What changed in this filing

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Item 1. Business

2024-03-13 compared with 2023-03-28 · 260 added, 141 removed, 68 unchanged (86% of the section changed)

TransAct Technologies Incorporated (together with its consolidated subsidiaries, “TransAct,” the “Company,” “we,” “us,” or “our”) was incorporated in June 1996 and began operating as a stand-alone business in August 1996 as a spin-off of the printer business that was formerly conducted by certain subsidiaries of Tridex Corporation.

TransAct Technologies Incorporated (together with its consolidated subsidiaries, “TransAct,” the “Company,” “we,” “us,” or “our”) was incorporated in

June 1996 and began operating as a stand-alone business in August 1996 as a spin-off of the printer business that was formerly conducted by certain subsidiaries of Tridex Corporation.

We completed an initial public offering on August 22, 1996.

TransAct is a global leader in developing and selling software-driven technology and printing solutions for high-growth markets including food service technology, point of sale (“POS”) automation and casino and gaming.

Our world-class products are designed from the ground up based on market and customer requirements and are sold under the BOHA!™, AccuDate™, Epic, EPICENTRAL®, and Ithaca®, brand names.

TransAct is a global leader in developing and selling software-driven technology and printing solutions for high-growth markets including food service

technology, point of sale (“POS”) automation and casino and gaming.

Our world-class products are designed from the ground up based on market and customer requirements and are sold under the BOHA!™, AccuDate™, Epic, EPICENTRAL®, and Ithaca® brand

During 2019, we launched a new line of products for the food service technology market, the BOHA!

branded suite of cloud-based applications and companion hardware solutions.

software and hardware products help restaurants, convenience stores and food service operators of all sizes automate the food production in the back-of-house operations.

Known and respected worldwide for innovative designs and real-world service reliability, our thermal printers and terminals generate top-quality labels, coupons and transaction records such as receipts, tickets and other documents.

We sell our technology to original equipment manufacturers (“OEMs”), value-added resellers, and select distributors, as well as directly to end users.

hardware solutions and companion branded suite of cloud-based applications.

software and hardware products help restaurants,

convenience stores and food service operators of all sizes automate the food production in the back-of-house operations.

Known and respected worldwide for innovative designs and real-world service reliability, our thermal printers and terminals

generate top-quality labels, coupons and transaction records such as receipts, tickets and other documents.

We sell our technology to original equipment manufacturers (“OEMs”), value-added resellers, and select distributors, as well as directly to

Our product distribution spans across the Americas, Europe, the Middle East, Africa, Asia, Australia, New Zealand, the Caribbean Islands and the South Pacific.

We also offer world-class service, support, labels, spare parts, accessories and printing supplies to our growing worldwide base of products currently in use by our customers.

Through our TransAct Services Group (“TSG”), we provide a complete range of supplies and consumables used in the printing activities of customers in the restaurant and hospitality, retail, casino and gaming, and government markets.

We also offer world-class service, support, labels, spare parts, accessories

and printing supplies to our growing worldwide base of products currently in use by our customers.

Through our TransAct Services Group (“TSG”), we provide a complete range of supplies and consumables used in the printing activities of customers in

the restaurant and hospitality, retail, casino and gaming, and government markets.

Through our webstore, www.transactsupplies.com, and our direct selling team, we address the demand for these products.

We operate in one reportable segment:

the design, development, and marketing of software-driven technology and printing solutions for high growth markets, and provide related services, supplies and spare parts.

design, development, and marketing of software-driven technology and printing solutions for high growth markets, and provide related services, supplies and spare parts.

Our primary operating, hardware research and development, and U.S.

service center is located in Ithaca, New York.

center is located in Ithaca, New York.

In addition, we have a casino and gaming sales headquarters and software research and development center in Las Vegas, Nevada;

a European sales and service center at our subsidiary in the United Kingdom (“UK”);

a European sales and service center at our subsidiary in the United Kingdom

and a sales office located in Macau, China.

Our executive offices are located at One Hamden Center, 2319 Whitney Avenue, Suite 3B, Hamden, Connecticut, 06518, with a telephone number of (203) 859-6800.

Impact of the COVID-19 Pandemic and Global Supply Chain Disruptions

Since early 2020, the COVID-19 pandemic has continued to cause uncertainty and disruption in the global economy and financial markets.

We have 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.

During 2021, our inventory levels decreased significantly as a result of these supply chain disruptions, and we experienced significantly lower sales levels.

However, during 2022 we were able to increase our inventory levels and minimize the impact to our customers by successfully modifying our products that were affected by supply chain disruptions, as well as sourcing component parts from alternate suppliers.

Although we were able to increase inventory levels during 2022 and expect to continue to do so in 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 be able to offset any future cost increases should they arise.

After a slowdown in the first quarter of 2022 resulting from the Omicron and other variants of COVID-19, we continued to experience demand recovery during the remainder of 2022.

Based on our strong backlog position and continued market share expansion, we expect this recovery to continue into 2023, though the exact timing and pace of recovery may be impacted by global economic conditions.

During 2020 and 2021, our gross margin was negatively impacted by significantly lower sales levels from the economic effects of the COVID-19 pandemic, as well as increased material and shipping costs resulting from worldwide supply chain disruptions continuing into 2022.

However, we saw significant improvement in the last nine months of 2022 resulting from significantly higher sales levels and price increases instituted on our products to mitigate higher material and shipping costs.

