I.T.S. Industrial Techno-Logic Solutions Ltd. Releases 2024 Audited Financials: Continued Losses, Going Concern Doubts, and Major Ownership Change

Key Highlights from the 2024 Consolidated Financial Statements

• Substantial Net Loss for 2024: I.T.S. reported a net loss of \$3.66 million for the year ended December 31, 2024, significantly higher than the \$2.32 million loss in 2023. Total comprehensive loss for 2024 was \$3.75 million.
• Sharp Decline in Revenues: Revenues dropped to \$8.87 million in 2024 from \$15.95 million in 2023, reflecting a material decrease in business activity.
• Continued Negative Cash Flow: Cash used in operating activities was \$0.49 million in 2024, compared to net cash provided of \$0.41 million in 2023. Cash, cash equivalents, and restricted cash at year-end fell to \$1.24 million from \$1.80 million.
• Going Concern Warning: The auditors issued a warning about substantial doubt regarding the Company’s ability to continue as a going concern. As of December 31, 2024, the Company had negative working capital of \$3.56 million, an accumulated deficit of \$5.04 million, and a shareholders’ deficit of \$4.66 million. The Company’s survival is dependent on raising additional capital and achieving sufficient revenues, which remains uncertain.
• Major Ownership Change (Subsequent Event): In June 2025, Star Twenty Six agreed to lend the Company approximately USD 3 million (NIS 10 million) in exchange for 51% ownership on a fully diluted basis. Star also secured an option to acquire the remaining 49% over the next three years at increasing prices (NIS 25M, 30M, or 35M, depending on year). As of February 16, 2026, Star had acquired 51% equity control of the Company.
• Impact of Geopolitical Events: The report details exposure to the ongoing conflicts in Israel, including escalations involving Hamas, Hezbollah, Iran, and others. As of the report date, operations have not been materially affected, but management cannot guarantee this will continue, acknowledging the potential for significant future impact.

Financial Position and Results in Detail

Balance Sheet

• Total Assets: \$7.76 million (down from \$11.88 million in 2023).
• Cash and Cash Equivalents: \$1.23 million.
• Inventory: \$2.80 million (down from \$4.98 million) after provisioning for impairment.
• Total Liabilities: \$12.42 million, including \$8.31 million in current liabilities and significant bank and related party loans.
• Shareholders’ Deficit: \$(4.66) million, a dramatic worsening from \$(0.91) million in 2023.

Income Statement

• Revenues: \$8.87 million (2024), \$15.95 million (2023).
• Cost of Revenues: \$10.38 million (2024), \$16.44 million (2023).
• Gross Loss: \$(1.52) million (2024), \$(0.48) million (2023).
• Operating Loss: \$(3.25) million (2024), \$(2.47) million (2023).
• Net Loss: \$(3.66) million (2024), \$(2.32) million (2023).
• No Government Grant Income in 2024: Other income fell to \$7, down from \$440,000 in 2023, as no government grants were received in 2024.

Cash Flow

• Operating Activities: Net cash used of \$(489,000) in 2024, compared to net cash provided of \$409,000 in 2023.
• Investing Activities: Small net inflow of \$25,000 in 2024, versus net outflow of \$(61,000) in 2023.
• Financing Activities: Net outflow of \$(85,000) in 2024, after significant inflow of \$396,000 in 2023.
• Cash at Year-End: \$1.24 million in 2024, down from \$1.80 million in 2023.

Additional Details of Note

• Debt Structure: The Company relies heavily on bank credit (Prime+1.4%-2.0%) and related party loans. As of December 31, 2024, short-term bank loans were \$1.79 million, with long-term bank and related party loans totaling \$1.90 million.
• Leases: The Company has significant lease liabilities (\$2.94 million at year-end) with multi-year commitments and a weighted-average remaining term of 4.7 years at a 6% discount rate.
• Inventory Issues: Inventory write-downs for impairment totaled \$1.02 million in 2024, up from \$0.87 million, indicating ongoing concerns about excess or obsolete materials.
• Tax Position: Company and subsidiary have accumulated tax losses of \$7.8 million and \$680,000, respectively, with no current deferred tax asset recognized due to a full valuation allowance.
• Related Party Transactions: As of year-end, related party loans stood at \$987,000, with ongoing financial reliance on insiders.
• Recent Major Capital Injection and Control Change: The post-year-end transaction with Star Twenty Six is transformative, providing immediate liquidity but resulting in a change of control. Star now owns 51% of the Company, with an option for full acquisition within three years at escalating prices. This may have significant implications for the Company’s strategic direction, financial stability, and potential future valuation.

Potential Share Price Sensitive Information

1. Going Concern Warning: The independent auditors have flagged substantial doubt over the Company’s ability to continue as a going concern. This is a major risk factor and could materially affect investor confidence and share valuation.
2. Material Decline in Revenues and Widening Losses: The sharp drop in sales and ongoing large operating losses point to fundamental business challenges.
3. Change in Control and Capital Injection: The acquisition of a controlling stake by Star Twenty Six and the related cash infusion are significant. While they provide needed liquidity, they also dilute existing shareholders and may lead to strategic changes.
4. Exposure to Geopolitical Risks: The Company is directly affected by ongoing conflicts in Israel and the region. Any escalation could disrupt operations and financial performance.
5. Reliance on Additional Fundraising: Management has stated that additional capital will be required to maintain operations, and there is no guarantee it will be secured.

Outlook and Management Plans

Management is actively seeking additional financing and is monitoring geopolitical developments closely. The recent capital injection and change of control may provide short-term stability, but the Company’s long-term viability remains uncertain without improved operating results and/or further investment.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Investors should review the full audited financial statements and consult with their financial advisors before making any investment decisions. Past performance is not indicative of future results. The Company faces significant risks, including but not limited to, liquidity risks, operational losses, geopolitical instability, and dependence on financing and key contracts.

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