Large accelerated filer ☐
|
Accelerated filer ☐
|
Non-accelerated filer ☒
|
U.S. GAAP ☒
|
International Financial Reporting Standards as issued Other ☐
|
by the International Accounting Standards Board ☐
|
(U.S. dollars in Thousands)
|
||||||||||||||||||||
December 31,
|
||||||||||||||||||||
2020
|
2019
|
2018
|
2017
|
2016
|
||||||||||||||||
Cash and cash equivalents
|
$
|
51,602
|
$
|
52,352
|
$
|
12,801
|
$
|
9,073
|
$
|
3,892
|
||||||||||
Total current assets
|
116,554
|
103,136
|
67,219
|
61,982
|
43,908
|
|||||||||||||||
Total assets from discontinued operations
|
-
|
-
|
-
|
306
|
853
|
|||||||||||||||
Total assets
|
140,388
|
123,447
|
75,087
|
71,853
|
47,980
|
|||||||||||||||
Total current liabilities
|
59,334
|
75,509
|
75,058
|
59,197
|
45,365
|
|||||||||||||||
Total liabilities from discontinued operations
|
-
|
-
|
-
|
41
|
536
|
|||||||||||||||
Total liabilities
|
95,551
|
84,832
|
109,943
|
98,595
|
81,457
|
|||||||||||||||
Redeemable non-controlling interests
|
75,322
|
74,300
|
-
|
-
|
-
|
|||||||||||||||
Shareholders' deficit
|
30,485
|
35,685
|
34,856
|
26,742
|
33,477
|
• |
Private Charter Flight Screening for Airlines - which includes security check of passengers' body andcarry-on items.
|
|
• |
Cargo Security Screening – for some international and domestic carriers.
|
|
• |
Catering Security Screening – for some international and domestic carriers.
|
|
• |
Aircraft Security Screening – for some international and domestic carriers.
|
|
• |
Aircraft Search – search of the entire aircraft to detect dangerous objects.
|
|
• |
Cleaning the aircraft interior
|
|
• |
Conducting cabin searches
|
|
• |
Waxing the aircraft exterior
|
Year ended December 31, | ||||
2021
|
$
|
4.0
|
||
2022
|
3.1
|
|||
2023
|
2.7
|
|||
2024
|
2.2
|
|||
2025
|
1.0
|
|||
Thereafter
|
1.4
|
|||
$
|
14.4
|
U.S. dollars in Thousands
|
||||||||||||
Year ended December 31,
|
||||||||||||
2020
|
2019
|
2018
|
||||||||||
Revenue
|
$
|
248,419
|
$
|
333,307
|
$
|
345,221
|
||||||
Cost of revenue
|
196,569
|
290,461
|
311,994
|
|||||||||
Gross profit
|
51,850
|
42,846
|
33,227
|
|||||||||
Operating expenses:
|
||||||||||||
Research and development
|
6,541
|
5,060
|
3,657
|
|||||||||
Goodwill impairment
|
-
|
-
|
1,563
|
|||||||||
Selling, general and administrative
|
37,239
|
33,063
|
34,924
|
|||||||||
Total operating expenses
|
43,780
|
38,123
|
40,144
|
|||||||||
OPERATING INCOME (LOSS)
|
8,070
|
4,723
|
(6,917
|
)
|
||||||||
Equity income (loss) from investment in affiliate
|
(790
|
)
|
91
|
124
|
||||||||
Other expenses, net
|
(1,288
|
)
|
(10,518
|
)
|
(3,586
|
)
|
||||||
INCOME (LOSS) BEFORE INCOME TAX EXPENSES
|
5,992
|
(5,704
|
)
|
(10,379
|
)
|
|||||||
Income tax expenses
|
590
|
1,549
|
685
|
|||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS
|
5,402
|
(7,253
|
)
|
(11,064
|
)
|
|||||||
Loss from discontinued operations
|
-
|
-
|
(289
|
)
|
||||||||
NET INCOME (LOSS)
|
5,402
|
(7,253
|
)
|
(11,353
|
)
|
|||||||
Less: Net income (loss) attributable to non-controlling interests
|
999
|
789
|
(123
|
)
|
||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO ICTS INTERNATIONAL N.V.
|
$
|
4,403
|
$
|
(8,042
|
)
|
$
|
(11,230
|
)
|
Year ended December 31,
|
||||||||||||
2020
|
2019
|
2018
|
||||||||||
Revenue
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||||
Cost of revenue
|
79.2
|
%
|
87.1
|
%
|
90.4
|
%
|
||||||
Gross profit
|
20.8
|
%
|
12.9
|
%
|
9.6
|
%
|
||||||
Research and development
|
2.6
|
%
|
1.5
|
%
|
1.1
|
%
|
||||||
Goodwill impairment
|
-
|
%
|
-
|
%
|
0.4
|
%
|
||||||
Selling, general and administrative
|
15.0
|
%
|
9.9
|
%
|
10.1
|
%
|
||||||
Total operating expenses
|
17.6
|
%
|
11.4
|
%
|
11.6
|
%
|
||||||
OPERATING INCOME (LOSS)
|
3.2
|
%
|
1.5
|
%
|
(2.0
|
)%
|
||||||
Equity loss from investment in affiliate
|
0.3 |
%
|
-
|
%
|
-
|
%
|
||||||
Other expenses, net
|
0.5
|
%
|
3.2
|
%
|
1.0
|
%
|
||||||
INCOME (LOSS) BEFORE INCOME TAX EXPENSES
|
2.4
|
%
|
(1.7
|
)%
|
(3.0
|
)%
|
||||||
Income tax expenses
|
0.2
|
%
|
0.5
|
%
|
0.2
|
%
|
||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS
|
2.2
|
%
|
(2.2
|
)%
|
(3.2
|
)%
|
||||||
Loss from discontinued operations
|
-
|
%
|
-
|
%
|
(0.1
|
)%
|
||||||
NET INCOME (LOSS)
|
2.2
|
%
|
(2.2
|
)%
|
(3.3
|
)%
|
||||||
Less: Net income (loss) attributable to non-controlling interests
|
0.4
|
%
|
0.2
|
%
|
-
|
%
|
||||||
NET INCOME (LOSS) ATTRIBUTABLE TO ICTS INTERNATIONAL N.V.
|
1.8
|
%
|
(2.4
|
)%
|
(3.3
|
)%
|
(U.S. dollars in Thousands)
|
||||||||||||
Year ended December 31,
|
||||||||||||
2020
|
2019
|
2018
|
||||||||||
Germany
|
$
|
119,500
|
$
|
137,207
|
$
|
134,646
|
||||||
Netherlands
|
58,446
|
97,700
|
121,465
|
|||||||||
United States of America
|
45,305
|
73,719
|
69,548
|
|||||||||
Other
|
25,168
|
24,681
|
19,562
|
|||||||||
Total Revenue
|
$
|
248,419
|
$
|
333,307
|
$
|
345,221
|
|
• |
Decrease of travel by flights, reducing the demand for services the Company provide as part of its airport security and other aviation services. As a result, our cumulative revenues of the airport security and other aviation services in
the twelve months ended December 31, 2020 were $86.9 million lower than our revenues for the twelve months ended December 31, 2019. Many of the Company’s employees were laid off and / or ordered to stay home.
|
|
• |
Governments in some of the countries in which we operate have announced the implementation of government assistance measures, which mitigated the impact of the COVID-19 outbreak on our results and liquidity. During 2020, in the United
States of America, the government has approved a payroll support of $13.7 million to the American subsidiary of the Company, all of which has been received as of December 31, 2020. Out of this amount the American subsidiary recognized an
amount of $12.7 million as reduction of labor expenses for the year ended December 31, 2020. Additional assistance up to $15.9 million was granted during 2021. In the Netherlands, the government has approved a support of €17.6 million
($21.6 million as of December 31, 2020) for the year ended December 31, 2020. The Dutch government extended the support program until June 30, 2021 and might extend it beyond. For the months January through March 2021, the Company was
granted additional assistance up to €4.6 million. In Germany, the employees are eligible for payroll support up to 60% of the employee’s payroll (on individual basis) in case the employees meet the support plan requirements.
|
|
• |
Depending on the duration of the COVID-19 crisis and continued negative impact on economic activity, the Company might experience further negative results and liquidity restrains. The exact impact on our activities in the remainder of
2021 and thereafter cannot be predicted.
|
U.S. Dollars in thousands
|
||||||||||||||||
Airport
|
||||||||||||||||
Security
|
||||||||||||||||
and Other
|
||||||||||||||||
Aviation
|
Authentication
|
|||||||||||||||
Corporate
|
Services
|
Technology
|
Total
|
|||||||||||||
Year ended December 31, 2020:
|
||||||||||||||||
Revenue
|
$
|
-
|
$
|
222,654
|
$
|
25,765
|
$
|
248,419
|
||||||||
Depreciation and amortization
|
72
|
1,302
|
716
|
2,090
|
||||||||||||
Income (loss) from continuing operations
|
(3,853
|
)
|
6,056
|
3,199
|
5,402
|
|||||||||||
Goodwill
|
-
|
746
|
-
|
746
|
||||||||||||
Total assets from continuing operations
|
12,448
|
86,550
|
41,350
|
140,388
|
||||||||||||
Year ended December 31, 2019:
|
||||||||||||||||
Revenue
|
$
|
-
|
$
|
309,548
|
$
|
23,759
|
$
|
333,307
|
||||||||
Depreciation and amortization
|
46
|
1,328
|
314
|
1,688
|
||||||||||||
Income (loss) from continuing operations
|
(11,740
|
)
|
(2,406
|
)
|
6,893
|
(7,253
|
)
|
|||||||||
Goodwill
|
-
|
681
|
-
|
681
|
||||||||||||
Total assets from continuing operations
|
23,381
|
64,647
|
35,419
|
123,447
|
||||||||||||
Year ended December 31, 2018:
|
||||||||||||||||
Revenue
|
$
|
-
|
$
|
329,150
|
$
|
16,071
|
$
|
345,221
|
||||||||
Depreciation and amortization
|
45
|
1,756
|
96
|
1,897
|
||||||||||||
Income (loss) from continuing operations
|
(6,205
|
)
|
(9,163
|
)
|
4,304
|
(11,064
|
)
|
|||||||||
Goodwill
|
695
|
695
|
||||||||||||||
Total assets from continuing operations
|
329
|
66,373
|
8,385
|
75,087
|
|
• |
Decrease of travel by flights, reducing the demand for services the Company provide as part of its airport security and other aviation services. As a result, our revenues in 2020 were $248.4 million compared to $333.3 million in 2019.
