Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2021shares | |
Entity Registrant Name | ICTS INTERNATIONAL N.V. |
Entity Central Index Key | 0001010134 |
Document Type | 20-F |
Document Period End Date | Dec. 31, 2021 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Is Entity a Well-known Seasoned Issuer | No |
Is Entity's Reporting Status Current | No |
Entity Filer Category | Non-accelerated Filer |
Entity Voluntary Filers | No |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 37,433,333 |
Document Fiscal Period Focus | FY |
Document Fiscal Year Focus | 2021 |
Entity Interactive Data Current | Yes |
Entity Incorporation, State or Country Code | P7 |
Document Annual Report | true |
Document Transition Report | false |
Document Shell Company Report | false |
Entity Address, Address Line One | Walaardt Sacréstraat 425-5 |
Document Accounting Standard | U.S. GAAP |
Document Registration Statement | false |
Entity Address, Postal Zip Code | 1117 BM |
Entity Address, City or Town | Schiphol-Oost |
Entity Address, Country | NL |
Entity File Number | 0-28542 |
Auditor Firm ID | 199 |
Auditor Location | New York, New York |
Auditor Name | Mayer Hoffman McCann CPAs |
Business Contact [Member] | |
Entity Address, Address Line One | Walaardt Sacréstraat 425-5 |
Contact Personnel Name | Alon Raich |
Entity Address, Postal Zip Code | 1117 BM |
Entity Address, City or Town | Schiphol-Oost |
Entity Address, Country | NL |
Local Phone Number | 20-3471077 |
Contact Personnel Email Address | alon@ictsintl.com |
City Area Code | 31 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 88,753 | $ 51,602 |
Restricted cash | 14,699 | 9,472 |
Accounts receivable, net | 55,089 | 34,371 |
Receivable from a related party | 0 | 2,200 |
Prepaid expenses and other current assets | 16,021 | 18,909 |
Total current assets | 174,562 | 116,554 |
Deferred tax assets, net | 1,403 | 1,169 |
Investments | 525 | 1,482 |
Property and equipment, net | 5,710 | 5,525 |
Operating lease right of use assets | 10,938 | 12,938 |
Goodwill | 690 | 746 |
Other assets | 2,052 | 1,974 |
Total assets | 195,880 | 140,388 |
CURRENT LIABILITIES: | ||
Notes payable-banks | 199 | 8,104 |
Accounts payable | 5,857 | 3,716 |
Accrued expenses and other current liabilities | 39,834 | 32,320 |
Value added tax (VAT) payable | 5,378 | 11,096 |
Income taxes payable | 6,292 | 567 |
Operating lease liabilities, current | 3,317 | 3,531 |
Total current liabilities | 60,877 | 59,334 |
Convertible notes payable to a related party | 1,192 | 1,200 |
Operating lease liabilities, non-current | 8,298 | 9,333 |
Other liabilities | 40,867 | 25,684 |
Total liabilities | 111,234 | 95,551 |
COMMITMENTS AND CONTINGENCIES | ||
REDEEMABLE NON-CONTROLLING INTERESTS | 90,478 | 75,322 |
SHAREHOLDERS' DEFICIT: | ||
Common stock, €0.45 par value; 150,000,000 shares authorized as of December 31, 2021 and 2020. 37,433,333 shares issued and outstanding as of December 31, 2021 and 2020. | 19,186 | 19,186 |
Additional paid-in capital | 16,844 | 26,706 |
Accumulated deficit | (33,796) | (68,603) |
Accumulated other comprehensive loss | (7,866) | (6,259) |
Non-controlling interests in subsidiaries | (200) | (1,515) |
Total shareholders' deficit | (5,832) | (30,485) |
Total liabilities and shareholders' deficit | $ 195,880 | $ 140,388 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - € / shares | Dec. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Common stock, par value per share | € 0.45 | € 0.45 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 37,433,333 | 37,433,333 |
Common stock, shares outstanding | 37,433,333 | 37,433,333 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Statement [Abstract] | |||
Revenue | $ 324,934 | $ 248,419 | $ 333,307 |
Cost of revenue | 209,771 | 196,569 | 290,461 |
GROSS PROFIT | 115,163 | 51,850 | 42,846 |
Operating expenses: | |||
Research and development | 12,114 | 6,541 | 5,060 |
Selling, general and administrative | 50,882 | 37,239 | 33,063 |
Goodwill impairment | 139 | 0 | 0 |
Total operating expenses | 63,135 | 43,780 | 38,123 |
OPERATING INCOME | 52,028 | 8,070 | 4,723 |
Equity income (loss) from investment in affiliates | (983) | (790) | 91 |
Other expenses, net | (537) | (1,288) | (10,518) |
INCOME (LOSS) BEFORE INCOME TAX EXPENSES | 50,508 | 5,992 | (5,704) |
Income tax expenses | 9,220 | 590 | 1,549 |
NET INCOME (LOSS) | 41,288 | 5,402 | (7,253) |
Net income attributable to non-controlling interests | 6,481 | 999 | 789 |
NET INCOME (LOSS) ATTRIBUTABLE TO ICTS INTERNATIONAL N.V. | 34,807 | 4,403 | (8,042) |
BASIC AND DILUTED NET INCOME (LOSS) ATTRIBUTABLE TO ICTS INTERNATIONAL N.V. PER SHARE | |||
Net income (loss) attributable to ICTS International N.V. | 34,807 | 4,403 | (8,042) |
Less deemed dividend attributable to redeemable non-controlling interests | 10,102 | 0 | 0 |
Net income (loss) available to ICTS International N.V. shareholders | $ 24,705 | $ 4,403 | $ (8,042) |
Basic weighted average number of shares | 37,433,333 | 35,827,854 | 30,524,461 |
Net income (loss) per share attributable to ICTS International N.V. - basic | $ 0.66 | $ 0.12 | $ (0.26) |
Diluted weighted average number of shares | 40,237,340 | 38,424,718 | 30,524,461 |
Net income (loss) per share attributable to ICTS International N.V. - diluted | $ 0.61 | $ 0.11 | $ (0.26) |
COMPREHENSIVE INCOME (LOSS) | |||
Net income (loss) | $ 41,288 | $ 5,402 | $ (7,253) |
Other Comprehensive Income (loss) - Translation adjustments | (1,861) | 20 | 79 |
Unrealized gains on derivative instruments | 32 | ||
Comprehensive income (loss) | 39,459 | 5,422 | (7,174) |
Comprehensive income attributable to non-controlling interests | 6,259 | 1,106 | 795 |
COMREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO ICTS INTERNATIONAL N.V. | $ 33,200 | $ 4,316 | $ (7,969) |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Non Controlling Interest | Total |
Balance at Dec. 31, 2018 | $ 12,896 | $ 23,457 | $ (64,964) | $ (6,245) | $ 0 | $ (34,856) |
Balance, shares at Dec. 31, 2018 | 25,100,000 | |||||
Issuance of common stock | $ 5,224 | 1,474 | 0 | 0 | 0 | 6,698 |
Issuance of common stock, shares | 10,333,333 | |||||
Net income (loss) | $ 0 | 0 | (8,042) | 0 | 15 | (8,027) |
Sale of AU10TIX Technologies B.V. preferred shares, series A-1, net | 0 | 2,041 | 0 | 0 | (1,614) | 427 |
Translation adjustment | 0 | 0 | 0 | 73 | 0 | 73 |
Balance at Dec. 31, 2019 | $ 18,120 | 26,972 | (73,006) | (6,172) | (1,599) | (35,685) |
Balance, shares at Dec. 31, 2019 | 35,433,333 | |||||
Issuance of common stock | $ 1,066 | (266) | 0 | 0 | 0 | 800 |
Issuance of common stock, shares | 2,000,000 | |||||
Net income (loss) | $ 0 | 0 | 4,403 | 0 | 74 | 4,477 |
Translation adjustment | 0 | 0 | 0 | (87) | 10 | (77) |
Balance at Dec. 31, 2020 | $ 19,186 | 26,706 | (68,603) | (6,259) | (1,515) | $ (30,485) |
Balance, shares at Dec. 31, 2020 | 37,433,333 | 37,433,333 | ||||
Conversion of preferred shares A and A-1 in AU10TIX Technologies B.V. to new series A | $ 0 | (10,102) | 0 | 0 | 1,045 | $ (9,057) |
Net income (loss) | 0 | 0 | 34,807 | 0 | 281 | 35,088 |
Stock-based compensation – AU10TIX Technologies B.V. | 0 | 240 | 0 | 0 | 0 | 240 |
Translation adjustment | 0 | 0 | 0 | (1,639) | (11) | (1,650) |
Unrealized gains on derivatives instruments | 0 | 0 | 0 | 32 | 0 | 32 |
Balance at Dec. 31, 2021 | $ 19,186 | $ 16,844 | $ (33,796) | $ (7,866) | $ (200) | $ (5,832) |
Balance, shares at Dec. 31, 2021 | 37,433,333 | 37,433,333 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
CASH FLOW FROM OPERATING ACTIVITIES: | |||
Net income (loss) | $ 41,288 | $ 5,402 | $ (7,253) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 2,061 | 2,090 | 1,688 |
Goodwill impairment | 139 | 0 | 0 |
Gain from sale of investment | (186) | 0 | 0 |
Bad debt expense | 864 | 272 | 260 |
Deferred income taxes | (292) | (651) | (35) |
Loss on disposal of property and equipment | 0 | 71 | 0 |
Equity loss (income) from investment in affiliates | 983 | 790 | (91) |
Stock-based compensation | 350 | 0 | 0 |
Revaluation and related costs reimbursed to related party | 0 | 0 | 8,139 |
Changes in assets and liabilities: | |||
Accounts receivable, net | (23,280) | 11,395 | 669 |
Receivable from related party | 2,200 | (2,200) | 0 |
Prepaid expenses and other current assets | 1,442 | (13,562) | 1,366 |
Other assets | (112) | 485 | (89) |
Accounts payable | 2,321 | (2,548) | (30) |
Accrued expenses and other current liabilities | 9,400 | (5,521) | (7,055) |
Vat Payable | (4,793) | 3,999 | (4,734) |
Income taxes payable | 5,745 | 405 | (1,799) |
Operating lease accounts, net | (1,919) | 19 | (102) |
Other liabilities | 17,172 | 23,786 | (26) |
Net cash provided by (used in) operating activities | 53,383 | 24,232 | (9,092) |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchase of property and equipment | (1,434) | (2,197) | (1,884) |
Purchase of company in Sweden | (150) | 0 | 0 |
Capitalization of software costs | (1,040) | (603) | 0 |
Proceeds from sale of property and equipment | 79 | 67 | 0 |
Proceeds from sale of investment | 200 | 0 | 0 |
Investments | (68) | (150) | (1,800) |
Deposits at (withdraws from) insurance companies | (4) | (226) | 151 |
Repayments from an affiliate | 0 | 0 | 180 |
Net cash used in investing activities | (2,417) | (3,109) | (3,353) |
CASH FLOW FROM FINANCING ACTIVITIES: | |||
Borrowings (repayments) under lines of credit, net | (7,230) | (13,091) | 8,076 |
Repayments of convertible notes payable to a related party | (8) | 0 | (29,572) |
Proceeds from a related party | 0 | 0 | 1,000 |
Repayments of loan payable to a related party | 0 | (1,538) | (368) |
Repayment of loan payable | 0 | (1,121) | (1,120) |
Proceeds from sale of a subsidiary's preferred shares | 0 | 0 | 80,000 |
Transaction costs | 0 | 0 | (6,054) |
Decrease in bank overdrafts | 0 | (738) | (107) |
Net cash provided by (used in) financing activities | (7,238) | (16,488) | 51,855 |
EFFECT OF CHANGES IN FOREIGN CURRENCY EXCHANGE RATES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (1,350) | 1,594 | (482) |
INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 42,378 | 6,229 | 38,928 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH BEGINNING OF YEAR | 61,074 | 54,845 | 15,917 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH END OF YEAR | 103,452 | 61,074 | 54,845 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | |||
Stock issuance as reduction against convertible notes payable to related party | 0 | 800 | 6,698 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES | |||
Cash paid during the year for: Interest | 152 | 613 | 1,963 |
Cash paid during the year for: Income taxes | $ 2,175 | $ 1,329 | $ 3,129 |
ORGANIZATION
ORGANIZATION | 12 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | NOTE 1 – ORGANIZATION Description of Business 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 three reportable segments: (a) corporate (b) airport security and other aviation services and (c) authentication technology. The corporate segment does not generate revenue and contains primarily non-operational expenses. The airport security and other aviation services segment provides security and other services to airlines and airport authorities, predominantly in Europe and the United States of America. The authentication technology segment provide authentication services to financial and other institutions, predominantly in the United States of America. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). The significant accounting policies are as follows: Functional Currency The accompanying consolidated financial statements are presented in United States dollars. The Company has determined that the functional currency of its foreign subsidiaries is the local currency, which is predominantly the Euro. For financial reporting purposes, the assets and liabilities of such subsidiaries are translated into United States dollars using exchange rates in effect at the balance sheet date. The revenue and expenses of such subsidiaries are translated into United States dollars using average exchange rates in effect during the reporting period. Resulting translation adjustments are presented as a separate category in shareholders' deficit called accumulated other comprehensive loss. Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. The most significant estimates and assumptions included in these consolidated financial statements consist of the: (a) calculation of the allowance for doubtful accounts, (b) determination of the fair value of stock options, (c) recognition of contingent liabilities (d) valuation allowance of deferred income taxes, (e) determination of goodwill impairment (f) determination of future lease periods of existing lease contracts, (g) determination of interest rates used in order to calculate the present value of the operating lease liabilities and (h) determination of the estimated fair value of the AU10TIX preferred shares conversion. Principles of Consolidation The consolidated financial statements include the accounts of ICTS International N.V. and its wholly-owned and majority-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash and cash equivalents. Restricted Cash Restricted cash as of December 31, 2021 consists of: (a) $3,350 held in bank accounts that serve as cash collateral for outstanding letters of credit ,(b) $10,599 held in several bank accounts in the Netherlands, which is restricted for payments to local tax authorities (see note 5) and (c) $750 secured for derivative instruments. Restricted cash as of December 31, 2020 consists of: (a) $3,991 held in bank accounts that serve as cash collateral for outstanding letters of credit and (b) $5,481 held in several bank accounts in the Netherlands, which is restricted for payments to local tax authorities. The following table provides a reconciliation of cash and restricted cash reported on the balance sheet that sum to the total of the same such amounts shown in the statements of cash flows. December 31, 2021 2020 Cash and cash equivalents $ 88,753 $ 51,602 Restricted cash 14,699 9,472 Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 103,452 $ 61,074 Accounts Receivable Accounts receivable represent amounts due to the Company for services rendered and are recorded net of an allowance for doubtful accounts. The allowance for credit losses is based on historical collection experience, factors related to specific customers and current economic trends. The Company writes off accounts receivable when determined to be uncollectible and are recognized as a reduction to the allowance for credit losses. As of December 31, 2021, and 2020, the allowance for doubtful accounts is $991 and $690, respectively. Fair Value Measurements The Company follows Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 820, “Fair Value Measurement”. Topic 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value should be based on assumptions that market participants would use. In determining the fair value, the Company assesses the inputs used to measure fair value using a three-tier hierarchy, as follows: 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. If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability. Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Investments The Company accounts for investments in the equity securities of companies which represent an ownership interest of 20% to 50% and the ability to exercise significant influence, provided that ability does not represent control, using the equity method. The equity method requires the Company to recognize its share of the net income (loss) of its investees in the consolidated statement of operations until the carrying value of the investment is zero. The Company records investments in the equity securities of privately held companies which represent an ownership interest of less than 20% at cost minus impairment. Derivative instruments Derivative instruments are measured at their fair value and recorded as either assets or liabilities. Changes in the fair value of derivatives designated as cash flow hedging instruments are initially recorded in other comprehensive income and a corresponding amount is reclassified out of other comprehensive income into earnings when the underlying transactions are recognized in the consolidated statements of operations and comprehensive income. The Company maintains a risk management strategy that may incorporate the use of put options and forward exchange contracts, to minimize significant fluctuation in cash flows and/or earnings that are caused by exchange rate or interest rate volatility. Property and Equipment Equipment and furniture, internal-use software, leasehold improvements and vehicles are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The estimated useful lives used in determining depreciation are as follows: Years Equipment and facilities 3-7 Internal- use software 4-7 Vehicles 3-7 Leasehold improvements are amortized using the straight-line method over the shorter of the total term of the lease or the estimated useful lives of the assets. Capitalized Internal-Use Software Costs The Company capitalizes certain costs incurred in developing internal-use software when capitalization requirements have been met. Costs prior to meeting the capitalization requirements are expensed as incurred. Costs, such as maintenance and training are also expensed as incurred. Capitalized costs are included in property and equipment, and amortized on a straight-lined basis over the estimated useful life of the software. Amortization expense, which is included in depreciation expense, amounted to $374, $147 and $0 during the years ended December 31, 2021, 2020 and 2019, respectively. Goodwill Goodwill represents the excess purchase price over the fair value of the net tangible and intangible assets of an acquired business. Goodwill is assessed for impairment by reporting unit on an annual basis or when events or changes in circumstances indicate that the carrying value may not be recoverable. The Company would record a goodwill impairment charge for the difference between the carrying value and the fair value of the goodwill, not to exceed the carrying amount of the goodwill. During the years ended December 31, 2021, 2020 and 2019, the Company recorded goodwill impairment charge of $139, $0 and $0, respectively on its goodwill. Long-Lived Assets The Company reviews long-lived assets, other than goodwill, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The Company assesses recoverability by determining whether the net book value of the related asset will be recovered through the projected undiscounted future cash flows of the asset. If the Company determines that the carrying value of the asset may not be recoverable, it measures any impairment based on the fair value of the asset as compared to its carrying value. During the years ended December 31, 2021, 2020, and 2019, the Company did not record any impairment charges on its long-lived assets. Employee Rights Upon Retirement The Company is required to make severance payments to its Israeli employees upon dismissal of an employee or upon a termination of employment in certain circumstances. The Israeli pension and severance pay liability to the employees is covered mainly by deposits made at insurance companies. For its employees who are employed under the Section 14 of the Israeli Severance Pay Law, 1963 (“Section 14”), the Company makes deposits with certain insurance companies for accounts controlled by each applicable employee in order to secure the employees’ rights upon termination. In addition, the related obligation and amounts deposited on behalf of the applicable employees for such obligations are not presented on the Company’s consolidated balance sheets, as the amounts funded are not under the control of management of the Company and the Company is legally released from the obligation to pay any severance payments to the employees once the required deposits amounts have been paid. For employees not under Section 14, severance liabilities are recorded based on the length of service and their latest monthly salary. The Company’s liabilities for the Israeli employees amounted to $1,631 and $1,556 as of December 31, 2021 and 2020, respectively and are included in other liabilities in the Company’s consolidated balance sheets. The deposits made at insurance companies to cover these liabilities amounted to $1,346 and $1,391 as of December 31, 2021 and 2020, respectively and are included in other assets in the Company’s consolidated balance sheets. Leases The . The standard provides a number of optional practical expedients in transition. The Company chose to apply the following permitted practical expedients: Not to reassess its prior conclusions regarding lease identification, lease classification and initial direct costs under the new standard. Short-term lease recognition exemption for all leases with a term shorter than 12 months. This means, that for those leases, the Company does not recognize Rights of Use (“ROU”) assets or lease liabilities. Applying the practical expedient to not separate lease and non-lease components for all of the Company’s leases as a lessee. The Company as a lessee Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. A lease is a finance lease if it meets any one of the criteria below, otherwise the lease is an operating lease: The lease transfers ownership of the underlying asset to the lessee by the end of the lease term. The lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise. The lease term is for the major part of the remaining economic life of the underlying asset. The present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all of the fair value of the underlying asset. The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of lease term. Based on the criteria above, all of the Company's leases are classified as operating leases. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term, while the ROU assets are also adjusted for any prepaid or accrued lease payments. The Company uses its incremental borrowing rate based on the information available at the commencement date to determine the present value of the lease payments. The lease term is the non-cancellable period of the lease plus periods covered by an extension or termination option if it reasonably certain that the Company will exercise the option. After lease commencement, the Company measures the lease liability at the present value of the remaining lease payments using the discount rate determined at lease commencement (as long as the discount rate hasn’t been updated as a result of a reassessment event). The Company subsequently measures the ROU asset at the present value of the remaining lease payments, adjusted for the remaining balance of any lease incentives received, any cumulative prepaid or accrued rent if relevant and any unamortized initial direct costs. Lease expenses are recognized on a straight-line basis over the lease term. Lease terms will include options to extend or terminate the lease when it is reasonably certain that the Company will exercise or not exercise the option to renew or terminate the lease. Variable lease payments that depend on an index or a rate On the commencement date, the lease payments shall include variable lease payments that depend on an index or a rate (such as the Consumer Price Index or a market interest rate), initially measured using the index or rate at the commencement date. The Company does not remeasure the lease liability for changes in future lease payments arising from changes in an index or rate unless the lease liability is remeasured for another reason. Therefore, after initial recognition, such variable lease payments are recognized in profit or loss as they are incurred. Convertible Debt Instruments The Company evaluates convertible debt instruments to determine whether the embedded conversion option needs to be bifurcated from the debt instrument and accounted for as a freestanding derivative instrument or considered a beneficial conversion option. An embedded conversion option is considered to be a freestanding derivative when: (a) the economic characteristics and risks of the embedded conversion option are not clearly and closely related to the economic characteristics and risks of the host instrument, (b) the hybrid instrument that embodies both the embedded conversion option and the host instrument is not re-measured at fair value under otherwise applicable US GAAP with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded conversion option would be considered a derivative instrument subject to certain requirements (except when the host instrument is deemed to be conventional). When it is determined that an embedded conversion option should not be bifurcated from its host instrument, the embedded conversion option is evaluated to determine whether it contains any intrinsic value which needs to be discounted from the carrying value of the convertible debt instrument. The intrinsic value of an embedded conversion option is considered to be the difference between the fair value of the underlying security on the commitment date of the debt instrument and the effective conversion price embedded in the debt instrument. Contingent Liabilities The Company is subject to various investigations, claims and legal proceedings covering a wide range of matters that arise in the normal course of its business activities. Liabilities for such contingencies are recognized when: (a) information available prior to the issuance of the consolidated financial statements indicates that it is probable that a liability had been incurred at the date of the consolidated financial statements and (b) the amount of loss can reasonably be estimated. Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss The Company's comprehensive income (loss) consists mostly of the Company’s net income (loss), foreign currency translation adjustments and changes in fair value of derivative instruments as cash flow instruments. Accumulated other comprehensive loss consist of the Company’s accumulated foreign exchange currency translation adjustments, and changes in fair value of derivative instruments. Stock-Based Compensation Stock-based compensation to employees and non-employees, including stock options, are measured at the fair value of the award on the date of grant based on the estimated number of awards that are ultimately expected to vest. The compensation expense resulting from stock-based compensation to management and administrative employees is recorded over the vesting period of the award in selling, general and administrative expense on the accompanying consolidated statements of operations and comprehensive income (loss). Compensation expense resulting from stock-based compensation to operational employees is recorded over the vesting period of the award in cost of revenue. Non-Controlling Interests The Company’s non-controlling interests represent the minority shareholder’s ownership interests related to the Company’s subsidiaries. The Company reports its non-controlling interests in subsidiaries as a separate component of equity in the consolidated balance sheets and reports net income (loss) attributable to the non-controlling interests in the consolidated statements of operations. Redeemable Non-Controlling Interests When the Company or its subsidiaries issues preferred shares, it considers the provisions of FASB ASC 480 –"Distinguishing Liabilities from Equity" (Topic 480) in order to determine whether the preferred share should be classified as a liability. If the instrument is not within the scope of Topic 480, the Company or its subsidiaries further analyses the instruments characteristics in order to determine whether it should be classified within temporary equity (mezzanine) or within permanent equity in accordance with the provisions of Topic 480-10-S99. AU10TIX redeemable convertible preferred shares are not mandatorily or currently redeemable. However, it includes a liquidation or deemed liquidation events that would constitute a redemption event that is outside of the Company’s control. As such, all shares of redeemable preferred shares have been presented outside of permanent equity. The Company has not adjusted the carrying values of the redeemable preferred shares to the deemed liquidation values of such shares since a liquidation event was not probable at any of the balance sheet dates. Subsequent adjustments to increase or decrease the carrying values to the ultimate liquidation values will be made only if and when it becomes probable that such a liquidation event will occur. Revenue Recognition Revenue is recognized when the promised services are performed for our clients, and the amount that reflects the consideration we are entitled to receive in exchange for those services is determined. The Company’s revenues are recorded net of any sales taxes. In order to determine the revenue, we (1) identify the contract with the client, (2) identify the performance obligations, usually it’s based on the hours spent, (3) determination of the transaction price, (4) allocation of the transaction price to the performance obligation and (5) we recognize revenue as performance obligation is satisfied. A performance obligation is a promise in a contract to transfer a distinct service to the client, and it is the unit of account for revenue recognition. The majority of our contracts have a single performance obligation as the promise to transfer the individual services is not separately identifiable from other promises in our contracts and, therefore, is not distinct. The following table presents the Company’s revenues according to the Company’s segments: Year ended December 31, 2021 2020 2019 Airport Security and Other Aviation Services $ 253,687 $ 222,654 $ 309,548 Authentication Technology 71,247 25,765 23,759 Total revenue $ 324,934 $ 248,419 $ 333,307 The following table presents the Company’s revenues generated from customers by geographical area based on the geographical location of the customers invoicing address: Year ended December 31, 2021 2020 2019 Germany $ 126,367 39 % $ 119,500 48 % $ 137,207 41 % The Netherlands 52,165 16 % 58,446 24 % 97,700 29 % United States 94,743 29 % 45,305 18 % 73,719 22 % Spain 30,946 10 % 7,465 3 % 3,138 1 % Other countries 20,713 6 % 17,703 7 % 21,543 7 % Total revenue $ 324,934 100 % $ 248,419 100 % $ 333,307 100 % Airport Security and Other Aviation Services Segment In the airport security and other aviation services, for performance obligations that we satisfy over time, revenues are recognized by consistently applying a method of measuring hours spent on that performance obligation. We generally utilize an input measure of time (hours and attendance for specific time framed service like specific flights) of the service provided. Performance obligations are satisfied over the course of each month and continue to be performed until the contract has been terminated or cancelled. Pricing and Reduction to Revenues We generally determine standalone selling prices based upon the prices included in the client contracts, using expected costs plus margin, or other observable prices. The price as specified in our client contracts is generally considered the standalone selling price as it is an observable input that depicts the price as if sold to a similar client in similar circumstances. Certain client contracts have variable consideration, including quality thresholds or other similar items that could reduce the transaction price. These amounts may be constrained and revenue is recorded to the extent we do not expect a significant reversal or when the uncertainty associated with the variable consideration is resolved. Our variable consideration amounts, if any, are not material, and we do not expect significant changes to our estimates. Contracts Our client contracts generally include standard payment terms acceptable in each of the countries, states and territories in which we operate. The payment terms vary by the type and location of our clients and services offered. Client payments are typically due in 30 to 60 days after invoicing, but may be a shorter or longer term depending on the contract. Our contracts with main customers are generally long-term contracts, between two to five years. The timing between satisfaction of the performance obligation, invoicing and payment is not significant. Practical Expedients and Exemptions Because nearly all our contracts are based on input measure of time of service provided (as hours or attendance) no exemptions need to be made. We have no material contracts with material revenues expected to be recognized subsequent to December 31, 2021 related to remaining performance obligations. Revenue Service Types The following is a description of our revenue service types, including Airport Security, Airline Security, Cargo Security, Other Airport Services, General Security Services and Other. Airport Security Staffing or manning for specialized airport security are usually based on long term contract issued via a public tender procedure. We recognize revenue given the unit of measure (hours) provided in the given time period and the specific price for specific hours agreed upon in the contracts. Quality and criteria of staffing are described in the contracts and are measured in the given time period. Deviations, if any, are discussed with the customer before invoicing and will be reflected in the invoice showing the approved hours and other cost elements as agreed upon price. Most contracts have an hourly rate that reflects an all-in tariff based on a full cost price calculation. In some of the contracts the hourly rates are split between a component based on hours and a component based on specific costs in a specific time period but always linked to the service provided in given time period. Revenue is recognized at the time period set in the contract. Airline Security Staffing or manning for airline security are usually based on long term contracts issued via a public tender procedure. We recognize revenue according to the unit of measure provided (usually attendance for specific time framed service like specific flights). The time framed specialized security services are in this case are the executed number of flights. When the manning for the security of these flights are delivered, the Company invoices the customer according to the agreed flight tariff. Cargo Security Staffing or manning for specialized cargo security are usually based on long term contract, sometimes publicly tendered. Contracts are based on hourly planned and executed screening services. Revenue is recognized based on the realized screening hours and contractually agreed upon hourly rate. Other Airport Services Airport Services include wheelchair attendants, pre-departure skycaps, bag-runners, agents, guards, charter security screening, janitorial, and cabin cleaning to major U.S. and foreign carriers in airports throughout the United States of America. Our contracts may include either single or multiple performance obligations and vary by airport and airline. We recognize revenue given the unit of measure (usually hours) provided in the given time period and the specific price for specific hours or attendance for specific event, time framed service as agreed upon in the contracts. General Security Services Security Services include providing armed and un-armed guards to private schools and places of worship, video surveillance and patrol. Contracts for security services generally include only a single performance obligation. We recognize revenue for security guard services given the unit of measure (hours) provided in the given time period. Revenue from video surveillance and patrol is recognized based upon a fixed monthly rate. Other Services Other services include revenues from (incidental) specialized security manning services, training services and ad hoc work performed on and off airports. Revenue is recognized over time as services are being performed, using the input of service delivered during the time period, according to the contractual agreed price. Authentication Technology Segment In the authentication technology segment, the Company offers authentication services on a cost per click basis, with a minimum yearly commitment which means the customer pays the Company according to the higher of (a) number of times the customer used the system in order to authenticate IDs or (b) according to the yearly minimum commitment. According to the agreement with the customers, each chargeable click has an agreed price and revenue is being recognized accordingly. Pricing and Reduction to Revenues The company determines standalone selling prices based upon the prices included in the client contracts, using expected costs plus margin, or other observable prices. The price as specified in our client contracts is considered the selling price as agreed with the customer. The Company’s variable consideration, if any, amounts are not material, and we do not expect significant changes to our estimates. The Company does not expect a significant reversal or when the uncertainty associated with the variable consideration is resolved. A customer might be offering a tier-based pricing scheme, or not, and in any event of usage above the committed amount, the pricing will remain unchanged. Contracts Client contracts generally include standard payment terms acceptable in each of the countries, states and territories in which the company operates, and are typically set to a three-year deal duration. The payment terms vary by the type and location of our clients and services offered. The minimum commitment is usually being paid in advance. Client payments are typically due in 30 days after invoicing, but may be a shorter or longer term depending on the contract. Client contracts are usually range from one to three years, with a convenience exit every twelve months period, and at the end of the contract there is a renewal option. The timing between satisfaction of the performance obligation, invoicing and payment is not significant. Deferred Revenues The Company records deferred revenues when cash payments are received or due in advance of our performance. Deferred revenues at December 31, 2021 and 2020 were $2,239 and $2,143, respectively shown as part of the accrued expenses and other current liabilities and $1,030 and $263 shown as other liabilities. Revenue recognized for the years ended December 31, 2021, 2020 and 2019 that was included in the deferred revenue at the beginning of each year was $2,049, $1,879 and $2,001, respectively. Our payment terms vary by the type and location of our customer and the products or services offered. The term between invoicing and when payment is due is not significant. Capitalized Contract Costs As part of obtaining contracts with certain customers in the authentication technology segment, the Company incurs upfront costs such as sales commissions. The Company capitalizes these costs which are subsequently amortized on a straight-line basis over the estimated life of the relationship with the customer. The Company applies the practical expedient that allows it to determine this estimate for a portfolio of contracts that have similar characteristics in terms of type of service, contract term and pricing. This estimate is reviewed by management at the end of each reporting period as additional information becomes available. Cost of Revenue Cost of revenue represents primarily payroll and employee related costs associated with employees who provide services under the terms of the Company’s contractual arrangements, insurance and depreciation and amortization. Research and Development Costs Research and development costs are expensed as incurred and consist primarily of payroll and related costs, professional services, consulting services and non-capitalized cost associated with the development of technologies. Advertising Costs Advertising costs are expensed as incurred. Advertising costs during the years ended December 31, 2021, 2020 and 2019 are $2,150, $735 and $828, respectively. Value Added Tax Certain of the Company’s operations are subject to Value Added Tax (“VAT”) applied on the services sold in those respective countries. The Company is required to remit the VAT collected to the tax authorities, but may deduct the VAT paid on certain eligible purchases. Income Taxes The Company accounts for income taxes using the liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities resulting Uncertain income tax positions are determined based upon the likelihood of the positions being sustained upon examination by taxing authorities. The benefit of a tax position is recognized in the consolidated financial statements in the period during which management believes it is more likely than not that the position will not be sustained. Income tax positions taken are not offset or aggregated with other positions. Income tax positions that meet the more-likely-than-not recog |
BUSINESS COMBINATION
BUSINESS COMBINATION | 12 Months Ended |
Dec. 31, 2021 | |
Business Combination Abstract | |
BUSINESS COMBINATION | NOTE 3 – BUSINESS COMBINATION Acquisition in Sweden In February 2021 the Company acquired 51% of the outstanding shares of Quality Detection Dogs Sweden AB (“QDD”). The purpose of the acquisition was to have a company with experience in training detection dogs in order to train dogs to detect explosive materials. Consideration of the acquisition was 1,250 SEK ($150 as of the purchase date), payment was done at closing. The acquisition was accounted for as a purchase and accordingly a purchase price was allocated to the assets acquired and liabilities assumed at their fair value. The following represents the allocation of the purchase price as of the purchase date in SEK and the translation to United States Dollars as of the purchase date: SEK U.S. Current assets 140 17 Goodwill 1,178 146 Total identifiable assets acquired 1,318 163 Current liabilities 68 13 Total liabilities assumed 68 13 1,250 150 Goodwill associated with the acquisition of QDD was 1,178 SEK ($139 as of December 31, 2021) and deductible for income tax purposes. The goodwill consists principally of the expectations of future earnings and profits from expanding this business. In December 2021, the Company evaluated the goodwill and concluded the goodwill should be fully impaired (see note 8). |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2021 | |
Prepaid Expenses And Other Current Assets Abstract | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | NOTE 4 – PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets are as following: December 31, 2021 2020 Receivable from the Dutch tax authorities (1) $ 9,091 $ 12,285 Receivable from the German authorities – COVID-19 (2) 527 1,887 Dutch Governmental support – COVID-19 (3) 2,614 1,068 Other 3,789 3,669 Total prepaid expenses and other current assets $ 16,021 $ 18,909 (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. 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 support following the COVID-19 crisis. |
INVESTMENTS
INVESTMENTS | 12 Months Ended |
Dec. 31, 2021 | |
Equity Method Investments and Joint Ventures [Abstract] | |
INVESTMENTS | NOTE 5 – INVESTMENTS Artemis Therapeutics, Inc. As of December 31, 2021, the Company owns 125,916 shares or 2.4% of the outstanding common stock of Artemis Therapeutics, Inc. (“ATMS”). As of December 31, 2021, ATMS has no operating business. The Company suspended its use of the equity method to accounting for this investment in 2007 after its investment balance was reduced to zero. As of December 31, 2021 and 2020, the Company’s share of the underlying net assets of ATMS is equal to the Company’s carrying value of its investment in ATMS ($0 and $0 at December 31, 2021 and 2020). The market value of the Company's investment in ATMS as of December 31, 2021 and 2020 is $120 and $79, respectively. The Company evaluated the stock price of ATMS but as ATMS share price is low, the number of shares that are being traded is low, and as ATMS still does not have any revenue, the Company determined that the value of the investment is impaired and accordingly, valued the investment at zero. Freezone I-SEC Korea Inc. In April 2018, the Company signed a Joint Venture Agreement with a South Korean Company in order to establish a Joint Venture Company (“JVC”) and to provide aviation security and non-security services in South Korea. Each one of the parties holds 50% (fifty percent) of the JVC’s equity. The Company uses the equity method for this investment. As of December 31, 2021, the Company’s investment is 322,224 KRW ($271). For the years ended December 31, 2021, 2020 and 2019, the Company recognized a profit (loss) in its consolidated statements of operations of (10,491) KRW, (17,742) KRW and 105,092 KRW, respectively $(8), $(15) and $91 as of December 31, 2021, 2020 and 2019, respectively) from its investment in the JVC. Mesh Technologies, Inc. In January 2019, the Company invested an amount of $50 in Mesh Technologies, Inc. (“Mesh”), a company incorporated in the USA. As of December 31, 2021, the investment represented less than 1% of the issued and outstanding share capital of Mesh. Mesh is a technology company providing cross border payments technology by innovating on the existing payment rails of established card networks available in the market. As Mesh is a private, closely held company, there is no active market for this investment. Therefore, the Company measures the investment at cost minus impairment. In December 2021, the Company sold approximately 25% of its investment for a total amount of $200 and recognized a gain of $186. Arrow Ecology & Engineering Overseas (1999) In December 2019, the Company invested an amount of $1,750 in Arrow Ecology & Engineering Overseas (1999) Ltd (“Arrow”), a limited company incorporated in Israel. Arrow develops and operates a sustainable green process to recycle mixed and sorted municipal solid waste. The Company purchased few types of shares representing 23.3% of Arrow’s equity for an amount of $22 and shareholders loans were purchased for a price of $1,728 ($4,146 stated value less $2,418 allowance for credit losses, which have not changed since the acquisition). The Company uses the equity method for this investment. During the years ended December 31, 2021 and 2020, the Company recognized its share in Arrow loss in the amount of $975 and $775, respectively, from this investment. The Company has an agreement with an entity related to its main shareholder, according to which, if the value of the investment decrease, the related party entity has guaranteed to repurchase this full investment at a minimum amount of $1,750. The guarantee is effective immediately as of the date of purchase and terminates after three years. Some Directors and managers of Arrow are related parties of the Company. GreenFox Logistics LLC. In March 2020, the Company invested an amount of $100 in GreenFox Logistics, LLC. (“GreenFox”), a company incorporated in the USA. The investment was done as SAFE investment (Simple Agreement for Future Equity). GreenFox is an on-demand delivery/moving/transportation company. As GreenFox is a private, closely held company, there is no active market for this investment. Therefore, the Company measures the investment at cost minus impairment. SardineAI Corp. In August 2020, the Company invested an amount of $50 in SardineAI Corp (“SardineAI”), a company incorporated in the USA. In return the Company received preferred shares representing less than 1% of SardineAI equity. SardineAI is a Fraud Prevention-as-a-Service (FaaS) platform for Digital businesses to detect frauds and financial crimes. As SardineAI is a private, closely held company, there is no active market for this investment. Therefore, the Company measures the investment at cost minus impairment. Silver Circle One In December 2021, the Company invested an amount of $18 in Silver Circle One, a capital fund which aims to invest in private emerging companies with focus on consumer, commerce and technology companies. The company committed to invest up to $100 on the pool. As Silver Circle One is a private, closely held fund, there is no active market for this investment. Therefore the company measures the investment at cost minus impairment. Justt Fintech Ltd (previously Acrocharge Ltd) In December 2021, the Company invested an amount of $50 in Justt Fintech Ltd ("Justt"), a company incorporated in Israel. As of December 31, 2021, the investment represented less than 1% of the issued and outstanding share capital of Justt Fintech Ltd. Justt is a technology company which fully automated chargeback disputes on behalf of online merchants. As Justt is a private, closely held company, there is not active market for this investment. Therefore, the Company measures the investment at cost minus impairment. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 6 - PROPERTY AND EQUIPMENT Property and equipment is as follows: December 31, 2021 2020 Office, equipment and facilities $ 9,222 $ 10,796 Internal-use software 1,490 1,449 Vehicles 1,617 1,958 Leasehold improvements 2,893 2,972 15,222 17,175 Less: accumulated depreciation and amortization 9,512 11,650 Total property and equipment, net $ 5,710 $ 5,525 Depreciation and amortization expenses are $2,061, $2,090 and $1,688 for the years ended December 31, 2021, 2020 and 2019 respectively. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
