{"url_path":"/sec/tact/10-k/2026/item-16","section_key":"item-16","section_title":"Item 16 Form 10-K Summary.","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-03-12","source_url":"https://www.sec.gov/Archives/edgar/data/1017303/0001140361-26-009238-index.html","accession_number":"0001140361-26-009238","cik":"0001017303","ticker":"TACT","issuer_name":"TRANSACT TECHNOLOGIES INC","edgar_url":"https://www.sec.gov/Archives/edgar/data/1017303/0001140361-26-009238-index.html","primary_entity_key":"0001017303","primary_entity_name":"TRANSACT TECHNOLOGIES INC"},"word_count":12164,"has_tables":true,"body_markdown":"Item 16. Form 10-K Summary.\n\nNone.\n\n33\n\n[Index](#INDEX)\n\nSIGNATURES\n\nPursuant 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\nbehalf by the undersigned, thereunto duly authorized.\n\n \n\nTRANSACT TECHNOLOGIES INCORPORATED\n\n \n\n \n\n \n\n \n\nBy:\n\n/s/ John M. Dillon\n\n \n\nName:\n\nJohn M. Dillon\n\n \n\nTitle:\n\nChief Executive Officer\n\nDate: March 12, 2026\n\nPursuant 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\nin the capacities and on the dates indicated.\n\n \n\nSignature\n\n \n\nTitle\n\n \n\nDate\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n/s/ John M. Dillon\n\n \n\nChief Executive Officer and Director\n\n \n\nMarch 12, 2026\n\n \n\n \n\nJohn M. Dillon\n\n \n\n(Principal Executive Officer)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n/s/ Steven A. DeMartino\n\n \n\nPresident, Chief Financial Officer, Treasurer and Secretary\n\n \n\nMarch 12, 2026\n\n \n\n \n\nSteven A. DeMartino\n\n \n\n(Principal Financial Officer)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n/s/ William J. DeFrances\n\n \n\nVice President and Chief Accounting Officer\n\n \n\nMarch 12, 2026\n\n \n\n \n\nWilliam J. DeFrances\n\n \n\n(Principal Accounting Officer)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n/s/ Haydee Ortiz Olinger\n\n \n\nChair of the Board\n\n \n\nMarch 12, 2026\n\n \n\n \n\nHaydee Ortiz Olinger\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n/s/ Audrey P. Dunning\n\n \n\nDirector\n\n \n\nMarch 12, 2026\n\n \n\n \n\nAudrey P. Dunning\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n/s/ Daniel M. Friedberg\n\n \n\nDirector\n\n \n\nMarch 12, 2026\n\n \n\n \n\nDaniel M. Friedberg\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n/s/ Randall S. Friedman\n\n \n\nDirector\n\n \n\nMarch 12, 2026\n\n \n\n \n\nRandall S. Friedman\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n/s/ Emanuel P. N. Hilario\n\n \n\nDirector\n\n \n\nMarch 12, 2026\n\n \n\n \n\nEmanuel P. N. Hilario\n\n \n\n \n\n \n\n \n\n \n\n34\n\n[Index](#INDEX)\n\nTRANSACT TECHNOLOGIES INCORPORATED\n\nINDEX TO CONSOLIDATED FINANCIAL STATEMENTS\n\nConsolidated Financial Statements\n\n \n\n \n\n[Report of Independent Registered Public Accounting Firm](#REPORT1) (PCAOB ID 199)\n\n \n\nF-2\n\n[Report of Independent Registered Public Accounting Firm](#REPORT2) (PCAOB ID 688)\n\n \n\nF-4\n\n[Consolidated Balance Sheets](#BalanceSheet) as of December 31, 2025 and 2024\n\n \n\nF-5\n\n[Consolidated Statements of Operations](#Operations) for the years ended December 31, 2025 and 2024\n\n \n\nF-6\n\n[Consolidated Statements of Comprehensive Loss](#ComprehensiveIncome) for the years ended December 31, 2025 and 2024\n\n \n\nF-7\n\n[Consolidated Statements of Changes in Shareholders’ Equity](#Equity) for the years ended December 31, 2025 and 2024\n\n \n\nF-8\n\n[Consolidated Statements of Cash Flows](#CashFlows) for the years ended December 31, 2025 and 2024\n\n \n\nF-9\n\n[Notes to Consolidated Financial Statements](#Notes)\n\n \n\nF-10\n\nF-1\n\n[Index](#INDEX)\n\nREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM\n\nTo the Shareholders and Board of Directors of\n\nTransAct Technologies Incorporated\n\nOpinion on the Financial Statements\n\nWe have audited the accompanying consolidated balance sheet of TransAct Technologies Incorporated (the “Company”) as of December 31, 2025, the related\nconsolidated 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\nfinancial 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\nprinciples generally accepted in the United States of America.\n\nBasis for Opinion\n\nThese financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial\nstatements 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\nsecurities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\nWe conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable\nassurance 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\nof 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\nexpress no such opinion.\n\nOur audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and\nperforming 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\nsignificant 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.\n\nCritical Audit Matters\n\nThe critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or\nrequired 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\ncritical 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\naccounts or disclosures to which they relate.\n\nValuation of Inventories - Excess and Obsolete Inventory Reserve\n\nAs described in Note 2 to the consolidated financial statements, inventories are stated at the lower of average cost or net realizable value. The Company\nreviews 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\nwrite-downs are recorded, as necessary, to reflect estimated obsolescence, excess quantities, and net realizable value.\n\nA majority of the Company’s excess and obsolete inventory reserve relates to excess quantities of products, based on the Company’s inventory levels and\nfuture 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.\n\nThe principal considerations for our determination that the Company’s valuation of inventories, specifically the excess and obsolete inventory reserve, was a\ncritical 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\ndeveloping 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\nreasonableness of audit evidence related to management’s assumptions of future product demand.\n\nF-2\n\n[Index](#INDEX)\n\nAddressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated\nfinancial statements. These procedures included, among others,\n\n•\n\nObtained an understanding of the Company’s accounting policy related to inventory, specifically as it relates to the excess and obsolete inventory\nreserve and ensure it is relevant to the accounting standards and consistent applied to prior periods;\n\n•\n\nRecalculated the inventory reserve based on the Company’s policy and our knowledge obtained above.  Ensure mathematical accuracy and test the\ncomputations for a sample of inventory items;\n\n•\n\nEvaluated management’s methodology and process for developing the excess and obsolete inventory reserve, including estimating assumptions related\nto future product demand based on historical usage and current market conditions;\n\n•\n\nTested management’s calculation of the excess and obsolete inventory reserve, which included evaluating the completeness and accuracy of underlying\ndata 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;\n\n•\n\nPerformed observation of inventory at various Company locations to ensure the quantities are in working order and identify damaged or poor\nconditioned inventory.\n\n/s/ CBIZ CPAs P.C.\n\nCBIZ CPAs P.C.\n\nWe 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.\neffective November 1, 2024).\n\nHartford, CT\n\nMarch 12, 2026\n\nF-3\n\n[Index](#INDEX)\n\nREPORT\nOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM\n\nTo the Shareholders and Board of Directors of\n\nTransAct Technologies Incorporated\n\nOpinion on the Financial Statements\n\nWe have audited the accompanying consolidated balance sheet of TransAct Technologies Incorporated (the “Company”) as of December 31, 2024, the related\nconsolidated 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,\nthe 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\nprinciples generally accepted in the United States of America.\n\nBasis for Opinion\n\nThese financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial\nstatements 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\nsecurities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\nWe conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable\nassurance 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\nof 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\nexpress no such opinion.\n\nOur audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and\nperforming 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\nsignificant 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.\n\n/s/ Marcum LLP\n\nMarcum LLP\n\nWe have served as the Company’s auditor from 2020 through 2025.