{"url_path":"/sec/tact/10-k/2026/item-7","section_key":"item-7","section_title":"Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations.","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":7846,"has_tables":true,"body_markdown":"Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.\n\nThis discussion should be read in conjunction with the Consolidated Financial Statements and notes thereto.\n\nRecent Developments\n\nOn August 6, 2025, the Company announced that it acquired a perpetual license to a copy of the source code for\nthe BOHA! software that it licenses from Avery Dennison.  Under the terms of the agreement, TransAct has obtained a perpetual and royalty free license to use, host, market, sublicense, distribute, copy, and modify the code as the Company sees fit\nfor its business purposes. In addition to the perpetual and royalty free license, TransAct will also host the code in its own environment, which is expected to go live in mid-2026. The Company has taken delivery of the source code and the related\nhosting environment and has begun internal review and development activities related to the underlying code. Total consideration for the acquisition was $2.55 million, plus professional services fees of approximately $1.0 million for transition\nservices to be provided by Avery Dennison, of which $1.5 million has been paid to date based on contractual milestone completion and transition services received. For information regarding the risks related to the BOHA! source code acquisition,\nplease see Part I, Item 1A, Risk Factors under the sub-caption “We may not realize the expected benefits of our acquisition of a perpetual license to the BOHA! source code within the anticipated time frame or at all” and the sub-caption “Until the\nin-housing of the BOHA! source code is complete, we continue to rely on third party service providers to host our FST software and deliver certain services, and any interruptions or delays in services from these third parties could impair the\ndelivery of our products and services, and our business, results of operations, and financial condition could be materially adversely affected.”\n\nCurrent Trends\n\nAfter strong demand during most of 2023 due in part to our primary competitor’s struggle to deliver products in the face of supply chain constraints, in late\n2023, we began to see indications of a temporary slowdown in demand in the casino and gaming market, as customers that had built up excess inventory due to supply chain concerns advised us that they would temporarily reduce orders until their stock\nnormalized. This slowdown impacted our results in the fourth quarter of 2023 and during the year ended December 31, 2024. By September 30, 2025, we believe that all significant domestic customers had been able to sell through their on-hand inventory\nand had resumed ordering, contributing to more normalized casino and gaming sales for the first nine months of 2025. During the fourth quarter of 2025, some domestic casino and gaming customers indicated slowing demand, and one large customer indicated\nthey 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\nand gaming industry. While these conditions impacted our casino and gaming sales in the fourth quarter of 2025, we expect demand to improve as customer inventory levels continue to normalize and installations proceed, 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\nWe are currently dependent upon a manufacturer located in Thailand for the manufacturing and assembly of substantially all of our printers and terminals.\nDuring 2025, the U.S. government announced and implemented various trade-related actions, including the imposition of tariffs on imports from several countries, including Thailand.  A recent decision of the U.S. Supreme Court invalidated certain\npreviously imposed U.S. tariffs and has resulted in increased uncertainty regarding the scope, durability and implementation of U.S. trade policy, including the potential for new, modified or reinstated tariffs through legislative or executive action.\n\nThese tariffs have impacted, and if continued, reinstated or increased, may continue to impact, certain goods that are assembled and imported into the United\nStates from our manufacturer in Thailand. The majority of raw components used in the manufacturing and assembly of our printers and terminals are sourced locally in Thailand, and to a lesser extent, from other countries in the region, including China.\nAs a result, we currently have a limited ability to mitigate the expected impact of tariffs on goods sold into the United States through alternative sourcing or manufacturing. We have mitigated these tariffs by raising prices to customers, but there\ncan be no assurance that we will be able to pass on all tariff costs to customers via price increases.\n\nWhile tariffs did not materially impact our net income for fiscal 2025, we expect that any continuing or reinstated tariffs on goods imported from Thailand\nwould impact our financial results going forward if implemented. There can be no assurance that future price increases and other mitigation efforts will be successful in offsetting future tariffs. In addition, it is uncertain whether other countries\nwill continue to seek further negotiations or retaliate as future developments occur, whether the U.S. government will reconsider or adjust tariffs based upon continued future negotiations, or grant further exemptions, and what types of products will\nbe eligible for such exemptions, if granted, or what actions the executive or legislative branch may take to impose new, modified or reinstated tariffs following the recent Supreme Court decision. The Company continues to monitor the rapidly evolving\nand uncertain tariff and global trade environment and the potential impacts to its Consolidated Financial Statements.\n\n21\n\n[Index](#INDEX)\n\nThe continued effects of any global tariffs may potentially increase the likelihood of a recession, create a significant reduction in consumer confidence and\ncustomer demand, increase inflation or impact credit markets and interest rates. Any of these resulting effects could materially and adversely affect our business, financial condition and results of operations.\n\nFor additional discussion of our business, refer to Part I, Item 1. Business, of this Form 10-K.\n\nCritical Accounting Estimates\n\nThe preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“GAAP”) requires\nmanagement to make use of estimates, judgments and assumptions that affect both Balance Sheet items and Statement of Operations categories.  