What changed in this filing

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Item 1. Financial Statements

2026-05-13 compared with 2025-11-13 · 235 added, 196 removed, 240 unchanged (64% of the section changed)

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C ONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2025

March 31, 2026

December 31, 2025

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Shareholders’ equity:

Common stock, $ 0.01 par

value, 20,000,000 shares authorized;

Common stock, $ 0.01 par value,

20,000,000 shares authorized;

and 14,170,676 shares issued, respectively;

10,112,585 and 10,023,207 shares

outstanding, respectively

10,276,279 and 10,125,834 shares outstanding, respectively

Additional paid-in capital

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TRANSACT TECHNOLOGIES INCORPORATED

CONDE NSED CONSOLIDATED STATEMENTS OF OPERATIONS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

Nine Months Ended

September 30,

(In thousands, except per share data)

(In thousands except share data)

Cost of sales

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Interest, net

Income (loss) before income taxes

Income tax (expense) benefit

Net income (loss)

Net income (loss) per common share:

Income before income taxes

Income tax expense

Net income per common share (Note 7):

Shares used in per-share calculation:

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TRANSACT TECHNOLOGIES INCORPORATED

CONDENSED CONSOLI DATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Net income (loss)

Foreign currency translation adjustment, net of tax

Comprehensive income (loss)

Foreign currency translation adjustment, net of taxes

Comprehensive income

See notes to Condensed Consolidated Financial Statements.

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CONDE NSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended

(In thousands)

Cash flows from operating activities:

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

Adjustments to reconcile net income to net cash used in operating activities:

Share-based compensation expense

Depreciation and amortization

Deferred income taxes

Unrealized foreign currency transaction gains

Unrealized foreign currency transaction losses (gains)

Changes in operating assets and liabilities:

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Accrued liabilities and other liabilities

Net cash provided by (used in) operating activities

Net cash used in operating activities

Cash flows from investing activities:

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Effect of exchange rate changes on cash and cash equivalents

Increase (decrease) in cash and cash equivalents

Decrease in cash and cash equivalents

Cash and cash equivalents, beginning of period

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Non-cash capital expenditure items

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

New right of use assets obtained in exchange for lease liabilities

See notes to Condensed Consolidated Financial Statements.

TRANSACT TECHNOLOGIES INCORPORATED

CONDENSED CONSO LIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

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Balance, beginning of period

Issuance of common stock from restricted stock units

Issuance of common stock on restricted stock units

Balance, end of period

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Balance, beginning of period

Net income (loss)

Balance, end of period

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GAAP to be included in full year financial statements.

In the opinion of management, all adjustments considered necessary for a fair statement of the results for the periods presented have been included and

are of a normal recurring nature .

The December 31, 2024 Condensed Consolidated Balance Sheet data was derived from audited financial statements, but does not include all disclosures required by U.S.

These interim financial statements

should be read in conjunction with the audited financial statements in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”).

results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the results to be expected for the full year ending December 31, 2025.

After strong demand during most of 2023 due in part to our primary competitor’s struggle to deliver products in the face of supply chain constraints, in

late 2023, we began to see indications of a temporary slowdown in demand in the casino and gaming market, as customers that had built up excess inventory due to supply chain concerns advised us that they would temporarily reduce orders until their

stock normalized.

The Condensed Consolidated Financial Statements as of March 31, 2026 and for the quarters ended March 31, 2026 and 2025 are unaudited, but in the

opinion of management, all adjustments considered necessary for a fair statement of the results for the periods presented have been included and are of a normal recurring nature .

The December 31, 2025 Condensed Consolidated Balance Sheet data was derived from audited

financial statements, but does not include all disclosures required by U.S.

These interim financial statements should be read in conjunction with the audited financial statements in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”).

The results of operations for the three months ended March 31, 2026

are not necessarily indicative of the results to be expected for the full year ending December 31, 2026.

