What changed in this filing

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Item 1. Financial Statements

2024-11-12 compared with 2024-08-09 · 77 added, 69 removed, 321 unchanged (31% of the section changed)

2 unchanged sentences

C ONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2024

September 30, 2024

December 31, 2023

7 unchanged sentences

Fixed assets, net of accumulated depreciation of $ 19,305

Right-of-use assets

Right-of-use assets, net

Deferred tax assets

14 unchanged sentences

Shareholders’ equity:

Common stock, $ 0.01 par

value, 20,000,000 shares authorized;

Common stock, $ 0.01 par value,

20,000,000 shares authorized;

and 14,003,653 shares issued, respectively;

9,998,307 and 9,958,811 shares

outstanding, respectively

10,010,357 and 9,958,811 shares outstanding, respectively

Additional paid-in capital

8 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands, except per share data)

16 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

5 unchanged sentences

CONDE NSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

5 unchanged sentences

Deferred income taxes

Unrealized foreign currency transaction losses

Unrealized foreign currency transaction (gains) losses

Changes in operating assets and liabilities:

23 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

14 unchanged sentences

Balance, beginning and end of period

Accumulated other comprehensive (loss) income, net of tax

Accumulated other comprehensive loss, net of tax

Balance, beginning of period

18 unchanged sentences

The December 31, 2023 Condensed Consolidated Balance Sheet data was derived from audited financial statements, but does not include all disclosures required by U.S.

These interim financial statements

should be read in conjunction with the audited financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”).

The results of operations for the three and six months ended June 30, 2024

These interim financial statements should

be read in conjunction with the audited financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”).

The results of operations for the three and nine months ended September 30, 2024

are not necessarily indicative of the results to be expected for the full year ending December 31, 2024.

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 temporarily

reduce orders until their stock normalized.

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 some limited downward pricing pressure in

that market and could exacerbate the demand slowdown, which has negatively impacted 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 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 further 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.

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 nine months of 2024 .

During the third

quarter of 2024, we believe all customers, with the exception of one large customer, were able to sell through their on-hand inventory and resumed ordering again.

As a result, we expect this trend to continue to impact results during at

least through the end of 2024 until this one remaining customer is 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 some downward pricing pressure in that market and could exacerbate the demand slowdown, which has negatively impacted our

worldwide casino and gaming sales.

In addition, during 2023 we experienced cost increases as a result of supply chain constraints , most of which we have been able to offset by increasing prices of our products.

However, there can be no guarantee that we will be able to increase prices sufficiently to offset any future

cost increases that cannot be predicted, and we may be further 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.

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 expenses, 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.

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 expenses, 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 began experiencing the full impact of these actions

in the first quarter of 2024 and expect they will result in approximately $ 3 million of annualized savings during 2024 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 resources.

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 this time.

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

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 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.

After reviewing whether conditions and/or events raise substantial doubt about our ability to meet future financial obligations over the 12 months following the date on

5 unchanged sentences

Financial Statements were issued is based on assumptions which involve significant judgment and estimates of future revenues, inflation, rising interest rates, capital expenditures and other operating costs.

Though demand for our products at casinos

has increased substantially post-pandemic, we cannot predict the ultimate impact of the current economic environment, including inflation, rising interest rates and supply chain disruptions on our customers, which may impact sales.

We believe that we

are positioned to withstand the impact of any potential future economic downturn and we would be able to take additional financial and operational actions to cut costs and/or increase liquidity.

We cannot predict the ultimate impact of the

current economic environment, including inflation, and rising interest rates on our customers, which may impact sales.

We believe that we are positioned to withstand the impact of any potential future economic downturn and we would be able to take

additional financial and operational actions to cut costs and/or increase liquidity.

In addition, the presentation of the accompanying unaudited Condensed Consolidated Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and the disclosure of

35 unchanged sentences

Three Months Ended

September 30,

(In thousands)

8 unchanged sentences

Total net sales

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

20 unchanged sentences

software applications and is recognized as revenue as (or when) we perform under the contract.

months ended June 30, 2024, we recognized revenue of $ 0.7 million related to our contract liabilities at December 31, 2023.

months ended September 30, 2024, we recognized revenue of $ 0.9 million related to our contract liabilities at December 31, 2023.

net contract liabilities consisted of the following:

June 30, 2024

September 30, 2024

December 31, 2023

8 unchanged sentences

R emaining performance obligations represent the transaction price of firm orders for which a good or service has not been delivered to our customer.

