☒ |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
06-1456680
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
One Hamden Center,
2319 Whitney Avenue, Suite 3B, Hamden,
CT
|
06518
|
|
(Address of principal executive offices)
|
(Zip Code)
|
(203)
859-6800
|
(Registrant’s Telephone Number, Including Area Code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
||
Common stock, par value $0.01 per share
|
TACT
|
NASDAQ Global Market
|
Large accelerated filer □
|
Accelerated filer □
|
Non-accelerated filer ⌧
|
Smaller reporting company ☒
|
Emerging growth company ☐
|
PART I.
|
||
Item 1.
|
Business
|
1
|
Item 1A.
|
Risk Factors
|
8
|
Item 1B.
|
Unresolved Staff Comments
|
19
|
Item 2.
|
Properties
|
19
|
Item 3.
|
Legal Proceedings
|
19
|
Item 4.
|
Mine Safety Disclosures
|
19
|
PART II.
|
||
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
20
|
Item 6.
|
[Reserved]
|
20
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
20
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
30
|
Item 8.
|
Financial Statements and Supplementary Data
|
30
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
30
|
Item 9A.
|
Controls and Procedures
|
30
|
Item 9B.
|
Other Information
|
31
|
Item 9C.
|
Disclosure Regarding Foreign Jurisdiction that Prevent Inspections
|
31
|
PART III.
|
||
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
32
|
Item 11.
|
Executive Compensation
|
32
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
32
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
32
|
Item 14.
|
Principal Accounting Fees and Services
|
32
|
PART IV.
|
||
Item 15.
|
Exhibits and Financial Statement Schedules
|
33
|
Item 16.
|
Form 10-K Summary
|
35
|
SIGNATURES
|
||
Signatures
|
36
|
|
CONSOLIDATED FINANCIAL STATEMENTS
|
||
Index to Consolidated Financial Statements
|
F-1
|
● |
Public Offerings – On October 16, 2020 and August 16, 2021, the Company raised net proceeds
of $8.7 million and $11.2 million (including the exercise of the underwriters’ overallotment options on October 16, 2020 and August 20, 2021), respectively,
after deducting underwriting discounts, commissions and offering expenses, through underwritten public offerings and sold an aggregate of 1,380,000 and 842,375 shares of common stock, respectively.
|
● |
PPP Loan – On May 1, 2020, the Company was granted a $2.2 million loan (the “PPP Loan”) under
the Paycheck Protection Program (the “PPP”) administered by the Small Business Administration (“SBA”) established under Division A, Title I of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, which enabled us to return
employees we furloughed earlier in 2020 to full time employment and to restore employees to full pay following certain pay cuts. On July 8, 2021, we
received notice that the PPP Loan had been forgiven as of July 1, 2021.
|
● |
Employee Retention Credit – Under the provisions of the CARES Act, the Company is
eligible for a refundable employee retention credit subject to certain criteria. In connection with the CARES Act, the Company recognized the employee retention credit during the fourth quarter of 2021 and recorded $1.5 million as “Gain from
employee retention credit” in the Consolidated Statement of Operations and the related receivable as “Employee retention credit receivable”” in the Consolidated Balance Sheet as of December 31, 2021. We expect to receive these funds during
2022.
|
● |
New Credit Facility – On March 13, 2020, we entered into a new credit facility with Siena Lending Group LLC that provides a revolving credit line of up to $10.0 million,
subject to a borrowing base.
|
● |
Reduced Capital Expenditures – We limited capital expenditures during 2020 and gradually increased expenses during 2021 as our sales improved.
|
Name
|
Age
|
Position
|
||
Bart C. Shuldman
|
64
|
Chairman of the Board and Chief Executive Officer
|
||
Steven A. DeMartino
|
52
|
President, Chief Financial Officer, Treasurer and Secretary
|
||
Tracey S. Chernay
|
62
|
Senior Vice President, Casino, Gaming and Lottery Sales
|
||
Andrew J. Hoffman
|
64
|
Senior Vice President, Operations
|
||
David B. Peters
|
43
|
Vice President and Chief Accounting Officer
|
||
Brent Richtsmeier
|
57
|
Chief Technology Officer
|
● |
delays between our expenditures to develop and market new or enhanced products and consumables and the generation of sales from those products;
|
● |
the geographic distribution of our sales and our supply chain;
|
● |
market acceptance of our products, both domestically and internationally;
|
● |
development of new competitive products by others;
|
● |
our responses to price competition;
|
● |
our level of research and development activities;
|
● |
changes in the amount that we spend to develop, acquire or license new products, consumables, technologies or businesses;
|
● |
changes in the amount we spend to promote our products and services;
|
● |
changes in the cost of satisfying our warranty obligations and servicing our installed base of products;
|
● |
availability of third-party components at reasonable prices;
|
● |
general economic and industry conditions, including changes in interest rates affecting returns on cash balances and investments, that affect customer demand;
|
● |
the dependence of of our supply chain on a few, foreign third-party manufacturers and suppliers and the impact on our supply chain of product or component shortages and
cost increases due to events beyond our control, including the COVID-19 pandemic and political or social instability such as the ongoing Russia-Ukraine conflict;
|
● |
severe weather events, public health crises, military actions and other external events out of our control that can disrupt our operations or the operations of our
customers’ or suppliers’ facilities; and
|
● |
changes in accounting rules.