After strong demand during most of 2023 due in part to our primary competitor’s

struggle to deliver products in the face of supply chain constraints, in late 2023, we began to see indications of a temporary slowdown in demand in the casino and gaming market, as customers that had built up excess inventory due to supply

chain concerns advised us that they would temporarily reduce orders until their stock normalized.

This slowdown impacted our results in the fourth quarter of 2023 and during the year ended December 31, 2024.

After reviewing whether conditions and/or

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

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

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

Condensed Consolidated Financial Statements were issued.

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.

While these conditions impacted our casino

and gaming sales in the fourth quarter of 2025, demand in 2026 has improved as customer inventory levels have normalized and installations have been proceeding.

Although the timing and extent of any improvement will depend on prevailing

economic and industry conditions in the casino and gaming market, we expect our domestic casino and gaming sales to be higher in 2026 compared to 2025.

On February 20, 2026, the U.S.

Supreme Court issued a ruling in Learning Resources, Inc.

Trump , holding that the International Emergency Economic Powers Act

(“IEEPA”) does not provide the executive branch with the authority to impose certain tariffs.

This ruling invalidated certain tariffs previously paid by the Company on goods imported from Thailand.

Following the Supreme Court’s ruling that

IEEPA-based tariffs were unlawful, the Court of International Trade (CIT) ordered U.S.

Customs and Border Protection (CBP) to provide a process for the refund of collected tariffs.

The refund mechanism allows importers to file claims for

duties paid on shipments through a declaration in the Consolidated Administration and Processing of Entries (“CAPE”) system, which was launched on April 20, 2026.

In addition, subsequent to the U.S.

Supreme Court’s decision invalidating certain

tariffs imposed under the IEEPA, the presidential administration implemented a tariff surcharge under Section 122 of the Trade Act of 1974, establishing a minimum 10% duty on imports, subject to certain exemptions.

The Company is currently

evaluating the impact of these additional tariffs but does not expect them to have a material adverse effect on its operations or financial condition.

Following the February 2026 U.S.

Supreme Court ruling regarding IEEPA tariffs, the

Company initiated a process of claiming refunds for approximately $ 0.5 million in previously paid duties.

In line with our commitment

to customer transparency, we intend to reimburse those specific customers in which tariff costs were previously passed through via pricing adjustments, subject to applicable law and any further legal or regulatory developments.

issue these reimbursements following our successful receipt of funds from U.S.

Customs and Border Protection.

The timing and ultimate amount of these payments remain subject to the federal CAPE portal processing timelines and final verification

of eligible entries.

The ultimate availability, timing and amount of any potential refunds remain highly uncertain and are subject to further legal, regulatory, and administrative developments.

Any tariff recoveries received from the CAPE portal will be recorded as a reduction

in cost of sales.

Under Accounting Standards Codification (“ASC”) Topic 606:

Revenue from Contracts with Customers (“ASC 606”), anticipated payments to customers are treated as variable consideration and will be recorded as a reduction to the transaction price (revenue) once they are collected by TransAct and reimbursed

to customers.

We will continue to evaluate the estimate of this liability as the federal refund process matures.

Due to the inherent uncertainties in this process, the Company has not recognized a receivable or payable for any potential refunds as of

March 31, 2026.

We will continue to monitor legal developments and evaluate our eligibility for recovery.

Use of assumptions and estimates

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

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

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

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

current assumption is that consumer traffic will continue to remain strong in casinos and restaurants during the remainder of 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 future economic downturn and we would be able to take additional financial and operational actions to

increase liquidity.

In addition, the presentation of the accompanying unaudited Condensed Consolidated Financial Statements requires us to make estimates and judgments that

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There have been no changes to our significant accounting policies since the 2025 Form 10-K.

Intangible assets:

The Company accounts for software development costs for products to be sold or marketed in accordance with Accounting Standards Codification (“ASC”) 985-20, Software -- Costs of Software to

Be Sold, Leased, or Marketed.

Costs incurred to establish the technological feasibility of a software product are engineering, design and product development costs and are expensed as incurred.

Technological feasibility is established when the

Company has completed all planning, designing, coding, and testing activities necessary to determine that a product can be produced to meet its design specifications.

