Item 1. Financial Statements
Item 1.
FINANCIAL STATEMENTS
TRANSACT TECHNOLOGIES INCORPORATED
C ONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
September 30, 2025
December 31, 2024
Assets:
(In thousands, except share data)
Current assets:
Cash and cash equivalents
$
20,041
$
14,394
Accounts receivable, net of allowance for expected credit losses of $ 476 and $ 474
5,839
6,507
Inventories
11,735
16,161
Prepaid income taxes
430
401
Other current assets
1,111
899
Total current assets
39,156
38,362
Fixed assets, net of accumulated depreciation of $ 19,950
and $ 19,468
1,389
1,818
Right-of-use assets, net of accumulated amortization of $ 2,539 and $ 1,796
419
1,141
Goodwill
2,621
2,621
Intangible assets, net of accumulated amortization of $ 1,606 and $ 1,606
1,352
–
Other assets
46
92
5,827
5,672
Total assets
$
44,983
$
44,034
Liabilities and Shareholders’ Equity:
Current liabilities:
Revolving loan payable
$
3,000
$
3,000
Accounts payable
3,703
4,569
Accrued liabilities
4,543
3,253
Lease liabilities
437
955
Deferred revenue
1,143
1,107
Total current liabilities
12,826
12,884
Deferred revenue, net of current portion
343
246
Lease liabilities, net of current portion
–
231
Other liabilities
36
40
379
517
Total liabilities
13,205
13,401
Commitments and contingencies (see Notes 5 and 8)
Shareholders’ Equity:
Common stock, $ 0.01 par
value, 20,000,000 shares authorized; 14,157,427 and 14,068,049 shares issued, respectively; 10,112,585 and 10,023,207 shares
outstanding, respectively
141
141
Additional paid-in capital
59,357
58,141
Retained earnings
4,406
4,515
Accumulated other comprehensive loss, net of tax
( 16
)
( 54
)
Treasury stock, at cost ( 4,044,842
shares)
( 32,110
)
( 32,110
)
Total shareholders’ equity
31,778
30,633
Total liabilities and shareholders’ equity
$
44,983
$
44,034
See notes to Condensed Consolidated Financial Statements.
3
Index
TRANSACT TECHNOLOGIES INCORPORATED
CONDE NSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2025
2024
2025
2024
(In thousands, except per share data)
Net sales
$
13,176
$
10,867
$
40,027
$
33,153
Cost of sales
6,620
5,640
20,460
16,192
Gross profit
6,556
5,227
19,567
16,961
Operating expenses:
Engineering, design and product development
1,656
1,640
5,016
5,405
Selling and marketing
2,091
1,880
6,279
6,160
General and administrative
2,795
2,544
8,531
7,972
6,542
6,064
19,826
19,537
Operating income (loss)
14
( 837
)
( 259
)
( 2,576
)
Interest and other income (expense):
Interest, net
61
42
123
116
Other, net
( 35
)
96
143
43
26
138
266
159
Income (loss) before income taxes
40
( 699
)
7
( 2,417
)
Income tax (expense) benefit
( 25
)
148
( 116
)
511
Net income (loss)
$
15
$
( 551
)
$
( 109
)
$
( 1,906
)
Net income (loss) per common share:
Basic
$
0.00
$
( 0.06
)
$
( 0.01
)
$
( 0.19
)
Diluted
$
0.00
$
( 0.06
)
$
( 0.01
)
$
( 0.19
)
Shares used in per-share calculation:
Basic
10,103
10,006
10,077
9,992
Diluted
10,157
10,006
10,077
9,992
See notes to Condensed Consolidated Financial Statements.
4
Index
TRANSACT TECHNOLOGIES INCORPORATED
CONDENSED CONSOLI DATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2025
2024
2025
2024
(In thousands)
Net income (loss)
$
15
$
( 551
)
$
( 109
)
$
( 1,906
)
Foreign currency translation adjustment, net of tax
( 15
)
47
38
43
Comprehensive income (loss)
$
–
$
( 504
)
$
( 71
)
$
( 1,863
)
See notes to Condensed Consolidated Financial Statements.
