What changed in this filing

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Item 1. Financial Statements

2025-05-14 compared with 2024-11-12 · 211 added, 210 removed, 188 unchanged (69% of the section changed)

2 unchanged sentences

C ONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2024

March 31, 2025

December 31, 2024

7 unchanged sentences

Fixed assets, net of accumulated depreciation of $ 19,652

Right-of-use assets, net

Deferred tax assets

Right-of-use assets, net of accumulated amortization of $ 2,041 and $ 1,796

Intangible assets, net of accumulated amortization of $ 1,606 and $ 1,606

13 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;

14,125,559 and 14,068,049 shares issued, respectively;

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

10,080,717 and 10,023,207 shares

outstanding, respectively

Additional paid-in capital

6 unchanged sentences

TRANSACT TECHNOLOGIES INCORPORATED

CONDE NSED CONSOLIDATED STATEMENTS OF OPERATIONS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

Nine Months Ended

September 30,

(In thousands, except per share data)

Cost of sales

3 unchanged sentences

General and administrative

Operating (loss) income

Operating loss

Interest and other income (expense):

Interest, net

(Loss) income before income taxes

Income tax benefit (expense)

Net (loss) income

Net (loss) income per common share:

Income (loss) before income taxes

Income tax expense (benefit)

Net income (loss)

Net income (loss) per common share (Note 7):

Shares used in per-share calculation:

1 unchanged sentence

TRANSACT TECHNOLOGIES INCORPORATED

CONDENSED CONSOLI DATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE

INCOME (LOSS)

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Net (loss) income

Net income (loss)

Foreign currency translation adjustment, net of tax

Comprehensive (loss) income

Comprehensive income (loss)

See notes to Condensed Consolidated Financial Statements.

1 unchanged sentence

CONDE NSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended

(In thousands)

Cash flows from operating activities:

Net (loss) income

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Share-based compensation expense

4 unchanged sentences

Accounts receivable

Employee retention credit receivable

Prepaid income taxes

2 unchanged sentences

Accrued liabilities and other liabilities

Net cash (used in) provided by operating activities

Net cash used in operating activities

Cash flows from investing activities:

5 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents

(Decrease) increase in cash and cash equivalents

Decrease in cash and cash equivalents

Cash and cash equivalents, beginning of period

2 unchanged sentences

Non-cash capital expenditure items

Right of use asset obtained in exchange for new operating lease liabilities

See notes to Condensed Consolidated Financial Statements.

TRANSACT TECHNOLOGIES INCORPORATED

CONDENSED CONSO LIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Equity beginning balance

Balance, beginning of period

Issuance of common stock from restricted stock units

Balance, end of period

Balance, beginning and end of period

Additional paid-in capital

5 unchanged sentences

Balance, beginning of period

Net (loss) income

Net income (loss)

Balance, end of period

22 unchanged sentences

The December 31, 2024 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 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 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.

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 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

which the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q were issued, including consideration of the actions to manage expenses and liquidity, we believe that our net cash to be provided by operations

combined with our cash and cash equivalents and borrowing availability under our revolving credit facility will provide sufficient liquidity to fund our current obligations, capital spending, and working capital requirements and to comply with the

financial covenants of our credit facility over at least 12 months following the date that the Condensed Consolidated Financial Statements were issued.

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, 2024 (the “2024 Form 10-K”).

The results of operations for the three months ended March 31, 2025 are

not necessarily indicative of the results to be expected for the full year ending December 31, 2025.

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 during the year ended December 31, 2024.

After reviewing whether conditions and/or

events raise substantial doubt about our ability to meet future financial obligations over the 12 months following the date on which the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q (this “Form 10-Q”)

were issued, including consideration of the actions to manage expenses and liquidity, we believe that our net cash to be provided by operations combined with our cash and cash equivalents and borrowing availability under our revolving credit

facility will provide sufficient liquidity to fund our current obligations, capital spending, and working capital requirements and to comply with the financial covenants of our credit facility over at least 12 months following the date that the

Condensed Consolidated Financial Statements were issued.

Use of Assumptions and Estimates

Management’s belief that the Company will be able to fund its planned operations over the 12 months following the date on which the unaudited Condensed Consolidated

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

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

contingent assets and liabilities.

Our estimates include those related to revenue recognition, accounts receivable, inventory obsolescence, goodwill and intangible assets, the valuation of deferred tax assets and liabilities, depreciable lives of

equipment, share-based compensation and contingent liabilities.

We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.

Actual results could differ from those estimates

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

cannot predict the ultimate impact of the current economic environment, including inflation, and rising interest rates on our customers, which may impact sales.