Capitalization of software costs begins upon the establishment of technological

feasibility and ceases when the product is available for general release to customers.

Capitalized software costs are amortized on a product-by-product basis using the straight-line method over the estimated economic life of the product, or the ratio

of current gross revenues to total current and anticipated future gross revenues, whichever is greater.

During the quarter ended March 31, 2026, the Company capitalized $ 0.5 million of software development costs.

Amortization will commence upon completion and release to customers and will be over

an estimated useful life of seven years .

Recently issued accounting pronouncements:

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

Improvements to Income Tax Disclosures .

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

reconciliations and income taxes paid disclosures.

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

These income tax disclosure requirements can be applied either prospectively or retrospectively to all

periods presented in the financial statements.

We have assessed the impact of adopting this standard and outside of enhanced disclosures, this adoption will not have a material impact on our Consolidated Financial Statements .

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

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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.

The amendments in ASU 2024-03 are effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal

years beginning after December 15, 2027.

Early adoption is permitted.

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

In July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326).

This amendment provides certain entities with an

additional practical expedient election for estimating expected credit losses on current accounts receivable and current contract assets arising from revenue transactions under Accounting Standards Codification (“ASC”) Topic 606;

Revenue from Contracts with Customers (“ASC Topic 606”).

This includes assets acquired in business combinations or through consolidation of VIEs that are not a

business if those assets arose from transactions that the acquiree or variable interest entity accounted for under ASC Topic 606.

We are currently

evaluating the impact of adopting this standard;

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

Other new accounting pronouncements issued, but not effective until after September 30, 2025 ,

did not have, and are not expected to have, a material impact on our financial position, results of operations or liquidity.

We account for revenue in accordance with ASC Topic 606 .

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

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for

Internal-Use Software.

The amendments in this update remove all references to prescriptive and sequential software development stages (referred to as “project stages”) throughout Subtopic 350-40.

The amendments in this update specify that the

disclosures in Subtopic 360-10, Property, Plant, and Equipment—Overall, are required for all capitalized internal-use software costs, regardless of how those costs are presented in the financial statements.

Additionally, the amendments clarify

that the intangibles disclosures in paragraphs 350-30-50-1 through 50-3 are not required for capitalized internal-use software costs.

The amendments in ASU 2025-06 are effective for fiscal years beginning after December 15, 2027, and interim

reporting periods within those annual reporting periods.

Early adoption is permitted.

We are currently evaluating the impact of this standard.

On January 1, 2026, the Company adopted ASU 2025-05, which provides a practical expedient for estimating expected credit losses.

Under this standard, the

Company elected the practical expedient that allows for the measurement of expected credit losses based on the assumption that current conditions will persist through the end of the contractual term of the financial assets.

By electing this

expedient, the Company is no longer required to develop or incorporate complex, forward-looking forecasts or revert to historical loss descriptions for the remaining life of the assets.

The Company applied this transition to its accounts

receivable assets using a modified retrospective approach.

The adoption did not have a material impact on the Company’s consolidated financial statements or opening retained earnings, as the current economic environment at the time of

adoption was consistent with the historical loss experience and existing trends previously utilized in our CECL models.

Other new accounting pronouncements issued, but not effective until after March 31, 2026, did not and are not expected to have a material impact on our financial

position, results of operations or liquidity.

We account for revenue in accordance with ASC 606.

Disaggregation of revenue

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

flows are affected by economic factors.

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

are affected by economic factors.

Sales and usage-based taxes are excluded from revenues.

Three Months Ended

September 30,

(In thousands)

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Total net sales

Nine Months Ended

September 30,

(In thousands)

United States

International

United States

International

Food service technology

POS automation

Casino and gaming

TransAct Services Group

Total net sales

Contract balances

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

months ended September 30, 2025, we recognized revenue of $ 1.0 million related to our contract liabilities at December 31, 2024.