|
|
• |
Governments in some of the countries in which we operate have announced the implementation of government assistance measures, which mitigated the negative impact of the COVID-19 outbreak on our results and liquidity. In the United States
of America, the government has approved in 2020 a payroll support of $13.7 million to the American subsidiary of the Company and additional $15.9 million in 2021. In the Netherlands, the government has approved a support of €17.6 million
($21.6 million as of December 31, 2020) for the period April 1, 2020 until December 31, 2020 and additional assistance up to €4.6 million for the period January through March 2021. The Company is entitled to request additional support for
the period April 1, 2021 until June 30, 2021. In Germany, the Company’s employees are eligible for payroll support up to 60% of the employee’s payroll (on individual basis) in case the employees meet the support plan requirements. The
Company pays to its German employees their full salary and the Company is being reimbursed by the German government for the payroll support amount. The Company has already applied for this support starting April 2020. These available
governmental support plans might be extended and/or changed according to the future COVID-19 developments.
|
|
• |
Depending on the duration of the COVID-19 crisis and continued negative impact on economic activity, the Company might experince negative results and liquidity restrains. The exact impact on our activities in the remainder of 2021 and
thereafter cannot be predicted.
|
Contractual Obligations
|
Payments due by Period (U.S. Dollars in Thousands)
|
|||||||||||||||||||
Total
|
Less than 1 Year
|
1-3 years
|
4-5 years
|
more than 5 years
|
||||||||||||||||
Lines of credit in Europe
|
$
|
13,814
|
$
|
13,814
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Consulting agreements
|
1,104
|
184
|
552
|
368
|
-
|
|||||||||||||||
Convertible notes payable - related party
|
1,200
|
-
|
1,200
|
-
|
-
|
|||||||||||||||
Operating lease obligations
|
14,418
|
4,048
|
8,063
|
1,465
|
842
|
|||||||||||||||
Governmental payments in the Netherlands (VAT, social security and wage tax)
|
25,548
|
2,115
|
23,433
|
-
|
||||||||||||||||
$
|
56,084
|
$
|
20,161
|
$
|
33,248
|
$
|
1,833
|
$
|
842
|
Contractual Obligations
|
Payments due by Period (U.S. Dollars in Thousands)
|
|||||||||||||||||||
Total
|
Less than 1 Year
|
1-3 years
|
4-5 years
|
more than 5 years
|
||||||||||||||||
Guarantees
|
$
|
1,195
|
$
|
-
|
$
|
1,195
|
$
|
-
|
$
|
-
|
||||||||||
Letters of credit
|
3,991
|
775
|
3,216
|
-
|
-
|
|||||||||||||||
|
$
|
5,186
|
$
|
775
|
$
|
4,411
|
$
|
-
|
$
|
-
|
Age
|
Position
|
|||
Menachem Atzmon
|
76
|
Chairman of the Supervisory Board
|
||
Ron Atzmon
|
47
|
Member of the Supervisory Board and Managing Director of AU10TIX
|
||
Gil Atzmon
|
45
|
Member of the Supervisory Board
|
||
Philip M. Getter
|
84
|
Member of the Supervisory Board, Chairman of the Audit Committee
|
||
David W. Sass
|
85
|
Member of the Supervisory Board
|
||
Gail F. Lieberman
|
77
|
Member of the Supervisory Board, Member of the Audit
Committee and Chairman of the Compensation Committee
|
||
Gordon Hausmann
|
75
|
Member of the Supervisory Board, Member of the Audit Committee and member of the Compensation Committee
Committee and Member of the Audit Committee
|
||
Alon Raich
|
45
|
Joint Managing Director and Chief Financial Officer
|
||
Rom Shaked
|
38
|
Joint Managing Director
|
Non-equity
|
Nonqualified
|
Number
|
Number
|
|||||||||||||||||||||||||||||||
Incentive
|
Deferred
|
of
|
of
|
|||||||||||||||||||||||||||||||
Principal
|
All Other
|
Plan
|
Compensation
|
Option
|
Stock
|
|||||||||||||||||||||||||||||
Position
|
Year
|
Salary
|
Bonus
|
Compensations
|
Compensation
|
Earnings
|
Award
|
Awards
|
Total
|
|||||||||||||||||||||||||
|
|
$
|
$
|
$
|
$
|
$
|
$
|
|||||||||||||||||||||||||||
Managing
|
2020
|
342
|
-
|
10
|
-
|
-
|
-
|
-
|
352
|
|||||||||||||||||||||||||
Director (a)
|
2019
|
476
|
-
|
20
|
-
|
-
|
-
|
-
|
496
|
|||||||||||||||||||||||||
|
2018
|
481
|
295
|
21
|
-
|
-
|
-
|
-
|
797
|
|
(a) |
Highest paid employee in 2018. The Mananging Director retired on September 30, 2020.
|
Non-equity
|
Nonqualified
|
Number
|
Number
|
|||||||||||||||||||||||||||||||
Incentive
|
Deferred
|
of
|
of
|
|||||||||||||||||||||||||||||||
Principal
|
Bonus /
|
All Other
|
Plan
|
Compensation
|
Option
|
Stock
|
||||||||||||||||||||||||||||
Position
|
Year
|
Salary
|
Commission
|
Compensations
|
Compensation
|
Earnings
|
Award
|
Awards
|
Total
|
|||||||||||||||||||||||||
|
|
$
|
$
|
$
|
$
|
$
|
$
|
|||||||||||||||||||||||||||
Managing
|
2020
|
192
|
459
|
90
|
-
|
-
|
-
|
-
|
741
|
|||||||||||||||||||||||||
Director of a subsidiary (b)
|
2019
|
185
|
529
|
87
|
-
|
-
|
-
|
-
|
801
|
|
(b) |
Highest paid employee in 2020 and 2019
|
Salaries, fees,
|
Pension, retirement
|
|||||||
commissions
|
and other
|
|||||||
and bonuses
|
similar benefits
|
|||||||
(in thousands)
|
||||||||
|
||||||||
Supervisory Directors as a group (7 persons)
|
$
|
322
|
$
|
-
|
||||
Officers as a group (6 persons)
|
$
|
1,324
|
$
|
163
|
Percent of
|
||||||||
Amount Beneficially
|
Common shares
|
|||||||
Name Shareholders Holding Five Percent or More
|
Owned (a)
|
Outstanding (a)
|
||||||
|
||||||||
MacPherson Trust and its Ultimate Beneficial Owners (b)
|
62.6
|
%
|
23,418,861
|
|||||
Menachem J. Atzmon
|
13.0
|
%
|
4,850,000
|
|||||
Igal Tabori
|
5.1
|
%
|
1,902,483
|
|||||
All officers and directors as a group (9 persons), the MacPherson Trust and its Ultimate Beneficial Owners
|
84.6
|
%
|
31,680,721
|
|
(a) |
The amounts include common shares owned by each of the above, directly or indirectly.
|
Year
|
High
|
Low
|
||||||
2016
|
$
|
0.71
|
$
|
0.40
|
||||
2017
|
$
|
1.30
|
$
|
0.45
|
||||
2018
|
$
|
1.09
|
$
|
0.40
|
||||
2019
|
$
|
3.00
|
$
|
0.15
|
||||
2020
|
$
|
4.09
|
$
|
1.34
|
2020
|
High
|
Low
|
||||||
First quarter
|
$
|
4.09
|
$
|
2.40
|
||||
Second quarter
|
$
|
3.00
|
$
|
1.34
|
||||
Third quarter
|
$
|
3.35
|
$
|
2.56
|
||||
Fourth quarter
|
$
|
4.00
|
$
|
2.31
|
||||
2019
|
High
|
Low
|
||||||
First quarter
|
$
|
0.26
|
$
|
0.25
|
||||
Second quarter
|
$
|
0.25
|
$
|
0.15
|
||||
Third quarter
|
$
|
1.45
|
$
|
0.19
|
||||
Fourth quarter
|
$
|
3.00
|
$
|
1.05
|
||||
|
||||||||
2018
|
High
|
Low
|
||||||
First quarter
|
$
|
1.09
|
$
|
0.60
|
||||
Second quarter
|
$
|
0.80
|
$
|
0.40
|
||||
Third quarter
|
$
|
0.80
|
$
|
0.47
|
||||
Fourth quarter
|
$
|
0.48
|
$
|
0.40
|
|
• |
The excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period for the shares,
|
|
• |
The amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which the Company was a PFIC, will be treated as ordinary income, and
|
|
• |
The amount allocated to each other year will be subject to tax at the highest tax rate in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each
such year.
|
|
• |
a corporation;
|
|
• |
another entity with a capital divided into shares;
|
|
• |
a cooperative (association); or
|
|
• |
another legal entity that has an enterprise or an interest in an enterprise to which the Shares are attributable,
but which is not:
|
|
• |
a qualifying pension fund;
|
|
• |
a qualifying investment fund (fiscale beleggingsinstelling) or a qualifying exempt investmentInstitution (vrijgestelde beleggingsinstelling); or
|
|
• |
another entity exempts from corporate income tax,
|
|
(a) |
such holder has an enterprise or an interest in an enterprise that is, in whole or in part, carried on through a permanent establishment (vaste inrichting) or a permanent representative (vaste vertegenwoordiger) in the Netherlands and to
which enterprise or part of an enterprise, as the case may be, Shares are attributable; or
|
|
(b) |
such income or capital gain forms a “benefit from miscellaneous activities in the Netherlands” (“resultaat uit overige werkzaamheden in Nederland”) which would for instance be the case if the activities in the Netherlands with respect to
Shares exceed “normal active asset management” (“normaal, actief vermogensbeheer” or if such income and gains are derived from the holding, whether directly or indirectly, of (a combination of) shares, debt claims or other rights (together,
a “lucrative interest” (“lucratief belang”)) that the holder thereof has acquired under such circumstances that such income and gains are intended to be remuneration for work or services performed by such holder (or a related person), in
whole or in part, in the Netherlands, whether within or outside an employment relation, where such lucrative interest provides the holder thereof, economically speaking, with certain benefits that have a relation to the relevant work or
services.