Such estimates and judgments are based upon historical experience and certain assumptions that are believed to\nbe reasonable in the particular circumstances; however, due to the inherent uncertainties in developing estimates, actual results could differ from the original estimates, requiring adjustments to these balances in future periods.\n\nWe base our estimates on historical experience, forecasts and on various other assumptions that are believed to be reasonable under the circumstances;\nhowever actual results may differ from those estimates under different assumptions or conditions. The methods, estimates and judgments we use in applying our accounting policies have a significant impact on the results we report in our financial\nstatements. Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain.\n\nThe following accounting policies are those that we believe to be most critical in the preparation of our financial statements.  These items utilize\nassumptions and estimates about the effect of future events that are inherently uncertain and are therefore based on our judgment.  Refer to Note 2 – Summary of significant accounting policies in the accompanying Consolidated Financial Statements for\na complete listing of our significant accounting policies.  We also have other policies that we consider key accounting policies; however, these policies typically do not\nrequire us to make estimates or judgments that are difficult or subjective.\n\nRevenue Recognition – Our net sales are derived from the sale of products and services and are adjusted for estimated returns and allowances, which historically have been insignificant. The application\n\nof GAAP to the measurement and recognition of revenue requires us to make judgments and estimates. Specifically, the determination of whether revenues related to our revenue contracts should be recognized over time or at a point in time.  We recognize revenue when the obligations under the terms of a contract with our customers are satisfied; generally, this occurs with the transfer of control of our printers,\nterminals, labels and replacement parts.  For our warranty, software applications and maintenance agreements, revenue is generally recognized ratably over the contract period. Other significant judgments include contracts that contain\nmultiple performance obligations (most commonly when contracts include a hardware product, software, financing and extended warranties) which require a contract’s transaction price to be allocated to each distinct performance obligation and recognized\nas revenue when, or as, the performance obligation is satisfied.  For arrangements containing multiple performance obligations, the revenue relating to the undelivered\nperformance obligation is deferred using the relative standalone selling price method utilizing estimated sales prices until satisfaction of the deferred performance obligation.  Both of these determinations impact the timing and amount of\nour reported revenues and net income and loss.\n\nAccounts Receivable – We have\nstandardized credit granting and review policies and procedures for all customer accounts, including: credit reviews of all new customer accounts; ongoing credit evaluations of current customers; credit limits and payment terms based on available\ncredit information; and adjustments to credit limits based upon payment history and the customer’s current creditworthiness.  We also provide an estimate for expected credit losses based on an expected loss methodology which considers a broad range of information to estimate expected credit losses, including historical information, current economic conditions and a reasonable forecast period.  Our reserve for\nexpected credit losses as of December 31, 2025 was $0.5 million, or 7% of outstanding trade accounts receivable, which we believe is appropriate considering the overall quality of our accounts receivable.  Although credit losses have historically been\nwithin expectations and the reserves established, there is no assurance that our credit loss experience will continue to be consistent with historical experience.  While we\nbelieve that our allowance for credit losses is adequate and represents our best estimate of future losses, we will continue to monitor customer liquidity and other economic conditions, which may result in changes to our estimates.\n\nInventories – The valuation of inventory requires us to estimate obsolete or excess inventory as well as inventory that is not of saleable quality. The determination of obsolete or excess\ninventory requires us to estimate the future demand for our products. We record valuation reserves on our inventory for estimated excess and obsolete inventory and lower of cost or net realizable value concerns equal to the difference between the\ncost of inventory and the estimated realizable value based upon assumptions about future product demand, market conditions and product selling prices. If future product demand, market conditions or product selling prices are less than those\nprojected by management or if continued modifications to products are required to meet specifications or other customer requirements, increases to inventory reserves may be required which would have a negative impact on our gross margin.\n\n22\n\n[Index](#INDEX)\n\nGoodwill and Intangible Assets – We evaluate goodwill and other indefinite-lived intangible assets for impairment annually and when an event occurs or circumstances change that indicate that the carrying value\nmay not be recoverable.  The Company utilizes the option to first assess qualitative factors to determine whether it is necessary to perform the Step 1 quantitative goodwill impairment test in accordance with the applicable accounting\nstandards. Under the qualitative assessment, management considers relevant events and circumstances including, but not limited to, macroeconomic conditions, industry and market considerations, Company performance, and events directly affecting the\nCompany. If the Company determines that the Step 1 quantitative impairment test is required, management estimates the fair value of the reporting unit primarily using the income approach.  Under the income approach, we use a discounted cash flow methodology to derive an indication of value, which requires management to make significant estimates and assumptions related to forecasted revenues, gross profit margins,\noperating income margins, working capital cash flow, perpetual growth rates, and long-term discount rates, among others.  