TRANSACT TECHNOLOGIES INC 10-K

Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), evaluated the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of December 31, 2025. Based on this evaluation of our disclosure controls and procedures as of December 31, 2025, our CEO and CFO concluded that, as of December 31, 2025, our disclosure controls and procedures were effective at the reasonable assurance level. Our management, including our CEO and CFO, has concluded that our consolidated financial statements, included in this Form 10-K, fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented in conformity with GAAP, and that they can be relied upon. Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. Our management assessed our internal control over financial reporting as of December 31, 2025. Our management based its assessment on criteria established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. In the opinion of management, TransAct maintained effective internal control over financial reporting as of December 31, 2025. Changes in Internal Control over Financial Reporting No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the three months ended December 31, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. (a) None (b) During the fourth quarter of 2025, no director or officer of the Company adopted or terminated a “Rule 10b5-1trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspection. Not applicable. 29 Index PART III Item 10. Directors, Executive Officers and Corporate Governance. Set forth in Part I, Item 1. Business of this Form 10-K, under the heading “Information about our Executive Officers,” is certain information regarding our executive officers, and information regarding our code of ethics is set forth below. The remaining information in response to this item is incorporated herein by reference to the disclosure, if any; that will be contained, as applicable, under the headings “Proposal 1: Election of Directors,” “Delinquent Section 16(a) Reports,” “Corporate Governance – Director Nomination Process,” “Corporate Governance – Committees of the Board” and “Executive Compensation – Insider Trading Policy ” in our Proxy Statement for our 2026 Annual Meeting of Stockholders (the “Proxy Statement”), which will be filed within 120 days after the end of the year covered by this Form 10-K. Code of Ethics We maintain a Standards of Business Conduct and Code of Ethics (“Standards of Business Conduct”) that includes our code of ethics that is applicable to all employees, including our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and Controller. Our Standards of Business Conduct, which require continued observance of high ethical standards, such as honesty, integrity and compliance with the law in the conduct of our business, are available for public access on our website at https://transacttech.gcs-web.com/governance/documents-charters. Any person may request a copy of our Standards of Business Conduct free of charge by calling (203) 859-6800. We will disclose on our website at https://transacttech.gcs-web.com/governance/documents-charters any amendment to or waiver of a provision of the Standards of Business Conduct as may be required and within the time period specified under the applicable SEC and Nasdaq rules. Item 11. Executive Compensation. The information in response to this item will be contained in the Proxy Statement under the headings “Executive Compensation,” “Summary Compensation Table,” “Outstanding Equity Awards at 2025 Fiscal Year-End,” “Potential Payments Upon Termination or Change in Control,” “Pay Versus Performance,” and “Director Compensation for Fiscal Year 2025” and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Set forth below is certain information regarding our equity compensation plans. The remaining information in response to this item will be contained in the Proxy Statement under the heading, “Security Ownership of Certain Beneficial Owners and Management,” and is incorporated herein by reference. Equity Compensation Plan Information Information regarding our equity compensation plans as of December 31, 2025 is as follows: Plan category (a) Number of securities to be issued upon exercise of outstanding options, warrants and rights (b) Weighted- average exercise price of outstanding options, warrants and rights (c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) Equity compensation plans approved by security holders: 2014 Equity Incentive Plan 1,302,870 $ 8.03 1,002,690 Total 1,302,870 $ 8.03 1,002,690 In May 2014, our stockholders approved the adoption of the 2014 Equity Incentive Plan. In May 2020, our stockholders approved an amendment and restatement of the 2014 Equity Incentive Plan to increase the number of shares of common stock which may be subject to awards granted under the plan from 1,400,000 to 2,200,000 shares. In June 2023, our stockholders approved an amendment and restatement of the 2014 Equity Incentive Plan to increase the number of shares of common stock which may be subject to awards granted under the plan from 2,200,000 to its current level of 2,900,000 and to change the date of adoption of the 2014 Equity Incentive Plan to April 17, 2023 (thereby extending its expiration date to April 17, 2033). The 2014 Equity Incentive Plan generally provides for awards in the form of: (i) incentive stock options, (ii) non-qualified stock options, (iii) restricted stock, (iv) restricted stock units (which may include performance-based vesting), (v) stock appreciation rights or (vi) limited stock appreciation rights. The Company does not have any equity plans that have not been approved by its stockholders. Item 13. Certain Relationships and Related Transactions, and Director Independence. The information in response to this item will be contained in the Proxy Statement under the headings “Certain Relationships and Related Transactions” and “Corporate Governance – Board Leadership Structure and Independence” and is incorporated herein by reference. Item 14. Principal Accountant Fees and Services. The information in response to this item will be contained in the Proxy Statement under the headings, “Policy Regarding Pre-Approval of Services Provided by the Independent Registered Public Accounting Firm” and “Independent Registered Public Accounting Firm’s Services and Fees” and is incorporated herein by reference. 30 Index PART IV Item 15. Exhibits and Financial Statement Schedules. (a) The following documents are filed as part of this Form 10-K: 1. Financial Statements. Reports of Independent Registered Public Accounting Firms Consolidated Balance Sheets as of December 31, 2025 and 2024 Consolidated Statements of Operations for the years ended December 31, 2025 and 2024 Consolidated Statements of Comprehensive Loss for the years ended December 31, 2025 and 2024 Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2025 and 2024 Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024 Notes to Consolidated Financial Statements 2. Schedules. All schedules are omitted because they are either inapplicable or not required, or because the information required therein is included in the Consolidated Financial Statements and Notes thereto. 3. Exhibits Exhibit Index 3.1(a) Certificate of Incorporation of TransAct Technologies Incorporated (conformed copy) (incorporated by reference to Exhibit 3.2 of the Company’s Quarterly Report on Form 10-Q (SEC File No. 000-21121) filed with the SEC on August 18, 2022). 3.1(b) Certificate of Designation, Series A Preferred Stock, filed with the Secretary of State of Delaware on December 2, 1997 (incorporated by reference to Exhibit C of the Form of Amended and Restated Rights Agreement, dated as of February 16, 1999, between TransAct Technologies Incorporated and American Stock Transfer & Trust Company filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K (SEC File No. 000-21121) filed with the SEC on February 18, 1999). 3.1(c) Certificate of Designation, Series B Preferred Stock, filed with the Secretary of State of Delaware on April 6, 2000 (incorporated by reference to Exhibit 3.1(c) of the Company’s Quarterly Report on Form 10-Q (SEC File No. 000-21121) filed with the SEC on May 8, 2000). 3.2 * Amended and Restated By-Laws of TransAct Technologies Incorporated (as of February 25, 2026). 4.1 Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 of the Company’s Registration Statement on Form S-1/A (No. 333-06895) filed with the SEC on August 1, 1996). 4.2 Description of Securities (incorporated by reference to Exhibit 4.2 of the Company’s Annual Report on Form 10-K (SEC File No. 000-21121) filed with the SEC on March 13, 2024). 10.1 (x) 2005 Equity Incentive Plan (incorporated by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K (SEC File No. 000-21121) filed with the SEC on June 1, 2005). 10.2 (x) TransAct Technologies Incorporated 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (SEC File No. 000-21121) filed with the SEC on May 19, 2014). 10.3 (x) Amendment to 2014 Equity Incentive Plan approved by Shareholders on May 22, 2017 (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q (SEC File No. 000-21121) filed with the SEC on August 9, 2017). 10.4 (x) TransAct Technologies Incorporated 2014 Equity Incentive Plan, as Amended and Restated in 2020 (incorporated by reference to Exhibit I to the Definitive Proxy Statement on Schedule 14A filed with the Commission on April 23, 2020, File No. 000-21121). 10.5 (x) TransAct Technologies Incorporated 2014 Equity Incentive Plan, as Amended and Restated in 2023 (incorporated by reference to Exhibit I to the Definitive Proxy Statement on Schedule 14A filed with the Commission on April 21, 2023, File No. 000-21121). 10.6 (x) 2014 Equity Incentive Plan Time-based Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q (SEC File No. 000-21121) filed with the SEC on May 6, 2016). 