|
● |
operating losses in excess of those we anticipated in transitioning our business focus toward the food service technology market, which, in addition to the factors
discussed below, may require us to seek to obtain additional capital through debt or equity financings or other arrangements to fund operations, or if such arrangements are not available, to take additional significant cost-cutting measures;
|
● |
supply chain disruptions, including delayed product shipments from two contract manufacturers located in Thailand and China that conduct substantially all of our printer
and BOHA! hardware manufacturing, which, if sustained, could lead to insufficient inventory levels and harm our ability to deliver products to our customers on time or at all, and cost increases as a result of such supply chain disruptions;
|
● |
continuing or new restrictions on the operations of our customers in the casino industry and food service industry, including, in some cases, partial or complete business
shutdowns, which have resulted in, and are likely to continue to result in, reduced demand for our products in the two primary markets that we serve;
|
● |
an inability of our customers to make payments in a timely fashion or at all, in the event that the downturn in economic conditions persist;
|
● |
devotion of significant time, management attention and resources to monitoring the COVID-19 pandemic and its impacts, and anticipated impacts, on our business, and
seeking to mitigate the effects of the pandemic on our business and workforce, which diverts management’s attention and resources away from strategic initiatives, new business opportunities, the transition of our business toward the food
service and casino and gaming markets, and the overall profitability of our business;
|
● |
a possible future reduction in the value of goodwill or other intangible assets causing the carrying value of such assets to exceed their fair value, which could require
us to recognize asset impairment;
|
● |
difficulty predicting our manufacturing requirements accurately due to volatile economic conditions, which could result, in the case of an underestimate, in inadequate
manufacturing capacity or inventory, interruptions in production and delayed deliveries to customers (with resulting losses in orders or customers lowering our net sales), or in the case of an overestimate, in an excess inventory of component
parts or manufactured products;
|
● |
increases in prices and/or decreases in availability of component parts and raw materials needed to produce our products;
|
● |
foreign exchange rate fluctuations due to volatile global economic conditions, which could negatively affect earnings and the value of our assets held outside the United
States, and if we increase prices to absorb a portion of the currency impact, could cause demand to decrease;
|
● |
volatility of, and decreases in, trading prices of our common stock; and
|
● |
the possibility that we may need to raise additional capital through an equity or debt
financing to support operations but are unable to do so due to, among other things, global economic conditions, conditions in the global financing markets, trading prices of our common stock and the outlook for the industries that we serve, all
of which could be negatively impacted by the COVID-19 pandemic, such that there can be no assurance that such financing would be available to us.
|
● |
technologically advanced products that satisfy user demands;
|
● |
superior customer service;
|
● |
high levels of quality and reliability; and
|
● |
dependable and efficient distribution networks.
|
● |
loss of channel and the ability to bring new products to market;
|
● |
concentration of credit risk, including disruption in distribution should the distributors, and / or resellers’ financial condition deteriorate;
|
● |
reduced visibility to end user demand and pricing issues which makes forecasting more difficult;
|
● |
distributors or resellers leveraging their buying power to change the terms of pricing, payment and product delivery schedules; and
|
● |
direct competition should a distributor or reseller decide to manufacture printers internally or source printers from a competitor.
|
● |
the imposition of additional duties, tariffs, quotas, taxes, trade barriers, capital flow restrictions and other charges on imports and exports by the United States or
the governments of the countries in which we or our manufacturers and suppliers operate;
|
● |
delays in the delivery of cargo due to port security considerations, labor disputes such as dock strikes, and our reliance on a limited number of shipping and air
carriers, which may experience capacity issues that adversely affect our ability to ship inventory in a timely manner or for an acceptable cost;
|
● |
fluctuations in the value of the U.S. Dollar against foreign currencies, which could restrict sales, or increase costs of purchasing, in foreign countries;
|
● |
economic or political instability in any of the countries in which we or our manufacturers or suppliers operate, which could result in a reduction in demand for our
products due to political and economic instability or impair our foreign assets;
|
● |
a reduced ability or inability to sell in or purchase from certain markets as a result of export or import restrictions;
|
● |
potentially limited intellectual property protection in certain countries, such as China, may limit recourse against infringing products or cause us to refrain from
selling in certain geographic territories;
|
● |
reliance on a limited number of shipping and air carriers who may experience capacity issues that adversely affect our ability to ship inventory in a timely manner or for
an acceptable cost; and
|
● |
economic uncertainties and adverse economic conditions (including inflation and recession).
