ICTS INTERNATIONAL N V Files 20-F with Financial Information and Government Support Details

TL;DR

<b>ICTS INTERNATIONAL N V filed its 20-F, detailing government support programs in Germany and the Netherlands, including a 50 million Yen loan and deferred tax payments.</b>

AI Summary

ICTS INTERNATIONAL N V (ICTSF) filed a Foreign Annual Report (20-F) with the SEC on May 10, 2024. Company received government reimbursement for payroll support in Germany. Company was eligible for COVID-19 crisis support in the Netherlands. A 50 million Yen loan from a financial institution was provided in July 2020 for COVID-19 related financial support. The loan has a variable interest rate of 0.21% - 1.10% and a five-year term. Deferred VAT and wage tax relate to Dutch government measures allowing postponed payments in installments.

Why It Matters

For investors and stakeholders tracking ICTS INTERNATIONAL N V, this filing contains several important signals. The filing highlights the company's reliance on and interaction with government support programs, which can impact financial stability and operational flexibility. Details on a 50 million Yen loan and deferred tax payments provide insight into the company's financial structure and its strategies for managing liquidity during challenging economic periods.

Risk Assessment

Risk Level: medium — ICTS INTERNATIONAL N V shows moderate risk based on this filing. The company's reliance on government support and deferred tax payments suggests potential financial vulnerabilities or complexities that could be affected by changes in government policy or economic conditions.

Analyst Insight

Monitor the company's ongoing eligibility for and utilization of government support programs, as well as the repayment schedule of the 50 million Yen loan and deferred tax liabilities.

Key Numbers

• 50,000,000 — Yen Loan Amount (Financial support in connection with COVID-19)
• 0.21% - 1.10% — Variable Interest Rate (For the 50 million Yen loan)
• 5 — Loan Term (Years for the 50 million Yen loan)
• $134 — Long Term Loan Balance (As of December 31, 2022)
• $280 — Long Term Loan Balance (As of December 31, 2021)
• 60 — Installments (For deferred VAT and wage tax payments)

Key Players & Entities

• ICTS INTERNATIONAL N V (company) — Filer
• Germany (location) — Country where employees are eligible for payroll support
• Netherlands (location) — Country where the company was eligible for support
• 50 million Yen (dollar_amount) — Loan amount
• July 2020 (date) — Loan provision date
• December 31, 2022 (date) — Balance date for long term loan
• December 31, 2021 (date) — Balance date for long term loan
• October 2022 (date) — Start date for deferred tax installment payments

FAQ

Risk Factors

• Government Support and Financial Assistance [medium — financial]: The company's financial performance and stability may be influenced by its participation in and reliance on government support programs and financial assistance, such as payroll support and deferred tax payments.
• Loan Obligations [medium — financial]: The company has a 50 million Yen loan with a financial institution, which carries variable interest rates and a five-year term, representing a financial obligation that requires management.

Glossary

Payroll Support

Government program to subsidize employee wages during economic downturns. (Indicates company's reliance on external aid for operational continuity.)

Deferred VAT

Postponement of Value Added Tax payments allowed by government measures. (Affects the company's short-term cash flow and liquidity management.)

Key Financial Figures

• $0.0 million — e American subsidiary of the Company of $0.0 million and $15.9 million, for the years ended
• $15.9 m — iary of the Company of $0.0 million and $15.9 million, for the years ended December 31,
• $16.9 million — recognized amounts of $0.0 million and $16.9 million as reduction of labor expenses for the
• $3.9 million — ompany of 3.7 million and 18.1 million ($3.9 million and $22.6 million as of December 31, 20
• $22.6 million — lion and 18.1 million ($3.9 million and $22.6 million as of December 31, 2022 and 2021), resp
• $27.3 million — ities of 24.9 million and 31.8 million ($27.3 million and $33.8 million as of December 31, 20
• $33.8 million — ion and 31.8 million ($27.3 million and $33.8 million as of December 31, 2023 and 2022), resp
• $60 million — an investor for a subscription price of $60 million in cash representing 24% of the outstan
• $20 million — a fully diluted basis. AU10TIX retained $20 million of the sale proceeds for general workin
• $40 million — or general working capital purposes and $40 million was transferred to its parent company,
• $30 million — N.V. In July 2019, the Company repaid $30 million to the entity related to the main share
• $10.6 m — e Company incurred net income (loss) of $10.6 million, $(5.2) million and $41.3 million
• $41.3 million — s) of $10.6 million, $(5.2) million and $41.3 million in 2023, 2022 and 2021, respectively. T
• $2.6 million — Company has a shareholders' deficit of $2.6 million and $10.4 million as of December 31, 20
• $10.4 million — areholders' deficit of $2.6 million and $10.4 million as of December 31, 2023 and 2022, respe

Filing Documents

• zk2431357.htm (20-F) — 2655KB
• exihibt_12-1.htm (EX-12.1) — 9KB
• exihibt_13-1.htm (EX-13.1) — 4KB
• 0001178913-24-001679.txt (&nbsp;) — 11564KB
• ictsf-20231231.xsd (EX-101.SCH) — 104KB
• ictsf-20231231_cal.xml (EX-101.CAL) — 76KB
• ictsf-20231231_def.xml (EX-101.DEF) — 312KB
• ictsf-20231231_lab.xml (EX-101.LAB) — 1103KB
• ictsf-20231231_pre.xml (EX-101.PRE) — 504KB
• zk2431357_htm.xml (XML) — 1978KB