Factors considered that may trigger an interim period impairment review of either acquired goodwill or intangible assets\nare: significant underperformance relative to expected historical or projected future operating results; significant changes in the manner of use of acquired assets or the strategy for the overall business; significant negative industry or economic\ntrends; and significant decline in market capitalization relative to net book value. Finite lived intangible assets are amortized and are tested for impairment when appropriate.\n\nAs of December 31, 2025, upon the completion of our annual assessment for impairment, we have determined that no goodwill or intangible asset impairment has\noccurred and the fair value of the Company was substantially higher than our carrying value.\n\nWe have evaluated the recoverability of the assets on our Consolidated Balance Sheet as of December 31, 2025 in accordance with relevant authoritative\naccounting literature. We have considered the effects caused by the global supply chain disruptions, inflation and macroeconomic factors potentially impacting accounts receivable, inventory, investments, intangible assets, goodwill and other assets and\nliabilities.  Where forward-looking estimates are required, we made a good-faith estimate based on information available as of the balance sheet date. We have continued to monitor for indicators of impairment through the date of this Form 10-K and\nreflected accordingly in the accompanying consolidated financial statements.\n\nIncome Taxes – We account for\nincome taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”).  In preparing our Consolidated Financial Statements, we are required to estimate income taxes in each of the jurisdictions in which we operate.  Among other things, this provision\nprescribes a minimum recognition threshold that an income tax position must meet before it is recorded in the reporting entity’s financial statements. It also requires that the effects of such income tax positions be recognized only if, as of the\nbalance sheet reporting date, it is “more likely than not” (i.e., more than a 50% likelihood) that the income tax position will be sustained based solely on its technical merits.  When making this assessment, management must assume that the responsible\ntaxing authority will examine the income tax position and have full knowledge of all relevant facts and other pertinent information.  The accounting guidance also clarifies the method for accruing interest and penalties when there is a difference\nbetween the amount claimed, or expected to be claimed, on a company’s income tax returns and the benefits recognized in the financial statements.  This involves estimating the actual current tax exposure together with assessing temporary differences\nbetween the tax basis of certain assets and liabilities and their reported amounts in the financial statements, as well as net operating losses, tax credits and other carryforwards.  These differences result in deferred tax assets and liabilities,\nwhich are reflected in our Consolidated Balance Sheets.  We then assess the likelihood that the deferred tax assets will be realized from future taxable income.\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. \nIn evaluating the need for a valuation allowance, management considers all potential sources of taxable income, including income available in carryback periods, future reversals of taxable temporary differences, projections of taxable income, and\nincome from tax planning strategies, as well as all available positive and negative evidence.  Positive evidence includes factors such as a history of profitable operations and, projections of future profitability within the carryforward period,\nincluding any potential tax planning strategies.  Negative evidence includes items such as cumulative losses and projections of future losses.  Existing valuation allowances are re-examined under the same standards of positive and negative evidence. If\nit is determined that it is more likely than not that a deferred tax asset will be realized, the appropriate amount of the valuation allowance, if any, is released.  Deferred tax assets and liabilities are also re-measured to reflect changes in\nunderlying tax rates due to law changes and the granting and lapse of tax holidays.\n\nIn 2024, TransAct recognized a $7.3 million discrete income tax charge for a valuation allowance on the full value of the net deferred tax assets in the\nUnited States.  The company’s deferred tax assets generated by net operating losses have an unlimited life and R&D credit carryforwards have a twenty-year life. After weighing all available positive and negative evidence, as described above,\nmanagement determined that it was no longer more likely than not that TransAct will realize the tax benefit of these deferred tax assets. This was mainly driven by a cumulative taxable loss over the three preceding fiscal years (2022 through 2024),\ncombined with a near term outlook of future taxable losses (a taxable loss was generated in 2025 as well).  The need for this valuation allowance will be assessed on a quarterly basis in future periods and, as a result, a portion, or all of the\nallowance, may be reversed based on changes in facts and circumstances.\n\nSignificant judgment is required in determining the provision for income taxes and, in particular, any valuation allowance or tax reserves with respect to\nour deferred tax assets and uncertain tax positions.  On a quarterly basis, we evaluate the recoverability of our deferred tax assets based upon historical results and forecasted taxable income over future years, and match this forecast against the\nbasis differences, deductions available in future years and the limitations allowed for net operating loss and tax credit carryforwards to ensure that there is adequate support for the realization of the deferred tax assets. Although we have considered\nfuture taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance, in the event we were to determine that we would not be able to realize all or part of our deferred tax assets in the future,\nan adjustment to the valuation allowance or tax reserves would be charged as a reduction to income in the period such determination was made.  Likewise, should we determine that we would be able to realize future deferred tax assets in excess of its\nnet recorded amount, an adjustment to the valuation allowance would increase net income in the period such determination was made.\n\nShare-Based Compensation – We\ncalculate share-based compensation expense in accordance with ASC 718, “Compensation – Stock Compensation” using the Black-Scholes option-pricing model to calculate the fair value of share-based awards.  The key assumptions for this valuation method\ninclude the expected term of an option grant, stock price volatility, risk-free interest rate, and dividend yield.  