\n\nHartford, CT\n\nMarch 24, 2025, except for Note 11, to which the date is March 12, 2026\n\nF-4\n\n[Index](#INDEX)\n\nTRANSACT TECHNOLOGIES INCORPORATED\n\nCONSOLIDATED BALANCE SHEETS\n\n(in thousands, except share data)\n\n \n\nDecember 31,\n\n2025\n\n \n\n \n\nDecember 31,\n\n2024\n\n \n\nAssets:\n\n \n\n \n\n \n\n \n\n \n\n \n\nCurrent assets:\n\n \n\n \n\n \n\n \n\n \n\n \n\nCash and cash equivalents\n\n \n\n$\n\n20,433\n\n \n\n \n\n$\n\n14,394\n\n \n\nAccounts receivable, net of allowance for expected credit losses of $476 and $474\n\n \n\n \n\n6,364\n\n \n\n \n\n \n\n6,507\n\n \n\nInventories\n\n \n\n \n\n10,858\n\n \n\n \n\n \n\n16,161\n\n \n\nPrepaid income taxes\n\n \n\n \n\n399\n\n \n\n \n\n \n\n401\n\n \n\nOther current assets\n\n \n\n \n\n754\n\n \n\n \n\n \n\n899\n\n \n\nTotal current assets\n\n \n\n \n\n38,808\n\n \n\n \n\n \n\n38,362\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nFixed assets, net of accumulated depreciation of $18,519\nand $19,468\n\n \n\n \n\n1,243\n\n \n\n \n\n \n\n1,818\n\n \n\nRight-of-use assets, net\n\n \n\n \n\n557\n\n \n\n \n\n \n\n1,141\n\n \n\nGoodwill\n\n \n\n \n\n2,621\n\n \n\n \n\n \n\n2,621\n\n \n\nIntangible assets, net of accumulated amortization of $1,606 and $1,606\n\n \n\n \n\n1,503\n\n \n\n \n\n \n\n–\n\n \n\nOther assets\n\n \n\n \n\n37\n\n \n\n \n\n \n\n92\n\n \n\n \n\n \n\n \n\n5,961\n\n \n\n \n\n \n\n5,672\n\n \n\nTotal assets\n\n \n\n$\n\n44,769\n\n \n\n \n\n$\n\n44,034\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nLiabilities and Shareholders’ Equity:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCurrent liabilities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nRevolving loan payable\n\n \n\n$\n\n3,000\n\n \n\n \n\n$\n\n3,000\n\n \n\nAccounts payable\n\n \n\n \n\n3,539\n\n \n\n \n\n \n\n4,569\n\n \n\nAccrued liabilities\n\n \n\n \n\n4,763\n\n \n\n \n\n \n\n3,253\n\n \n\nLease liabilities\n\n \n\n \n\n346\n\n \n\n \n\n \n\n955\n\n \n\nDeferred revenue\n\n \n\n \n\n1,400\n\n \n\n \n\n \n\n1,107\n\n \n\nTotal current liabilities\n\n \n\n \n\n13,048\n\n \n\n \n\n \n\n12,884\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDeferred revenue, net of current portion\n\n \n\n \n\n355\n\n \n\n \n\n \n\n246\n\n \n\nLease liabilities, net of current portion\n\n \n\n \n\n215\n\n \n\n \n\n \n\n231\n\n \n\nOther liabilities\n\n \n\n \n\n35\n\n \n\n \n\n \n\n40\n\n \n\n \n\n \n\n \n\n605\n\n \n\n \n\n \n\n517\n\n \n\nTotal liabilities\n\n \n\n \n\n13,653\n\n \n\n \n\n \n\n13,401\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCommitments and contingencies (see Notes 9 and 15)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nShareholders’ equity:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nPreferred stock, $0.01 value, 4,800,000 authorized, none issued and outstanding\n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\nPreferred stock, Series A, $0.01 par value, 200,000 authorized, none issued and outstanding\n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\nCommon stock, $0.01 par value, 20,000,000 authorized at December 31, 2025 and 2024; 14,170,676 and 14,068,049 shares\nissued; 10,125,834 and 10,023,207\nshares outstanding, at December 31, 2025 and 2024, respectively\n\n \n\n \n\n141\n\n \n\n \n\n \n\n141\n\n \n\nAdditional paid-in capital\n\n \n\n \n\n59,824\n\n \n\n \n\n \n\n58,141\n\n \n\nRetained earnings\n\n \n\n \n\n3,275\n\n \n\n \n\n \n\n4,515\n\n \n\nAccumulated other comprehensive loss, net of tax\n\n \n\n \n\n(14\n\n)\n\n \n\n \n\n(54\n\n)\n\nTreasury stock, 4,044,842 shares, at cost\n\n \n\n \n\n(32,110\n\n)\n\n \n\n \n\n(32,110\n\n)\n\nTotal shareholders’ equity\n\n \n\n \n\n31,116\n\n \n\n \n\n \n\n30,633\n\n \n\nTotal liabilities and shareholders’ equity\n\n \n\n$\n\n44,769\n\n \n\n \n\n$\n\n44,034\n\n \n\nSee accompanying notes to Consolidated Financial Statements.\n\nF-5\n\n[Index](#INDEX)\n\nTRANSACT TECHNOLOGIES INCORPORATED\n\nCONSOLIDATED STATEMENTS OF OPERATIONS\n\n(in thousands, except per share data)\n\n \n\n \n\nYears Ended December 31,\n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNet sales\n\n \n\n$\n\n51,480\n\n \n\n \n\n$\n\n43,384\n\n \n\nCost of sales\n\n \n\n \n\n26,465\n\n \n\n \n\n \n\n21,902\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nGross profit\n\n \n\n \n\n25,015\n\n \n\n \n\n \n\n21,482\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOperating expenses:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nEngineering, design and product development\n\n \n\n \n\n6,701\n\n \n\n \n\n \n\n6,977\n\n \n\nSelling and marketing\n\n \n\n \n\n8,433\n\n \n\n \n\n \n\n8,195\n\n \n\nGeneral and administrative\n\n \n\n \n\n11,296\n\n \n\n \n\n \n\n9,936\n\n \n\n \n\n \n\n \n\n26,430\n\n \n\n \n\n \n\n25,108\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOperating loss\n\n \n\n \n\n(1,415\n\n)\n\n \n\n \n\n(3,626\n\n)\n\nInterest and other income (expense):\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nInterest expense\n\n \n\n \n\n(339\n\n)\n\n \n\n \n\n(322\n\n)\n\nInterest income\n\n \n\n \n\n537\n\n \n\n \n\n \n\n469\n\n \n\nOther, net\n\n \n\n \n\n133\n\n \n\n \n\n \n\n(89\n\n)\n\n \n\n \n\n \n\n331\n\n \n\n \n\n \n\n58\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nLoss before income taxes\n\n \n\n \n\n(1,084\n\n)\n\n \n\n \n\n(3,568\n\n)\n\nIncome tax expense\n\n \n\n \n\n(156\n\n)\n\n \n\n \n\n(6,295\n\n)\n\nNet loss\n\n \n\n$\n\n(1,240\n\n)\n\n \n\n$\n\n(9,863\n\n)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNet loss per common share:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nBasic\n\n \n\n$\n\n(0.12\n\n)\n\n \n\n$\n\n(0.99\n\n)\n\nDiluted\n\n \n\n$\n\n(0.12\n\n)\n\n \n\n$\n\n(0.99\n\n)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nShares used in per-share calculation:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nBasic\n\n \n\n \n\n10,087\n\n \n\n \n\n \n\n9,997\n\n \n\nDiluted\n\n \n\n \n\n10,087\n\n \n\n \n\n \n\n9,997\n\n \n\nSee accompanying notes to Consolidated Financial Statements.\n\nF-6\n\n[Index](#INDEX)\n\nTRANSACT TECHNOLOGIES INCORPORATED\n\nCONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS\n\n(in thousands)\n\n \n\n \n\nYears Ended December 31,\n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNet loss\n\n \n\n$\n\n(1,240\n\n)\n\n \n\n$\n\n(9,863\n\n)\n\nForeign currency translation adjustment, net of tax\n\n \n\n \n\n40\n\n \n\n \n\n \n\n(5\n\n)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nComprehensive loss\n\n \n\n$\n\n(1,200\n\n)\n\n \n\n$\n\n(9,868\n\n)\n\nSee accompanying notes to Consolidated Financial Statements.\n\nF-7\n\n[Index](#INDEX)\n\nTRANSACT TECHNOLOGIES INCORPORATED\n\nCONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY\n\n(in thousands, except share data)\n\n \n\nCommon Stock\n\n \n\n \n\nAdditional\n\nPaid-in\n\n \n\n \n\nRetained\n\n \n\n \n\nTreasury\n\n \n\n \n\nAccumulated\n\nOther\n\nComprehensive\n\n \n\n \n\nTotal\n\n \n\n \n\n \n\nShares\n\n \n\n \n\nAmount\n\n \n\n \n\nCapital\n\n \n\n \n\nEarnings\n\n \n\n \n\nStock\n\n \n\n \n\nLoss\n\n \n\n \n\nEquity\n\n \n\nBalance, December 31, 2023\n\n \n\n \n\n9,958,811\n\n \n\n \n\n$\n\n140\n\n \n\n \n\n$\n\n57,055\n\n \n\n \n\n$\n\n14,378\n\n \n\n \n\n$\n\n(32,110\n\n)\n\n \n\n$\n\n(49\n\n)\n\n \n\n$\n\n39,414\n\n \n\nIssuance of common stock on restricted stock units\n\n \n\n \n\n74,995\n\n \n\n \n\n \n\n1\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n1\n\n \n\nRelinquishment of stock awards and deferred stock units to pay withholding taxes\n\n \n\n \n\n(10,599\n\n)\n\n \n\n \n\n–\n\n \n\n \n\n \n\n(71\n\n)\n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n(71\n\n)\n\nShare-based compensation expense\n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n1,157\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n1,157\n\n \n\nForeign currency translation adjustment, net of tax\n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n(5\n\n)\n\n \n\n \n\n(5\n\n)\n\nNet loss\n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n(9,863\n\n)\n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n(9,863\n\n)\n\nBalance, December 31, 2024\n\n \n\n \n\n10,023,207\n\n \n\n \n\n \n\n141\n\n \n\n \n\n \n\n58,141\n\n \n\n \n\n \n\n4,515\n\n \n\n \n\n \n\n(32,110\n\n)\n\n \n\n \n\n(54\n\n)\n\n \n\n \n\n30,633\n\n \n\nIssuance of common stock on restricted stock units\n\n \n\n \n\n129,858\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\nRelinquishment of stock awards and deferred stock units to pay withholding taxes\n\n \n\n \n\n(27,231\n\n)\n\n \n\n \n\n–\n\n \n\n \n\n \n\n(119\n\n)\n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n(119\n\n)\n\nShare-based compensation expense\n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n1,802\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n1,802\n\n \n\nForeign currency translation adjustment, net of tax\n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n40\n\n \n\n \n\n \n\n40\n\n \n\nNet loss\n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n(1,240\n\n)\n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n(1,240\n\n)\n\nBalance, December 31, 2025\n\n \n\n \n\n10,125,834\n\n \n\n \n\n$\n\n141\n\n \n\n \n\n$\n\n59,824\n\n \n\n \n\n$\n\n3,275\n\n \n\n \n\n$\n\n(32,110\n\n)\n\n \n\n$\n\n(14\n\n)\n\n \n\n$\n\n31,116\n\n \n\nSee accompanying notes to Consolidated Financial Statements.