Though we expect this trend to continue into 2023, our gross margin may be negatively 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 on the markets we serve.

Although in 2022 we continued to gradually return to more normalized pre-COVID-19 spending levels after implementing a number of cost saving measures in 2020 through 2022, we expect to continue to closely monitor our spending levels as circumstances warrant.

Since the onset of the COVID-19 pandemic, our top priority has been to ensure the health and safety of our employees while continuing to provide our customers with high-quality, personalized service.

After instituting work-from-home practices in 2020, we transitioned in 2022 to a more flexible hybrid model to accommodate both our employees and the needs of the business.

In addition, even with the transition to a hybrid model, our internal control structure remains operational and unchanged.

Our executive offices are located at One Hamden Center, 2319 Whitney Avenue, Suite 3B, Hamden, Connecticut, 06518, and our telephone number is (203) 859-6800.

Recent Developments

In the fourth quarter of 2023, we completed an asset sale of our Printrex product line (essentially inventory

on-hand) and recorded 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.

Current Business Trends

After strong demand during the year due in part to our primary competitor’s struggle to deliver products in the

face of supply chain constraints, in late 2023, we began to see indications of a temporary slowdown in demand in the casino and gaming market, as customers that had built up excess inventory due to supply chain concerns advised us that they would

temporarily reduce orders until their stock normalized.

This slowdown impacted our results in the fourth quarter of 2023, and we expect this trend to continue to impact results in 2024.

Further, our primary competitor in the casino and gaming

market has resumed supplying product with increasing volume in 2024, which has begun to result in downward pricing pressure in that market and could exacerbate the demand slowdown, either of which could negatively impact our worldwide casino and

gaming sales.

In addition, we have experienced cost increases as a result of current economic conditions, most of which we have been able to offset by increasing the prices of our products.

However, there can be no guarantee that we will be able

to increase prices sufficiently to offset any future such cost increases that cannot be predicted, and we may be impacted by supply chain disruptions, inflationary pressures and other global economic conditions that may affect 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:

Public Offerings – On August 16, 2021, the Company raised net proceeds of $11.2 million (including the exercise of the underwriters’ overallotment option on August 20, 2021), after deducting underwriting discounts, commissions and offering expenses, through an underwritten public offering and sold an aggregate of 842,375 shares of common stock.

PPP Loan – On May 1, 2020, the Company was granted a $2.2 million loan (the “PPP Loan”) under the Paycheck Protection Program (the “PPP”) administered by the Small Business Administration (“SBA”) established under Division A, Title I of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, which enabled us to return employees we furloughed earlier in 2020 to full time employment and to restore employees to full pay following certain pay cuts.

On July 8, 2021, we received notice that the PPP Loan had been forgiven as of July 1, 2021.

See Note 8 for further details regarding the PPP Loan.

Employee Retention Credit – Under the provisions of the CARES Act, the Company was eligible for a refundable employee retention credit subject to certain criteria.

In connection with the CARES Act, the Company 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.

We received these funds in the first quarter of 2023.

Credit Facility – On March 13, 2020, we entered into a new 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 8 for further details regarding this facility.

Reduced Capital Expenditures – We limited capital expenditures during 2020 and 2021 and gradually increased expenses during 2022 as our sales improved.

Notwithstanding the foregoing, there is no assurance that the actions we have taken in response to the pandemic, global supply chain disruptions and inflation are sufficient or adequate, and we may be required to take additional preventive or responsive measures, as the ultimate extent of the effects of these risks on the Company, our financial condition, results of operations, liquidity, and cash flows are uncertain and are dependent on evolving developments which cannot be predicted at this time.

See Part I, Item 1A, Risk Factors, of this Form 10-K for further discussion of risks related to COVID-19, global supply chain disruptions and inflation.

Products, Services and Distribution Methods

Printers, terminals and other hardware:

TransAct designs, develops and markets a broad array of transaction-based and specialty printers and terminals utilizing thermal printing technology for applications, primarily in the food service technology, POS automation, casino and gaming, and prior to exiting the market on December 31, 2021, the oil and gas printing markets.

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.

We expect these actions will result in

approximately $3 million of annualized savings beginning in 2024, partially offset by typical annual inflationary and cost of living increases in operating expenses.

Notwithstanding the foregoing, there is no assurance that the cost-cutting efforts

we have taken to bring expenses in line with our revenue and mitigate the impact of global economic conditions such as supply chain disruptions and inflation are sufficient or adequate, and we may be required to take additional measures, as the

ultimate extent of the effects of these risks on the Company, our financial condition, results of operations, liquidity, and cash flows are uncertain and are dependent on evolving developments which cannot be predicted at this time.

Item 1A, Risk Factors, of this Form 10-K for further discussion of risks related to global economic conditions, supply chain disruptions and inflation.

Products, Services, Markets and Distribution Methods

Printers, terminals and other

casino and gaming markets.

Our printers and terminals are configurable and offer customers the ability to choose from a variety of features and functions.

Options typically include interface configuration, mounting configuration, paper cutting devices, paper handling capacities and cabinetry color.

Our food service technology terminals also offer software configurable menu options and our food service technology market includes sales of optional hardware products including temperature probes, temperature sensors and gateways.

Options typically include interface configuration, mounting configuration, paper cutting

devices and paper handling capacities.

and gateways (i.e.

access points needed to enable wireless communications).