LEASES | NOTE 7 - LEASES Lessee Arrangements The Company enters into leases in the normal course of business primarily as part of its operations in the different airports, back office operations, research and development offices and headquarters offices. The table below presents the effects on the amounts relating to the Company’s total lease cost: Year ended December 31, 2021 2020 2019 Operating lease cost $ 4,422 $ 3,914 $ 3,421 Short-term lease cost 1,542 1,580 994 Total lease cost $ 5,964 $ 5,494 $ 4,415 Other information: Cash paid for amounts included in the measurement of Lease liabilities: Operating cash flows from operating leases $ 4,465 $ 3,962 Right-of-use assets obtained in exchange for new operating lease liabilities $ 3,164 $ 4,941 Weighted-average remaining lease term - operating leases 4.0 years 4.5 years Weighted-average discount rate - operating leases 5.12 % 4.8 % Supplemental balance sheet information related to operating leases was as follows: December 31, 2021 2020 Operating lease ROU assets $ 10,938 $ 12,938 Other current liabilities $ 3,317 $ 3,531 Operating lease liabilities 8,298 9,333 Total operating lease liabilities $ 11,615 $ 12,864 Future undiscounted lease payments for operation leases with initial terms of more than one year as of December 31, 2021 are as follows: Year ending December 31, 2022 3,753 2023 3,365 2024 2,802 2025 1,239 2026 862 Thereafter 941 Total future minimum lease payments 12,962 Less: imputed interest 1,347 Total $ 11,615 |
GOODWILL
GOODWILL | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill Abstract | |
GOODWILL | NOTE 8 – GOODWILL All the Company’s goodwill relates to its airport security and other aviation services segment. The change in goodwill during the year is as follows: 2021 2020 Balance as of the beginning of the year: Goodwill $ 2,361 $ 2,182 Accumulated impairment losses (1,615 ) (1,501 ) 746 681 Goodwill acquired during the year 146 - Impairment losses (139 ) - Exchange rate effect (63 ) 65 690 746 Balance as of the end of the year: Goodwill 2,346 2,361 Accumulated impairment losses (1,656 ) (1,615 ) $ 690 $ 746 At December 31, 2021, the qualitative assessment indicated that it was more likely than not that the carrying value of the reporting unit exceeded fair value. The quantitative impairment test includes comparing the carrying value of the reporting unit, including the existing goodwill and intangible assets, to the fair value of the reporting unit. If the carrying amount of the reporting unit exceeds its fair value, a goodwill impairment charge is recorded for the amounts in which the carrying value of the reporting unit exceeds the fair value of the reporting unit, up to the amount of goodwill attributed to the reporting unit. After performing the quantitative testing, it was determined that the carrying amount exceeds the reporting unit’s fair value, resulting in an impairment charge of $139 for the year ended December 31, 2021. At December 31, 2020, the Company performed qualitative assessments to determine if it was more likely than not that the fair value of the reporting units exceeded its carrying values, including goodwill. The qualitative assessments indicated that it was more likely than not that the fair value exceeded the carrying value of the reporting unit. During the years ended on December 31, 2021, 2020 and 2019, the Company recognized impairment charges of $139, $0 and $0, respectively. The facts and circumstances that led to the impairment of goodwill during the year ended December 31, 2021 are as follows: In February 2021, the Company acquired 51% of the outstanding shares of Quality Detection Dogs Sweden AB (see note 3) and recorded goodwill of €122 ($146 as of the purchase date). The purpose of the acquisition was to have a company with experience on detection dogs in order to train dogs to detect explosive materials. QDD’s revenue, operating profits and cash flows were lower than expected. The earnings forecast for the next year was revised and an impairment loss of €122 ($139 as of December 31, 2021) was recognized. |
NOTES PAYABLE - BANKS
NOTES PAYABLE - BANKS | 12 Months Ended |
Dec. 31, 2021 | |
Notes Payable to Bank [Abstract] | |
NOTES PAYABLE - BANKS | NOTE 9 – NOTES PAYABLE – BANKS United States of America The Company’s U.S. subsidiary was a party to a credit facility with a commercial lender, which provided a maximum borrowing capacity up to $10,000, subject to a borrowing base limitation. The borrowing base limitation was equivalent to: (i) 85% of eligible accounts receivable, as defined, plus (ii) 80% of eligible unbilled receivables, as defined, plus (iii) 95% of a $500 standby letter of credit. Borrowings under the credit facility are secured by the U.S. subsidiary’s accounts receivable, unbilled receivables, equipment, cash and the $500 letter of credit that was provided to the lender by the Company. The credit facility expired on October 2021. As of December 31, 2020, the Company did not have any outstanding balance under the line of credit arrangement. Borrowings made under the credit facility bore interest, which was payable monthly, at LIBOR plus 3% per annum. The Company’s weighted average interest rate in the United States of America during the years ended December 31, 2020 and 2019 was 4.42% and 5.44% respectively. Europe The Company had a credit arrangement with a commercial bank, to provide it with up to €12,000 in borrowings which was renewed in May 2020 through March 2021. Borrowings under the line of credit bore interest at one-month EURIBOR plus 4.8% with a minimum of 4.8% per annum. The Company was also subject to unused line fee of 0.75% per annum, which was payable quarterly. The line of credit was secured by accounts receivable of ten of the Company’s European subsidiaries, tangible fixed assets and a bank guarantee of €2,000 ($2,457 as of December 31, 2020) provided by the parent company, ICTS International N.V. The line of credit could not exceed 70% of the borrowing base. The line of credit includes certain financial covenants. The line of credit expired in March 2021. As of December 31, 2020, the Company had €6,432 ($7,902 as of December 31, 2020), in outstanding borrowings under the line of credit arrangement. In addition to the line of credit arrangement, a guarantee facility of €2,500 ($2,841 as of December 31, 2021) is provided to the Company by the same commercial bank, which was renewed until March 2022, with an interest of 2.5% per annum and an unused line fee of 0.75% per annum which is payable quarterly. As of December 31, 2021 and 2020, the Company had €1,022 and €973 ($1,161 and $1,195 as of December 31, 2021 and 2020), respectively, of outstanding guarantees under the guarantee facility, which related to leases and performance guarantees for contracts. The guarantee facility expired in March 2022. The guarantee facility is secured by the accounts receivables of ten of the Company’s European subsidiaries. The Company’s weighted average interest rate in Europe during the years ended December 31, 2021, 2020 and 2019, is 4.8%, 4.4% and 3.5% respectively. The Company has an additional credit arrangement in Sweden to provide it with up to 4,000 SEK ($442 as of December 31, 2021) in borrowings. Borrowings under the line of credit bear annual interest of 2.8% and subject to annual extension by the financial institution. The line of credit is secured by accounts receivable of the Swedish subsidiary. As of December 31, 2021 and 2020, the Company had 1,800 SEK and 1,648 SEK ($199 and $202 as of December 31, 2021 and 2020) respectively in outstanding borrowings under the line of credit facility. |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2021 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | NOTE 10 - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities are as follows: December 31, 2021 2020 Accrued payroll and related costs $ 25,050 $ 18,938 Accrued vacation 7,152 5,582 Labor union contribution 925 1,440 Deferred revenue 2,239 2,143 Payroll support program funding - 1,019 Other 4,468 3,198 Total accrued expenses and other current liabilities $ 39,834 $ 32,320 |
DEBT TO RELATED PARTIES
DEBT TO RELATED PARTIES | 12 Months Ended |
Dec. 31, 2021 | |
Convertible Notes Payable [Abstract] | |
DEBT TO RELATED PARTIES | NOTE 11 – DEBT TO RELATED PARTIES Convertible Notes Payable to a Related Party The Company has an agreement with an entity related to its main shareholder, to provide it with up to $37,000 in revolving loans through June 30, 2020. The term of the arrangement can be automatically extended for four additional six-month periods at the option of the holder. Loans received under the arrangement bear interest, which is compounded semi-annually and payable at maturity, at the interest rate of LIBOR plus 7% for U.S. dollar-denominated loans and the Company’s European commercial bank interest base rate plus 3% for Euro-denominated loans. The arrangement is secured by a 26% interest in one of the Company's European subsidiaries. In connection with the arrangement, the holder was granted an option to convert the outstanding principal notes payable under the arrangement into the Company's common stock at a price of $1.50 per share and the unpaid accrued interest at a price of $0.75 per share. In January 2019, the entity related to the main shareholder converted $2,889 accrued interest into 3,852,364 shares at a price of$0.75 per share. In May 2019, the Company granted this entity, the option to convert up to $2,000 of the loan into the Company’s shares at a price of $0.40 per share, and all other conversion rights for the balance of the debt except $2,611, which were converted into 3,480,968 shares in December 2019. In October 2020, the entity converted $800 into 2,000,000 shares. In June 2019, the Board of Directors approved a one-time compensation of $8,139 to this entity for exchange rate and related losses suffered in connection with its convertible notes to the Company during the years. Compensation was approved subject to closing of investment transaction in the Company’s subsidiary, AU10TIX Technologies B.V. (“AU10TIX”), which happened in July 2019 (see note 13). As a result, the Company recorded $8,139 in connection with this payment which is included in other expenses in the consolidated statement of operation and comprehensive income (loss) during the year ended December 31, 2019. In October 2020, the loan was extended until January 2022, the loan amount was reduced to $3,000 and the pledge of 26% interest in one of the Company's European subsidiaries was terminated. In December 2021, the loan was extended until January 2024, the loan amount was reduced to $2,000 and the interest rate was adjusted to 2.5% per annum. The Company’s weighted average interest during the years ended December 31, 2021, 2020 and 2019 is 7.10%, 7.60% and 8.30% , respectively. As of December 31, 2021 and 2020, convertible notes payable to this related party consist of $1,192 and $1,200, respectively. Total interest expense related to the note is $83, $171 and $1,218 for the years ended December 2021, 2020 and 2019, respectively. |
OTHER LIABILITIES
OTHER LIABILITIES | 12 Months Ended |
Dec. 31, 2021 | |
Other Liabilities [Abstract] | |
OTHER LIABILITIES | NOTE 12 – OTHER LIABILITIES Other liabilities are as follows: December 31, 2021 2020 Severance pay liability $ 1,631 $ 1,556 Deferred revenue 1,030 263 Deferred VAT (1) 14,703 10,319 Deferred wage tax and social security (1) 22,534 13,100 Other (2) 969 446 Total other liabilities $ 40,867 $ 25,684 (1) Deferred VAT and deferred wage tax relates to measurements taken by the Dutch government, on which they postponed all VAT payable for the years 2021 and 2020 and all wage tax and social security payable for the months March – December 2021 to be paid in 60 installments starting March 2023, except for VAT payments starting October 2022. (2) Including a 50 million Yen loan with a financial institution as a financial support in connection of COVID-19. The loan was provided in July 2020 for a period of five years with a variable interest of 0.21% - 1.10%. The long term balances as of December 31, 2021 and 2020 are $280 and $425, respectively. |
REDEEMABLE NON-CONTROLLING INTE
REDEEMABLE NON-CONTROLLING INTERESTS | 12 Months Ended |
Dec. 31, 2021 | |
Noncontrolling Interest [Abstract] | |
REDEEMABLE NON-CONTROLLING INTERESTS | NOTE 13 – REDEEMABLE NON-CONTROLLING INTERESTS On July 3, 2019, AU10TIX entered into a Series A Preferred Subscription Agreement (the "Agreement") with TPG Lux 2018 SC I, S.a.r.l ("TPG"), according to which AU10TIX issued 3,000,000 Series A Preferred Shares ("Series A Shares") to TPG for a subscription price of US$60,000 in cash representing approximately 24% of the outstanding share capital of AU10TIX and 23.077% of the fully-diluted share capital of AU10TIX (see note 15). Transaction costs totaled $4,540 and were deducted from the redeemable non-controlling interests balance. On November 7, 2019, AU10TIX entered into a Series A and Series A-1 Preferred Subscription Agreement with Oak HC/FT Partners II, L.P. ("Oak"), according to which AU10TIX issued 1,000,000 Series A Preferred Shares and 23,622 Series A-1 Preferred Shares ("Series A-1 Shares" and together with Series A Shares – "the Preferred Shares") to Oak for a subscription price of US$20,000 in cash representing approximately 7.401% of the outstanding share capital of AU10TIX and 7.143% of the fully-diluted share capital of AU10TIX. For accounting purposes, the investment was allocated to the Series A and Series A-1 Preferred Shares on a relative fair value basis: $19,537 and $461, respectively. Transaction costs totaled $1,513 and were deducted from the respective investment amounts. Following the Oak investment, on November 7, 2019, TPG subscribed for 307,087 Series A-1 Shares at nominal value (US$0.001 per share) (“Bonus Issue Series A-1 Shares”) in order to preserve its 23.077% ownership interest in the fully diluted share capital of AU10TIX. The Preferred Shares Rights Liquidation Preference: The holders of Series A Shares (“Series A Holders”) are entitled to a liquidation preference upon the occurrence of a sale, initial public offering (“IPO”), merger, consolidation, reorganization, winding-up, dissolution or liquidation of AU10TIX, pursuant to which the Series A Holders are entitled, on the occurrence of such event and in priority to the ordinary shares, to receive the greater of: (a) an amount equal to the initial subscription price for the Series A Shares, plus all accrued but unpaid dividends in respect of the Series A Shares, less all dividends previously paid on the Series A Shares, and (b) the proceeds distributable in respect of the Series A Shares had they been converted into ordinary shares. The initial subscription price for the Series A Shares (and calculations derived therefrom) are subject to customary adjustments as set forth in the agreements executed in connection with the Sale. Conversion Rights: The Series A Shares are subject to conversion into ordinary shares of AU10TIX: (a) on the written request by any Series A Shareholder; and (b) immediately prior to a qualifying IPO of AU10TIX (being an IPO where the net aggregate gross proceeds to AU10TIX exceed US$75 million and where the subscription price per share paid by the public is not less than 150% of the initial subscription price paid for the Series A Shares). Pursuant to these conversion arrangements, the Series A Shares will convert into ordinary shares on a 1:1 basis (subject to certain agreed upon adjustments). Anti-Dilution Protection: The Shareholders Agreements contain customary broad-based weighted average anti-dilution protection whereby, if further shares are issued by AU10TIX at a price per new security that is less than the initial subscription price paid for the Series A Shares, then the Series A Holders shall be entitled to receive additional Series A Shares (at no further cost) on a weighted-average basis, reflecting the value of equity in AU10TIX as determined based on the subscription price paid in the new issue of securities. Pre-emption Rights: The Shareholders Agreements contain a restriction on issuing any securities ranking senior to or on party with the Series A Shares for as long as TPG and/or any subsequent investor holds at least one third of the overall number of Series A Shares in issue as at the date of completion of the Sale. In addition, each shareholder holding in excess of 3% of the shares of AU10TIX has the right to participate in any new issuance of securities by the AU10TIX, subject to customary exceptions. Exit Rights: At any time from and after the fifth (5th) anniversary of completion of the issuance, upon written request by TPG, AU10TIX is required to use reasonable endeavors to facilitate the sale by TPG of the Preferred Shares (or, following conversion, ordinary shares) to a third party at a price in excess of 150% of the initial subscription price paid for the Series A Shares and subject to a right of first refusal in favor of AU10TIX. In the event that, three (3) months thereafter, a sale of the Preferred Shares held by TPG has not been consummated, upon written request by TPG, AU10TIX is required to facilitate a sale of AU10TIX within six (6) months after such written request, and thereafter, TPG has the right to require AU10TIX to facilitate a sale or IPO of AU10TIX. On the exercise of such rights, each other shareholder (including AU10TIX) is required to cooperate with TPG regarding such sale or IPO and TPG has the right to exercise drag rights over the shares held by other shareholders in order to facilitate such exit event. The Exit Right is part of the issuance of the Series A Shares, and was not entered into separately from the transaction that created the non-controlling interests. The Exit Right is not legally detachable from the non-controlling interests because it is non-transferrable (i.e., the instrument cannot be transferred without the underlying preferred shares). Thus, the Exit Right would not be separately exercisable from the non-controlling interests shares because the non-controlling interests shares will be settled when the Exit Right is exercised. As a result, the Exit Right would be considered embedded in the Series A Shares held by TPG. Shares of redeemable convertible preferred stock are not mandatorily or currently redeemable. However, the Exit Right would constitute a contingent redemption event that is outside of AU10TIX’s control. As such, Series A Shares have been presented outside of permanent equity as redeemable non-controlling interests. AU10TIX has adjusted the carrying value of the redeemable non-controlling interests to adjust for the non-controlling interests share in AU10TIX's profits and Other Comprehensive Income (Loss). AU10TIX has not adjusted the carrying values of the redeemable non-controlling interests to the deemed liquidation values of such shares since a liquidation event was not probable at any of the balance sheet dates. Subsequent adjustments to increase or decrease the carrying values to the ultimate liquidation values will be made only if and when it becomes probable that such a liquidation event will occur. The Series A-1 Preferred Shares do not entitle their holders to any liquidation or exit rights as the Series A Preferred Shares, and therefore are classified within permanent equity, as non-controlling interests. The anti-dilution provisions cited above have not been bifurcated from the host contract since they are to be settled into AU10TIX's non-traded shares, thus the "net settlement" criteria is not met. On June 28, 2021, TPG, Oak, GF GW LLC (“GF”) and AU10TIX, entered into a Sale and Purchase Agreement (the “SPA”), pursuant to which Oak and GF purchased preferred shares in AU10TIX from TPG. In connection with the SPA, (i) such parties and ICTS entered into an amended and restated shareholders agreement (the “SHA”) and an amended and restated registration rights agreement (the “RRA”) and (ii) AU10TIX’s Articles of Association (the “Articles”) were amended by a deed of amendment (the “Deed of Amendment”). Pursuant to the SPA, Oak purchased 755,906 AU10TIX Series A Preferred shares from TPG and GF purchased 1,511,811 AU10TIX Series A Preferred Shares from TPG. In connection with such purchases, all outstanding AU10TIX’s Series A Preferred Shares and Series A-1 Preferred Shares were re-designated as New Series A Preferred Shares and the Ordinary Shares owned by ICTS were re-designated as Class B Ordinary Shares, as described below. In consideration of the benefits to Oak increasing its shareholding and GF becoming a shareholder, AU10TIX provided certain customary warranties to Oak and GF concerning AU10TIX and its business. In addition, AU10TIX agreed to be primarily liable to Oak and GF for any breaches by TPG of its customary fundamental warranties given to Oak and GF (including that TPG owns AU10TIX Series A Preferred Shares being sold to Oak and GF); provided, that, TPG has agreed to indemnify and hold AU10TIX harmless for any losses incurred by AU10TIX in relation to such fundamental warranties given by TPG. Following the completion of the sales and purchases contemplated by the SPA on June 28, 2021: (i) ICTS owns 68.69% of the outstanding share capital of AU10TIX in the form of Class B Ordinary Shares; (ii) Oak owns 12.87% of the outstanding share capital of AU10TIX in the form of New Series A Preferred Shares; (iii) GF owned 10.93% of the outstanding share capital of AU10TIX in the form of New Series A Preferred Shares; and (iv) TPG owns 7.51% of the outstanding share capital of AU10TIX in the form of New Series A Preferred Shares. In addition, AU10TIX may issue up to 500,000 Class A Ordinary Shares under its existing employee stock option plan. The SHA and the Articles (as amended by the Deed of Amendment) provide for the following material matters in respect of the rights attaching to the New Series A Preferred Shares and the Ordinary Shares and the ongoing governance of AU10TIX: General: The New Series A Preferred Shares are entitled to one vote per share and rank equally with the Ordinary Shares in regards to dividends. The Ordinary Shares are divided into two classes: Class A Ordinary Shares and Class B Ordinary Shares, which rank equally as to dividends. The Class A Ordinary Shares are entitled to one vote per share. The Class B Ordinary Shares are entitled to three votes per share and may only be held by ICTS and its permitted transferees. Liquidation Preference: the holders of New Series A Preferred Shares (“Series A Holders”) are entitled to a liquidation preference upon the occurrence of a (i) sale, initial public offering, which term includes certain business combinations with a SPAC (an “IPO”), merger, consolidation or reorganization, which results in change of control of AU10TIX, and (ii) winding-up, dissolution or liquidation of AU10TIX, pursuant to which the Series A Holders are entitled, on the occurrence of such event and in priority to the Ordinary Shares, to receive the greater of: (a) US$26.4583 per share, subject to adjustments for certain events affecting the capital of AU10TIX (the “Starting Price”) plus all accrued but unpaid dividends in respect of the New Series A Preferred Shares, less