What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-09 compared with 2024-05-14 · 381 added, 191 removed, 219 unchanged (72% of the section changed)

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Forward Looking Statements

Certain statements included in this Quarterly Report on Form 10-Q for the period ended March 31, 2024 (this “Report”), including

without limitation, statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are “forward-looking statements” within the meaning of the U.S.

federal securities laws, including the Private Securities

Litigation Reform Act of 1995.

Certain statements included in this Quarterly Report on Form 10-Q for the period ended June 30, 2024 (this “Report”), including without

limitation, statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are “forward-looking statements” within the meaning of the U.S.

federal securities laws, including the Private Securities Litigation

Reform Act of 1995.

Forward-looking statements are any statements other than statements of historical fact.

Forward-looking statements represent current views about possible future events and are often identified by the use of

forward-looking terminology, such as “may,” “will,” “could,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “project,” “plan,” “predict,” “design” or “continue” or the negative thereof or other similar words.

Forward-looking statements are

subject to certain risks, uncertainties and assumptions.

In the event that one or more of such risks or uncertainties materialize, or one or more underlying assumptions prove incorrect, actual results may differ materially from those expressed or

implied by the forward-looking statements.

Forward-looking statements represent current views about possible future events and are often identified by the use of forward-looking

terminology, such as “may,” “will,” “could,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “project,” “plan,” “predict,” “design” or “continue” or the negative thereof or other similar words.

Forward-looking statements are subject to

certain risks, uncertainties and assumptions.

In the event that one or more of such risks or uncertainties materialize, or one or more underlying assumptions prove incorrect, actual results may differ materially from those expressed or implied by

the forward-looking statements.

Important factors and uncertainties that could cause

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manufacturing capacity or a shortfall or excess of inventory as a result of difficulty in predicting manufacturing requirements due to volatile economic conditions, price increases or decreased availability of third party component parts or raw

materials at reasonable prices, our ability to successfully develop new products that garner customer acceptance and generate sales, both domestically and internationally, in the face of substantial competition;

materials at reasonable prices;

our ability to successfully develop new products that garner customer acceptance and generate sales, both domestically and internationally, in the face of substantial competition;

our reliance on an unrelated third

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risks associated with the pursuit of strategic initiatives and business growth;

our dependence on contract manufacturers for the assembly of a large

portion of our products in Asia;

our dependence on contract manufacturers for the assembly of

a large portion of our products in Asia;

our dependence on significant suppliers;

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marketplace acceptance of new products;

associated with foreign operations;

risks associated with foreign operations;

price wars, supply chain disruptions or other significant pricing pressures affecting the Company’s products in the United States or abroad;

increased product costs or reduced customer demand for our products due

to changes in U.S.

increased product costs or reduced customer demand for our

products due to changes in U.S.

policy that may result in trade wars or tariffs;

political and policy uncertainties with the approach of the U.S.

presidential election;

our ability to protect intellectual property;

exchange rate fluctuations;

the availability of needed financing on acceptable terms or at all;

volatility of, and decreases in

trading prices of our common stock and other risk factors identified and discussed in Part I, Item 1A, Risk Factors, and Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”) and that may be detailed from time to time in the Company’s other reports filed with the Securities and Exchange Commission (the “SEC”).

availability of needed financing on acceptable terms or at all;

volatility of, and decreases in trading prices of our common stock and other risk factors identified and discussed in Part I, Item 1A, Risk Factors, and Part II, Item 7, Management’s

Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form

10-K”) and that may be detailed from time to time in the Company’s other reports filed with the Securities and Exchange Commission (the

We caution readers not to place undue reliance on forward-looking statements, which speak only as of the date of this Report.

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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

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:

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.

Solely for convenience, some of the trademarks, service marks, trade names and copyrights referred to in this Form 10-Q are listed without the ©, ® and ™

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Recent Developments

The Company engaged an advisor in the fourth quarter of 2023 to assist in determining the best long-term strategy for its business and ensure the Company is

maximizing the value of its operations for all shareholders and stakeholders.

For information regarding the risks related to our engagement with an advisor, please see Part I, Item 1A, Risk Factors under the sub-caption “Our success may depend in part

on our ability to identify and pursue the best long-term strategy for our businesses” in our 2023 Form 10-K.

The Company engaged an advisor, Roth Capital Partners, LLC (“Roth”), in the fourth quarter of 2023 to assist in determining the best long-term strategy for its

business and ensure the Company is maximizing the value of its operations for all shareholders and stakeholders.

The Company continues to actively access strategic alternatives with the assistance of Roth while continuing to pursue its business

growth and development initiatives on a parallel track.

The Company has engaged with a number of outside parties and is in various stages of discussion with such outside parties.

The Company is committed to pursuing an optimal outcome for all its

stakeholders and maximizing shareholder value.

For information regarding the risks related to our engagement with an advisor, please see Part I, Item 1A, Risk Factors under the sub-caption “Our success may depend in part on our ability to identify

and pursue the best long-term strategy for our businesses” in our 2023 Form 10-K.

Current Business Trends

After strong demand during most of 2023 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

After strong demand during most of 2023 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 the first quarter of 2024, and we expect this trend to continue to impact results during 2024 until these customers are able to

This slowdown impacted our results in the fourth quarter of 2023 and the first half of 2024, and we expect this trend to continue to impact results during 2024 until these customers are able to

sell their on-hand inventory.

Further, our primary competitor in the casino and gaming market has resumed supplying product and continued to increase volume at what we believe is full capacity, which has resulted in the beginning of downward pricing

pressure in that market and could exacerbate the demand slowdown, which has negatively impacted our worldwide casino and gaming sales.