Food Service Technology (“FST”):

2 unchanged sentences

labeling, timers, and media software.

In addition, customers may individually purchase cloud-based software applications that connect to a separate application on a separate mobile device into a solution to automate back-of-house operations in restaurants, convenience stores and food service operations.

addition, customers may individually purchase cloud-based software applications that connect to a separate application on a separate mobile device into a solution to automate back-of-house operations in restaurants, convenience stores and food

service operations.

The additional software offering of BOHA!

consists of a variety of individually purchased software-as-a-service (“SaaS”)-based applications for both Android and iOS operating systems, including applications for, temperature monitoring, temperature taking and checklists and task lists.

consists of a variety of individually purchased software-as-a-service (“SaaS”)-based applications for both Android and iOS operating systems, including applications for, temperature

monitoring, temperature taking and creating checklists and task lists.

These applications are sold separately, and customers purchase the applications they need for their back-of-house operations.

Customers may also purchase associated hardware, such as handheld devices, tablets, temperature probes and temperature sensors and gateways.

Terminal combines  

an operating system and hardware components in a device that includes a touchscreen and one or two thermal print mechanisms that print easy-to-read food rotation labels, grab-and-go labels, and nutritional labels for prepared foods, and “enjoy by” date labels.

WorkStation uses an iPad or Android tablet instead of an integrated touchscreen.

Terminal and the BOHA!

WorkStation are equipped with the TransAct Enterprise Management System to ensure that only approved touchscreen functions are available on the touchscreen device and to allow over-the-air updates to the operating system.

helps food service establishments and restaurants (including fine dining, casual dining, fast casual and quick-service restaurants, convenience stores, hospitality establishments and contract food service providers) effectively manage food safety and grab-and-go initiatives, as well as automate and manage back-of-house operations.

Customers may also purchase associated hardware,

such as tablets, temperature sensors and gateways.

Terminal and newly-launched Terminal 2 combine an operating system and hardware components in a device

that includes a touchscreen and one or two thermal print mechanisms that print easy-to-read food rotation labels, grab-and-go labels, and nutritional labels for prepared foods, and “enjoy by” date labels.

WorkStation uses an iPad or

Android tablet instead of an integrated touchscreen.

Terminal, Terminal 2 and WorkStation are equipped with the TransAct Enterprise Management System to ensure that only approved touchscreen functions are available on the touchscreen

device and to allow over-the-air updates to the operating system.

helps food service establishments and restaurants (including fine dining, casual dining, fast casual and quick-service restaurants, convenience stores, hospitality

establishments and contract food service providers) effectively manage food safety and grab-and-go initiatives, as well as automate and manage back-of-house operations.

Recurring revenue from BOHA!

is generated by software sales, including software subscriptions that are typically charged to customers annually on a per-application basis, as well as sales of labels, extended warranty and service contracts, and technical support services.

In the food service technology market, we use an internal sales force to solicit sales directly from end users.

is generated by software sales, including software

subscriptions that are typically charged to customers annually on a per-application basis, as well as sales of labels, extended warranty and service contracts, and technical support services.

In the food service technology market, we use an

internal sales force to solicit sales directly from end users.

In May 2023, we launched our new BOHA!

Terminal 2 (the “T2”).

The T2 is designed to be a high-end product intended for enterprise customers with increased speed, print resolution and

wide-label capability.

We started receiving orders for the T2 in the latter part of 2023 from both our international and domestic markets.

POS automation:

In the POS market, we sell a printer utilizing thermal printing technology.

Our POS printer is used primarily by McDonald’s, and to a lesser extent, other quick-service restaurants located either at the checkout counter or within self-service kiosks to print receipts for consumers or print on linerless labels.

In the POS market, we primarily sell our products through a network of domestic and international distributors and resellers.

Our POS printer is used primarily by McDonald’s, and to a lesser

extent, other quick-service restaurants and are located either at the checkout counter or within self-service kiosks, to print receipts for consumers or print on linerless labels.

In the POS market, we primarily sell our products through a network

of domestic and international distributors and resellers.

We use an internal sales force to manage sales through our distributors and resellers, as well as to solicit sales directly from end-users.

Casino and gaming:

We sell several models of printers used in slot machines and video lottery terminals (“VLTs”) and other gaming machines that print tickets or receipts instead of issuing coins (“ticket-in, ticket-out” or “TITO”) at casinos, racetracks and other gaming venues worldwide.

These printers utilize thermal printing technology to print tickets and receipts in monochrome and offer various other features such as jam resistant bezels and a dual port interface that enables casinos to print coupons and promotions.

In addition, we sell printers using thermal roll-fed printing technology for use in international non-casino establishments, including game types such as Amusements with Prizes, Skills with Prizes, Fixed Odds Betting Terminals, sports betting establishments and other off-premise gaming type machines around the world.

We sell our casino and gaming products primarily (1) to slot machine manufacturers, who incorporate our printers into slot machines and, in turn, sell completed slot machines directly to casinos and other gaming establishments and (2) through distributors.

We also maintain a dedicated internal sales force to solicit sales from slot machine manufacturers and casinos, and to manage sales through our distributors.

We also offer a software solution, the EPICENTRAL Print System, including annual software maintenance, that enables casino operators to create promotional coupons and marketing messages and to print them in real time at the slot machine.