all dividends previously paid on the New Series A Preferred Shares, and (b) the proceeds distributable in respect of the New Series A Preferred Shares had they been converted into Class A Ordinary Shares. The Ordinary Shares rank equally in liquidation. Conversion Rights: The New Series A Preferred Shares are subject to conversion into Class A Ordinary Shares on a 1:1 basis (subject to adjustments for certain events affecting the capital of AU10TIX): (a) upon the written request by any Series A Holder; and (b) immediately prior to a qualifying IPO of AU10TIX (being an IPO where each Class A Ordinary Share is valued at not less than 150% of the Starting Price at the completion of the IPO, subject to adjustments for certain events affecting the capital of AU10TIX) (a "Qualifying IPO"). The Class B Ordinary Shares are convertible into Class A Ordinary Shares at any time upon the written request of a holder of Class B Ordinary Shares on a 1:1 basis, subject to adjustments for certain events affecting the capital of AU10TIX. Anti-Dilution Protection: The SHA contains customary broad-based weighted average anti-dilution protection whereby, if further shares are issued by AU10TIX at a price per new security that is less than the Starting Price, then the Series A Holders shall be entitled to receive additional Class A Ordinary Shares (at no further cost) on a weighted-average basis, reflecting the value of the equity in AU10TIX, as determined based on the subscription price paid in the new issue of securities. Transfers: Subject to certain customary exceptions, including a transfer to a permitted transferee, any shareholder (other than TPG, Oak and GF) wishing to transfer any of the shares held by it shall first offer such shares to each shareholder holding 3% or more of AU10TIX’s outstanding share capital at the same price and on the same terms at which the selling shareholder wishes to transfer such shares. New Issuances: Subject to certain customary exceptions, each shareholder holding 3% or more of AU10TIX’s outstanding share capital has the right to participate in any new issuance of securities by AU10TIX. Information Rights: Subject to certain exceptions, each shareholder holding 3% or more of AU10TIX’s outstanding share capital is entitled to receive certain financial information regarding AU10TIX including budgets, annual and quarterly accounts and details of any third party offer for the stock or assets of AU10TIX, as well as certain inspection rights. Exit Rights: At any time from and after July 3, 2026, upon written request by Series A Holders holding at least 60% of the then outstanding New Series A Preferred Shares (the “Preferred Majority”), AU10TIX is required to use reasonable endeavors to facilitate a sale of AU10TIX within six months after such written request, and, thereafter, the Preferred Majority has the right to step-in and require AU10TIX to facilitate a sale or IPO. On the exercise of such step-in right, each other shareholder (including ICTS) is required to cooperate with the Preferred Majority regarding such sale or IPO and the Preferred Majority has the right to exercise drag rights over the shares held by other shareholders in order to facilitate such exit event. Board Arrangements: The Shareholders Agreement and Articles provide that the board of directors of AU10TIX shall be constituted by up to six directors: (i) four of whom will be appointed by the holder of a majority of the Class B Ordinary Shares (i.e., currently ICTS); (ii) one of whom will be appointed by Oak (for so long as Oak holds at least 50% of the New Series A Preferred Shares held on the date of the closing of the transactions contemplated by the SPA, subject to adjustments for certain events affecting the capital of AU10TIX); and (iii) one of whom will be appointed by GF (for so long as GF holds at least 50% of the New Series A Preferred Shares held on the date of the closing of the transactions contemplated by the SPA, subject to adjustments for certain events affecting the capital of AU10TIX). As a general matter, the board of AU10TIX is able to pass resolutions by a simple majority, subject to the consent rights of the Preferred Majority set out below. Preferred Majority Consent Rights: For as long as the Series A Holders hold, in the aggregate, at least 25% of the New Series A Shares Preferred Shares held on the date of the closing of the transactions contemplated by the SPA, subject to adjustments for certain events affecting the capital of AU10TIX, the consent of the Preferred Majority is required for the following actions (i) amending the SHA or the Articles in a manner that would adversely affect the rights, preferences or privileges of the New Series A Preferred Shares; (ii) issuing new securities ranking senior to or pari passu with the New Series A Preferred Shares; (iii) making of any dividend or distribution other than a dividend or distribution that is pro rata to the Series A Holders and the holders of the Ordinary Shares; (iv) redeeming any Ordinary Shares; (v) incurring debt in excess of 4.0x AU10TIX’s consolidated EBITDA in the 12-month period ending on the last day of the month preceding the month in which the debt was incurred; (vi) consummating an IPO other than a Qualifying IPO; (vii) making certain changes to the size of AU10TIX’s board; (viii) making any fundamental change in the nature of the business of AU10TIX and its subsidiaries; (ix) entering into related party transactions, unless such transaction is commercially reasonable and on an arm’s-length basis; and (x) either amending AU10TIX’s existing stock option plan or creating a new stock option plan to allow for the issuance of more than 500,000 additional Class A Common Shares. Tag Rights: Following completion of the procedures on transfers set out above, each Series A Holder holding 3% or more of AU10TIX’s outstanding shares will have the right to participate proportionately in any third-party share sale by another shareholder other than a Series A Holder (subject to certain customary exceptions). Drag Rights: AU10TIX has the right to drag other shareholders into an exit event subject to certain requirements being satisfied (including either (i) holders of New Series A Shares receiving the greater of: (a) the Starting Price and (b) the proceeds distributable in respect of the New Series A Preferred Shares had they been converted into Class A Ordinary Shares, in each case with the approval of the Board, the Preferred Majority and the holders of a majority of the shares or (ii) a minimum value per New Series A Share of 150% of the Starting Price approved by the Board and holders of a majority of the shares, in each case subject to adjustments for certain events affecting the capital of AU10TIX) in relation to such exit transaction. Termination: The SHA terminates upon (i) the agreement of AU10TIX, the Preferred Majority and a majority of the holders of the Ordinary Shares or (ii) the closing of a Qualifying IPO. Tax Matters: AU10TIX is required to provide the Series A Holders with certain customary information for U.S. federal tax reporting purposes. Confidentiality and Public Announcements: The SHA provides for customary confidentiality protections and limitations on public announcements without consent. The RRA provides the Series A Holders (and in certain cases the holders of the Class B Ordinary Shares) with a limited number of customary long-form and short-form demand registration rights, shelf registration rights and the right to participate under certain conditions if AU10TIX determines to register its shares. In addition, AU10TIX has undertaken to (i) take certain actions to facilitate the rights of the parties under the RRA; (ii) provide customary indemnification; (iii) not agree to further registration rights superior to those granted under the RRA; and (iv) limit issuances of its shares under certain circumstances set out in the RRA. Pre-emption Rights: The Shareholders Agreement contains a restriction on issuing any securities senior to or pari passu with the New Series A Preferred Shares for so long as the holders of the New Series A Preferred Shares on June 28, 2021 (or their transferees in accordance with the terms of the Shareholders Agreement) continue to collectively hold at least 25% of such number (appropriately adjusted for certain corporate events) of New Series A Preferred Shares. In addition, each shareholder holding in excess of 3% of AU10TIX’s outstanding shares has the right to participate in any new issuance of securities by AU10TIX, subject to customary exceptions. The Company has assessed whether the change in the terms of the Preferred Shares following the closing of the 2021 SPA constituted a modification or extinguishment for accounting purposes, by comparing the fair value of these Preferred Shares immediately before and immediately after the closing of the 2021 SPA. An extinguishment occurs when the difference in fair value exceeds 10%, while a modification occurs when such fair value difference is lower than 10%. Additionally, the carrying value of the Series A-1 Shares, which were previously presented among non-controlling interests, were reclassified to redeemable non-controlling interests and initially recognized at their fair value, following their re-designation as New Series A Preferred Shares. Following the modification and extinguishment of the Preferred Shares, and the reclassification of the Series A-1 Shares, the Company adjusted the carrying value of the redeemable non-controlling interests by $9,057, with a corresponding decrease to additional paid-in capital and non-controlling interests in the amounts of $10,102 and $1,045, respectively. The following table sets forth for the movement in the redeemable non-controlling interests: Year Ended December 31, 2021 2020 Balance as of the beginning of the year $ 75,322 $ 74,300 Net Income 6,200 925 Other Comprehensive Income - Translation adjustment (211 ) 97 Conversion of AU10TIX shares A-1 into new series A 9,057 - Stock-based compensation 110 - Balance as of the end of the year $ 90,478 $ 75,322 |
GOVERNMENTAL SUPPORT
GOVERNMENTAL SUPPORT | 12 Months Ended |
Dec. 31, 2021 | |
Governmental Support [Abstract] | |
GOVERNMENTAL SUPPORT | NOTE 14 – GOVERNMENTAL SUPPORT During 2021 and 2020, 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. In the United States of America, the government has approved a payroll support of $15,918 and $13,680, respectively to the American subsidiary of the Company. Out of those amounts, the American subsidiary recognized amounts of $16,925 and $12,672 as reduction of labor expenses for the years ended December 31, 2021 and 2020, respectively. During the years ended December 31, 2021 and 2020, the Dutch government has provided financial assistance of €18,135 and €17,619 ($22,608 and $21,645 as of December 31, 2021 and 2020), respectively. The Dutch government extended the support program until March, 2022 and will not extended it beyond. For the months January through March 2022, 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 applied for this support starting from April 2020 to June 2021. These available governmental support plans might be extended and/or changed according to the future COVID-19 developments, although currently the Company does not expect those measures to be renewed or extended. In the Netherlands wage tax, social security and VAT payments for the period March 2020 until September 2021 were postponed and will have to be paid in 60 installments, starting March 2023, except for VAT payments starting October 2022. As of December 31, 2021 and 2020, the Company accumulated debt of €33,456 and €20,796 ($38,011 and $25,548 as of December 31, 2021 and 2020), respectively 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 was paid during the year 2021. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | NOTE 15 – STOCK-BASED COMPENSATION AU10TIX’s Limited, AU10TIX’s subsidiary, has a Stock Option Plan which has reserved 500,000 shares of its common stock for its future issuance. As of December 31, 2021, the subsidiary has 18,000,000 authorized shares of which 12,500,000 shares are issued and outstanding. Under the stock option plan, stock options may be granted to employees, officers, directors, consultants and service providers of the subsidiary at an exercise price as determined by the subsidiary’s board of directors with expiration terms of not more than ten years after the date such option is granted. Options granted under the plan generally vest over a period of four years. The following is a summary of the AU10TIX Limited stock options issued and outstanding: Number of options Weighted average exercise price Weighted average remaining contractual term Options outstanding as of December 31, 2020 200,500 $ 0.01 Options granted - - Options exercised - - Forfeited 625 - Options outstanding , end of the year 199,875 $ 0.01 5.5 years Options exercisable, as of December 31, 2021 199,875 $ 0.01 5.5 years There are no non-vested options in AU10TIX Limited. In August 2020, AU10TIX’s board agreed to move the option plan from AU10TIX Limited to AU10TIX Technologies B.V., which is still in process. The following is a summary of the AU10TIX Technologies B.V. stock options issued and outstanding: Number of options Weighted average exercise price Weighted average remaining contractual term Options outstanding as of December 31, 2020 - $ - Options granted 30,000 26.46 Options exercised - - Forfeited - - Options outstanding , end of the year 30,000 $ 26.46 5.2 years Options exercisable, as of December 31, 2021 22,500 $ 26.46 5.2 years During the years ended December 31, 2021, 2020 and 2019, there were $350, $0 and $0 compensation expenses. As of December 31, 2021, the Company has $116 of unrecognized compensation cost related to stock options. |
OTHER EXPENSES, NET
OTHER EXPENSES, NET | 12 Months Ended |
Dec. 31, 2021 | |
Other Income and Expenses [Abstract] | |
OTHER EXPENSES, NET | NOTE 16 – OTHER EXPENSES, NET Other expense is summarized as follows: Year ended December 31, 2021 2020 2019 Interest expense to related parties (see Note 11) $ (83 ) $ (171 ) $ (1,218 ) Interest expense and other bank charges (801 ) (901 ) (1,479 ) Interest income 24 178 151 Revaluation and related costs reimbursed to related party - - (8,139 ) Foreign currency gain (loss) 60 (254 ) 148 Gain from sale of Mesh shares (see Note 5) _ 186 - - Other income (expense) 77 (140 ) 19 Total other income (expense), net $ (537 ) $ (1,288 ) $ (10,518 ) |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 17 – INCOME TAXES The components of income (loss) before income tax benefit (expense) from continuing operations are as follows: Year Ended December 31, 2021 2020 2019 The Netherlands $ (3,070 ) $ 469 $ (11,508 ) Subsidiaries outside of the Netherlands 53,578 5,523 5,804 Income (loss) before income tax expenses $ 50,508 $ 5,992 $ (5,704 ) The current income tax expense from subsidiaries outside of the Netherlands is $8,937, $1,345 and $1,492, for the years ended December 31, 2021, 2020 and 2019, respectively. There was no current income tax expense or benefit for the Netherlands for the years ended December 31, 2021, 2020 and 2019. The deferred income tax benefit from subsidiaries outside of the Netherlands is $331, $676 and $29, for the years ended December 31, 2021, 2020 and 2019, respectively. There was no deferred income tax expense for the Netherlands for the years ended December 31, 2021, 2020 and 2019. Additionally, tax expenses (benefits) from subsidiaries outside the Netherlands include $614, $(79) and $86, for the years ended December 31, 2021, 2020 and 2019, respectively, of tax related to previous years. There were no tax expenses related to previous years in the Netherlands for the years ended December 31, 2021, 2020 and 2019. The components of deferred tax assets and liabilities are as follows: December 31, 2021 2020 Deferred tax assets: Operating loss carryforwards $ 10,547 $ 16,694 Capital loss carryforwards 165 159 Allowance for doubtful accounts 150 110 Tax credit carryforwards 560 560 Accrued expenses and other 536 774 Research and development expenses, net 1,183 432 Total deferred tax assets 13,141 18,729 Deferred tax liabilities: Depreciation of property and equipment (108 ) (115 ) 13,033 18,614 Valuation allowance (11,630 ) (17,445 ) Deferred tax assets, net $ 1,403 $ 1,169 As of December 31, 2021, the Company has net operating losses carry forwards of $22,056 in the Netherlands. These losses can be carried forward and do not expire but starting 2022 the yearly utilization is limited to one million Euro per year, plus 50% of the excess taxable income. As of December 31, 2021, the Company has net operating loss carry forwards of $6,300 in the United States of America, which will expire in 2031 through 2037. In Israel, the Company has net carry forward losses of $7,060 which do not expire. The ultimate utilization of such net operating loss carry forwards is limited in certain situations. As of December 31, 2021, the Company has capital loss carry forwards of $715 in Israel. Such capital loss carry forwards do not expire and can be offset against future capital gains generated in Israel. As of December 31, 2021, the Company has $560 in tax credits for the welfare to work and work opportunity programs in the United States of America that expire in 2024 through 2029. During the years ended December 31, 2021 and 2020 the valuation allowance decreased by $5,815 and $3,601, respectively. The Company’s effective income tax rate differs from the Netherlands’ statutory rate of 25% as follows: Year Ended December 31, 2021 2020 2019 Effective loss (income) tax benefit from continuing operations at statutory rate $ (12,627 ) $ (1,498 ) $ 1,426 Rate differential 2,915 610 1,024 Non-deductible expenses (1,643 ) (857 ) (584 ) Adjustments to prior year tax losses (2,599 ) (3,604 ) (429 ) Changes in valuation allowance 5,815 3,601 (2,568 ) Other (1,081 ) 1,158 (418 ) Income tax expense from continuing operations $ (9,220 ) $ (590 ) $ (1,549 ) Uncertain tax positions The Company is subject to income taxes in the Netherlands, and numerous foreign jurisdictions. Significant judgment is required in evaluating the Company’s tax positions and determine its provision for income taxes. During the ordinary course of business, there are transactions and calculations for which the ultimate tax determination is uncertain. The Company establishes reserves for tax related uncertainties based on estimates of whether and the extent to which additional taxes will be due. These reserves are established when the Company believes that certain positions might be challenged despite evidence supporting the position. The Company adjust this reserve in light of changing facts and circumstances, such as the outcome of tax audits. The provision for income taxes includes the impact of reserve positions and changes to reserves that are considered probable. As of December 31, 2021 and 2020, there are $688 and $0 of unrecognized tax benefits, respectively, that if recognized would reduce the effective tax rate. Interest and penalties assessed by taxing authorities on an underpayment of income taxes are included as components of income tax provision in the consolidated statements of operations and comprehensive income. A reconciliation of the Company’s unrecognized tax benefits is as follows: December 31, 2021 2020 Balance at beginning of year $ - $ - Additions based on tax positions taken in prior years 546 - Additions based on tax positions taken in the current year 142 - Reduction based on tax positions taken in prior years - - Balance at end of year $ 688 $ - The Company files income tax returns in the Netherlands and other foreign jurisdictions. Income tax returns for the years since 2015 are subject to examination in the Netherlands. In the United States of America, income tax returns for the years since 2018 are subject to examination. Income tax returns for the tax years since 2016 are subject to examination in foreign jurisdictions. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 18 - RELATED PARTY TRANSACTIONS An entity related to one of the Company’s Supervisory Board members provide legal services to the Company. Legal expense related to these services is $59, $46 and $46 for the years ended December 31, 2021, 2020 and 2019, respectively. The Company engages the services of a related party to provide certain selling and management services to the authentication technology segment. The Company incurred expenses of $1,710, $741 and $801 for such services for the years ended December 31, 2021, 2020 and 2019, respectively. As of December 31, 2021, and 2020 the outstanding balances due for these services were $311 and $114, respectively, included in accrued expenses and other current liabilities. In addition, since April 2018, the related party serves as a board member of the Company and was paid an amount of $38, $38 and $28 as board fees, for the years ended December 31, 2021, 2020 and 2019, respectively. The Company engages the services of a related party to provide certain selling services to its authentication technology segment. The Company incurred expenses of $148, $87 and $106 for such services for the years ended December 31, 2021, 2020 and 2019, respectively. The Company engaged the services of a related party to provide internal audit services. As of February 2020, the related party acts as a Managing Director of the Company. The Company incurred expenses of $286, $182 and $170 for such services for the years ended December 31, 2021, 2020 and 2019, respectively. The chairman of the board, a related party, receives annual compensation of $50 for his services as chairman. In addition, in 2021 and 2020, the Company incurred salary expenses of $117 and $125, respectively for the services he provides to AU10TIX. In August 2017, the Company engaged the services of a related party to provide certain selling and administrative services to its authentication technology segment. The Company incurred expenses of $0, $0 and $39 for such services for the years ended December 31, 2021, 2020 and 2019, respectively. In addition, the related party serves as a board member of the Company, and was paid an amount of $38, $38 and $30 as board fees, for the years ended December 31, 2021, 2020 and 2019, respectively. In May 2018, the Company engaged the services of a related party to provide certain administration services. The Company incurred expenses of $141, $118 and $98 for such services for the years ended December 31, 2021, 2020 and 2019, respectively. In May 2019, the Company engaged the services of Arrow (see note 5) to provide some administrative services. The Company incurred expenses of $286, $115 and $62 for such services for the years ended December 31, 2021, 2020 and 2019, respectively. In June 2019, the Company issued 3,000,000 shares to certain directors and officers of the Company for a purchase price of $0.40 per share. The Compensation Committee determines the composition and amount of director and key employee compensation. When the annual award consists of equity purchases, it is only permitted at a price equal or above market. In December 2019, the Company purchased shares and shareholders debt of Arrow for $1,750 (see note 5). In May 2020, an entity related to the Company’s main shareholder provided a letter of credit of €2,000 ($2,273 as of December 31, 2021) to a commercial bank to guarantee a borrowing arrangement on behalf of one of the Company’s subsidiaries. The Company provided to the related party a deposit of $2,200 against the letter of credit which was paid back to the Company after the letter of credit was cancelled. The Company has debt to related parties (see note 11). |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 19 - COMMITMENTS AND CONTINGENCIES Letters of Credit and Guarantees As of December 31, 2021, the Company has $3,250 in outstanding letters of credit. Such letters of credit are being secured by the same amounts in restricted cash with commercial banks (see note 2). As of December 31, 2021, the Company has €1,022 ($1,161 as of December 31, 2021) in outstanding guarantees on its lines of credit arrangement in Europe (see note 9), which relate