Total net contract liabilities consisted of the following:

September 30, 2025

For the three

months ended March 31, 2026, we recognized revenue of $ 0.5 million related to our contract liabilities at December 31, 2025.

contract liabilities consisted of the following:

March 31, 2026

December 31, 2025

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Remaining performance obligations

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

As of September 30, 2025, the aggregat e amount of transaction prices allo cated t o RPO s was $ 3.7

The Company expects to recognize revenue of $ 3.4 million of its RPO s within the next 12 months following September 30, 2025, an additional $ 0.2 million within the next 24 months

following September 30, 2025 and the balance

of these RPO s within the next 36 months following September 30, 2025.

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

As of March 31, 2026,

the aggregat e amount of transaction prices allo cated t o r emaining performance obligations was $ 6.4 million.

The Company expects to recognize revenue of $ 6.0

million of its r emaining performance obligations within the next 12 months following March 31, 2026, $ 0.3 million within the next 24 months

following March 31, 2026 and the balance

of these r emaining performance

obligations recognized within the next 36 months following March 31, 2026.

The components of inventories were:

September 30, 2025

March 31, 2026

December 31, 2025

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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.

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.

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additional indebtedness and create other liens.

We have remained in compliance with our excess availability covenant through September 30, 2025.

We have remained in compliance with our excess availability covenant through March 31, 2026.

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

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

As of September 30, 2025, we had $ 3.0 million of outstanding borrowings under the Siena Credit Facility at an interest rate of 9.00 %.

As of March 31, 2026, we had $ 3.0 million of outstanding borrowings under the Siena Credit Facility at an interest rate of 8.50 %.

We had $ 2.8 million of net borrowing capacity available

under the Siena Credit Facility at September 30, 2025.

under the Siena Credit Facility at March 31, 2026.

Segment reporting

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

view our operations and manage our business as one segment:

the design, development, and marketing of software-driven technology and printing solutions for large and emerging markets, and the provision of related services, supplies and spare parts.

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

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

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

We apply the provisions of ASC Topic 280:

Segment Reporting .

our operations and manage our business as one segment:

the design, development, and marketing of software-driven technology and printing

solutions for high growth markets, and provide related services, supplies and spare parts.

Factors used to identify TransAct’s single operating segment include

the similar design, construction and functionality of our products and services, the combined research & development team that supports the entire company, a combined assembly, production and supply chain logistics process used to construct our

products and services and a similar class of customers within our core markets (distributors, resellers, original equipment manufacturers (“OEMs”) and end users).

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

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The Company’s CODM

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

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

adjusted EBITDA to make operational and strategic decisions.

These financial measures are compared to budgeted and forecasted amounts by the CODM on a regular

function is performed by the Company’s Chief Executive Officer and the Company’s Chief Financial Officer, who utilize a consolidated approach to assess the performance of and allocate resources to the business.

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

and adjusted EBITDA to make operational and strategic decisions.

These financial measures are compared to budgeted and forecasted amounts by the CODM s on a regular

basis to measure our progress towards our strategic plans, pursue product enhancements, conduct research and development initiatives and make any other necessary overall strategic changes to the business.

We disclose these non-GAAP segment

results because we believe they provide meaningful supplemental information and are used by the CODM in making decisions about how to allocate resources and assess performance.

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

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

We disclose these non-GAAP segment results

because we believe they provide meaningful supplemental information and are used by the CODM in making decisions about how to allocate resources and assess performance.

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

Three Months Ended

September 30,

(In thousands)

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Marketing expenses

Severance expenses

Severance expense

Depreciation and amortization

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Interest expense

Income tax (expense) benefit

Net income (loss)

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

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

Three Months Ended

September 30,

Income tax expense

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

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

(In thousands)

Net income (loss)

Interest income, net

Income tax expense (benefit)

Income tax expense

Depreciation and amortization

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Three Months Ended

Nine Months Ended

September 30,

(In thousands, except per-share data)

Net income (loss)

Weighted average common shares outstanding

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

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

treasury stock method

Weighted average common and common equivalent shares outstanding

Net income (loss) per common share:

Net income per common share:

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

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

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

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

Furthermore, in periods when a net loss is reported, basic

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

There were 1.6 million of

anti-dilutive stock awards excluded from the computation of earnings per share for both of the quarters ended September 30, 2025 and 2024, and 1.8 million and 1.5 million of anti-dilutive stock awards excluded from the computation of earnings per diluted share for the nine months ended September 30, 2025 and 2024, respectively.