|
2020
|
2019
|
|||||||
Audit fees
|
$
|
257
|
$
|
283
|
||||
Audit related fees
|
-
|
-
|
||||||
Tax fees
|
-
|
-
|
||||||
Total fees
|
$
|
257
|
$
|
283
|
|
12.1 |
|
12.2 |
|
13.2 |
By:
|
/s/ Rom Shaked
|
|
Name:
|
Rom Shaked
|
|
Title:
|
Managing Director
|
|
Date:
|
May 14, 2021
|
|
By:
|
/s/ Alon Raich
|
|
Name:
|
Alon Raich
|
|
Title:
|
Managing Director and Chief Financial Officer
|
|
Date:
|
May 14, 2021
|
F-2
|
||
F-3
|
||
F-4
|
||
F-5 | ||
F-6 | ||
F-8
|
||
Financial Statement Schedule:
|
||
F-41
|
See accompanying notes to the consolidated financial statements.
|
For the Years Ended December 31,
|
||||||||||||
2020
|
2019
|
2018
|
||||||||||
Revenue
|
$
|
248,419
|
$
|
333,307
|
$
|
345,221
|
||||||
Cost of revenue
|
196,569
|
290,461
|
311,994
|
|||||||||
GROSS PROFIT
|
51,850
|
42,846
|
33,227
|
|||||||||
Operating expenses:
|
||||||||||||
Research and development
|
6,541
|
5,060
|
3,657
|
|||||||||
Goodwill impairment
|
-
|
-
|
1,563
|
|||||||||
Selling, general and administrative
|
37,239
|
33,063
|
34,924
|
|||||||||
Total operating expenses
|
43,780
|
38,123
|
40,144
|
|||||||||
OPERATING INCOME (LOSS)
|
8,070
|
4,723
|
(6,917
|
)
|
||||||||
Equity income (loss) from investment in affiliate
|
(790
|
)
|
91
|
124
|
||||||||
Other expenses, net
|
(1,288
|
)
|
(10,518
|
)
|
(3,586
|
)
|
||||||
INCOME (LOSS) BEFORE INCOME TAX EXPENSES
|
5,992
|
(5,704
|
)
|
(10,379
|
)
|
|||||||
Income tax expenses
|
590
|
1,549
|
685
|
|||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS
|
5,402
|
(7,253
|
)
|
(11,064
|
)
|
|||||||
Loss from discontinued operations
|
-
|
-
|
(289
|
)
|
||||||||
NET INCOME (LOSS)
|
5,402
|
(7,253
|
)
|
(11,353
|
)
|
|||||||
Net income (loss) attributable to non-controlling interests
|
999
|
789
|
(123
|
)
|
||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO ICTS INTERNATIONAL N.V.
|
$
|
4,403
|
$
|
(8,042
|
)
|
$
|
(11,230
|
)
|
||||
BASIC NET INCOME (LOSS) ATTRIBUTABLE TO ICTS INTERNATIONAL N.V. PER SHARE
|
||||||||||||
Income (loss) from continuing operations
|
$
|
0.12
|
$
|
(0.26
|
)
|
$
|
(0.47
|
)
|
||||
Loss from discontinued operations
|
-
|
-
|
(0.01
|
)
|
||||||||
Net income (loss)
|
$
|
0.12
|
$
|
(0.26
|
)
|
$
|
(0.48
|
)
|
||||
Basic weighted average number of shares
|
35,827,854
|
30,524,461
|
23,415,068
|
|||||||||
DILUTED NET INCOME (LOSS) ATTRIBUTABLE TO ICTS INTERNATIONAL N.V. PER SHARE
|
||||||||||||
Income (loss) from continuing operations
|
$
|
0.11
|
$
|
(0.26
|
)
|
$
|
(0.47
|
)
|
||||
Loss from discontinued operations
|
- | - |
(0.01
|
)
|
||||||||
Net income (loss)
|
$
|
0.11
|
$
|
(0.26
|
)
|
$
|
(0.48
|
)
|
||||
Diluted weighted average number of shares
|
38,424,718
|
30,524,461
|
23,415,068
|
|||||||||
COMPREHENSIVE INCOME (LOSS)
|
||||||||||||
Net income (loss)
|
$
|
5,402
|
$
|
(7,253
|
)
|
$
|
(11,353
|
)
|
||||
Other Comprehensive Income - Translation adjustments
|
20
|
79
|
669
|
|||||||||
Comprehensive income (loss)
|
5,422
|
(7,174
|
)
|
(10,684
|
)
|
|||||||
Comprehensive income (loss) attributable to non-controlling interests
|
1,106
|
795
|
(123
|
)
|
||||||||
COMREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO ICTS INTERNATIONAL N.V.
|
$
|
4,316
|
$
|
(7,969
|
)
|
$
|
(10,561
|
)
|
Accumulated
|
||||||||||||||||||||||||||||
Additional
|
Other
|
Non
|
Total
|
|||||||||||||||||||||||||
Common Stock
|
Paid-In
|
Accumulated
|
Comprehensive
|
Controlling
|
Shareholders'
|
|||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
Loss
|
Interests
|
Deficit
|
||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2017
|
21,000,000
|
$
|
10,655
|
$
|
23,128
|
$
|
(53,734
|
)
|
$
|
(6,914
|
)
|
$
|
123
|
$
|
(26,742
|
)
|
||||||||||||
Issuance of common stock
|
4,100,000
|
2,241
|
329
|
-
|
-
|
-
|
2,570
|
|||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
(11,230
|
)
|
-
|
(123
|
)
|
(11,353
|
)
|
||||||||||||||||||
Translation adjustment
|
-
|
-
|
-
|
-
|
669
|
-
|
669
|
|||||||||||||||||||||
BALANCE AT DECEMBER 31, 2018
|
25,100,000
|
12,896
|
23,457
|
(64,964
|
)
|
(6,245
|
)
|
-
|
(34,856
|
)
|
||||||||||||||||||
Net income (loss)
|
-
|
-
|
-
|
(8,042
|
)
|
-
|
15
|
(8,027
|
)
|
|||||||||||||||||||
Issuance of common stock
|
10,333,333
|
5,224
|
1,474
|
-
|
-
|
-
|
6,698
|
|||||||||||||||||||||
Sale of AU10TIX Technologies B.V. preferred shares, series A-1, net
|
-
|
-
|
2,041
|
-
|
-
|
(1,614
|
)
|
427
|
||||||||||||||||||||
Translation adjustment
|
-
|
-
|
-
|
-
|
73
|
-
|
73
|
|||||||||||||||||||||
BALANCE AT DECEMBER 31, 2019
|
35,433,333
|
18,120
|
26,972
|
(73,006
|
)
|
(6,172
|
)
|
(1,599
|
)
|
(35,685
|
)
|
|||||||||||||||||
Issuance of common stock
|
2,000,000
|
1,066
|
(266
|
)
|
-
|
-
|
-
|
800
|
||||||||||||||||||||
Net income
|
-
|
-
|
-
|
4,403
|
-
|
74
|
4,477
|
|||||||||||||||||||||
Translation adjustment
|
-
|
-
|
-
|
-
|
(87
|
)
|
10
|
(77
|
)
|
|||||||||||||||||||
BALANCE AT DECEMBER 31, 2020
|
37,433,333
|
$
|
19,186
|
$
|
26,706
|
$
|
(68,603
|
)
|
$
|
(6,259
|
)
|
$
|
(1,515
|
)
|
$
|
(30,485
|
)
|
See accompanying notes to the consolidated financial statements.