10.7 (x) 2014 Equity Incentive Plan Performance-based Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q (SEC File No. 000-211121) filed with the SEC on August 8, 2016). 10.8 (x) 2014 Equity Incentive Plan Non-statutory Stock Option Agreement (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K (SEC File No. 000-21121) filed with the SEC on May 19, 2014). 10.1 0 (x) Severance Agreement by and between TransAct Technologies Incorporated and Brent Richtsmeier, dated as of January 1, 2021 (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q (SEC File No. 000-21121) filed with the SEC on May 15, 2023). 10.11 (x) Severance Agreement by and between TransAct and Tracey S. Winslow, dated as of December 22, 2023 (incorporated by reference to Exhibit 10.11 to the Company’s Annual Report on Form 10-K (SEC File No. 000-21121) filed with the SEC on March 24, 2025). 1 0.12 (x) Severance Agreement by and between TransAct and William J. DeFrances, dated as of August 3, 2022 (incorporated by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K (SEC File No. 000-21121) filed with the SEC on March 24, 2025). 31 Index 10.13 ( x) Executive Employment Agreement by and between TransAct Technologies Incorporated and John M. Dillon, dated as of September 4, 2024 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (SEC File No. 000-21121) filed with the SEC on September 6, 2024). 10.14 (x) Executive Employment Agreement by and between TransAct Technologies Incorporated and Steven A. DeMartino, dated as of September 4, 2024 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (SEC File No. 000-21121) filed with the SEC on September 6, 2024). 10.15 Lease Agreement between Bomax Properties, LLC and TransAct, dated July 18, 2001 (incorporated by reference to Exhibit 10.16 to the Company’s Annual Report on Form 10-K (SEC File No. 000-21121) filed with the SEC on March 13, 2024). 10.16 Amendment No. 1 to Lease Agreement between Bomax Properties, LLC and TransAct, dated May 8, 2012 (incorporated by reference to Exhibit 10.16 of the Company’s Quarterly Report on Form 10-Q (SEC File No. 000-21121) filed with the SEC on May 10, 2012). 10.17 Amendment No. 2 to Lease Agreement between Bomax Properties, LLC and TransAct, dated January 14, 2016 (incorporated by reference to Exhibit 10.13 of the Company’s Annual Report on Form 10-K (SEC File No. 000-21121) filed with the SEC on March 11, 2016). 10.18 Amendment No. 3 to Lease Agreement between Bomax Properties, LLC and TransAct, dated February 29, 2020 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (SEC File No. 000-21121) filed with the SEC on March 4, 2020). 10.19 Amendment No. 4 to Lease Agreement between Bomax Properties, LLC and TransAct, dated July 15, 2022 (incorporated by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K (SEC File No. 000-21121) filed with the SEC on March 24, 2025). 10.2 0 Amendment No. 5 to Lease Agreement between Bomax Properties, LLC and TransAct, dated May 31, 2024 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (SEC File No. 000-21121) filed with the SEC on August 9, 2024). 10.21 Lease Agreement by and between 2319 Hamden Center I, L.L.C. and TransAct dated November 27, 2006 (incorporated by reference to Exhibit 10.14 of the Company’s Annual Report on Form 10-K (SEC File No. 000-21121) filed with the SEC on March 15, 2007). 10.22 First Amendment to Lease by and between 2319 Hamden Center I, L.L.C. and TransAct dated January 3, 2017 (incorporated by reference to Exhibit 10.20 of the Company’s Annual Report on Form 10-K (SEC File No. 000-21121) filed with the SEC on March 16, 2017). 10.23 Second Amendment to Lease by and between 2319 Hamden Center I, L.L.C. and TransAct Technologies dated April 30, 2021 (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q (SEC File No. 000-21121) filed with the SEC on May 13, 2021). 10.24 Third Amendment to Lease, dated as of November 3, 2025, by and between One Hamden Center, LLC and TransAct Technologies Incorporated (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (SEC File No. 000-21121) filed with the SEC on November 7, 2025). 10.25 Loan and Security Agreement, dated as of March 13, 2020, among Siena Lending Group LLC, TransAct Technologies Incorporated and the other Loan Parties from time to time party thereto (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q (SEC File No. 000-21121) filed with the SEC on May 22, 2020). 10.26 Amendment No. 1 To Loan and Security Agreement, dated as of July 21, 2021, among Siena Lending Group and TransAct Technologies Incorporated (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K (SEC File No. 000-21121) filed with the SEC on July 26, 2021) 10.27 Amendment No. 2 To Loan and Security Agreement, dated as of July 19, 2022, between Siena Lending Group LLC and TransAct Technologies Incorporated (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (SEC File No. 000-21121) filed with the SEC on July 25, 2022). 10.28 Letter Amendment, dated May 1, 2023 (Amendment No. 3), to Loan and Security Agreement between Siena Lending Group LLC and TransAct Technologies Incorporated (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (SEC File No. 000-21121) filed with the SEC on May 4, 2023). 10.29 Amendment No. 4 To Loan and Security Agreement, dated as of November 20, 2024, between Siena Lending Group LLC and TransAct Technologies Incorporated (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (SEC File No. 000-21121) filed with the SEC on November 21,2024). 10.30 Second Amended and Restated Fee Letter, dated as of November 20, 2024, between Siena Lending Group LLC and TransAct Technologies Incorporated (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (SEC File No. 000-21121) filed with the SEC on November 21, 2024). 10.31 † Master License Agreement dated February 22, 2019 and amendments thereto (incorporated by reference to Exhibit 10.24 to the Company’s Annual Report on Form 10-K (SEC File No. 000-21121) filed with the SEC on March 12, 2021). 10.32 † Master Development and License Agreement dated July 20, 2018 (incorporated by reference to Exhibit 10.25 to the Company’s Annual Report on Form 10-K (SEC File No. 000-21121) filed with the SEC on March 12, 2021). 10.33 Lease Agreement by and between Constantino Noval Nevada 3, LLC and Transact Technologies Incorporated, dated February 9, 2026 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (SEC File No. 000-21121) filed with the SEC on February 13, 2026). 10.34 † Source Code Purchase and Perpetual License Agreement, dated as of August 5, 2025 by and between TransAct Technologies Incorporated and Avery Dennison Corporation (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (SEC File No. 000-21121) filed with the SEC on August 6, 2025). 19 * TransAct Technologies Incorporated Insider Trading Policy. 32 Index 21 Subsidiaries of the Company (incorporated by reference to Exhibit 21 to the Company’s Annual Report on Form 10-K (SEC File No. 000-21121) filed with the SEC on March 12, 2021). 23.1 * Consent of CBIZ CPAs P.C. 23.2 * Consent of Marcum LLP. 31.1 * Rule 13a-14(a) Certification of Chief Executive Officer in accordance with Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 * Rule 13a-14(a) Certification of Chief Financial Officer in accordance with Section 302 of the Sarbanes-Oxley Act of 2002. 32 ‡ Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 97 TransAct Technologies Incorporated Clawback Policy in the Event of a Financial Restatement (incorporated by reference to Exhibit 97 to the Company’s Annual Report on Form 10-K (SEC File No. 000-21121) filed with the SEC on March 13, 2024). 101.INS Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). 101.SCH Inline XBRL Taxonomy Extension Schema Document. 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). (x) Management contract or compensatory plan or arrangement. * These exhibits are filed herewith. † Certain portions of this exhibit (indicated by “[***]”) have been omitted pursuant to Item (601)(b)(10) of Regulation S-K. ‡ These exhibits are furnished herewith (b) Exhibits. The Exhibits required by Item 601 of Regulation S-K under the Exchange Act are included in the Exhibit Index above under a(3) of this Item 15. (c) Financial Statement Schedules. See the Notes to the Consolidated Financial Statements included in this Form 10-K. Item 16. Form 10-K Summary. None. 33 Index SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TRANSACT TECHNOLOGIES INCORPORATED By: /s/ John M. Dillon Name: John M. Dillon Title: Chief Executive Officer Date: March 12, 2026 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ John M. Dillon Chief Executive Officer and Director March 12, 2026 John M. Dillon (Principal Executive Officer) /s/ Steven A. DeMartino President, Chief Financial Officer, Treasurer and Secretary March 12, 2026 Steven A. DeMartino (Principal Financial Officer) /s/ William J. DeFrances Vice President and Chief Accounting Officer March 12, 2026 William J. DeFrances (Principal Accounting Officer) /s/ Haydee Ortiz Olinger Chair of the Board March 12, 2026 Haydee Ortiz Olinger /s/ Audrey P. Dunning Director March 12, 2026 Audrey P. Dunning /s/ Daniel M. Friedberg Director March 12, 2026 Daniel M. Friedberg /s/ Randall S. Friedman Director March 12, 2026 Randall S. Friedman /s/ Emanuel P. N. Hilario Director March 12, 2026 Emanuel P. N. Hilario 34 Index TRANSACT TECHNOLOGIES INCORPORATED INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Statements Report of Independent Registered Public Accounting Firm (PCAOB ID 199 ) F-2 Report of Independent Registered Public Accounting Firm (PCAOB ID 688 ) F-4 Consolidated Balance Sheets as of December 31, 2025 and 2024 F-5 Consolidated Statements of Operations for the years ended December 31, 2025 and 2024 F-6 Consolidated Statements of Comprehensive Loss for the years ended December 31, 2025 and 2024 F-7 Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2025 and 2024 F-8 Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024 F-9 Notes to Consolidated Financial Statements F-10 F-1 Index REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of TransAct Technologies Incorporated Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of TransAct Technologies Incorporated (the “Company”) as of December 31, 2025, the related consolidated statements of operations, comprehensive loss, changes in shareholders’ equity and cash flows for the year ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Valuation of Inventories - Excess and Obsolete Inventory Reserve As described in Note 2 to the consolidated financial statements, inventories are stated at the lower of average cost or net realizable value. The Company reviews net realizable value based on estimated selling prices in the ordinary course of business less estimated costs of completions, disposal and transportation, historical usage and estimates of future demand. Based on these reviews, inventory write-downs are recorded, as necessary, to reflect estimated obsolescence, excess quantities, and net realizable value. A majority of the Company’s excess and obsolete inventory reserve relates to excess quantities of products, based on the Company’s inventory levels and future product purchase commitments compared to assumptions relating to future demand and market conditions. As of December 31, 2025, the Company’s consolidated inventories balance was $10.858 million. The principal considerations for our determination that the Company’s valuation of inventories, specifically the excess and obsolete inventory reserve, was a critical audit matter included the following: (1) management identifies inventories as a critical accounting estimate, and (2) there were significant judgments made by management in estimating the excess and obsolete inventory reserve, including developing assumptions related to future product demand based on historical usage and current market conditions. This in turn led to a high degree of auditor judgment in performing our audit procedures, which were designed to evaluate the reasonableness of audit evidence related to management’s assumptions of future product demand. F-2 Index Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others, • Obtained an understanding of the Company’s accounting policy related to inventory, specifically as it relates to the excess and obsolete inventory reserve and ensure it is relevant to the accounting standards and consistent applied to prior periods; • Recalculated the inventory reserve based on the Company’s policy and our knowledge obtained above. Ensure mathematical accuracy and test the computations for a sample of inventory items; • Evaluated management’s methodology and process for developing the excess and obsolete inventory reserve, including estimating assumptions related to future product demand based on historical usage and current market conditions; • Tested management’s calculation of the excess and obsolete inventory reserve, which included evaluating the completeness and accuracy of underlying data used by management in the calculation, principally inputs such as actual usage and management’s determination of future estimated consumption of inventory and comparing them to historical amounts; • Performed observation of inventory at various Company locations to ensure the quantities are in working order and identify damaged or poor conditioned inventory. /s/ CBIZ CPAs P.C. CBIZ CPAs P.C. We have served as the Company’s auditor since 2020 (such date takes into account the acquisition of the attest business of Marcum LLP by CBIZ CPAs P.C. effective November 1, 2024). Hartford, CT March 12, 2026 F-3 Index R EPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of TransAct Technologies Incorporated Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of TransAct Technologies Incorporated (the “Company”) as of December 31, 2024, the related consolidated statements of operations, comprehensive (loss) income, changes in shareholders’ equity and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ Marcum LLP Marcum LLP We have served as the Company’s auditor from 2020 through 2025. Hartford, CT March 24, 2025, except for Note 11, to which the date is March 12, 2026 F-4 Index TRANSACT TECHNOLOGIES INCORPORATED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) December 31, 2025 December 31, 2024 Assets: Current assets: Cash and cash equivalents $ 20,433 $ 14,394 Accounts receivable, net of allowance for expected credit losses of $ 476 and $ 474 6,364 6,507 Inventories 10,858 16,161 Prepaid income taxes 399 401 Other current assets 754 899 Total current assets 38,808 38,362 Fixed assets, net of accumulated depreciation of $ 18,519 and $ 19,468 1,243 1,818 Right-of-use assets, net 557 1,141 Goodwill 2,621 2,621 Intangible assets, net of accumulated amortization of $ 1,606 and $ 1,606 1,503 – Other assets 37 92 5,961 5,672 Total assets $ 44,769 $ 44,034 Liabilities and Shareholders’ Equity: Current liabilities: Revolving loan payable $ 3,000 $ 3,000 Accounts payable 3,539 4,569 Accrued liabilities 4,763 3,253 Lease liabilities 346 955 Deferred revenue 1,400 1,107 Total current liabilities 13,048 12,884 Deferred revenue, net of current portion 355 246 Lease liabilities, net of current portion 215 231 Other liabilities 35 40 605 517 Total liabilities 13,653 13,401 Commitments and contingencies (see Notes 9 and 15) Shareholders’ equity: Preferred stock, $ 0.01 value, 4,800,000 authorized, none issued and outstanding – – Preferred stock, Series A, $ 0.01 par value, 200,000 authorized, none issued and outstanding – – Common stock, $ 0.01 par value, 20,000,000 authorized at December 31, 2025 and 2024 ; 14,170,676 and 14,068,049 shares issued; 10,125,834 and 10,023,207 shares outstanding, at December 31, 2025 and 2024 , respectively 141 141 Additional paid-in capital 59,824 58,141 Retained earnings 3,275 4,515 Accumulated other comprehensive loss, net of tax ( 14 ) ( 54 ) Treasury stock, 4,044,842 shares, at cost ( 32,110 ) ( 32,110 ) Total shareholders’ equity 31,116 30,633 Total liabilities and shareholders’ equity $ 44,769 $ 44,034 See accompanying notes to Consolidated Financial Statements. F-5 Index TRANSACT TECHNOLOGIES INCORPORATED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) Years Ended December 31, 2025 2024 Net sales $ 51,480 $ 43,384 Cost of sales 26,465 21,902 Gross profit 25,015 21,482 Operating expenses: Engineering, design and product development 6,701 6,977 Selling and marketing 8,433 8,195 General and administrative 11,296 9,936 26,430 25,108 Operating loss ( 1,415 ) ( 3,626 ) Interest and other income (expense): Interest expense ( 339 ) ( 322 ) Interest income 537 469 Other, net 133 ( 89 ) 331 58 Loss before income taxes ( 1,084 ) ( 3,568 ) Income tax expense ( 156 ) ( 6,295 ) Net loss $ ( 1,240 ) $ ( 9,863 ) Net loss per common share: Basic $ ( 0.12 ) $ ( 0.99 ) Diluted $ ( 0.12 ) $ ( 0.99 ) Shares used in per-share calculation: Basic 10,087 9,997 Diluted 10,087 9,997 See accompanying notes to Consolidated Financial Statements. F-6 Index TRANSACT TECHNOLOGIES INCORPORATED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in thousands) Years Ended December 31, 2025 2024 Net loss $ ( 1,240 ) $ ( 9,863 ) Foreign currency translation adjustment, net of tax 40 ( 5 ) Comprehensive loss $ ( 1,200 ) $ ( 9,868 ) See accompanying notes to Consolidated Financial Statements. F-7 Index TRANSACT TECHNOLOGIES INCORPORATED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (in thousands, except share data) Common Stock Additional Paid-in Retained Treasury Accumulated Other Comprehensive Total Shares Amount Capital Earnings Stock Loss Equity Balance, December 31, 2023 9,958,811 $ 140 $ 57,055 $ 14,378 $ ( 32,110 ) $ ( 49 ) $ 39,414 Issuance of common stock on restricted stock units 74,995 1 – – – – 1 Relinquishment of stock awards and deferred stock units to pay withholding taxes ( 10,599 ) – ( 71 ) – – – ( 71 ) Share-based compensation expense – – 1,157 – – – 1,157 Foreign currency translation adjustment, net of tax – – – – – ( 5 ) ( 5 ) Net loss – – – ( 9,863 ) – – ( 9,863 ) Balance, December 31, 2024 10,023,207 141 58,141 4,515 ( 32,110 ) ( 54 ) 30,633 Issuance of common stock on restricted stock units 129,858 – – – – – – Relinquishment of stock awards and deferred stock units to pay withholding taxes ( 27,231 ) – ( 119 ) – – – ( 119 ) Share-based compensation expense – – 1,802 – – – 1,802 Foreign currency translation adjustment, net of tax – – – – – 40 40 Net loss – – – ( 1,240 ) – – ( 1,240 ) Balance, December 31, 2025 10,125,834 $ 141 $ 59,824 $ 3,275 $ ( 32,110 ) $ ( 14 ) $ 31,116 See accompanying notes to Consolidated Financial Statements. F-8 Index TRANSACT TECHNOLOGIES INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Years Ended December 31, 2025 2024 Cash flows from operating activities: Net loss $ ( 1,240 ) $ ( 9,863 ) Adjustments to reconcile net loss to net cash provided by operating activities: Share-based compensation expense 1,802 1,157 Depreciation and amortization 672 1,037 Deferred income taxes – 6,304 Loss on disposal of fixed assets 17 – Foreign currency transaction (gains) losses ( 239 ) 89 Changes in operating assets and liabilities: Accounts receivable 179 3,315 Inventories 5,445 1,607 Prepaid income taxes 22 ( 80 ) Other current and long-term assets 176 ( 43 ) Accounts payable ( 1,025 ) 149 Accrued liabilities and other liabilities 1,864 ( 1,811 ) Net cash provided by operating activities 7,673 1,861 Cash flows from investing activities: Capital expenditures ( 109 ) ( 322 ) Capitalized software development costs ( 1,503 ) – Net cash used in investing activities ( 1,612 ) ( 322 ) Cash flows from financing activities: Proceeds from bank borrowings – 750 Withholding taxes paid on stock issuance ( 119 ) ( 71 ) Payment of bank financing costs – ( 45 ) Net cash (used in) provided by financing activities ( 119 ) 634 Effect of exchange rate changes on cash and cash equivalents 97 ( 100 ) Increase in cash and cash equivalents 6,039 2,073 Cash and cash equivalents, beginning of period 14,394 12,321 Cash and cash equivalents, end of period $ 20,433 $ 14,394 Supplemental cash flow information: Interest paid $ 317 $ 272 Income taxes paid 162 499 Non-cash capital expenditures 15 9 See accompanying notes to Consolidated Financial Statements. F-9 Index TRANSACT TECHNOLOGIES INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Description of business TransAct Technologies Incorporated (together with its subsidiaries, “TransAct,” the “Company,” “we,” “us,” or “our”), which has its headquarters in Hamden, Connecticut and its primary operating facility in Ithaca, New York, operates in one operating segment: software-driven technology and printing solutions for high growth markets including food service technology, casino and gaming and “point of sale” (“POS”) automation markets. Our solutions are designed from the ground up based on market and customer requirements and are sold under the BOHA! TM , AccuDate™, Epic, Ithaca®, and EPICENTRAL ® product brands. We sell our products to original equipment manufacturers, value-added resellers, select distributors, and directly to end-users. Our product distribution spans across the Americas, Europe, the Middle East, Africa, Asia, Australia, New Zealand, the Caribbean Islands and the South Pacific. TransAct also provides world-class service, spare parts, accessories and consumables to its growing worldwide installed base of products. We also generate revenue from the after-market side of the business, providing printer and terminal service, labels and spare parts in addition to revenue from our two software solutions; (i) our line of BOHA! software applications used to automate the back-of-house operations of restaurants, convenience stores and food service operators and (ii) the EPICENTRAL Print System (“EPICENTRAL”), that enables casino operators to create promotional coupons and marketing messages and print them in real time at the slot machine. 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. By the first quarter of 2025, we believe that all significant domestic customers had been able to sell through their on-hand inventory and had resumed ordering, contributing to more normalized casino and gaming sales for the first nine months of 2025. During the fourth quarter of 2025, some domestic casino and gaming customers indicated slowing demand, and one large customer indicated they were in an overstock position while awaiting jurisdictional approvals on new machines. We believe this more recent softness reflects a combination of customer-specific ordering dynamics and broader macroeconomic conditions affecting the casino and gaming industry. While these conditions impacted our casino and gaming sales in the fourth quarter of 2025, we expect demand to improve as customer inventory levels continue to normalize and installations proceeding, although the timing and extent of any improvement will depend on prevailing economic and industry conditions in the casino and gaming market as we move through 2026. 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 Consolidated Financial Statements were issued is based on assumptions which involve significant judgment and estimates of future revenues, inflation, interest rates, capital expenditures and other operating costs. Our current assumption is that consumer traffic will continue to remain strong in casinos and restaurants during 2026. We cannot predict the ultimate impact of the current economic environment, including inflation, interest rates and supply chain disruptions on our customers, which may impact sales. We believe that we are positioned to withstand the impact of any potential 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 audited 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. Smaller Reporting Company As a smaller reporting company, as defined in Item 10(f)(1) of Regulation S-K, we may choose to prepare our disclosures relying on certain scaled disclosure requirements for smaller reporting companies in Regulation S-K and in Article 8 of Regulation S-X. The scaled disclosure requirements for smaller reporting companies permit us (i) to include less extensive narrative disclosure than required of other reporting companies, particularly in the description of executive compensation in our proxy statement and (ii) to provide audited financial statements for two fiscal years in our Form 10-K, in contrast to other reporting companies, which must provide audited financial statements for three years. We will cease to be a smaller reporting company if we have (i) equal to or greater than $250 million in market value of our shares held by non-affiliates as of the last business day of our second fiscal quarter, (ii) equal to or greater than $100 million in annual revenue for the most recent fiscal year or (iii) less than $100 million in annual revenue for the most recent fiscal year and the market value of our shares held by non-affiliates exceeds $700 million as of the last business day of our second fiscal quarter. 2. Summary of significant accounting policies Principles of consolidation: The accompanying Consolidated Financial Statements include the audited Consolidated Financial Statements of TransAct and its wholly-owned subsidiaries, which require consolidation, after the elimination of intercompany accounts, transactions and unrealized profit. Use of estimates : The preparation of Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and disclosure of contingent assets and liabilities as of the date of the Consolidated Financial Statements and the reported amounts of sales and expenses during the reporting period. Actual results could differ from those estimates. F-10 Index Cash and cash equivalents : We consider all highly liquid investments with a maturity date of three months or less at date of purchase to be cash equivalents. Accounts receivable and credit losses : The Company records accounts receivable when the right to consideration becomes unconditional. We establish an allowance for expected credit losses to ensure trade receivables are valued appropriately. We are exposed to credit losses primarily through our net sales of products and services to our customers which are recorded as Accounts Receivable, net on the Consolidated Balance Sheets. We evaluate each customer’s ability to pay through assessing customer creditworthiness, historical experience and current economic conditions through a reasonable forecast period. Factors considered in our evaluation of assessing collectability and risk include: underlying value of any collateral or security interests, significant past due balances, historical losses and existing economic conditions including country and political risk. There can be no assurance that actual results will not differ from estimates or that consideration of these factors in the future will not result in an increase or decrease to the allowance for credit losses. We may require collateral or prepayment to mitigate credit risk. We estimate expected credit losses of financial assets with similar risk characteristics. We determine if an asset is impaired when our assessment identifies there is a risk that we will be unable to collect amounts due according to the contractual terms of the agreement. We monitor our ongoing credit exposure through reviews of customer balances against contract terms and due dates, current economic conditions and dispute resolution. Estimated credit losses are written off in the period in which the financial asset is no longer collectible. The following table summarizes the activity recorded in the allowance for expected credit losses related to accounts receivable: Years Ended December 31, (In thousands) 2025 2024 Balance, beginning of period $ 474 $ 768 Additions charged to costs and expenses – – Deductions – ( 294 ) Foreign exchange and other 2 – Balance, end of period $ 476 $ 474 Inventories: Inventories are stated at the lower of average cost or net realizable value. We review net realizable value based on estimated selling prices in the ordinary course of business less estimated costs of completion, disposal and transportation, historical usage and estimates of future demand. Based on these reviews, inventory write-downs are recorded, as necessary, to reflect estimated obsolescence, excess quantities and net realizable value. We purchase raw materials and component parts for use in our manufacturing process . Fixed assets: Fixed assets are stated at cost. Depreciation is recorded using the straight-line method over the estimated useful lives. The estimated useful life of tooling is five years ; machinery and equipment is ten years ; furniture and office equipment is five years to ten years ; and computer software and equipment is three years to seven years . Leasehold improvements are amortized over the shorter of the term of the lease or the useful life of the asset. Costs related to repairs and maintenance are expensed as incurred. The costs of sold or retired assets are removed from the related asset and accumulated depreciation accounts and any gain or loss is recognized. Depreciation expense was $ 0.7 and $ 0.9 million in 2025 and 2024, respectively. Leases: We account for leases in accordance with ASC 842, “Leases” (“ASC 842”), which requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification determines whether lease expense is recognized based on an effective interest method for finance leases or on a straight-line basis over the term of the lease for operating leases. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. If risks and rewards are conveyed without the transfer of control, the lease is treated as financing. If the lessor does not convey risks and rewards or control, the lease is treated as operating. We applied the practical expedient allowing for our short term leases of 12 months or less to be accounted for on the straight-line basis, with no right-of-use asset or lease liability recorded. We have lease agreements that include lease and non-lease components, and we do not apply the practical expedients to combine these components for any of our leases. We enter into lease agreements for the use of real estate space and certain equipment under operating leases and we have no financing or sales-type leases. We determine if an arrangement contains a lease at inception. Our leases are included in “Right-of-use assets, net” and “Lease liabilities” in our Consolidated Balance Sheets. Right of use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Lease right of use assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. Lease expense is recognized on a straight-line basis over the lease term. As most of our leases do not provide an implicit rate, the Company determines its incremental borrowing rate by using the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Our lease right of use asset excludes lease incentives. Our leases have remaining lease terms of one year to five years , some of which include options to extend. The exercise of lease renewal options is at our sole discretion and our lease right of use assets and liabilities reflect only the options we are reasonably certain that we will exercise. F-11 Index Goodwill and Intangible assets : We acquire businesses in purchase transactions that result in the recognition of goodwill and intangible assets. The determination of the value of intangible assets requires management to make estimates and assumptions. In accordance with ASC 350-20 “Goodwill,” acquired goodwill is not amortized but is subject to impairment testing at least annually and when an event occurs or circumstances change that indicate it is more likely than not an impairment exists. We perform a fair value-based impairment test to the carrying value of goodwill and indefinite-lived intangible assets on an annual basis and, if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis. The Company utilizes the option to first assess qualitative factors to determine whether it is necessary to perform the Step 1 quantitative goodwill impairment test in accordance with the applicable accounting standards. Under the qualitative assessment, management considers relevant events and circumstances including but not limited to macroeconomic conditions, industry and market considerations, Company performance and events directly affecting the Company. If the Company determines that the Step 1 quantitative impairment test is required, management estimates the fair value of the reporting unit primarily using the income approach, which reflects management’s cash flow projections, and also evaluates the fair value using the market approach. Factors considered that may trigger an interim period impairment review of either acquired goodwill or intangible assets are: significant underperformance relative to expected historical or projected future operating results; significant changes in the manner of use of acquired assets or the strategy for the overall business; significant negative industry or economic trends; and significant decline in market capitalization relative to net book value. Finite lived intangible assets are amortized and are tested for impairment when appropriate. Finite lived intangible assets are amortizable and tested for impairment when appropriate. As of December 31, 2025, we have determined that no goodwill or intangible asset impairment has occurred and the fair value of goodwill was substantially higher than our carrying value based on our assessment as of December 31, 2025 when our annual review for impairment was performed. Revenue recognition: We account for revenue in accordance with ASC 606: “Revenue from Contracts with Customers”. In accordance with ASC 606, a performance obligation is a promise in a contract with a customer to transfer a distinct good or service to the customer. Some of our contracts with customers contain a single performance obligation, while other contracts contain multiple performance obligations (most commonly when contracts include a hardware product, software and extended warranties). A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company acts as a principal in shipping and handling activities. Consequently, amounts billed to customers for shipping and handling are included in Net Sales in the Consolidated Statements of Operations. The corresponding costs incurred for shipping and handling are classified as Cost of Goods Sold. The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer. To the extent the transaction price includes variable consideration, such as price protection, reserves for returns and other allowances, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the “expected value” method or the “most likely amount” method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. For a majority of our revenue, which consists of printers, terminals, labels, and replacement parts, the Company recognizes revenue as of a point of time. The transaction price is recognized upon shipment of the order when control of the goods is transferred to the customer and at the time the performance obligation is fulfilled. We also sell a software solution in our casino and gaming market, EPICENTRAL, that enables casino operators to create promotional coupons and marketing messages and to print them in real time at the slot machine. EPICENTRAL is primarily comprised of both a software component, which is licensed to the customer, and a hardware component. EPICENTRAL software and hardware are integrated to deliver the system’s full functionality. The transaction prices from EPICENTRAL software license and hardware are recognized upon installation and formal acceptance by the customer when control of the license is transferred to the customer. For out-of-warranty repairs, the transaction price is recognized after the repair work is completed and the printer or terminal is returned to the customer, as control of the product is transferred to the customer and our performance obligation is completed. Performance obligations are satisfied over time if the customer receives the benefits as we perform work, if the customer controls the asset as it is being produced, or if the product being produced for the customer has no alternative use and we have a contractual right to payment. For our separately priced extended warranty, BOHA! cloud-based software applications, technical support for our food service technology terminals and maintenance agreements (including free one-year maintenance received by customers upon completion of EPICENTRAL installation) revenue is recognized over time as the customer receives the benefit. The transaction price from the maintenance services is recognized ratably over time, using output methods, as control of the services is transferred to the customer. Our cloud-based BOHA! software allows customers to use hosted software over the contract period on a subscription basis without taking possession of the software and the subscription price is recognized ratably over the contract period. For extended warranties, the transaction price is recognized ratably over the warranty period, using output methods, as control of the services is transferred to the customer. When there is more than one performance obligation in a customer arrangement, the Company typically uses the “standalone selling price” method to determine the transaction price to allocate to each performance obligation. The Company sells the performance obligations separately and has established standalone selling prices for its products and services. In the case of an overall price discount, the discount is applied to each performance obligation proportionately based on standalone selling price. To determine the standalone selling price for initial EPICENTRAL installations, the Company uses the adjusted market assessment approach. For contracts with terms of less than 12 months, the Company expenses sales commissions as they are incurred, since the expected amortization period of the cost to obtain a contract is less than 12 months. F-12 Index Disaggregation of revenue The following table disaggregates our revenue by market type, as we believe it 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. Year Ended December 31, 2025 (In thousands) United States International Total Food service technology $ 17,886 $ 1,432 $ 19,318 POS automation 2,208 5 2,213 Casino and gaming 19,586 7,287 26,873 TransAct Services Group 2,435 641 3,076 Total net sales $ 42,115 $ 9,365 $ 51,480 Year Ended December 31, 2024 (In thousands) United States International Total Food service technology $ 14,719 $ 1,382 $ 16,101 POS automation 3,361 – 3,361 Casino and gaming 12,522 7,826 20,348 TransAct Services Group 2,883 691 3,574 Total net sales $ 33,485 $ 9,899 $ 43,384 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” on the Consolidated Balance Sheets. Contract liabilities consist of customer prepayments and deferred revenue. Customer prepayments are reported as “Accrued Liabilities” in current liabilities in the Consolidated Balance Sheets and represent customer payments made in advance of performance obligations in instances where credit has not been extended and is 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. During the year ended December 31, 2025, we recognized revenue of $ 1.1 million related to our contract liabilities as of December 31, 2024. Net contract liabilities consist of the following: December 31, (In thousands) 2025 2024 Unbilled receivables, current $ 31 $ 106 Unbilled receivables, non-current 1 32 Customer pre-payments ( 26 ) ( 164 ) Deferred revenue, current ( 1,400 ) ( 1,107 ) Deferred