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Balance Sheet, Cash Flow and Liquidity.

third quarter of 2023, we began a cost reduction initiative to reduce our overall level of operating expenses that included 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 saw the full impact of these actions in the first quarter of 2024 and expect they will result in approximately $3 million of annualized savings

compared to 2023 levels, 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, and conditions in our markets will be 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.

Notwithstanding the foregoing, there is no assurance that the actions we have taken in response to the current business trends 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 that cannot be predicted at this time.

See Part I, Item 1A, Risk Factors, of the 2023 Form 10-K for further discussion of risks related to these current business trends.

During the third quarter

of 2023, we began a cost reduction initiative to reduce our overall level of operating expenses that included 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 experienced the full impact of these actions in the first quarter of 2024 and expect they will result in approximately $3 million of annualized savings compared

to the 2023 levels, partially offset by typical annual inflationary and cost of living increases in operating expenses.

We also began an additional cost reduction initiative in the second quarter of 2024 focused largely on further reducing employee headcount and other external third party

Savings from this initiative are expected to be approximately $2 million on an annualized basis and realized beginning in the third quarter of 2024.

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, and conditions in our markets will be 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

Critical Accounting Estimates

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There have been no material changes in our critical accounting estimates from the information presented in Part II, Item 7.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in the 2023 Form

“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” since the filing of

the 2023 Form 10-K.

Results of Operations:

Three months ended March 31, 2024 compared to three months ended March 31, 2023

Three months ended June 30, 2024 compared to three months ended June 30, 2023

Net sales, which

include printer, terminal and software sales, as well as sales of replacement parts, consumables (including labels) and maintenance and repair services, by market for the three months ended March 31, 2024 and 2023 were as follows (in thousands,

include printer, terminal and software sales, as well as sales of replacement parts, consumables (including labels) and maintenance and repair services, by market for the three months ended June 30, 2024 and 2023 were as follows (in thousands,

except percentages):

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Three Months Ended

March 31, 2024

March 31, 2023

June 30, 2024

June 30, 2023

Food service technology (“FST”)

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and terminals to international destinations.

Net sales for the first quarter of 2024 decreased $11.6 million, or 52%,

compared to the first quarter of 2023.

Net sales for the second quarter of 2024 decreased $8.3 million, or 42%,

compared to the second quarter of 2023.

Printer, terminal and other hardware unit sales volume decreased 49% to approximately 22,000 units, due primarily to a 55% unit sales volume decrease in the casino and gaming market, a 27% unit sales volume decline in the POS automation market and a 25% unit sales volume decline in FST hardware.

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described above, please refer to the results of operations for each of our markets discussed further below.

The average selling price of our printers, terminals and other hardware was relatively flat in the first quarter of 2024 compared to the

first quarter of 2023.

In addition, FST software, labels and other recurring revenue increased $0.1 million, or 3%, in the first quarter of 2024 compared to the first quarter of 2023.

International sales for the first quarter of 2024 decreased $1.8 million, or 38%, from the same period in 2023 due primarily to lower sales in our casino

and gaming market.

The average selling price of our printers, terminals and other hardware was relatively flat in the second quarter of 2024 compared to the

second quarter of 2023.

FST software, labels and other recurring revenue increased $0.3 million, or 12%, in the second quarter of 2024 compared to the second quarter of 2023.

International sales for the second quarter of 2024 decreased $0.4 million, or 13%, from the same period in 2023 due primarily to lower sales in our

casino and gaming market.

Food service technology (“FST”) .

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customers annually on a per-application basis, as well as sales of labels, extended warranty and service contracts, and technical support services.

Sales of our worldwide FST products for the three months ended March 31, 2024 and 2023 were as follows (in thousands, except percentages):

Sales of our worldwide FST products for the three months ended June 30, 2024 and 2023 were as follows (in thousands, except percentages):

Three Months Ended

March 31, 2024

March 31, 2023

June 30, 2024

June 30, 2023

International

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Three Months Ended

March 31, 2024

March 31, 2023

June 30, 2024

June 30, 2023

Software, labels and other recurring revenue

The decrease in food service technology sales in the first quarter of 2024 compared to the

first quarter of 2023 was primarily driven by a decrease in hardware sales.

Hardware sales decreased 21% in the first quarter of 2024 compared to the first quarter of 2023 due primarily to 89% lower sales of our AccuDate 9700 terminals which

we discontinued at the end of 2023.

This decrease was partially offset by a 43% increase in sales of our BOHA!

terminals and Workstation, led by strong sales of our newly launched BOHA!

Terminal 2 to a large international quick serve restaurant (“QSR”)

FST software, labels and other recurring revenue increased 3% compared to the prior year period due largely to the overall increased base of installed terminals.

Recently, a significant customer notified us that it would be terminating service, including its BOHA!

software subscriptions and label sales, for its

existing installed base of BOHA!

terminals by the middle of June 2024.

Total sales to this customer were approximately $4.0 million in 2023.

Despite the loss of this customer, we expect FST revenue for the remainder of 2024 to be relatively

consistent with 2023, as we expect revenue from new customers, including those from our newly announced international QSR customer, to largely offset those from the lost customer.

The increase in food service technology sales in the second quarter of 2024 compared to the second quarter of 2023 was driven by an increase in software, labels and other recurring revenue.

Domestic sales increased 4% in the second quarter of 2024 compared to the second quarter of 2023, while hardware sales were relatively flat in the second quarter of 2024 compared to the second

quarter of 2023 decreasing by less than 1%.

Hardware sales were impacted by a 97% decrease in sales of our AccuDate 9700 terminals which we discontinued at the end of 2023 and 78% lower sales of our legacy BOHA!

These decreases were

almost entirely offset by strong sales of our newly launched BOHA!