With EPICENTRAL, casinos can utilize the system to create multiple promotions and incentives to either increase customer time spent on the casino floor or encourage additional visits to generate more revenue to the casinos.

Through TSG, we proactively market the sale of consumable products (including POS receipt paper, ribbons and other printing supplies), replacement parts, maintenance and repair services, and shipping and handling charges.

Our maintenance services include the sale of extended warranties, multi-year maintenance contracts, a 24-hour guaranteed replacement product service called TransAct Xpress™ and other repair services for our non-FST products.

several models of printers used in slot machines and video lottery terminals (“VLTs”) and other gaming machines that print tickets or receipts instead of issuing coins (“ticket-in, ticket-out” or “TITO”) at casinos, racetracks and other gaming

venues worldwide.

betting establishments and other off-premise gaming type machines around the world.

We sell our casino and gaming products primarily (1) to slot machine manufacturers, who incorporate our printers into slot machines and, in turn, sell completed

slot machines directly to casinos and other gaming establishments and (2) through distributors.

We also maintain a dedicated internal sales force to solicit sales from slot machine manufacturers and casinos, and to manage sales through our

distributors.

In the fourth quarter of 2023, we launched the Epic TR80, our newest casino and gaming printer, which we believe will help us retain and expand our customer base in the casino and gaming markets.

We also offer a software solution, the EPICENTRAL Print System, including annual software maintenance, that enables casino operators to create

promotional coupons and marketing messages and to print them in real time at the slot machine.

With EPICENTRAL, casinos can utilize the system to create multiple promotions and incentives to either increase customer time spent on the casino floor

or encourage additional visits to generate more revenue to the casinos.

Through TSG, we proactively market the sale of consumable products (including POS receipt paper, ribbons and other printing supplies), replacement parts,

maintenance and repair services, and shipping and handling charges.

Our maintenance services include the sale of extended warranties, multi-year maintenance contracts, a 24-hour guaranteed replacement product service called TransAct Xpress™ and

other repair services for our non-FST products.

Within the United States, we provide repair services through our service center in Ithaca, New York.

Internationally, we provide repair services through our European service center located in Doncaster, UK, and through partners strategically located around the world.

We also provide customers with telephone sales and technical support, and a personal account representative to handle orders, shipping and general information.

Internationally, we provide repair services through our European service center located in

Doncaster, UK, and through partners strategically located around the world.

We also provide customers with telephone sales and technical support, and a personal account representative to handle orders, shipping and general

Technical and sales support personnel receive training on all our products and services.

In addition to personalized telephone and technical support, we also market and sell consumable products 24 hours a day, seven days a week, via our webstore, www.transactsupplies.com.

In addition to personalized telephone and technical support, we also market and sell consumable products 24 hours a day, seven days a week, via

our webstore, www.transactsupplies.com.

Sources and Availability of Raw Materials

We design our products to optimize product performance, quality, reliability and durability.

These designs combine cost efficient materials, sourcing and assembly methods with high standards of workmanship.

These designs combine cost efficient materials, sourcing

and assembly methods with high standards of workmanship.

Almost all of our printers and terminals are currently produced by a third party manufacturer located in Thailand.

A small portion of our products are assembled in our Ithaca, New York facility largely on a configure-to-order basis using components and subassemblies that have been sourced from vendors and contract manufacturers around the world.

We procure component parts and subassemblies for use in the assembly of a small portion of our hardware products in Ithaca, New York.

Critical component parts and subassemblies include thermal print heads, printing/cutting mechanisms, power supplies, motors, injection molded plastic parts, LCD screens, circuit boards and electronic components, which are obtained from domestic and foreign suppliers at competitive prices, subject to availability.

As a result of the majority of our production being performed by our contract manufacturers, the majority of our purchases consist of fully assembled printers and terminals produced by our contract manufacturers and, to a much lesser extent, component parts.

We typically strive to maintain more than one source for our component parts, subassemblies and fully assembled printers and terminals to reduce the risk of parts shortages or unavailability.

However, we have experienced and could continue to experience some disruption due to certain suppliers being unable to source specific components and we could experience temporary disruption in the availability of components.

A small portion of our products are assembled in our Ithaca, New York

facility largely on a configure-to-order basis using components and subassemblies that have been sourced from vendors and contract manufacturers around the world.

Critical component parts and subassemblies include thermal print heads, printing/cutting mechanisms, power supplies, motors, injection molded plastic

parts, LCD screens, tablets, circuit boards and electronic components, which are obtained from domestic and foreign suppliers at competitive prices, subject to availability.

As a result of the majority of our production being performed by our

contract manufacturers, the majority of our purchases consist of fully assembled printers and terminals produced by our contract manufacturers and, to a much lesser extent, component parts.

We typically strive to maintain more than one source for

our component parts, subassemblies and fully assembled printers and terminals to reduce the risk of parts shortages or unavailability.

However, we have experienced and could continue to experience some disruption due to certain suppliers being

unable to source specific components and we could experience temporary disruption in the availability of components.

In addition, we could experience temporary disruption if certain suppliers ceased doing business with us, as described below.

We currently buy a majority of our thermal print mechanisms, an important component of our thermal printers, and fully assembled printers for substantially all of our printer and food service technology terminal models, from a foreign contract manufacturer in Thailand.

We believe that other contract manufacturers could provide similar thermal print mechanisms or fully assembled printers and terminals, on comparable terms.