5
Index
TRANSACT TECHNOLOGIES INCORPORATED
CONDE NSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Nine Months Ended
September 30,
2025
2024
(In thousands)
Cash flows from operating activities:
Net loss
$
( 109
)
$
( 1,906
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Share-based compensation expense
1,300
873
Depreciation and amortization
507
844
Deferred income taxes
–
( 739
)
Unrealized foreign currency transaction gains
( 242
)
( 43
)
Changes in operating assets and liabilities:
Accounts receivable
710
2,455
Inventories
4,553
1,033
Prepaid income taxes
( 9
)
( 391
)
Other current and long-term assets
( 187
)
( 247
)
Accounts payable
( 847
)
( 1,199
)
Accrued liabilities and other liabilities
1,388
( 1,207
)
Net cash provided by (used in) operating activities
7,064
( 527
)
Cash flows from investing activities:
Capital expenditures
( 89
)
( 311
)
Capitalized software development costs
( 1,352
)
–
Net cash used in investing activities
( 1,441
)
( 311
)
Cash flows from financing activities:
Withholding taxes paid on stock issuances
( 84
)
( 71
)
Net cash used in financing activities
( 84
)
( 71
)
Effect of exchange rate changes on cash and cash equivalents
108
( 69
)
Increase (decrease) in cash and cash equivalents
5,647
( 978
)
Cash and cash equivalents, beginning of period
14,394
12,321
Cash and cash equivalents, end of period
$
20,041
$
11,343
Supplemental schedule of non-cash investing and financing activities:
Non-cash capital expenditure items
$
1
$
22
Right of use asset obtained in exchange for new operating lease liabilities
$
–
$
465
See notes to Condensed Consolidated Financial Statements.
6
Index
TRANSACT TECHNOLOGIES INCORPORATED
CONDENSED CONSO LIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2025
2024
2025
2024
(In thousands)
Equity beginning balance
$
31,285
$
38,528
$
30,633
$
39,414
Common stock
Balance, beginning of period
141
140
141
140
Issuance of common stock from restricted stock units
–
1
–
1
Balance, end of period
141
141
141
141
Additional paid-in capital
Balance, beginning of period
58,864
57,528
58,141
57,055
Share-based compensation expense
527
329
1,300
873
Relinquishment of stock awards to pay for withholding taxes
( 34
)
–
( 84
)
( 71
)
Balance, end of period
59,357
57,857
59,357
57,857
Retained earnings
Balance, beginning of period
4,391
13,023
4,515
14,378
Net income (loss)
15
( 551
)
( 109
)
( 1,906
)
Balance, end of period
4,406
12,472
4,406
12,472
Treasury stock
Balance, beginning and end of period
( 32,110
)
( 32,110
)
( 32,110
)
( 32,110
)
Accumulated other comprehensive loss, net of tax
Balance, beginning of period
( 1
)
( 53
)
( 54
)
( 49
)
Foreign currency translation adjustment, net of tax
( 15
)
47
38
43
Balance, end of period
( 16
)
( 6
)
( 16
)
( 6
)
Equity ending balance
$
31,778
$
38,354
$
31,778
$
38,354
Supplemental share information
Issuance of shares from stock awards
25
12
109
62
Relinquishment of stock awards to pay withholding taxes
4
–
20
11
See notes to Condensed Consolidated Financial Statements.
7
Index
TRANSACT TECHNOLOGIES INCORPORATED
N OTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Basis of presentation
The accompanying unaudited financial statements of TransAct Technologies Incorporated (“TransAct”,
the “Company”, “we”, “us”, or “our”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the
information and footnotes required by U.S. GAAP to be included in full year financial statements. In the opinion of management, all adjustments considered necessary for a fair statement of the results for the periods presented have been included and
are of a normal recurring nature . 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. GAAP. 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 nine months ended September 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
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, tariffs and other trade restrictions, interest rates, capital expenditures and other operating costs.
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 .
8
Index
2. Significant accounting policies
For a discussion of our significant accounting policies, see Note 2, Summary of significant accounting policies within Part II,
Item 8. “Financial Statements and Supplementary Data” in the 2024 Form 10-K. There have been no changes to our significant accounting policies since the 2024 Form 10-K.
Recently issued accounting pronouncements:
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 . 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. We have assessed the impact of adopting this standard and outside of enhanced disclosures, this adoption will not 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. We
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.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326). This amendment provides certain entities with an
additional practical expedient election for estimating expected credit losses on current accounts receivable and current contract assets arising from revenue transactions under Accounting Standards Codification (“ASC”) Topic 606; Revenue from Contracts with Customers (“ASC Topic 606”). This includes assets acquired in business combinations or through consolidation of VIEs that are not a
business if those assets arose from transactions that the acquiree or variable interest entity accounted for under ASC Topic 606. 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.
Other new accounting pronouncements issued, but not effective until after September 30, 2025 ,
did not have, and are not expected to have, a material impact on our financial position, results of operations or liquidity.
3. Revenue
We account for revenue in accordance with ASC Topic 606 .
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. Sales and usage-based taxes are excluded from revenues.