to leases and performance guarantee for contracts. Legal Proceedings General The Company is subject to various investigations, claims and legal proceedings covering a wide range of matters that arise in the ordinary course of its business activities. These claims are primarily related to grievances filed by current and former employees for unfair labor practices or discrimination, and for passenger aviation claims. Management recognizes a liability for any matter when the likelihood of an unfavorable outcome is deemed to be probable and the amount is able to be reasonably estimated. Management has concluded that such claims, in the aggregate, would not have a material adverse effect on the Company's consolidated financial position, results of operations, or cash flows. Inquiry Proceedings On June 24, 2021 a minority shareholder of the Company initiated inquiry proceedings before the Enterprise Chamber of the Amsterdam Court of Appeal (the “Court”) which is a specialized court dedicated to resolving corporate disputes. The shareholder has requested the Court to appoint an investigator on behalf of the Court in accordance with Dutch law, to investigate certain activities of the Company that have been previously disclosed by the Company in its periodic filings with the SEC for the fiscal years ended December 31, 2020 and 2019. The shareholder has not requested the Court to order preliminary relief, but has requested the Court to order the registrant to pay the costs of the proceedings. The Company expects that the Court will grant its judgement in June 2022. White Line In 2017, the company invested $3,500 in White Line B.V., a limited Company incorporated in the Netherlands, representing 10% of the issued and outstanding share capital of White Line B.V. The Company had an agreement with an entity related to its main shareholder, according to which, if the value of this investment decreased, the related party entity has guaranteed to repurchase this full investment in minimum amount of $3,500. In December 2018, the related party entity purchased the full investment from the Company for $3,500. In 2021, the Company has a dispute with White Line B.V. as certain items disclosed in White Line B.V. financials appeared questionable. As the economical ownership is not within the Company any more, the Company has no financial exposure on this dispute. Agency Agreements In April 2013, prior to the purchase of one of the current subsidiaries in Europe, the Company entered into an agency agreement with a third party to assist it with this transaction. According to the agreement, in the event that the operations in that country are sold in the future, the third-party agent is entitled to a payment of €3,000 ($3,409 as of December 31, 2021). In March 2016, the Company entered into an agreement with a third party to assist the Company with the possible sale of one of the Company’s subsidiaries (see note 13). The fees depend on the outcome of the assignment and are between 2% - 5% of the sale consideration but not less than $4,000. In February 2019 the agreement was amended. According to the amendment, in case that less than 50% of the voting stock or majority of the subsidiary assets are being sold, the transaction fee will be 5% of the sale consideration but not lower than $3,000. In January 2022, the agreement was amended so that the fees will be 2%-3% of the sale consideration but not less than $4,000 and with a cap of $20,000. In case that less than 50% of the voting stock or majority of the subsidiary assets are being sold the transaction fee will be 5% of the sale consideration but not lower than $4,000. In August 2017, the Company entered into an agreement with a third party to assist the Company with a possible sale of one of the Company’s subsidiaries. The fees depend on the outcome of the assignment and are between 2% - 10% of the sale consideration but not less than € 2,000 ($2,273 as of December 31, 2021). The agreement was terminated in June 2021, although the third party is entitled to the consideration in case that subsidiary will be sold before December 2022. |
SEGMENT AND GEOGRAPHICAL INFORM
SEGMENT AND GEOGRAPHICAL INFORMATION | 12 Months Ended |
Dec. 31, 2021 | |
Segment Reporting [Abstract] | |
SEGMENT AND GEOGRAPHICAL INFORMATION | NOTE 20 – SEGMENT AND GEOGRAPHICAL INFORMATION The Company operates in three reportable segments: (a) corporate (b) airport security and other aviation services and (c) authentication technology. The corporate segment does not generate revenue and contains primarily non-operational expenses. The airport security and other aviation services segment provides security and other aviation services to airlines and airport authorities, predominantly in the United States of America. The authentication technology segment provides authentication services to financial and other institutions, predominantly in Europe and the United States of America. All inter-segment transactions are eliminated in consolidation. The accounting policies of the segments are the same as the accounting policies of the Company as a whole. The operating results of these reportable segments are regularly reviewed by the chief operating decision. Corporate Airport Security Authentication Total Year ended December 31, 2021: Revenue $ - $ 253,687 $ 71,247 $ 324,934 Depreciation and amortization 75 1,106 880 2,061 Net income (loss) (1,666 ) 21,558 21,396 41,288 Goodwill - 690 - 690 Total assets 10,349 112,425 73,106 195,880 Year ended December 31, 2020: Revenue $ - $ 222,654 $ 25,765 $ 248,419 Depreciation and amortization 72 1,302 716 2,090 Net income (loss) (3,853 ) 6,056 3,199 5,402 Goodwill - 746 - 746 Total assets 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 Net income (loss) (11,740 ) (2,406 ) 6,893 (7,253 ) Goodwill - 681 - 681 Total assets 23,381 64,647 35,419 123,447 The following table sets forth, for the periods indicated, revenue generated from customers by geographical area based on the geographical location of the customer’s invoicing address: Year Ended December 31, 2021 2020 2019 Germany $ 126,367 $ 119,500 $ 137,207 The Netherlands 52,165 58,446 97,700 United States 94,743 45,305 73,719 Spain 30,946 7,465 3,138 Other countries 20,713 17,703 21,543 Total revenue $ 324,934 $ 248,419 $ 333,307 The following table sets forth, for the periods indicated, property and equipment, net of accumulated depreciation and amortization, by country: December 31, 2021 2020 Germany $ 361 $ 449 The Netherlands 624 598 United States 422 305 Spain 118 159 Other countries 4,185 4,014 Total property and equipment, net $ 5,710 $ 5,525 Property and equipment, net, in other countries include $3,956 and $3,179 property and equipment in Israel, as of December 31, 2021 and 2020, respectively. |
Valuation and Qualifying Accoun
Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2021 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
Valuation and Qualifying Accounts | Valuation and Qualifying Accounts (US $in thousands) Beginning Charges Charges Deductions End of Allowance for doubtful accounts (1): Year ended December 31, 2019 $ 240 261 (83 ) - $ 418 Year ended December 31, 2020 $ 418 710 (438 ) - $ 690 Year ended December 31, 2021 $ 690 864 (563 ) - $ 991 Allowance for net deferred tax assets: Year ended December 31, 2019 $ 18,478 - 2,568 - $ 21,046 Year ended December 31, 2020 $ 21,046 - - (3,601 ) $ 17,445 Year ended December 31, 2021 $ 17,445 - - (5,815 ) $ 11,630 (1) Write-off net of recoveries for the allowance for doubtful accounts. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Functional Currency | Functional Currency The accompanying consolidated financial statements are presented in United States dollars. The Company has determined that the functional currency of its foreign subsidiaries is the local currency, which is predominantly the Euro. For financial reporting purposes, the assets and liabilities of such subsidiaries are translated into United States dollars using exchange rates in effect at the balance sheet date. The revenue and expenses of such subsidiaries are translated into United States dollars using average exchange rates in effect during the reporting period. Resulting translation adjustments are presented as a separate category in shareholders' deficit called accumulated other comprehensive loss. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. The most significant estimates and assumptions included in these consolidated financial statements consist of the: (a) calculation of the allowance for doubtful accounts, (b) determination of the fair value of stock options, (c) recognition of contingent liabilities (d) valuation allowance of deferred income taxes, (e) determination of goodwill impairment (f) determination of future lease periods of existing lease contracts, (g) determination of interest rates used in order to calculate the present value of the operating lease liabilities and (h) determination of the estimated fair value of the AU10TIX preferred shares conversion. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of ICTS International N.V. and its wholly-owned and majority-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash and cash equivalents. |
Restricted Cash | Restricted Cash Restricted cash as of December 31, 2021 consists of: (a) $3,350 held in bank accounts that serve as cash collateral for outstanding letters of credit ,(b) $10,599 held in several bank accounts in the Netherlands, which is restricted for payments to local tax authorities (see note 5) and (c) $750 secured for derivative instruments. Restricted cash as of December 31, 2020 consists of: (a) $3,991 held in bank accounts that serve as cash collateral for outstanding letters of credit and (b) $5,481 held in several bank accounts in the Netherlands, which is restricted for payments to local tax authorities. The following table provides a reconciliation of cash and restricted cash reported on the balance sheet that sum to the total of the same such amounts shown in the statements of cash flows. December 31, 2021 2020 Cash and cash equivalents $ 88,753 $ 51,602 Restricted cash 14,699 9,472 Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 103,452 $ 61,074 |
Accounts Receivable | Accounts Receivable Accounts receivable represent amounts due to the Company for services rendered and are recorded net of an allowance for doubtful accounts. The allowance for credit losses is based on historical collection experience, factors related to specific customers and current economic trends. The Company writes off accounts receivable when determined to be uncollectible and are recognized as a reduction to the allowance for credit losses. As of December 31, 2021, and 2020, the allowance for doubtful accounts is $991 and $690, respectively. |
Fair Value Measurements | Fair Value Measurements The Company follows Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 820, “Fair Value Measurement”. Topic 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value should be based on assumptions that market participants would use. In determining the fair value, the Company assesses the inputs used to measure fair value using a three-tier hierarchy, as follows: 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. If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability. Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement. |
Investments | Investments The Company accounts for investments in the equity securities of companies which represent an ownership interest of 20% to 50% and the ability to exercise significant influence, provided that ability does not represent control, using the equity method. The equity method requires the Company to recognize its share of the net income (loss) of its investees in the consolidated statement of operations until the carrying value of the investment is zero. The Company records investments in the equity securities of privately held companies which represent an ownership interest of less than 20% at cost minus impairment. |
Derivative instruments | Derivative instruments Derivative instruments are measured at their fair value and recorded as either assets or liabilities. Changes in the fair value of derivatives designated as cash flow hedging instruments are initially recorded in other comprehensive income and a corresponding amount is reclassified out of other comprehensive income into earnings when the underlying transactions are recognized in the consolidated statements of operations and comprehensive income. The Company maintains a risk management strategy that may incorporate the use of put options and forward exchange contracts, to minimize significant fluctuation in cash flows and/or earnings that are caused by exchange rate or interest rate volatility. |
Property and Equipment | Property and Equipment Equipment and furniture, internal-use software, leasehold improvements and vehicles are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The estimated useful lives used in determining depreciation are as follows: Years Equipment and facilities 3-7 Internal- use software 4-7 Vehicles 3-7 Leasehold improvements are amortized using the straight-line method over the shorter of the total term of the lease or the estimated useful lives of the assets. |
Capitalized Internal-Use Software Costs | Capitalized Internal-Use Software Costs The Company capitalizes certain costs incurred in developing internal-use software when capitalization requirements have been met. Costs prior to meeting the capitalization requirements are expensed as incurred. Costs, such as maintenance and training are also expensed as incurred. Capitalized costs are included in property and equipment, and amortized on a straight-lined basis over the estimated useful life of the software. Amortization expense, which is included in depreciation expense, amounted to $374, $147 and $0 during the years ended December 31, 2021, 2020 and 2019, respectively. |
Goodwill | Goodwill Goodwill represents the excess purchase price over the fair value of the net tangible and intangible assets of an acquired business. Goodwill is assessed for impairment by reporting unit on an annual basis or when events or changes in circumstances indicate that the carrying value may not be recoverable. The Company would record a goodwill impairment charge for the difference between the carrying value and the fair value of the goodwill, not to exceed the carrying amount of the goodwill. During the years ended December 31, 2021, 2020 and 2019, the Company recorded goodwill impairment charge of $139, $0 and $0, respectively on its goodwill. |
Long-Lived Assets | Long-Lived Assets The Company reviews long-lived assets, other than goodwill, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The Company assesses recoverability by determining whether the net book value of the related asset will be recovered through the projected undiscounted future cash flows of the asset. If the Company determines that the carrying value of the asset may not be recoverable, it measures any impairment based on the fair value of the asset as compared to its carrying value. During the years ended December 31, 2021, 2020, and 2019, the Company did not record any impairment charges on its long-lived assets. |
Employee Rights Upon Retirement | Employee Rights Upon Retirement The Company is required to make severance payments to its Israeli employees upon dismissal of an employee or upon a termination of employment in certain circumstances. The Israeli pension and severance pay liability to the employees is covered mainly by deposits made at insurance companies. For its employees who are employed under the Section 14 of the Israeli Severance Pay Law, 1963 (“Section 14”), the Company makes deposits with certain insurance companies for accounts controlled by each applicable employee in order to secure the employees’ rights upon termination. In addition, the related obligation and amounts deposited on behalf of the applicable employees for such obligations are not presented on the Company’s consolidated balance sheets, as the amounts funded are not under the control of management of the Company and the Company is legally released from the obligation to pay any severance payments to the employees once the required deposits amounts have been paid. For employees not under Section 14, severance liabilities are recorded based on the length of service and their latest monthly salary. The Company’s liabilities for the Israeli employees amounted to $1,631 and $1,556 as of December 31, 2021 and 2020, respectively and are included in other liabilities in the Company’s consolidated balance sheets. The deposits made at insurance companies to cover these liabilities amounted to $1,346 and $1,391 as of December 31, 2021 and 2020, respectively and are included in other assets in the Company’s consolidated balance sheets. |
Leases | Leases The . The standard provides a number of optional practical expedients in transition. The Company chose to apply the following permitted practical expedients: Not to reassess its prior conclusions regarding lease identification, lease classification and initial direct costs under the new standard. Short-term lease recognition exemption for all leases with a term shorter than 12 months. This means, that for those leases, the Company does not recognize Rights of Use (“ROU”) assets or lease liabilities. Applying the practical expedient to not separate lease and non-lease components for all of the Company’s leases as a lessee. The Company as a lessee Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. A lease is a finance lease if it meets any one of the criteria below, otherwise the lease is an operating lease: The lease transfers ownership of the underlying asset to the lessee by the end of the lease term. The lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise. The lease term is for the major part of the remaining economic life of the underlying asset. The present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all of the fair value of the underlying asset. The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of lease term. Based on the criteria above, all of the Company's leases are classified as operating leases. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term, while the ROU assets are also adjusted for any prepaid or accrued lease payments. The Company uses its incremental borrowing rate based on the information available at the commencement date to determine the present value of the lease payments. The lease term is the non-cancellable period of the lease plus periods covered by an extension or termination option if it reasonably certain that the Company will exercise the option. After lease commencement, the Company measures the lease liability at the present value of the remaining lease payments using the discount rate determined at lease commencement (as long as the discount rate hasn’t been updated as a result of a reassessment event). The Company subsequently measures the ROU asset at the present value of the remaining lease payments, adjusted for the remaining balance of any lease incentives received, any cumulative prepaid or accrued rent if relevant and any unamortized initial direct costs. Lease expenses are recognized on a straight-line basis over the lease term. Lease terms will include options to extend or terminate the lease when it is reasonably certain that the Company will exercise or not exercise the option to renew or terminate the lease. Variable lease payments that depend on an index or a rate On the commencement date, the lease payments shall include variable lease payments that depend on an index or a rate (such as the Consumer Price Index or a market interest rate), initially measured using the index or rate at the commencement date. The Company does not remeasure the lease liability for changes in future lease payments arising from changes in an index or rate unless the lease liability is remeasured for another reason. Therefore, after initial recognition, such variable lease payments are recognized in profit or loss as they are incurred. |
Convertible Debt Instruments | Convertible Debt Instruments The Company evaluates convertible debt instruments to determine whether the embedded conversion option needs to be bifurcated from the debt instrument and accounted for as a freestanding derivative instrument or considered a beneficial conversion option. An embedded conversion option is considered to be a freestanding derivative when: (a) the economic characteristics and risks of the embedded conversion option are not clearly and closely related to the economic characteristics and risks of the host instrument, (b) the hybrid instrument that embodies both the embedded conversion option and the host instrument is not re-measured at fair value under otherwise applicable US GAAP with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded conversion option would be considered a derivative instrument subject to certain requirements (except when the host instrument is deemed to be conventional). When it is determined that an embedded conversion option should not be bifurcated from its host instrument, the embedded conversion option is evaluated to determine whether it contains any intrinsic value which needs to be discounted from the carrying value of the convertible debt instrument. The intrinsic value of an embedded conversion option is considered to be the difference between the fair value of the underlying security on the commitment date of the debt instrument and the effective conversion price embedded in the debt instrument. |
Contingent Liabilities | Contingent Liabilities The Company is subject to various investigations, claims and legal proceedings covering a wide range of matters that arise in the normal course of its business activities. Liabilities for such contingencies are recognized when: (a) information available prior to the issuance of the consolidated financial statements indicates that it is probable that a liability had been incurred at the date of the consolidated financial statements and (b) the amount of loss can reasonably be estimated. |
Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss | Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss The Company's comprehensive income (loss) consists mostly of the Company’s net income (loss), foreign currency translation adjustments and changes in fair value of derivative instruments as cash flow instruments. Accumulated other comprehensive loss consist of the Company’s accumulated foreign exchange currency translation adjustments, and changes in fair value of derivative instruments. |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation to employees and non-employees, including stock options, are measured at the fair value of the award on the date of grant based on the estimated number of awards that are ultimately expected to vest. The compensation expense resulting from stock-based compensation to management and administrative employees is recorded over the vesting period of the award in selling, general and administrative expense on the accompanying consolidated statements of operations and comprehensive income (loss). Compensation expense resulting from stock-based compensation to operational employees is recorded over the vesting period of the award in cost of revenue. |
Non-Controlling Interests | Non-Controlling Interests The Company’s non-controlling interests represent the minority shareholder’s ownership interests related to the Company’s subsidiaries. The Company reports its non-controlling interests in subsidiaries as a separate component of equity in the consolidated balance sheets and reports net income (loss) attributable to the non-controlling interests in the consolidated statements of operations. |
