Item 1. Financial Statements
Item 1.
FINANCIAL STATEMENTS
TRANSACT TECHNOLOGIES INCORPORATED
C ONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
September 30, 2023
December 31, 2022
Assets:
(In thousands, except share data)
Current assets:
Cash and cash equivalents
$
11,605
$
7,946
Accounts receivable, net
12,184
13,927
Employee retention credit receivable
–
1,500
Inventories
17,559
12,028
Other current assets
1,306
724
Total current assets
42,654
36,125
Fixed assets, net of accumulated depreciation of $ 18,300
and $ 17,656 , respectively
2,653
2,781
Right-of-use assets, net
1,824
2,488
Goodwill
2,621
2,621
Deferred tax assets
6,589
7,327
Intangible assets, net of accumulated amortization of $ 1,480 and $ 1,364 , respectively
126
242
Other assets
198
248
14,011
15,707
Total assets
$
56,665
$
51,832
Liabilities and Shareholders’ Equity:
Current liabilities:
Revolving loan payable
$
2,250
$
2,250
Accounts payable
6,239
7,395
Accrued liabilities
5,723
4,077
Lease liabilities
915
875
Deferred revenue
977
1,329
Total current liabilities
16,104
15,926
Deferred revenue, net of current portion
201
143
Lease liabilities, net of current portion
965
1,683
Other liabilities
221
218
1,387
2,044
Total liabilities
17,491
17,970
Commitments and contingencies (see Notes 5 and 7)
Shareholders’ equity:
Common stock, $ 0.01 par
value, 20,000,000 shares authorized; 14,002,960 and 13,956,725 shares issued, respectively; 9,958,118 and 9,911,883 shares
outstanding, respectively
140
139
Additional paid-in capital
56,807
56,282
Retained earnings
14,440
9,630
Accumulated other comprehensive loss, net of tax
( 103
)
( 79
)
Treasury stock, at cost ( 4,044,842
shares)
( 32,110
)
( 32,110
)
Total shareholders’ equity
39,174
33,862
Total liabilities and shareholders’ equity
$
56,665
$
51,832
See notes to Condensed Consolidated Financial Statements.
3
Index
TRANSACT TECHNOLOGIES INCORPORATED
CONDE NSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
(In thousands, except per share data)
Net sales
$
17,190
$
17,856
$
59,366
$
40,181
Cost of sales
8,274
9,663
27,337
23,988
Gross profit
8,916
8,193
32,029
16,193
Operating expenses:
Engineering, design and product development
2,509
1,985
7,283
6,440
Selling and marketing
2,397
2,748
7,838
8,724
General and administrative
2,819
3,073
10,680
9,200
7,725
7,806
25,801
24,364
Operating income (loss)
1,191
387
6,228
( 8,171
)
Interest and other (expense) income:
Interest, net
( 73
)
( 53
)
( 207
)
( 145
)
Other, net
( 43
)
132
( 22
)
( 167
)
( 116
)
79
( 229
)
( 312
)
Income (loss) before income taxes
1,075
466
5,999
( 8,483
)
Income tax (expense) benefit
( 169
)
62
( 1,189
)
2,287
Net income (loss)
$
906
$
528
$
4,810
$
( 6,196
)
Net income (loss) per common share:
Basic
$
0.09
$
0.05
$
0.48
$
( 0.63
)
Diluted
$
0.09
$
0.05
$
0.48
$
( 0.63
)
Shares used in per-share calculation:
Basic
9,958
9,911
9,948
9,902
Diluted
10,052
9,911
10,023
9,902
See notes to Condensed Consolidated Financial Statements.
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Index
TRANSACT TECHNOLOGIES INCORPORATED
CONDENSED CONSOLI DATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
(In thousands)
Net income (loss)
$
906
$
528
$
4,810
$
( 6,196
)
Foreign currency translation adjustment, net of tax
( 35
)
( 205
)
( 24
)
( 255
)
Comprehensive income (loss)
$
871
$
323
$
4,786
$
( 6,451
)
See notes to Condensed Consolidated Financial Statements.