Three Months Ended
September 30,
2025
2024
(In thousands)
United States
International
Total
United States
International
Total
Food service technology
$
4,531
$
310
$
4,841
$
3,982
$
339
$
4,321
POS automation
399
–
399
1,148
–
1,148
Casino and gaming
4,897
2,247
7,144
2,757
1,777
4,534
Transact Services Group
609
183
792
707
157
864
Total net sales
$
10,436
$
2,740
$
13,176
$
8,594
$
2,273
$
10,867
9
Index
Nine Months Ended
September 30,
2025
2024
(In thousands)
United States
International
Total
United States
International
Total
Food service technology
$
13,507
$
1,003
$
14,510
$
10,784
$
1,015
$
11,799
POS automation
1,602
5
1,607
2,950
–
2,950
Casino and gaming
15,678
5,814
21,492
9,173
6,416
15,589
TransAct Services Group
1,877
541
2,418
2,271
544
2,815
Total net sales
$
32,664
$
7,363
$
40,027
$
25,178
$
7,975
$
33,153
Contract balances
Contract assets consist of unbilled receivables. Pursuant to the over-time revenue recognition model, revenue may be recognized prior to the customer being invoiced.
An unbilled receivable is recorded to reflect revenue that is recognized when such revenue exceeds the amount invoiced to the customer. Unbilled receivables are separated into current and non-current assets and included within “Accounts receivable,
net” and “Other assets” in the Condensed Consolidated Balance Sheets.
Contract liabilities consist of customer pre-payments and deferred revenue. Customer prepayments are reported as “Accrued liabilities” in current liabilities in the
Condensed Consolidated Balance Sheets and represent customer payments made in advance of performance obligations in instances where credit has not been extended and are recognized as revenue when the performance obligation is complete. Deferred
revenue is reported separately in current liabilities and non-current liabilities and consists of our extended warranty contracts, technical support for our food service technology terminals, EPICENTRAL maintenance contracts and prepaid software
subscriptions for our BOHA! software applications and is recognized as revenue as (or when) we perform under the contract. For the nine
months ended September 30, 2025, we recognized revenue of $ 1.0 million related to our contract liabilities at December 31, 2024. Total net contract liabilities consisted of the following:
September 30, 2025
December 31, 2024
(In thousands)
Unbilled receivables, current
$
41
$
106
Unbilled receivables, net of current portion
4
32
Customer pre-payments
( 34
)
( 164
)
Deferred revenue, current
( 1,143
)
( 1,107
)
Deferred revenue, net of current portion
( 343
)
( 246
)
Total net contract liabilities
$
( 1,475
)
$
( 1,379
)
Remaining performance obligations
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 September 30, 2025, the aggregat e amount of transaction prices allo cated t o RPO s was $ 3.7
million. The Company expects to recognize revenue of $ 3.4 million of its RPO s within the next 12 months following September 30, 2025, an additional $ 0.2 million within the next 24 months
following September 30, 2025 and the balance
of these RPO s within the next 36 months following September 30, 2025.
4. Inventories
The components of inventories were:
September 30, 2025
December 31, 2024
(In thousands)
Raw materials and purchased component parts
$
5,754
$
8,413
Finished goods
5,981
7,748
$
11,735
$
16,161
10
Index
5. Borrowings
Credit Facility
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 September 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. The maturity
date of the Siena Credit Facility is March 31, 2027.
As of September 30, 2025, we had $ 3.0 million of outstanding borrowings under the Siena Credit Facility at an interest rate of 9.00 %. We had $ 4.8 million of net borrowing capacity available
under the Siena Credit Facility at September 30, 2025.
6. Segment reporting
We apply the provisions of 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 the provision of 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 CODM ,
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 CODM 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
terminals. 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.