\n\nF-8\n\n[Index](#INDEX)\n\nTRANSACT TECHNOLOGIES INCORPORATED\n\nCONSOLIDATED STATEMENTS OF CASH FLOWS\n\n(in thousands)\n\n \n\n \n\nYears Ended December 31,\n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nCash flows from operating activities:\n\n \n\n \n\n \n\n \n\n \n\n \n\nNet loss\n\n \n\n$\n\n(1,240\n\n)\n\n \n\n$\n\n(9,863\n\n)\n\nAdjustments to reconcile net loss to net cash provided by operating activities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nShare-based compensation expense\n\n \n\n \n\n1,802\n\n \n\n \n\n \n\n1,157\n\n \n\nDepreciation and amortization\n\n \n\n \n\n672\n\n \n\n \n\n \n\n1,037\n\n \n\nDeferred income taxes\n\n \n\n \n\n–\n\n \n\n \n\n \n\n6,304\n\n \n\nLoss on disposal of fixed assets\n\n \n\n \n\n17\n\n \n\n \n\n \n\n–\n\n \n\nForeign currency transaction (gains) losses\n\n \n\n \n\n(239\n\n)\n\n \n\n \n\n89\n\n \n\nChanges in operating assets and liabilities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAccounts receivable\n\n \n\n \n\n179\n\n \n\n \n\n \n\n3,315\n\n \n\nInventories\n\n \n\n \n\n5,445\n\n \n\n \n\n \n\n1,607\n\n \n\nPrepaid income taxes\n\n \n\n \n\n22\n\n \n\n \n\n \n\n(80\n\n)\n\nOther current and long-term assets\n\n \n\n \n\n176\n\n \n\n \n\n \n\n(43\n\n)\n\nAccounts payable\n\n \n\n \n\n(1,025\n\n)\n\n \n\n \n\n149\n\n \n\nAccrued liabilities and other liabilities\n\n \n\n \n\n1,864\n\n \n\n \n\n \n\n(1,811\n\n)\n\nNet cash provided by operating activities\n\n \n\n \n\n7,673\n\n \n\n \n\n \n\n1,861\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCash flows from investing activities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCapital expenditures\n\n \n\n \n\n(109\n\n)\n\n \n\n \n\n(322\n\n)\n\nCapitalized software development costs\n\n \n\n \n\n(1,503\n\n)\n\n \n\n \n\n–\n\n \n\nNet cash used in investing activities\n\n \n\n \n\n(1,612\n\n)\n\n \n\n \n\n(322\n\n)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCash flows from financing activities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nProceeds from bank borrowings\n\n \n\n \n\n–\n\n \n\n \n\n \n\n750\n\n \n\nWithholding taxes paid on stock issuance\n\n \n\n \n\n(119\n\n)\n\n \n\n \n\n(71\n\n)\n\nPayment of bank financing costs\n\n \n\n \n\n–\n\n \n\n \n\n \n\n(45\n\n)\n\nNet cash (used in) provided by financing activities\n\n \n\n \n\n(119\n\n)\n\n \n\n \n\n634\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nEffect of exchange rate changes on cash and cash equivalents\n\n \n\n \n\n97\n\n \n\n \n\n \n\n(100\n\n)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nIncrease in cash and cash equivalents\n\n \n\n \n\n6,039\n\n \n\n \n\n \n\n2,073\n\n \n\nCash and cash equivalents, beginning of period\n\n \n\n \n\n14,394\n\n \n\n \n\n \n\n12,321\n\n \n\nCash and cash equivalents, end of period\n\n \n\n$\n\n20,433\n\n \n\n \n\n$\n\n14,394\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nSupplemental cash flow information:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nInterest paid\n\n \n\n$\n\n317\n\n \n\n \n\n$\n\n272\n\n \n\nIncome taxes paid\n\n \n\n \n\n162\n\n \n\n \n\n \n\n499\n\n \n\nNon-cash capital expenditures\n\n \n\n \n\n15\n\n \n\n \n\n \n\n9\n\n \n\nSee accompanying notes to Consolidated Financial Statements.\n\nF-9\n\n[Index](#INDEX)\n\nTRANSACT TECHNOLOGIES INCORPORATED\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n1. Description of business\n\nTransAct Technologies Incorporated (together with its subsidiaries, “TransAct,” the “Company,” “we,” “us,” or “our”), which has its headquarters in\nHamden, Connecticut and its primary operating facility in Ithaca, New York, operates in one operating segment: software-driven technology\nand 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\nunder 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\ndistribution 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\nworldwide 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\nand (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.\n\nAfter strong demand during most of 2023 due in part to our primary competitor’s struggle to deliver products in the face\nof 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\ntemporarily 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\nhad 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\nindicated 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\nindustry. 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\nany improvement will depend on prevailing economic and industry conditions in the casino and gaming market as we move through 2026.\n\nUse of Assumptions and Estimates\n\nManagement’s belief that the Company will\nbe 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,\ninterest 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\nenvironment, 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\nadditional financial and operational actions to cut costs and/or increase liquidity.\n\nIn addition, the presentation of the accompanying audited Consolidated Financial Statements requires us to make estimates\nand 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\nobsolescence, 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\nother assumptions that we believe to be reasonable under the circumstances. Actual results could differ from those estimates used.\n\nSmaller Reporting Company\n\nAs 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\ndisclosure requirements for smaller reporting companies in Regulation S-K and in Article 8 of Regulation S-X.\n\nThe scaled disclosure requirements for smaller reporting companies permit us (i) to include less extensive narrative disclosure than required of other\nreporting 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\naudited financial statements for three years.\n\nWe 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\nbusiness 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\nshares held by non-affiliates exceeds $700 million as of the last business day of our second fiscal quarter.\n\n2. Summary of significant accounting policies\n\nPrinciples of consolidation: The accompanying Consolidated Financial Statements include\nthe audited Consolidated Financial Statements of TransAct and its wholly-owned subsidiaries, which require consolidation, after the elimination of intercompany accounts, transactions and unrealized profit.\n\nUse of estimates: The preparation of Consolidated Financial\nStatements 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\ndisclosure 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.\n\nF-10\n\n[Index](#INDEX)\n\nCash and cash equivalents: We consider all highly liquid\ninvestments with a maturity date of three months or less at date of purchase to be cash equivalents.\n\nAccounts receivable and credit losses: The Company records accounts receivable when the right to consideration becomes\nunconditional. We establish an allowance for expected credit losses to ensure trade receivables are valued appropriately.\n\nWe 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\nConsolidated 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\nassessing 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\nthat 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.\n\nWe estimate expected credit losses of financial assets with similar risk characteristics. We determine if an asset is impaired when our assessment identifies there is\na 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\nand dispute resolution. Estimated credit losses are written off in the period in which the financial asset is no longer collectible.\n\n \n\nThe following table summarizes the activity recorded in the allowance\nfor expected credit losses related to accounts receivable:\n\n \n\n \n\nYears Ended December 31,\n\n \n\n(In thousands)\n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nBalance, beginning of period\n\n \n\n$\n\n474\n\n \n\n \n\n$\n\n768\n\n \n\nAdditions charged to costs and expenses\n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\nDeductions\n\n \n\n \n\n–\n\n \n\n \n\n(294\n\n)\n\nForeign exchange and other\n\n \n\n \n\n2\n\n \n\n \n\n \n\n–\n\n \n\nBalance, end of period\n\n \n\n$\n\n476\n\n \n\n \n\n$\n\n474\n\n \n\nInventories: Inventories are stated at the lower\nof 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\ndemand.  