5
Index
TRANSACT TECHNOLOGIES INCORPORATED
CONDE NSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Nine Months Ended
September 30,
2023
2022
(In thousands)
Cash flows from operating activities:
Net income (loss)
$
4,810
$
( 6,196
)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Share-based compensation expense
611
868
Depreciation and amortization
1,103
984
Deferred income taxes
746
( 2,387
)
Unrealized foreign currency transaction losses
22
165
Changes in operating assets and liabilities:
Accounts receivable
1,786
( 6,343
)
Employee retention credit receivable
1,500
–
Inventories
( 5,584
)
( 3,551
)
Prepaid income taxes
( 178
)
( 51
)
Other current and long-term assets
( 344
)
( 137
)
Accounts payable
( 1,152
)
1,926
Accrued liabilities and other liabilities
1,271
508
Net cash provided by (used in) operating activities
4,591
( 14,214
)
Cash flows from investing activities:
Capital expenditures
( 788
)
( 955
)
Net cash used in investing activities
( 788
)
( 955
)
Cash flows from financing activities:
Proceeds from bank borrowings
–
2,250
Withholding taxes paid on stock issuances
( 86
)
( 119
)
Payment of bank financing costs
–
( 69
)
Net cash (used in) provided by financing activities
( 86
)
2,062
Effect of exchange rate changes on cash and cash equivalents
( 58
)
14
Increase (decrease) in cash and cash equivalents
3,659
( 13,093
)
Cash and cash equivalents, beginning of period
7,946
19,457
Cash and cash equivalents, end of period
$
11,605
$
6,364
Supplemental schedule of non-cash investing activities:
Non-cash capital expenditure items
$
36
$
19
See notes to Condensed Consolidated Financial Statements.
6
Index
TRANSACT TECHNOLOGIES INCORPORATED
CONDENSED CONSO LIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
(In thousands)
Equity beginning balance
$
38,090
$
32,672
$
33,862
$
38,984
Common stock
Balance, beginning of period
140
139
139
139
Issuance of common stock from restricted stock units
–
–
1
–
Balance, end of period
140
139
140
139
Additional paid-in capital
Balance, beginning of period
56,594
55,708
56,282
55,246
Share-based compensation expense
213
287
611
868
Relinquishment of stock awards to pay for withholding taxes
–
–
( 86
)
( 119
)
Balance, end of period
56,807
55,995
56,807
55,995
Retained earnings
Balance, beginning of period
13,534
8,842
9,630
15,566
Net income (loss)
906
528
4,810
( 6,196
)
Balance, end of period
14,440
9,370
14,440
9,370
Treasury stock
Balance, beginning and end of period
( 32,110
)
( 32,110
)
( 32,110
)
( 32,110
)
Accumulated other comprehensive (loss) income, net of tax
Balance, beginning of period
( 68
)
93
( 79
)
143
Foreign currency translation adjustment, net of tax
( 35
)
( 205
)
( 24
)
( 255
)
Balance, end of period
( 103
)
( 112
)
( 103
)
( 112
)
Equity ending balance
$
39,174
$
33,282
$
39,174
$
33,282
Supplemental share information
Issuance of shares from stock awards
1
2
58
65
Relinquishment of stock awards to pay withholding taxes
–
–
12
26
See notes to Condensed Consolidated Financial Statements.
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Index
TRANSACT TECHNOLOGIES INCORPORATED
N OTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Basis of presentation
The accompanying unaudited financial statements of TransAct Technologies Incorporated (“TransAct”,
the “Company”, “we”, “us”, or “our”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the
information and footnotes required by U.S. GAAP to be included in full year financial statements. In the opinion of management, all adjustments considered necessary for a fair statement of the results for the periods presented have been included and
are of a normal recurring nature . The December 31, 2022 Condensed Consolidated Balance Sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. These interim financial statements
should be read in conjunction with the audited financial statements in our Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”).
The results of operations for the three and nine months ended September 30, 2023
are not necessarily indicative of the results to be expected for the full year ending December 31, 2023.
Impact of Global Economic Conditions, Supply Chain Disruptions and the COVID-19 Pandemic
Since early 2020 and into the first quarter of 2022, the COVID-19 pandemic caused uncertainty and disruption in the global
economy and financial markets. Similar to other companies, TransAct has also been impacted by global supply chain issues, increased shipping costs and inflationary pressures, which have increased our costs and, in some instances, slowed our ability
to deliver products to our customers. After experiencing significantly lower inventory and sales levels in 2021 due to supply chain disruptions, we were able to increase our inventory levels and minimize the impact to our customers in 2022 by
successfully modifying our products that were affected by supply chain disruptions, as well as by sourcing component parts from alternate suppliers. At the same time, after a slowdown resulting from the Omicron and other variants of COVID-19 that
began to ease in the first nine months of 2022, we continued to experience demand recovery during the remainder of 2022 and into 2023. Although we were able to increase inventory levels during 2022 and the first nine months of 2023 and expect to
continue to do so in the balance of 2023, there can be no assurance that new or continuing supply chain disruptions will not affect our products or that we will be able to make timely modifications to address any future supply chain issues that
arise. Further, while we have offset most of our cost increases by increasing prices of our products, there can be no guarantee that we will not be impacted by the economic effects of any future cost increases that cannot be predicted, supply chain
disruptions, inflationary pressures and potential new COVID-19 variants in the markets we serve and from which we source our supplies and parts.