Terminal 2 (that will replace our BOHA!

Terminal 1) to a large international quick serve restaurant (“QSR”) customer as well as increased sales of Workstations.

Despite the loss of a

significant customer (explained further below), FST software, labels and other recurring revenue increased 12% compared to the prior year period due largely to increased label sales to several of our larger existing customers.

During the second quarter of 2024, a significant customer notified us that it would be terminating service, including its BOHA!

software subscriptions and

label sales, for its existing installed base of BOHA!

terminals by the middle of July 2024.

Total sales to this customer (including hardware, software, labels and other recurring revenue) were approximately $4.0 million in 2023.

We do not expect any

significant sales to this customer beyond the second quarter of 2024.

Despite the loss of this customer, we expect FST revenue for the remainder of 2024 to be relatively consistent with the comparable period of 2023, as we expect revenue from new

customers, including those from our newly announced international QSR customer, to largely offset those from this lost customer.

POS automation:

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sell our products through a network of domestic and international distributors and resellers.

Sales of our worldwide POS automation products for the three months ended March 31, 2024 and 2023 were as follows (in thousands, except percentages):

Sales of our worldwide POS automation products for the three months ended June 30, 2024 and 2023 were as follows (in thousands, except percentages):

Three Months Ended

March 31, 2024

March 31, 2023

June 30, 2024

June 30, 2023

International

The decrease in POS automation sales in the first quarter of 2024 compared to the first quarter of 2023 was largely driven by a 64% decrease in domestic

The decrease in POS automation sales in the second quarter of 2024 compared to the second quarter of 2023 was driven by a 40% decrease in domestic sales.

During the second quarter of 2022, due to production limitations caused by the worldwide supply chain slowdown at that time, we could not produce enough POS automation printers to fulfill customer orders.

However, by the first quarter of 2023,

we successfully managed through the shortage, significantly increased production and began to fulfill our large backlog of sales orders which resulted in unusually high sales for this period.

During 2024, due to the fact that many of our customers have built up higher than normal levels of inventory of our product as described above, we have seen a slowdown in their order and shipment rates as well as a

reduction in our average selling prices due to renewed competitive pressure.

We expect POS automation sales to continue to be lower in 2024 compared to 2023 as our competitors have resumed volume shipments and we therefore anticipate

our sales volume and average selling price to return to more normalized levels.

However, by the first quarter of 2023, we

successfully managed through the shortage, significantly increased production and began to fulfill our large backlog of sales orders which resulted in unusually high sales in the first half of 2023.

During the second quarter of 2024, we experienced

renewed competitive pressure that has resulted in a a return to a more normalized level of sales as well as a reduction in our average selling prices.

We expect POS automation sales to continue to be lower in 2024 compared to 2023 as our competitors have resumed volume shipments and we therefore

anticipate our sales volume and average selling price to return to more normalized levels.

Casino and gaming .

the casino and gaming market includes sales of thermal ticket printers used in slot machines, video lottery terminals, and other gaming machines that print tickets or receipts instead of issuing coins at casinos, racetracks and other gaming venues

Revenue from this market also includes sales of thermal roll-fed printers used in the international off-premise gaming market in gaming machines such as Amusement with Prizes, Skills with Prizes and Fixed Odds Betting Terminals and kiosks

for sports betting at non-casino gaming and sports betting establishments.

from the casino and gaming market includes sales of thermal ticket printers used in slot machines, video lottery terminals, and other gaming machines that print tickets or receipts instead of issuing coins at casinos, racetracks and other gaming

venues worldwide.

and kiosks for sports betting at non-casino gaming and sports betting establishments.

Revenue from this market also includes royalties related to our patented casino and gaming technology.

In addition, casino and gaming market revenue includes sales of the

EPICENTRAL print system, our software solution (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 .

Sales of our worldwide casino and gaming products for the three months ended March 31, 2024 and 2023 were as follows

(in thousands, except percentages):

In addition, casino and gaming market revenue includes

sales of the EPICENTRAL print system, our software solution (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 .

Sales of our worldwide casino and gaming products for the three months ended June 30,

2024 and 2023 were as follows (in thousands, except percentages):

Three Months Ended

March 31, 2024

March 31, 2023

June 30, 2024

June 30, 2023

International

The decrease in domestic sales of our casino and gaming products for the first quarter of

2024 compared to the first quarter of 2023 of $8.3 million, or 72% is due to the fact that many of our customers have built up higher than normal levels of inventory of our product accumulated as a hedge by our customers during the worldwide

supply chain crisis during 2022 and 2023.

As a result, we have experienced a slowdown in their order and shipment rates that we expect to continue during 2024 until they are able to sell through their on-hand inventory.

We expect this dynamic to

continue through at least the second quarter of 2024 with order rates and sales expected to steadily improve as we move through the second half of 2024.

In addition, we expect an overall more competitive environment in 2024 as our largest competitor

has resumed volume shipments.

The decrease in international casino and gaming sales during the first quarter of 2024 compared to the first quarter of 2023 was due to a 42% decrease in sales of our

Domestic sales of our casino and gaming products for the second quarter of 2024

declined by $6.3 million, or 67%, compared to the second quarter of 2023.

Sales during the second quarter of 2023 were unusually high due to our largest competitor’s inability to supply product due to the supply chain issues.

two of our larger customers continue to hold higher than normal levels of inventory of our product accumulated as a hedge during the worldwide supply chain crisis during 2022 and 2023.

As a result, we have experienced a significant slowdown in their

order and shipment rates that we expect to continue for the remainder of 2024 until they are able to sell through their on-hand inventory.

We expect this dynamic to improve by the end of 2024 and into 2025.