revenue, non-current ( 355 ) ( 246 ) Net contract liabilities $ ( 1,749 ) $ ( 1,379 ) Remaining performance obligations Remaining performance obligations represent the transaction price of firm orders for which a good or service has not been delivered to our customer. As of December 31, 2025, the aggregate amount of the transaction price allocated to remaining performance obligations was $ 5.9 million. The Company expects to recognize revenue on $ 5.5 million of its remaining performance obligations within the next 12 months following December 31, 2025, $ 0.3 million within the next 24 months following December 31, 2025 and the balance of these remaining performance obligations within the next 36 months following December 31, 2025. F-13 Index Concentration of credit risk: Financial instruments that potentially expose us to concentrations of credit risk are limited to cash and cash equivalents held by our banks with balances in excess of FDIC insured limits, and accounts receivable. The Company maintains its cash and cash equivalents with high-quality financial institutions. Accounts receivable from customers representing 10% or more of total accounts receivable, net during the years ended December 31, 2025 and 2024 were as follows: December 31, 2025 2024 Aristocrat Technologies, Inc. 22 % 6 % Light & Wonder Gaming, Inc. 4 % 15 % Sales to customers representing 10% or more of total net sales during the years ended December 31, 2025 and 2024 were as follows: December 31, 2025 2024 Light & Wonder Gaming, Inc. 9 % 11 % Engineering, design and product development: Engineering, design and product development expenses include expenses incurred in connection with specialized engineering and design to introduce new products and to customize existing products, and are expensed as a component of operating expenses as incurred. We recorded $ 6.7 million and $ 7.0 million of research and development expenses in 2025 and 2024, respectively. Costs incurred in the engineering, design and product development of a computer software product are charged to expense until technological feasibility has been established, at which point all material software costs are capitalized within Intangible assets in our Consolidated Balance Sheet until the product is available for general release to customers. While judgment is required in determining when technological feasibility of a product is established, we have determined that it is reached after all high-risk development issues have been documented in a formal detailed plan design. The amortization of these costs has been included in cost of sales over the estimated life of the product. Advertising: Advertising costs are expensed as incurred. Advertising expenses, which are included in selling and marketing expense on the accompanying Consolidated Statements of Operations for 2025 and 2024 totaled $ 1.2 million and $ 1.2 million, respectively. These expenses include items such as consulting, professional services, tradeshows, and print advertising. Income taxes: The income tax amounts reflected in the accompanying Consolidated Financial Statements are accounted for under the liability method in accordance with ASC 740, “Income Taxes” (“ASC 740”). Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize some portion of the deferred tax assets through future operations. In accordance with ASC 740, we identified, evaluated and measured the amount of benefits to be recognized for our tax return positions. See Note 11 – Income taxes . Foreign currency translation: The financial position and results of operations of our foreign subsidiary in the UK are measured using local currency as the functional currency. Assets and liabilities of such subsidiary have been translated into U.S. dollars at the year-end exchange rate, related sales and expenses have been translated at the weighted average rate for the period, and shareholders’ equity has been translated at historical exchange rates. The resulting translation gains or losses, net of tax, are recorded in shareholders’ equity as a cumulative translation adjustment, which is a component of accumulated other comprehensive income and loss. Foreign currency transaction gains and losses, including those related to intercompany balances, are recognized in Other, net on the Consolidated Statements of Operations. Share-based payments: At December 31, 2025, we have share-based employee compensation plans, which are described more fully in Note 10 – Stock incentive plans . We account for those plans under the recognition and measurement principles of ASC 718, “Compensation – Stock Compensation.” Share-based compensation expense is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the employee’s requisite service period. We use the Black-Scholes option-pricing model to calculate the fair value of share-based awards. The key assumptions for this valuation method include the expected term of the option, our stock price volatility, risk-free interest rate, dividend yield, market price of our underlying stock and exercise price. Many of these assumptions require judgment and are highly sensitive in the determination of compensation expense. Forfeitures are recognized as they occur. Net income (loss) per share : We report net income or loss per share in accordance with ASC 260, “Earnings per Share (EPS).” Under this guidance, basic EPS, which excludes dilution, is computed by dividing income or loss available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Diluted EPS includes in-the-money stock options using the treasury stock method. During a loss period, the assumed exercise of in-the-money stock options has an anti-dilutive effect, and therefore, these instruments are excluded from the computation of diluted EPS. See Note 12 – Earnings per share . F-14 Index Recently issued accounting pronouncements : On December 14, 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) . 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 evaluated the impact of adopting this standard and it did not have a material impact on our Consolidated Financial Statements. We have adopted this standard in our fiscal year 2025 annual financial statements and have applied this standard retrospectively for all prior periods presented in the financial statements. See Note 11 – Income taxes . 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. 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 December 31, 2025, did not have, and are not expected to have, a material impact on our financial position, results of operations or liquidity. 3. Inventories The components of inventories are: December 31, (In thousands) 2025 2024 Raw materials and purchased component parts $ 4,797 $ 8,413 Finished goods 6,061 7,748 $ 10,858 $ 16,161 4. Fixed assets, net The components of fixed assets, net are: December 31, (In thousands) 2025 2024 Tooling, machinery and equipment $ 7,930 $ 7,828 Furniture and office equipment 1,754 2,078 Computer software and equipment 8,022 8,412 Leasehold improvements 2,056 2,895 19,762 21,213 Less: Accumulated depreciation and amortization ( 18,519 ) ( 19,468 ) 1,243 1,745 Construction in-process – 73 $ 1,243 $ 1,818 5. Intangible assets, net Identifiable intangible assets are recorded in Intangible assets, net in the accompanying Consolidated Balance Sheets and are comprised of the following: December 31, 2025 2024 (In thousands) Gross Amount Accumulated Amortization Gross Amount Accumulated Amortization Purchased technology $ 3,094 $ ( 1,591 ) $ 1,591 $ ( 1,591 ) Patents 15 ( 15 ) 15 ( 15 ) Total $ 3,109 $ ( 1,606 ) $ 1,606 $ ( 1,606 ) Amortization expense was zero and $ 88 thousand in 2025 and 2024, respectively. F-15 Index 6. Accrued liabilities The components of accrued liabilities are: December 31, (In thousands) 2025 2024 Salaries and compensation related $ 3,107 $ 1,786 Taxes 877 725 Professional and consulting 420 200 Other 359 542 $ 4,763 $ 3,253 7. Segment reporting We apply the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 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 and the sale of printer and terminal related software, services, labels and spare parts. Factors used to identify the Company’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 the Company’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. The following table provides the operating financial results of our segment: December 31, (In thousands) 2025 2024 Revenues $ 51,480 $ 43,384 Cost of materials sold 19,050 15,268 Compensation costs 20,144 18,323 Professional services 3,760 3,493 Occupancy costs 1,458 1,477 Marketing expenses 983 1,109 IT expenses 1,328 1,255 Severance expense 133 75 Depreciation and amortization 672 1,037 Other segment expenses (1) 5,367 4,973 52,895 47,010 Operating loss ( 1,415 ) ( 3,626 ) Interest income 537 469 Interest expense ( 339 ) ( 322 ) Other income (expense) 133 ( 89 ) Income tax expense ( 156 ) ( 6,295 ) Net loss $ ( 1,240 ) $ ( 9,863 ) (1) Other Segment expenses included in Segment net income primarily include other cost of goods sold, other administrative costs and engineering costs. F-16 Index A reconciliation of net loss to EBITDA and adjusted EBITDA follows: Years Ended December 31, (In thousands) 2025 2024 Net loss $ ( 1,240 ) $ ( 9,863 ) Interest income, net ( 198 ) ( 147 ) Income tax expense 156 6,295 Depreciation and amortization 672 1,037 EBITDA ( 610 ) ( 2,678 ) Share-based compensation 1,802 1,157 Adjusted EBITDA $ 1,192 $ ( 1,521 ) Please see Note 14 – Geographic area information for net sales and long-lived assets by geographic area. 8. Retirement savings plan We maintain a 401(k) plan under which all full-time employees are eligible to participate at the beginning of the month immediately following their date of hire. We match employees’ contributions at a rate of 50 % of employees’ contributions up to the first 6 % of the employees’ compensation contributed to the 401(k) plan. Our matching contributions, net of applied forfeitures, were $ 264 thousand and $ 364 thousand in 2025 and 2024, respectively. 