In addition, we cannot predict the ultimate impact that recent or future tariff actions

government and other countries may have on our costs and supply chain or provide assurance that all such cost increases can be offset by price increases.

Tariffs may also change customer behavior, as some customers may seek to order

further in advance than they typically do to avoid any potential cost increases, which could result in lower demand in future periods.

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 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 contingent assets and liabilities.

Our estimates include those related to revenue recognition, accounts receivable, inventory obsolescence, goodwill and intangible

assets, the valuation of deferred tax assets and liabilities, depreciable lives of equipment, share-based compensation and contingent liabilities.

We base our estimates on historical experience and on various other assumptions that we believe to be

reasonable under the circumstances.

Actual results could differ from those estimates used.

Significant accounting policies

3 unchanged sentences

Recently issued accounting pronouncements:

On November 27, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting

Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280) .

The amendments improve reportable segment disclosures requirements and clarify circumstances in which an entity can disclose

multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment and contain other disclosure requirements.

These amendments are effective for fiscal years beginning after

December 15, 2023 and for interim periods beginning after December 15, 2024.

These segment disclosure requirements must be applied retrospectively to all periods presented in the financial statements.

We are currently evaluating the impact of

adopting this standard;

however, we do not expect it to have a material impact on our Consolidated Financial Statements.

On December 14, 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

On December 14, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

ASU requires the use of consistent categories and greater disaggregation in tax rate reconciliations and income taxes paid disclosures.

This ASU requires the use of consistent categories and greater disaggregation in tax rate reconciliations and income

taxes paid disclosures.

These amendments are effective for fiscal years beginning after December 15, 2024.

These income tax disclosure

requirements can be applied either prospectively or retrospectively to all periods presented in the financial statements.

These income tax disclosure requirements can be applied either prospectively or retrospectively to all periods presented in the financial

We are currently evaluating the impact of adopting this standard;

however, we do not expect it to have a material impact on

our Consolidated Financial Statements.

We account for revenue in accordance with Financial Accounting Standards Codification (“ASC”) Topic 606:

however, we do not expect it to have a material impact on our Consolidated Financial Statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation

of Income Statement Expenses.

The amendments in this update require footnote disclosures on disaggregated information about specific categories underlying certain income statement expense line items that are considered relevant.

This includes

items such as the purchase of inventory, employee compensation, depreciation, and intangible asset amortization.

The amendments in ASU 2024-03 are effective for fiscal years beginning after December 15, 2026.

Early adoption is permitted.

expect that adoption of this ASU will result in additional disclosure, but will not impact our consolidated financial position, results of operations, or cash flows.

Other new accounting pronouncements issued, but not effective until after March 31, 2025, did not and are not expected to have a material impact on our financial

position, results of operations or liquidity.

We account for revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606:

Revenue from Contracts with Customers.

Disaggregation of revenue

The following tables disaggregate our revenue by market type, as we believe this best depicts how the nature, amount, timing and uncertainty of our revenue and cash

flows are affected by economic factors.

The following tables disaggregate our revenue by market type, as we believe this best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows

are affected by economic factors.

Sales and usage-based taxes are excluded from revenues.

Three Months Ended

September 30,

(In thousands)

8 unchanged sentences

Total net sales

Nine Months Ended

September 30,

(In thousands)

United States

International

United States

International

Food service technology

POS automation

Casino and gaming

TransAct Services Group

Total net sales

Contract balances

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

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:

September 30, 2024

For the three

months ended March 31, 2025, we recognized revenue of $ 0.4 million related to our contract liabilities at December 31, 2024.

Total net contract liabilities consisted of the following:

March 31, 2025

December 31, 2024

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

As of March 31, 2025, the aggregat e amount of transaction prices allo cated t o rem aining performance obligations was $ 6.6 million.

The Company expects to recognize revenue of $ 6.3 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.

remaining performance obligations within the next 12 months following March 31, 2025, $ 0.2 million within the next 24 months following March 31, 2025 and

the balance of these remaining performance obligations recognized within the next 36 months following March 31, 2025.

The components of inventories were:

September 30, 2024

March 31, 2025

December 31, 2024

3 unchanged sentences

Credit Facility

On March 13, 2020, we entered into the Loan and Security Agreement governing a credit facility (the “Sien a Credit Facility”) with Siena Lending Group

LLC (the “Lender”).

The Siena Credit Facility provides for a revolving credit line of up to $ 10.0 million and was originally scheduled to

expire on March 13, 2023, prior to being extended, as discussed below.

Borrowings under the Siena Credit Facility bear a floating rate of interest equal to the greatest of (i) the prime rate plus 1.75 %, (ii) the federal funds rate plus 2.25 %, and (iii) 6.50 %.

The total deferred financing costs related to expenses incurred to complete the Siena Credit Facility were $ 245 thousand which were reported as “Other current assets” in current assets and “Other assets” in non-current assets in the Condensed Consolidated

Balance Sheets.

We also pay a fee of 0.50 % on unused borrowings under the Siena Credit Facility.

Borrowings under the Siena Credit

Facility are secured by a lien on substantially all the assets of the Company.

Borrowings under the Siena Credit Facility are subject to a borrowing base based on 85 % of eligible accounts receivable plus the lesser of (a) $ 5.0

million and (b) 50 % of eligible raw material and 60 % of finished goods inventory.

The Siena Credit Facility imposes a financial covenant on the Company and restricts, among other things, our ability to incur additional indebtedness and create other

On July 21, 2021, the Company entered into an amendment (“Siena Credit Facility Amendment No.

1”) to the Siena Credit Facility.

Siena Credit Facility Amendment No.

1 changed the financial covenant under the Siena Credit Facility from a minimum

EBITDA covenant to an excess availability covenant requiring that the Company maintain excess availability of at least $ 750 thousand under

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

From July 31, 2021 through September 30, 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.

2 (“Siena Credit Facility Amendment No.

2”) to the Siena Credit Facility as amended by Siena

Credit Facility Amendment No.

Also on July 19, 2022, the Company and the Lender entered into an Amended and Restated Fee Letter (the “Amended Fee Letter”) in connection with Siena Credit Facility Amendment No.

Siena Credit Facility Amendment

2 did not modify the aggregate amount of the revolving commitment or the interest rate applicable to the loans .

The changes to the Siena Credit Facility provided for in Siena Credit Facility Amendment No.

2 include, among other things, the following:

The extension of the maturity date from March 13, 2023 to March 13, 2025;

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.

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.

Prior to such amendment, Section 7.1(m) of the Loan

and Security Agreement governing the Siena Credit Facility required that any successor to the Company’s former Chief Executive Officer be reasonably acceptable to the Lender.

This amendment confirmed that Mr.

John Dillon, the Company’s current

Chief Executive Officer, is an acceptable successor, and applied the same requirement to any future successor to Mr.

Dillon as Chief Executive Officer .

We are party to a Loan and Security Agreement, dated as of March 13, 2020 (as amended, the “Loan Agreement”), with Siena Lending Group LLC (the

“Lender”) that provides for a revolving credit line of up to $ 10.0 million, subject to a borrowing base based on 85 % of eligible accounts receivable plus the lesser of (a) $ 5.0

million and (b) 50 % of eligible raw material and 60 % of finished goods inventory (the “Siena Credit Facility”).

Borrowings under the Siena Credit Facility bear a floating rate of interest equal to the greatest of (i) the prime rate plus 1.75 %, (ii) the federal funds rate plus 2.25 %,

and (iii) 6.50 %.

We also pay a fee of 0.50 %

on unused borrowings under the Siena Credit Facility.

Borrowings under the Siena Credit Facility are secured by a lien on substantially all the assets of the Company.

The Siena Credit Facility imposes a financial covenant on the Company requiring that the Company maintain excess availability of at least $ 750 thousand under the Siena Credit Facility, tested as of the end of each calendar month and restricts, among other things, our ability to incur additional

indebtedness and create other liens.

We have remained in compliance with our excess availability covenant through March 31, 2025.

The Company is required to either maintain outstanding borrowings under the Siena Credit Facility of at least $ 3.0 million in principal amount, or during any period during which the Lender has control of the Company’s deposit account in accordance with the Loan Agreement, to pay interest

on at least $ 3.0 million principal amount of loans, whether or not such amount of loans is actually outstanding.

The maturity date of the

Siena Credit Facility is March 31, 2027.

As of March 31, 2025, we had $ 3.0 million of outstanding borrowings under the Siena Credit Facility at an interest rate of 9.25 %.

We had $ 3.3 million of net borrowing capacity available under

the Siena Credit Facility at March 31, 2025.

Segment reporting

We apply the provisions of FASB ASC Topic 280, “ Segment Reporting .”

We view our operations and manage our business as one 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.

Factors used to identify TransAct’s single operating segment include the similar design, construction and functionality of our products and services,

the combined research & development team that supports the entire company, a combined assembly, production and supply chain logistics process used to construct our products and services and a similar class of customers within our core markets

(distributors, resellers, original equipment manufacturers (“OEMs”) and end users).

Other factors used to identify TransAct’s single operating segment include the organizational structure of the Company and the financial information

available for evaluation by the chief operating decision-maker (“CODM”) in making decisions about how to allocate resources and assess performance.

The Company’s chief operating decision makers, who are the Company’s Chief Executive Officer and the

Company’s Chief Financial Officer, utilize a consolidated approach to assess the performance of and allocate resources to the business.

We generally use measures of sales, gross margin percentage, net income, earnings before interest, taxes, depreciation and amortization (“EBITDA”)

and adjusted EBITDA to make operational and strategic decisions.

These financial measures are compared to budgeted and forecasted amounts by the CODMs on a regular basis to measure our progress towards our strategic plans, pursue product

enhancements, conduct research and development initiatives and make any other necessary overall strategic changes to the business.

We disclose these non-GAAP segment results because we believe they provide meaningful supplemental information and are

used by the CODM in making decisions about how to allocate resources and assess performance.

We are currently dependent upon one manufacturer located in Thailand for the manufacturing and assembly of substantially all of our printers and

The majority of raw components used in the manufacturing and assembly of our printers and terminals are sourced locally in Thailand, and to a lessor extent, from other countries in the region, including China.

The following table provides the operating financial results of our segment:

(In thousands)

Cost of materials sold

Compensation costs

Professional services

Occupancy costs

Marketing expenses

Severance expense

Depreciation and amortization

Other segment expenses (1)

Operating loss

Interest income

Interest expense

Income tax (expense) benefit

Net income (loss)

Other segment expenses included in segment net income primarily include other cost of goods sold, other administrative costs and engineering costs.

A reconciliation of net income (loss) to EBITDA and adjusted EBITDA follows:

(In thousands)

Net income (loss)

Interest income, net

Income tax expense (benefit)

Depreciation and amortization

Share-based compensation

Adjusted EBITDA

Earnings per share

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 30,

(In thousands, except per-share data)

Net (loss) income

Net income (loss)

Weighted average common shares outstanding

Dilutive effect of outstanding options and restricted stock units as determined by the treasury stock method

Dilutive effect of outstanding options and restricted stock units as determined by the treasury

Weighted average common and common equivalent shares outstanding

Net (loss) income per common share:

The computation of diluted earnings per share excludes the effect of the potential exercise of stock

awards, including stock options and restricted stock units, when the average market price of the common stock is lower than the exercise price of the related stock award during the period, as the inclusion of these stock awards in the computation

of diluted earnings would be anti-dilutive.

For the 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 nine months ended September 30, 2023.

Net income (loss) per common share:

The computation of basic net earnings per share for each period is computed by dividing earnings by the basic weighted average number of common

shares outstanding during the period.

Diluted earnings per share is computed by dividing net earnings by the weighted average number of shares outstanding during the period increased by the number of additional shares that would have been

outstanding related to potentially dilutive securities under the treasury stock method (including stock options, restricted stock units and performance stock units), if the impact is dilutive.

When the average market price of our common stock is lower than the exercise price of the related stock option during the period, the

computation of diluted earnings per share excludes the effect of the potential exercise of these stock option awards because the effect of including these stock option exercises would be anti-dilutive.

Furthermore, in periods when a net loss is

reported, basic and diluted net loss per common share are calculated using the same method.

Anti-dilutive stock option awards excluded from the computation of earnings per dilutive share were 1.3 million and 1.5 million at March 31, 2025 and 2024, respectively.

Anti-dilutive restricted stock awards excluded from the computation of earnings per dilutive share were 0.1 million and 0.2 million at March 31, 2025 and 2024, respectively.

Anti-dilutive performance stock awards excluded from the computation of earnings per dilutive share

(including performance stock awards whose performance conditions were not satisfied as of the end of the period) were zero and 0.1 million at March 31, 2025 and

2024, respectively.

We account for leases in accordance with ASC Topic 842:

We enter into lease agreements for the use of real estate space and certain equipment under operating leases and we have no financing leases.

are included in “Right-of-use-assets” and “Lease liabilities” in our Condensed Consolidated Balance Sheets.

Our leases are included

in “Right-of-use-assets” and “Lease liabilities” in our Condensed Consolidated Balance Sheets.

Our leases have various lease terms, some of which include options to extend.

On May 31, 2024, we entered into an amendment to extend the

lease on our facility in Ithaca, New York, which resulted in a right-of-use asset obtained in exchange for a new operating lease liability of $ 465

The lease amendment provides for an extension of the lease for an additional year from May 31, 2025 to May 31, 2026, with an

option to extend for an additional year.

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

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

and 2023 was $ 759 thousand

and $ 742 thousand, respectively, and is reported as “Cost of sales”, “Engineering, design and product development expense”, “Selling and

marketing expense”, and “General and administrative expense” in the Condensed Consolidated Statements of Operations.

Operating lease expense for the three months ended March 31, 2025

and 2024 was $ 259

thousand and $ 282 thousand, respectively, and is reported as “Cost of sales”, “Engineering, design and product development expense”,

“Selling and marketing expense”, and “General and administrative expense” in the Condensed Consolidated Statements of Operations.

Operating lease expenses include short-term lease costs, which were immaterial during the periods presented.

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

Nine Months Ended,

September 30,

Three Months Ended,

Operating cash outflows from leases

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

September 30, 2024

The following summarizes additional information related to our leases as of March 31, 2025 and December 31, 2024:

March 31, 2025

December 31, 2024

1 unchanged sentence

Weighted average discount rate

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

The maturity of the Company’s operating lease liabilities as of March 31, 2025 and December 31, 2024 were as follows (in thousands):

March 31, 2025

December 31, 2024

2 unchanged sentences

Total lease liabilities

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 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 recorded income tax expense in the first quarter of 2025 of $ 51 thousand at an effective tax rate of 72.9 % compared to an income tax benefit in the first quarter

of 2024 of $ 277 thousand at an effective tax rate of ( 21.1 %).

The effective rate for the first quarter of 2025 was unusually high due to (1) a near-breakeven level of pre-tax earnings of $ 70 thousand and (2) tax expense only included taxes associated with earnings in the United Kingdom and minimum required state taxes in the US.

As of March 31, 2025 and December 31, 2024, we had $ 8.3

million and $ 8.1 million, respectively, of valuation allowance against our net deferred income tax assets in multiple global tax

jurisdictions.

Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not (greater than 50%) that a tax benefit will not be realized.

In evaluating the need for a valuation allowance, management considers

all potential sources of taxable income, including income available in carryback periods, future reversals of taxable temporary differences, projections of taxable income, income from tax planning strategies, as well as all available positive and

negative evidence.

Positive evidence includes factors such as a history of profitable operations and projections of future profitability within the carryforward period, including any potential tax planning strategies.

Negative evidence includes

items such as cumulative losses and projections of future losses.

Upon changes in facts and circumstances, management may conclude that deferred tax assets for which no valuation allowance is currently recorded may not be realized, resulting in

a charge to establish a valuation allowance.

Existing valuation allowances are re-examined on a quarterly basis under the same standards of positive and negative evidence.

In the fourth quarter of 2024, TransAct recognized a $ 7.3

million discrete income tax charge for a valuation allowance on the full value of the net deferred tax assets in the United States.

These deferred tax assets have an unlimited life (for net operating losses, capitalized R&D expenses and

R&D credit carryforwards).

The need for this valuation allowance has been assessed as of March 31, 2025 and management continues to believe that the negative evidence, as discussed above, continues to support our valuation allowance.

We are subject to U.S.

federal income tax, as well as income

tax in certain U.S.

federal income tax, as well as income tax in certain U.S.

state and foreign jurisdictions.

We have substantially concluded all U.S.

We have substantially concluded

federal, state and local income tax, and foreign tax regulatory examination matters through 2020.

However, our federal tax returns for the years 2021

through 2023 remain open to examination.

state and foreign tax jurisdiction tax years remain open to examination as well, but we believe that any additional assessment would be immaterial to the Condensed Consolidated Financial

The Company maintains a valuation allowance against certain deferred tax assets where realization is not certain.

However, our federal tax returns for the years 2021 through 2024 remain open to examination.

state and foreign tax jurisdiction

tax years remain open to examination as well, but we believe that any additional assessment would be immaterial to the Condensed Consolidated Financial Statements.

Subsequent events

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

The Company is continuously monitoring the ongoing U.S.

government’s executive order tariffs and counter tariffs imposed on the U.S.

by certain countries .

Since February 2025, the U.S.

government has issued several

executive orders imposing tariffs on imports from most countries with which the U.S.

engages in trade.

We are currently dependent upon a manufacturer located in Thailand for the manufacturing and assembly of substantially all of our

printers and terminals.

On April 2, 2025, the U.S.

government imposed a baseline 10 % tariff on goods imported from Thailand,

effective April 5, 2025.

In addition, the U.S.

government announced a 36 % reciprocal tariff on goods imported from Thailand

that was intended to replace the baseline tariff on April 9, 2025, but was subsequently suspended until July 2025.

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

available to be issued.

Based upon this review, the Company did not identify any 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