In addition, we expect a normalized

competitive environment to continue through the second half of 2024 as our largest competitor has resumed volume shipments.

The decrease in international casino and gaming sales during the second quarter of 2024 compared to the second quarter of 2023 was due to a 19% decrease in sales of our

thermal casino printers.

Similar to our domestic customers, our international customers also began to slow their order rates for the first quarter of 2024 due to higher-than-normal inventory levels.

Similar to our domestic customers, our international customers also began to slow their order rates in the first quarter of 2024 due to higher-than-normal inventory levels.

We expect this to continue to impact our

international sales during 2024.

international sales for the remainder of 2024.

TransAct Services Group (“TSG”):

generated by TSG includes sales of consumable products (POS receipt paper, ribbons and other printing supplies for non-FST legacy products), replacement parts and accessories, maintenance and repair services, refurbished printers, and shipping and

handling charges.

Sales in our worldwide TSG market for the three months ended March 31, 2024 and 2023 were as follows (in thousands, except percentages) :

Sales in our worldwide TSG market for the three months ended June 30, 2024 and 2023 were as follows (in thousands, except percentages):

Three Months Ended

March 31, 2024

March 31, 2023

June 30, 2024

June 30, 2023

International

The decrease in both domestic and international revenue from TSG during the first quarter of 2024 as compared to the first quarter of 2023 was due largely

to 31% lower sales of legacy replacement parts for lottery printers, partially offset by a 32% increase in service revenue.

The decrease in both domestic and international revenue from TSG during the second quarter of 2024 as compared to the second quarter of 2023 was due largely to 68%

lower domestic sales of legacy replacement parts for lottery printers, and to a much lesser extent, lower legacy consumables sales and service revenue.

We expect TSG sales to be lower in 2024 compared to 2023 as we experienced an unusually high level of sales of legacy lottery printer replacement parts in

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Gross Profit.

information for the three months ended March 31, 2024 and 2023 is summarized below (in thousands, except percentages):

Three Months Ended March 31,

information for the three months ended June 30, 2024 and 2023 is summarized below (in thousands, except percentages):

Three Months Ended June 30,

Total Sales - 2024

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to the third-party licensor of our food service technology software products.

For the first quarter of 2024, gross profit decreased $6.6 million, or 54%, and gross

margin decreased 240 basis points to 53% due primarily to a 52% decline in overall sales including a 64% decline in sales of higher margin casino and gaming printers.

We expect this downward trend in gross margin to continue for much of 2024 due

to the continued expected slowdown in order rates from many of our casino and gaming and POS customers until they sell through higher-than-normal levels of inventory of our product.

For the second quarter of 2024, gross profit decreased $4.7 million, or 44%, and gross

margin declined 180 basis points to 53% due primarily to a 42% decline in overall sales including a 56% decline in sales of higher margin casino and gaming printers.

We expect this downward trend in gross margin to continue for the second half

of 2024 due to the continued expected slowdown in order rates from certain of our casino and gaming customers until they sell through higher-than-normal levels of inventory of our product.

As a result, we expect gross margin for the remainder of

2024 to be in the mid-40% to high-40% range.

Operating Expenses - Engineering, Design

and Product Development.

Engineering, design and product development expense information for the three months ended March 31, 2024 and 2023 is summarized below (in thousands, except percentages):

Three Months Ended March 31,

Operating Expenses - Engineering, Design and Product Development.

Engineering, design and product development expense information

for the three months ended June 30, 2024 and 2023 is summarized below (in thousands, except percentages):

Three Months Ended June 30,

Total Sales - 2024

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Engineering, design and product development expenses primarily include salary and payroll-related expenses for our hardware and software engineering staff,

depreciation and design expenses (including prototype printer expenses, outside design, development and testing services, supplies and contract software development expenses including those payments to third-party licensor of our food service

technology software products).

Engineering, design and product development expenses decreased $303 thousand, or 13%, for the first quarter of 2024 compared to the first

Engineering, design and product development expenses decreased $706 thousand, or 28%, for the second quarter of 2024 compared to the second

quarter of 2023 due to cost reduction initiatives taken during the latter part of 2023, including a reduction of contracted software development expenses.

As a result of these initiatives, we expect that engineering expenses will continue to be lower

for the remainder of 2024 compared to 2023.

As a result of these initiatives and additional cost-cutting initiatives taken in the

second quarter of 2024 as discussed above under the heading “Current Business Trends,” we expect that engineering expenses will continue to be lower for the remainder of 2024 compared to 2023.

Operating Expenses - Selling and Marketing.

Selling and marketing information for the three months ended March 31, 2024 and 2023 is summarized below (in thousands, except percentages):

Three Months Ended March 31,

Selling and marketing information for the three months ended June 30, 2024 and 2023 is summarized below (in thousands, except percentages):

Three Months Ended June 30,

Total Sales - 2024

Total Sales - 2023

Selling and marketing expenses primarily include salaries and payroll-related expenses for our sales, marketing and customer success staff, sales

commissions, travel expenses, expenses associated with the lease of sales offices, advertising, trade show expenses, public relations, e-commerce and other promotional marketing expenses.

Selling and marketing expenses decreased by $674 thousand, or 24%, in the first quarter of 2024 compared to the first quarter of 2023 due to cost reduction initiatives including reduced headcount, trade show and other marketing

As a result of these initiatives, we expect selling and marketing expenses will continue to be lower for the remainder of 2024 compared to 2023.