|
● |
merge, consolidate, form subsidiaries or dispose of assets;
|
● |
acquire assets outside the ordinary course of business;
|
● |
enter into other transactions outside the ordinary course of business;
|
● |
sell, transfer, return or dispose of collateral;
|
● |
make loans to or investments in, or enter into transactions with, affiliates;
|
● |
incur or guarantee indebtedness, incur liens;
|
● |
redeem equity interests while borrowings are outstanding under the credit facility;
|
● |
change our capital structure; or
|
● |
dissolve, divide, change our line of business or cease or suffer a disruption to all or a material portion of our business.
|
● |
prevailing domestic and international market and economic conditions, and conditions in the industries we serve, including current market volatility and the economic
impact of COVID-19 and resulting shutdowns on the casino and food service industries and on the U.S. and global economies;
|
● |
adverse business conditions faced by customers, or bankruptcies or store closures of our customers resulting from adverse economic conditions due to COVID-19 or
otherwise;
|
● |
changes in our business, operations or prospects;
|
● |
developments in our relationships with our customers or strategic partners;
|
● |
announcements of new products or services by us or by our competitors;
|
● |
announcement or completion of acquisitions by us or by our competitors;
|
● |
changes in existing or adoption of additional government regulations; and
|
● |
unfavorable or reduced analyst coverage.
|
Location
|
Operations Conducted
|
Size
(Approx. Sq. Ft.)
|
Owned
or Leased
|
Lease Expiration
Date
|
|||||
Hamden, Connecticut
|
Executive offices and sales office
|
11,100
|
Leased
|
October 31, 2025
|
|||||
Ithaca, New York
|
Hardware design and development, assembly and service facility
|
73,900
|
Leased
|
May 31, 2025
|
|||||
Las Vegas, Nevada
|
Software design and development and casino and gaming sales office
|
19,600
|
Leased
|
October 31, 2022
|
|||||
Doncaster, UK
|
Sales office and service center
|
6,000
|
Leased
|
August 26, 2026
|
|||||
Macau, China
|
Sales office
|
180
|
Leased
|
June 30, 2022
|
|||||
110,780
|
Year Ended
|
Year Ended
|
|||||||||||||||||||||||
(In thousands, except percentages)
|
December 31, 2021
|
December 31, 2020
|
$ Change
|
% Change
|
||||||||||||||||||||
Food service technology (“FST”)
|
$
|
12,625
|
32.1
|
%
|
$
|
7,734
|
25.3
|
%
|
$
|
4,891
|
63.2
|
%
|
||||||||||||
POS automation
|
4,825
|
12.2
|
%
|
3,770
|
12.3
|
%
|
1,055
|
28.0
|
%
|
|||||||||||||||
Casino and gaming
|
15,302
|
38.9
|
%
|
10,979
|
35.9
|
%
|
4,323
|
39.4
|
%
|
|||||||||||||||
Lottery
|
–
|
0.0
|
%
|
817
|
2.7
|
%
|
(817
|
)
|
(100.0
|
%)
|
||||||||||||||
Printrex
|
631
|
1.6
|
%
|
300
|
1.0
|
%
|
331
|
110.3
|
%
|
|||||||||||||||
TSG
|
6,003
|
15.2
|
%
|
6,995
|
22.8
|
%
|
(992
|
)
|
(14.2
|
%)
|
||||||||||||||
$
|
39,386
|
100.0
|
%
|
$
|
30,595
|
100.0
|
%
|
$
|
8,791
|
28.7
|
%
|
Year Ended
|
Year Ended
|
|||||||||||||||||||||||
(In thousands, except percentages)
|
December 31, 2021
|
December 31, 2020
|
$ Change
|
% Change
|
||||||||||||||||||||
Food service technology
|
$
|
12,625
|
32.1
|
%
|
$
|
7,734
|
25.3
|
%
|
$
|
4,891
|
63.2
|
%
|
||||||||||||
POS automation
|
4,825
|
12.2
|
%
|
3,770
|
12.3
|
%
|
1,055
|
28.0
|
%
|
|||||||||||||||
Casino and gaming
|
15,302
|
38.9
|
%
|
10,979
|
35.9
|
%
|
4,323
|
39.4
|
%
|
|||||||||||||||
Lottery
|
–
|
0.0
|
%
|
817
|
2.7
|
%
|
(817
|
)
|
(100.0
|
%)
|
||||||||||||||
Printrex
|
631
|
1.6
|
%
|
300
|
1.0
|
%
|
331
|
110.3
|
%
|
|||||||||||||||
TSG
|
6,003
|
15.2
|
%
|
6,995
|
22.8
|
%
|
(992
|
)
|
(14.2
|
%)
|
||||||||||||||
$
|
39,386
|
100.0
|
%
|
$
|
30,595
|
100.0
|
%
|
$
|
8,791
|
28.7
|
%
|
|||||||||||||
International*
|
$
|
6,986
|
17.7
|
%
|
$
|
5,862
|
19.2
|
%
|
$
|
1,124
|
19.2
|
%
|
* |
International sales do not include sales of products to domestic distributors or other customers who in turn ship those products to international destinations.