9. 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 December 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 December 31, 2025 and 2024, we had $ 3.0 million of outstanding borrowings under the Siena Credit Facility at interest rates of 8.5 % and 9.25 %, respectively. We had $ 3.8 million of net borrowing capacity available under the Siena Credit Facility at December 31, 2025. 10. Stock incentive plans Stock incentive plans . We currently have one stock incentive plan: the 2014 Equity Incentive Plan, which provides for awards to executives, key employees, directors and consultants. The plan generally provides for awards in the form of: (i) incentive stock options, (ii) non-qualified stock options, (iii) restricted stock, (iv) restricted stock units (which may include performance-based vesting), (v) stock appreciation rights or (vi) limited stock appreciation rights. Awards granted under this plan have exercise prices equal to 100 % of the fair market value of the common stock at the date of grant. Awards granted have a ten-year term and generally vest over a two-year to four-year period, unless automatically accelerated for certain defined events. Under our 2014 Equity Incentive Plan, as amended in May 2023, we are authorized to grant awards of up to 2.9 million shares of TransAct common stock. At December 31, 2025, 1,002,690 shares of common stock remained available for issuance under the 2014 Equity Incentive Plan. Under the assumptions indicated below, the weighted-average per share fair value of stock option grants for 2024 was $ 3.98 . We did not issue any stock options in 2025. We also issued restricted stock units for certain executives and employees that vest over a specified period of time, and in some instances require achieving certain performance metrics. The weighted-average per share fair value of these restricted stock units was $ 3.59 and $ 5.81 in 2025 and 2024, respectively. The per share fair value of restricted stock units is the trading value of the stock on the date of the grant. F-17 Index The table below indicates the key assumptions (on a weighted-average basis) used in the option valuation calculations for options granted in 2024 (we did not grant any options in 2025) and a discussion of our methodology for developing each of the assumptions used in the valuation model: Years ended December 31, 2025 2024 Expected option term (in years) – 6.1 Expected volatility – 57.7 % Risk-free interest rate – 4.3 % Dividend yield – 0.0 % Expected Option Term - This is the weighted average period of time over which the options granted are expected to remain outstanding giving consideration to our historical exercise patterns. Options granted have a maximum term of ten years and an increase in the expected term will increase compensation expense. Expected Volatility – The stock volatility for each grant is measured using the weighted average of historical daily price changes of our common stock over the most recent period approximately equal to the expected option term of the grant. An increase in the expected volatility factor will increase compensation expense. Risk-Free Interest Rate - This is the U.S. Treasury rate in effect at the time of grant having a term approximately equal to the expected term of the option. An increase in the risk-free interest rate will increase compensation expense. Dividend Yield –The dividend yield is calculated by dividing the annual dividend declared per common share by the weighted average market value of our common stock on the date of grant. An increase in the dividend yield will decrease compensation expense. We recorded $ 1.8 and $ 1.2 million of share-based compensation expense for 2025 and 2024, respectively, included primarily in general and administrative expense in our Consolidated Statements of Operations. We also recorded income tax benefits of $ 0.4 million in 2025 and $ 0.3 million in 2024, related to such share-based compensation. At December 31, 2025, these benefits are recorded as a deferred tax asset, with a corresponding valuation allowance, in the Consolidated Balance Sheets. Equity award activity in the 2005 Equity Incentive Plan and the 2014 Equity Incentive Plan, as amended, is summarized below: Stock Options Restricted Stock Units Number of Shares Average Price* Number of Units Average Price** Outstanding at December 31, 2024 1,377,113 $ 8.41 376,565 $ 6.44 Granted – – 389,800 3.59 Exercised – – ( 129,858 ) 5.98 Forfeited ( 37,375 ) 6.67 ( 100,000 ) 6.54 Expired ( 573,375 ) 9.04 – – Outstanding at December 31, 2025 766,363 $ 8.03 536,507 $ 4.47 * weighted average exercise price per share ** weighted average grant stock price per share The following summarizes information about equity awards outstanding that are vested and expect to vest and equity awards that are exercisable at December 31, 2025: Equity Awards Vested and Expected to Vest Equity Awards That Are Exercisable Awards Average Price* Aggregate Intrinsic Value (In thousands) Remaining Term** Awards Average Price* Aggregate Intrinsic Value Remaining Term** Stock Options 766,363 $ 8.03 $ – 5.7 531,838 $ 8.52 $ – 4.78 Restricted stock units 536,507 – 2,146 1.7 – – – – * weighted average exercise price per share ** weighted-average contractual remaining term in years Shares that are issued upon exercise of employee stock awards are newly issued shares and not issued from treasury stock. As of December 31, 2025, unrecognized compensation cost related to non-vested equity awards granted under our stock incentive plans is approximately $ 2.2 million, which is expected to be recognized over a weighted average period of 1.9 years. The total fair value of awards vested was $ 1.3 million and $ 0.9 million during the years ended December 31, 2025 and 2024, respectively. No stock options were exercised during the years ended December 31, 2025 and 2024. F-18 Index 11. Income taxes 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. For example, 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 has evaluated the impact of OBBBA and reflected the changes in its 2025 Consolidated Financial Statements. The effects of the OBBBA, including remeasurement of deferred tax assets and liabilities and changes to current and future tax expense, are reflected in the period of enactment. Given TransAct’s current tax positions (including a full valuation allowance against its net deferred tax assets), this law did not have a material impact on our Consolidated Financial Statements. The components of our loss before income taxes are as follows: Year Ended December 31, (In thousands) 2025 2024 Domestic $ ( 1,261 ) $ ( 3,981 ) Foreign 177 413 Loss before income taxes $ ( 1,084 ) $ ( 3,568 ) The components of the income tax expense are as follows: December 31, (In thousands) 2025 2024 Current: Federal $ – $ ( 154 ) State 53 37 Foreign 103 108 156 ( 9 ) Deferred: Federal – 5,991 State – 293 Foreign – 20 – 6,304 Income tax expense $ 156 $ 6,295 Total income tax expense in 2025 from continuing operations was $ 0 , $ 53 thousand and $ 103 thousand for federal, state and local, and foreign components, respectively. During the fiscal year ended December 31, 2025, we adopted ASU 2023-09 to enhance income tax disclosures regarding income taxes paid and further rate reconciliation disclosures. We paid the following amount of income taxes (net of refunds received) disaggregated by federal, state and foreign jurisdictions: December 31, (In thousands) 2025 2024 U.S. Federal $ – $ 360 State: Connecticut 25 – Texas 12 22 New York – 22 All other 8 16 State Subtotal 45 60 Foreign: United Kingdom 117 79 Foreign Subtotal 117 79 Total cash paid for income taxes, net of refunds $ 162 $ 499 F-19 Index Our effective tax rates were ( 14.4 %) and ( 176.4 %) for 2025 and 2024 , respectively. Our 2024 tax rate was impacted by an income tax charge of $ 7.3 million related to the write down of our U.S. net deferred income tax asset as more fully described below. At December 31, 2025, we have $ 3.5 million of federal net operating loss carryforwards, $ 221 thousand of tax-effected state net operating loss carryforwards, $ 1.2 million in R&D credit carryforwards, and no state tax credit carryforwards. These items have a full valuation allowance against them as of December 31, 2025. Federal net operating losses can be carried forward indefinitely, however these indefinite-lived NOLs are generally limited to offsetting 80% of taxable income in any given year. The Federal R&D credit carryforwards typically have a 20-year carryforward period. Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the Consolidated Financial Statements. Our deferred tax assets and liabilities were comprised of the following: December 31, (In thousands) 2025 2024 Deferred tax assets: Federal net operating losses $ 3,545 $ 276 Foreign net operating losses 870 802 State net operating losses 221 135 Accrued severance 12 20 Capitalized R&D expenses – 3,708 Inventory reserves 1,086 1,047 Deferred revenue 13 7 Warranty reserve 31 29 Stock compensation expense 1,043 853 Other accrued compensation 496 165 R&D credit carryforward 1,217 903 Other Assets 425 379 Gross deferred tax assets 8,959 8,324 Valuation allowance ( 8,664 ) ( 8,103 ) Net deferred tax assets 295 221 Deferred tax liabilities: Depreciation and amortization 251 179 Other 44 42 Net deferred tax liabilities 295 221 Total net deferred tax assets $ – $ – As of December 31, 2025 and 2024, we had $ 8.7 million and $ 8.1 million, respectively, of valuation allowance against our deferred income tax assets. The following table summarizes the activity recorded in the valuation allowance on the deferred tax assets: Year Ended December 31, (In thousands) 2025 2024 Balance, beginning of period $ 8,103 $ 719 Additions charged to income tax provision 561 7,384 Balance, end of period $ 8,664 $ 8,103 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, 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 under the same standards of positive and negative evidence. If it is determined that it is more likely than not that a deferred tax asset will be realized, the appropriate amount of the valuation allowance, if any, is released. Deferred tax assets and liabilities are also re-measured to reflect changes in underlying tax rates due to law changes and the granting and lapse of tax holidays. F-20 Index In 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. The company’s deferred tax assets generated by net operating losses have an unlimited life and R&D credit carryforwards have a twenty-year life. After weighing all available positive and negative evidence, as described above, management determined that it was no longer more likely than not that TransAct will realize the tax benefit of these deferred tax assets. This was mainly driven by a cumulative taxable loss over the three preceding fiscal years (2022 through 2024) combined with a near term outlook of future taxable losses (a taxable loss was generated in 2025 as well). The need for this valuation allowance will be assessed on a quarterly basis in future periods and, as a result, a portion, or all of the allowance, may be reversed based on changes in facts and circumstances. Differences between the U.S. statutory federal income tax rate and our effective income tax rate are analyzed below: 2025 2024 (Dollars in thousands) $ % $ % Loss before income taxes $ ( 1,084 ) $ ( 3,568 ) U.S. Federal Statutory Tax Rate ( 228 ) 21.0 % ( 749 ) 21.0 % Current State and Local Income Taxes, net of Federal Income Tax Effect 57 ( 5.3 %) ( 36 ) 1.0 % Foreign Tax Effects United Kingdom – statutory rate differences ( 1 ) – 17 ( 0.5 %) Macau – change in valuation allowance 68 ( 6.3 %) – – Effect of changes in Tax Laws or Rates Enacted in the Current Period – – – – Effect of Cross-Border Tax Laws – – – – Tax Credits ( 313 ) 28.9 % ( 313 ) 8.8 % Nontaxable or Nondeductible Items Share based payment awards 36 ( 3.3 %) 27 ( 0.8 %) Stock Option cancellations 56 ( 5.2 %) 74 ( 2.1 %) Meals and entertainment 12 ( 1.1 %) – – Changes in Valuation Allowance 450 ( 41.5 %) 7,384 ( 206.9 %) Other Adjustments Resolution of uncertain tax positions ( 16 ) 1.5 % – – Net operating losses 31 ( 2.8 %) – – Research and development credit carryforward – – ( 99 ) 2.7 % Other 4 ( 0.3 %) ( 10 ) 0.4 % Effective Tax Rate $ 156 ( 14.4 %) $ 6,295 ( 176.4 %) We had $ 187 and $ 203 thousand of total gross unrecognized tax benefits at December 31, 2025 and 2024, respectively that, if recognized, would favorably affect the effective income tax rate in any future periods. We are not aware of any events that could occur within the next twelve months that could cause a significant change in the total amount of unrecognized tax benefits. A tabular reconciliation of the gross amounts of unrecognized tax benefits at the beginning and end of the year is as follows: December 31, (In thousands) 2025 2024 Balance, beginning of period $ 203 $ 197 Tax positions taken during the current period 25 31 Reductions for tax positions in prior years ( 41 ) ( 25 ) Balance, end of period $ 187 $ 203 We recognize interest and penalties related to uncertain tax positions in the income tax provision. We are subject to U.S. federal income tax as well as income tax of certain state and foreign jurisdictions. We have substantially concluded all U.S. federal income tax, state and local, and foreign tax matters through 2021. However, our federal tax returns for the years 2022 through 2025 remain open to examination. Various state and foreign tax jurisdiction tax years remain open to examination as well, though we believe that any additional assessment would be immaterial to the Consolidated Financial Statements. F-21 Index 12. Earnings per share Earnings per share was computed as follows (in thousands, except per share amounts): Years Ended December 31, 2025 2024 Net loss $ ( 1,240 ) $ ( 9,863 ) Shares: Basic: Weighted average common shares outstanding 10,087 9,997 Add: Dilutive effect of outstanding equity awards as determined by the treasury stock method – – Diluted: Weighted average common and common equivalent shares outstanding 10,087 9,997 Net loss per common share: Basic $ ( 0.12 ) $ ( 0.99 ) Diluted ( 0.12 ) ( 0.99 ) The computation of diluted earnings per share excludes the effect of the potential exercise of stock awards, including stock options, restricted stock units and performance stock awards, when the average market price of the common stock is lower than the exercise price of the related stock award during the period. These outstanding stock awards are not included in the computation of diluted earnings per share because the effect would be anti-dilutive. Furthermore, in periods when a net loss is reported, such as in 2025 and 2024, basic and diluted net loss per common share are calculated using the same method. There were 1.2 million and 1.8 million of anti-dilutive stock awards excluded from the computation of earnings per share for the years ended December 31, 2025 and 2024, respectively. 13. Stock repurchase program We use the cost method to account for treasury stock purchases, under which the price paid for the stock is charged to the treasury stock account. Repurchases of our common stock are accounted for as of the settlement date. During 2025 and 2024, we did no t repurchase any shares of our common stock. From January 1, 2005 through December 31, 2019, we repurchased a total of 4,044,842 shares of common stock for $ 32.1 million, at an average price of $ 7.94 per share. 14. Geographic area information Information regarding our operations by geographic area is contained in the following table. These amounts in the geographic area table are based on the location of the customer and asset. Years Ended December 31, (In thousands) 2025 2024 Net sales: United States $ 42,115 $ 33,485 International 9,365 9,899 Total $ 51,480 $ 43,384 Fixed assets, net: United States $ 553 $ 831 International 690 987 Total $ 1,243 $ 1,818 Sales to international customers were 18 % and 23 % of total sales in 2025 and 2024, respectively. Sales to Europe represented 59 % and 55 %, sales to the Pacific Rim (which includes Australia and Asia) represented 28 % and 34 %, and sales to Canada represented 13 % and 10 % of total international sales in 2025 and 2024, respectively. International long-lived assets consist of net fixed assets located at our foreign subsidiary in the UK, as well as our contract manufacturer in Thailand. 15. Leases Operating lease expense was $ 1.0 million and $ 1.0 million for the years ended December 31, 2025 and 2024 , 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 Consolidated Statements of Operations. Operating costs include short-term lease costs. On November 3, 2025, the Company entered into a third amendment to its corporate headquarters lease in Hamden, Connecticut, extending the lease term from November 1, 2025 through December 31, 2029 and reducing the area of the leased premises from approximately 11,000 square feet to 3,630 square feet. F-22 Index The following information represents supplemental disclosure for the statement of cash flows related to operating leases (in thousands): Years Ended December 31, 2025 2024 Operating cash outflows from leases $ 1,073 $ 1,022 The following summarizes additional information related to our leases: Years Ended December 31, 2025 2024 Weighted average remaining lease term (in years) 2.3 1.2 Weighted average discount rate 9.1 % 7.7 % The maturity of the Company’s operating lease liabilities are as follows (in thousands): December 31, 2025 2026 $ 376 2027 82 2028 82 Thereafter 82 Total undiscounted lease payments 622 Less imputed interest 61 Total lease liabilities $ 561 For details regarding the new lease agreement for a new facility in Las Vegas, Nevada, see Note 18 – Subsequent events . 16. Quarterly results of operations (unaudited) Our quarterly results of operations for 2025 and 2024 are as follows: Quarter Ended (In thousands, except per share amounts) March 31 June 30 September 30 December 31 2025: Net sales $ 13,053 $ 13,798 $ 13,176 $ 11,453 Gross profit 6,359 6,652 6,556 5,448 Net income (loss) 19 ( 143 ) 15 ( 1,131 ) Net income (loss) per common share: Basic 0.00 ( 0.01 ) 0.00 ( 0.11 ) Diluted 0.00 ( 0.01 ) 0.00 ( 0.11 ) 2024: Net sales $ 10,687 $ 11,599 $ 10,867 $ 10,231 Gross profit 5,624 6,110 5,227 4,521 Net loss ( 1,036 ) ( 319 ) ( 551 ) ( 7,957 ) Net loss per common share: Basic ( 0.10 ) ( 0.03 ) ( 0.06 ) ( 0.79 ) Diluted ( 0.10 ) ( 0.03 ) ( 0.06 ) ( 0.79 ) F-23 Index 17. Related party transactions One of the Company’s directors serves as President and Chief Executive Officer of The One Group Hospitality, Inc. The Company sold various food service technology products to The One Group Hospitality, Inc. on an arms’ length basis totaling $ 161 thousand and $ 117 thousand in 2025 and 2024, respectively. The Company’s accounts receivable from The One Group Hospitality, Inc. amounted to $ 30 thousand and $ 5 thousand at December 31, 2025 and 2024, respectively. 18. Subsequent events On February 9, 2026, we entered into a new lease agreement for a new facility in Las Vegas, Nevada. This new lease agreement replaces an existing Las Vegas lease agreement (and facility) which expired on February 28, 2026. We will continue to use this new Las Vegas leased facility for software design and development, assembly, and services. This new lease is for 9,427 square feet and expires on June 30, 2031. The Company has evaluated all other events or transactions that occurred up to the date the consolidated financial statements were available to issue. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the consolidated financial statements. F-24