We do not have supply agreements with foreign contract manufacturers, and we believe that our supply of thermal print mechanisms and fully assembled printers will be adequate in 2023 and the foreseeable future.

We currently buy a majority of our thermal print mechanisms, an important component of our thermal printers, and fully assembled printers for

substantially all of our printer and food service technology terminal models, from a foreign contract manufacturer in Thailand.

We believe that other contract manufacturers could provide similar thermal print mechanisms or fully assembled printers

and terminals, on comparable terms.

We do not have supply agreements with foreign contract manufacturers, and we believe that our supply of thermal print mechanisms and fully assembled printers and terminals will be adequate in 2024 and the

foreseeable future.

Patents and Proprietary Information

TransAct relies on a combination of trade secrets, patents, employee and third party nondisclosure agreements, copyright laws and contractual rights to establish and protect its proprietary rights in its products.

As of January 31, 2023, we hold 34 United States and 34 foreign patents and have two foreign patent applications pending pertaining to our products.

TransAct relies on a combination of trade secrets, patents, employee and third party nondisclosure agreements, copyright laws and contractual rights to

establish and protect its proprietary rights in its products.

As of January 31, 2024, we hold 26 active United States patents and 29 active foreign patents and have

seven foreign patent applications and two US patent applications pertaining to our products.

The remaining duration of these patents ranges from one to 25 years.

The expiration of any individual patent would not have a significant negative impact on our business.

During the year ended December 31, 2023, no US patents were issued and two foreign

patents were issued.

During the year ended December 31, 2023, one United States patent expired and one foreign patent expired.

The expiration of this foreign patent has not had a material negative impact on our business.

The expiration of any individual patent would not have a significant negative impact on our

We regard certain manufacturing processes and designs to be proprietary and attempt to protect them through employee and third party nondisclosure agreements and similar means.

It may be possible for unauthorized third parties to copy certain portions of our products or to reverse engineer or otherwise obtain and use, to our detriment, information that we regard as proprietary.

Moreover, the laws of some foreign countries do not afford the same protection to our proprietary rights as do the laws of the United States.

There can be no assurance that legal protections we rely upon to protect our proprietary position will be adequate or that our competitors will not independently develop technologies that are substantially equivalent or superior to our technologies.

It may be possible for unauthorized third parties to copy

certain portions of our products or to reverse engineer or otherwise obtain and use, to our detriment, information that we regard as proprietary.

Moreover, the laws of some foreign countries do not afford the same protection to our proprietary

rights as do the laws of the United States.

There can be no assurance that legal protections we rely upon to protect our proprietary position will be adequate or that our competitors will not independently develop technologies that are

substantially equivalent or superior to our technologies.

Trademarks, Service Marks Trade Names and Copyrights

We own or have rights to trademarks, service marks, trade names and copyrights that we use in connection with the operation of our business, including our corporate names, logos and website names.

We own or have rights to trademarks, service marks, trade names and copyrights that we use in connection with the operation of our business, including

our corporate names, logos and website names.

Other trademarks, service marks and trade names appearing in this Form 10-K are the property of their respective owners.

The trademarks we own include TransAct®, BOHA!

TM , AccuDate™, EPICENTRAL®, Ithaca® and Printrex®.

Solely for convenience, some of the trademarks, service marks, trade names and copyrights referred to in this Form 10-K are listed without the ©, ® and ™ symbols, but we will assert, to the fullest extent under applicable law, our rights to our trademarks, service marks, trade names and copyrights.

Restaurants typically reduce purchases of equipment in the fourth quarter due to the increased volume of transactions during the holiday period, which may negatively impact sales of our food service technology products or POS printers.

TM , AccuDate™,

EPICENTRAL® and Ithaca®.

law, our rights to our trademarks, service marks, trade names and copyrights.

Restaurants typically reduce purchases of equipment in the fourth quarter due to the increased volume of transactions during the holiday period, which

may negatively impact sales of our food service technology products or POS printers.

Working Capital

Inventory, accounts receivable, and accounts payable levels, payment terms, and where applicable, return policies are in accordance with the general practices of the industry and standard business procedures.

See also Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-K.

Certain Significant Customers

IGT is our most significant customer, although to a lesser extent than in previous years, and has been since 1995.

IGT is our most significant customer.

We sell casino and gaming printers and, prior to 2021, online lottery printers to IGT.

On May 29, 2015, we signed an agreement with IGT to sell online lottery and casino printers to IGT on a non-exclusive basis through December 31, 2019.

We decided not to renew the agreement upon its expiration and to exit the online lottery market.

Although we no longer have an agreement with IGT, we expect to continue selling casino and gaming printers to IGT, as well as spare parts for our remaining, but declining, installed base of lottery printers, in the future.

Although we no longer have

an agreement to sell lottery printers to IGT, we expect to continue selling casino and gaming printers to IGT, as well as spare parts for our remaining, but declining, installed base of lottery printers, in the future.

Sales to IGT represented 15% and 10% of our total net sales for the years ended December 31, 2023 and 2022, respectively.

Our backlog of firm orders was approximately $10.7 million as of February 29, 2024, compared to $27.5 million as of February 28, 2023.

The increase in firm orders as of February 28, 2023 compared to February 28, 2022 is due primarily to advance orders placed by our casino and gaming customers due to increased production lead time, resulting from worldwide supply chain shortages caused by the pandemic.