Balance Sheet, Cash Flow and Liquidity. We have taken the following actions to increase liquidity and strengthen our financial position in an effort to mitigate the negative impacts from the COVID -19 pandemic, supply chain disruptions and inflationary pressures:
●
Employee Retention Credit – The Company received a refundable employee retention credit under the CARES Act in the first quarter of 2023. The Company previously recognized the
employee retention credit during the fourth quarter of 2021 as a $ 1.5 million “Gain from employee retention credit” in the
Consolidated Statement of Operations for the year ended December 31, 2021 and recorded a $ 1.5 million “Employee retention
credit receivable” in the Consolidated Balance Sheets as of December 31, 2022 and December 31, 2021.
●
Credit Facility – On March 13, 2020, we entered into a credit facility with Siena Lending Group LLC that provides a revolving credit line of up to $ 10.0 million ,
subject to a borrowing base, and on July 19, 2022, we entered into an amendment to extend the maturity of the facility to March 13, 2025. See Note 5 for further details regarding this facility.
●
Expense Reductions – During the third quarter of 2023, we began a cost reduction initiative to reduce our overall level of operating expenses that includes reducing employee
headcount, trade show, advertising and other promotional marketing expenses, certain third party engineering resources and other expenses, and to a lesser extent, certain general and administrative expenses. When completed in the fourth
quarter of 2023, we expect these actions will result in approximately $ 3 million of annualized savings beginning in 2024
After reviewing whether conditions and/or events raise substantial doubt about our ability to meet future financial obligations over the 12 months following the date on
which the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q were issued, including consideration of the actions to manage expenses and liquidity, we believe that our net cash to be provided by operations
combined with our cash and cash equivalents and borrowing availability under our revolving credit facility will provide sufficient liquidity to fund our current obligations, capital spending, and working capital requirements and to comply with the
financial covenants of our credit facility over at least 12 months following the date that the Condensed Consolidated Financial Statements were issued.
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Index
Use of Assumptions and Estimates
Management’s belief that the Company will be able to fund its planned operations over the 12 months following the date on which the Condensed Consolidated Financial
Statements were issued is based on assumptions which involve significant judgment and estimates of future revenues, inflation, rising interest rates, capital expenditures and other operating costs. Our current assumptions are that casinos and
restaurants will remain open and consumer traffic will continue to remain strong during the remainder of 2023. Though demand for our products at casinos increased substantially in 2022 and during the first nine months of 2023, we cannot predict the
ultimate impact of the current economic environment, including inflation, rising interest rates and supply chain disruptions on our customers, which may impact sales. We believe that we are positioned to withstand the impact of any potential economic
downturn or slower than anticipated economic recovery. However, should conditions warrant, we believe we will be able to take additional financial and operational actions to cut costs and/or increase liquidity.
In addition, the presentation of the accompanying unaudited financial statements requires us to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenue and expenses, and the disclosure of contingent assets and liabilities. Our estimates include those related to revenue recognition, accounts receivable, inventory obsolescence, goodwill and intangible assets, the valuation of
deferred tax assets and liabilities, depreciable lives of equipment, share-based compensation and contingent liabilities. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the
circumstances. Actual results could differ from those estimates used.
Certain reclassifications have been made to prior year financial statements to conform to classifications used in the current year.
2. Significant accounting policies
For a discussion of our significant accounting policies, see Note 2, Summary of significant accounting policies within Part II, Item 8. “Financial Statements and
Supplementary Data” in the 2022 Form 10-K. There have been no changes to our significant accounting policies since the 2022 Form 10-K.