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.\n\nFixed assets: Fixed assets are stated at cost.  Depreciation is recorded using the\nstraight-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\nto ten years; and computer software and equipment is three years to seven years.  Leasehold improvements are amortized over the shorter\nof 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\nloss is recognized.  Depreciation expense was $0.7 and $0.9 million in 2025 and 2024, respectively.\n\nLeases: We account for leases in accordance with ASC 842, “Leases” (“ASC 842”), which requires lessees to\napply 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\nbased 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\nthan 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.\n\nWe applied the practical expedient allowing for our short term leases of 12 months or less to be accounted for on the straight-line basis,\nwith 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.\n\nWe 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\nleases. 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.\n\nRight of use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease\npayments 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.\n\nLease 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\ndetermines 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\nright 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\nthe options we are reasonably certain that we will exercise.\n\nF-11\n\n[Index](#INDEX)\n\nGoodwill and Intangible assets: We acquire\nbusinesses 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,”\nacquired 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\nthe 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\nassess 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\nand 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\nrequired, 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\nan 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\nthe 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\nappropriate. Finite lived intangible assets are amortizable and tested for impairment when appropriate.\n\nAs of December 31, 2025, we have\ndetermined that no goodwill or intangible asset impairment has occurred and the fair value of goodwill was substantially higher than our\ncarrying value based on our assessment as of December 31, 2025 when our annual review for impairment was performed.\n\nRevenue\nrecognition: 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\ncontract 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\ncontracts 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\nacts 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\nhandling are classified as Cost of Goods Sold.\n\nThe transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the\ncustomer.  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\nprice 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\na significant future reversal of cumulative revenue under the contract will not occur.\n\nFor a majority of our revenue, which consists of printers, terminals, labels, and replacement parts, the Company recognizes revenue as of a point of\ntime.  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,\nEPICENTRAL, 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\nhardware 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\ncustomer 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\nis transferred to the customer and our performance obligation is completed.\n\nPerformance obligations are satisfied over time if the customer receives the benefits as we perform work, if the customer controls the asset as it is\nbeing 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\nservice technology terminals and maintenance agreements (including free one-year maintenance received by customers upon completion of\nEPICENTRAL 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\ncustomer.  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\nextended warranties, the transaction price is recognized ratably over the warranty period, using output methods, as control of the services is transferred to the customer.\n\nWhen there is more than one performance obligation in a customer arrangement, the Company typically uses the “standalone selling price” method to\ndetermine 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,\nthe 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.\n\nFor contracts with terms of less than 12 months, the Company expenses sales commissions as they are incurred, since the expected amortization period\nof the cost to obtain a contract is less than 12 months.\n\nF-12\n\n[Index](#INDEX)\n\nDisaggregation of revenue\n\nThe following table disaggregates our revenue by market type, as we believe it best depicts how the nature, amount, timing and uncertainty of our\nrevenue and cash flows are affected by economic factors.  Sales and usage-based taxes are excluded from revenues.\n\n \n\nYear Ended December 31, 2025\n\n \n\n (In thousands)\n\n \n\nUnited States\n\n \n\n \n\nInternational\n\n \n\n \n\nTotal\n\n \n\nFood service technology\n\n \n\n$\n\n17,886\n\n \n\n \n\n$\n\n1,432\n\n \n\n \n\n$\n\n19,318\n\n \n\nPOS automation\n\n \n\n \n\n2,208\n\n \n\n \n\n \n\n5\n\n \n\n \n\n \n\n2,213\n\n \n\nCasino and gaming\n\n \n\n \n\n19,586\n\n \n\n \n\n \n\n7,287\n\n \n\n \n\n \n\n26,873\n\n \n\nTransAct Services Group\n\n \n\n \n\n2,435\n\n \n\n \n\n \n\n641\n\n \n\n \n\n \n\n3,076\n\n \n\nTotal net sales\n\n \n\n$\n\n42,115\n\n \n\n \n\n$\n\n9,365\n\n \n\n \n\n$\n\n51,480\n\n \n\n \n\nYear Ended December 31, 2024\n\n \n\n (In thousands)\n\n \n\nUnited States\n\n \n\n \n\nInternational\n\n \n\n \n\nTotal\n\n \n\nFood service technology\n\n \n\n$\n\n14,719\n\n \n\n \n\n$\n\n1,382\n\n \n\n \n\n$\n\n16,101\n\n \n\nPOS automation\n\n \n\n \n\n3,361\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n3,361\n\n \n\nCasino and gaming\n\n \n\n \n\n12,522\n\n \n\n \n\n \n\n7,826\n\n \n\n \n\n \n\n20,348\n\n \n\nTransAct Services Group\n\n \n\n \n\n2,883\n\n \n\n \n\n \n\n691\n\n \n\n \n\n \n\n3,574\n\n \n\nTotal net sales\n\n \n\n$\n\n33,485\n\n \n\n \n\n$\n\n9,899\n\n \n\n \n\n$\n\n43,384\n\n \n\nContract balances\n\nContract assets consist of unbilled receivables.  Pursuant to the over-time revenue recognition model, revenue may be recognized prior to the customer\nbeing 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\nReceivable, net” and “Other Assets” on the Consolidated Balance Sheets.\n\nContract liabilities consist of customer prepayments and deferred revenue.  Customer prepayments are reported as “Accrued Liabilities” in current\nliabilities 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. \nDeferred 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\nsoftware 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 $1.1 million related to our contract liabilities as of December 31, 2024.\n\nNet contract liabilities consist of the following:\n\n \n\n \n\nDecember 31,\n\n \n\n (In thousands)\n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nUnbilled receivables, current\n\n \n\n$\n\n31\n\n \n\n \n\n$\n\n106\n\n \n\nUnbilled receivables, non-current\n\n \n\n \n\n1\n\n \n\n \n\n \n\n32\n\n \n\nCustomer pre-payments\n\n \n\n \n\n(26\n\n)\n\n \n\n \n\n(164\n\n)\n\nDeferred revenue, current\n\n \n\n \n\n(1,400\n\n)\n\n \n\n \n\n(1,107\n\n)\n\nDeferred revenue, non-current\n\n \n\n \n\n(355\n\n)\n\n \n\n \n\n(246\n\n)\n\nNet contract liabilities\n\n \n\n$\n\n(1,749\n\n)\n\n \n\n$\n\n(1,379\n\n)\n\nRemaining performance obligations\n\nRemaining performance obligations represent the transaction price of firm orders for which a good or service has not been delivered to our customer. \nAs 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\nmillion 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\nthe balance of these remaining performance obligations within the next 36 months following December 31, 2025.\n\nF-13\n\n[Index](#INDEX)\n\nConcentration of credit risk:  Financial instruments that potentially expose us to concentrations\nof 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.\n\nAccounts receivable from customers representing 10% or more of total accounts receivable, net during the years ended December 31, 2025 and 2024 were as\nfollows:\n\n \n\nDecember 31,\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nAristocrat Technologies, Inc.\n\n \n\n \n\n22\n\n%\n\n \n\n \n\n6\n\n%\n\nLight & Wonder Gaming, Inc.\n\n \n\n \n\n4\n\n%\n\n \n\n \n\n15\n\n%\n\nSales to customers representing 10% or more of total net sales during the years ended December 31, 2025 and 2024 were as follows:\n\n \n\nDecember 31,\n\n \n\n2025\n\n \n\n2024\n\n \n\nLight & Wonder Gaming, Inc.