Selling and marketing expenses primarily include salaries and payroll-related expenses for our sales, marketing and customer success staff, sales commissions, travel

expenses, expenses associated with the lease of sales offices, advertising, trade show expenses, public relations, e-commerce and other promotional marketing expenses.

and marketing expenses decreased by $487 thousand, or 18%, in the second quarter of 2024 compared to the second quarter of 2023 due largely to cost reduction initiatives including reduced headcount, trade show and other marketing expenses.

result of these initiatives and additional cost-cutting initiatives taken in the second quarter of 2024 as discussed above under

the heading “Current Business Trends,” we expect selling and marketing expenses will continue to be lower for the remainder of 2024 compared to 2023.

Operating Expenses - General and

Administrative .

General and administrative information for the three months ended March 31, 2024 and 2023 is summarized below (in

General and administrative information for the three months ended June 30, 2024 and 2023 is summarized below (in

thousands, except percentages):

Three Months Ended March 31,,

Three Months Ended June 30,

Total Sales - 2024

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traded company.

General and administrative expenses decreased $540 thousand, or 16%, during the first quarter of 2024 compared to the first quarter of 2023 due largely to

reduced legal fees, lower bad debt expense and the impact of cost reduction initiatives taken during the latter part of 2023.

We expect general and administrative expenses for 2024 to be slightly lower compared to 2023.

General and administrative expenses decreased $1.9 million, or 43%, during the second quarter of 2024 compared to the second quarter of 2023.

decline was largely due to a severance charge of $1.5 million incurred during the second quarter of 2023 in connection with the resignation of TransAct’s former Chief Executive Officer in April 2023.

In addition, we incurred lower bad debt and

incentive compensation expense, as well as benefited from cost reduction initiatives taken during the latter part of 2023.

We expect general and administrative expenses to continue to be lower for the second half of 2024 as compared to 2023.

Operating (Loss) Income.

(loss) income information for the three months ended March 31, 2024 and 2023 is summarized below (in thousands, except percentages):

Three Months Ended March 31,

Operating (loss) income for the three months ended June 30, 2024 and 2023 is summarized below (in thousands, except percentages):

Three Months Ended June 30,

Total Sales – 2024

Total Sales – 2023

Our operating income decreased $5.1 million, or 134%, in the first quarter of 2024 compared to the first quarter of 2023 due largely to a 52% decline in

Our operating income decreased $1.7 million, or 136%, in the second quarter of 2024 compared to the second quarter of 2023 due largely to a 42% decline in

sales and a resulting $4.7 million decrease in gross profit (including a 180 basis point decline in gross margin).

This was partially offset by a reduction in operating expenses of $3.1 million, or 32%, primarily due to cost reduction efforts

commenced in the latter part of 2023.

commenced in the latter part of 2023 as well as a $1.5 million severance charge incurred during the second quarter of 2023 in connection with the resignation of TransAct’s former Chief Executive Officer in April 2023.

Interest, net.

We recorded net interest income of $48 thousand in the first quarter of 2024 compared to $66 thousand of net interest expense in the first quarter of 2023.

For both periods, we incurred interest

expense on the minimum $2.3 million of borrowings pursuant to the terms of the July 2022 amendment of our credit facility – see Note 5 to the accompanying condensed consolidated financial statements.

During the first quarter of 2024, we

earned more interest income than in the first quarter of 2023 due to higher levels of cash on hand combined with a higher interest rate environment.

Other, net primarily includes foreign exchange gains or losses by our UK subsidiary.

During the first quarter of 2024 we recognized $60 thousand of foreign exchange losses

compared to $21 thousand of foreign exchange gains in the first quarter of 2023.

Going forward, we may continue to experience more foreign exchange gains

or losses depending on the level of sales to European customers through our UK subsidiary and the fluctuation in exchange rates of the euro and pound sterling against the U.S.

We recorded net interest income of $26 thousand in the second quarter of 2024 compared to $68 thousand of net interest expense in the second quarter of 2023.

periods, we incurred interest expense on the minimum $2.3 million of borrowings pursuant to the terms of the July 2022 amendment of our credit facility – see Note 5 to the accompanying condensed consolidated financial statements.

the second quarter of 2024, we earned more interest income than in the second quarter of 2023 due to higher levels of cash on hand combined with a higher interest rate environment.

Other, net primarily includes foreign exchange gains and losses by our UK subsidiary.

During the second quarter of 2024 we recognized $7 thousand of foreign exchange gains

compared to no net foreign exchange gain or loss in the second quarter of 2023.

Going forward, we may continue to experience more foreign exchange gains or losses depending on the level of sales to European customers through our UK

subsidiary and the fluctuation in exchange rates of the euro and pound sterling against the U.S.

Income Taxes.

We recorded an income

tax benefit in the first quarter of 2024 of $277 thousand at an effective tax rate of (21.1%), compared to an income tax expense during the first quarter of 2023 of $629 thousand at an effective tax rate of 16.7%.

In periods with pre-tax income,

such as the first quarter of 2023, the R&D credit has the effect of lowering the effective tax rate.

In periods with pre-tax losses, such as the first quarter of 2024, the R&D credit has the effect of raising the effective tax rate.

We recorded an income tax benefit in the second quarter of 2024 of $86 thousand at an effective tax rate of (21.2%), compared to an income tax expense during the second quarter

of 2023 of $391 thousand at an effective tax rate of 33.8%.

The effective tax rate for the second quarter of 2023 of 33.8% was abnormally high as a result of the non-tax deductibility of a portion of the severance of the Company’s former

Net (Loss) Income .

We reported a net loss for the first quarter of 2024 of $(1.0) million, or ($0.10) per diluted share, compared to net income of $3.1 million, or

$0.31 per diluted share, for the first quarter of 2023.

We reported a net loss for the second quarter of 2024 of $(0.3) million, or ($0.03) per diluted share, compared to net income of $0.8 million, or

$0.08 per diluted share, for the second quarter of 2023.