|
Year Ended December 31,
|
||||||||||||
2020
|
2019
|
2018
|
||||||||||
CASH FLOW FROM OPERATING ACTIVITIES:
|
||||||||||||
Income (loss) from continuing operations
|
$
|
5,402
|
$
|
(7,253
|
)
|
$
|
(11,064
|
)
|
||||
Loss from discontinued operations
|
-
|
-
|
(289
|
)
|
||||||||
Net income (loss)
|
5,402
|
(7,253
|
)
|
(11,353
|
)
|
|||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
||||||||||||
Depreciation and amortization
|
2,090
|
1,688
|
1,897
|
|||||||||
Goodwill impairment
|
-
|
-
|
1,563
|
|||||||||
Accrued interest on convertible notes payable to a related party
|
-
|
-
|
2,687
|
|||||||||
Accrued interest on loan payable to a related party
|
-
|
-
|
59
|
|||||||||
Bad debt expense
|
272
|
260
|
303
|
|||||||||
Deferred income taxes
|
(651
|
)
|
(35
|
)
|
(103
|
)
|
||||||
Loss on disposal of property and equipment
|
71
|
-
|
-
|
|||||||||
Equity loss (income) from investment in affiliate
|
790
|
(91
|
)
|
(124
|
)
|
|||||||
Revaluation and related costs reimbursed to related party
|
-
|
8,139
|
-
|
|||||||||
Changes in assets and liabilities:
|
||||||||||||
Accounts receivable, net
|
11,395
|
669
|
(249
|
)
|
||||||||
Receivable from related party
|
(2,200
|
)
|
-
|
-
|
||||||||
Prepaid expenses and other current assets
|
(13,562
|
)
|
1,366
|
(3,680
|
)
|
|||||||
Other assets
|
485
|
(89
|
)
|
28
|
||||||||
Accounts payable
|
(2,548
|
)
|
(30
|
)
|
592
|
|||||||
Accrued expenses and other current liabilities
|
(5,116
|
)
|
(8,854
|
)
|
11,311
|
|||||||
VAT payable
|
3,999
|
(4,734
|
)
|
4,540
|
||||||||
Operating lease accounts, net
|
19
|
(102
|
)
|
-
|
||||||||
Other liabilities
|
23,786
|
(26
|
)
|
(308
|
)
|
|||||||
Net cash provided by discontinued operations
|
-
|
-
|
253
|
|||||||||
Net cash provided by (used in) operating activities
|
24,232
|
(9,092
|
)
|
7,416
|
||||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Purchase of property and equipment
|
(2,197
|
)
|
(1,884
|
)
|
(2,917
|
)
|
||||||
Capitalization of software costs
|
(603
|
)
|
-
|
-
|
||||||||
Proceeds from sale of property and equipment
|
67
|
-
|
-
|
|||||||||
Purchase of subsidiary in Sweden, net of acquired cash of $74
|
-
|
-
|
(989
|
)
|
||||||||
Purchase of subsidiary in Spain, net of acquired cash of $36
|
-
|
-
|
(184
|
)
|
||||||||
Investments
|
(150
|
)
|
(1,800
|
)
|
(131
|
)
|
||||||
Deposits at (withdraws from) insurance companies
|
(226
|
)
|
151
|
(295
|
)
|
|||||||
Repayments from (loan to) an affiliate
|
-
|
180
|
(180
|
)
|
||||||||
Net cash used in investing activities
|
$
|
(3,109
|
)
|
$
|
(3,353
|
)
|
$
|
(4,696
|
)
|
Year Ended December 31,
|
||||||||||||
2020
|
2019
|
2018
|
||||||||||
CASH FLOW FROM FINANCING ACTIVITIES:
|
||||||||||||
Borrowings (repayments) under lines of credit, net
|
$
|
(13,091
|
)
|
$
|
8,076
|
$
|
1,485
|
|||||
Repayments of convertible notes payable to a related party
|
-
|
(29,572
|
)
|
(2,381
|
)
|
|||||||
Proceeds from a related party
|
-
|
1,000
|
-
|
|||||||||
Repayments of loan payable to a related party
|
(1,538
|
)
|
(368
|
)
|
(1,100
|
)
|
||||||
Proceeds from loan payable
|
-
|
-
|
2,288
|
|||||||||
Repayment of loan payable
|
(1,121
|
)
|
(1,120
|
)
|
(1,198
|
)
|
||||||
Proceeds from sale of a subsidiary's preferred shares
|
-
|
80,000
|
-
|
|||||||||
Transaction costs
|
-
|
(6,054
|
)
|
-
|
||||||||
Increase (decrease) in bank overdrafts
|
(738
|
)
|
(107
|
)
|
845
|
|||||||
Net cash provided by (used in) financing activities
|
(16,488
|
)
|
51,855
|
(61
|
)
|
|||||||
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
1,594
|
(482
|
)
|
(247
|
)
|
|||||||
INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
6,229
|
38,928
|
2,412
|
|||||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH BEGINNING OF YEAR
|
54,845
|
15,917
|
13,505
|
|||||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH END OF YEAR
|
$
|
61,074
|
$
|
54,845
|
$
|
15,917
|
||||||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
|
||||||||||||
Stock issuance as reduction against convertible notes payable to related party
|
$
|
800
|
$
|
6,698
|
$
|
2,570
|
||||||
Sale of investment in White Line as reduction against convertible notes payable to related party
|
$
|
-
|
$
|
-
|
$
|
3,500
|
||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES
|
||||||||||||
Cash paid during the year for:
|
||||||||||||
Interest
|
$
|
613
|
$
|
1,963
|
$
|
836
|
||||||
Income taxes
|
$
|
1,329
|
$
|
3,129
|
$
|
1,322
|
|
• |
Decrease of travel by flights, reducing the demand for services the Company provide as part of its Airport Security and other aviation services. As a result, our cumulative revenues of the airport security and other aviation services
in the twelve months ended December 31, 2020 were $86,894 lower than our revenues for the twelve months ended December 31, 2019. Many of the Company’s employees were laid off and / or ordered to stay home.
|
|
• |
Governments in some of the countries in which we operate have announced the implementation of government assistance measures, which mitigated the impact of the COVID-19 outbreak on our results and liquidity. During 2020, in the
United States of America, the government has approved a payroll support of $13,680 to the American subsidiary of the Company, all of which has been received as of December 31, 2020. Out of this amount the American subsidiary recognized
an amount of $12,672 as reduction of labor expenses for the year ended December 31, 2020. In addition, during the first four months of 2021 additional support up to $15,916 was approved to that subsidiary. In the Netherlands, the
government has approved a support of €17,619 ($21,645 as of December 31, 2020) for the year ended December 31, 2020. The Dutch government extended the support program until June 30, 2021 and might extend it beyond. For the months
January through March 2021, the Company was granted additional assistance up to €4,556. In Germany, the employees are eligible for payroll support up to 60% of the employee’s payroll (on individual basis) in case the employees meet the
support plan requirements. The Company pays to its German employees their full salary and the Company is being reimbursed by the German government for the payroll support amount. The Company has already applied for this support starting
from April 2020. These available governmental support plans might be extended and/or changed according to the future COVID-19 developments.
|
|
• |
In the Netherlands wage tax, social security and VAT payments for the period March 2020 till May 2021 were postponed and will have to be paid in 36 installments, starting October 2021. As of December 31, 2020, the Company accumulated
debt of €20,796 ($25,548 as of December 31, 2020) to the Dutch tax authorities. In Germany, the government postponed the payment of the VAT for the period February through April, 2020. The Company accumulated €5,462 ($6,710 as of
December 31, 2020) which will be paid in the second half year of 2021.
|
|
• |
Depending on the duration of the COVID-19 crisis and continued negative impact on economic activity, the Company might experience further negative results and liquidity restrains. The exact impact on our activities in the remainder
of 2021 and thereafter cannot be predicted.
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Cash and cash equivalents
|
$
|
51,602
|
$
|
52,352
|
||||
Restricted cash
|
9,472
|
2,493
|
||||||
Total cash, cash equivalents and restricted cash
|
||||||||
shown in the statement of cash flows
|
$
|
61,074
|
$
|
54,845
|
|
Level 1 - |
Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Companies have the ability to access at the measurement date.
|
|
Level 2 - |
Inputs to the valuation methodology include:
|
|
• |
Quoted prices for similar assets or liabilities in active markets;
|
|
• |
Quoted prices for identical or similar assets or liabilities in inactive markets;
|
|
• |
Inputs other than quoted prices that are observable for the asset or liability;
|
|
• |
Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
|
Level 3 - |
Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
|
Years
|
|
Equipment and facilities
|
3-7
|
Internal- use software
|
4-7
|
Vehicles
|
3-7
|
Year ended December 31,
|
||||||||||||
2020
|
2019
|
2018
|
||||||||||
Airport Security and Other Aviation Services
|
$
|
222,654
|
$
|
309,548
|
$
|
329,150
|
||||||
Authentication Technology
|
25,765
|
23,759
|
16,071
|
|||||||||
Total revenue
|
$
|
248,419
|
$
|
333,307
|
$
|
345,221
|
Year ended December 31,
|
||||||||||||||||||||||||
2020
|
2019
|
2018
|
||||||||||||||||||||||
Germany
|
$
|
119,500
|
48
|
%
|
$
|
137,207
|
41
|
%
|
$
|
134,646
|
39
|
%
|
||||||||||||
The Netherlands
|
58,446
|
24
|
%
|
97,700
|
29
|
%
|
121,465
|
35
|
%
|
|||||||||||||||
United States
|
45,305
|
18
|
%
|
73,719
|
22
|
%
|
69,548
|
20
|
%
|
|||||||||||||||
Other countries
|
25,168
|
10
|
%
|
24,681
|
8
|
%
|
19,562
|
6
|
%
|
|||||||||||||||
Total revenue
|
$
|
248,419
|
100
|
%
|
$
|
333,307
|
100
|
%
|
$
|
345,221
|
100
|
%
|
Year Ended December 31,
|
||||||||||||
2020
|
2019
|
2018
|
||||||||||
Shares issuable upon conversion of convertible notes
|
||||||||||||
payable to related party at a price of $0.40
|
3,000,000
|
5,000,000
|
-
|
|||||||||
Shares issuable upon conversion of convertible notes
|
||||||||||||
payable to related party at a price of $1.50
|
-
|
-
|
14,731,267
|
|||||||||
Shares issuable upon conversion of accrued interest
|
||||||||||||
payable to related party at a price of $0.75
|
-
|
-
|
11,779,776
|
|||||||||
Total
|
3,000,000
|
5,000,000
|
26,511,043
|
SEK
|
U.S. Dollars
|
|||||||
Cash
|
663
|
74
|
||||||
Accounts receivable
|
8,902
|
999
|
||||||
Other current assets
|
445
|
50
|
||||||
Fixed assets
|
1,189
|
133
|
||||||
Goodwill
|
9,005
|
1,010
|
||||||
Other assets
|
1,039
|
116
|
||||||
Total identifiable assets acquired
|
21,243
|
2,382
|
||||||
Notes Payables-banks
|
4,734
|
531
|
||||||
Accounts Payable
|
182
|
20
|
||||||
Other current liabilities
|
5,788
|
649
|
||||||
Non current liabilities
|
1,039
|
117
|
||||||
Total liabilities assumed
|
11,743
|
1,317
|
||||||
9,500
|
1,065
|
EUR
|
U.S. Dollars
|
|||||||
Cash
|
29
|
36
|
||||||
Accounts receivable
|
142
|
175
|
||||||
Fixed assets
|
88
|
108
|
||||||
Other assets
|
11
|
14
|
||||||
Goodwill
|
188
|
232
|
||||||
Total identifiable assets acquired
|
458
|
565
|
||||||
Notes payables-banks
|
11
|
14
|
||||||
Accounts payable
|
19
|
23
|
||||||
Accrued expenses and other current liabilities
|
126
|
155
|
||||||
Other liabilities
|
119
|
147
|
||||||
Total liabilities assumed
|
275
|
339
|
||||||
183
|
226
|
For the Years Ended December 31,
|
||||||||||||
2020
|
2019
|
2018
|
||||||||||
Revenue
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Cost of revenue
|
-
|
-
|
-
|
|||||||||
GROSS PROFIT
|
-
|
-
|
-
|
|||||||||
Selling, general and administrative
|
-
|
-
|
289
|
|||||||||
Net loss
|
-
|
-
|
(289
|
)
|
||||||||
Less: Net loss attributable to non-controlling interests
|
-
|
-
|
123
|
|||||||||
LOSS FROM DISCONTINUED OPERATIONS ATTRIBUTABLE
|
||||||||||||
TO ICTS INTERNATIONAL N.V.
|
$
|
-
|
$
|
-
|
$
|
(166
|
)
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Receivable from the Dutch tax authorities (1)
|
$
|
12,285
|
$
|
1,682
|
||||
Receivable from the German authorities - COVID 19 (2)
|
1,887
|
-
|
||||||
Dutch Governmental support - COVID 19 (3)
|
1,068
|
-
|
||||||
Other
|
3,669
|
3,298
|
||||||
Total prepaid expenses and other currect assets
|
$
|
18,909
|
$
|
4,980
|
|
(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 Germany, the employees are eligible for payroll support (see note 1). The Company pays to its German employees their full salary and the Company is being reimbursed by the German government for the payroll support amount.