\n\n \n\n \n\n9\n\n%\n\n \n\n \n\n11\n\n%\n\nEngineering, design and product development: Engineering, design and product\ndevelopment 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\ndevelopment expenses in 2025 and 2024,\nrespectively.\n\nCosts incurred in the engineering, design and product development of a computer software product are charged to expense until technological\nfeasibility 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\ndetermining 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\nincluded in cost of sales over the estimated life of the product.\n\nAdvertising: Advertising costs are expensed as incurred.  Advertising expenses, which are included in selling\nand 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.\n\nIncome taxes: The income tax amounts reflected in the accompanying Consolidated Financial Statements are\naccounted 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\ncarrying 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\ntemporary 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\noperations.  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.\n\nForeign currency translation: The financial position and results of operations of our\nforeign 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\nat 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,\nwhich 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.\n\nShare-based payments: At December 31, 2025, we have share-based employee compensation plans, which are described more fully in Note 10 – Stock incentive\nplans. 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\naward, and is recognized as expense over the employee’s requisite service period.\n\nWe use the Black-Scholes option-pricing model to calculate the fair value of share-based awards. The key assumptions for this valuation method include\nthe 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\ncompensation expense.  Forfeitures are recognized as they occur.\n\nNet 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\ndividing 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\nwere 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\ninstruments are excluded from the computation of diluted EPS.  See Note 12 – Earnings per share.\n\nF-14\n\n[Index](#INDEX)\n\nRecently issued accounting pronouncements:\n\nOn December 14, 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740).  \n\nThis 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\ndisclosure 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\nConsolidated Financial Statements. We have adopted this standard in our fiscal year 2025 annual financial statements and have applied this standard retrospectively\nfor all prior periods presented in the financial statements. See Note 11 – Income taxes.\n\nIn November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation\nof 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\nitems 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.\nAdoption of this ASU will result in additional disclosure, but will not impact our consolidated financial position, results of operations, or cash flows.\n\nIn July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326). This amendment provides certain entities with an additional practical\nexpedient 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\nCustomers (“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\nunder 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.\n\nOther 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\nfinancial position, results of operations or liquidity.\n\n3. Inventories\n\nThe components of inventories are:\n\n \n\nDecember 31,\n\n \n\n(In thousands)\n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nRaw materials and purchased component parts\n\n \n\n$\n\n4,797\n\n \n\n \n\n$\n\n8,413\n\n \n\nFinished goods\n\n \n\n \n\n6,061\n\n \n\n \n\n \n\n7,748\n\n \n\n \n\n \n\n$\n\n10,858\n\n \n\n \n\n$\n\n16,161\n\n \n\n4. Fixed assets, net\n\nThe components of fixed assets, net are:\n\n \n\nDecember 31,\n\n \n\n(In thousands)\n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nTooling, machinery and equipment\n\n \n\n$\n\n7,930\n\n \n\n \n\n$\n\n7,828\n\n \n\nFurniture and office equipment\n\n \n\n \n\n1,754\n\n \n\n \n\n \n\n2,078\n\n \n\nComputer software and equipment\n\n \n\n \n\n8,022\n\n \n\n \n\n \n\n8,412\n\n \n\nLeasehold improvements\n\n \n\n \n\n2,056\n\n \n\n \n\n \n\n2,895\n\n \n\n \n\n \n\n \n\n19,762\n\n \n\n \n\n \n\n21,213\n\n \n\nLess: Accumulated depreciation and amortization\n\n \n\n \n\n(18,519\n\n)\n\n \n\n \n\n(19,468\n\n)\n\n \n\n \n\n \n\n1,243\n\n \n\n \n\n \n\n1,745\n\n \n\nConstruction in-process\n\n \n\n \n\n–\n\n \n\n \n\n \n\n73\n\n \n\n \n\n \n\n$\n\n1,243\n\n \n\n \n\n$\n\n1,818\n\n \n\n5. Intangible assets, net\n\nIdentifiable intangible assets are recorded in Intangible assets, net in the accompanying Consolidated Balance Sheets and are comprised of the following:\n\n \n\nDecember 31,\n\n \n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\n(In thousands)\n\n \n\nGross Amount\n\n \n\n \n\nAccumulated Amortization\n\n \n\n \n\nGross Amount\n\n \n\n \n\nAccumulated Amortization\n\n \n\nPurchased technology\n\n \n\n$\n\n3,094\n\n \n\n \n\n$\n\n(1,591\n\n)\n\n \n\n$\n\n1,591\n\n \n\n \n\n$\n\n(1,591\n\n)\n\nPatents\n\n \n\n \n\n15\n\n \n\n \n\n \n\n(15\n\n)\n\n \n\n \n\n15\n\n \n\n \n\n \n\n(15\n\n)\n\nTotal\n\n \n\n$\n\n3,109\n\n \n\n \n\n$\n\n(1,606\n\n)\n\n \n\n$\n\n1,606\n\n \n\n \n\n$\n\n(1,606\n\n)\n\nAmortization expense was zero and $88 thousand in 2025 and 2024, respectively.\n\nF-15\n\n[Index](#INDEX)\n\n6. Accrued liabilities\n\nThe components of accrued liabilities are:\n\n \n\nDecember 31,\n\n \n\n(In thousands)\n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nSalaries and compensation related\n\n \n\n$\n\n3,107\n\n \n\n \n\n$\n\n1,786\n\n \n\nTaxes\n\n \n\n \n\n877\n\n \n\n \n\n \n\n725\n\n \n\nProfessional and consulting\n\n \n\n \n\n420\n\n \n\n \n\n \n\n200\n\n \n\nOther\n\n \n\n \n\n359\n\n \n\n \n\n \n\n542\n\n \n\n \n\n \n\n$\n\n4,763\n\n \n\n \n\n$\n\n3,253\n\n \n\n7. Segment reporting\n\nWe apply the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 280, “Segment Reporting.”  We\nview our operations and manage our business as one segment: the design, development and marketing of software-driven technology and\nprinting solutions and the sale of printer and terminal related software, services, labels and spare parts.  Factors used to identify the Company’s single\noperating 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\nprocess 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\noperating 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,\nutilize a consolidated approach to assess the performance of and allocate resources to the business.\n\nWe generally use measures of sales, gross margin percentage, net income, earnings before interest, taxes, depreciation and amortization (“EBITDA”) and\nadjusted 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,\nconduct research and development initiatives and make any other necessary overall strategic changes to the business.\n\nThe following table provides the operating financial results of our segment:\n\n \n\n \n\nDecember 31,\n\n \n\n(In thousands)\n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nRevenues\n\n \n\n$\n\n51,480\n\n \n\n \n\n$\n\n43,384\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCost of materials sold\n\n \n\n \n\n19,050\n\n \n\n \n\n \n\n15,268\n\n \n\nCompensation costs\n\n \n\n \n\n20,144\n\n \n\n \n\n \n\n18,323\n\n \n\nProfessional services\n\n \n\n \n\n3,760\n\n \n\n \n\n \n\n3,493\n\n \n\nOccupancy costs\n\n \n\n \n\n1,458\n\n \n\n \n\n \n\n1,477\n\n \n\nMarketing expenses\n\n \n\n \n\n983\n\n \n\n \n\n \n\n1,109\n\n \n\nIT expenses\n\n \n\n \n\n1,328\n\n \n\n \n\n \n\n1,255\n\n \n\nSeverance expense\n\n \n\n \n\n133\n\n \n\n \n\n \n\n75\n\n \n\nDepreciation and amortization\n\n \n\n \n\n672\n\n \n\n \n\n \n\n1,037\n\n \n\nOther segment expenses(1)\n\n \n\n \n\n5,367\n\n \n\n \n\n \n\n4,973\n\n \n\n \n\n \n\n \n\n52,895\n\n \n\n \n\n \n\n47,010\n\n \n\nOperating loss\n\n \n\n \n\n(1,415\n\n)\n\n \n\n \n\n(3,626\n\n)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nInterest income\n\n \n\n \n\n537\n\n \n\n \n\n \n\n469\n\n \n\nInterest expense\n\n \n\n \n\n(339\n\n)\n\n \n\n \n\n(322\n\n)\n\nOther income (expense)\n\n \n\n \n\n133\n\n \n\n \n\n \n\n(89\n\n)\n\nIncome tax expense\n\n \n\n \n\n(156\n\n)\n\n \n\n \n\n(6,295\n\n)\n\nNet loss\n\n \n\n$\n\n(1,240\n\n)\n\n \n\n$\n\n(9,863\n\n)\n\n(1)\n\nOther Segment expenses included in Segment net income primarily include other cost of goods sold, other administrative costs and engineering costs.