Based on customers’ current delivery requirements, we expect to fill and recognize as revenue $26.9 million of our current backlog during 2023, $0.5 million during 2024 and the remaining balance of the amount during 2025.

The market for transaction-based and specialty printers and food service technology terminals is extremely competitive, and we expect such competition to continue in the future.

The decrease in

firm orders as of February 29, 2024 compared to February 28, 2023 is due primarily to casino and gaming customers placing a large number of advance orders in 2023 due to pandemic-related supply chain shortages that have now begun to cease.

on customers’ current delivery requirements, we expect to fill and recognize as revenue $10.3 million of our current backlog during 2024, $0.3 million during 2025 and the remaining balance of the amount during 2026.

The market for transaction-based and specialty printers, food service technology terminals and related software applications is extremely competitive,

and we expect such competition to continue in the future.

However, we experience less competition for EPICENTRAL software due to the highly customized nature of the product.

We compete with a number of companies, many of which have greater financial, technical and marketing resources than TransAct.

We believe our ability to compete successfully depends on a number of factors both within and outside our control, including durability, reliability, quality, design capability, product customization, price, customer support, success in developing new products, manufacturing expertise and capacity, supply of component parts and materials, strategic relationships with suppliers, the timing of new product introductions by us and our competitors, general market, economic and political conditions and, in some cases, the uniqueness of our products.

In the food service technology market, we primarily compete with Zenput, Squadle Inc., Jolt Software, Avery Dennison Corporation, Ecolab Inc., ITD Food Safety, CMC Daymark, Integrated Control Corp, Digi International, and Toast.

We compete in this market based largely on our ability to provide highly specialized purpose-built hardware products, different software applications that can be chosen by a customer and ongoing technical support.

We rely upon third party developed software and hosting services combined with our own proprietary hardware and software to offer a unique BOHA!

We compete with a number of companies, many of which have greater

financial, technical and marketing resources than TransAct.

We believe our ability to compete successfully depends on a number of factors both within and outside our control, including durability, reliability, quality, design capability, product

customization, price, customer support, success in developing new products, manufacturing expertise and capacity, supply of component parts and materials, strategic relationships with suppliers, the timing of new product introductions by us and our

competitors, general market, economic and political conditions and, in some cases, the uniqueness of our products.

In the food service technology market, we primarily compete with CrunchTime!

Information Systems, Inc.

(including its Zenput and Squadle brands), Jolt

Software, Avery Dennison Corporation, Ecolab Inc., ITD Food Safety, CMC Daymark, Integrated Control Corp, Digi International, and Toast.

We compete in this market based largely on our ability to provide highly specialized purpose-built hardware

products, different software applications that can be chosen by a customer and ongoing technical support.

We rely upon third party developed software and hosting services combined with our own proprietary hardware and software to offer a unique

branded solution to support back-of-house operations in the food service industry.

Our competitors or others may develop, or may establish relationships with developers with the capability to develop, software and services that are similar to or competitive with ours, which may be disadvantageous to our competitive position.

Certain portions of our food service technology software are licensed from a third party developer on a non-exclusive basis through 2031 and are subject to a revenue sharing arrangement with the developer.

Our competitors or others may develop, or may establish relationships with developers with the capability to develop, software and services that are similar to

or competitive with ours, which may be disadvantageous to our competitive position.

Certain portions of our food service technology software are licensed from a third party developer on a non-exclusive basis through 2031 and are subject to a

revenue sharing arrangement with the developer.

We are reliant upon the third party developer to further develop and maintain its developed software, and the developer controls the software source code.

The license agreement does not preclude the developer from working with others on similar products.

The license agreement does not preclude the

developer or the Company from working with others on similar products.

Also, the third party developer hosts the web-based applications.

Therefore, presently, we are highly dependent upon this third party developer for continued service to our customers and the further development of our food service technology software products.

Therefore, presently, we are highly dependent upon this third party developer for continued service to our

customers and the further development of our food service technology software products.

In the POS automation market, we primarily compete with Epson America, Inc., which holds a dominant market position.

We also compete, to a much lesser extent, with Star Micronics America, Inc.

We also compete, to a much lesser

extent, with BIXOLON America, Inc., Star Micronics America, Inc.

and Citizen - CBM America Corporation.

Certain competitors of ours have greater financial resources and lower costs attributable to higher volume production which enables them to occasionally offer lower prices than us.

In the casino and gaming market (consisting principally of slot machine printing, VLT transaction printing and promotional coupon printing), we compete with several companies including JCM Global, Nanoptix, Inc., Custom Engineering SPA, Eurocoin and others.

Certain of our products sold for casino and gaming applications compete based upon our ability to provide highly specialized products, custom engineering and ongoing technical support.

In 2022, we increased our overall market share due largely to our largest competitor’s inability to supply product due to supply chain issues.

In the oil and gas market, our Printrex products competed primarily with the products of Imaging Systems Group, Inc.

and Neuralog Inc.

However, we exited the oil and gas market at the end of 2021 in order to shift our focus toward our higher-value, technology enabled food service technology and gaming products.

The market in which TSG competes is highly fragmented, and we compete with numerous competitors of various sizes, including POS and internet resellers and paper converters depending on the geographic area.