|
Year Ended
|
Year Ended
|
|||||||||||||||||||||||
(In thousands, except percentages)
|
December 31, 2021
|
December 31, 2020
|
$ Change
|
% Change
|
||||||||||||||||||||
Domestic
|
$
|
11,738
|
93.0
|
%
|
$
|
6,956
|
89.9
|
%
|
$
|
4,782
|
68.7
|
%
|
||||||||||||
International
|
887
|
7.0
|
%
|
778
|
10.1
|
%
|
109
|
14.0
|
%
|
|||||||||||||||
$
|
12,625
|
100.0
|
%
|
$
|
7,734
|
100.0
|
%
|
$
|
4,891
|
63.2
|
%
|
Year Ended
|
Year Ended
|
|||||||||||||||||||||||
(In thousands, except percentages)
|
December 31, 2021
|
December 31, 2020
|
$ Change
|
% Change
|
||||||||||||||||||||
Hardware
|
$
|
5,226
|
41.4
|
%
|
$
|
3,938
|
50.9
|
%
|
$
|
1,288
|
32.7
|
%
|
||||||||||||
Software, labels and other recurring revenue
|
7,399
|
58.6
|
%
|
3,796
|
49.1
|
%
|
3,603
|
94.9
|
%
|
|||||||||||||||
$
|
12,625
|
100.0
|
%
|
$
|
7,734
|
100.0
|
%
|
$
|
4,891
|
63.2
|
%
|
Year Ended
|
Year Ended
|
|||||||||||||||||||||||
(In thousands, except percentages)
|
December 31, 2021
|
December 31, 2020
|
$ Change
|
% Change
|
||||||||||||||||||||
Domestic
|
$
|
4,817
|
99.8
|
%
|
$
|
3,763
|
99.8
|
%
|
$
|
1,054
|
28.0
|
%
|
||||||||||||
International
|
8
|
0.2
|
%
|
7
|
0.2
|
%
|
1
|
14.3
|
%
|
|||||||||||||||
$
|
4,825
|
100.0
|
%
|
$
|
3,770
|
100.0
|
%
|
$
|
1,055
|
28.0
|
%
|
Year Ended
|
Year Ended
|
|||||||||||||||||||||||
(In thousands, except percentages)
|
December 31, 2021
|
December 31, 2020
|
$ Change
|
% Change
|
||||||||||||||||||||
Domestic
|
$
|
10,173
|
66.5
|
%
|
$
|
6,852
|
62.4
|
%
|
$
|
3,321
|
48.5
|
%
|
||||||||||||
International
|
5,129
|
33.5
|
%
|
4,127
|
37.6
|
%
|
1,002
|
24.3
|
%
|
|||||||||||||||
$
|
15,302
|
100.0
|
%
|
$
|
10,979
|
100.0
|
%
|
$
|
4,323
|
39.4
|
%
|
Year Ended
|
Year Ended
|
|||||||||||||||||||||||
(In thousands, except percentages)
|
December 31, 2021
|
December 31, 2020
|
$ Change
|
% Change
|
||||||||||||||||||||
Domestic
|
$
|
–
|
0.0
|
%
|
$
|
817
|
100.0
|
%
|
$
|
(817
|
)
|
(100.0
|
%)
|
|||||||||||
International
|
–
|
0.0
|
%
|
–
|
0.0
|
%
|
–
|
0.0
|
%
|
|||||||||||||||
$
|
–
|
0.0
|
%
|
$
|
817
|
100.0
|
%
|
$
|
(817
|
)
|
(100.0
|
%)
|
Year Ended
|
Year Ended
|
|||||||||||||||||||||||
(In thousands, except percentages)
|
December 31, 2021
|
December 31, 2020
|
$ Change
|
% Change
|
||||||||||||||||||||
Domestic
|
$
|
171
|
27.1
|
%
|
$
|
83
|
27.7
|
%
|
$
|
88
|
106.0
|
%
|
||||||||||||
International
|
460
|
72.9
|
%
|
217
|
72.3
|
%
|
243
|
112.0
|
%
|
|||||||||||||||
$
|
631
|
100.0
|
%
|
$
|
300
|
100.0
|
%
|
$
|
331
|
110.3
|
%
|
Year Ended
|
Year Ended
|
|||||||||||||||||||||||
(In thousands, except percentages)
|
December 31, 2021
|
December 31, 2020
|
$ Change
|
% Change
|
||||||||||||||||||||
Domestic
|
$
|
5,501
|
91.6
|
%
|
$
|
6,262
|
89.5
|
%
|
$
|
(761
|
)
|
(12.2
|
%)
|
|||||||||||
International
|
502
|
8.4
|
%
|
733
|
10.5
|
%
|
(231
|
)
|
(31.5
|
%)
|
||||||||||||||
$
|
6,003
|
100.0
|
%
|
$
|
6,995
|
100.0
|
%
|
$
|
(992
|
)
|
(14.2
|
%)
|
Year Ended December 31,
|
Percent
|
Percent of
|
Percent of
|
|||||||||||||||
2021
|
2020
|
Change
|
Total Sales - 2021
|
Total Sales - 2020
|
||||||||||||||
$
|
15,249
|
$
|
12,929
|
17.9
|
%
|
38.7
|
%
|
42.3
|
%
|
Year Ended December 31,
|
Percent
|
Percent of
|
Percent of
|
|||||||||||||||
2021
|
2020
|
Change
|
Total Sales - 2021
|
Total Sales - 2020
|
||||||||||||||
$
|
7,475
|
$
|
5,703
|
31.1
|
%
|
19.0
|
%
|
18.6
|
%
|
Year Ended December 31,
|
Percent
|
Percent of
|
Percent of
|
|||||||||||||||
2021
|
2020
|
Change
|
Total Sales - 2021
|
Total Sales - 2020
|
||||||||||||||
$
|
7,658
|
$
|
6,144
|
24.6
|
%
|
19.4
|
%
|
20.1
|
%
|
Year Ended December 31,
|
Percent
|
Percent of
|
Percent of
|
|||||||||||||||
2021
|
2020
|
Change
|
Total Sales - 2021
|
Total Sales - 2020
|
||||||||||||||
$
|
9,626
|
$
|
9,255
|
4.0
|
%
|