|
|
(3) |
In the Netherlands, the Company is eligible for payroll support (see note 1).
|
Property and equipment is as follows:
|
||||||||
December 31,
|
||||||||
2020
|
2019
|
|||||||
Office, equipment and facilities
|
$
|
10,796
|
$
|
8,866
|
||||
Internal-use software
|
1,449
|
595
|
||||||
Vehicles
|
1,958
|
1,870
|
||||||
Leasehold improvements
|
2,972
|
2,352
|
||||||
17,175
|
13,683
|
|||||||
Less: accumulated depreciation and amortization
|
11,650
|
9,097
|
||||||
Total property and equipment, net
|
$
|
5,525
|
$
|
4,586
|
Year ended December 31,
|
||||||||
2020
|
2019
|
|||||||
Operating lease ROU assets
|
$
|
12,938
|
$
|
10,367
|
||||
Other current liabilities
|
$
|
3,531
|
$
|
2,725
|
||||
Operating lease liabilities
|
9,333
|
7,562
|
||||||
Total operating lease liabilities
|
$
|
12,864
|
$
|
10,287
|
Year ending December 31,
|
||||
2021
|
4,048
|
|||
2022
|
3,122
|
|||
2023
|
2,747
|
|||
2024
|
2,194
|
|||
2025
|
906
|
|||
Thereafter
|
1,400
|
|||
Total future minimum lease payments
|
14,417
|
|||
Less: imputed interest
|
1,553
|
|||
Total
|
$
|
12,864
|
2020
|
2019
|
|||||||
Balance as of the beginning of the year:
|
||||||||
Goodwill
|
$
|
2,182
|
$
|
2,220
|
||||
Accumulated impairment losses
|
(1,501
|
)
|
(1,525
|
)
|
||||
681
|
695
|
|||||||
Goodwill acquired during the year
|
-
|
-
|
||||||
Impairment losses
|
-
|
-
|
||||||
Exchange rate effect
|
65
|
(14
|
)
|
|||||
746
|
681
|
|||||||
Balance as of the end of the year:
|
||||||||
Goodwill
|
2,361
|
2,182
|
||||||
Accumulated impairment losses
|
(1,615
|
)
|
(1,501
|
)
|
||||
$
|
746
|
$
|
681
|
Accrued expenses and other current liabilities are as follows:
|
||||||||
December 31,
|
||||||||
2020
|
2019
|
|||||||
Accrued payroll and related costs
|
$
|
18,938
|
$
|
20,662
|
||||
Accrued vacation
|
5,582
|
6,639
|
||||||
Labor union contribution
|
1,440
|
2,089
|
||||||
Deferred revenue
|
2,143
|
1,652
|
||||||
Payroll support program funding
|
1,019
|
-
|
||||||
Other
|
3,765
|
4,153
|
||||||
Total accrued expenses and other current liabilities
|
$
|
32,887
|
$
|
35,195
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Severance pay liability
|
$
|
1,556
|
$
|
1,493
|
||||
Deferred revenue
|
263
|
268
|
||||||
Deferred VAT
|
10,319
|
-
|
||||||
Deferred wage tax and social security
|
13,100
|
-
|
||||||
Other
|
446
|
-
|
||||||
Total other liabilities
|
$
|
25,684
|
$
|
1,761
|
Year Ended December 31,
|
||||||||
2020
|
2019
|
|||||||
Balance as of the beginning of the year
|
$
|
74,300
|
$
|
-
|
||||
Sale of AU10TIX Technologies B.V. series A Shares, net
|
-
|
73,520
|
||||||
Net Income
|
925
|
774
|
||||||
Other Comprehensive Income - Translation adjustment
|
97
|
6
|
||||||
Balance as of the end of the year
|
$
|
75,322
|
$
|
74,300
|
Number of options
|
Weighted average exercise price
|
Weighted average remaining contractual term
|
||||||||||
Options outstanding as of December 31, 2019
|
200,500
|
$
|
0.01
|
|
||||||||
Options granted
|
-
|
-
|
||||||||||
Options exercised
|
-
|
-
|
||||||||||
Forfeited
|
-
|
-
|
|
|||||||||
Options outstanding , end of the year
|
200,500
|
$
|
0.01
|
6.5 years
|
||||||||
Options exercisable, as of December 31, 2020
|
200,500
|
$
|
0.01
|
6.5 years
|
Non-vested options consist of the following
|
||||||||
Number of
|
Weighted average
|
|||||||
options
|
exercise price
|
|||||||
Non-vested opions, as of December 31, 2019
|
43,875
|
$
|
0.01
|
|||||
Granted
|
-
|
-
|
||||||
Vested
|
43,875
|
0.01
|
||||||
Forfeited
|
-
|
-
|
||||||
Non-vested options, as of December 31, 2020
|
-
|
$
|
-
|
Other expense is summarized as follows:
|
||||||||||||
Year ended December 31,
|
||||||||||||
2020
|
2019
|
2018
|
||||||||||
Interest expense to related parties (see Note 13)
|
$
|
(171
|
)
|
$
|
(1,218
|
)
|
$
|
(2,746
|
)
|
|||
Interest expense and other bank charges
|
(901
|
)
|
(1,479
|
)
|
(1,261
|
)
|
||||||
Interest income
|
178
|
151
|
-
|
|||||||||
Revaluation and related costs reimbursed to related party
|
-
|
(8,139
|
)
|
-
|
||||||||
Foreign currency gain (loss)
|
(254
|
)
|
148
|
417
|
||||||||
Other income (expense)
|
(140
|
)
|
19
|
4
|
||||||||
Total other expense, net
|
$
|
(1,288
|
)
|
$
|
(10,518
|
)
|
$
|
(3,586
|
)
|
The components of income (loss) before income tax benefit (expense) from continuing operations are as follows:
|
||||||||||||
Year Ended December 31,
|
||||||||||||
2020
|
2019
|
2018
|
||||||||||
The Netherlands
|
$
|
469 |
$
|
(11,508
|
)
|
$
|
(13,107
|
)
|
||||
Subsidiaries outside of the Netherlands
|
5,523
|
5,804
|
2,728
|
|||||||||
Income (loss) before income tax expenses
|
$
|
5,992
|
$
|
(5,704
|
)
|
$
|
(10,379
|
)
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Deferred tax assets:
|
||||||||
Operating loss carryforwards
|
$
|
16,694
|
$
|
20,171
|
||||
Capital loss carryforwards
|
159
|
148
|
||||||
Allowance for doubtful accounts
|
110
|
14
|
||||||
Tax credit carryforwards
|
560
|
560
|
||||||
Accrued expenses and other
|
774
|
691
|
||||||
Research and development expenses
|
432
|
-
|
||||||
Total deferred tax assets
|
18,729
|
21,584
|
||||||
Deferred tax liabilities:
|
||||||||
Depreciation of property and equipment
|
(115
|
)
|
(62
|
)
|
||||
18,614
|
21,522
|
|||||||
Valuation allowance
|
(17,445
|
)
|
(21,046
|
)
|
||||
Deferred tax assets, net
|
$
|
1,169
|
$
|
476
|
The Company's effective income tax rate differs from the Netherlands' statutory rate of 25% as follows:
|
||||||||||||
Year Ended December 31,
|
||||||||||||
2020
|
2019
|
2018
|
||||||||||
Effective loss (income) tax benefit from continuing operations at statutory rate
|
$
|
(1,498
|
)
|
$
|
1,426
|
$
|
2,595
|
|||||
Rate differential
|
610
|
1,024
|
682
|
|||||||||
Non-deductible expense
|
(857
|
)
|
(584
|
)
|
(565
|
)
|
||||||
Adjustments to prior year tax losses
|
(3,604
|
)
|
(429
|
)
|
(408
|
)
|
||||||
Changes in valuation allowance
|
3,601
|
(2,568
|
)
|
(2,577
|
)
|
|||||||
Other
|
1,158
|
(418
|
)
|
(412
|
)
|
|||||||
Income tax expense from continuing operations
|
$
|
(590
|
)
|
$
|
(1,549
|
)
|
$
|
(685
|
)
|
Airport
Security
and Other
Aviation
Services
|
||||||||||||||||
|
||||||||||||||||
Corporate
|
Authentication
Technology
|
Total
|
||||||||||||||
Year ended December 31, 2020:
|
||||||||||||||||
Revenue
|
$
|
-
|
$
|
222,654
|
$
|
25,765
|
$
|
248,419
|
||||||||
Depreciation and amortization
|
72
|
1,302
|
716
|
2,090
|
||||||||||||
Income (loss) from continuing operations
|
(3,853
|
)
|
6,056
|
3,199
|
5,402
|
|||||||||||
Goodwill
|
-
|
746
|
-
|
746
|
||||||||||||
Total assets from continuing operations
|
12,488
|
86,550
|
41,350
|
140,388
|
||||||||||||
Year ended December 31, 2019:
|
||||||||||||||||
Revenue
|
$
|
-
|
$
|
309,548
|
$
|
23,759
|
$
|
333,307
|
||||||||
Depreciation and amortization
|
46
|
1,328
|
314
|
1,688
|
||||||||||||
Income (loss) from continuing operations
|
(11,740
|
)
|
(2,406
|
)
|
6,893
|
(7,253
|
)
|
|||||||||
Goodwill
|
-
|
681
|
-
|
681
|
||||||||||||
Total assets from continuing operations
|
23,381
|
64,647
|
35,419
|
123,447
|
||||||||||||
Year ended December 31, 2018:
|
||||||||||||||||
Revenue
|
$
|
-
|
$
|
329,150
|
$
|
16,071
|
$
|
345,221
|
||||||||
Depreciation and amortization
|
45
|
1,756
|
96
|
1,897
|
||||||||||||
Income (loss) from continuing operations
|
(6,205
|
)
|
(9,163
|
)
|
4,304
|
(11,064
|
)
|
|||||||||
Goodwill
|
-
|
695
|
-
|
695
|
||||||||||||
Total assets from continuing operations
|
329
|
66,373
|
8,385
|
75,087
|
Year Ended December 31,
|
||||||||||||
2020
|
2019
|
2018
|
||||||||||
Germany
|
$
|
119,500
|
$
|
137,207
|
$
|
134,646
|
||||||
The Netherlands
|
58,446
|
97,700
|
121,465
|
|||||||||
United States
|
45,305
|
73,719
|
69,548
|
|||||||||
Other countries
|
25,168
|
24,681
|
19,562
|
|||||||||
Total revenue
|
$
|
248,419
|
$
|
333,307
|
$
|
345,221
|
December 31,
|
||||||||
2020
|
2019
|
|||||||
Germany
|
$
|
449
|
$
|
516
|
||||
The Netherlands
|
598
|
862
|
||||||
United States
|
305
|
354
|
||||||
Other countries
|
4,173
|
2,854
|
||||||
Total property and equipmat, net
|
$
|
5,525
|
$
|
4,586
|
Charges
|
Charges
|
|||||||||||||||||||
to
|
to
|
|||||||||||||||||||
Beginning
|
Costs and
|
other
|
End of
|
|||||||||||||||||
of year
|
Expenses
|
accounts
|
Deductions
|
Year
|
||||||||||||||||
Allowance for doubtful accounts (1):
|
||||||||||||||||||||
Year ended December 31, 2018
|
$
|
103
|
303
|
(166
|
)
|
-
|
$ |
240
|
||||||||||||
Year ended December 31, 2019
|
$ |
240
|
261
|
(83
|
)
|
-
|
$ |
418
|
||||||||||||
Year ended December 31, 2020
|
$
|
418
|
710
|
(438
|
)
|
-
|
$ |
690
|
||||||||||||
Allowance for net deferred tax assets:
|
||||||||||||||||||||
Year ended December 31, 2018
|
$
|
15,901
|
-
|
2,577
|
-
|
$ |
18,478
|
|||||||||||||
Year ended December 31, 2019
|
$ |
18,478
|
-
|
2,568
|
-
|
$ |
21,046
|
|||||||||||||
Year ended December 31, 2020
|
$
|
21,046
|
-
|
-
|
(3,601
|
)
|
$ |
17,445
|
||||||||||||
Exhibit 4
Continuous text of the articles of association of ICTS International N.V. as per
January 4th, 2021 (unofficial translation)
Name and registered office.
Article 1.
1. |
The name of the Company limited by shares is: ICTS INTERNATIONAL N.V. and has its registered office in Amstelveen, The Netherlands.
|
2. | The Company has been established for an indefinite period of time. |
Objects.
Article 2.
1. |
The objects for which the Company has been established are:
|
a. |
to advise and render other services regarding the security of persons and goods and to arrange for (cause others to arrange for) such
security by order of companies, government bodies and private persons; in particular but not exclusively: to (have others) install, manage and check security systems for the prevention and control of crime and terrorism in and around grounds,
buildings, installations, vessels and aircraft;
|
b. |
to acquire and dispose of participations or other interests in companies and enterprises, - whether or not together with others -, to
cooperate with companies and enterprises and to manage the same;
|
c. |
to acquire, manage, commercially exploit, encumber, dispose of property - including intellectual and industrial property rights -, and to
invest capital;
|
d. |
to grant loans or cause the granting of loans, in particular - but not exclusively - to legal persons and companies which are subsidiaries
and or group companies of the Company or in which the Company has a participation - all with due of observance of the statutory provisions - and to draw loans or to cause the drawing of loans;
|
e. |
to enter into agreements by which the Company commits itself as guarantor or joint and several debtor, warrants performance by a third
party or commits itself besides or on behalf of others, in particular - but not exclusively - for the benefit of legal persons and companies as referred to under d, all with due observance to the provisions of paragraph 2 of this article;
|
f. |
to perform any and all acts which are related or maybe conducive to the foregoing;
|
g. |
to engage in any other lawful act or activity for which companies may be organized under the Netherlands Civil Code, as amended from time
to time.
|
2. | Unless the provisions of section 98c of Book 2 of the Netherlands Civil Code apply, the Company may not stand surety, give price guarantees, enter into agreements by which the Company commits itself as guarantor or joint and several debtor, warrants performance by a third party or commits itself besides or on behalf of others, with an eye to the taking or acquiring by others of shares in its capital or depositary receipts thereof. |
1
Capital.
Article 3.
The authorised capital of the Company amounts fifteen million euro and thirty eurocents (EUR 15,000,000.30), divided into thirty three million and three hundred thirty-tree thousand and three hundred thirty four (33,333,334) shares, each share having a par value of fort-five euro cents (EUR 0.45).
Article 4.
1. |
In these Articles of Association the following terms shall have the following meaning:
|
a. |
Management Board/Managing Director(s): the management/managing officer(s) within the meaning of Book 2 of the Netherlands Civil Code;
|
b. |
Supervisory Board/Members of the Supervisory Board: the supervisory board/members of the supervisory board within the meaning of Book 2 of
the Netherlands Civil Code;
|
c. |
shares: shares in the capital of the Company;
|
d. |
the General Meeting: the body of the Company formed by shareholders and other persons entitled to vote;
|
e. |
the General Meeting of Shareholders: the meeting of shareholders and other persons entitled to attend the General Meeting;
|
f. |
the Annual Meeting: The General Meeting of Shareholders held for the purpose of discussion and adoption of the annual accounts;
|
g. |
annual accounts: the balance sheet and the profit and loss account with the explanatory notes thereon, both in drafted and adopted form,
unless the context shows differently;
|
h. |
the law: the law of The Netherlands.
|
2. |
In these Articles of Association the term “in writing” shall also mean: by telegram, by telex or by telecopier.
|
Shares: share certificates.
Article 5.
1. |
The shares may not be divided into sub-shares.
|
2. |
The shares shall be registered shares.
|
3. |
Registered shares shall be available:
|
- |
in the form of an entry in the share register without issue of a share certificate (“uncertificated shares”); or
|
- |
at the option of the shareholder, in the form of an entry in the share register with issue of a certificate (“certificated shares”).
|
4. |
Upon request of a shareholder collective share certificates for any number of shares may be issued to that shareholder. Where these
Articles of Association refer to share certificates this term shall include collective share certificates.
|
5. | Share certificates shall be signed by or on behalf of the Management Board either by original signature or by printed facsimile. |
|
6. |
Subject to the approval of the Supervisory Board the Management Board can determine that for the trade at foreign Exchanges share
certificates shall be issued complying with the requirements set by said foreign Exchange(s) and not provided with any dividend sheet.
|
|
7. |
The shareholder may, upon his request, have issued to him one or more share certificates for his shares.
|
|
8. |
Damaged, but in the opinion of the Management Board still identifiable share certificates, may be exchanged by the Management Board for
duplicates; the Management Board shall in that case ensure that the damaged documents are destroyed. For the destroyed or lost share certificates, the Management Board may issue duplicates, while complying with such requirements as the
Management Board shall determine.
Each document newly to be issued shall be clearly provided with the word: “duplicate” and shall bear the same specification as the document which it is to replace. The issue of the duplicate shall render the document which it replaces null and void. All costs of implementation of the provisions of this paragraph shall be for the applicants account, unless determined otherwise by the Management Board. |
2
Usufruct and pledge on shares. Delivery of title to shares.
Article 6.
1. |
Shares may be encumbered with usufruct.
|
2. |
Shares may be pledged as security. A pledge may also be created without acknowledgment by or service on the Company.
|
3. |
A shareholder without the right to vote as a result of a qualified right created on his shares and a usufructuary and pledgee with the
right to vote shall have the rights granted to holders of depositary receipts issued with the cooperation of the Company under the law. Usufructuaries and pledgees of shares without the right to vote shall not have such rights.
|
Notification of place of residence and address. Notices and
communications. Register of shareholders.
Article 7.
1. |
With due regard to the provisions of the law in respect of registered shares a register shall be kept by or on behalf of the Company, which
register shall be regularly updated and, at the discretion of the Management Board, may, in whole or in part, be kept in more than one copy and at more than one place. As long as shares in the Company are quoted on the NASDAQ National Market,
a part of the share register may be kept in New York.
|
2. |
Each shareholder’s name, his address and such further data as the Management Board deems desirable, whether at the request of a shareholder
or not, shall be entered in the register.
|
3. | The form and the contents of the share register shall be determined by the Management Board with due regard to the provisions of paragraphs 1 and 2 of this Article. |
|
4. |
Upon request a shareholder shall be given free of charge a declaration of what is stated in the register with regard to the shares
registered in his name, which declaration may be signed by a specially authorized person to be appointed by the Management Board for this purpose.
|
|
5. |
The provisions of the preceding four paragraphs shall equally apply to those who hold a right of usufruct or lien on one or more shares,
with the proviso that the other data required by law must be entered in the register.
|
Transfer of shares
Article 8.
|
1. |
The transfer of shares and the creation and the transfer of a limited right thereon shall take place in accordance with the applicable
provisions of the law.
|
|
2. | The allotment of shares on the partitioning of any joint property shall take place in accordance with the applicable formalities for transfer of shares in such situations. |
3
Issue of shares. Payment.
Article 9.
1. |
The General Meeting - or, as the case may be, the Supervisory Board if and to the extent that it has been designated thereto by the General
Meeting - shall decide in respect of the issue of shares; if the Supervisory Board has been designated thereto, the General Meeting may not decide in respect of the issue as long as the designation is in effect.
|
2. |
The General Meeting or, as the case may be, the Supervisory Board shall determine the price of issue as well as the other conditions of
issue, the payment in foreign currencies on shares included.
|
3. |
If the Supervisory Board is designated as authorized to decide on the issue of shares, such designation shall specify the number of shares
which may be issued. Such designation shall also determine the duration of the designation which may not exceed five years. The designation can be renewed each time for a period not exceeding five years. Unless stipulated otherwise upon
designation, it may not be withdrawn.
|
4. |
The provisions of paragraphs 1 through 3 of this Article shall apply mutatis mutandis to the granting of rights to take shares, but shall
not apply to the issue of shares to a person who exercises a previously acquired right to take shares.
|
5. |
The Company may not subscribe for its own shares.
|
6. |
Shares shall never be issued below nominal value, without prejudice to the provisions of Section 80, Subsection 2 of Book 2 of the Netherlands Civil Code.
|
7. |
Payment shall be made in cash insofar as another form of payment has not been agreed upon, with due observance of the relevant provisions
of the law. Payment may only be made in foreign currencies with the permission of the Company and, furthermore, with due observance of the relevant provisions of the law.
|
Preemptive right upon issue.
Article 10.