We account for forfeitures as they occur.\n\n23\n\n[Index](#INDEX)\n\nResults of Operations: Year Ended December 31, 2025 Compared to Year Ended December 31, 2024\n\nNet Sales.  Net sales, which\ninclude printer, terminal and software sales as well as sales of replacement parts, consumables and maintenance and repair services, by market for the years ended December 31, 2025 and 2024 are detailed in the below table.\n\n \n\n \n\nYear Ended\n\n \n\n \n\nYear Ended\n\n \n\n \n\n \n\n \n\n(In thousands, except percentages)\n\n \n\nDecember 31, 2025\n\n \n\n \n\nDecember 31, 2024\n\n \n\n \n\n$ Change\n\n \n\n \n\n% Change\n\n \n\nFST\n\n \n\n$\n\n19,318\n\n \n\n \n\n \n\n37.5\n\n%\n\n \n\n$\n\n16,101\n\n \n\n \n\n \n\n37.1\n\n%\n\n \n\n$\n\n3,217\n\n \n\n \n\n \n\n20.0\n\n%\n\nPOS automation\n\n \n\n \n\n2,213\n\n \n\n \n\n \n\n4.3\n\n%\n\n \n\n \n\n3,361\n\n \n\n \n\n \n\n7.8\n\n%\n\n \n\n \n\n(1,148\n\n)\n\n \n\n \n\n(34.2\n\n%)\n\nCasino and gaming\n\n \n\n \n\n26,873\n\n \n\n \n\n \n\n52.2\n\n%\n\n \n\n \n\n20,348\n\n \n\n \n\n \n\n46.9\n\n%\n\n \n\n \n\n6,525\n\n \n\n \n\n \n\n32.1\n\n%\n\nTSG\n\n \n\n \n\n3,076\n\n \n\n \n\n \n\n6.0\n\n%\n\n \n\n \n\n3,574\n\n \n\n \n\n \n\n8.2\n\n%\n\n \n\n \n\n(498\n\n)\n\n \n\n \n\n(13.9\n\n%)\n\n \n\n \n\n$\n\n51,480\n\n \n\n \n\n \n\n100.0\n\n%\n\n \n\n$\n\n43,384\n\n \n\n \n\n \n\n100.0\n\n%\n\n \n\n$\n\n8,096\n\n \n\n \n\n \n\n18.7\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\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nInternational*\n\n \n\n$\n\n9,365\n\n \n\n \n\n \n\n18.2\n\n%\n\n \n\n$\n\n9,899\n\n \n\n \n\n \n\n22.8\n\n%\n\n \n\n$\n\n(534\n\n)\n\n \n\n \n\n(5.4\n\n%)\n\n*\n\nInternational sales do not include sales of products to domestic distributors or other customers who in turn ship those products to international destinations.\n\nNet sales for 2025 increased $8.1 million, or 19%, from 2024.  Printer, terminal and other hardware sales volume increased by 19% to approximately 94,000\nunits for 2025, driven largely by a 32% increase in unit volume from the casino and gaming market, and to a much lesser extent, an 18% hardware unit volume increase in our FST market. These increases were somewhat offset by a 32% decrease in unit\nvolume in the POS automation market.  For more information about the sales volume changes described above, please refer to the results of operations for each of our markets discussed further below.  The average selling price of our printers, terminals\nand other hardware increased approximately 5% during 2025 compared to 2024 due in part to increased costs in the latter part of 2025 resulting from U.S. tariffs imposed on our products assembled in Thailand, which have generally been passed on in the\nform of price increases to our customers. This additional cost primarily relates to an agreement which was made between the U.S. Government and Thailand to establish a U.S. tariff of 19% on goods imported from Thailand, effective August 7, 2025. The\nCompany is closely monitoring developments relating to tariffs and the evolving international trade environment, including the implications of the recent U.S. Supreme Court ruling.\n\nInternational sales for 2025 decreased $0.5 million, or 5%, compared to 2024 due primarily to a 7% decrease in sales within the international casino and\ngaming market.\n\nFST. Our primary offering in the FST market is our line of BOHA! products. The BOHA! product suite combines our latest generation terminal or workstation, which includes one or two printers, with our BOHA! labeling,\ntimers, and media software.  In addition, customers may individually purchase cloud-based software applications that connect to an application on a separate mobile device into a solution to automate back-of-house operations in restaurants, convenience\nstores and food service operations. The additional software offering of BOHA! consists of a variety of individually purchased software-as-a-service (“SaaS”) based applications for both Android and iOS operating systems, including applications for\ntemperature monitoring, temperature taking, checklists, and task lists. These applications are sold separately, and customers purchase the applications they need for their back-of-house operations. Customers may also purchase associated hardware, such\nas tablets, temperature sensors, and gateways. The BOHA! Terminal, and the more recently launched Terminal 2, combine an operating system and hardware components in a\nsingle touchscreen device with one or two thermal print mechanisms that print easy-to-read food rotation labels, grab-and-go labels, nutritional labels for prepared foods, and “enjoy by” date labels. The BOHA! WorkStation uses an iPad or Android tablet\ninstead of an integrated touchscreen. The BOHA! Terminal, Terminal 2, and WorkStation are equipped with the TransAct Enterprise Management System to ensure that only approved touchscreen functions are available on the device and to allow over-the-air\nupdates to the operating system. BOHA! helps food service establishments and restaurants (including fine dining, casual dining, fast casual and quick-service restaurants, convenience stores, hospitality establishments, and contract food service\nproviders) effectively manage food safety and grab-and-go initiatives, as well as automate and manage back-of-house operations. Recurring revenue from BOHA! is generated by software sales, including software subscriptions that are typically charged to\ncustomers annually on a per-application basis, as well as sales of labels, extended warranty, service contracts, and technical support services. Sales of our worldwide FST products for the years ended December 31, 2025 and 2024 were as follows:\n\n \n\n \n\nYear Ended\n\n \n\n \n\nYear Ended\n\n \n\n \n\n \n\n \n\n(In thousands, except percentages)\n\n \n\nDecember 31, 2025\n\n \n\n \n\nDecember 31, 2024\n\n \n\n \n\n$ Change\n\n \n\n \n\n% Change\n\n \n\nDomestic\n\n \n\n$\n\n17,886\n\n \n\n \n\n \n\n92.6\n\n%\n\n \n\n$\n\n14,719\n\n \n\n \n\n \n\n91.4\n\n%\n\n \n\n$\n\n3,167\n\n \n\n \n\n \n\n21.5\n\n%\n\nInternational\n\n \n\n \n\n1,432\n\n \n\n \n\n \n\n7.4\n\n%\n\n \n\n \n\n1,382\n\n \n\n \n\n \n\n8.6\n\n%\n\n \n\n \n\n50\n\n \n\n \n\n \n\n3.6\n\n%\n\n \n\n \n\n$\n\n19,318\n\n \n\n \n\n \n\n100.0\n\n%\n\n \n\n$\n\n16,101\n\n \n\n \n\n \n\n100.0\n\n%\n\n \n\n$\n\n3,217\n\n \n\n \n\n \n\n20.0\n\n%\n\n \n\n \n\nYear Ended\n\n \n\n \n\nYear Ended\n\n \n\n \n\n \n\n \n\n(In thousands, except percentages)\n\n \n\nDecember 31, 2025\n\n \n\n \n\nDecember 31, 2024\n\n \n\n \n\n$ Change\n\n \n\n \n\n% Change\n\n \n\nHardware\n\n \n\n$\n\n7,076\n\n \n\n \n\n \n\n36.6\n\n%\n\n \n\n$\n\n5,319\n\n \n\n \n\n \n\n33.0\n\n%\n\n \n\n$\n\n1,757\n\n \n\n \n\n \n\n33.0\n\n%\n\nSoftware, labels and other recurring revenue\n\n \n\n \n\n12,242\n\n \n\n \n\n \n\n63.4\n\n%\n\n \n\n \n\n10,782\n\n \n\n \n\n \n\n67.0\n\n%\n\n \n\n \n\n1,460\n\n \n\n \n\n \n\n13.5\n\n%\n\n \n\n \n\n$\n\n19,318\n\n \n\n \n\n \n\n100.0\n\n%\n\n \n\n$\n\n16,101\n\n \n\n \n\n \n\n100.0\n\n%\n\n \n\n$\n\n3,217\n\n \n\n \n\n \n\n20.0\n\n%\n\n24\n\n[Index](#INDEX)\n\nSales in our FST market increased $3.2 million, or 20%, in 2025 compared to 2024 driven primarily by a 33% increase in sales of BOHA! hardware, which was\nprimarily driven by sales of our new BOHA! Terminal 2 which replaced our BOHA! Terminal 1. Hardware sales were also impacted by a 43% decline (albeit from a small base) of our AccuDate 9700 terminals which we discontinued at the end of 2023 and a 25%\nincrease in sales of our BOHA! Workstations.