\n\nF-16\n\n[Index](#INDEX)\n\nA reconciliation of net loss to EBITDA and adjusted EBITDA follows:\n\n \n\n \n\nYears Ended December 31,\n\n \n\n(In thousands)\n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nNet loss\n\n \n\n$\n\n(1,240\n\n)\n\n \n\n$\n\n(9,863\n\n)\n\nInterest income, net\n\n \n\n \n\n(198\n\n)\n\n \n\n \n\n(147\n\n)\n\nIncome tax expense\n\n \n\n \n\n156\n\n \n\n \n\n \n\n6,295\n\n \n\nDepreciation and amortization\n\n \n\n \n\n672\n\n \n\n \n\n \n\n1,037\n\n \n\nEBITDA\n\n \n\n \n\n(610\n\n)\n\n \n\n \n\n(2,678\n\n)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nShare-based compensation\n\n \n\n \n\n1,802\n\n \n\n \n\n \n\n1,157\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAdjusted EBITDA\n\n \n\n$\n\n1,192\n\n \n\n \n\n$\n\n(1,521\n\n)\n\nPlease see Note 14 – Geographic area information for net sales and long-lived assets by geographic area.\n\n8. Retirement savings plan\n\nWe 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\nof 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.\n\n9. Borrowings\n\nCredit Facility\n\nWe 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\nrevolving 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\nmillion 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\nunused 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. \n\nThe 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\nadditional indebtedness and create other liens. We have remained in compliance with our excess availability covenant through December 31, 2025.\n\nThe 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\nLoan Agreement, to pay interest on at least $3.0 million principal amount of loans, whether or not such amount of loans is actually\noutstanding. The maturity date of the Siena Credit Facility is March 31, 2027.\n\nAs 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.\n\n10. Stock incentive plans\n\nStock incentive plans.  We currently have one\nstock 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\noptions, (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\nauthorized 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\nremained available for issuance under the 2014 Equity Incentive Plan.\n\nUnder 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\nalso 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\nstock units was $3.59 and $5.81\nin 2025 and 2024,\nrespectively. The per share fair value of restricted stock units is the trading value of the stock on the date of the grant.\n\nF-17\n\n[Index](#INDEX)\n\nThe 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:\n\n \n\n \n\nYears ended December 31,\n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nExpected option term (in years)\n\n \n\n \n\n–\n\n \n\n \n\n \n\n6.1\n\n \n\nExpected volatility\n\n \n\n \n\n–\n\n \n\n \n\n57.7\n\n%\n\nRisk-free interest rate\n\n \n\n \n\n–\n\n \n\n \n\n4.3\n\n%\n\nDividend yield\n\n \n\n \n\n–\n\n \n\n \n\n0.0\n\n%\n\nExpected 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\nhave a maximum term of ten years and an increase in the expected term will increase compensation expense.\n\nExpected 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\nthe grant.  An increase in the expected volatility factor will increase compensation expense.\n\nRisk-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\nincrease compensation expense.\n\nDividend 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\ndecrease compensation expense.\n\nWe recorded $1.8 and $1.2 million of share-based compensation expense for 2025\nand 2024, respectively, included primarily in general and administrative expense in our Consolidated Statements of Operations.  We also\nrecorded income tax benefits of $0.4 million in 2025 and $0.3 million in 2024, related to such share-based compensation.  At December 31, 2025,\nthese benefits are recorded as a deferred tax asset, with a corresponding valuation allowance, in the Consolidated Balance Sheets.\n\nEquity award activity in the 2005 Equity Incentive Plan and the 2014 Equity Incentive Plan, as amended, is summarized below:\n\n \n\nStock Options\n\n \n\n \n\nRestricted Stock Units\n\n \n\n \n\n \n\nNumber\n\nof Shares\n\n \n\n \n\nAverage Price*\n\n \n\n \n\nNumber\n\nof Units\n\n \n\n \n\nAverage Price**\n\n \n\nOutstanding at December 31, 2024\n\n \n\n \n\n1,377,113\n\n \n\n \n\n$\n\n8.41\n\n \n\n \n\n \n\n376,565\n\n \n\n \n\n$\n\n6.44\n\n \n\nGranted\n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n389,800\n\n \n\n \n\n \n\n3.59\n\n \n\nExercised\n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n(129,858\n\n)\n\n \n\n \n\n5.98\n\n \n\nForfeited\n\n \n\n \n\n(37,375\n\n)\n\n \n\n \n\n6.67\n\n \n\n \n\n \n\n(100,000\n\n)\n\n \n\n \n\n6.54\n\n \n\nExpired\n\n \n\n \n\n(573,375\n\n)\n\n \n\n \n\n9.04\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\nOutstanding at December 31, 2025\n\n \n\n \n\n766,363\n\n \n\n \n\n$\n\n8.03\n\n \n\n \n\n \n\n536,507\n\n \n\n \n\n$\n\n4.47\n\n \n\n*\n\nweighted average exercise price per share\n\n**\n\nweighted average grant stock price per share\n\nThe following summarizes information about equity awards outstanding that are vested and expect to vest and equity awards that are exercisable at December 31, 2025:\n\nEquity Awards Vested and Expected to Vest\n\n \n\nEquity Awards That Are Exercisable\n\n \n\n \n\nAwards\n\n \n\nAverage Price*\n\n \n\nAggregate\n\nIntrinsic\n\nValue\n\n(In thousands)\n\n \n\nRemaining Term**\n\n \n\nAwards\n\n \n\nAverage Price*\n\n \n\nAggregate\n\nIntrinsic\n\nValue\n\n \n\nRemaining Term**\n\n \n\nStock Options\n\n \n\n \n\n766,363\n\n \n\n \n\n$\n\n8.03\n\n \n\n \n\n$\n\n–\n\n \n\n \n\n \n\n5.7\n\n \n\n \n\n \n\n531,838\n\n \n\n \n\n$\n\n8.52\n\n \n\n \n\n$\n\n–\n\n \n\n \n\n \n\n4.78\n\n \n\nRestricted stock units\n\n \n\n \n\n536,507\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n2,146\n\n \n\n \n\n \n\n1.7\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n*\n\nweighted average exercise price per share\n\n**\n\nweighted-average contractual remaining term in\nyears\n\nShares 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.\n\nThe total fair value of awards vested was $1.3\nmillion and $0.9 million during the years ended December 31, 2025 and 2024, respectively.  No stock options were exercised during the years ended December 31, 2025 and 2024.\n\nF-18\n\n[Index](#INDEX)\n\n11. Income taxes\n\nOn July 4, 2025, the U.S. President signed into law the One Big Beautiful Bill Act (the “OBBBA”), which introduces significant federal tax law changes.\nFor example, the OBBBA includes numerous changes to U.S. corporate income tax law, including but not limited to: (i) a permanent 100% bonus depreciation for qualified property, (ii) immediate expensing of domestic research and experimental\nexpenditures, (iii) modifications to the limitation on business interest expense deductions, (iv) increased expensing limits under Section 179 of the Internal Revenue Code (the “Code”), (v) changes to certain international tax provisions, (vi) and\nexpanded limitations on the deductibility of executive compensation under Section 162(m) of the Code.\n\nMost provisions are effective for tax years beginning after December 31, 2024, with certain transition rules and exceptions. The Company has evaluated\nthe impact of OBBBA and reflected the changes in its 2025 Consolidated Financial Statements. The effects of the OBBBA, including remeasurement of deferred tax assets and liabilities and changes to current and future tax expense, are reflected in\nthe period of enactment. Given TransAct’s current tax positions (including a full valuation allowance against its net deferred tax assets), this law did not have a material impact on our Consolidated Financial Statements.\n\nThe components of our loss before income taxes are as follows:\n\n \n\n \n\nYear Ended December 31,\n\n \n\n(In thousands)\n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nDomestic\n\n \n\n$\n\n(1,261\n\n)\n\n \n\n$\n\n(3,981\n\n)\n\nForeign\n\n \n\n \n\n177\n\n \n\n \n\n \n\n413\n\n \n\nLoss before income taxes\n\n \n\n$\n\n(1,084\n\n)\n\n \n\n$\n\n(3,568\n\n)\n\nThe components of the income tax expense are as follows:\n\n \n\n \n\nDecember 31,\n\n \n\n(In thousands)\n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nCurrent:\n\n \n\n \n\n \n\n \n\n \n\n \n\nFederal\n\n \n\n$\n\n–\n\n \n\n \n\n$\n\n(154\n\n)\n\nState\n\n \n\n \n\n53\n\n \n\n \n\n \n\n37\n\n \n\nForeign\n\n \n\n \n\n103\n\n \n\n \n\n \n\n108\n\n \n\n \n\n \n\n \n\n156\n\n \n\n \n\n \n\n(9\n\n)\n\nDeferred:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nFederal\n\n \n\n \n\n–\n\n \n\n \n\n \n\n5,991\n\n \n\nState\n\n \n\n \n\n–\n\n \n\n \n\n \n\n293\n\n \n\nForeign\n\n \n\n \n\n–\n\n \n\n \n\n \n\n20\n\n \n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n6,304\n\n \n\nIncome tax expense\n\n \n\n$\n\n156\n\n \n\n \n\n$\n\n6,295\n\n \n\nTotal income tax expense in 2025 from continuing operations was $0, $53 thousand and $103 thousand for federal, state and local, and foreign components, respectively.