Recently Adopted Accounting Pronouncement
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses
(Topic 326): Measurement of Credit Losses on Financial Instruments . This ASU and its related amendments (collectively, the “Credit Loss Standard”) modifies the impairment model to utilize an expected loss methodology in place of the
incurred loss methodology for financial instruments, including trade receivables, contract assets and off-balance sheet credit exposures. The Credit Loss Standard requires consideration of a broader range of information to estimate expected credit
losses, including historical information, current economic conditions and a reasonable forecast period. This Credit Loss Standard requires that the statement of operations reflect estimates of expected credit losses for newly recognized financial
assets as well as changes in the estimate of expected credit losses that have taken place during the period, which may result in earlier recognition of certain losses.
We adopted this standard effective January 1, 2023, and this standard did not have a material impact on the Company’s Condensed Consolidated Financial Statements.
We are exposed to credit losses primarily through our sales of products and software to commercial customers which are recorded as Accounts receivable, net on the
Condensed Consolidated Balance Sheets. Our method for developing our allowance for credit losses involves making informed judgments regarding whether an adjustment is necessary to our historical loss experiences to reflect our expectations around
current economic conditions and reasonable and supportable forecast periods, where applicable. We utilize current economic market data as well as other internal and external information available to us to inform our decision making in this process.
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Index
3. Revenue
We account for revenue in accordance with ASC Topic 606: Revenue from Contracts with Customers.
Disaggregation of revenue
The following tables disaggregate our revenue by market type, as we believe this best depicts how the nature, amount, timing and uncertainty of our revenue and cash
flows are affected by economic factors. Sales and usage-based taxes are excluded from revenues.
Three Months Ended
September 30,
2023
2022
(In thousands)
United States
International
Total
United States
International
Total
Food service technology
$
4,049
$
192
$
4,241
$
3,496
$
252
$
3,748
POS automation
1,575
69
1,644
5,228
–
5,228
Casino and gaming
5,411
3,608
9,019
3,758
3,985
7,743
TransAct Services Group
2,087
199
2,286
983
154
1,137
Total net sales
$
13,122
$
4,068
$
17,190
$
13,465
$
4,391
$
17,856
Nine Months Ended
September 30,
2023
2022
(In thousands)
United States
International
Total
United States
International
Total
Food service technology
$
10,937
$
657
$
11,594
$
8,723
$
587
$
9,310
POS automation
5,261
84
5,345
7,700
–
7,700
Casino and gaming
26,455
10,547
37,002
10,475
8,555
19,030
TransAct Services Group
4,791
634
5,425
3,396
745
4,141
Total net sales
$
47,444
$
11,922
$
59,366
$
30,294
$
9,887
$
40,181
Contract balances
Contract assets consist of unbilled receivables. Pursuant to the over-time revenue recognition model, revenue may be recognized prior to the customer being invoiced.
An unbilled receivable is recorded to reflect revenue that is recognized when such revenue exceeds the amount invoiced to the customer. Unbilled receivables are separated into current and non-current assets and included within “Accounts receivable,
net” and “Other assets” in the Condensed Consolidated Balance Sheets.
Contract liabilities consist of customer pre-payments and deferred revenue. Customer prepayments are reported as “Accrued liabilities” in current liabilities in the
Condensed Consolidated Balance Sheets and represent customer payments made in advance of performance obligations in instances where credit has not been extended and are recognized as revenue when the performance obligation is complete. Deferred
revenue is reported separately in current liabilities and non-current liabilities and consists of our extended warranty contracts, technical support for our food service technology terminals, EPICENTRAL maintenance contracts and prepaid software
subscriptions for our BOHA! software applications, and is recognized as revenue as (or when) we perform under the contract. For the nine months ended September 30, 2023 , we recognized revenue of $ 1.2 million related to our contract liabilities at December 31, 2022 . Total net contract liabilities consisted of the following:
September 30, 2023
December 31, 2022
(In thousands)
Unbilled receivables, current
$
194
$
392
Unbilled receivables, net of current portion
144
163
Customer pre-payments
( 410
)
( 101
)
Deferred revenue, current
( 977
)
( 1,329
)
Deferred revenue, net of current portion
( 201
)
( 143
)
Total net contract liabilities
$
( 1,250
)
$
( 1,018
)
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Index
Remaining performance obligations
Remaining performance obligations represent the transaction price of firm orders for which a good or service has not been delivered to our customer. As of September 30, 2023, the aggregate amount of transaction prices allocated to remaining performance obligations was $ 12.0 million. The Company expects to recognize revenue of $ 11.7
million of its remaining performance obligations within the next 12 months following September 30, 2023, $ 0.2 million within the next 24 months following September 30, 2023
and the balance of these remaining performance obligations recognized within the next 36 months following September 30, 2023.