Our strategy for competing in our markets is to continually develop and/or license new products (hardware and software), such as launching BOHA!

in 2019, and product line extensions that are technologically advanced and provide differentiated features and functions, to increase our market penetration, to take advantage of strategic relationships, and to lower the cost of our products by sourcing certain products overseas.

Although we believe that our products, operations and relationships provide a competitive foundation, there can be no assurance that we will compete successfully in the future.

Certain competitors of ours have greater financial resources and lower costs attributable to higher volume production which enables them to

occasionally offer lower prices than us.

In the casino and gaming market (consisting principally of slot machine printing, VLT and sports betting transaction and promotional coupon printing), we

compete with several companies including JCM Global, Nanoptix, Inc., Custom Engineering SPA, Eurocoin and others.

Certain of our products sold for casino and gaming applications compete based upon our ability to provide highly specialized

products, custom engineering and ongoing technical support.

We believe we have increased our market share in casino and gaming during 2022 and 2023 compared to prior years primarily as a result of our largest competitor’s inability to supply

product due to supply chain issues, but we that competitor has recently begun to supply product to the market, resulting in a more competitive environment in the casino and gaming market going forward in 2024.

The market in which TSG competes is highly fragmented, and we compete with numerous competitors of various sizes, including POS and internet resellers

and paper converters depending on the geographic area.

Our strategy for competing in our markets is to continually develop and/or license new products (hardware and software), such as launching the BOHA!

Terminal in 2019 and the BOHA!

Terminal 2 in 2023, and product line extensions that are technologically advanced and provide differentiated features and functions, to increase our market penetration, to take advantage of strategic relationships,

and to lower the cost of our products by sourcing certain products overseas.

Although we believe that our products, operations and relationships provide a competitive foundation, there can be no assurance that we will compete successfully in the

In addition, our printer products utilize certain thermal printing technologies and licensed software.

If new technologies are introduced, or existing technologies evolve, we may be required to incorporate these technologies into our products.

If new technologies are introduced, or existing technologies evolve, we may be required to incorporate these technologies into our

Alternatively, if such technologies were to become available to our competitors, our printer products could become obsolete, which could have a significant negative impact on our business.

Governmental Regulation

The casino and gaming industries are generally subject to extensive and evolving regulation that in many jurisdictions includes licensing or regulatory

screening of suppliers, manufacturers and distributors and their applicable affiliates, their major shareholders, officers, directors and key employees.

In addition, certain of our casino and gaming products and technologies must be certified or

approved in each of the jurisdictions in which we operate.

Regulators review many facets of an applicant or holder of a license, including its financial stability, integrity and business experience.

Any failure to receive a license or the loss of a

license that we currently hold could have a material adverse effect on us or on our results of operations, cash flow or financial condition.

While we believe that we are in compliance with all material casino and gaming laws and regulatory requirements applicable to us, we cannot assure that

our activities or the activities of our customers will not become the subject of any regulatory or law enforcement proceeding or that any such proceeding would not have a material adverse impact on us or our results of operations, cash flows or

financial condition.

Environmental Compliance

Our compliance with federal, state and local laws and regulations relating to environmental protection and discharge of hazardous materials has not had a material impact on our capital expenditures, earnings or competitive position, and we do not anticipate any material impact from such compliance in the future.

Our compliance with federal, state and local laws and regulations relating to environmental protection and discharge of hazardous materials has not had a

material impact on our capital expenditures, earnings or competitive position, and we do not anticipate any material impact from such compliance in the future.

Available Information

We make available free of charge through the “Investor Relations” tab on our Internet website, www.transact-tech.com, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and all amendments to those reports and statements as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov.

We make available free of charge through the “Investor Relations” tab on our website, www.transact-tech.com, our Annual Report on Form 10-K, Quarterly

Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and all amendments to those reports and statements as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC pursuant to Sections

13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the

SEC at http://www.sec.gov.

The content on any website referred to in this Form 10-K is not incorporated by reference in this Form 10-K unless expressly noted.

As of December 31, 2023, TransAct and our subsidiaries employed 117 persons, all of whom were full-time employees.

None of our employees are unionized, and we consider our relationships with our employees to be good.

None of our employees are unionized,

and we consider our relationships with our employees to be good.

Information about our Executive Officers

The following is a list of the names and ages of all executive officers of the registrant, indicating all positions and offices with the registrant held by each such person and each person’s principal occupations and employment during at least the past five years.

The following is a list of the names and ages of all executive officers of the registrant, indicating all positions and offices with the registrant held

by each such person and each person’s principal occupations and employment during at least the past five years.

Chief Executive Officer

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Chief Technology Officer

Shuldman has been Chief Executive Officer and a Director of the Company since its formation in June 1996.

Shuldman served as President of the Company from its formation until June 2010, when he relinquished the President title to focus on new products and markets, international expansion and potential acquisitions.

Shuldman also served as Chairman of the Board from February 2001 through March 2022.

DeMartino was named as TransAct’s President, Chief Financial Officer, Treasurer and Secretary on June 1, 2010.

Vice President & Chief Accounting Officer

Dillon was appointed Chief Executive Officer of TransAct on April 4, 2023 and has been a member of the Board of Directors of the Company since

Dillon has been the Chairman of the Board of Directors of Aerospike, the world’s first flash-optimized database and the fastest database at scale, since January 2022 and served as CEO of Aerospike from January 2015 to January 2022.

to joining Aerospike, Mr.