As of June 30, 2024, the aggregat e amount of transaction prices allo cated t o rem aining performance obligations was $ 4.8

The Company expects to recognize revenue of $ 4.5 million of its remaining performance obligations within the next 12 months following June 30, 2024, $ 0.2 million within the next 24 months

following June 30, 2024 and the balance

of these remaining performance obligations recognized within the next 36 months following June 30, 2024.

As of September 30, 2024, the aggregat e amount of transaction prices allo cated t o rem aining performance obligations was $ 3.0 million.

The Company expects to recognize revenue of $ 2.7 million of its

remaining performance obligations within the next 12 months following September 30, 2024, $ 0.2 million within the next 24 months following September 30, 2024

and the balance of these remaining performance obligations recognized within the next 36 months following September 30, 2024.

The components of inventories were:

June 30, 2024

September 30, 2024

December 31, 2023

22 unchanged sentences

the Siena Credit Facility, tested as of the end of each calendar month, beginning with the calendar month ended July 31, 2021.

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

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.

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

As of September 30, 2024, we had $ 2.3 million of outstanding borrowings under the Siena Credit Facility and $ 4.2 million of net borrowing capacity available under the Siena Credit Facility.

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

26 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(In thousands, except per share data)

7 unchanged sentences

of diluted earnings would be anti-dilutive.

For the three and six months ended June 30, 2024, when a loss was reported, basic and

diluted EPS are calculated using the same method and as a result, 1.6 million and 1.5 million shares, respectively, of potentially dilutive shares consisting of stock awards were excluded from the calculation of earnings per diluted share.

For the three and nine months ended September 30, 2024, when a loss was reported, basic

and diluted EPS are calculated using the same method and as a result, 1.6 million and 1.5 million shares, respectively, of potentially dilutive shares consisting of stock awards were excluded from the calculation of earnings per diluted share.

Anti-dilutive

stock awards excluded from the computation of earnings per dilutive share were 0.9 million in each of the three and six months ended

June 30, 2023.

stock awards excluded from the computation of earnings per dilutive share were 0.9 million in each of the three and nine months ended September 30, 2023.

We account for leases in accordance with ASC Topic 842:

7 unchanged sentences

Lease expense is recognized on a straight-line basis over the lease term.

Operating lease expense for the six months ended June 30, 2024

Operating lease expense for the nine months ended September 30, 2024

and 2023 was $ 759 thousand

3 unchanged sentences

The following information represents supplemental disclosure for the statement of cash flows related to operating leases (in thousands):

Six Months Ended,

Nine Months Ended,

September 30,

Operating cash outflows from leases

The following summarizes additional information related to our leases as of June 30, 2024 and December 31, 2023:

June 30, 2024

The following summarizes additional information related to our leases as of September 30, 2024 and December 31, 2023:

September 30, 2024

December 31, 2023

1 unchanged sentence

Weighted average discount rate

The maturity of the Company’s operating lease liabilities as of June 30, 2024 and December 31, 2023 were as follows (in thousands):

June 30, 2024

The maturity of the Company’s operating lease liabilities as of September 30, 2024 and December 31, 2023 were as follows (in thousands):

September 30, 2024

December 31, 2023

2 unchanged sentences

Total lease liabilities

We recorde d an income tax benefit in the second

We recorde d an income tax benefit in the third

quarter of 2024 of $ 148

thousand at an effective tax rate of ( 21.2 %) compared to an income tax expense in the second quarter of 2023 of $ 391 thousand at an effective tax rate of 33.8 %.

For the six months ended June 30, 2024, we recorded income tax benefit of $ 363 thousand at an effective tax rate of ( 21.1 %) , compared to an income tax expense for the six months ended June 30, 2023

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

thousand at an effective tax rate of ( 21.2 %) compared to an income tax expense in the third quarter of 2023 of $ 169 thousand at an effective tax rate of 15.7 %.

For the nine months ended September 30, 2024, we recorded income tax benefit of $ 511 thousand at an effective tax rate of ( 21.1 %) , compared to an income tax expense for the nine months ended September 30, 2023 of $ 1.2 million at an effective tax rate of

We are subject to U.S.

9 unchanged sentences

Subsequent events

The Company has evaluated all events or transactions that occurred up to the

date the Condensed Consolidated Financial Statements were available to be issued.

Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the Condensed Consolidated

Financial Statements.

The Company has evaluated all events or transactions that occurred up to the date the Condensed Consolidated Financial Statements were available to

Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the Condensed Consolidated Financial Statements.

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 1. Financial Statements