4. Inventories
The components of inventories were:
September 30, 2023
December 31, 2022
(In thousands)
Raw materials and purchased component parts
$
10,069
$
8,884
Finished goods
7,490
3,144
$
17,559
$
12,028
5. Debt
Credit Facility
On March 13, 2020, we entered into a credit facility (the “Siena Credit Facility”) with Siena Lending Group LLC (the “Lender”). The Siena Credit Facility provides for a
revolving credit line of up to $ 10.0 million and was originally scheduled to expire on March 13, 2023. Borrowings under the Siena Credit
Facility bear a floating rate of interest equal to the greatest of (i) the prime rate plus 1.75 %, (ii) the federal funds rate plus 2.25 %, and (iii) 6.50 %. The total deferred
financing costs related to expenses incurred to complete the Siena Credit Facility was $ 245 thousand, which were reported as “Other current
assets” in current assets and “Other assets” in non-current assets in the Condensed Consolidated Balance Sheets. We also pay a fee of 0.50 %
on unused borrowings under the Siena Credit Facility. Borrowings under the Siena Credit Facility are secured by a lien on substantially all the assets of the Company.
The Siena Credit Facility imposes a financial covenant on the Company and borrowings are subject to a borrowing base based on 85 % of eligible accounts receivable plus the lesser of (a) $ 5.0
million and (b) 50 % of eligible raw material and 60 % of finished goods inventory. The agreement governing the Siena Credit Facility restricts, among other things, our ability to incur additional indebtedness and create other liens. On July 21, 2021, the Company
entered into an amendment (“Siena Credit Facility Amendment No. 1”) to the Loan and Security Agreement governing the Siena Credit Facility. Siena Credit Facility Amendment No. 1 changed the financial covenant under the Siena Credit Facility from a
minimum EBITDA covenant to an excess availability covenant requiring that the Company maintain excess availability of at least $ 750 thousand
under the Siena Credit Facility, tested as of the end of each calendar month, beginning with the calendar month ended July 31, 2021. From July 31, 2021 through September 30, 2023, we remained in compliance with our excess availability covenant. As of September 30, 2023,
we had $ 2.3 million of outstanding borrowings under the Siena Credit Facility and $ 6.8 million of net borrowing capacity available under the Siena Credit Facility.
On July 19, 2022, the Company and the Lender entered into Amendment No. 2 (“Siena Credit Facility Amendment No. 2”) to the Loan and Security Agreement governing the Siena
Credit Facility, as amended by Siena Credit Facility Amendment No. 1. Also on July 19, 2022, the Company and the Lender entered into an Amended and Restated Fee Letter (the “Amended Fee Letter”) in connection with Siena Credit Facility Amendment No.
2. Siena Credit Facility Amendment No. 2 did not modify the aggregate amount of the revolving commitment or the interest rate applicable to the loans .
The changes to the Siena Credit Facility provided for in Siena Credit Facility Amendment No. 2 include, among other things, the following:
(i) The extension of the maturity date from March 13, 2023 to March 13, 2025; and
(ii) The termination of the existing blocked account control agreement and entry into a new “springing” deposit account control agreement, permitting
the Company to direct the use of funds in its deposit account until such time as (a) the sum of excess availability under the Siena Credit Facility (as amended) and unrestricted cash is less than $ 5 million for 3 consecutive business days or (b) an event of default
occurs and is continuing.
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Index
In addition, the Amended Fee Letter requires the Company, while it retains the ability to direct the use of funds in the deposit account, to maintain outstanding
borrowings of at least $ 2,250,000 in principal amount. If the Company does not have the ability to direct the use of funds in the deposit
account, then the Amended Fee Letter requires the Company to pay interest on at least $ 2,250,000 principal amount of loans, whether or not
such amount of loans is actually outstanding.
On May 1, 2023, the Company and the Lender agreed to a letter amendment to the Loan and Security Agreement governing the Siena Credit Facility. Section 7.1(m) of the
Loan and Security Agreement governing the Siena Credit Facility required that any successor to the Company’s former Chief Executive Officer be reasonably acceptable to the Lender, and this amendment confirmed that John Dillon, the Company’s current
Chief Executive Officer, is an acceptable successor and applied the same requirement to any future successor to Mr. Dillon.
