FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report Of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 under the
Securities Exchange Act of 1934
For the period ending June 30, 2010
Commission File Number: 0-28542
ICTS International N.V.
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(Translation of registrant's name into English)
Biesbosch 225, 1181 JC Amstelveen, The Netherlands
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(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F X Form 40-F _____
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): ____
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a
Form 6-K if submitted solely to provide an attached annual report to security
holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7):______ ____
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a
Form 6-K if submitted to furnish a report or other document that the registrant
foreign private issuer must furnish and make public under the laws of the
jurisdiction in which the registrant is incorporated, domiciled or legally
organized (the registrant's "home country"), or under the rules of the home
country exchange on which the registrant's securities are traded, as long as the
report or other document is not a press release, is not required to be and has
not been distributed to the registrant's security holders, and, if discussing a
material event, has already been the subject of a Form 6-K submission or other
Commission filing on EDGAR.
Indicate by check mark whether by furnishing the information contained in this
Form, the registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes_____ No __X__
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82- ________
ICTS INTERNATIONAL N.V
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
2010 2009
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(US $ in thousands)
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ASSETS
CURRENT ASSETS:
Cash and cash equivalents $4,452 $4,835
Restricted certificate of deposit 3,500 3,500
Accounts receivable, net 11,805 11,556
Prepaid expenses and other current assets 1,761 1,307
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Total current assets $21,518 $21,198
Property and equipment, net 1,528 1,873
Goodwill 314 314
Receivable - Unites States Transportation
Security Administration - 3,000
Other assets 310 442
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Total assets $23,670 $26,827
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LIABILITIES AND SHAREHOLDERS' DEFICIENCY
CURRENT LIABILITIES:
Notes payable - bank $5,878 $6,070
Accounts payable 3,405 2,684
Accrued expenses and other current liabilities 22,640 21,856
Current liabilities from discontinued operations 650 1,222
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Total current liabilities $32,573 $31,832
Convertible notes payable to related party, including
accrued interest 11,864 10,144
Other liabilities 1,560 3,141
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13,424 13,285
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Total liabilities $45,997 $45,117
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SHAREHOLDERS' DEFICIENCY
Common stock, (Euro) 0.45 par value, 17,000,000
shares authorized;
8,009,185 shares issued and outstanding as
of June 30, 2010;
7,890,137 shares issued and outstanding as
of December 31,2009 $4,475 $4,409
Additional paid-in capital 20,843 20,661
Accumulated deficit (40,361) (35,904)
Accumulated other comprehensive loss (7,284) (7,456)
Total shareholders' deficiency (22,327) (18,290)
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Total liabilities and shareholders' equity $23,670 $26,827
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ICTS INTERNATIONAL N.V
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(US $ in thousands, except share and per share data)
(Unaudited)
Six months ended Six months ended
June 30, 2010 June 30, 2009
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Revenue $47,560 $45,973
Cost of revenue 42,318 41,111
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GROSS PROFIT 5,242 4,862
Selling, general and administrative expenses 6,862 6,797
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OPERATING LOSS 1,620 1,935
Other expenses, net 1.836 466
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LOSS BEFORE EQUITY LOSS FROM INVESTMENT
IN AFFILIATES AND INCOME TAX EXPENSES 3,456 2,401
Equity loss from investments in affiliates 675 -
Income tax expense 236 12
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LOSS FROM CONTINUING OPERATIONS 4,367 2,413
Income (Loss) from discontinued operations (90) 4,811
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NET INCOME (LOSS) $(4,457) $2,398
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INCOME(LOSS) PER SHARE, BASIC AND DILUTED
Continuing operations $(0.55) $(0.37)
Discontinued operations $(0.01) $ 0.74
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Net income (loss) $(0.56) $ 0.37
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Weighted average number of shares outstanding 7,890,137 6,536,433
COMPREHENSIVE INCOME (LOSS)
Net income (loss) $(4,457) $2,398
Translation adjustment 172 (54)
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Comprehensive income (loss) $(4,285) $2,344
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Overview
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ICTS International, N.V., including its subsidiaries (referred here as the
"Company") is a provider of aviation security and other aviation related
services through service contracts with airline companies, airport authorities
and governments.
The following summary of information represents only the results of the
Company from continuing operations unless mentioned otherwise and relates to
period of six months ending at June 30, 2010 and to the comparable period ending
at June 30, 2009. All amounts are in thousands (U.S Dollars). More detailed
information about the 2009 figures can be found in the Company's financial
statements for the whole year 2009 which are attached to the Company's 20F form.