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

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

Furthermore, in periods when a net loss is

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

There were 1.1 million and 1.4 million anti-dilutive stock awards excluded from the computation of earnings per share for the quarters ended March 31, 2026, and March 31, 2025, respectively.

We account for leases in accordance with ASC Topic 842:

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

Operating lease expense for the nine months ended September 30, 2025

On March 31, 2026, we amended our lease agreement for our facility in Ithaca, New York.

This amendment extends the expiration of the lease from May 31, 2026 to

September 30, 2031, resulting in a $ 3.0 million increase in our right of use assets and lease liabilities.

Operating lease expense for the three months ended March 31, 2026

and 2025 was $ 235

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

Nine Months Ended,

September 30,

Three Months Ended,

Operating cash outflows from leases

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

September 30, 2025

The following summarizes additional information related to our leases as of March 31, 2026 and December 31, 2025:

March 31, 2026

December 31, 2025

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Weighted average discount rate

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

The maturity of the Company’s operating lease liabilities as of March 31, 2026

and December 31, 2025 were as follows (in thousands):

September 30, 2025

March 31, 2026

December 31, 2025

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Total lease liabilities

We recorded income tax expense in the third quarter of 2025

of $ 25 thousand at an effective tax rate of 62.5 % compared to an income tax benefit in the third quarter

of 2024 of $ 148 thousand at an effective tax rate of ( 21.2 %).

For the nine months ended September 30, 2025 , we recorded income tax expense of $ 116 thousand (on pre-tax income of $ 7 thousand) compared to an

income tax benefit of $ 511 thousand at an effective rate of ( 21.1 %) for the nine months ended September 30, 2024 .

The effective tax rates for the third quarter of 2025 and the nine months ended September 30, 2025 were unusually high because (1) pre-tax income was at near-breakeven levels of $ 40 thousand and $ 7 thousand, respectively, and (2) tax expense

only included taxes associated with earnings in the United Kingdom and minimum required state taxes in the United States.

As discussed below, we provided for a full valuation allowance against our U.S.

deferred taxes in the fourth quarter of 2024

and continue to believe this allowance is required as of September 30, 2025.

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

tax expense associated with pre-tax income recorded in the third quarter of 2025 and the nine months ended September 30, 2025.

As of September 30, 2025 and

December 31, 2024, we had $ 8.4 million and $ 8.1 million, respectively, of valuation allowance against our net deferred income tax assets in multiple global tax jurisdictions.

Valuation allowances are recorded to reduce deferred tax assets when it is more

likely than not (greater than 50%) that a tax benefit will not be realized.

In evaluating the need for a valuation allowance, management considers all potential sources of taxable income, including income available in carryback periods, future

reversals of taxable temporary differences, projections of taxable income, income from tax planning strategies, as well as all available positive and negative evidence.

Positive evidence includes factors such as a history of profitable

operations and projections of future profitability within the carryforward period, including any potential tax planning strategies.

We recorded income tax expense in the first quarter of 2026 of $ 23 thousand at an effective tax rate of 2.9 % compared to income tax expense in the first quarter of

2025 of $ 51 thousand at an effective tax rate of 72.9 %.

In the fourth quarter of 2024, the Company recorded a valuation allowance on the full value of its U.S.

federal net deferred tax asset.

The need for this valuation allowance has

been assessed as of March 31, 2026 and management continues to believe that the negative evidence, as further discussed below, continues to support our valuation allowance.

As such, we recorded no U.S.

federal income tax expense during the first quarter of 2026 and the first quarter of 2025.

The effective tax rate for the first quarter of 2026 was low due to tax

expense only being recorded on income taxes associated with earnings in the United Kingdom and minimum required state taxes in the United States.