24.4
|
%
|
30.3
|
%
|
Year Ended December 31,
|
Percent
|
Percent of
|
Percent of
|
|||||||||||||||
2021
|
2020
|
Change
|
Total Sales – 2021
|
Total Sales – 2020
|
||||||||||||||
$
|
(9,510
|
)
|
$
|
(8,173
|
)
|
16.4
|
%
|
(24.1
|
%)
|
(26.7
|
%)
|
● |
We reported a net loss of $4.1 million.
|
● |
We recorded depreciation and amortization of $1.0 million and share-based compensation expense of $1.2 million.
|
● |
We recorded a gain of $2.2 million from the forgiveness of the PPP loan.
|
● |
Accounts receivable increased $4.2 million, or 125%, primarily due to increased sales volume during the fourth quarter of 2021.
|
● |
We recorded a receivable of $1.5 million for the employee retention credit that is expected to be collected during 2022.
|
● |
Inventories decreased $3.6 million, or 32%, primarily due to the utilization of inventory on hand to fulfill sales and significantly reduced inventory purchases
resulting from the supply chain disruptions caused by the COVID-19 pandemic.
|
● |
Prepaid income taxes decreased $2.2 million due to receiving an income tax refund in 2021 related to the net operating loss reported for 2020 that was carried back to
prior years as permitted by the CARES Act.
|
● |
Other current and long-term assets decreased $0.3 million, or 23%, primarily due to reduction of a contract asset related to a long-term BOHA! sales contract completed
in 2020.
|
● |
Accounts payable increased $2.5 million, or 150%, due to inventory purchases made
towards the end of the fourth quarter of 2021 to support expected 2022 sales.
|
● |
Accrued liabilities and other liabilities increased $0.6 million, or 7%, due primarily to increased deferred revenue.
|
● |
We reported a net loss of $5.6 million.
|
● |
We recorded depreciation and amortization of $1.3 million and share-based compensation expense of $0.9 million.
|
● |
Accounts receivable decreased $3 million, or 47%, primarily due to lower sales volume during the fourth quarter of 2020 compared to the fourth quarter of 2019 due to
the pandemic.
|
● |
Inventories decreased $0.9 million, or 7%, primarily due to the utilization of inventory on hand to fulfill sales in response to the pandemic.
|
● |
Prepaid income taxes increased $2.2 million due to an income tax refund, subsequently received in 2021, related to the net operating loss reported for 2020 that was
carried back to prior years as permitted by the CARES Act.
|
● |
Other current and long-term assets increased $0.2 million, or 19%, due primarily to recording a contract asset related to a long-term BOHA! sales contract which was
partially offset by the recognition of royalty expense that was prepaid in 2019 to a technology partner for food service technology.
|
● |
Accounts payable decreased $1.3 million, or 43%, due to inventory purchases made
towards the end of the fourth quarter of 2019 that were subsequently paid in the first quarter of 2020 and a lower level of inventory purchases during 2020 due to the pandemic.
|
● |
Accrued liabilities and other liabilities increased $0.2 million, or 3%, due primarily to an increase in accrued inventive compensation.
|
Plan category
|
(a)
Number of securities to be
issued upon exercise of outstanding
options, warrants and rights
|
(b)
Weighted-average exercise price
of outstanding options, warrants and rights
|
(c)
Number of securities remaining available for
future issuance under equity compensation plans
(excluding securities reflected in column (a)
|
|||||||||
Equity compensation plans approved by security holders:
|
||||||||||||
2005 Equity Incentive Plan
|
195,500
|
$
|
9.52
|
–
|
||||||||
2014 Equity Incentive Plan
|
1,229,080
|
7.97
|
611,652
|
|||||||||
Total
|
1,424,580
|
$
|
8.18
|
611,652
|
(a)
|
The following documents are filed as part of this Form 10-K:
|
1.