\n\nDuring the fiscal year ended December 31, 2025, we adopted ASU 2023-09 to enhance income tax disclosures regarding income taxes paid and further rate reconciliation\ndisclosures. We paid the\nfollowing amount of income taxes (net of refunds received) disaggregated by federal, state and foreign jurisdictions:\n\n \n\nDecember 31,\n\n \n\n(In thousands)\n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nU.S. Federal\n\n \n\n$\n\n–\n\n \n\n \n\n$\n\n360\n\n \n\nState:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n   Connecticut\n\n \n\n \n\n25\n\n \n\n \n\n \n\n–\n\n \n\n   Texas\n\n \n\n \n\n12\n\n \n\n \n\n \n\n22\n\n \n\n   New York\n\n \n\n \n\n–\n\n \n\n \n\n \n\n22\n\n \n\n   All other\n\n \n\n \n\n8\n\n \n\n \n\n \n\n16\n\n \n\n      State Subtotal\n\n \n\n \n\n45\n\n \n\n \n\n \n\n60\n\n \n\nForeign:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n   United Kingdom\n\n \n\n \n\n117\n\n \n\n \n\n \n\n79\n\n \n\n      Foreign Subtotal\n\n \n\n \n\n117\n\n \n\n \n\n \n\n79\n\n \n\nTotal cash paid for income taxes, net of refunds\n\n \n\n$\n\n162\n\n \n\n \n\n$\n\n499\n\n \n\nF-19\n\n[Index](#INDEX)\n\nOur 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.\n\nAt December 31, 2025, we have $3.5 million of federal net operating loss carryforwards, $221\nthousand of tax-effected state net operating loss carryforwards,  $1.2 million in R&D credit carryforwards, and no state tax credit carryforwards.  These items have a full valuation allowance against them as of December 31, 2025.  Federal net operating losses can\nbe carried forward indefinitely, however these indefinite-lived NOLs are generally limited to offsetting 80% of taxable income in any given year. The Federal R&D credit carryforwards typically have a 20-year carryforward period.\n\nDeferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the Consolidated Financial Statements.  Our\ndeferred tax assets and liabilities were comprised of the following:\n\n \n\nDecember 31,\n\n \n\n(In thousands)\n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nDeferred tax assets:\n\n \n\n \n\n \n\n \n\n \n\n \n\nFederal net operating losses\n\n \n\n$\n\n3,545\n\n \n\n \n\n$\n\n276\n\n \n\nForeign net operating losses\n\n \n\n \n\n870\n\n \n\n \n\n \n\n802\n\n \n\nState net operating losses\n\n \n\n \n\n221\n\n \n\n \n\n \n\n135\n\n \n\nAccrued severance\n\n \n\n \n\n12\n\n \n\n \n\n \n\n20\n\n \n\nCapitalized R&D expenses\n\n \n\n \n\n–\n\n \n\n \n\n \n\n3,708\n\n \n\nInventory reserves\n\n \n\n \n\n1,086\n\n \n\n \n\n \n\n1,047\n\n \n\nDeferred revenue\n\n \n\n \n\n13\n\n \n\n \n\n \n\n7\n\n \n\nWarranty reserve\n\n \n\n \n\n31\n\n \n\n \n\n \n\n29\n\n \n\nStock compensation expense\n\n \n\n \n\n1,043\n\n \n\n \n\n \n\n853\n\n \n\nOther accrued compensation\n\n \n\n \n\n496\n\n \n\n \n\n \n\n165\n\n \n\nR&D credit carryforward\n\n \n\n \n\n1,217\n\n \n\n \n\n \n\n903\n\n \n\nOther Assets\n\n \n\n \n\n425\n\n \n\n \n\n \n\n379\n\n \n\nGross deferred tax assets\n\n \n\n \n\n8,959\n\n \n\n \n\n \n\n8,324\n\n \n\nValuation allowance\n\n \n\n \n\n(8,664\n\n)\n\n \n\n \n\n(8,103\n\n)\n\nNet deferred tax assets\n\n \n\n \n\n295\n\n \n\n \n\n \n\n221\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDeferred tax liabilities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDepreciation and amortization\n\n \n\n \n\n251\n\n \n\n \n\n \n\n179\n\n \n\nOther\n\n \n\n \n\n44\n\n \n\n \n\n \n\n42\n\n \n\nNet deferred tax liabilities\n\n \n\n \n\n295\n\n \n\n \n\n \n\n221\n\n \n\nTotal net deferred tax assets\n\n \n\n$\n\n–\n\n \n\n \n\n$\n\n–\n\n \n\nAs of December 31, 2025 and 2024, we had $8.7 million and $8.1 million, respectively,\nof valuation allowance against our deferred income tax assets. The following table summarizes the activity recorded in the valuation allowance on the deferred tax assets:\n\n \n\nYear Ended December 31,\n\n \n\n(In thousands)\n\n2025\n\n \n\n2024\n\n \n\nBalance, beginning of period\n\n \n\n$\n\n8,103\n\n \n\n \n\n$\n\n719\n\n \n\nAdditions charged to income tax provision\n\n \n\n \n\n561\n\n \n\n \n\n \n\n7,384\n\n \n\nBalance, end of period\n\n \n\n$\n\n8,664\n\n \n\n \n\n$\n\n8,103\n\n \n\nValuation 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\nevaluating 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\nfrom 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\npotential 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\nallowance 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\nmore 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\nchanges and the granting and lapse of tax holidays.\n\nF-20\n\n[Index](#INDEX)\n\nIn 2024, TransAct recognized a $7.3 million discrete\nincome tax charge for a valuation allowance on the full value of the net deferred tax assets in the United States. The company’s deferred tax assets generated by net operating losses have an unlimited life and R&D credit carryforwards have a\ntwenty-year life. After weighing all available positive and negative evidence, as described above, management determined that it was no longer more likely than not that TransAct will realize the tax benefit of these deferred tax assets. This was\nmainly driven by a cumulative taxable loss over the three preceding fiscal years (2022 through 2024) combined with a near term outlook of future taxable losses (a taxable loss was generated in 2025 as well).  The need for this valuation allowance\nwill be assessed on a quarterly basis in future periods and, as a result, a portion, or all of the allowance, may be reversed based on changes in facts and circumstances.\n\nDifferences between the U.S. statutory federal income tax rate and our effective income tax rate are analyzed below:\n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n(Dollars in thousands)\n\n \n\n$\n\n \n\n \n\n%\n\n \n\n \n\n$\n\n \n\n \n\n%\n\n \n\nLoss before income taxes\n\n \n\n$\n\n(1,084\n\n)\n\n \n\n \n\n \n\n \n\n \n\n$\n\n(3,568\n\n)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nU.S. Federal Statutory Tax Rate\n\n \n\n \n\n(228\n\n)\n\n \n\n \n\n21.0\n\n%\n\n \n\n \n\n(749\n\n)\n\n \n\n \n\n21.0\n\n%\n\nCurrent State and Local Income Taxes, net of Federal Income Tax Effect\n\n \n\n \n\n57\n\n \n\n \n\n \n\n(5.3\n\n%)\n\n \n\n \n\n(36\n\n)\n\n \n\n \n\n1.0\n\n%\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nForeign Tax Effects\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n    United Kingdom – statutory rate differences\n\n \n\n \n\n(1\n\n)\n\n \n\n \n\n–\n\n \n\n \n\n \n\n17\n\n \n\n \n\n \n\n(0.5\n\n%)\n\nMacau – change in valuation allowance\n\n \n\n \n\n68\n\n \n\n \n\n \n\n(6.3\n\n%)\n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nEffect of changes in Tax Laws or Rates Enacted in the Current Period\n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nEffect of Cross-Border Tax Laws\n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nTax Credits\n\n \n\n \n\n(313\n\n)\n\n \n\n \n\n28.9\n\n%\n\n \n\n \n\n(313\n\n)\n\n \n\n \n\n8.8\n\n%\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNontaxable or Nondeductible Items\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n    Share based payment awards\n\n \n\n \n\n36\n\n \n\n \n\n \n\n(3.3\n\n%)\n\n \n\n \n\n27\n\n \n\n \n\n \n\n(0.8\n\n%)\n\n    Stock Option cancellations\n\n \n\n \n\n56\n\n \n\n \n\n \n\n(5.2\n\n%)\n\n \n\n \n\n74\n\n \n\n \n\n \n\n(2.1\n\n%)\n\nMeals and entertainment\n\n \n\n \n\n12\n\n \n\n \n\n \n\n(1.1\n\n%)\n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nChanges in Valuation Allowance\n\n \n\n \n\n450\n\n \n\n \n\n \n\n(41.5\n\n%)\n\n \n\n \n\n7,384\n\n \n\n \n\n \n\n(206.9\n\n%)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOther Adjustments\n\n \n\n \n\n \n\n     Resolution of uncertain tax positions\n\n \n\n \n\n(16\n\n)\n\n \n\n \n\n1.5\n\n%\n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n     Net operating losses\n\n \n\n \n\n31\n\n \n\n \n\n \n\n(2.8\n\n%)\n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n     Research and development credit carryforward\n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n(99\n\n)\n\n \n\n \n\n2.7\n\n%\n\n     Other\n\n \n\n \n\n4\n\n \n\n \n\n \n\n(0.3\n\n%)\n\n \n\n \n\n(10\n\n)\n\n \n\n \n\n0.4\n\n%\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nEffective Tax Rate\n\n \n\n$\n\n156\n\n \n\n \n\n \n\n(14.4\n\n%)\n\n \n\n$\n\n6,295\n\n \n\n \n\n \n\n(176.4\n\n%)\n\nWe had $187 and $203 thousand of total gross unrecognized tax benefits at December 31, 2025 and 2024, respectively that, if recognized, would favorably affect the effective income tax\nrate in any future periods.  