1. | On the issuance of common shares, each holder of common shares shall have a right of pre-emption in proportion to the aggregate nominal value of his common shares, with due observance of the relevant limitations set by law. Holders of common shares shall have a similar right of pre-emption if options are granted to subscribe for common shares. |
|
2. | The right of pre-emption may, subject to due observance of the relevant provisions of the law, be limited or excluded by the General Meeting or by the Supervisory Board designated in this respect by resolution of the General Meeting for a fixed period of time not exceeding five years. Such a designation may only be made if the Supervisory Board is also or simultaneously designated as the body authorized to issue shares. |
4
Acquisition by the Company of its own shares. Reduction of capital.
Article 11.
1. |
Any acquisition by the Company of partly paid shares in its own capital shall be null and void.
|
2. |
The Company may acquire fully paid up shares for no consideration or if:
|
a. |
its shareholders equity, reduced by the acquisition price is not less than the paid and called up part of the capital increased by the
reserves which must be maintained by law or these Articles of Association;
|
b. | the nominal amount of the shares in its capital to be acquired and already jointly held by the Company and its subsidiaries does not exceed two tenth of the issued capital; | |
3. |
The factor deciding whether the acquisition is valid shall be the amount of the shareholders equity as
shown in the most recently adopted balance sheet, reduced by the acquisition price of shares in the capital of the Company and any payments from profit or reserves from third parties, which became due by the Company and its subsidiaries after
the balance sheet date. In the event that more than six months of a financial year have passed without the annual accounts having been adopted, acquisition in accordance with paragraph 2 other than for no consideration, shall not be permitted.
|
4. |
The Company may acquire shares in its own capital other than for no consideration only after the General Meeting has authorized the
Management Board thereto. This authorization shall be valid for a period not exceeding eighteen months. In the authorization the General Meeting shall determine how many shares may be acquired, how they may be acquired and between which
limits the price should be. No authorization shall be required, insofar as the Articles of Association permit the Company to acquire its own shares for the purpose of transferring the same to employees of the Company or of a group Company
under a scheme applicable to such employees. Such shares must be officially listed on an exchange.
|
5. |
The preceding paragraphs shall not apply in respect of shares acquired by the Company by universal succession.
|
6. |
The term shares where used in the preceding paragraphs of this Article shall include depositary receipts of shares.
|
7. | Acquisition of shares in violation of the provisions of this Article shall be null and void. The Managing Directors shall be jointly and severally liable vis-à-vis the transferor in good faith who suffers a loss as a result of such nullity. |
|
8. |
On proposal of the Supervisory Board, the General Meeting may decide to reduce the issued capital by withdrawing shares or by reducing the
amount of shares by alteration of the Articles of Association. In such resolution the shares to which the resolution relates shall be designated and the implementation of the resolution shall be arranged. The paid up and called part of the
capital may not be reduced below the minimum capital prescribed at the time of the resolution.
|
|
9. |
A resolution to withdraw may only relate to shares held by the Company itself or the depositary receipts whereof are held by the Company.
|
5
10. |
Partial repayment in respect of shares or dispensation of the obligation to pay up shall be possible only in the implementation of a
resolution to reduce the amount of the shares. Repayment or dispensation shall be effected proportionally in respect of all shares. The requirement of proportionally may be deviated from with the approval of all shareholders concerned.
|
11. |
The notice convening a meeting at which a resolution referred to in paragraph 8 or 10 of this Article shall be passed, shall state the
object of the reduction of capital and the manner of implementation. The provisions of Article 21 of these Articles of Association shall apply mutatis mutandis.
|
12. | The Company shall deposit the resolutions referred to in paragraphs 8 or 10 of this Article at the office of the commercial register and shall announce the deposit in a national daily newspaper. |
Joint owners of a share.
Article 12.
If more than one person jointly possess rights in respect of a share, such joint owners may exercise such rights only by having themselves represented vis-à-vis the Company by one person.
Management and supervision.
Article 13.
1. |
The Company shall be managed by a Management Board consisting of one or more Directors. The Management Board shall be under the supervision
of a Supervisory Board consisting of one or more Members. Only natural persons are capable of being Members of the Supervisory Board.
|
2. |
The number of Managing Directors and Members of the Supervisory Board shall be determined by the General Meeting.
|
3. |
The remuneration and the further terms of employment of each of the Managing Directors shall be determined by the Supervisory Board. The
Supervisory Board may determine the aggregate remuneration of its Members in amounts up to two million United States dollars (USD 2,000,000.--) or the equivalent thereof in other currency per annum. Any aggregate remuneration of the Members
of the Supervisory Board in amounts in excess of the abovementioned amount can only be granted by the General Meeting.
|
4. | The Managing Directors and Members of the Supervisory Board shall be appointed by the General Meeting. The Members of the Supervisory Board shall be appointed for an indefinite period of time. The Supervisory Board can make recommendations for new Managing Directors or Members of the Supervisory Board. |
|
5. |
Managing Directors and Members of the Supervisory Board may be suspended or removed from office by the General Meeting at all times.
Besides, Managing Directors can at all times be suspended by the Supervisory Board, the reasons for such suspension being stated.
|
|
6. |
If in the event of suspension of a Managing Director or a Member of the Supervisory Board the General Meeting has not within three months
after the effective date of suspension resolved to remove him from office, the suspension shall end. The suspended Managing Director or Member of the Supervisory Board shall be given the opportunity to account for his actions to the General
Meeting and may have himself assisted for that purpose by a legal adviser.
|
6
Management Board.
Article 14.
1. |
Subject to these articles and the relevant provisions of the law, the Management Board is entrusted with the management of the Company. The
Management Board represents the Company. Moreover, the Company can be represented by two Managing Directors acting jointly. If a member of the Management Board has a conflict of interest with the Company, such member of the Management Board
will immediately notify the Supervisory Board of any such conflict and the Company will not be represented by a Managing Director in such matter. In such situations, the Supervisory Board shall be authorized to appoint a disinterested person,
either from within or outside of the Supervisory Board, to represent the Company.
|
2. |
If there is more than one member of the Management Board, such members may divide their activities between or among themselves in such
fashion as they shall mutually agree, subject to review and modification, if appropriate, by the Supervisory Board.
|
3. |
The Management Board is authorized to appoint persons who may represent the Company and to grant such persons any title and power as it
deems appropriate.
|
4. |
Members of the Management Board serve until their resignation, death or removal.
|
5. |
If one or more Managing Directors are absent or unable to act, the other Managing Directors or the sole remaining Managing Director shall
be temporarily entrusted with the entire management. In the event that all Managing Directors are absent or unable to act, a person appointed to this end for an indefinite period of time by the Supervisory Board from among or not from among
its members shall temporarily be charged with the entire management.
|
7
Supervisory Board.
Article 15.
|
1. | It shall be the duty of the Supervisory Board to supervise the conduct of affairs by the Management Board and the general course of business in the Company and in the business connected with it. It shall assist the Management Board by advice. In the accomplishment of their task the Members of the Supervisory Board shall be guided by the interests of the Company and of the business connected with it. |
2. |
The Management Board shall furnish the Supervisory Board in due time with the particulars which the latter needs for the performance of its
task and shall, besides, furnish each Member of the Supervisory Board with all the information about the Company’s affairs which he may desire. The Supervisory Board shall be authorized to inspect and to cause to be inspected all the books,
records and correspondence of the Company; each Member of the Supervisory Board shall at all times have access to all the buildings and grounds used by the Company.
|
3. |
In the accomplishment of its task the Supervisory Board may call in the assistance of experts at the Company’s expense.
|
4. |
The Supervisory Board shall appoint one of its members to be chairman.
|
5. |
Each Member of the Supervisory Board as well as the Management Board shall be entitled to convene a meeting of the Supervisory Board. At a
meeting of the Supervisory Board a Member of the Supervisory Board may have himself represented by another Member of this Board, appointed by an instrument in writing.
|
6. |
The Supervisory Board shall pass resolutions by an absolute majority of votes. In case of an equality of votes the proposal shall be
regarded as rejected.
|
7. |
The Supervisory Board can also pass resolutions without holding a meeting, provided this is done in writing, each of the Members of the
Supervisory Board has cast his vote and none of them has opposed this manner of passing resolutions. A resolution shall then have been passed if more than half of the number of Members of the Supervisory Board have pronounced in favor of the
proposal.
|
8. | If there is only one Member of the Supervisory Board, he shall have all the powers and obligations conferred or imposed respectively upon the Supervisory Board and its chairman by these Articles of Association. |
8
General Meeting of Shareholders.
Article 16.
|
1. |
General Meetings of Shareholders shall be held in the place where the Company has its registered office or in Amsterdam, Rotterdam or The
Hague. Lawful resolutions may be passed at a General Meeting of Shareholders held elsewhere than in the preceding sentence, only if the entire issued capital is represented.
|
|
2. |
At least one General Meeting of Shareholders shall be held each year, not later than six months after the end of the financial year.
|
|
3. | The Managing Board and the Supervisory Board shall be equally entitled to convene a General Meeting of Shareholders. The Managing Board and the Supervisory Board shall be required to call a General Meeting of Shareholders if one or more shareholders jointly representing at least one tenth of the issued capital shall so request in writing, thereby stating the subjects to be considered in detail. If in such case neither the Managing Board nor the Supervisory Board have taken such measures that the General Meeting of Shareholders can be held within six weeks of the request, each of the shareholders concerned shall be authorized to call a General Meeting of Shareholders themselves - with due observance of the relevant provisions of these Articles of Association. |
4. |
All convocations of General Meetings of Shareholders and all notifications to shareholders and beneficiaries of a usufruct and pledgees to
whom voting rights have been granted shall be made by letter mailed to their addresses as shown in the register of shareholders.
|
5. |
Communications which by law or the Articles of Association must be addressed to the General Meeting may be made by inclusion either in the notice calling the meeting
or in the document deposited for inspection at the office of the Company and in a place in Amsterdam, provided that this is stated in the notice calling the meeting. The notice shall be sent no later than on the fifteenth day prior to the day
of the meeting.
|
6. |
If the entire issued capital is represented at the meeting as well as all other persons who by virtue of the law or these Articles of
Association must be called to the meeting legally valid resolutions may be passed by the General Meeting of Shareholders about all subjects put forward for the vote, provided that they are passed unanimously even if the requirements set by
law or these Articles of Association in respect of the notice of the General Meeting of Shareholders were not observed.