\n\nDuring the second quarter of 2024, a significant customer notified us that it would be terminating service, including its BOHA! software subscriptions and\nlabel sales, for its existing installed base of BOHA! Terminals by the middle of July 2024. Total sales to this customer (including hardware, software, labels and other recurring revenue) were approximately $0.9 million in 2024.  We had a de minimis\namount of sales to this customer in 2025. Despite the loss of this customer, software, labels and other recurring revenue increased $1.5 million, or 14%, compared to the prior year period due primarily to higher label sales to a new sushi customer\n(approximately $0.8 million) and one existing convenience store customer (up approximately $0.5 million).\n\nWe expect FST revenue to be higher in 2026 than in 2025 as we continue to focus on growing our installed base of terminals and the related recurring revenue\n(primarily the sale of labels and subscription software revenue.\n\nPOS automation. Revenue from the POS automation\nmarket includes sales of our Ithaca 9000 thermal printer used primarily by McDonald’s, and to a much lesser extent, other quick-service restaurants located either at the checkout counter or within self-service kiosks to print receipts for consumers or\nprint liner-less labels.  Sales of our worldwide POS automation products for the years ended December 31, 2025 and 2024 were as follows:\n\n \n\n \n\nYear Ended\n\n \n\n \n\nYear Ended\n\n \n\n \n\n \n\n \n\n(In thousands, except percentages)\n\n \n\nDecember 31, 2025\n\n \n\n \n\nDecember 31, 2024\n\n \n\n \n\n$ Change\n\n \n\n \n\n% Change\n\n \n\nDomestic\n\n \n\n$\n\n2,208\n\n \n\n \n\n \n\n99.8\n\n%\n\n \n\n$\n\n3,361\n\n \n\n \n\n \n\n100.0\n\n%\n\n \n\n$\n\n(1,153\n\n)\n\n \n\n \n\n(34.3\n\n%)\n\nInternational\n\n \n\n \n\n5\n\n \n\n \n\n \n\n0.2\n\n%\n\n \n\n \n\n–\n\n \n\n \n\n \n\n–\n\n \n\n \n\n \n\n5\n\n \n\n \n\n \n\nN/A\n\n \n\n \n\n \n\n$\n\n2,213\n\n \n\n \n\n \n\n100.0\n\n%\n\n \n\n$\n\n3,361\n\n \n\n \n\n \n\n100.0\n\n%\n\n \n\n$\n\n(1,148\n\n)\n\n \n\n \n\n(34.2\n\n%)\n\nSales of POS automation printers decreased $1.1 million, or 34%, in 2025 compared to 2024. We continue to experience competitive pressure that has resulted\nin a lower level of sales as well as a reduction in our average selling prices.\n\nWe expect 2026 POS automation sales to be relatively consistent with 2025 levels.\n\nCasino and gaming. Revenue from our casino and gaming\nmarket includes sales of thermal printers used in slot machines, video lottery terminals, and other gaming machines that print tickets or receipts instead of issuing coins at casinos, racetracks, charitable gaming establishments, and other gaming\nvenues worldwide. Revenue from this market also includes sales of thermal roll-fed printers used in the international off-premise gaming market. This gaming market includes gaming machines such as Amusement with Prizes, Skills with Prizes, and Fixed\nOdds Betting Terminals and kiosks for sports betting at non-casino gaming and sports betting establishments.  In addition, casino and gaming market revenue includes sales of the EPICENTRAL print system, our software solution (including annual software\nmaintenance) that enables casino operators to create promotional coupons and marketing messages for printing in real time at slot machines.  Sales of our worldwide casino and gaming products for the years ended December 31, 2025 and 2024 were as\nfollows:\n\n \n\n \n\nYear Ended\n\n \n\n \n\nYear Ended\n\n \n\n \n\n \n\n \n\n(In thousands, except percentages)\n\n \n\nDecember 31, 2025\n\n \n\n \n\nDecember 31, 2024\n\n \n\n \n\n$ Change\n\n \n\n \n\n% Change\n\n \n\nDomestic\n\n \n\n$\n\n19,586\n\n \n\n \n\n \n\n72.9\n\n%\n\n \n\n$\n\n12,522\n\n \n\n \n\n \n\n61.5\n\n%\n\n \n\n$\n\n7,064\n\n \n\n \n\n \n\n56.4\n\n%\n\nInternational\n\n \n\n \n\n7,287\n\n \n\n \n\n \n\n27.1\n\n%\n\n \n\n \n\n7,826\n\n \n\n \n\n \n\n38.5\n\n%\n\n \n\n \n\n(539\n\n)\n\n \n\n \n\n(6.9\n\n%)\n\n \n\n \n\n$\n\n26,873\n\n \n\n \n\n \n\n100.0\n\n%\n\n \n\n$\n\n20,348\n\n \n\n \n\n \n\n100.0\n\n%\n\n \n\n$\n\n6,525\n\n \n\n \n\n \n\n32.1\n\n%\n\nDomestic sales of our casino and gaming products in 2025 increased by $7.1 million, or 56%, compared to 2024. Sales in 2024 were negatively impacted as many\nof our customers had accumulated higher-than-normal levels of inventory of our product as a hedge during the worldwide supply chain crisis during 2022 and 2023. As a result, during 2024, we experienced a significant slowdown in their order and shipment\nrates as they worked through this excess inventory. Sales increased in 2025 compared to 2024 as most of our major domestic casino and gaming customers had worked through their on-hand inventory by the first quarter of 2025 and were ordering at\nnormalized levels in the second and third quarters of 2025. In addition, sales in 2025 benefitted from sales of our casino printer to a new OEM customer for the use in charitable gaming establishments. However, we believe this customer is now in an\noverstock position awaiting jurisdictional approvals to install new gaming machines. As a result, we expect a more moderate pace of sales to this new customer in 2026. Though we experienced slowing demand from our domestic OEM customers during the\nfourth quarter of 2025, we expect to demand to resume more normalized levels in 2026. As a result of these factors, we expect our domestic casino and gaming sales to be slightly lower in 2026 compared to 2025.\n\nOur international casino and gaming sales were down $0.5 million or 7% in 2025 compared to 2024. This decrease is largely due to a significant European OEM\nstill working down an overstock of their on-hand inventory. Despite this, we expect international sales in 2026 to be higher than in 2025 due to anticipated strengthening demand as well as additional contributions from our roll-fed gaming printer that\nwe believe will begin to gain traction in the international markets.