We are not aware of any events that could occur within the next twelve months that could cause a significant change in the total amount of unrecognized tax benefits.  A tabular reconciliation of the gross amounts of\nunrecognized tax benefits at the beginning and end of the year is as follows:\n\n \n\nDecember 31,\n\n \n\n(In thousands)\n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nBalance, beginning of period\n\n \n\n$\n\n203\n\n \n\n \n\n$\n\n197\n\n \n\nTax positions taken during the current period\n\n \n\n \n\n25\n\n \n\n \n\n \n\n31\n\n \n\nReductions for tax positions in prior years\n\n \n\n \n\n(41\n\n)\n\n \n\n \n\n(25\n\n)\n\nBalance, end of period\n\n \n\n$\n\n187\n\n \n\n \n\n$\n\n203\n\n \n\nWe recognize interest and penalties related to uncertain tax positions in the income tax provision.\n\nWe are subject to U.S. federal income tax as well as income tax of certain state and foreign jurisdictions.  We have substantially concluded all U.S.\nfederal income tax, state and local, and foreign tax matters through 2021.  However, our federal tax returns for the years 2022 through 2025 remain open to examination. Various state and foreign tax jurisdiction tax years remain open to examination\nas well, though we believe that any additional assessment would be immaterial to the Consolidated Financial Statements.\n\nF-21\n\n[Index](#INDEX)\n\n12. Earnings per share\n\nEarnings per share was computed as follows (in thousands, except per share amounts):\n\n \n\n \n\nYears Ended December 31,\n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nNet loss\n\n \n\n$\n\n(1,240\n\n)\n\n \n\n$\n\n(9,863\n\n)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nShares:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nBasic:  Weighted average common shares outstanding\n\n \n\n \n\n10,087\n\n \n\n \n\n \n\n9,997\n\n \n\nAdd:  Dilutive effect of outstanding equity awards as determined by the treasury stock method\n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\nDiluted:  Weighted average common and common equivalent shares outstanding\n\n \n\n \n\n10,087\n\n \n\n \n\n \n\n9,997\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNet loss per common share:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nBasic\n\n \n\n$\n\n(0.12\n\n)\n\n \n\n$\n\n(0.99\n\n)\n\nDiluted\n\n \n\n \n\n(0.12\n\n)\n\n \n\n \n\n(0.99\n\n)\n\nThe computation of diluted earnings per share excludes the effect of the potential exercise of stock awards, including stock options, restricted\nstock 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\ndiluted 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\nanti-dilutive stock awards excluded from the computation of earnings per share for the years ended December 31, 2025 and 2024, respectively.\n\n13. Stock repurchase program\n\nWe 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. \nRepurchases of our common stock are accounted for as of the settlement date.  During 2025 and 2024, we did not repurchase any shares of our common stock. \nFrom 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 $7.94\nper share.\n\n14. Geographic area information\n\nInformation regarding our operations by geographic area is contained in the following table.  These amounts in the geographic area table are based on the\nlocation of the customer and asset.\n\n \n\n \n\nYears Ended December 31,\n\n \n\n(In thousands)\n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nNet sales:\n\n \n\n \n\n \n\n \n\n \n\n \n\nUnited States\n\n \n\n$\n\n42,115\n\n \n\n \n\n$\n\n33,485\n\n \n\nInternational\n\n \n\n \n\n9,365\n\n \n\n \n\n \n\n9,899\n\n \n\nTotal\n\n \n\n$\n\n51,480\n\n \n\n \n\n$\n\n43,384\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nFixed assets, net:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nUnited States\n\n \n\n$\n\n553\n\n \n\n \n\n$\n\n831\n\n \n\nInternational\n\n \n\n \n\n690\n\n \n\n \n\n \n\n987\n\n \n\nTotal\n\n \n\n$\n\n1,243\n\n \n\n \n\n$\n\n1,818\n\n \n\nSales to international customers were 18%\nand 23% of total sales in 2025\nand 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\nrepresented 13% and 10% of\ntotal international sales in 2025 and 2024,\nrespectively.  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.\n\n15. Leases\n\nOperating lease expense was $1.0 million and $1.0 million for the years ended December 31, 2025 and 2024, respectively, and is reported as “Cost of sales,” “Engineering, design and product development expense,” “Selling and marketing expense,” and “General and administrative expense” in the Consolidated Statements of\nOperations.  Operating costs include short-term lease costs.\n\nOn November 3, 2025, the Company entered into a third amendment to its corporate headquarters lease in Hamden, Connecticut, extending the lease\nterm from November 1, 2025 through December 31, 2029 and reducing the area of the leased premises from approximately 11,000 square feet\nto 3,630 square feet.\n\nF-22\n\n[Index](#INDEX)\n\nThe following information represents supplemental disclosure for the statement of cash flows related to operating leases (in thousands):\n\n \n\n \n\nYears Ended December 31,\n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nOperating cash outflows from leases\n\n \n\n$\n\n1,073\n\n \n\n \n\n$\n\n1,022\n\n \n\nThe following summarizes additional information related to our leases:\n\n \n\n \n\nYears Ended December 31,\n\n \n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\nWeighted average remaining lease term (in years)\n\n \n\n \n\n2.3\n\n \n\n \n\n \n\n1.2\n\n \n\nWeighted average discount rate\n\n \n\n \n\n9.1\n\n%\n\n \n\n \n\n7.7\n\n%\n\nThe maturity of the Company’s operating lease liabilities are as follows (in thousands):\n\n \n\nDecember 31, 2025\n\n \n\n2026\n\n \n\n$\n\n376\n\n \n\n2027\n\n \n\n \n\n82\n\n \n\n2028\n\n \n\n \n\n82\n\n \n\nThereafter\n\n \n\n \n\n82\n\n \n\nTotal undiscounted lease payments\n\n \n\n \n\n622\n\n \n\nLess imputed interest\n\n \n\n \n\n61\n\n \n\nTotal lease liabilities\n\n \n\n$\n\n561\n\n \n\nFor details regarding the new lease agreement for a new facility in Las Vegas, Nevada, see Note 18 – Subsequent\nevents.\n\n16. Quarterly results of operations (unaudited)\n\nOur quarterly results of operations for 2025\nand 2024 are as follows:\n\n \n\nQuarter Ended\n\n \n\n(In thousands, except per share amounts)\n\n \n\nMarch 31\n\n \n\n \n\nJune 30\n\n \n\n \n\nSeptember 30\n\n \n\n \n\nDecember 31\n\n \n\n2025:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNet sales\n\n \n\n$\n\n13,053\n\n \n\n \n\n$\n\n13,798\n\n \n\n \n\n$\n\n13,176\n\n \n\n \n\n$\n\n11,453\n\n \n\nGross profit\n\n \n\n \n\n6,359\n\n \n\n \n\n \n\n6,652\n\n \n\n \n\n \n\n6,556\n\n \n\n \n\n \n\n5,448\n\n \n\nNet income (loss)\n\n \n\n \n\n19\n\n \n\n \n\n \n\n(143\n\n)\n\n \n\n \n\n15\n\n \n\n \n\n \n\n(1,131\n\n)\n\nNet income (loss) per common share:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nBasic\n\n \n\n \n\n0.00\n\n \n\n \n\n \n\n(0.01\n\n)\n\n \n\n \n\n0.00\n\n \n\n \n\n \n\n(0.11\n\n)\n\nDiluted\n\n \n\n \n\n0.00\n\n \n\n \n\n \n\n(0.01\n\n)\n\n \n\n \n\n0.00\n\n \n\n \n\n \n\n(0.11\n\n)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n2024:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNet sales\n\n \n\n$\n\n10,687\n\n \n\n \n\n$\n\n11,599\n\n \n\n \n\n$\n\n10,867\n\n \n\n \n\n$\n\n10,231\n\n \n\nGross profit\n\n \n\n \n\n5,624\n\n \n\n \n\n \n\n6,110\n\n \n\n \n\n \n\n5,227\n\n \n\n \n\n \n\n4,521\n\n \n\nNet loss\n\n \n\n \n\n(1,036\n\n)\n\n \n\n \n\n(319\n\n)\n\n \n\n \n\n(551\n\n)\n\n \n\n \n\n(7,957\n\n)\n\nNet loss per common share:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nBasic\n\n \n\n \n\n(0.10\n\n)\n\n \n\n \n\n(0.03\n\n)\n\n \n\n \n\n(0.06\n\n)\n\n \n\n \n\n(0.79\n\n)\n\nDiluted\n\n \n\n \n\n(0.10\n\n)\n\n \n\n \n\n(0.03\n\n)\n\n \n\n \n\n(0.06\n\n)\n\n \n\n \n\n(0.79\n\n)\n\nF-23\n\n[Index](#INDEX)\n\n17. Related party transactions\n\nOne of the Company’s directors serves as President and Chief Executive Officer of The One Group Hospitality, Inc.  The\nCompany sold various food service technology products to The One Group Hospitality, Inc. on an arms’ length basis totaling $161 thousand\nand $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\n31, 2025 and 2024, respectively.\n\n18. Subsequent events\n\nOn 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\nagreement (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.\n\nThe 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\nreview, the Company did not identify any subsequent events that would have required adjustment or disclosure in the consolidated financial statements.\n\nF-24"}