6. Earnings per share
The following table sets forth the reconciliation of basic and diluted weighted average shares outstanding:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
(In thousands, except per share data)
Net income (loss)
$
906
$
528
$
4,810
$
( 6,196
)
Shares:
Basic: Weighted average common shares outstanding
9,958
9,911
9,948
9,902
Add: Dilutive effect of outstanding options and restricted stock units as determined by the treasury stock method
94
–
75
–
Diluted: Weighted average common and common equivalent shares outstanding
10,052
9,911
10,023
9,902
Net income (loss) per common share:
Basic
$
0.09
$
0.05
$
0.48
$
( 0.63
)
Diluted
$
0.09
$
0.05
$
0.48
$
( 0.63
)
The computation of diluted earnings per share excludes the effect of the potential exercise of stock
awards, including stock options and restricted stock units, when the average market price of the common stock is lower than the exercise price of the related stock award during the period, as the inclusion of these stock awards in the computation
of diluted earnings would be anti-dilutive. For the nine months ended September 30, 2022, there were 1.6 million of potentially dilutive shares consisting of stock awards that were excluded from the calculation of earnings per diluted share. Furthermore,
in periods when a net loss is reported, such as the nine months September 30, 2022, basic and diluted net loss per common share are calculated using the same method.
7. Leases
We account for leases in accordance with ASC Topic 842: Leases.
We enter into lease agreements for the use of real estate space and certain equipment under operating leases and we have no financing leases. Our leases are included in
“Right-of-use-assets” and “Lease liabilities” in our Condensed Consolidated Balance Sheets. Our leases have various lease terms, some of which include options to extend. Lease expense is recognized on a straight-line basis over the lease term.
Operating lease expense for the nine months ended September 30, 2023
and 2022 was $ 742
thousand and $ 748 thousand, respectively, and is reported as “Cost of sales”, “Engineering, design and product development expense”,
“Selling and marketing expense”, and “General and administrative expense” in the Condensed Consolidated Statements of Operations. Operating lease expenses include short-term lease costs, which were immaterial during the periods presented.
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Index
The following information represents supplemental disclosure for the statement of cash flows related to operating leases (in thousands):
Nine Months Ended
September 30,
2023
2022
Operating cash outflows from leases
$
756
$
617
The following summarizes additional information related to our leases as of September 30, 2023 and December 31, 2022:
September 30, 2023
December 31, 2022
Weighted average remaining lease term (in years)
2.0
2.7
Weighted average discount rate
4.5
%
4.5
%
The maturity of the Company’s operating lease liabilities as of September 30, 2023 and December 31, 2022 were as follows (in thousands):
September 30, 2023
December 31, 2022
2023
216
972
2024
1,022
1,022
2025
711
710
2026
21
20
Total undiscounted lease payments
1,970
2,724
Less imputed interest
90
166
Total lease liabilities
$
1,880
$
2,558
8. Income taxes
We recorde d income tax expense in the third
quarter of 2023 of $ 169
thousand at an effective tax rate of 15.7 % compared to an income tax benefit in the third quarter of 2022 of $ 62 thousand at an effective tax rate of ( 13.3 %).
For the nine months ended September 30, 2023, we recorded income tax expense of $ 1.2 million at an effective tax rate of 19.8 % , compared to an income tax benefit for the nine months ended September 30, 2022 of $ 2.3 million at an effective tax rate of ( 27.0 %) .
We are subject to U.S. federal income tax, as well as income
tax in certain U.S. state and foreign jurisdictions. We have substantially concluded all U.S. federal, state and local income tax, and foreign tax regulatory examination matters through 2019. However, our federal tax returns for the years 2020
through 2022 remain open to examination. Various U.S. state and foreign tax jurisdiction tax years remain open to examination as well, but we believe that any additional assessment would be immaterial to the Condensed Consolidated Financial
Statements. The Company maintains a valuation allowance against certain deferred tax assets where realization is not certain.
9. Subsequent events
In the fourth quarter of 2023, we completed an asset sale of our Printrex product line (essentially inventory on-hand) and plan to record a resulting
non-operating gain of approximately $ 0.4 million in the fourth quarter of 2023. Prior to this sale, the last TransAct sales of Printrex
products occurred in 2021.
The Company has evaluated all other events or transactions that occurred up to the date the Condensed Consolidated Financial Statements were available
to be issued. Based upon this review, the Company did not identify any other subsequent events that would have required adjustment or disclosure in the Condensed Consolidated Financial Statements.
13
Index
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