\n\n25\n\n[Index](#INDEX)\n\nTSG: Revenue generated by TSG includes sales of\nconsumable products (POS receipt paper and ribbons for non-FST legacy products), replacement parts and accessories, maintenance and repair services, and shipping and handling charges.  Sales in our worldwide TSG market for the years ended December 31,\n2025 and 2024 were as follows:\n\n \n\n \n\nYear Ended\n\n \n\n \n\nYear Ended\n\n \n\n \n\n \n\n \n\n(In thousands, except percentages)\n\n \n\nDecember 31, 2025\n\n \n\n \n\nDecember 31, 2024\n\n \n\n \n\n$ Change\n\n \n\n \n\n% Change\n\n \n\nDomestic\n\n \n\n$\n\n2,435\n\n \n\n \n\n \n\n79.2\n\n%\n\n \n\n$\n\n2,883\n\n \n\n \n\n \n\n80.7\n\n%\n\n \n\n$\n\n(448\n\n)\n\n \n\n \n\n(15.5\n\n%)\n\nInternational\n\n \n\n \n\n641\n\n \n\n \n\n \n\n20.8\n\n%\n\n \n\n \n\n691\n\n \n\n \n\n \n\n19.3\n\n%\n\n \n\n \n\n(50\n\n)\n\n \n\n \n\n(7.2\n\n%)\n\n \n\n \n\n$\n\n3,076\n\n \n\n \n\n \n\n100.0\n\n%\n\n \n\n$\n\n3,574\n\n \n\n \n\n \n\n100.0\n\n%\n\n \n\n$\n\n(498\n\n)\n\n \n\n \n\n(13.9\n\n%)\n\nThe decrease of $0.4 million, or 16%, in domestic revenue from TSG during 2025 as compared to 2024 resulted primarily from a $0.3 million, or 20%, decrease\nin sales of replacement parts and a $0.2 million, or 22%, decrease in repairs, partially offset by a $0.1 million, or 26%, increase in shipping charges (as a result of higher overall sales volume in 2025 compared to 2024).  Also contributing to the\ndecline was a $0.1 million, or 75%, decrease in consumable sales as we are no longer focused on selling these legacy products (POS paper and ribbons) and we expect to have virtually no sales of these legacy products in 2026. Internationally, TSG\nrevenue decreased 7% during 2025 compared to 2024, due primarily to a decline in sales of replacement parts and accessories to international casino and gaming customers.\n\nGross Profit.  Gross profit\ninformation for the years ended December 31, 2025 and 2024 is summarized below (in thousands, except percentages):\n\nYear Ended December 31,\n\n \n\n \n\nPercent\n\n \n\n \n\nPercent of\n\n \n\n \n\nPercent of\n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\nChange\n\n \n\n \n\nTotal Sales - 2025\n\n \n\n \n\nTotal Sales - 2024\n\n \n\n$\n\n25,015\n\n \n\n \n\n$\n\n21,482\n\n \n\n \n\n \n\n16.4\n\n%\n\n \n\n \n\n48.6\n\n%\n\n \n\n \n\n49.5\n\n%\n\nGross profit is measured as revenue less cost of sales, which includes primarily the cost of all raw materials and component parts, direct labor,\nmanufacturing overhead expenses, cost of finished products purchased directly from our contract manufacturers, expenses associated with installations and support of our EPICENTRAL print system and our line of BOHA! products, and royalty payments to\nthird-parties, including to the third party licensor of our food service technology software products.  Gross profit increased $3.5 million, or 16% primarily driven by an increase of sales of $8.1 million in 2025 compared to 2024, partially reduced by\nlower gross margin in 2025 as discussed below. Gross margin decreased 90 basis points from 49.5% in 2024 compared to 48.6% in 2025. largely due to higher sales of BOHA! hardware products which carry lower average margins than our other products, and to\na lesser extent, increased overhead costs, inflation, tariffs and lower prices on our POS automation printer due to increased competitive pressure.\n\nWe expect gross margin for 2026 to be relatively consistent with 2025..\n\nOperating Expenses - Engineering, Design\nand Product Development.  Engineering, design and product development information for the years ended December 31, 2025 and 2024 is summarized below (in thousands, except percentages):\n\nYear Ended December 31,\n\n \n\n \n\nPercent\n\n \n\n \n\nPercent of\n\n \n\n \n\nPercent of\n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\nChange\n\n \n\n \n\nTotal Sales - 2025\n\n \n\n \n\nTotal Sales - 2024\n\n \n\n$\n\n6,701\n\n \n\n \n\n$\n\n6,977\n\n \n\n \n\n \n\n(4.0\n\n%)\n\n \n\n \n\n13.0\n\n%\n\n \n\n \n\n16.1\n\n%\n\nEngineering, design and product development expenses primarily include salary and payroll-related expenses for our hardware and software engineering staff,\ndepreciation and design expenses (including prototype printer expenses, outside design, development and testing services, supplies and contracted software development expenses including those to the third-party licensor of our food service technology software products).  Engineering, design and product development expenses\ndecreased $0.3 million, or 4%, in 2025 compared to 2024 due to cost reduction initiatives taken in the second quarter of 2024 (the full benefit of which was realized in 2025), including a reduction of contracted software development expenses,\npartially offset by higher incentive compensation due to improved financial results in 2025 compared to 2024.\n\nOperating Expenses - Selling and\nMarketing.  Selling and marketing information for the years ended December 31, 2025 and 2024 is summarized below (in thousands, except\npercentages):\n\nYear Ended December 31,\n\n \n\n \n\nPercent\n\n \n\n \n\nPercent of\n\n \n\n \n\nPercent of\n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\nChange\n\n \n\n \n\nTotal Sales - 2025\n\n \n\n \n\nTotal Sales - 2024\n\n \n\n$\n\n8,433\n\n \n\n \n\n$\n\n8,195\n\n \n\n \n\n \n\n2.9\n\n%\n\n \n\n \n\n16.4\n\n%\n\n \n\n \n\n18.9\n\n%\n\nSelling and marketing expenses primarily include salaries and payroll-related expenses for our sales, marketing and customer success staff, sales\ncommissions, travel expenses, expenses associated with the lease of sales offices, advertising, trade show expenses, public relations, e-commerce and other promotional marketing expenses.  Selling and marketing expenses increased $0.2 million, or 3%,\nduring 2025 compared to 2024 due largely to higher costs related to programs to further improve the Company’s go-to-market strategy as well as higher sales commissions and incentive compensation due to improved financial results in 2025 compared to\n2024, partially offset by cost reduction initiatives including reduced headcount, trade show and other marketing expenses.\n\n26\n\n[Index](#INDEX)\n\nOperating Expenses - General and\nAdministrative.  