|
Financial Statements.
|
Report of Independent Registered Public Accounting Firm
|
Consolidated Balance Sheets as of December 31, 2021 and 2020
|
Consolidated Statements of Operations for the years ended December 31, 2021 and 2020
|
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2021 and 2020
|
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2021 and 2020
|
Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020
|
Notes to Consolidated Financial Statements
|
2.
|
Schedules.
|
Certificate of Incorporation of TransAct Technologies Incorporated (conformed copy) (incorporated by reference to Exhibit 3(i)
of the Company’s Quarterly Report on Form 10-Q (SEC File No. 000-21121) filed with the SEC on August 9, 2019).
|
|
Certificate of Designation, Series A Preferred Stock, filed with the Secretary of State of Delaware on December 2, 1997
(incorporated by reference to Exhibit C of the Company’s Current Report on Form 8-K (SEC File No. 000-21121) filed with the SEC on February 18, 1999).
|
|
Certificate of Designation, Series B Preferred Stock, filed with the Secretary of State of Delaware on April 6, 2000
(incorporated by reference to Exhibit 3.1(c) of the Company’s Quarterly Report on Form 10-Q (SEC File No. 000-21121) filed with the SEC on May 8, 2000).
|
|
Amended and Restated By-laws of the Company (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form
8-K (SEC File No. 000-21121) filed with the SEC on August 2, 2019).
|
|
Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 of the Company’s Registration Statement on Form
S-1/A (No. 333-06895) filed with the SEC on August 1, 1996).
|
|
Description of Securities (incorporated by
reference to Exhibit 4.2 of the Company’s Annual Report on Form 10-K (SEC File No.
000-21121) filed with the SEC on March 16, 2020).
|
|
10.1(x)
|
2005 Equity Incentive Plan (incorporated by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K (SEC File No.
000-21121) filed with the SEC on June 1, 2005).
|
10.2(x)
|
TransAct Technologies Incorporated 2014 Equity Incentive Plan, as Amended and Restated (incorporated by reference to Exhibit I
to the Definitive Proxy Statement on Schedule 14A filed with the Commission on April 23, 2020, File No. 000-21121).
|
10.3(x)
|
2014 Equity Incentive Plan Time-based Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.2 of the
Company’s Quarterly Report on Form 10-Q (SEC File No. 000-21121) filed with the SEC on May 6, 2016).
|
10.4(x)
|
2014 Equity Incentive Plan Performance-based Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.1 of the
Company’s Quarterly Report on Form 10-Q (SEC File No. 000-211121) filed with the SEC on August 8, 2016).
|
10.5(x) | 2014 Equity Incentive Plan Nonstatutory Stock Option Agreement (incorproated by reference to Exhibit 10.2 of the Company's current
Report on Form 8-K (SEC File No. 000-21121) filed with the SEC on May 19, 2014). |
10.6(x)
|
Employment Agreement, dated July 31, 1996, by and between TransAct and Bart C. Shuldman (incorporated by reference to Exhibit
10.20 of the Company’s Registration Statement on Form S-1/A (No. 333-06895) filed with the SEC on August 1, 1996).
|
10.7(x)
|
Severance Agreement by and between TransAct and Steven A. DeMartino, dated June 1, 2004 (incorporated by reference to Exhibit
10.8 of the Company’s Annual Report on Form 10-K (SEC File No. 000-21121) filed with the SEC on March 16, 2005).
|
10.8(x)
|
Amendment to Employment Agreement, effective January 1, 2008, by and between TransAct and Bart C. Shuldman (incorporated by
reference to Exhibit 10.10 of the Company’s Annual Report on Form 10-K (SEC File No. 000-21121) filed with the SEC on March 16, 2009).
|
10.9(x)
|
Amendment to Severance Agreement by and between TransAct and Steven A. DeMartino, effective January 1, 2008 (incorporated by
reference to Exhibit 10.12 of the Company’s Annual Report on Form 10-K (SEC File No. 000-21121) filed with the SEC on March 16, 2009).
|
10.10(x)‡ | Severance Agreement by and between TransAct and Andrew J. Hoffman (as amended), effective December 23, 2008. |
10.11(x)‡ | Second Amendment to Severance Agreement by and between TransAct and Steven A. DeMartino, effective April 29, 2021
|
Lease Agreement by and between Bomax Properties and Ithaca, dated as of March 23, 1992 (incorporated by reference to Exhibit
10.14 of the Company’s Registration Statement on Form S-1 (No. 333-06895) filed with the SEC on June 26, 1996).
|
|
Second Amendment to Lease Agreement by and between Bomax Properties and Ithaca, dated December 2, 1996 (incorporated by reference to Exhibit 10.27 of the Company’s Annual Report on Form 10-K (SEC File No. 000-21121) filed with the SEC on March 31, 1998).
|
Agreement regarding the Continuation and Renewal of Lease by and between Bomax Properties, LLC and TransAct, dated July 18,
2001 (incorporated by reference to Exhibit 10.8 of the Company’s Annual Report on Form 10-K (SEC File No. 000-21121) filed with the SEC on March 29, 2002).