Redeemable Non-Controlling Interests | Redeemable Non-Controlling Interests When the Company or its subsidiaries issues preferred shares, it considers the provisions of FASB ASC 480 –"Distinguishing Liabilities from Equity" (Topic 480) in order to determine whether the preferred share should be classified as a liability. If the instrument is not within the scope of Topic 480, the Company or its subsidiaries further analyses the instruments characteristics in order to determine whether it should be classified within temporary equity (mezzanine) or within permanent equity in accordance with the provisions of Topic 480-10-S99. AU10TIX redeemable convertible preferred shares are not mandatorily or currently redeemable. However, it includes a liquidation or deemed liquidation events that would constitute a redemption event that is outside of the Company’s control. As such, all shares of redeemable preferred shares have been presented outside of permanent equity. The Company has not adjusted the carrying values of the redeemable preferred shares to the deemed liquidation values of such shares since a liquidation event was not probable at any of the balance sheet dates. Subsequent adjustments to increase or decrease the carrying values to the ultimate liquidation values will be made only if and when it becomes probable that such a liquidation event will occur. |
Revenue Recognition | Revenue Recognition Revenue is recognized when the promised services are performed for our clients, and the amount that reflects the consideration we are entitled to receive in exchange for those services is determined. The Company’s revenues are recorded net of any sales taxes. In order to determine the revenue, we (1) identify the contract with the client, (2) identify the performance obligations, usually it’s based on the hours spent, (3) determination of the transaction price, (4) allocation of the transaction price to the performance obligation and (5) we recognize revenue as performance obligation is satisfied. A performance obligation is a promise in a contract to transfer a distinct service to the client, and it is the unit of account for revenue recognition. The majority of our contracts have a single performance obligation as the promise to transfer the individual services is not separately identifiable from other promises in our contracts and, therefore, is not distinct. The following table presents the Company’s revenues according to the Company’s segments: Year ended December 31, 2021 2020 2019 Airport Security and Other Aviation Services $ 253,687 $ 222,654 $ 309,548 Authentication Technology 71,247 25,765 23,759 Total revenue $ 324,934 $ 248,419 $ 333,307 The following table presents the Company’s revenues generated from customers by geographical area based on the geographical location of the customers invoicing address: Year ended December 31, 2021 2020 2019 Germany $ 126,367 39 % $ 119,500 48 % $ 137,207 41 % The Netherlands 52,165 16 % 58,446 24 % 97,700 29 % United States 94,743 29 % 45,305 18 % 73,719 22 % Spain 30,946 10 % 7,465 3 % 3,138 1 % Other countries 20,713 6 % 17,703 7 % 21,543 7 % Total revenue $ 324,934 100 % $ 248,419 100 % $ 333,307 100 % Airport Security and Other Aviation Services Segment In the airport security and other aviation services, for performance obligations that we satisfy over time, revenues are recognized by consistently applying a method of measuring hours spent on that performance obligation. We generally utilize an input measure of time (hours and attendance for specific time framed service like specific flights) of the service provided. Performance obligations are satisfied over the course of each month and continue to be performed until the contract has been terminated or cancelled. Pricing and Reduction to Revenues We generally determine standalone selling prices based upon the prices included in the client contracts, using expected costs plus margin, or other observable prices. The price as specified in our client contracts is generally considered the standalone selling price as it is an observable input that depicts the price as if sold to a similar client in similar circumstances. Certain client contracts have variable consideration, including quality thresholds or other similar items that could reduce the transaction price. These amounts may be constrained and revenue is recorded to the extent we do not expect a significant reversal or when the uncertainty associated with the variable consideration is resolved. Our variable consideration amounts, if any, are not material, and we do not expect significant changes to our estimates. Contracts Our client contracts generally include standard payment terms acceptable in each of the countries, states and territories in which we operate. The payment terms vary by the type and location of our clients and services offered. Client payments are typically due in 30 to 60 days after invoicing, but may be a shorter or longer term depending on the contract. Our contracts with main customers are generally long-term contracts, between two to five years. The timing between satisfaction of the performance obligation, invoicing and payment is not significant. Practical Expedients and Exemptions Because nearly all our contracts are based on input measure of time of service provided (as hours or attendance) no exemptions need to be made. We have no material contracts with material revenues expected to be recognized subsequent to December 31, 2021 related to remaining performance obligations. Revenue Service Types The following is a description of our revenue service types, including Airport Security, Airline Security, Cargo Security, Other Airport Services, General Security Services and Other. Airport Security Staffing or manning for specialized airport security are usually based on long term contract issued via a public tender procedure. We recognize revenue given the unit of measure (hours) provided in the given time period and the specific price for specific hours agreed upon in the contracts. Quality and criteria of staffing are described in the contracts and are measured in the given time period. Deviations, if any, are discussed with the customer before invoicing and will be reflected in the invoice showing the approved hours and other cost elements as agreed upon price. Most contracts have an hourly rate that reflects an all-in tariff based on a full cost price calculation. In some of the contracts the hourly rates are split between a component based on hours and a component based on specific costs in a specific time period but always linked to the service provided in given time period. Revenue is recognized at the time period set in the contract. Airline Security Staffing or manning for airline security are usually based on long term contracts issued via a public tender procedure. We recognize revenue according to the unit of measure provided (usually attendance for specific time framed service like specific flights). The time framed specialized security services are in this case are the executed number of flights. When the manning for the security of these flights are delivered, the Company invoices the customer according to the agreed flight tariff. Cargo Security Staffing or manning for specialized cargo security are usually based on long term contract, sometimes publicly tendered. Contracts are based on hourly planned and executed screening services. Revenue is recognized based on the realized screening hours and contractually agreed upon hourly rate. Other Airport Services Airport Services include wheelchair attendants, pre-departure skycaps, bag-runners, agents, guards, charter security screening, janitorial, and cabin cleaning to major U.S. and foreign carriers in airports throughout the United States of America. Our contracts may include either single or multiple performance obligations and vary by airport and airline. We recognize revenue given the unit of measure (usually hours) provided in the given time period and the specific price for specific hours or attendance for specific event, time framed service as agreed upon in the contracts. General Security Services Security Services include providing armed and un-armed guards to private schools and places of worship, video surveillance and patrol. Contracts for security services generally include only a single performance obligation. We recognize revenue for security guard services given the unit of measure (hours) provided in the given time period. Revenue from video surveillance and patrol is recognized based upon a fixed monthly rate. Other Services Other services include revenues from (incidental) specialized security manning services, training services and ad hoc work performed on and off airports. Revenue is recognized over time as services are being performed, using the input of service delivered during the time period, according to the contractual agreed price. Authentication Technology Segment In the authentication technology segment, the Company offers authentication services on a cost per click basis, with a minimum yearly commitment which means the customer pays the Company according to the higher of (a) number of times the customer used the system in order to authenticate IDs or (b) according to the yearly minimum commitment. According to the agreement with the customers, each chargeable click has an agreed price and revenue is being recognized accordingly. Pricing and Reduction to Revenues The company determines standalone selling prices based upon the prices included in the client contracts, using expected costs plus margin, or other observable prices. The price as specified in our client contracts is considered the selling price as agreed with the customer. The Company’s variable consideration, if any, amounts are not material, and we do not expect significant changes to our estimates. The Company does not expect a significant reversal or when the uncertainty associated with the variable consideration is resolved. A customer might be offering a tier-based pricing scheme, or not, and in any event of usage above the committed amount, the pricing will remain unchanged. Contracts Client contracts generally include standard payment terms acceptable in each of the countries, states and territories in which the company operates, and are typically set to a three-year deal duration. The payment terms vary by the type and location of our clients and services offered. The minimum commitment is usually being paid in advance. Client payments are typically due in 30 days after invoicing, but may be a shorter or longer term depending on the contract. Client contracts are usually range from one to three years, with a convenience exit every twelve months period, and at the end of the contract there is a renewal option. The timing between satisfaction of the performance obligation, invoicing and payment is not significant. Deferred Revenues The Company records deferred revenues when cash payments are received or due in advance of our performance. Deferred revenues at December 31, 2021 and 2020 were $2,239 and $2,143, respectively shown as part of the accrued expenses and other current liabilities and $1,030 and $263 shown as other liabilities. Revenue recognized for the years ended December 31, 2021, 2020 and 2019 that was included in the deferred revenue at the beginning of each year was $2,049, $1,879 and $2,001, respectively. Our payment terms vary by the type and location of our customer and the products or services offered. The term between invoicing and when payment is due is not significant. Capitalized Contract Costs As part of obtaining contracts with certain customers in the authentication technology segment, the Company incurs upfront costs such as sales commissions. The Company capitalizes these costs which are subsequently amortized on a straight-line basis over the estimated life of the relationship with the customer. The Company applies the practical expedient that allows it to determine this estimate for a portfolio of contracts that have similar characteristics in terms of type of service, contract term and pricing. This estimate is reviewed by management at the end of each reporting period as additional information becomes available. |
Cost of Revenue | Cost of Revenue Cost of revenue represents primarily payroll and employee related costs associated with employees who provide services under the terms of the Company’s contractual arrangements, insurance and depreciation and amortization. |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred and consist primarily of payroll and related costs, professional services, consulting services and non-capitalized cost associated with the development of technologies. |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred. Advertising costs during the years ended December 31, 2021, 2020 and 2019 are $2,150, $735 and $828, respectively. |
Value Added Tax | Value Added Tax Certain of the Company’s operations are subject to Value Added Tax (“VAT”) applied on the services sold in those respective countries. The Company is required to remit the VAT collected to the tax authorities, but may deduct the VAT paid on certain eligible purchases. |
Income Taxes | Income Taxes The Company accounts for income taxes using the liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities resulting Uncertain income tax positions are determined based upon the likelihood of the positions being sustained upon examination by taxing authorities. The benefit of a tax position is recognized in the consolidated financial statements in the period during which management believes it is more likely than not that the position will not be sustained. Income tax positions taken are not offset or aggregated with other positions. Income tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of income tax benefit that is more than 50 percent likely of being realized if challenged by the applicable taxing authority. The portion of the benefits associated with income tax positions taken that exceeds the amount measured is reflected as income taxes payable. |
Income (Loss) Per Share | Income (Loss) Per Share Basic income (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted income (loss) per share is determined in the same manner as basic income (loss) per share, except that the number of shares is increased to include potentially dilutive securities using the treasury stock method. The Company had net income for the years ended December 31, 2021 and 2020. For the year ended December 31, 2021 the net income of the Company was adjusted by $10,102 deemed dividends following the conversion of preferred shares A and A-1 in AU10TIX Technologies B.V. to new Series A. Potentially dilutive securities were included in the computation of diluted income per share as the conversion rate of the convertible note payable to related party was lower than the weighted average computed price of the Company’s stock for the year 2021 and 2020. The Company had a net loss for the year ended December 31, 2019. For periods of net loss, diluted loss per share is calculated similarly to basic loss per share because the impact of all dilutive potential common share is anti-dilutive due to the net loss in 2019. Potentially dilutive securities were excluded from the computation of diluted loss per share as the conversion rate of the convertible note payable to related party was higher than the market price of the Company’s common stock as of December 31, 2019, and the effect of including them is anti-dilutive. The number of shares of common stock attributable to potentially dilutive securities for the years ended December 31, 2021, 2020 and 2019 were 2,978,843, 3,000,000 and 5,000,000 shares. Those shares were issuable upon conversion of convertible notes payable to related party at price of $0.40. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The fair values of cash and cash equivalents, restricted cash, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses and other current liabilities, income taxes payable, VAT payable, notes payable-banks, long-term loan payable and loan payable to related party approximate their carrying values due to the short-term nature of the instruments. The carrying values of the convertible notes payable to a related party and other liabilities are not readily determinable because: (a) these instruments are not traded and, therefore, no quoted market prices exist upon which to base an estimate |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments which are subject to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash and accounts receivable. The Company maintains cash and cash equivalents and restricted cash in accounts with financial institutions in the United States of America, Europe, Japan and Israel. As of December 31, 2021, accounts at financial institutions located in the United States of America are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250 per institution. As of December 31, 2021, cash, cash equivalents and restricted cash of $17,522 is being held in the United States of America, of which $17,063 is uninsured. Bank accounts located in Europe, Japan and Israel, totaling $85,930 as of December 31, 2021, are uninsured. The Company renders services to a limited number of airlines and airports through service contracts and provides credit without collateral. Some of these airlines and airports may have difficulties in meeting their financial obligations, which can have a material adverse effect on the Company’s consolidated financial position, results of operations and cash flows. To mitigate this risk, the Company regularly reviews the creditworthiness of its customers through its credit evaluation process. Revenue from three customers represented 64% of total revenue during the year ended December 31, 2021, of which customer A accounted for 39%, customer B accounted for 14% of total revenue and customer C accounted for 11% of total revenue. Accounts receivable from these three customers represented 39% of total accounts receivable as of December 31, 2021. Revenue from two customers represented 70% of total revenue during the year ended December 31, 2020, of which customer A accounted for 48% and customer B accounted for 22% of total revenue. Accounts receivable from these two customers represented 47% of total accounts receivable as of December 31, 2020. Revenue from two customers represented 69% of total revenue during the year ended December 31, 2019, of which customer A accounted for 41% and customer B accounted for 28% of total revenue. Accounts receivable from these two customers represented 57% of total accounts receivable as of December 31, 2019. Customers A and B mentioned above, have been principle customers in the last three years. |
Risks and Uncertainties | Risks and Uncertainties The Company is currently engaged in direct operations in numerous countries and is therefore subject to risks associated with international operations (including economic and/or political instability and trade restrictions). Such risks can cause the Company to have significant difficulties in connection with the sale or provision of its services in international markets and have a material impact on the Company’s consolidated financial position, results of operations and cash flows. The Company is subject to changes in interest rates based on Central Banks Federal Reserve actions and general market conditions. The Company does not utilize derivative instruments to manage its exposure to interest rate risk. Furthermore, as a result of its international operations, the Company is subject to market risks associated with foreign currency exchange rate fluctuations. The Company does not utilize derivative instruments to manage its exposure to such market risk except in one of its subsidiaries. As such, significant foreign currency exchange rate fluctuations can have a material impact on the Company’s consolidated financial position, results of operations and cash flows. |
Reclassification | Reclassification Certain amounts have been reclassified in prior years balance sheets and statements of cash flows to conform with current period presentation. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Accounting Standards Update 2021-10 In November 2021, the FASB issued an update for Government Assistance (Topic 832); Disclosures by Business Entities about Government Assistance. The amendment requires annual disclosures about transactions with a government that are accounted for as information about the nature of the transactions and the related accounting policy used, the line items on the balance sheet and income statement that are affected by the transactions and the significant terms and conditions of the transactions. The amendment is affective for financial statements issued for annual periods beginning after December 15, 2021. The Company has early adopted ASU 2021-10 and has provided the disclosures on Government Assistance in Note 14. Accounting Standards Update 2021-08 In October 2021, the FASB issued an update for Business Combinations (Topic 805): Accounting for Contract Assets and Contract liabilities from Contracts with customers. This ASU requires entities to apply Topic 606, Revenue from Contracts with Customers to recognize and measure contract asset and contract liabilities in a business combination. The amendment is effective for public business entities for fiscal years beginning after December 15, 2022, including interim periods within that fiscal year. The adoption of this standard is not expected to have a material effect on the Company’s operating results or financial condition. Accounting Standards Update 2020-06 In August 2020, the FASB issued an update for Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Own Equity (Subtopic 815-40): Accounting for Convertible instruments and Contracts in an Entity’s Own Equity. This ASU simplifies accounting for convertible instruments by removing major separation models required under current U.S.GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument and more convertible preferred stock as a single equity instruments with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The ASU also simplifies the diluted earnings per share (EPS) calculation in certain areas. The amendment is effective for public business entity for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The adoption of this standard is not expected to have a material effect on the Company’s operating results or financial condition. |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Schedule of Reconciliation of Cash and Restricted Cash | December 31, 2021 2020 Cash and cash equivalents $ 88,753 $ 51,602 Restricted cash 14,699 9,472 Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 103,452 $ 61,074 |
Schedule of Property and Equipment Estimated Useful Lives | Years Equipment and facilities 3-7 Internal- use software 4-7 Vehicles 3-7 |
Schedule of Revenues Segments | Year ended December 31, 2021 2020 2019 Airport Security and Other Aviation Services $ 253,687 $ 222,654 $ 309,548 Authentication Technology 71,247 25,765 23,759 Total revenue $ 324,934 $ 248,419 $ 333,307 |
Schedule of Disaggregated by Geography and Percentage of Revenues | Year ended December 31, 2021 2020 2019 Germany $ 126,367 39 % $ 119,500 48 % $ 137,207 41 % The Netherlands 52,165 16 % 58,446 24 % 97,700 29 % United States 94,743 29 % 45,305 18 % 73,719 22 % Spain 30,946 10 % 7,465 3 % 3,138 1 % Other countries 20,713 6 % 17,703 7 % 21,543 7 % Total revenue $ 324,934 100 % $ 248,419 100 % $ 333,307 100 % |
BUSINESS COMBINATION (Tables)
BUSINESS COMBINATION (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Quality Detection Dogs Sweden AB [Member] | |
Schedule of allocation of purchase price as of purchase date | SEK U.S. Current assets 140 17 Goodwill 1,178 146 Total identifiable assets acquired 1,318 163 Current liabilities 68 13 Total liabilities assumed 68 13 1,250 150 |
PREPAID EXPENSES AND OTHER CU_2
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Prepaid Expense, Current [Abstract] | |
Schedule of Prepaid expenses and other current assets | December 31, 2021 2020 Receivable from the Dutch tax authorities (1) $ 9,091 $ 12,285 Receivable from the German authorities – COVID-19 (2) 527 1,887 Dutch Governmental support – COVID-19 (3) 2,614 1,068 Other 3,789 3,669 Total prepaid expenses and other current assets $ 16,021 $ 18,909 (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. 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 support following the COVID-19 crisis. |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property And Equipment | December 31, 2021 2020 Office, equipment and facilities $ 9,222 $ 10,796 Internal-use software 1,490 1,449 Vehicles 1,617 1,958 Leasehold improvements 2,893 2,972 15,222 17,175 Less: accumulated depreciation and amortization 9,512 11,650 Total property and equipment, net $ 5,710 $ 5,525 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Lessee Disclosure [Abstract] | |