General and administrative information for the years ended December 31, 2025 and 2024 is summarized below (in thousands, except percentages):\n\nYear Ended December 31,\n\n \n\n \n\nPercent\n\n \n\n \n\nPercent of\n\n \n\n \n\nPercent of\n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\nChange\n\n \n\n \n\nTotal Sales - 2025\n\n \n\n \n\nTotal Sales - 2024\n\n \n\n$\n\n11,296\n\n \n\n \n\n$\n\n9,936\n\n \n\n \n\n \n\n13.7\n\n%\n\n \n\n \n\n21.9\n\n%\n\n \n\n \n\n22.9\n\n%\n\nGeneral and administrative expenses primarily include salaries, incentive compensation, and other payroll-related expenses for our Chief Executive Officer,\nChief Financial Officer, accounting, human resources, corporate development and information technology staff, corporate headquarters expenses, professional and legal expenses, information technology expenses, and other expenses related to being a\npublicly traded company.  General and administrative expenses increased $1.4 million, or 14%, during 2025 compared to 2024. This increase was driven largely by higher\nincentive compensation and share-based compensation expense due to improved financial results in 2025 compared to 2024. These increases were partially offset by the impact of cost reduction initiatives taken in the second quarter of 2024.\n\nOperating Loss.  Operating loss\ninformation for the years ended December 31, 2025 and 2024 is summarized below (in thousands, except percentages):\n\nYear Ended December 31,\n\n \n\n \n\nPercent\n\n \n\n \n\nPercent of\n\n \n\n \n\nPercent of\n\n \n\n2025\n\n \n\n \n\n2024\n\n \n\n \n\nChange\n\n \n\n \n\nTotal Sales – 2025\n\n \n\n \n\nTotal Sales – 2024\n\n \n\n$\n\n(1,415\n\n)\n\n \n\n$\n\n(3,626\n\n)\n\n \n\n \n\n61.0\n\n%\n\n \n\n \n\n(2.7\n\n%)\n\n \n\n \n\n(8.4\n\n%)\n\nOur operating loss improved by $2.2 million, or 61%, during 2025 compared to 2024 as a $3.5 million, or 16% increase, in gross profit on 19% higher sales was partially offset by a $1.3 million or 5% increase in operating expenses in\n2025 compared to 2024.\n\nInterest, net.  We recorded net interest income of $198 thousand in 2025 compared to net interest income of $147 thousand in 2024. During 2025 we earned more interest income than in\n2024 due to higher levels of invested cash on hand (cash and cash equivalents were $20.4 million and $14.4 million at December 31, 2025 and 2024, respectively). During both\n2025 and 2024 we incurred interest expense related to minimum borrowings required pursuant to the Siena Credit Facility. Following the November 2024 amendment of the Siena Credit Facility, we were required to maintain outstanding borrowings of\nat least $3 million in principal amount, an increase from $2.25 million prior to the amendment.  The interest rate of our Siena Credit Facility was 8.50% and 9.25% as of December 31, 2025 and 2024, respectively. See Note 9 – Borrowings to the accompanying consolidated financial statements.\n\nOther, net.  We recorded other income of $133 thousand in 2025 compared to other expense of $89 thousand in 2024.  The other income in 2025 is related to foreign exchange gains\nrecorded by our UK subsidiary  compared to foreign exchange losses of $89 thousand in 2024. Going forward, we may continue to experience more foreign exchange gains or losses depending on the level of sales to European customers through our UK\nsubsidiary and the fluctuation in exchange rates of the Euro and Pound Sterling against the U.S. Dollar, which may be impacted by volatility in global economic conditions and political instability throughout the world.\n\nIncome Taxes.  We recorded income tax expense in 2025 of $0.2 million at an\neffective tax rate of (14.4%), compared to income tax expense in 2024 of $6.3 million at an effective tax rate of (176.4%).  Our tax expense in 2025 only included taxes associated with earnings in the United Kingdom and minimum required state taxes in\nthe United States. The effective tax rate for 2024 was unusually high due to 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 (See Note 11 – Income taxes to the accompanying consolidated financial statements). We continue to believe this tax valuation allowance is required as of December 31, 2025. As such, the Company has not recorded any U.S. federal tax benefits\nassociated with losses recorded in 2025.\n\nNet Loss.  As a result of the\nabove, we reported a net loss for the year ended December 31, 2025 of $1.2 million, or ($0.12) per diluted share, compared to a net loss of $9.9 million, or ($0.99) per diluted share in 2024.\n\nLiquidity and Capital Resources\n\nWe assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities.  Significant factors affecting\nthe management of liquidity are cash flows from operating activities, capital expenditures, the purchase of a copy of the source code and capitalized software development costs related to our BOHA! software, access to bank lines of credit and our\nability to attract long-term capital with satisfactory terms.\n\nInternal cash generation together with currently available cash and cash equivalents, available borrowing facilities and an ability to access credit lines at\nmarket-competitive rates, if needed, are expected to be sufficient to fund operations, capital expenditures, and any increase in working capital that would be required to accommodate our anticipated level of business activity for the 2025 fiscal year\nand beyond.\n\nDuring the third quarter of 2023, we began a cost reduction initiative to reduce our overall level of operating expenses that included reducing employee\nheadcount, trade show, advertising and other promotional marketing expenses, certain third-party engineering resources and other expenses, and to a lesser extent, certain general and administrative expenses. We estimated annual cost savings from these\ninitiatives to be approximately $3.0 million and we realized the full savings from these actions in 2024. We also began an additional cost reduction initiative in the second quarter of 2024 focused largely on further reducing employee headcount and\nother external third-party resources. Savings from this initiative were realized beginning in the third quarter of 2024 and resulted in approximately $2.0 million of savings on an annualized basis. Notwithstanding the foregoing, there is no assurance\nthat the cost-cutting efforts we have taken to bring expenses in line with our revenue and mitigate the impact of global economic conditions such as supply chain disruptions and inflation are sufficient or adequate, and we may be required to take\nadditional measures, as the ultimate extent of the effects of these risks on the Company, our financial condition, results of operations, liquidity, and cash flows are uncertain and are dependent on evolving developments which cannot be predicted at\nthis time.  See Part I, Item 1A, Risk Factors, of this Form 10-K for further discussion of risks related to global economic conditions, supply chain disruptions and inflation.