|
7. |
Each shareholder and each person to whom the law grants this right shall be authorized, in person or by a proxy appointed in writing, to
attend and address the General Meeting of Shareholders. Before he is granted access to a meeting a shareholder, a person as referred to in the previous sentence or their proxy shall sign an attendance list and state his name and, insofar as
applicable, the number of votes which he may cast. A proxy shall also state the name of the person he represents.
|
8. | Members of the Supervisory Board, Members of the Management Board and any other persons who have the right of access pursuant to law shall have access to the General Meeting of Shareholders. In addition, the General Meeting may decide on the admittance of persons other than the persons referred to in the previous sentence. Members of the Supervisory Board and Members of the Management Board shall have an advisory voice at the General Meeting of Shareholders. |
9
Article 17.
|
1. |
The General Meeting of Shareholders shall be presided over by the Chairman of the Supervisory Board or, in his absence, by a member of the
Supervisory Board selected by the Supervisory Board acting as a body. The Supervisory Board has the authority to designate a person who is not a member of the Supervisory Board as chairman of the General Meeting of Shareholders. If no members
of the Supervisory Board are present, the General Meeting of shareholders shall be presided over by the person appointed for that purpose by the General Meeting itself.
|
|
2. | Unless a notarial record is drawn up, minutes of the meeting shall be kept by a person designated thereto by the Chairman - who can also appoint himself as such -, which minutes shall be confirmed at that or the next meeting by the General Meeting and which shall be signed in evidence thereof by the Chairman and the person keeping the minutes of that meeting. Each Managing Director, as well as one or more holders of shares representing at least one tenth of the issued capital may determine that a notarial record be drawn up. The cost of a notarial record shall be for the account of the Company. |
Voting at General Meeting of Shareholders.
Article 18.
1. |
Each share carries the right to cast one vote.
|
2. |
Resolutions may be adopted only when a quorum of at least fifty percent (50%) of the outstanding shares entitled to vote are represented
and require an absolute majority of the votes cast. Section 120 subsection 3 of Book 2 of the Netherlands Civil Code is hereby deemed to be inapplicable. Resolutions of the General Meeting of Shareholders with respect to an amendment of the
Articles of Association, dissolution of the Company, acquisition of its own shares by the Company or pertaining to a merger may be adopted only when a quorum of at least fifty percent of the outstanding shares entitled to vote are represented
and require a vote of at least two-thirds of the votes cast, representing more than fifty percent (50 %) of the outstanding capital.
|
3. |
If there is a tie in the vote for the election of the Members of the Supervisory Board, the chairman of the Supervisory Board shall select
which nominee shall be elected. For all other shareholders’ resolutions, if there is a tie in the vote, the proposal shall be rejected.
|
4. |
Abstentions on a particular matter shall be counted toward the quorum, but shall not be counted as affirmative votes.
|
Financial year, annual account and distribution of profit.
Article 19.
1. |
The financial year of the Company shall coincide with the calendar year.
|
2. |
Each year within five months after the end of the financial year of the Company, save where this period is extended by a maximum of six
months by the General Meeting on account of special circumstances, the Management Board shall draw up the annual accounts and deposit the same at the office of the Company open to the inspection of the shareholders. Within this period the
Management Board - unless section 403 of Book 2 of the Netherlands Civil Code applies to the Company - shall furthermore draw up the annual report and deposit it for inspection as stated above. The particulars as referred to in section 392,
subsection 1 of Book 2 of the Netherlands Civil Code shall be added to these documents and furthermore, if the Supervisory Board gave an opinion, that opinion shall be added to these documents. The annual accounts shall be signed by all
Managing Directors and Members of the Supervisory Board; if the signature of one or more of them is missing, this and the reason for such absence shall be stated.
|
10
|
3. |
Without prejudice to the provisions of the preceding paragraph, the Company shall ensure that the documents referred to in said paragraph
shall be available at its office for inspection as stated above from the date of convening of the General Meeting of Shareholders at which said documents are to be considered. The persons entitled to inspect said documents may obtain a copy
thereof at no cost.
|
|
4. | The annual accounts shall be adopted by the General Meeting. Adoption of the annual accounts without reservation shall constitute a discharge from liability of the Managing Directors and the Members of the Supervisory Board, without prejudice to the provisions of sections 139 and 150 Volume 2 of the Netherlands Civil Code. |
Article 20,
1. |
The profit shall be determined in accordance with generally accepted accounting principals.
|
2. |
Of the profit appearing from the annual accounts adopted by the General Meeting such a sum can be reserved as shall be fixed by the
Supervisory Board.
|
3. |
The remaining profits after the application of paragraph 2 of this Article shall be available to the General Meeting.
|
4. |
The Company may make distributions of profit to the shareholders only to the extent that the shareholders equity exceeds the paid and
called up part of the capital increased by the amount of the reserves which it is required to maintain by law or by these Articles of Association.
|
5. |
Distribution of profit shall be made only after adoption of the annual accounts which shows that such distribution is possible.
|
6. |
In calculating the distribution of profit shares or the depositary receipts thereof, the full ownership of which is vested in the Company
or in respect of which the Company has usufruct shall not be counted.
|
7. |
The Company may pay interim dividends with due observance of the provisions of paragraph 4. The resolution to distribute an interim
dividend shall be passed by the Management Board after the approval of the Supervisory Board has been obtained.
|
8. |
The date on which dividends and other distributions become payable, no later than three months from the date such dividends have been
declared shall be determined by the Supervisory Board and announced in accordance with the provisions of Article 16, Section 4.
|
9. |
Dividends which have not been claimed within five years after the date on which they were made payable shall be forfeited to the benefit of
the Company.
|
Alteration of the Articles of Association and winding up.
Article 21.
When a proposal to amend these Articles of Association or dissolve the Company is made to the General Meeting, this must be stated in the convocation to the General Meeting of Shareholders. With respect to an amendment to the Articles of Association, a copy of the proposal in which the proposed modification is stated in full must be filed at the office of the Company for inspection by every shareholder and must be kept on file and available for inspection until the end of the meeting. The provisions of Article 123 of the Netherlands Civil Code shall apply accordingly. In addition, no amendment to the Articles of Association will become effective until the Dutch Ministry of Justice has reviewed and approved such amendment and the notarial deed of alteration of the Articles of Association has been executed.
11
Liquidation.
Article 22.
|
1. |
If the Company is wound up, its liquidation shall be carried out by the Management Board under the supervision of the Supervisory Board.
The provisions of Article 13 and Article 14, paragraphs 1 and 2, shall apply mutatis mutandis.
|
|
2. | The General Meeting shall determine the remuneration of the liquidators. |
3. |
During the liquidation these Articles of Association shall remain in force to the extent possible.
|
4. |
The surplus assets remaining after satisfaction of all liabilities of the Company, shall be paid to the shareholders pro rata to the amount
paid up on each one’s shares.
|
Indemnification.
Article 23.
1. |
The Company shall, to the fullest extent permitted by the law indemnify, and advance expenses to, each of its now acting and former members
of the Supervisory Board, members of the Management Board, officers, employees and agents, whenever any such person is made a party, or threatened to be made a party, in any action, suit or proceeding by reason of his or her service with the
Company.
|
2. | The Company is authorized, to the fullest extent permitted by the law, as amended from time to time, to produce liability insurance on behalf of its now acting and former members of the Supervisory Board, members of the Management Board, officers, employees and agents. |
Transitory provision authorized share capital.
Article 24.
As per the moment the management board of the company files a declaration with the Dutch Chamber of Commerce that at least ninety percent (90%) of the authorized share capital is issued, then article 3 of the articles of association will provide as follows:
“The authorised capital of the Company amounts sixty-seven and five hundred thousand (EUR 67,500,000), divided into hundred fifty million (150,000,000) shares, each share having a par value of fort-five euro cents (EUR 0.45).”
12
|
a)
|
The Section 406 Officers shall supervise the implementation of measures that are designed to ensure that information disclosed in reports and documents filed with or submitted to the Securities and Exchange
Commission, or contained in other public communications made by ICTS, is full, fair, accurate, complete, timely and understandable.
|
|
b)
|
The Section 406 Officers shall promptly bring to the attention of the Audit Committee of the ICTS's Supervisory Board any material information of which he or she may become aware that could affect the
disclosures made by ICTS in its public filings.
|
|
c)
|
The Section 406 Officers shall promptly bring to the attention of the Audit Committee any information he or she may have concerning (i) significant deficiencies in the design or operation of internal controls
which could adversely affect ICTS ability to record, process, summarize and report financial data or (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in ICTS’s financial
reporting, disclosures or internal controls.
|
|
d)
|
The Section 406 Officers shall promptly bring to the attention of ICTS’s Corporate Compliance Officer and to the Audit Committee any information he or she may have concerning any violation of this Code of
Ethics or ICTS’s Business Conduct Guidelines by any director, officer or other employee of the Company.
|
|
e)
|
The Section 406 Officers shall promptly bring to the attention of the Corporate Compliance Officer and to the Audit Committee any material transaction or relationship that arises and of which he or she
becomes aware that reasonably could be expected to give rise to an actual or apparent conflict of interest between a director or senior officer of ICTS, on the one hand, and ICTS, on the other. Any failure of a Section 406 Officer to
observe the terms of this Code of Ethics or the Business Conduct Guidelines may result in appropriate disciplinary action that shall be designed to deter wrongdoing and to promote accountability to this Code of Ethics and the Business
Conduct Guidelines.
|
|
|
The Audit Committee shall be responsible for recommending to the ICTS’s Supervisory Board whether and on what terms to grant to any Section 406 Officer a waiver of this Code of Ethics or the Business Conduct
Guidelines. The decision to grant to any Section 406 Officer a waiver of this Code of Ethics or the Business Conduct Guidelines shall be made by the Supervisory Board and shall be promptly disclosed to the public and ICTS’s shareholders in
accordance with applicable law and listing standards.
|
|
I, |
Rom Shaked, certify that:
|
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c) |
Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
|
|
(d) |
Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the
company's internal control over financial reporting; and
|
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report
financial information; and
|
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting.
|
Dated: |
May 14, 2021
|
By: |
/s/ Rom Shaked
|
By: |
/s/ Rom Shaked
|
Dated: |
May 14, 2021
|
By: |
/s/ Alon Raich
|
Dated: |
May 14, 2021
|