The effective tax rate for the first quarter of 2025 was unusually high due to (1) a near-breakeven

level of pre-tax earnings of $ 70 thousand and (2) tax expense only included taxes associated with earnings in the United Kingdom and

minimum required state taxes in the United States.

As of March 31, 2026 and December 31, 2025, we had $ 8.5

million and $ 8.7 million, respectively, of valuation allowance against our net deferred income tax assets in multiple global tax

jurisdictions.

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

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.

In evaluating the need for a valuation allowance, management considers all potential sources of taxable income, including income available in carryback

periods, future reversals of taxable temporary differences, projections of taxable income, income from tax planning strategies, as well as all available positive and negative evidence.

Positive evidence includes factors such as a history of

profitable operations and projections of future profitability within the carryforward period, including any potential tax planning strategies.

Negative evidence includes items such as cumulative losses and projections of future losses.

Upon changes in

facts and circumstances, management may conclude that deferred tax assets for which no valuation allowance is currently recorded may not be realized, resulting in a charge to establish a valuation allowance.

Existing valuation allowances are

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

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

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

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

capitalized R&D expenses).

The need for this valuation allowance has been assessed as of September 30, 2025 and management

continues to believe that the negative evidence, as discussed above, continues to support our valuation allowance.

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

Existing valuation

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

We are subject to U.S.

4 unchanged sentences

However, our federal tax returns for the years 2022 through 2025 remain open to examination.

state and foreign tax

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

state and foreign tax jurisdiction

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

Subsequent events

On October 26, 2025, the U.S.

government and Thai

government issued a joint statement announcing a Framework for an Agreement on Reciprocal Trade, pursuant to which, among other things, the U.S.

has agreed to maintain a tariff of 19% on goods imported from Thailand, as set forth in Executive

Order 14257 issued April 2, 2025, as amended, with certain products eventually to be identified for a 0% tariff rate.

See further discussion of tariffs in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” below.

On November 3, 2025, we entered into an amendment to modify the square footage and expiration date of our lease on our Hamden, Connecticut facility.

lease, which was last amended on April 30, 2021, was scheduled to expire on October 31, 2025.

This lease amendment, which was effective on November 1, 2025, modified the expiration date of the lease to December 31, 2029 and reduced the leased

square footage from 11,075 square feet to 3,630

The Company is continuously monitoring the ongoing U.S.

government’s executive order tariffs and counter

tariffs imposed on the U.S.

by certain countries.

Since February 2025, the U.S.

government has issued several executive orders imposing tariffs on imports from most countries with which the U.S.

engages in trade, including a minimum 10% duty on

imports, subject to certain exemptions, pursuant to Section 122 of the Trade Act of 1974.

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

On February 20, 2026, the U.S.

Supreme Court issued a ruling in Learning Resources, Inc.

Trump , holding that the International Emergency Economic Powers Act (“IEEPA”) does not provide the executive branch

with the authority to impose certain tariffs.

This ruling invalidated certain tariffs previously paid by the Company on goods imported from Thailand.

Following the Supreme Court’s ruling that IEEPA-based tariffs were unlawful, the Court of

International Trade (“CIT”) ordered U.S.

Customs and Border Protection (“CBP”) to provide a process for the refund of collected tariffs.

The refund mechanism allows importers to file claims for duties paid on shipments through a declaration in

the Consolidated Administration and Processing of Entries (“CAPE”) system, which was launched on April 20, 2026.

See Note 1 Basis of presentation .

On April 28, 2026, the Company’s Board of Directors approved a share repurchase program authorizing the purchase of up to $ 3 million of the Company’s outstanding common stock.

Under this program, the Company may repurchase shares from time to time in the open market, through negotiated

transactions, or other legal means, depending on market conditions, share price, and other factors.

The program has a term of one year ,

unless terminated earlier by the Board of Directors.

The repurchase program will be funded using the Company’s existing cash balance and cash generated from operations.

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

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

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

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements