What changed in this filing

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Item 1. Financial Statements

2025-08-12 compared with 2025-05-14 · 162 added, 121 removed, 278 unchanged (50% of the section changed)

2 unchanged sentences

C ONDENSED CONSOLIDATED BALANCE SHEETS

March 31, 2025

June 30, 2025

December 31, 2024

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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 14,068,049 shares issued, respectively;

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

outstanding, respectively

10,092,326 and 10,023,207 shares outstanding, respectively

Additional paid-in capital

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TRANSACT TECHNOLOGIES INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

CONDE NSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

Six Months Ended

(In thousands, except per share data)

Cost of sales

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Interest, net

Income (loss) before income taxes

Loss before income taxes

Income tax (expense) benefit

Net income (loss)

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

Net loss per common share:

Shares used in per-share calculation:

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TRANSACT TECHNOLOGIES INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE

INCOME (LOSS)

CONDENSED CONSOLI DATED STATEMENTS OF COMPREHENSIVE LOSS

Three Months Ended

Net income (loss)

Six Months Ended

(In thousands)

Foreign currency translation adjustment, net of tax

Comprehensive income (loss)

Comprehensive loss

See notes to Condensed Consolidated Financial Statements.

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CONDE NSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

(In thousands)

Cash flows from operating activities:

Net income (loss)

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

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

Share-based compensation expense

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Accrued liabilities and other liabilities

Net cash used in operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

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Effect of exchange rate changes on cash and cash equivalents

Decrease in cash and cash equivalents

Increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of period

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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 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

CONDENSED CONSO LIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Three Months Ended

Six Months Ended

(In thousands)

Equity beginning balance

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Balance, beginning of period

Net income (loss)

Balance, end of period

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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, 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.

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 and six months ended June 30, 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

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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

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

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.

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

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reasonable under the circumstances.

Actual results could differ from those estimates used.

While there was not a material impact to our Condensed Consolidated Financial Statements as of June 30, 2025 and for the quarters and six months ended June 30, 2025 and 2024 resulting from our assessments of these

matters, future assessment of our expectations of the magnitude and duration of these macroeconomic developments, as well as other factors, could result in material impacts to our Condensed Consolidated Financial Statements in future reporting

Significant accounting policies

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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

Other new accounting pronouncements issued, but not effective until after June 30, 2025, did not and are not expected to have a material impact on our financial

position, results of operations or liquidity.

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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.

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Total net sales

Six Months Ended

(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.

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

months ended June 30, 2025, we recognized revenue of $ 0.7 million related to our contract liabilities at December 31, 2024.

net contract liabilities consisted of the following:

June 30, 2025

December 31, 2024

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Remaining performance obligations

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 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 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.

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

As of June 30, 2025, the aggregat e amount of transaction prices allo cated t o RPO s was $ 6.4

The Company expects to recognize revenue of $ 6.1 million of its RPO s within the next 12 months following June 30, 2025, $ 0.2 million within the next 24 months

following June 30, 2025 and the balance

of these RPO s recognized within the

next 36 months following June 30, 2025.

The components of inventories were:

March 31, 2025

June 30, 2025

December 31, 2024

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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.

additional indebtedness and create other liens.

We have remained in compliance with our excess availability covenant through June 30, 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.

date of the Siena Credit Facility is March 31, 2027.

As of June 30, 2025, we had $ 3.0 million of outstanding borrowings under the Siena Credit Facility at an interest rate of 9.25 %.

We had $ 1.6 million of net borrowing capacity available

under the Siena Credit Facility at June 30, 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 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 large and emerging 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”)

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

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

Three Months Ended

Six Months Ended

(In thousands)

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Marketing expenses

Severance expense

Severance expenses

Depreciation and amortization

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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:

A reconciliation of net loss to EBITDA and adjusted EBITDA follows:

Three Months Ended

Six Months Ended

(In thousands)

Net income (loss)

Interest income, net

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Three Months Ended

Six Months Ended

(In thousands, except per share data)

Net income (loss)

Weighted average common shares outstanding

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

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

Weighted average common and common equivalent shares outstanding

Net income (loss) per common share:

Net 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

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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.

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.

There were 1.8 million and 1.6 million of anti-dilutive stock awards excluded from the computation of earnings per share for the quarters ended June 30, 2025 and 2024, respectively, and 1.7 million and 1.5 million of anti-dilutive stock awards

excluded from the computation of earnings per diluted share for the six months ended June 30, 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.

Our 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.

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

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 expense for the six months ended June 30, 2025 and

2024 was $ 518 thousand and

$ 500 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):

Three Months Ended,

Six Months Ended,

Operating cash outflows from leases

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

March 31, 2025

The following summarizes additional information related to our leases as of June 30, 2025 and December 31, 2024:

June 30, 2025

December 31, 2024

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Weighted average discount rate

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

The maturity of the Company’s operating lease liabilities as of June 30, 2025

and December 31, 2024 were as follows (in thousands):

June 30, 2025

December 31, 2024

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Total lease liabilities

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

We recorded income tax expense in the second quarter of 2025 of $ 40 thousand at an effective tax rate of 38.8 %

compared to an income tax benefit in the second quarter of 2024 of $ 86 thousand at an

effective tax rate of ( 21.2 %).

For the six months ended June 30, 2025 , we recorded income tax expense of $ 91

thousand at an effective rate of 275.8 % compared to an income tax benefit of $ 363 thousand at an effective rate of ( 21.1 %) for the six months ended June 30, 2024 .

The effective tax rates for the second quarter of 2025 and the six months ended June 30, 2025 were unusually high because (1) pre-tax losses

were at near-breakeven levels of $ 103 thousand and $ 33 thousand, respectively, and (2) tax expense only included taxes associated with earnings in the United Kingdom and minimum required state taxes in the United States.

As discussed below,

we provided for a full valuation allowance against our U.S.

deferred taxes in the fourth quarter of 2024 and continue to believe this allowance is required as of June 30, 2025.

As such, the Company has not recorded any U.S.

federal tax benefits

associated with losses recorded in the second quarter of 2025 and the six months ended June 30, 2025.

As of June 30, 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

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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.

These deferred tax assets have varying lives (for federal net operating losses, state net operating losses and

capitalized R&D expenses).

The need for this valuation allowance has been assessed as of June 30, 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.

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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.

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 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.

On July 4, 2025, the U.S.

President signed into law the One Big Beautiful Bill Act (the “OBBBA”), which introduces significant federal tax law changes.

the OBBBA includes numerous changes to U.S.

corporate income tax law, including but not limited to:

(i) a permanent 100% bonus depreciation for qualified property, (ii) immediate expensing of domestic research and experimental expenditures, (iii)

modifications to the limitation on business interest expense deductions, (iv) increased expensing limits under Section 179 of the Internal Revenue Code (the “Code”), (v) changes to certain international tax provisions, (vi) and expanded limitations

on the deductibility of executive compensation under Section 162(m) of the Code.

Most provisions are effective for tax years beginning after December 31, 2024, with certain transition rules and exceptions.

The Company is currently evaluating the impact of the OBBBA on its Consolidated Financial Statements.

The effects of the OBBBA, including remeasurement of deferred tax

assets and liabilities and changes to current and future tax expense, will be reflected in the period of enactment and in future periods as additional guidance is issued and the Company completes its analysis.

Given TransAct’s current tax positions

(including a full valuation allowance against its net deferred tax assets), we do not anticipate this law to have a material impact on our Consolidated Financial Statements.

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

During 2025, the U.S.

government has announced a variety of trade-related actions, including the imposition of tariffs on imports from several countries, including Thailand.

In response, many countries announced their own

retaliatory tariffs.

Certain tariffs were paused for a period of time but have not been withdrawn, while others have been revised .

On July 30, 2025, the U.S.

government announced that an agreement was made with Thailand to establish a

tariff of 19 % on goods imported from Thailand, effective August 7, 2025.

The Company continues to monitor the rapidly evolving and uncertain tariff and global

trade environment and the potential impact to its Consolidated Financial Statements.

On August 6, 2025, the Company announced that it acquired a perpetual license to a copy of the source code for the BOHA!

software that it currently licenses from Avery Dennison .

Under the terms of the agreement, TransAct has obtained a perpetual and

royalty free license to use , host , market, sublicense, distribute, copy, and modify the code as the Company sees fit for its business purposes.

In addition to

the perpetual and royalty free license, TransAct will also host the code in its own environment, which is expected to go live in early 2027.

Total consideration for the acquisition was $ 2.55

million, plus professional services fees of approximately $ 1.0

million for the transition services to be provided by Avery Dennison .

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 on this review, the Company did not identify any other 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