Results of Operations:

Six Months Ended June 30, 2024 compared to six months ended June 30, 2023

Net sales, which include printer, terminal and software sales, as well as sales of replacement parts, consumables and maintenance and repair services, by market for the six

months ended June 30, 2024 and 2023 were as follows (in thousands, except percentages) :

Six Months Ended

June 30, 2024

June 30, 2023

POS automation

Casino and gaming

International *

International sales do not include sales of printers and terminals made to domestic distributors or other domestic customers that may, in turn, ship those printers

and terminals to international destinations.

Net sales for the first six months of 2024 decreased $19.9 million, or 47%,

from the same period in 2023.

Printer, terminal and other hardware sales unit volume decreased by 56% to approximately 41,000 units for the first six months of 2024 driven primarily by a 59% decrease in units within our casino and gaming market.

For more information about the sales volume decreases described above, please refer to the discussion below of the results of operations for each of our markets.

average selling price of our printers, terminals and other hardware remained relatively flat for the first six months of 2024 compared to the first six months of 2023.

FST software, labels and other recurring revenue increased $0.4 million, or

8%, in the first six months of 2024 compared to the first six months of 2023 .

International sales for the first six months of 2024 decreased $2.2 million, or 27%, from the same period in 2023 due primarily to a 33% decrease in the

international casino and gaming market.

Food service technology.

Sales of our worldwide

food service technology products for the six months ended June 30, 2024 and 2023 were as follows (in thousands, except percentages) :

Six Months Ended

June 30, 2024

June 30, 2023

International

Six Months Ended

June 30, 2024

June 30, 2023

Software, labels and other recurring revenue

The increase in food service technology sales of $0.1 million, or 2%, in the first six months of 2024 compared to the first six months of 2023 was driven by an 8%

increase in sales of BOHA!

software, labels and other recurring revenue, partially offset by 10% lower sales of FST hardware.

Despite the loss of a significant customer (explained further below), FST software, labels and recurring revenue

increased compared to the prior year period primarily due to higher label sales to several of or our larger existing customers and, to a lesser extent, increased software sales due principally to the growth of the installed base of our BOHA!

terminals and workstations.

Hardware sales were impacted by a 94% decrease in sales of our AccuDate 9700 terminals which we discontinued at the end of 2023 and 69% lower sales of our legacy BOHA!

Terminal 1 (including those from a lost customer

explained further below).

These decreases were largely offset by strong sales of our newly launched BOHA!

Terminal 2 (that will replace our BOHA!

Terminal 1) to a large international quick serve restaurant (“QSR”) customer as well as increased

sales of Workstations.

During the second quarter of 2024, a significant customer notified us that it would be terminating service, including its BOHA!

software subscriptions

and label sales, for its existing installed base of BOHA terminals by the middle of July 2024.

Total sales to this customer (including hardware, software, labels and other recurring revenue) were approximately $4.0 million in 2023.

expect any significant sales to this customer beyond the second quarter of 2024.

Despite the loss of this customer, we expect FST revenue for the remainder of 2024 to be relatively consistent with the comparable period 2023, as we expect revenues

from new customers, including those from our newly announced international QSR customer, to largely offset those from this lost customer.

POS automation.

Sales of our worldwide POS automation products for the six months ended June 30, 2024 and 2023 were as follows (in thousands, except percentages) :

Six Months Ended

June 30, 2024

June 30, 2023

International

Sales of POS automation printers decreased $1.9 million, or 51%, for the first six

months of 2024 compared to the first six months of 2023.

During the second quarter of 2022, due to production limitations caused by the worldwide supply chain slowdown at that time, we could not produce enough POS automation printers to

fulfill customer orders.

However, by the first quarter of 2023, we successfully managed through the shortage, significantly increased production and began to fulfill our large backlog of sales orders which resulted in unusually high sales in the

first half of 2023.

During the first six months of 2024, we experienced renewed competitive pressure that has resulted in a a return to a more normalized level of sales as well as a reduction in our average selling prices.

In addition to the slowdown in customer order and shipment rates described above, we expect POS automation sales to continue to be lower in 2024 compared

to 2023 due to the resumption of volume shipments by our competitors and we therefore anticipate our sales volume and average selling price to return to more normalized levels.

Casino and gaming.

Sales of our worldwide casino and gaming products for the six months ended June 30, 2024 and 2023 were as follows (in thousands, except percentages) :

Six Months Ended

June 30, 2024

June 30, 2023

International

Domestic sales of our casino and gaming products declined by $14.6 million, or 70%, for the first six months of 2024 compared to the first six months of 2023.

during the first half of 2023 were unusually high due to our largest competitor’s inability to supply product due to the supply chain issues.

In addition, many of our customers built up, and two continue to hold, higher than normal levels of

inventory of our product accumulated as a hedge during the worldwide supply chain crisis during 2022 and 2023.

As a result, we have experienced a significant slowdown in their order and shipment rates that we expect to continue for the remainder of

2024 until they are able to sell through their on-hand inventory.

We expect this dynamic to improve by the end of 2024 and into 2025.

In addition, we expect a normalized competitive environment to continue through the second half of 2024 as our

largest competitor has resumed volume shipments.

International sales of our casino and gaming products decreased by $2.3

million, or 33%, in the first six months of 2024 compared to the first six months of 2023.

Similar to our domestic customers, our international customers also began to slow their order rates for the first half of 2024 due to

higher-than-normal inventory levels.

We expect this to continue to impact our international sales during the remainder of 2024.

