ICTS Icts International N.V (MM)

ICTS International N.V. (NASDAQ: ICTS), today reported that the principal reason the Company is delayed in the filing of its annual report on Form 20-F is as follows. Last year the Company's subsidiary ICTS USA, Inc. filed a refund claim with the Internal Revenue Service ("IRS") in an amount in excess of $2 million which was to be reflected on the December 31, 2005 year end financial statements as a receivable. The refund was not received and the Company made a demand to the IRS for the refund. Thereafter, by letter dated August 15, 2006, the Company was advised that a criminal investigation by the United States Department of Justice, Tax Division is ongoing by a grand jury regarding possible criminal tax violations by the subsidiary for the tax years 2002 and 2003 regarding certain royalty payment made to the Company. As a result of the investigation the Company believes that the refund had been put on hold. Mr. Menachem Atzmon, the Chairman of the Company's Supervisory Board stated that, "The Company is unaware of any wrong doing by its subsidiary. The subject matter of the investigation, the royalties, was dealt with great care, and was subject to a study prepared by the Company's auditors, being one of the big five. The Company adopted the auditors recommendation and recorded the royalties accordingly. The process was fully transparent and was reviewed by the government agencies for which it was providing services. The Company has filed its tax returns in full compliance with law, under the guidance of its auditors. The Company will take all the necessary steps to collect the sums due under the terms of the law. I wonder if there is any connection between these events and the Company's claims against the government, which are due to be heard in November?" About ICTS International N.V. ICTS specializes in the development and implementation of innovative security concepts and solutions designed to meet the needs of a variety of industries, mainly including transportation (aviation, railroad and other means of public transportation), border control and sensitive facilities. ICTS International benefits from over two decades of expertise and international operational experience in transportation security, with a particular emphasis on high-risk environments, passenger processing transactions and the integration of security services to provide a comprehensive security solution. It also offers a wide variety of customized training programs, tailored procedures and a wide range of security consulting services. The company has developed and implemented unique technological solutions, based on its comprehensive approach to security, designed to enhance the level of security while accelerating the security check process. www.icts-int.com This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, regarding the Company's business strategy and future plans of operations. Forward-looking statements involve known and unknown risks and uncertainties, both general and specific to the matters discussed in this press release. These and other important factors, including those mentioned in various Securities and Exchange Commission filings made periodically by the Company, may cause the Company's actual results and performance to differ materially from the future results and performance expressed in or implied by such forward-looking statements. The forward-looking statements contained in this press release speak only as of the date hereof and the Company expressly disclaims any obligation to provide public updates, revisions or amendments to any forward-looking statements made herein to reflect changes in the Company's expectations or future events.