Revenue - Revenues for the period ended June 30, 2010 were $47.6 million
compared to $46.0 million in the first six months of 2009. Revenues from U.S
operations decreased by $1.1 million compared to the first six months of 2009
mainly because of the economic slowdown and the increasing competition in the
related aviation security services segment. Revenues from the European
activities increased by $2.7 million compared to the 2009 comparable period as
the Company extended the security services it provides in its existing
locations. In addition, revenues of the European activities were affected by the
translation of the Euro to the Dollars, as this year, the exchange rate
decreased by 4.6%.
Cost of revenue - Cost of revenue for the period ended June 30, 2010 was
$42.3 million (89.0% of revenue) compared to $41.1 million (89.4% of revenue)
for the first six months of 2009. Cost of revenue includes also the expenses of
the Technology segment of the Company which totaled to $1.4 million for the
period ended June 30, 2010 compared to $1.0 million in the comparable period.
Selling, general and administrative expenses (SG&A) - SG&A expenses were
$6.9 million for the period ended June 30, 2010 (14.4% of revenue) compared to
$6.8 million (14.8% of revenue) for the 2009 comparable period.
Other expenses, net - Other expenses, net include interest to banks and
related party regarding the Company's loans, exchange rate expenses, bank
charges and expenses regarding the agreements between the Company and the United
States Transportation Security Administration ("TSA") and the Unites States
Department of Labor ("DOL"). Other expenses, net, were $1,836 for the first six
months of 2010 compared to $466 for the comparable period ending June 30, 2009.
During 2010, the Company reached an agreement with the DOL and the TSA.
The receivable of $3 million from the TSA was eliminated and the liability to
the DOL was decreased from $3 million to $1.5 million. The financial affect of
those agreements totaled to a onetime expense of $1.5 million, which was
reflected in the results of the first six months of 2010.
Interest expenses to related party totaled $250 in the first six months of
2010 compared to $181 in the comparable period of 2009. Exchange rate income in
the first six months of 2010 totaled $526 compared to $37 at the 2009 comparable
period.
Equity loss from investment in affiliates - As of December 31, 2009 the
Company had an ownership interest in Inksure Technologies Inc ("Inksure") of
27.4%. In the beginning of 2010, the Company invested $675 in a private
placement done by Inksure. As the Company presents its investment according to
the equity method, and as Inksure's equity after the private placement was still
negative, the Company expensed its additional investment to the profit and loss
report. As of June 30, 2010, the Company holds 23.9% of Inksure.
Income tax expense - Income tax expenses were $236 for the period ended
June 30, 2010 compared to $12 for the 2009 comparable period. The increase of
the expenses relates to income taxes payable in different locations in Europe
and based on the local tax requirements in the different countries.
Loss from continued operations - As a result of the foregoing, ICTS's loss
from continued operations amounted $4.4 million for the first six months of
2010, compared to $2.4 million loss for the first six months of 2009.
Income from discontinued operations -During the first 6 months of 2009,
the Company has reached into an agreement with the landlord of the Explore sites
on which ICTS will pay to the landlord $2.6 million until December 31, 2010. The
company updated the liability recorded in its books accordingly, which resulted
in profit of $4.7 million only from this transaction.
Net Profit - As a result of the foregoing, ICTS's loss amounted $4.5
million for the first six months of 2010, compared to net income of $2.4 million
for the comparable period of 2009.
Segment and Geographical Information
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The Company operates in three reportable segments: (a) Corporate (b)
Airport security and other aviation services and (c) Technology. The Corporate
segment does not generate revenue and contains primarily non-operational
expenses. The Airport security and other aviation services segment provide
services to airlines and airport authorities, in the United States of America,
Europe and the Far East. The Technology segment is predominantly involved in the
development and sale of identity security software to financial institutions and
airport authorities, mainly in Europe. All inter - segment transactions are
eliminated in the 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 segments are based primarily on loss from continuing operations.
Airport
Security and
Other Aviation
Corporate Services Technology Total
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Six months ended June 30, 2010:
Revenue - $47,310 $ 250 $ 47,560
Depreciation and amortization 6 342 23 371
Income (loss) from continuing operations (1,457) (917) (1,993) (4,367)
Total assets 995 22,088 587 23,670
Six months ended June 30, 2009:
Revenue - $45,647 $ 326 $ 45,973
Depreciation and amortization 5 321 19 345
Income (loss) from continuing operations (1,021) (235) (1,157) (2,413)
Total assets 718 24,769 564 26,051
Revenue by country is summarized as follows:
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Six months ended June 30,
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2010 2009
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United States of America $ 17,077 $ 18,222
Netherlands 20,686 20,875
Other 9,797 6,876
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Total $ 47,560 $ 45,973
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ICTS INTERNATIONAL N.V.
By: /s/ Avraham Dan
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Avraham Dan, Managing Director
Dated: December 28, 2010