Schedule of Components of Lease Cost | Year ended December 31, 2021 2020 2019 Operating lease cost $ 4,422 $ 3,914 $ 3,421 Short-term lease cost 1,542 1,580 994 Total lease cost $ 5,964 $ 5,494 $ 4,415 Other information: Cash paid for amounts included in the measurement of Lease liabilities: Operating cash flows from operating leases $ 4,465 $ 3,962 Right-of-use assets obtained in exchange for new operating lease liabilities $ 3,164 $ 4,941 Weighted-average remaining lease term - operating leases 4.0 years 4.5 years Weighted-average discount rate - operating leases 5.12 % 4.8 % |
Schedule of Supplemental Cash Flow Information Related to Leases | December 31, 2021 2020 Operating lease ROU assets $ 10,938 $ 12,938 Other current liabilities $ 3,317 $ 3,531 Operating lease liabilities 8,298 9,333 Total operating lease liabilities $ 11,615 $ 12,864 |
Schedule of Future Minimum Lease Payment | Year ending December 31, 2022 3,753 2023 3,365 2024 2,802 2025 1,239 2026 862 Thereafter 941 Total future minimum lease payments 12,962 Less: imputed interest 1,347 Total $ 11,615 |
GOODWILL (Tables)
GOODWILL (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | 2021 2020 Balance as of the beginning of the year: Goodwill $ 2,361 $ 2,182 Accumulated impairment losses (1,615 ) (1,501 ) 746 681 Goodwill acquired during the year 146 - Impairment losses (139 ) - Exchange rate effect (63 ) 65 690 746 Balance as of the end of the year: Goodwill 2,346 2,361 Accumulated impairment losses (1,656 ) (1,615 ) $ 690 $ 746 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities are as follows: December 31, 2021 2020 Accrued payroll and related costs $ 25,050 $ 18,938 Accrued vacation 7,152 5,582 Labor union contribution 925 1,440 Deferred revenue 2,239 2,143 Payroll support program funding - 1,019 Other 4,468 3,198 Total accrued expenses and other current liabilities $ 39,834 $ 32,320 |
OTHER LIABILITIES (Tables)
OTHER LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Other Liabilities [Abstract] | |
Other Liabilities [Table Text Block] | December 31, 2021 2020 Severance pay liability $ 1,631 $ 1,556 Deferred revenue 1,030 263 Deferred VAT (1) 14,703 10,319 Deferred wage tax and social security (1) 22,534 13,100 Other (2) 969 446 Total other liabilities $ 40,867 $ 25,684 |
REDEEMABLE NON-CONTROLLING IN_2
REDEEMABLE NON-CONTROLLING INTERESTS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Noncontrolling Interest [Abstract] | |
Schedule of Redeemable Non-controlling Interests | Year Ended December 31, 2021 2020 Balance as of the beginning of the year $ 75,322 $ 74,300 Net Income 6,200 925 Other Comprehensive Income - Translation adjustment (211 ) 97 Conversion of AU10TIX shares A-1 into new series A 9,057 - Stock-based compensation 110 - Balance as of the end of the year $ 90,478 $ 75,322 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Au10tix Limited [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Stock Option Activity | Number of options Weighted average exercise price Weighted average remaining contractual term Options outstanding as of December 31, 2020 200,500 $ 0.01 Options granted - - Options exercised - - Forfeited 625 - Options outstanding , end of the year 199,875 $ 0.01 5.5 years Options exercisable, as of December 31, 2021 199,875 $ 0.01 5.5 years |
AU10TIX Technologies B.V [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Stock Option Activity | Number of options Weighted average exercise price Weighted average remaining contractual term Options outstanding as of December 31, 2020 - $ - Options granted 30,000 26.46 Options exercised - - Forfeited - - Options outstanding , end of the year 30,000 $ 26.46 5.2 years Options exercisable, as of December 31, 2021 22,500 $ 26.46 5.2 years |
OTHER EXPENSES, NET (Tables)
OTHER EXPENSES, NET (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Other Income and Expenses [Abstract] | |
Schedule of Other Expenses | Year ended December 31, 2021 2020 2019 Interest expense to related parties (see Note 11) $ (83 ) $ (171 ) $ (1,218 ) Interest expense and other bank charges (801 ) (901 ) (1,479 ) Interest income 24 178 151 Revaluation and related costs reimbursed to related party - - (8,139 ) Foreign currency gain (loss) 60 (254 ) 148 Gain from sale of Mesh shares (see Note 5) _ 186 - - Other income (expense) 77 (140 ) 19 Total other income (expense), net $ (537 ) $ (1,288 ) $ (10,518 ) |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of components of income (loss) before income tax benefit (expense) | Year Ended December 31, 2021 2020 2019 The Netherlands $ (3,070 ) $ 469 $ (11,508 ) Subsidiaries outside of the Netherlands 53,578 5,523 5,804 Income (loss) before income tax expenses $ 50,508 $ 5,992 $ (5,704 ) |
Schedule of Deferred Tax Assets and Liabilities | December 31, 2021 2020 Deferred tax assets: Operating loss carryforwards $ 10,547 $ 16,694 Capital loss carryforwards 165 159 Allowance for doubtful accounts 150 110 Tax credit carryforwards 560 560 Accrued expenses and other 536 774 Research and development expenses, net 1,183 432 Total deferred tax assets 13,141 18,729 Deferred tax liabilities: Depreciation of property and equipment (108 ) (115 ) 13,033 18,614 Valuation allowance (11,630 ) (17,445 ) Deferred tax assets, net $ 1,403 $ 1,169 |
Schedule of Effective Income Tax Rate | Year Ended December 31, 2021 2020 2019 Effective loss (income) tax benefit from continuing operations at statutory rate $ (12,627 ) $ (1,498 ) $ 1,426 Rate differential 2,915 610 1,024 Non-deductible expenses (1,643 ) (857 ) (584 ) Adjustments to prior year tax losses (2,599 ) (3,604 ) (429 ) Changes in valuation allowance 5,815 3,601 (2,568 ) Other (1,081 ) 1,158 (418 ) Income tax expense from continuing operations $ (9,220 ) $ (590 ) $ (1,549 ) |
Schedule of Reconciliation of Unrecognized Tax Benefits | December 31, 2021 2020 Balance at beginning of year $ - $ - Additions based on tax positions taken in prior years 546 - Additions based on tax positions taken in the current year 142 - Reduction based on tax positions taken in prior years - - Balance at end of year $ 688 $ - |
SEGMENT AND GEOGRAPHICAL INFO_2
SEGMENT AND GEOGRAPHICAL INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Segment Reporting [Abstract] | |
Schedule of Operating Results by Segment | Corporate Airport Security Authentication Total Year ended December 31, 2021: Revenue $ - $ 253,687 $ 71,247 $ 324,934 Depreciation and amortization 75 1,106 880 2,061 Net income (loss) (1,666 ) 21,558 21,396 41,288 Goodwill - 690 - 690 Total assets 10,349 112,425 73,106 195,880 Year ended December 31, 2020: Revenue $ - $ 222,654 $ 25,765 $ 248,419 Depreciation and amortization 72 1,302 716 2,090 Net income (loss) (3,853 ) 6,056 3,199 5,402 Goodwill - 746 - 746 Total assets 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 Net income (loss) (11,740 ) (2,406 ) 6,893 (7,253 ) Goodwill - 681 - 681 Total assets 23,381 64,647 35,419 123,447 |
Schedule of Revenues by Geographic Area | Year Ended December 31, 2021 2020 2019 Germany $ 126,367 $ 119,500 $ 137,207 The Netherlands 52,165 58,446 97,700 United States 94,743 45,305 73,719 Spain 30,946 7,465 3,138 Other countries 20,713 17,703 21,543 Total revenue $ 324,934 $ 248,419 $ 333,307 |
Schedule of Property and Equipment, Net by Geographic Regions | December 31, 2021 2020 Germany $ 361 $ 449 The Netherlands 624 598 United States 422 305 Spain 118 159 Other countries 4,185 4,014 Total property and equipment, net $ 5,710 $ 5,525 |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021USD ($)Customer$ / sharesshares | Dec. 31, 2020USD ($)Customershares | Dec. 31, 2019USD ($)Customershares | |
Allowance for doubtful debts | $ 991 | $ 690 | |
Goodwill impairment | 139 | 0 | $ 0 |
Advertising costs | $ 2,150 | $ 735 | $ 828 |
Deemed dividends | shares | 10,102 | ||
Potentially dilutive securities | shares | 2,978,843 | 3,000,000 | 5,000,000 |
FDIC Insured amount | $ 250 | ||
Deferred revenues | 2,239 | $ 2,143 | |
Other liabilities | 1,030 | 263 | |
Revenue recognized | 2,049 | 1,879 | $ 2,001 |
Amortization expense of capitalized internal-use software costs | $ 374 | 147 | $ 0 |
Conversion price | $ / shares | $ 0.40 | ||
Israeli employees [Member] | |||
Total severance liabilities | $ 1,631 | 1,556 | |
Deposits to cover severance liabilities | $ 1,346 | $ 1,391 | |
Sales Revenue, Goods, Net [Member] | |||
Number of customers | Customer | 3 | 2 | 2 |
Sales Revenue, Goods, Net [Member] | Customer Concentration Risk [Member] | |||
Concentration risk, threshold percentage | 64.00% | 70.00% | 69.00% |
Sales Revenue, Goods, Net [Member] | Customer A [Member] | Customer Concentration Risk [Member] | |||
Concentration risk, percentage | 39.00% | 48.00% | 41.00% |
Sales Revenue, Goods, Net [Member] | Customer B [Member] | Customer Concentration Risk [Member] | |||
Concentration risk, percentage | 14.00% | 22.00% | 28.00% |
Sales Revenue, Goods, Net [Member] | Customer C [Member] | Customer Concentration Risk [Member] | |||
Concentration risk, percentage | 11.00% | ||
Accounts Receivable [Member] | |||
Number of customers | Customer | 3 | 2 | 2 |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | |||
Concentration risk, threshold percentage | 39.00% | 47.00% | 57.00% |
Europe Japan And Israel [Member] | |||
Total cash balance not insured by the FDIC | $ 85,930 | ||
United States [Member] | |||
Cash and cash equivalents and restricted cash | 17,522 | ||
Total cash balance not insured by the FDIC | $ 17,063 | ||
Minimum [Member] | |||
Ownership interest | 20.00% | ||
Maximum [Member] | |||
Ownership interest | 50.00% | ||
Letter of Credit [Member] | |||
Restricted cash | $ 3,350 | $ 3,991 | |
Cash Restricted For Payments To Local Tax Authorities [Member] | |||
Restricted cash | 10,599 | $ 5,481 | |
Derivative instruments [Member] | |||
Restricted cash | $ 750 |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES (Schedule of Reconciliation of Cash and Restricted Cash) (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Significant Accounting Policies Schedule Of Property And Equipment Estimated Useful Lives 111 Details Abstract | ||||
Cash and cash equivalents | $ 88,753 | $ 51,602 | ||
Restricted cash | 14,699 | 9,472 | ||
Total cash, cash equivalents and restricted cash shown in the statement of cash flows | $ 103,452 | $ 61,074 | $ 54,845 | $ 15,917 |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES (Schedule of Property and Equipment Estimated Useful Lives) (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Equipment and facilities [Member] | Minimum [Member] | |
Accounting Policies Line Items | |
Estimated useful life | 3 years |
Equipment and facilities [Member] | Maximum [Member] | |
Accounting Policies Line Items | |
Estimated useful life | 7 years |
Internal-use software [Member] | Minimum [Member] | |
Accounting Policies Line Items | |
Estimated useful life | 4 years |
Internal-use software [Member] | Maximum [Member] | |
Accounting Policies Line Items | |
Estimated useful life | 7 years |
Vehicles [Member] | Minimum [Member] | |
Accounting Policies Line Items | |
Estimated useful life | 3 years |
Vehicles [Member] | Maximum [Member] | |
Accounting Policies Line Items | |
Estimated useful life | 7 years |
SIGNIFICANT ACCOUNTING POLICI_7
SIGNIFICANT ACCOUNTING POLICIES (Schedule of Revenues Segments) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Accounting Policies Line Items | |||
Total revenues | $ 324,934 | $ 248,419 | $ 333,307 |
Airport Security and Other Aviation Services [Member] | |||
Accounting Policies Line Items | |||
Total revenues | 253,687 | 222,654 | 309,548 |
Authentication Technology [Member] | |||
Accounting Policies Line Items | |||
Total revenues | $ 71,247 | $ 25,765 | $ 23,759 |
SIGNIFICANT ACCOUNTING POLICI_8
SIGNIFICANT ACCOUNTING POLICIES (Schedule of Disaggregated by Geography and Percentage of Revenues) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Accounting Policies Line Items | |||
Total revenues | $ 324,934 | $ 248,419 | $ 333,307 |
Percentage of Revenues | 100.00% | 100.00% | 100.00% |
GERMANY | |||
Accounting Policies Line Items | |||
Total revenues | $ 126,367 | $ 119,500 | $ 137,207 |
Percentage of Revenues | 39.00% | 48.00% | 41.00% |
The Netherlands [Member] | |||
Accounting Policies Line Items | |||
Total revenues | $ 52,165 | $ 58,446 | $ 97,700 |
Percentage of Revenues | 16.00% | 24.00% | 29.00% |
United States [Member] | |||
Accounting Policies Line Items | |||
Total revenues | $ 94,743 | $ 45,305 | $ 73,719 |
Percentage of Revenues | 29.00% | 18.00% | 22.00% |
Spain [Member] | |||
Accounting Policies Line Items | |||
Total revenues | $ 30,946 | $ 7,465 | $ 3,138 |
Percentage of Revenues | 10.00% | 3.00% | 1.00% |
Other countries [Member] | |||
Accounting Policies Line Items | |||
Total revenues | $ 20,713 | $ 17,703 | $ 21,543 |
Percentage of Revenues | 6.00% | 7.00% | 7.00% |
BUSINESS COMBINATION (Narrative
BUSINESS COMBINATION (Narrative) (Details) - Quality Detection Dogs Sweden AB [Member] kr in Thousands, $ in Thousands | 1 Months Ended | ||||
Feb. 28, 2021SEK (kr) | Feb. 28, 2021USD ($) | Dec. 31, 2021SEK (kr) | Dec. 31, 2021USD ($) | Feb. 28, 2021USD ($) | |
Percentage of acquistion of outstanding shares | 51.00% | 51.00% | |||
Consideration | kr 1,250 | $ 150 | |||
Goodwill | kr 1,178 | kr 1,178 | $ 139 | $ 146 |
BUSINESS COMBINATION (Schedule
BUSINESS COMBINATION (Schedule of Purchase Price Allocation) (Details) - Quality Detection Dogs Sweden AB [Member] kr in Thousands, $ in Thousands | Dec. 31, 2021SEK (kr) | Dec. 31, 2021USD ($) | Feb. 28, 2021SEK (kr) | Feb. 28, 2021USD ($) |
Current assets | kr 140 | $ 17 | ||
Goodwill | kr 1,178 | $ 139 | 1,178 | 146 |
Total identifiable assets acquired | 1,318 | 163 | ||
Current liabilities | 68 | 13 | ||
Total liabilities assumed | 68 | 13 | ||
Total identifiable assets acquired and liabilities assumed | kr 1,250 | $ 150 |
PREPAID EXPENSES AND OTHER CU_3
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Schedule of Prepaid expenses and other current assets consist) (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | |
Prepaid Expense, Current [Abstract] | |||
Receivable from the Dutch tax authorities | [1] | $ 9,091 | $ 12,285 |
Receivable from the German authorities – COVID-19 | [2] | 527 | 1,887 |
Dutch Governmental support – COVID-19 | [3] | 2,614 | 1,068 |
Other | 3,789 | 3,669 | |
Total prepaid expenses and other current assets | $ 16,021 | $ 18,909 | |
[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 support following the COVID 19 crisis. (see note 1). |
INVESTMENTS (Narrative) (Detail
INVESTMENTS (Narrative) (Details) ₩ in Thousands, $ in Thousands | 12 Months Ended | ||||||||||
Dec. 31, 2021KRW (₩)shares | Dec. 31, 2021USD ($)shares | Dec. 31, 2020KRW (₩) | Dec. 31, 2020USD ($) | Dec. 31, 2019KRW (₩) | Dec. 31, 2019USD ($) | Dec. 31, 2021USD ($) | Aug. 31, 2020USD ($) | Mar. 31, 2020USD ($) | Jan. 31, 2019USD ($) | Apr. 30, 2018 | |
Investments in and Advances to Affiliates [Line Items] | |||||||||||
Investments | $ 1,482 | $ 525 | |||||||||
Realized Investment Gain (Loss) | $ 186 | 0 | $ 0 | ||||||||
Freezone I-SEC Korea Inc. [Member] | |||||||||||
Investments in and Advances to Affiliates [Line Items] | |||||||||||
Ownership interest | 50.00% | ||||||||||
Investments | ₩ 322,224 | 271 | |||||||||
Realized Investment Gain (Loss) | ₩ (10,491) | $ (8) | ₩ (17,742) | (15) | ₩ 105,092 | 91 | |||||
Mesh Technologies, Inc. [Member] | |||||||||||
Investments in and Advances to Affiliates [Line Items] | |||||||||||
Ownership interest description | less than 1% | less than 1% | |||||||||
Investments | $ 50 | ||||||||||
Percentage of investment sold | 25.00% | 25.00% | |||||||||
Investment sold | $ 200 | ||||||||||
Realized Investment Gain (Loss) | 186 | ||||||||||
Arrow [Member] | |||||||||||
Investments in and Advances to Affiliates [Line Items] | |||||||||||
Price paid for shares | 22 | ||||||||||
Price paid for debt | $ 1,728 | ||||||||||
Ownership interest | 23.30% | ||||||||||
Investments | $ 1,750 | 1,750 | |||||||||
Option to purchase investment | 1,750 | ||||||||||
Receivables stated value | 4,146 | ||||||||||
Allowance for credit losses | $ 2,418 | ||||||||||
Estimated loss on investment | $ 975 | 775 | |||||||||
GreenFox Logistics, LLC. [Member] | |||||||||||
Investments in and Advances to Affiliates [Line Items] | |||||||||||
Investments | $ 100 | ||||||||||
SardineAI Corp [Member] | |||||||||||
Investments in and Advances to Affiliates [Line Items] | |||||||||||
Investments | $ 50 | ||||||||||
Silver Circle One [Member] | |||||||||||
Investments in and Advances to Affiliates [Line Items] | |||||||||||
Investments | 18 | ||||||||||
Committed to invest | 100 | ||||||||||
Justt Fintech Ltd (previously Acrocharge Ltd) [Member] | |||||||||||
Investments in and Advances to Affiliates [Line Items] | |||||||||||
Ownership interest description | less than 1% | less than 1% | |||||||||
Investments | 50 | ||||||||||
Artemis Therapeutics, Inc. [Member] | |||||||||||
Investments in and Advances to Affiliates [Line Items] | |||||||||||
Common stock owned | shares | 125,916 | 125,916 | |||||||||
Carrying value | 0 | 0 | |||||||||
Market value | $ 79 | $ 120 | |||||||||
Ownership interest | 2.40% | 2.40% |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Line Items] | |||
Total property and equipment, gross | $ 15,222 | $ 17,175 | |
Less: accumulated depreciation and amortization | (9,512) | (11,650) | |
Total property and equipment, net | 5,710 | 5,525 | |
Depreciation expense | 2,061 | 2,090 | $ 1,688 |
Equipment And Facilities Member | |||
Property, Plant and Equipment [Line Items] | |||
Total property and equipment, gross | 9,222 | 10,796 | |
Internal-use software [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Total property and equipment, gross | 1,490 | 1,449 | |
Vehicles [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Total property and equipment, gross | 1,617 | 1,958 | |
Leasehold Improvements [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Total property and equipment, gross | $ 2,893 | $ 2,972 |
LEASE (Schedule of Components o
LEASE (Schedule of Components of Lease Expense) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Lease Cost | |||
Operating lease cost | $ 4,422 | $ 3,914 | $ 3,421 |
Short-term lease cost | 1,542 | 1,580 | 994 |
Total lease cost | 5,964 | 5,494 | $ 4,415 |
Cash paid for amounts included in the measurement of Lease liabilities: | |||
Operating cash flows from operating leases | 4,465 | 3,962 | |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 3,164 | $ 4,941 | |
Weighted-average remaining lease term - operating leases | 4 years | 4 years 6 months | |
Weighted-average discount rate - operating leases | 5.12% | 4.80% |
LEASES (Schedule of Supplementa
LEASES (Schedule of Supplemental Balance Sheet Information Related to Leases) (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Lessee Disclosure [Abstract] | ||
Operating lease ROU assets | $ 10,938 | $ 12,938 |
Other current liabilities | 3,317 | 3,531 |
Operating lease liabilities | 8,298 | 9,333 |
Total operating lease liabilities | $ 11,615 | $ 12,864 |
LEASES (Schedule of Future Mini
LEASES (Schedule of Future Minimum Lease Payments) (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Operating leases | ||
2022 | $ 3,753 | |
2023 | 3,365 | |
2024 | 2,802 | |
2025 | 1,239 | |
2026 | 862 | |
Thereafter | 941 | |
Total future minimum lease payments | 12,962 | |
Less: imputed interest | 1,347 | |
Total | $ 11,615 | $ 12,864 |
GOODWILL (Schedule of Goodwill)
GOODWILL (Schedule of Goodwill) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Balance As Of Beginning Of Year Abstract | |||
Goodwill | $ 2,361 | $ 2,182 | |
Accumulated impairment losses | (1,615) | (1,501) | |
Goodwill, net | 746 | 681 | |
Goodwil acquired during the year | 146 | 0 | |
Impairment losses | (139) | 0 | $ 0 |
Exchange rate effect | (63) | 65 | |
Total | 690 | 746 | |
Balance as of the end of the year: | |||
Goodwill | 2,346 | 2,361 | 2,182 |
Accumulated impairment losses | (1,656) | (1,615) | (1,501) |
Goodwill, net | $ 690 | $ 746 | $ 681 |
GOODWILL (Narrative) (Details)
GOODWILL (Narrative) (Details) € in Thousands, $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2021EUR (€) | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Feb. 28, 2021EUR (€) | Feb. 28, 2021USD ($) | |
Goodwill | $ 690 | $ 746 | $ 681 | |||
Goodwill impairment loss | 139 | $ 0 | $ 0 | |||
Quality Detection Dogs Sweden Ab [Member] | ||||||
Ownership interest | 51.00% | 51.00% | ||||
Goodwill | € 122 | $ 146 | ||||
Goodwill impairment loss | € 122 | $ 139 |
NOTES PAYABLE - BANKS (Narrativ
NOTES PAYABLE - BANKS (Narrative) (Details) € in Thousands, kr in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||
Mar. 31, 2021EUR (€) | Dec. 31, 2021EUR (€) | Dec. 31, 2020EUR (€) | Dec. 31, 2021SEK (kr) | Dec. 31, 2021USD ($) | Oct. 31, 2021USD ($) | Dec. 31, 2020SEK (kr) | Dec. 31, 2020USD ($) | Dec. 31, 2019 | |
Debt Instrument [Line Items] | |||||||||
Outstanding guarantees | € 1,022 | $ 1,161 | |||||||
Replacement of amount of letter of credit | $ 500 | ||||||||
Commercial bank [Member] | Bank Guarantee Facility [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest rate | 2.50% | ||||||||
Unused line fee | 0.75% | ||||||||
United States [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Line of credit, maximum borrowing amount | $ 10,000 | ||||||||
Weighted average interest rate | 4.42% | 4.42% | 4.42% | 5.44% | |||||
Europe [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Weighted average interest rate | 4.80% | 4.40% | 4.80% | 4.80% | 4.40% | 4.40% | 3.50% | ||
Europe [Member] | Commercial bank [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Bank guarantee Amount | € 2,000 | $ 2,457 | |||||||
Line of credit not exceed | 70.00% | ||||||||
Line of Credit [Member] | United States [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, interest rate basis points above reference rate | 3.00% | ||||||||
Line of Credit [Member] | Accounts Receivable [Member] | United States [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Percentage of collateral | 85.00% | ||||||||
Line Of Credit Two [Member] | Unbilled Accounts Receivable [Member] | United States [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Percentage of collateral | 80.00% | 80.00% | 80.00% | ||||||
Line Of Credit Three [Member] | Unbilled Accounts Receivable [Member] | United States [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Pledged assets used to secure credit facility | $ 500 | ||||||||
Percentage of collateral | 95.00% | ||||||||
Line of Credit Europe [Member] | Europe [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Line of credit, maximum borrowing amount | € | € 12,000 | ||||||||
Debt instrument, interest rate basis points above reference rate | 4.80% | ||||||||
Unused line fee | 0.75% | ||||||||
Line of Credit Europe [Member] | Sweden [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, effective interest rate | 2.80% | 2.80% | 2.80% | ||||||
Line of Credit Ten [Member] | Europe [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Credit facility, amount outstanding | € 6,432 | 7,902 | |||||||
Line of Credit Ten [Member] | Sweden [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Credit facility, amount outstanding | kr 1,800 | $ 199 | kr 1,648 | 202 | |||||
Guarantees facility [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Outstanding guarantees | € 1,022 | € 973 | 1,161 | $ 1,195 | |||||
Guarantees facility [Member] | Europe [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Line of credit, maximum borrowing amount | € 2,500 | 2,841 | |||||||
Line of Credit Europe [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Line of credit, maximum borrowing amount | kr 4,000 | $ 442 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Payables and Accruals [Abstract] | ||
Accrued payroll and related costs | $ 25,050 | $ 18,938 |
Accrued vacation | 7,152 | 5,582 |