|
|
Amendment No. 1 to Lease Agreement between Bomax Properties, LLC and TransAct (incorporated by reference to Exhibit 10.16 of
the Company’s Quarterly Report on Form 10-Q (SEC File No. 000-21121) filed with the SEC on May 10, 2012).
|
|
Amendment No. 2 to Lease Agreement between Bomax Properties, LLC and TransAct, dated January 14, 2016 (incorporated by
reference to Exhibit 10.13 of the Company’s Annual Report on Form 10-K (SEC File No. 000-21121) filed with the SEC on March 11, 2016).
|
|
Amendment No. 3 to Lease Agreement between Bomax Properties, LLC and TransAct, dated February 28, 2020 (incorporated by
reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (SEC File No. 000-21121) filed with the SEC on March 4, 2020).
|
|
Lease Agreement by and between Las Vegas Airport Properties LLC and TransAct dated December 2, 2004 (incorporated by reference
to Exhibit 10.13 of the Company’s Annual Report on Form 10-K (SEC File No. 000-21121) filed with the SEC on March 16, 2005).
|
|
First Amendment to Lease Agreement by and between CIP Hughes Center LLC and TransAct dated August 24, 2009 (incorporated by
reference to Exhibit 10.19 of the Company’s Annual Report on Form 10-K (SEC File No. 000-21121) filed with the SEC on March 16, 2010).
|
|
Second Amendment to Lease Agreement by and between The Realty Associates Fund IX LP and TransAct dated June 30, 2015
(incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q (SEC File No. 000-21121) filed with the SEC on August 7, 2015).
|
|
Lease Agreement by and between 2319 Hamden Center I, L.L.C. and TransAct dated November 27, 2006 (incorporated by reference to
Exhibit 10.14 of the Company’s Annual Report on Form 10-K (SEC File No. 000-21121) filed with the SEC on March 15, 2007).
|
|
First Amendment to Lease by and between 2319 Hamden Center I, L.L.C. and TransAct dated January 3, 2017 (incorporated by
reference to Exhibit 10.20 of the Company’s Annual Report on Form 10-K (SEC File No. 000-21121) filed with the SEC on March 16, 2017).
|
|
Second Amendment to Lease by and between 2319 Hamden Center I, L.L.C. and TransAct Technologies dated April 30, 2021
(incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q (SEC File No. 000-21121) filed with the SEC on May 13, 2021).
|
|
Loan and Security Agreement, dated as of March 13, 2020, among Siena Lending Group LLC, TransAct Technologies Incorporated and
the other Loan Parties from time to time party thereto (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q (SEC File No. 000-21121) filed with the SEC on May 22, 2020).
|
|
Amendment No. 1 To Loan and Security Agreement, dated as of July 21, 2021, among Siena Lending Group and TransAct Technologies
Incorporated (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K (SEC File No. 000-21121) filed with the SEC on July 26, 2021)
|
|
Master License Agreement dated February 22, 2019 and amendments thereto (incorporated by reference to Exhibit 10.24 to the
Company’s Annual Report on Form 10-K (SEC File No. 000-21121) filed with the SEC on March 12, 2021).
|
|
Master Development and License Agreement dated July 20, 2018 (incorporated by reference to Exhibit 10.25 to the Company’s Annual
Report on Form 10-K (SEC File No. 000-21121) filed with the SEC on March 12, 2021).
|
|
Subsidiaries of the Company(incorporated by reference to Exhibit 21 to the Company’s Annual Report on Form 10-K (SEC File No.
000-21121) filed with the SEC on March 12, 2021).
|
|
23.1*
|
Consent of Marcum LLP
|
31.1*
|
Rule 13a-14(a) Certification of Chief Executive Officer in accordance with Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2*
|
Rule 13a-14(a) Certification of Chief Financial Officer in accordance with Section 302 of the Sarbanes-Oxley Act of 2002.
|
32‡
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS
|
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are
embedded within the Inline XBRL document).
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
104
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
|
(x) |
Management contract or compensatory plan or arrangement.
|
* |
These exhibits are filed herewith.
|
† |
Certain portions of this exhibit (indicated by “[***]”) have been omitted pursuant to Item (601)(b)(10) of Regulation S-K.
|
‡ |
Furnished herewith.
|
(b)
|
Exhibits.
|
(c)
|
Financial Statement Schedules.