Dillon served as CEO of Engine Yard, Inc., the leading cloud platform for automating and developing Ruby on Rails and PHP applications, from 2009 to 2014.

He served as CEO for Navis, Inc., a private company specializing in

software systems for operating large marine container terminals and distribution centers, from 2002 to 2008.

Before Navis, he also served as CEO for Salesforce, Inc.

(formerly Salesforce.com) and President and CEO of Hyperion Solutions.

his career as a Systems Engineer for EDS (Electronic Data Systems) and then moved into a variety of sales management positions for various high-tech companies, including Oracle Corporation.

Dillon holds a Bachelor’s degree in Engineering from

the United States Naval Academy and an MBA from Golden Gate University.

DeMartino was named TransAct’s President, Chief Financial Officer, Treasurer and Secretary on June 1, 2010.

Previously, Mr.

DeMartino served as Executive Vice President, Chief Financial Officer, Treasurer and Secretary from June 2004 to May 2010, Senior Vice President, Finance and Information Technology from October 2001 to May 2004, Vice President and Corporate Controller from January 1998 to October 2001, and Corporate Controller from August 1996 to December 1997.

DeMartino served

as Executive Vice President, Chief Financial Officer, Treasurer and Secretary from June 2004 to May 2010, Senior Vice President, Finance and Information Technology from October 2001 to May 2004, Vice President and Corporate Controller from January

1998 to October 2001, and Corporate Controller from August 1996 to December 1997.

DeMartino is a certified public accountant.

Winslow was appointed Chief Revenue Officer of the Company in March 2023 with responsibility for worldwide sales in all of the Company’s markets.

Winslow was named Chief Revenue Officer of the Company in March 2023 with responsibility for worldwide sales in all of the Company’s markets.

Prior to this appointment, Ms.

1 unchanged sentence

Previously, Ms.

Winslow served as Senior Vice President, Sales and Marketing from June 2007 to May 2010, Senior Vice President, Marketing and Sales, POS and Banking with the Company from July 2006 to June 2007, and joined TransAct in May of 2005 as Senior Vice President, Marketing.

Winslow served as

Senior Vice President, Sales and Marketing from June 2007 to May 2010, Senior Vice President, Marketing and Sales, POS and Banking with the Company from July 2006 to June 2007, and joined TransAct in May of 2005 as Senior Vice President,

Prior to joining TransAct, Ms.

1 unchanged sentence

She joined Xerox Corporation in 1983.

Brent Richtsmeier was named as Chief Technology Officer in September 2021.

Brent Richtsmeier was named Chief Technology Officer in September 2021.

Previously, Mr.

Richtsmeier served as Senior Vice President, Software Engineering since joining TransAct in December 2019 and was appointed as an officer of the Company in January 2021.

Richtsmeier served as Senior Vice President, Software

Engineering since joining TransAct in December 2019 and was appointed as an officer of the Company in January 2021.

Prior to joining TransAct, Mr.

Richtsmeier was employed with Samsung, an electronics corporation, from May 2004 until November 2017 as the VP of Development where he was responsible for software strategy, software development at scale and business development.

In November 2017, Samsung Electronics sold their business products division to HP Inc, and Mr.

Richtsmeier was employed with Samsung Electronics Co., Ltd., an electronics corporation, from May

2004 until November 2017 as the VP of Development where he was responsible for software strategy, software development at scale and business development.

In November 2017, Samsung Electronics sold their business products division to HP Inc, and

Richtsmeier transferred to HP Inc to become the Global Head of Cloud and Mobile Software Solutions until joining TransAct in 2019.

There are no family relationships between any of our executive officers and there is no arrangement or understanding between any of such officers and any other person pursuant to which he or she was selected as an officer.

Each of our executive officers was elected by the Board of Directors to hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal.

DeFrances joined TransAct as Vice President & Chief Accounting Officer in July 2022.

DeFrances previously served as Corporate

Controller at Omega Engineering, Inc., an electronics and instrumentation company that was, during Mr.

DeFrances’ tenure, a subsidiary of Spectris plc, a UK public company listed on the London Stock Exchange, from September 2020 to July 2022.

From August 2019 to August 2020, Mr.

DeFrances worked as an independent financial consultant.

Prior to this, Mr.

DeFrances held various positions with United Technologies Corporation (now RTX Corporation, formerly Raytheon Technologies

Corporation) (“UTC”) and Sikorsky Aircraft (owned by Lockheed Martin Corporation).

DeFrances previously served as an Associate Director of Military Finance for Pratt & Whitney, a subsidiary of UTC, from October 2018 to August 2019, and

the Business Unit Controller, USG/Military and International Military for Sikorsky Aircraft from October 2015 to October 2018.

Prior to this, Mr.

DeFrances also served as the Assistant Controller, Financial Reporting for Sikorsky Aircraft from

2009 to 2013.

In addition, Mr.

DeFrances held various accounting and financial roles (VP Treasurer and VP Controller) from 2005 to 2009 at ATMI, Inc.

(acquired by Entegris, Inc.), an advanced manufacturing company in the semiconductor industry.

DeFrances is a certified public accountant.

There are no family relationships between any of our executive officers and there is no arrangement or understanding between any of such officers and any

other person pursuant to which he or she was selected as an officer.

Each of our executive officers was elected by the Board of Directors to hold office until his or her successor is elected and qualified or until his or her earlier resignation or

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What changed 10-K

Item 1. Business