Labor union contribution | 925 | 1,440 |
Deferred revenue | 2,239 | 2,143 |
Payroll support program funding | 0 | 1,019 |
Other | 4,468 | 3,198 |
Total accrued expenses and other current liabilities | $ 39,834 | $ 32,320 |
DEBT TO RELATED PARTIES (Narrat
DEBT TO RELATED PARTIES (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2021 | Oct. 31, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | May 31, 2019 | Jan. 31, 2019 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2020 | |
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Convertible, Conversion Price | $ 0.40 | $ 0.40 | ||||||||
Debt conversion, amount converted | $ 800 | |||||||||
Debt conversion, shares issued | 2,000,000 | 3,480,968 | ||||||||
Debt instrument, principal | $ 1,192 | $ 1,192 | $ 1,200 | |||||||
Interest expense | $ 83 | $ 171 | $ 1,218 | |||||||
Convertible Note Payable [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Convertible, Conversion Price | $ 0.75 | |||||||||
Debt conversion, shares issued | 3,852,364 | |||||||||
Weighted average interest rate | 7.10% | 7.10% | 7.60% | 8.30% | ||||||
Debt Conversion Option To Convert | $ 2,889 | |||||||||
Convertible Note Payable [Member] | Majority Shareholder [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Percent of interest in subsidiary securing arrangement | 26.00% | 26.00% | ||||||||
Debt Instrument, Convertible, Conversion Price | $ 1.50 | $ 0.75 | ||||||||
Loan amount | $ 2,000 | $ 3,000 | ||||||||
Interest rate | 2.50% | |||||||||
One time compensation approved | $ 8,139 | |||||||||
Convertible Note Payable [Member] | Majority Shareholder [Member] | Option to convert [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Conversion Option To Convert | $ 2,000 | |||||||||
Convertible Note Payable [Member] | Majority Shareholder [Member] | All other conversion rights for balance of debt [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Convertible, Conversion Price | $ 0.40 | |||||||||
Debt Conversion Option To Convert | $ 2,611 | |||||||||
Convertible Note Payable [Member] | Majority Shareholder [Member] | United States of America, Dollars | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Basis Spread On Variable Rate | 7.00% | |||||||||
Convertible Note Payable [Member] | Majority Shareholder [Member] | Euro Member Countries, Euro [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Basis Spread On Variable Rate | 3.00% | |||||||||
Convertible Note Payable [Member] | Maximum [Member] | Majority Shareholder [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Loan amount | $ 37,000 |
OTHER LIABILITIES (Narrative) (
OTHER LIABILITIES (Narrative) (Details) $ in Thousands, ¥ in Millions | 1 Months Ended | ||
Jul. 31, 2020JPY (¥) | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | |
Other Liabilities [Line Items] | |||
Long term loan balances | $ | $ 280 | $ 425 | |
Loan from financial institution | ¥ | ¥ 50 | ||
Term of loan | 5 years | ||
Minimum [Member] | |||
Other Liabilities [Line Items] | |||
Minimum interest rate on loan from financial institution | 0.21% | ||
Maximum [Member] | |||
Other Liabilities [Line Items] | |||
Maximum interest rate on loan from financial institution | 1.10% |
OTHER LIABILITIES (Schedule of
OTHER LIABILITIES (Schedule of Other Liabilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | |
Other Liabilities [Abstract] | |||
Severance pay liability | $ 1,631 | $ 1,556 | |
Deferred revenue | 1,030 | 263 | |
Deferred VAT | [1] | 14,703 | 10,319 |
Deferred wage tax and social security | [1] | 22,534 | 13,100 |
Other | [2] | 969 | 446 |
Total other liabilities | $ 40,867 | $ 25,684 | |
[1] | Deferred VAT and deferred wage tax relates to measurements taken by the Dutch government, on which they postponed all VAT payable for the years 2021 and 2020 and all wage tax and social security payable for the months March – December 2021 to be paid in 60 installments starting March 2023, except for VAT payments starting October 2022. | ||
[2] | Including a 50 million Yen loan with a financial institution as a financial support in connection of COVID-19. The loan was provided in July 2020 for a period of five years with a variable interest of 0.21% - 1.10%. The long term balances as of December 31, 2021 and 2020 are $280 and $425, respectively. |
REDEEMABLE NON-CONTROLLING IN_3
REDEEMABLE NON-CONTROLLING INTERESTS (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands | Nov. 07, 2019 | Jul. 03, 2019 | Jun. 28, 2021 | Dec. 31, 2021 | Dec. 31, 2020 |
Subscription Price Of Preferred Shares Represents Percentage Of Outstanding Share Capital | 24.00% | ||||
Holdings Percentage Of Outstanding Fully Diluted Share Capital | 68.69% | ||||
IPO, possible proceeds | $ 75,000 | ||||
Subscripition price, minimum percentage of initial subscription price | 150.00% | ||||
Conversion basis | 1:1 | ||||
Shares issuable upon the exercise of stock options | 500,000 | ||||
Percentage of shareholder holding right to purchase shares | 3.00% | ||||
Percentage of minimum value per new series A share | 150.00% | ||||
Conversion of AU10TIX shares A-1 into new series A | $ 9,057 | $ 0 | |||
Decrease in APIC | 10,102 | ||||
Decrease in non-controlling interests | $ 1,045 | ||||
Series A Preferred Stock [Member] | |||||
Percentage of shares right to purchase shares in case of sale by one of the shareholders, the seller has to offer to other shareholders | 50.00% | ||||
Percentage of shareholder holding exit rights | 60.00% | ||||
Aggregate percentage of holding share | 25.00% | ||||
Shareholders agreement continue to collectively hold percentage | 25.00% | ||||
AU10TIX Technologies Member | |||||
Holdings Percentage Of Outstanding Fully Diluted Share Capital | 3.00% | ||||
Subscripition price, minimum percentage of initial subscription price | 150.00% | ||||
Percentage of shareholder holding right to purchase shares | 3.00% | ||||
AU10TIX Technologies Member | Series A Preferred Stock [Member] | |||||
Number of stock issued | 3,000,000 | ||||
Value of preferred shares issued | $ 20,000 | $ 60,000 | |||
Subscription Price Of Preferred Shares Represents Percentage Of Outstanding Share Capital | 7.401% | ||||
Subscription Price Of Preferred Shares Represents Percentage Of Fullydiluted Share Captial | 7.143% | 23.077% | |||
Transaction costs | $ 4,540 | $ 1,513 | |||
Shares issued | 1,000,000 | ||||
Fair value of investment | $ 19,537 | ||||
Conversion basis | 1:1 | ||||
Share price | $ 26.4583 | ||||
AU10TIX Technologies Member | Series A-1 Preferred Stock [Member] | |||||
Fair value of investment | $ 461 | ||||
AU10TIX Technologies Member | Series B Ordinary Shares [Member] | |||||
Conversion basis | 1:1 | ||||
AU10TIX Technologies Member | Investor [Member] | Series A-1 Preferred Stock [Member] | |||||
Shares issued | 23,622 | ||||
TPG [Member] | |||||
Percentage of initial subscription price paid | 150.00% | ||||
TPG [Member] | Series A Preferred Stock [Member] | |||||
Subscription Price Of Preferred Shares Represents Percentage Of Fullydiluted Share Captial | 7.51% | ||||
TPG [Member] | Investor [Member] | Series A-1 Preferred Stock [Member] | |||||
Holdings Percentage Of Outstanding Fully Diluted Share Capital | 23.077% | ||||
Number of Preferred shares subscribed | 307,087 | ||||
Nominal value per share | $ 0.001 | ||||
Oak [Member] | |||||
Subscription Price Of Preferred Shares Represents Percentage Of Fullydiluted Share Captial | 12.87% | ||||
Oak [Member] | Series A Preferred Stock [Member] | |||||
Percentage of shares right to purchase shares in case of sale by one of the shareholders, the seller has to offer to other shareholders | 50.00% | ||||
Purchase of preferred stock | 755,906 | ||||
GF [Member] | Series A Preferred Stock [Member] | |||||
Subscription Price Of Preferred Shares Represents Percentage Of Fullydiluted Share Captial | 10.93% | ||||
Purchase of preferred stock | 1,511,811 |
REDEEMABLE NON-CONTROLLING IN_4
REDEEMABLE NON-CONTROLLING INTERESTS (Schedule of Redeemable Non-controlling Interests) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Noncontrolling Interest [Abstract] | ||
Balance as of the beginning of the year | $ 75,322 | $ 74,300 |
Net Income | 6,200 | 925 |
Other Comprehensive Income - Translation adjustment | (211) | 97 |
Conversion of AU10TIX shares A-1 into new series A | 9,057 | 0 |
Stock-based compensation | 110 | 0 |
Balance as of the end of the year | $ 90,478 | $ 75,322 |
GOVERNMENTAL SUPPORT (Narrative
GOVERNMENTAL SUPPORT (Narrative) (Details) € in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | ||||||
Mar. 31, 2022EUR (€) | Dec. 31, 2021EUR (€) | Dec. 31, 2021USD ($) | Dec. 31, 2020EUR (€) | Dec. 31, 2020USD ($) | Dec. 31, 2021USD ($) | Oct. 31, 2021USD ($) | Dec. 31, 2020USD ($) | |
The Netherlands [Member] | ||||||||
Payroll support amount | € 18,135 | $ 22,608 | € 17,619 | $ 21,645 | ||||
Accumulated debt to tax authorities | € 33,456 | 20,796 | $ 38,011 | $ 25,548 | ||||
United States [Member] | ||||||||
Line of credit, borrowing capacity | $ 10,000 | |||||||
Germany [Member] | ||||||||
Payroll support, percentage | 60.00% | 60.00% | ||||||
Debt to VAT | € 5,462 | $ 6,710 | ||||||
Subsequent Event [Member] | The Netherlands [Member] | ||||||||
Payroll support amount | € | € 4,556 | |||||||
American subsidiary [Member] | ||||||||
Payroll support amount | $ 15,918 | 13,680 | ||||||
Reduction of labor expenses | $ 16,925 | $ 12,672 |
STOCK-BASED COMPENSATION (Narra
STOCK-BASED COMPENSATION (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized compensation cost related to stock options granted | $ 116 | ||
Share-based compensation expense | $ 350 | $ 0 | $ 0 |
Common stock, shares authorized | 150,000,000 | 150,000,000 | |
Common stock, shares issued | 37,433,333 | 37,433,333 | |
Common stock, shares outstanding | 37,433,333 | 37,433,333 | |
Au10tix Limited [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common stock reserved for issuance | 500,000 | ||
Common stock, shares authorized | 18,000,000 | ||
Common stock, shares issued | 12,500,000 | ||
Common stock, shares outstanding | 12,500,000 | ||
Vesting period of options | 4 years |
STOCK-BASED COMPENSATION (Sched
STOCK-BASED COMPENSATION (Schedule of Stock Option Activity for Subsidiary) (Details) | 12 Months Ended |
Dec. 31, 2021$ / sharesshares | |
Au10tix Limited [Member] | |
Number of options | |
Options outstanding, beginning balance | shares | 200,500 |
Options granted | shares | 0 |
Options exercised | shares | 0 |
Forfeited | shares | 625 |
Options outstanding, ending balance | shares | 199,875 |
Options exercisable at end of period | shares | 199,875 |
Stock Option, Weighted Average Exercise Price | |
Options outstanding, beginning balance | $ / shares | $ 0.01 |
Options granted | $ / shares | 0 |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price | $ / shares | 0 |
Forfeited | $ / shares | 0 |
Options outstanding, ending balance | $ / shares | 0.01 |
Options exercisable at end of period | $ / shares | $ 0.01 |
Stock Option, Additional Disclosures | |
Weighted average remaining contractual term | 5 years 6 months |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term | 5 years 6 months |
AU10TIX Technologies B.V [Member] | |
Number of options | |
Options outstanding, beginning balance | shares | 0 |
Options granted | shares | 30,000 |
Options exercised | shares | 0 |
Forfeited | shares | 0 |
Options outstanding, ending balance | shares | 30,000 |
Options exercisable at end of period | shares | 22,500 |
Stock Option, Weighted Average Exercise Price | |
Options outstanding, beginning balance | $ / shares | $ 0 |
Options granted | $ / shares | 26.46 |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price | $ / shares | 0 |
Forfeited | $ / shares | 0 |
Options outstanding, ending balance | $ / shares | 26.46 |
Options exercisable at end of period | $ / shares | $ 26.46 |
Stock Option, Additional Disclosures | |
Weighted average remaining contractual term | 5 years 2 months 12 days |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term | 5 years 2 months 12 days |
OTHER EXPENSES, NET (Details)
OTHER EXPENSES, NET (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Other Income and Expenses [Abstract] | |||
Interest expense to related parties | $ (83) | $ (171) | $ (1,218) |
Interest expense and other bank charges | (801) | (901) | (1,479) |
Interest income | 24 | 178 | 151 |
Revaluation and related costs reimbursed to related party | 0 | 0 | (8,139) |
Foreign currency gain (loss) | 60 | (254) | 148 |
Gain from sale of Mesh shares | 186 | 0 | 0 |
Other income (expense) | 77 | (140) | 19 |
Total other income (expense), net | $ (537) | $ (1,288) | $ (10,518) |
INCOME TAXES (Components of inc
INCOME TAXES (Components of income (loss) before income tax benefit (expense) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Taxes [Line Items] | |||
Income (loss) before income tax expenses | $ 50,508 | $ 5,992 | $ (5,704) |
Netherlands [Member] | |||
Income Taxes [Line Items] | |||
Income (loss) before income tax expenses | (3,070) | 469 | (11,508) |
Subsidiaries outside of the Netherlands [Member] | |||
Income Taxes [Line Items] | |||
Income (loss) before income tax expenses | $ 53,578 | $ 5,523 | $ 5,804 |
INCOME TAXES (Deferred Tax Asse
INCOME TAXES (Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred tax assets: | ||
Operating loss carryforwards | $ 10,547 | $ 16,694 |
Capital loss carryforwards | 165 | 159 |
Allowance for doubtful accounts | 150 | 110 |
Tax credit carryforwards | 560 | 560 |
Accrued expenses and other | 536 | 774 |
Research and development expenses | 1,183 | 432 |
Total deferred tax assets | 13,141 | 18,729 |
Deferred tax liabilities: | ||
Depreciation of property and equipment | (108) | (115) |
Deferred tax assets net of deferred tax liabilities before valuation allowance | 13,033 | 18,614 |
Valuation allowance | (11,630) | (17,445) |
Deferred tax assets, net | $ 1,403 | $ 1,169 |
INCOME TAXES (Effective Income
INCOME TAXES (Effective Income Tax Rate Reconciliation) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |||
The Netherlands' statutory rate | 25.00% | 25.00% | 25.00% |
Effective loss (income) tax benefit from continuing operations at statutory rate | $ (12,627) | $ (1,498) | $ 1,426 |
Rate differential | 2,915 | 610 | 1,024 |
Non-deductible expense | (1,643) | (857) | (584) |
Adjustments to prior year tax losses | (2,599) | (3,604) | (429) |
Changes in valuation allowance | 5,815 | 3,601 | (2,568) |
Other | (1,081) | 1,158 | (418) |
Income tax expense from continuing operations | $ (9,220) | $ (590) | $ (1,549) |
INCOME TAXES (Reconciliation of
INCOME TAXES (Reconciliation of unrecognized tax benefits) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Balance at beginning of year | $ 0 | $ 0 |
Additions based on tax positions taken in prior years | 546 | 0 |
Additions based on tax positions taken in the current year | 142 | 0 |
Reduction based on tax positions taken in prior years | 0 | 0 |
Balance at beginning of year | $ 688 | $ 0 |
INCOME TAXES (Narrative) (Detai
INCOME TAXES (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income tax benefit (expense) | |||
Current: Subsidiaries outside of The Netherlands | $ (8,937) | $ (1,345) | $ (1,492) |
Deferred: Subsidiaries outside of the Netherlands | 331 | 676 | 29 |
Previous: Subsidiaries outside of The Netherlands | $ 614 | $ (79) | $ 86 |
INCOME TAXES (Narrative) (Det_2
INCOME TAXES (Narrative) (Details 1) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Operating Loss Carryforwards [Line Items] | |||
Deferred tax assets. capital loss carryforwards | $ 165 | $ 159 | |
Change in valuation allowance | 5,815 | 3,601 | |
Unrecognized Tax Benefits | 688 | $ 0 | $ 0 |
Netherlands [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carry forward | 22,056 | ||
United States [Member] | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carry forward | 6,300 | ||
Tax credit carryforwards | 560 | ||
ISRAEL | |||
Operating Loss Carryforwards [Line Items] | |||
Deferred tax assets. capital loss carryforwards | 715 | ||
Net operating loss carry forward | $ 7,060 |
RELATED PARTY TRANSACTIONS (Nar
RELATED PARTY TRANSACTIONS (Narrative) (Details) $ / shares in Units, € in Thousands, $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | May 31, 2020EUR (€) | May 31, 2020USD ($) | Jun. 30, 2019$ / sharesshares | |
Related Party Transaction [Line Items] | ||||||
Legal expense | $ 59 | $ 46 | $ 46 | |||
Investments | 525 | 1,482 | ||||
Arrow Ecology And Engineering Overseas Ltd Member | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses incurred for services | 286 | 115 | 62 | |||
Investments | 1,750 | 1,750 | ||||
Board of Directors [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Board fees | 50 | 50 | ||||
Directors and Officers [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Issuance of common stock | shares | 3,000,000 | |||||
Issuance of stock, per share | $ / shares | $ 0.40 | |||||
Shareholder [Member] | Guarantees Member | ||||||
Related Party Transaction [Line Items] | ||||||
Security deposit | $ 2,200 | |||||
Shareholder [Member] | Guarantees Member | Euro Member Countries, Euro [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Letter of credit | € 2,000 | $ 2,273 | ||||
Related Party One [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Selling and management services | 1,710 | 741 | 801 | |||
Board fees | 38 | 38 | 28 | |||
Amount due to related parties | 311 | 114 | ||||
Related Party One [Member] | Board of Directors [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Board fees | 38 | 38 | 30 | |||
Related Party Two [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Selling and management services | 148 | 87 | 106 | |||
Related Party Four [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses incurred for services | 0 | 0 | 39 | |||
Au10tix Member | Board of Directors [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Board fees | 117 | 125 | ||||
Related Party Three [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Management and audit | 286 | 182 | 170 | |||
Related Party Five [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses incurred for services | $ 141 | $ 118 | $ 98 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Narrative) (Details) € in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | |||||||
Feb. 28, 2019USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2021EUR (€) | Dec. 31, 2021USD ($) | Jan. 31, 2022USD ($) | Dec. 31, 2021USD ($) | Dec. 31, 2018USD ($) | Aug. 31, 2017 | Mar. 31, 2016USD ($) | |
Commitments And Contingencies [Line Items] | |||||||||
Outstanding letters of credit | $ 3,250 | ||||||||
Guarantees as security | € 1,022 | 1,161 | |||||||
Minimum agency fee payable | $ 3,000 | € 3,000 | $ 3,409 | ||||||
Expected Commission | 5.00% | 5.00% | 5.00% | ||||||
Sale consideration, fee | € 2,000 | $ 2,273 | |||||||
Percentage of issued and outstanding share acquired | 10.00% | ||||||||
Guaranteed amount for investment repurchase | $ 3,500 | ||||||||
Amount of investment repurchase | $ 3,500 | ||||||||
Percentage of shares of the subsidiary will be sold | 50.00% | 50.00% | 50.00% | ||||||
Subsequent Event [Member] | |||||||||
Commitments And Contingencies [Line Items] | |||||||||
Minimum agency fee payable | $ 4,000 | ||||||||
Maximum agency fee payable | $ 20,000 | ||||||||
White Line B V [Member] | |||||||||
Commitments And Contingencies [Line Items] | |||||||||
Investment amount | $ 3,500 | ||||||||
Minimum [Member] | |||||||||
Commitments And Contingencies [Line Items] | |||||||||
Minimum agency fee payable | $ 4,000 | $ 4,000 | |||||||
Expected Commission | 2.00% | 2.00% | |||||||
Minimum [Member] | Subsequent Event [Member] | |||||||||
Commitments And Contingencies [Line Items] | |||||||||
Expected Commission | 2.00% | ||||||||
Maximum [Member] | |||||||||
Commitments And Contingencies [Line Items] | |||||||||
Expected Commission | 10.00% | 5.00% | |||||||
Maximum [Member] | Subsequent Event [Member] | |||||||||
Commitments And Contingencies [Line Items] | |||||||||
Expected Commission | 3.00% |
SEGMENT AND GEOGRAPHICAL INFO_3
SEGMENT AND GEOGRAPHICAL INFORMATION (Narrative) (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Segment Reporting Information [Line Items] | ||
Property and equipment, net | $ 5,710 | $ 5,525 |
Israel [Member] | ||
Segment Reporting Information [Line Items] | ||
Property and equipment, net | $ 3,956 | $ 3,179 |
SEGMENT AND GEOGRAPHICAL INFO_4
SEGMENT AND GEOGRAPHICAL INFORMATION (Summary of Operating Results by Segment) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Segment Reporting Information [Line Items] | |||
Revenues | $ 324,934 | $ 248,419 | $ 333,307 |
Depreciation and amortization | 2,061 | 2,090 | 1,688 |
Net income (loss) | 41,288 | 5,402 | (7,253) |
Goodwill | 690 | 746 | 681 |
Total assets | 195,880 | 140,388 | 123,447 |
Corporate [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 0 | 0 | 0 |
Depreciation and amortization | 75 | 72 | 46 |
Net income (loss) | (1,666) | (3,853) | (11,740) |
Goodwill | 0 | 0 | 0 |
Total assets | 10,349 | 12,488 | 23,381 |
Airport Security and Other Aviation Services [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 253,687 | 222,654 | 309,548 |
Depreciation and amortization | 1,106 | 1,302 | 1,328 |
Net income (loss) | 21,558 | 6,056 | (2,406) |
Goodwill | 690 | 746 | 681 |
Total assets | 112,425 | 86,550 | 64,647 |
Authentication Technology Member | |||
Segment Reporting Information [Line Items] | |||
Revenues | 71,247 | 25,765 | 23,759 |
Depreciation and amortization | 880 | 716 | 314 |
Net income (loss) | 21,396 | 3,199 | 6,893 |
Goodwill | 0 | 0 | 0 |
Total assets | $ 73,106 | $ 41,350 | $ 35,419 |
SEGMENT AND GEOGRAPHICAL INFO_5
SEGMENT AND GEOGRAPHICAL INFORMATION (Revenue by Country) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Segment Reporting Information [Line Items] | |||
Revenues | $ 324,934 | $ 248,419 | $ 333,307 |
GERMANY | |||
Segment Reporting Information [Line Items] | |||
Revenues | 126,367 | 119,500 | 137,207 |
The Netherlands [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 52,165 | 58,446 | 97,700 |
United States [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 94,743 | 45,305 | 73,719 |
Spain [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 30,946 | 7,465 | 3,138 |
Other countries [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | $ 20,713 | $ 17,703 | $ 21,543 |
SEGMENT AND GEOGRAPHICAL INFO_6
SEGMENT AND GEOGRAPHICAL INFORMATION (Property and Equipment by Country) (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Segment Reporting Information [Line Items] | ||
Property and equipment, net | $ 5,710 | $ 5,525 |
GERMANY | ||
Segment Reporting Information [Line Items] | ||
Property and equipment, net | 361 | 449 |
The Netherlands [Member] | ||
Segment Reporting Information [Line Items] | ||
Property and equipment, net | 624 | 598 |
United States [Member] | ||
Segment Reporting Information [Line Items] | ||
Property and equipment, net | 422 | 305 |
Spain [Member] | ||
Segment Reporting Information [Line Items] | ||
Property and equipment, net | 118 | 159 |
Other countries [Member] | ||
Segment Reporting Information [Line Items] | ||
Property and equipment, net | 4,185 | 4,014 |
Israel [Member] | ||
Segment Reporting Information [Line Items] | ||
Property and equipment, net | $ 3,956 | $ 3,179 |
Valuation and Qualifying Acco_2
Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | ||
Allowance for Doubtful Accounts [Member] | ||||
SEC Schedule, 12-09, Valuation and Qualifying Accounts Disclosure [Line Items] | ||||
Beginning of year | [1] | $ 690 | $ 418 | $ 240 |
Valuation Allowances And Reserves Charged Deducted To Cost And Expense | [1] | 864 | 710 | 261 |
Charges to other accounts | [1] | (563) | (438) | (83) |
Deductions | [1] | 0 | 0 | 0 |
End of Year | [1] | 991 | 690 | 418 |
Allowance for Net Deferred Tax Assets [Member] | ||||
SEC Schedule, 12-09, Valuation and Qualifying Accounts Disclosure [Line Items] | ||||
Beginning of year | 17,445 | 21,046 | 18,478 | |
Valuation Allowances And Reserves Charged Deducted To Cost And Expense | 0 | 0 | 0 | |
Charges to other accounts | 0 | 0 | 2,568 | |
Deductions | (5,815) | (3,601) | 0 | |
End of Year | $ 11,630 | $ 17,445 | $ 21,046 | |
[1] | Write-off net of recoveries for the allowance for doubtful accounts. |