Item 18

Item 17 Item 18 If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES NO (APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS) Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. YES NO When used in this Form 20-F, the words "may", "will", "expect", "anticipate", "continue", "estimates", "project", "intend" and similar expressions are intended to identify Forward-Looking Statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 regarding events, conditions and financial trends that may affect the Company's future plans of operations, business strategy, operating results and financial position. Prospective investors are cautioned that any Forward-Looking Statements are not guarantees of future performance and are subject to risks and uncertainties and those actual results may differ materially from those included within the Forward-Looking Statements as a result of various factors. 2 Table of Contents Part I Item 1 Identity of Directors, Senior Management and Advisers 4 Item 2 Offer Statistics and Expected Timetable 4 Item 3 Key Information 4 Item 4 Information on the Company 11 Item 5 Operating and Financial Review and Prospects 21 Item 6 Directors, Senior Management and Employees 33 Item 7 Major Shareholders and Related Party Transactions 38 Item 8 Financial Information 39 Item 9 The Offer and Listing 41 Item 10 Additional Information 42 Item 11 Qualitative Disclosures about Market Risk 58 Item 12

Description of Securities other than Equity Securities

Description of Securities other than Equity Securities 58 Part II Item 13 Defaults, Dividend Arrearages and Delinquencies 58 Item 14 Material Modifications to the Rights of Security Holders and the Use of Proceeds 58 Item 15

Controls and Procedures

Controls and Procedures 59 Item 16A Audit Committee Financial Expert 59 Item 16B Code of Ethics 59 Item 16C Principal Accountant Fees and Services 59 Item 16D Exemptions from the Listing Standards for Audit Committees 59 Item 16E Purchases of Equity Securities by the Issuer and Affiliated Purchasers 59 Item 16F Change in Registrant's Certifying Accountant 60 Item 16G Corporate Governance 60 Item 16K Cybersecurity 60 Part III Item 17

Financial Statements

Financial Statements 61 Item 18

Financial Statements

Financial Statements 61 Item 19 Exhibits 62 Exhibits Exhibit 12.1 Certification Exhibit 13.1 Certification 3 PART I Item 1. Identity of Directors, Senior Management and Advisers Not Applicable Item 2. Offer Statistics and Expected Timetable Not Applicable Item 3. Key information Operations ICTS International N.V. ("ICTS") was registered at the Department of Justice in Amstelveen, Netherlands on October 9, 1992. ICTS and subsidiaries (collectively referred to as "ICTS" or the "Company") operate 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 and contains primarily non-operational expenses. The airport security segment provides security services primarily to airport authorities and airlines predominantly in Europe. The other aviation services segment provides services primarily 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.

Selected Financial Data

Selected Financial Data Selected data set forth below have been derived from the ICTS Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). The Selected Consolidated Financial Data set forth below should be read in conjunction with Item 5 - Operating and Financial Review and Prospects, the ICTS Consolidated Financial Statements and the Notes to those Consolidated Financial Statements included in Item 18 in this Annual Report. During 2022 and 2021, governments in some of the countries in which we operate have implemented government assistance measures, which mitigated the impact of the COVID-19 outbreak on our results and liquidity. In the United States of America, the government has approved a payroll support to the American subsidiary of the Company of $0.0 million and $15.9 million, for the years ended December 31, 2022 and 2021. Out of those amounts, the American subsidiary recognized amounts of $0.0 million and $16.9 million as reduction of labor expenses for the years ended December 31, 2022 and 2021, respectively. For the years ended December 31, 2022 and 2021, the Dutch government has provided financial assistance to the Dutch subsidiary of the Company of 3.7 million and 18.1 million ($3.9 million and $22.6 million as of December 31, 2022 and 2021), respectively. The Dutch government terminated the support program on March, 2022. For the year ended December 31, 2023 the Company did not receive any payroll support or financial assistance from any government regarding COVID-19. In the Netherlands wage tax, social security and VAT payments for the period March 2020 through September 2021 were postponed and are to be paid in 60 monthly installments beginning 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 December 31, 2023 and 2022, the

Risk Factors

Risk Factors You should carefully consider the risks described below regarding the business and the ownership of our shares. If any of the risks are realized, our business, financial condition or results of operations could be adversely affected, and the price of our common stock could decline significantly. Labor Concerns Our subsidiaries operate in many different jurisdictions in Europe, the United States of America and Asia and are therefore subject to the different labor laws of such jurisdictions. Any changes in such laws, as an example, the establishment or change of minimum wages, could have an adverse effect on the business of the Company. In addition, some of our employees are covered by collective bargaining agreements with unions. Such collective agreement detail, inter alia , financial and non-financial entitlements to our employees that effect our financial results. Relationship with unions, including work stoppages or changes in work rules, could have an adverse impact on our financial results. In some jurisdictions and subject to legislation related to employees' entitlements during sick leave, increase in employees' sick rate could have an adverse impact on our financial results. Lack of manpower and/or employees' turnover may lead to additional costs. As an example, recruitment and training cost, and therefore increase in employees' turnover rate could have an adverse impact on our financial results. If any of such changes and/or circumstances have a financial impact on the Company and the Company is not able to fully adjust its fees for its services to accommodate such changes and/or circumstances, of which there is no assurance, there could be a material adverse effect on our business. Further, escalating costs of providing employee benefits and other labor issues may lead to labor disputes and disruption of our business. Potential Liability Claims From time to time lawsuits have been commenced against the Company or its subsidiaries usua

View Full Filing

View this 20-F filing on SEC EDGAR