11
Index
The following table provides the operating financial results of our segment:
Three Months Ended
Nine
Months Ended
September 30,
September 30,
2025
2024
2025
2024
(In thousands)
Revenues
$
13,176
$
10,867
$
40,027
$
33,153
Cost of materials sold
4,623
4,161
14,790
11,217
Compensation costs
5,100
4,506
15,423
14,207
Professional services
846
828
2,697
2,755
Occupancy costs
374
383
1,106
1,114
Marketing expenses
192
205
668
785
IT expenses
339
325
986
941
Severance expenses
–
5
8
75
Depreciation and amortization
163
208
507
844
Other segment expenses (1)
1,525
1,083
4,101
3,791
13,162
11,704
40,286
35,729
Operating income (loss)
14
( 837
)
( 259
)
( 2,576
)
Interest income
147
122
380
355
Interest expense
( 86
)
( 80
)
( 257
)
( 239
)
Other, net
( 35
)
96
143
43
Income tax (expense) benefit
( 25
)
148
( 116
)
511
Net income (loss)
$
15
$
( 551
)
$
( 109
)
$
( 1,906
)
(1)
Other segment expenses included in segment net income (loss) 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:
Three Months Ended
Nine
Months Ended
September 30,
September 30,
2025
2024
2025
2024
(In thousands)
Net income (loss)
$
15
$
( 551
)
$
( 109
)
$
( 1,906
)
Interest income, net
( 61
)
( 42
)
( 123
)
( 116
)
Income tax expense (benefit)
25
( 148
)
116
( 511
)
Depreciation and amortization
163
208
507
844
EBITDA
142
( 533
)
391
( 1,689
)
Share-based compensation
527
329
1,300
873
Adjusted EBITDA
$
669
$
( 204
)
$
1,691
$
( 816
)
12
Index
7. Earnings per share
The following table sets forth the reconciliation of basic and diluted weighted average shares outstanding:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2025
2024
2025
2024
(In thousands, except per share data)
Net income (loss)
$
15
$
( 551
)
$
( 109
)
$
( 1,906
)
Shares:
Basic: Weighted average common shares outstanding
10,103
10,006
10,077
9,992
Add: Dilutive effect of outstanding options and restricted stock units as determined by the treasury stock method
54
–
–
–
Diluted: Weighted average common and common equivalent shares outstanding
10,157
10,006
10,077
9,992
Net income (loss) per common share:
Basic
$
0.00
$
( 0.06
)
$
( 0.01
)
$
( 0.19
)
Diluted
$
0.00
$
( 0.06
)
$
( 0.01
)
$
( 0.19
)
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.
There were 1.6 million of
anti-dilutive stock awards excluded from the computation of earnings per share for both of the quarters ended September 30, 2025 and 2024, and 1.8 million and 1.5 million of anti-dilutive stock awards excluded from the computation of earnings per diluted share for the nine months ended September 30, 2025 and 2024, respectively.
8. Leases
We account for leases in accordance with ASC Topic 842: Leases .
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 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 nine months ended September 30, 2025
and 2024 was $ 778
thousand and $ 759 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 for the periods presented.
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Index
The following information represents supplemental disclosure for the statement of cash flows related to operating leases (in thousands):
Nine Months Ended,
September 30,
2025
2024
Operating cash outflows from leases
$
803
$
767
The following summarizes additional information related to our leases as of September 30, 2025 and December 31, 2024:
September 30, 2025
December 31, 2024
Weighted average remaining lease term (in years)
0.6
1.2
Weighted average discount rate
8.8
%
7.7
%
The maturity of the Company’s operating lease liabilities as of September 30, 2025
and December 31, 2024 were as follows (in thousands):
September 30, 2025
December 31, 2024
2025
$
214
$
1,014
2026
238
237
Total undiscounted lease payments
452
1,251
Less imputed interest
15
65
Total lease liabilities
$
437
$
1,186
9. Income taxes
We recorded income tax expense in the third quarter of 2025
of $ 25 thousand at an effective tax rate of 62.5 % compared to an income tax benefit in the third quarter
of 2024 of $ 148 thousand at an effective tax rate of ( 21.2 %). For the nine months ended September 30, 2025 , we recorded income tax expense of $ 116 thousand (on pre-tax income of $ 7 thousand) compared to an
income tax benefit of $ 511 thousand at an effective rate of ( 21.1 %) for the nine months ended September 30, 2024 .
The effective tax rates for the third quarter of 2025 and the nine months ended September 30, 2025 were unusually high because (1) pre-tax income was at near-breakeven levels of $ 40 thousand and $ 7 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 September 30, 2025. As such, the Company has not recorded any U.S. federal
tax expense associated with pre-tax income recorded in the third quarter of 2025 and the nine months ended September 30, 2025.
As of September 30, 2025 and
December 31, 2024, we had $ 8.4 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.
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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 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 September 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. federal income tax, as well as income tax in certain U.S. state and foreign jurisdictions. We have substantially concluded
all U.S. federal, state and local income tax, and foreign tax regulatory examination matters through 2020. However, our federal tax returns for the years 2021 through 2024 remain open to examination. Various U.S. 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.
10. Subsequent events
On October 26, 2025, the U.S. government and Thai
government issued a joint statement announcing a Framework for an Agreement on Reciprocal Trade, pursuant to which, among other things, the U.S. has agreed to maintain a tariff of 19% on goods imported from Thailand, as set forth in Executive
Order 14257 issued April 2, 2025, as amended, with certain products eventually to be identified for a 0% tariff rate. See further discussion of tariffs in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” below.
On November 3, 2025, we entered into an amendment to modify the square footage and expiration date of our lease on our Hamden, Connecticut facility. The
lease, which was last amended on April 30, 2021, was scheduled to expire on October 31, 2025. This lease amendment, which was effective on November 1, 2025, modified the expiration date of the lease to December 31, 2029 and reduced the leased
square footage from 11,075 square feet to 3,630
square feet.
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.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.