\n\n27\n\n[Index](#INDEX)\n\nCash Flow\n\nDuring 2025, our cash balance increased $6.0 million, or 42% (versus an increase of $2.1 million in 2024) due primarily to operating activities, including a\nreduction in inventory of $5.4 million and an increase in accrued liabilities and other liabilities of $1.9 million. Investing activities used $1.6 million in cash, primarily attributed to capitalized software development costs. We had $20.4 million in\ncash and cash equivalents as of December 31, 2025, of which $310 thousand was held by our UK subsidiary.\n\nOperating activities: The following significant\nfactors primarily affected our cash provided by operating activities of $7.7 million in 2025 as compared to cash provided by operating activities of $1.9 million in 2024.\n\nFor 2025:\n\n•\n\nWe reported a net loss of $1.2 million.\n\n•\n\nWe recorded depreciation and amortization of $0.7 million and share-based compensation expense of $1.8 million.\n\n•\n\nInventory decreased $5.4 million despite higher sales in 2025 due to an inventory reduction program we put into place in the latter part of 2024.\n\n•\n\nAccrued liabilities and other liabilities increased $1.9 million due primarily to an increase in our employee bonus accrual.\n\n•\n\nAccounts payable decreased $1.0 million due to a reduction in inventory purchases and the timing of cash disbursements.\n\nFor 2024:\n\n•\n\nWe reported a net loss of $9.9 million.\n\n•\n\nWe recorded depreciation and amortization of $1.0 million and share-based compensation expense of $1.2 million.\n\n•\n\nWe recorded a decrease in our net deferred tax assets of $6.3 million due to an\nincome tax charge of $7.3 million related to the write down of our U.S. net deferred income tax asset.\n\n•\n\nAccounts receivable decreased $3.3 million primarily due to lower sales volume in 2024.\n\n•\n\nInventories decreased $1.6 million primarily due to lower sales volume in 2024.\n\n•\n\nAccrued liabilities and other liabilities decreased $1.8 million due to lower employee bonus and payroll accruals in 2024 compared to\n2023.\n\nInvesting activities:  Our capital expenditures were $0.1 million and $0.3 million in 2025 and 2024, respectively.  We also incurred $1.5 million in capitalized software development costs during 2025 related to our\npurchase of a copy of the source code related to our BOHA! line of products.\n\nFinancing activities:  Financing activities used $0.1\nmillion in 2025 related to withholding taxes paid on stock issuances while financing activities provided $0.6 million of cash in 2024 due primarily to proceeds received from the increase in the required minimum borrowings on our Siena Credit Facility.\n\nResource Sufficiency\n\nOver the past two years, we have been impacted by global supply chain issues, increased shipping costs, increased interest rates and inflationary pressures. \nAfter experiencing lingering effects of the COVID-19 pandemic through 2022, our operating results and operating cash flow improved significantly during 2023 due largely to certain competitors’ inability to supply products in both the POS automation and\ncasino and gaming markets.  In late 2023, we began to see indications of a temporary slowdown in demand in the casino and gaming market, as customers that had built up excess inventory due to supply chain concerns advised us that they would temporarily\nreduce orders until their stock normalized. This slowdown impacted our results in the fourth quarter of 2023 and during the year ended December 31, 2024. Given the continued uncertainty related to the impact of external factors on the food service and\ncasino industries, we continue to monitor our cash generation, usage and preservation including the management of working capital to generate cash.\n\nWe believe that our cash and cash equivalents on hand, our expected cash flows generated from operating activities, and borrowings available under our Siena\nCredit Facility will provide sufficient resources to meet our working capital needs, finance our capital expenditures,  fund the purchase of a copy of the source code and capitalized software development costs related to our BOHA! software, and meet\nour liquidity requirements through at least the next twelve months.  Notwithstanding this belief, the ultimate impact of current global economic pressures and uncertainty relating to tariffs, inflationary pressures and market instability is unknown.\n\nCredit Facility and Borrowings\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”)\nthat provides for a revolving credit line of up to $10.0 million, subject to a borrowing base based on 85% of eligible accounts receivable plus the lesser of (a) $5.0 million and (b) 50% of eligible raw material and 60% of finished goods inventory (the\n“Siena Credit Facility”). Borrowings under the Siena Credit Facility bear a floating rate of interest equal to the greatest of (i) the prime rate plus 1.75%, (ii) the federal funds rate plus 2.25%, and (iii) 6.50%. We also pay a fee of 0.50% on unused\nborrowings 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\nthe Siena Credit Facility, tested as of the end of each calendar month and restricts, among other things, our ability to incur additional indebtedness and create other liens. We have remained in compliance with our excess availability covenant through\nDecember 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\nany period during which the Lender has control of the Company’s deposit account in accordance with the Loan Agreement, to pay interest on at least $3.0 million principal amount of loans, whether or not such amount of loans is actually outstanding. The\nmaturity date of the Siena Credit Facility is March 31, 2027.\n\n28\n\n[Index](#INDEX)\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%,\nrespectively.  We had $3.8 million of net borrowing capacity available under the Siena Credit Facility at December 31, 2025.\n\nAs stated above, we continue to monitor our cash generation, usage and preservation including the management of working capital to generate cash and continue\nto evaluate alternative sources of funding as necessary.\n\nStock Repurchase Program\n\nDuring 2025 and 2024, we did not repurchase any shares of our common stock.\n\nShareholders’ Equity\n\nShareholders’ equity increased $0.5 million, or 2%, to $31.1 million at December 31, 2025 from $30.6 million at December 31, 2024.  The increase  was\nprimarily due to share-based compensation expense related to stock awards of $1.7 million (net of withholding taxes paid by relinquishment of shares) in 2025, partially offset by a net loss of $1.2 million in 2025."}