Sales in our worldwide TSG market for the six months ended June 30, 2024 and 2023 were as follows (in thousands, except percentages) :

Six Months Ended

June 30, 2024

June 30, 2023

International

The decrease in domestic TSG revenue of $1.1 million, or 42%, for the first six months of 2024 as compared to the first six months of 2023 was primarily due largely to

57% lower sales of legacy replacement parts for lottery printers, and to a much lesser extent, lower consumables sales and service revenue.

Internationally, TSG revenue decreased $48 thousand, or 11%, for the first six months of 2024 compared to the first six months of 2023, primarily due to a

13% decrease in sales of replacement parts to international casino and gaming customers.

We expect TSG sales to be lower in 2024 compared to 2023 as we experienced an unusually high level of sales of legacy lottery printer replacement parts in

2023 that we do not expect to repeat at the same level in 2024 as the installed base of these printers continues to decline.

Gross Profit.

Gross profit for

the six months ended June 30, 2024 and 2023 is summarized below (in thousands, except percentages):

Six Months Ended June 30,

Total Sales - 2024

Total Sales – 2023

For the first six months of 2024, gross profit decreased $11.4 million, or 49%.

Gross margin also decreased 210 basis points to 53% in the first half of 2024 compared

to 55% in the first half of 2023 compared to the first half of 2023.

Both gross profit and gross margin declined primarily due to a 47% decline in overall sales

including a 61% decline in sales of higher margin casino and gaming printers.

We expect this downward trend in gross margin to continue for the second half of 2024 due to the continued expected slowdown in order rates from certain of our casino

and gaming customers until they sell through higher-than-normal levels of inventory of our product.

As a result, we expect gross margin for the remainder of 2024 to be in the mid-40% to high-40% range.

Operating Expenses - Engineering, Design

and Product Development.

Engineering, design and product development expense for the six months ended June 30, 2024 and 2023 is summarized below (in thousands, except percentages):

Six Months Ended June 30,

Total Sales - 2024

Total Sales - 2023

Engineering, design and product development expenses decreased $1.0 million, or 21%, during the first six months of 2024 compared to first six months of

2023 due to cost reduction initiatives taken during the latter part of 2023, including a reduction of contracted software development expenses .

As a result of these

initiatives and additional cost-cutting initiatives taken in the second quarter of 2024, we expect that engineering expenses will continue to be lower for the remainder of 2024 compared to 2023.

Operating Expenses - Selling and

Selling and marketing expense for the six months ended June 30, 2024 and 2023 is summarized below (in thousands, except percentages):

Six Months Ended June 30,

Total Sales - 2024

Total Sales - 2023

Selling and marketing expenses decreased $1.2 million, or 21%, for the first six months of 2024 compared to the first six months of 2023 due

largely to cost reduction initiatives including reduced headcount, trade show and other marketing expenses.

As a result of these initiatives and additional cost-cutting initiatives taken in the second quarter of 2024, we expect selling and

marketing expenses will continue to be lower for the remainder of 2024 compared to 2023.

Operating Expenses - General and

Administrative .

General and administrative expense for the six months ended June 30, 2024 and 2023 is summarized below (in thousands,

except percentages):

Six Months Ended June 30,

Total Sales - 2024

Total Sales - 2023

General and administrative expenses decreased $2.4 million, or 31%, for the first six months of 2024 compared to the first six months of 2023.

The decline was largely due to a severance charge of $1.5 million incurred during the second quarter of 2023 in connection with the resignation of TransAct’s former Chief

Executive Officer in April 2023.

In addition, we incurred lower legal fees, bad debt and incentive compensation expense, as well as benefited from cost reduction initiatives taken during the latter part of 2023.

We expect general and

administrative expenses to continue to be lower for the second half of 2024 compared to 2023.

Operating (Loss) Income.

(loss) income for the six months ended June 30, 2024 and 2023 is summarized below (in thousands, except percentages):

Six Months Ended June 30,

Total Sales - 2024

Total Sales - 2023

Our operating income decreased $6.8 million, or 135%, for the first six months of 2024 compared to the first six months of 2023 due largely to a 47%

decline in sales and a resulting $11.4 million decrease in gross profit (including a 210 basis point decline in gross margin).

This was partially offset by a reduction in operating expenses of $4.6 million, or 25%, primarily due to cost reduction

efforts commenced in the latter part of 2023 as well as a $1.5 million severance charge incurred during the second quarter of 2023 in connection with the resignation of TransAct’s former Chief Executive Officer in April 2023.

Interest, net.

We recorded net

interest income of $74 thousand for the first six months of 2024 compared to net interest expense of $134 thousand for the first six months of 2023.

For both periods, we

incurred interest expense on the minimum $2.3 million of borrowings pursuant to the terms of the July 2022 amendment of our credit facility – see Note 5, Borrowings to the accompanying condensed consolidated financial statements for more

information regarding the Company’s credit facility.

During the first six months of 2024, we earned more interest income than in the first six months of 2023 due to higher levels of cash on hand combined with a higher interest rate environment.

We recorded other expense of $53 thousand for the first six months of 2024 compared

to other income of $21 thousand for the first six months of 2023 relating primarily to foreign exchange gains and losses.

Going forward, we may continue to experience more foreign exchange gains or losses depending on the level of sales to

European customers through our UK subsidiary and the fluctuation in exchange rates of the euro and pound sterling against the U.S.

Income Taxes.

We recorded an income tax benefit for the first six months of 2024 of $363 thousand at an effective tax rate of (21.1%), compared to an income tax expense for the first six

months of 2023 of $1.0 million at an effective tax rate of 20.7%.

Net (Loss) Income .

As a result of the above, we reported a net loss for the first six months of 2024 of $(1.4) million, or $(0.14) per diluted share, compared to net

income of $3.9 million, or $0.39 per diluted share for the first six months of 2023.

Liquidity and Capital Resources

For the first three months of 2024, our cash and cash equivalents balance decreased $1.7 million from December 31, 2023.

We ended the first quarter of 2024

For the first six months of 2024, our cash and cash equivalents balance decreased $1.2 million from December 31, 2023.

We ended the second quarter of 2024

with $11.1 million in cash and cash equivalents, of which $0.1 million was held by our U.K.

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The following significant

factors affected our cash used in operating activities of $1.5 million for the first three months of 2024 as compared to cash used in operating activities of $0.8 million for the first three months of 2023:

During the first three months of 2024:

factors affected our cash used in operating activities of $0.9 million for the first six months of 2024 as compared to cash provided by operating activities of $3.7 million for the first six months of 2023:

During the first six months of 2024:

We reported a net loss of $1.4 million.

We recorded depreciation and amortization of $0.6 million and share-based compensation expense of $0.5 million.

Inventories increased $1.4 million consistent with the slowdown in sales as discussed in our Results of Operations above.

We expect our

inventories to decline, particularly during the second half of 2024, as we reduce our ordering levels and sell through our inventories on hand.

Accounts receivable decreased $2.0 million due to the continued collections of sales combined with the slowdown in sales as discussed in our

Results of Operations above.

Accrued and other liabilities decreased $1.0 million due largely to the payout of 2023 bonuses in the first quarter of 2024.

During the first three months of 2023:

Accounts receivable decreased $3.1 million due to the continued collections of sales combined with the slowdown in sales as discussed in the Results of Operations

Accounts payable decreased $1.4 million due to the slowdown in inventory purchases associated with the slowdown in sales as discussed in the Results of Operations

Accrued and other liabilities decreased $1.6 million due in part to a reduction in planned 2024 bonuses.

During the first six months of 2023:

We reported net income of $3.9 million.

We recorded depreciation and amortization of $0.7 million, and share-based compensation expense of $0.4 million.

Deferred tax assets were down $0.5 million due to pre-tax income being recognized in the first quarter of 2023.

Accounts receivable increased $3.0 million in 2023 due primarily to increased sales.

Deferred income taxes were down $0.8 million due to pre-tax income being recognized in the first six months of 2023.

Employee retention credit receivable decreased $1.5 million due to the collection of this receivable in the first quarter of 2023.

Accounts payable declined $2.8 million in 2023 due largely to the sell through of inventory on-hand at the end of 2022 as well as the timing of

vendor payments.

Inventories increased $3.4 million consistent with overall increases in sales in 2023 compared to 2022.

Accounts payable were down $1.1 million in 2023 due largely to the timing of vendor payments.

Accrued liabilities and other liabilities increased $1.3 million due largely to accrued

severance i n connection with the resignation of TransAct’s former Chief Executive Officer in April 2023.

Investing activities:

Our capital expenditures

were $106 thousand for the first three months of 2024 compared to $378 thousand for the first three months of 2023.

Our capital expenditures were

$243 thousand for the first six months of 2024 compared to $689 thousand for the first six months of 2023.

Expenditures for both periods were primarily for computer and networking equipment and new tooling equipment.

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Financing activities used $71

$71 thousand of cash during the first three months of 2024 and used $86 thousand in cash during the first three months of 2023.

thousand of cash during the first six months of 2024 and used $86 thousand in cash during the first six months of 2023.

These amounts relate to cash used to pay withholding taxes on stock issued from our stock compensation plans.

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and operating cash flow improved significantly during 2023 due largely to certain competitors’ inability to supply products in both the POS automation and casino and gaming markets.

Our customers also began to slow their order rates for the first

quarter of 2024 due to higher-than-normal inventory levels.

We expect this to continue to negatively impact our sales during 2024.

Nevertheless, given the continued uncertainty related to the demand slowdown and pricing pressure on the food service

and casino industries, including the loss of a major customer described above, we continue to monitor our cash generation, usage and preservation including the management of working capital to generate cash.

Certain large customers also began to slow their order rates for

the first half of 2024 due to higher-than-normal inventory levels.

We expect this to continue to negatively impact our sales during the remainder of 2024.

Given the continued uncertainty related to the demand slowdown and pricing pressure on the

food service and casino industries, including the loss of a major customer described above, we continue to monitor our cash generation, usage and preservation including the management of working capital to generate cash.

We believe that our cash and cash equivalents on hand, our expected cash flows generated from operating activities, and borrowings available under our

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calendar month ended July 31, 2021.

From July 31, 2021 through March 31, 2024, we remained in compliance with our excess availability covenant.

From July 31, 2021 through June 30, 2024, we remained in compliance with our excess availability covenant.

On July 19, 2022, the Company and the Lender entered into Amendment No.

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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.

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.

above, we continue to monitor our cash generation, usage and preservation including the management of working capital to generate cash and continue to evaluate any alternative sources of funding as necessary, including the possible extension of our

line of credit under the Siena Credit Facility.

occurs and is continuing.

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.

As stated above, we continue to monitor our cash generation, usage and preservation including the management of working capital to generate cash and continue to

evaluate any alternative sources of funding as necessary, including the possible extension of our line of credit under the Siena Credit Facility.

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.

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Dillon as Chief Executive Officer.

As of March 31, 2024, we had $2.3 million of outstanding borrowings under the Siena Credit Facility and $3.0 million of net borrowing capacity available

As of June 30, 2024, we had $2.3 million of outstanding borrowings under the Siena Credit Facility and $4.3 million of net borrowing capacity available

under the Siena Credit Facility.

As stated above, we continue to monitor our cash generation, usage and preservation including the management of working capital to generate cash and

continue to evaluate alternative sources of funding as necessary.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis