non controlling interest in subsidaries |
1,075 |
557 | ||||||
Total shareholders' deficit |
(12,366 |
) |
(10,360 |
) | ||||
Total liabilities and shareholders' deficit |
$ |
185,576 |
$ |
184,633 |
4 |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) |
(US $ in thousands, except share and per share data) |
(Unaudited) |
Six months ended | Six months ended | |||||||
June 30, 2023
|
June 30, 2022
| |||||||
Revenue
|
$
|
204,408
|
$
|
156,011
| ||||
Cost of revenue
|
170,705
|
119,095
| ||||||
GROSS PROFIT
|
33,703
|
36,916
| ||||||
Operating expenses:
| ||||||||
Research and development
|
6,533
|
6,607
| ||||||
Selling, general and administrative
|
28,612
|
27,912
| ||||||
Total operating expenses
|
35,145
|
34,519
| ||||||
OPERATING INCOME (LOSS)
|
(1,442
| ) |
2,397
| |||||
Equity loss from investment in affiliates
|
-
|
93
| ||||||
Other income, net
|
727
|
65
| ||||||
INCOME (LOSS) BEFORE INCOME TAX EXPENSE
|
(715
| ) |
2,369
| |||||
Income tax expense
|
625
|
2,414
| ||||||
NET LOSS
|
(1,340
|
)
|
(45
| ) | ||||
Net income (loss) attributable to non-controlling interests
|
1,000
|
(52
| ) | |||||
NET INCOME (LOSS) ATTRIBUTABLE TO ICTS INTERNATIONAL N.V.
|
$
|
(2,340
| ) |
$
|
7
| |||
BASIC AND DILUTED NET INCOME (LOSS) ATTRIBUTABLE TO ICTS
| ||||||||
INTERNATIONAL N.V. PER SHARE
| ||||||||
Net income (loss) attributable to ICTS International N.V.
|
$
|
(2,340
| ) |
$
|
7
| |||
Basic weighted average number of shares
|
37,433,333
|
37,433,333
| ||||||
Net Income (loss) per share attributable to ICTS International N.V. - basic
|
$
|
(0.06
| ) |
$
|
0.00
| |||
Diluted weighted average number of shares
|
37,433,333
|
40,108,529
| ||||||
Net income (loss) per share attributable to ICTS International N.V. - diluted
|
$
|
(0.06
| ) |
$
|
0.00
| |||
COMPREHENSIVE LOSS
| ||||||||
Net loss
|
$
|
(1,340
|
)
|
$
|
(45
| ) | ||
Other comprehensive income (loss) - translation adjustments
| 46 |
(314
|
)
| |||||
Unrealized loss on derivative instruments
|
(230 | ) |
(352
| ) | ||||
Comprehensive loss
|
$
|
(1,524
| ) |
$
|
(711
| ) | ||
Comprehensive income (loss) attributable to non controlling interests
|
1,413
|
(38
| ) | |||||
COMPREHENSIVE LOSS ATTRUBUTABLE TO ICTS INTERNATIONAL N.V.
|
$
|
(2,937
| ) |
$
|
(673
| ) |
5 |
Common Stock | Additional Paid-In | Accumulated | Accumulated Other Comprehensive | Non Controlling | Total Shareholders' | |||||||||||||||||||||||
Shares |
Amount |
Capital |
Deficit |
Loss |
Interest |
Deficit | ||||||||||||||||||||||
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 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 |
) | |||||||||||||||||
Net loss |
- |
- |
- |
(4,732 | ) | - |
(6 | ) | (4,738 | ) | ||||||||||||||||||
Translation adjustment |
- |
- |
- | - | (130 |
) |
23 |
(107 | ) | |||||||||||||||||||
Unrealized gains on derivatives instruments | - | - | - | - | 317 | - | 317 | |||||||||||||||||||||
Stock-based compensation - AU10TIX Technologies B.V. | - | - | (240 | ) | - | - | 753 | 513 | ||||||||||||||||||||
BALANCE AT DECEMBER 31, 2022 |
37,433,333 |
19,186 |
16,604 |
(38,521 |
) |
(8,186 |
) |
557 |
(10,360 |
) | ||||||||||||||||||
Net loss |
- |
- |
- |
(2,340 | ) |
- |
- |
(2,340 | ) | |||||||||||||||||||
Translation adjustment |
- |
- |
- |
- |
46 |
- |
46 | |||||||||||||||||||||
Sale of QDD Shares on Januay 1, 2023 | - | - | - | - | - | 194 | 194 | |||||||||||||||||||||
Unrealized losses on derivatives instruments | - | - | - | - | (230 | ) | - | (230 | ) | |||||||||||||||||||
Stock-based compensation - AU10TIX Technologies B.V. | - | - | - | - | - | 324 | 324 | |||||||||||||||||||||
BALANCE AT JUNE 30, 2023 |
37,433,333 | $ | 19,186 | $ | 16,604 | $ | (40,861 | ) | $ | (8,370 |
) | $ | 1,075 | $ | (12,366 | ) |
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 four reportable segments: (a) Corporate (b) Airport security (c) Other aviation related services and (d) Authentication technology.
The corporate segment does not generate revenue from third parties and contains primarily non-operational expenses. The airport security segment provides security services mostly to airport authorities and airlines predominantly in Europe. The other aviation services segment provides services mostly to airlines and airport authorities, in the United States of America. The authentication technology segment provides authentication services to financial and other companies predominantly in the United States of America.7 |
(US $ in thousands, except share and per share data)
June 30, |
December 31, | |||||||
2023 |
2022 | |||||||
Dutch governmental support - COVID 19 (1) |
$ |
4,685 |
$ |
4,302 | ||||
Receivable from the German authorities (2) |
514 |
483 | ||||||
Income tax receivable |
1,108 |
118 | ||||||
VAT receivable |
427 |
1,759 | ||||||
Prepaid insurance |
915 |
536 | ||||||
Prepaid uniforms |
761 |
811 | ||||||
Prepaid licenses and training |
1,049 |
139 | ||||||
Other |
2,213 |
1,657 | ||||||
$ |
11,672 |
$ |
9,805 |
1. | In Germany, the employees are eligible for payroll support. The Company pay to its German employees their full salary and afterwards, the Company is being reimbursed by the German government for the payroll support amount. |
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)
June 30, |
December 31, | |||||||
2023 |
2022 | |||||||
Office, equipment and facilities |
$ |
8,968 |
$ |
8,885 | ||||
Internal-use software |
2,754 |
2,845 | ||||||
Vehicles |
2,167 |
1,990 | ||||||
Leasehold improvements |
2,902 |
2,871 | ||||||
16,791 |
16,591 | |||||||
Less: accumulated depreciation and amortization |
10,914 |
10,315 | ||||||
Total property and equipment, net |
$ |
5,877 |
$ |
6,276 |
Depreciation and amortization expense are $1,322 and $1,117 for the periods ended June 30, 2023 and 2022, respectively.
The Company has a credit arrangement in Sweden to provide it with up to 4,000 SEK ($368 as of June 30, 2023) 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, 2023, and December 31, 2022, the Company had 1,904 SEK and 1,196 SEK ($175 and $115 as of June 30, 2023 and December 31, 2022) respectively, in outstanding borrowings under the line of credit facility.
10 |
(US $ in thousands, except share and per share data)
June 30, |
December 31, | |||||||
2023 | 2022 | |||||||
Accrued payroll and related costs |
$ |
29,470 |
$ |
26,774 | ||||
Accrued vacation |
10,613 |
8,080 | ||||||
Advanced payments in dispute from a customer (1) | 3,585 | - | ||||||
Labor union contribution |
- |
333 | ||||||
Deferred revenue |
3,616 |
3,570 | ||||||
Currency hedging costs | 354 | 19 | ||||||
Other |
3,610 |
2,931 | ||||||
Total accrued expenses and other current liabilities |
$ |
51,248 |
$ |
41,707 |
(*) Starting January 2023, there have been some structural changes in the operations of one of the Company's major customers. The customer has agreed to pay the Company monthly advances until the full impact of the changes will be determined and a final settlement will be reached. The Company is currently negotiating the amount of this final settlement.
Other liabilties are as follows: | ||||||||
June 30, |
December 31, | |||||||
2023 |
2022 | |||||||
Deferred wagetax and social security |
$ |
14,052 |
$ |
15,824 | ||||
Deferred VAT |
9,411 |
10,882 | ||||||
Severance pay |
1,795 |
1,893 | ||||||
Deferred revenue |
- |
336 | ||||||
Other |
316 |
279 | ||||||
Total other liabilities |
$ |
25,574 |
$ |
29,214 |
11 |
(US $ in thousands, except share and per share data)
NOTE 9 - OTHER LIABILITIES (CONTINUED)
12 |
(US $ in thousands, except share and per share data)
NOTE 10 - REDEEMABLE NON-CONTROLLING INTERESTS (CONTINUED)
Period Ended, | ||||||||
June 30,
2023 |
December 31,
2022 | |||||||
Balance as of the beginning of the year |
$ |
89,974 |
$ |
90,478 | ||||
Net Income (Loss) |
1,000 | (379 | ) | |||||
Other Comprehensive Income - Translation adjustment |
(105 |
) |
(15 | ) | ||||
Other |
- |
(110 | ) | |||||
Balance as of the end of the period |
$ |
90,869 |
$ |
89,974 |
Period ended June 30, | ||||||||
2023 |
2022 | |||||||
AviationSecurity |
$ |
146,837 | $ |
107,237 | ||||
Other Aviation Related Services | 31,328 | 23,954 | ||||||
Authentication Technology |
26,243 |
24,820 | ||||||
Total revenues |
$ |
204,408 |
$ |
156,011 |
Period ended June 30, | ||||||||||||||||
2023 |
2022 | |||||||||||||||
Germany |
$ |
56,189 |
27.5 |
% |
$ |
57,064 |
36.6 |
% | ||||||||
United States |
50,034 |
24.5 |
% |
42,843 |
27.5 |
% | ||||||||||
The Netherlands | 46,436 |
22.7 |
% |
28,383 |
18.2 |
% | ||||||||||
Spain | 39,176 | 19.2 | % | 17,300 | 11.1 | % | ||||||||||
Other countries |
12,573 |
6.2 |
% |
10,421 |
6.7 |
% | ||||||||||
Total revenues |
$ |
204,408 |
100.0 |
% |
$ |
156,011 |
100.0 |
% |
13 |
(US $ in thousands, except share and per share data)
NOTE 11 - REVENUE RECOGNITION (CONTINUED)
Deferred Revenues
The Company records deferred revenues when cash payments are received or due in advance of our performance. Deferred revenues as of June 30, 2023 and December 31, 2022 were $3,616 and $3,570, respectively shown as part of the accrued expenses and other current liabilities and $0 and $336 shown as other liabilities. Revenue recognized for the periods ended June 30, 2023 and 2022 that was included in the deferred revenue at the beginning of each period was $3,569 and $2,217, respectively.
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 monthly installments, starting October 2022. The debt incurs annual interest starting July 2022 of 1% and increases every six months to a maximum of 4% starting on January 1, 2024 onwards. As of June 30, 2023, and December 31, 2022, the Company accumulated debt of €28,206 and €31,796 ($30,584 and $33,826 as of June 30, 2023 and December 31, 2022), respectively, to the Dutch tax authorities.
14 |
(US $ in thousands, except share and per share data)
NOTE 13 -COMMITMENTS AND CONTINGENCIES (CONTINUED)
15 |
(US $ in thousands, except share and per share data)
NOTE 14 - SEGMENT AND GEOGRAPHICAL INFORMATION (CONTINUED)
Airport | Other Aviation | Authentication | ||||||||||||||||||
Corporate | Security | Services | Technology |
Total | ||||||||||||||||
Six months ended June 30, 2023: | ||||||||||||||||||||
Revenue |
$ |
- |
$ |
146,837 | $ | 31,328 |
$ |
26,243 |
$ |
204,408 | ||||||||||
Depreciation and amortization |
4 |
435 | 153 |
730 |
1,322 | |||||||||||||||
Net income (loss) |
(1,554 |
) |
(2,556 | ) | (422 | ) |
3,192 |
(1,340 | ) | |||||||||||
Total assets |
$ |
7,144 |
$ |
86,035 | $ | 24,508 |
$ |
67,889 |
$ |
185,576 | ||||||||||
Six months ended June 30, 2022: | ||||||||||||||||||||
Revenue |
$ |
- |
$ |
107,237 | $ | 23,954 |
$ |
24,820 |
$ |
156,011 | ||||||||||
Depreciation and amortization |
41 |
391 | 75 |
610 |
1,117 | |||||||||||||||
Net income (loss) |
(1,198 |
) |
1,943 | (667 |
)
| (123 | ) |
(45 |
)
| |||||||||||
Total assets |
$ |
10,108 |
$ |
78,872 | $ | 27,034 |
$ |
70,459 |
$ |
186,473 |
16
(US $ in thousands, except share and per share data)
U.S. Dollars in Thousands Period ended June 30, | ||||||||||||||||||||
2023 |
2022 |
2021 |
2020 |
2019 | ||||||||||||||||
Revenue |
$ |
204,408 |
$ |
156,011 |
$ |
154,419 |
$ |
126,126 |
$ |
164,492 | ||||||||||
Cost of revenue |
170,705 |
119,095 |
93,260 |
111,343 |
143,887 | |||||||||||||||
GROSS PROFIT |
33,703 |
36,916 |
61,159 |
14,783 |
20,605 | |||||||||||||||
Operating expenses: | ||||||||||||||||||||
Research and development |
6,533 |
6,607 |
5,545 |
3,880 |
1,969 | |||||||||||||||
Selling, general and administrative |
28,612 |
27,912 |
22,915 |
19,466 |
16,327 | |||||||||||||||
Total operating expenses |
35,145 |
34,519 |
28,460 |
23,346 |
18,296 | |||||||||||||||
OPERATING INCOME (LOSS) |
(1,442 |
) |
2,397 |
32,699 |
(8,563 |
) |
2,309 | |||||||||||||
Equity Income (loss) from investment in affiliate |
- |
(93 |
) |
(447 |
) |
(89 |
) |
45 | ||||||||||||
Other income, net |
727 |
65 |
96 |
738 |
2,049 | |||||||||||||||
INCOME (LOSS) BEFORE INCOME TAX EXPENSES |
(715 |
) |
2,369 |
32,156 |
(9,390 |
) |
305 | |||||||||||||
Income tax expenses |
625 |
2,414 |
3,215 |
708 |
962 | |||||||||||||||
NET INCOME (LOSS) |
(1,340 |
) |
(45 |
) |
28,941 |
(10,098 |
) |
(657 |
) | |||||||||||
Net income (loss) attributable to non-controlling interests |
1,000 |
(52 |
) |
6,273 |
431 |
- | ||||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO ICTS INTERNATIONAL N.V. |
$ |
(2,340 |
) |
$ |
7 |
$ |
22,668 |
$ |
(10,529 |
) |
$ |
(657 |
) | |||||||
BASIC NET INCOME (LOSS) ATTRIBUTABLE TO ICTS INTERNATIONAL N.V.PER SHARE | ||||||||||||||||||||
Net Income (loss) |
$ |
(0.06 |
) |
$ |
- |
$ |
0.34 |
$ |
(0.30 |
) |
$ |
(0.02 |
) | |||||||
Basic weighted average number of shares |
37,433,333 |
37,433,333 |
37,433,333 |
35,433,333 |
28,926,925 | |||||||||||||||
DILUTED NET INCOME (LOSS) ATTRIBUTABLE TO ICTS INTERNATIONAL N.V. PER SHARE | ||||||||||||||||||||
Net Income (loss) |
$ |
(0.06 |
) |
$ |
- |
$ |
0.31 |
$ |
(0.30 |
) |
$ |
(0.02 |
) | |||||||
Diluted weighted average number of shares |
37,433,333 |
40,108,529 |
40,231,313 |
35,433,333 |
28,926,925 |
ICTS INTERNATIONAL N.V. AND SUBSIDIARIES
(US $ in thousands, except share and per share data) |
ICTS INTERNATIONAL N.V. AND SUBSIDIARIES
(US $ in thousands, except share and per share data) |
ICTS INTERNATIONAL N.V. AND SUBSIDIARIES
(US $ in thousands, except share and per share data) |
SIGNATURES |
ICTS INTERNATIONAL N.V. AND SUBSIDIARIES
(US $ in thousands, except share and per share data) |
SIGNATURES |
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Disclaimer
ICTS International NV published this content on 31 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 October 2023 19:16:49 UTC.