|
TRANSACT TECHNOLOGIES INCORPORATED
|
||
By:
|
/s/ Bart C. Shuldman
|
|
Name:
|
Bart C. Shuldman
|
|
Title:
|
Chairman of the Board and Chief Executive Officer
|
Signature
|
Title
|
Date
|
||||
/s/ Bart C. Shuldman
|
Chairman of the Board and Chief Executive Officer
|
March 24, 2022
|
||||
Bart C. Shuldman
|
(Principal Executive Officer)
|
|||||
/s/ Steven A. DeMartino
|
President, Chief Financial Officer, Treasurer and Secretary
|
March 24, 2022
|
||||
Steven A. DeMartino
|
(Principal Financial Officer)
|
|||||
/s/ David B. Peters
|
Vice President and Chief Accounting Officer
|
March 24, 2022
|
||||
David B. Peters
|
(Principal Accounting Officer)
|
|||||
/s/ John M. Dillon
|
Director
|
March 24, 2022
|
||||
John M. Dillon
|
||||||
/s/ Randall S. Friedman
|
Director
|
March 24, 2022
|
||||
Randall S. Friedman
|
||||||
/s/ Emanuel P. N. Hilario
|
Director
|
March 24, 2022
|
||||
Emanuel P. N. Hilario
|
||||||
/s/ Haydee Olinger
|
Director
|
March 24, 2022
|
||||
Haydee Olinger
|
Financial Statements
|
||
Report of Independent Registered Public Accounting Firm (PCAOB ID
) |
F-2
|
|
Consolidated Balance Sheets as of December 31, 2021 and 2020
|
F-4
|
|
Consolidated Statements of Operations for the years ended December 31, 2021 and 2020
|
F-5
|
|
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2021 and 2020
|
F-6
|
|
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2021 and 2020
|
F-7
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020
|
F-8
|
|
Notes to Consolidated Financial Statements
|
F-9
|
December 31,
2021
|
December 31,
2020
|
|||||||
Assets:
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
19,457
|
$
|
10,359
|
||||
Accounts receivable, net
|
7,593
|
3,377
|
||||||
Employee retention credit receivable
|
1,500
|
–
|
||||||
Note receivable
|
–
|
100
|
||||||
Inventories
|
7,720
|
11,286
|
||||||
Prepaid income taxes
|
137
|
2,409
|
||||||
Other current assets
|
738
|
644
|
||||||
Total current assets
|
37,145
|
28,175
|
||||||
Fixed assets, net
|
2,684
|
1,950
|
||||||
Notes receivable, net of current portion
|
–
|
1,584
|
||||||
Right-of-use asset
|
2,553
|
3,618
|
||||||
Goodwill
|
2,621
|
2,621
|
||||||
Deferred tax assets
|
5,141
|
2,939
|
||||||
Intangible assets, net
|
397
|
583
|
||||||
Other assets
|
400
|
777
|
||||||
13,796
|
14,072
|
|||||||
Total assets
|
$
|
50,941
|
$
|
42,247
|
||||
Liabilities and Shareholders’ Equity:
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
4,308
|
$
|
1,691
|
||||
Accrued liabilities
|
3,894
|
3,665
|
||||||
Lease liability
|
789
|
837
|
||||||
Deferred revenue
|
805
|
504
|
||||||
Total current liabilities
|
9,796
|
6,697
|
||||||
Long-term debt
|
–
|
2,173
|
||||||
Deferred revenue, net of current portion
|
186
|
111
|
||||||
Lease liability, net of current portion
|
1,781
|
2,864
|
||||||
Other liabilities
|
187
|
166
|
||||||
2,154
|
5,314
|
|||||||
Total liabilities
|
11,950
|
12,011
|
||||||
Commitments and contingencies
|
|
|
||||||
Shareholders’ equity:
|
||||||||
Preferred stock, $0.01 value, 4,800,000 authorized, none issued and outstanding
|
–
|
–
|
||||||
Preferred stock, Series A, $0.01 par value, 200,000 authorized, none issued and outstanding
|
–
|
–
|
||||||
Common stock, $0.01 par value, 20,000,000 authorized at December 31, 2021 and 2020; 13,917,731 and 12,976,227 shares
issued; 9,872,889 and 8,931,385
shares outstanding, at December 31, 2021 and 2020, respectively
|
139
|
130
|
||||||
Additional paid-in capital
|
55,246
|
42,536
|
||||||
Retained earnings
|
15,573
|
19,718
|
||||||
Accumulated other comprehensive income (loss), net of tax
|
143
|
(38
|
)
|
|||||
Treasury stock, 4,044,842 shares, at cost
|
(32,110
|
)
|
(32,110
|
)
|
||||
Total shareholders’ equity
|
38,991
|
30,236
|
||||||
Total liabilities and shareholders’ equity
|
$
|
50,941
|
$
|
42,247
|
Year Ended December 31,
|
||||||||
2021
|
2020
|
|||||||
Net sales
|
$
|
39,386
|
$
|
30,595
|
||||
Cost of sales
|
24,137
|
17,666
|
||||||
Gross profit
|
15,249
|
12,929
|
||||||
Operating expenses:
|
||||||||
Engineering, design and product development
|
7,475
|
5,703
|
||||||
Selling and marketing
|
7,658
|
6,144
|
||||||
General and administrative
|
9,626
|
9,255
|
||||||
24,759
|
21,102
|
|||||||
Operating loss
|
(9,510
|
)
|
(8,173
|
)
|
||||
Interest and other income (expense):
|
||||||||
Interest expense
|
(157
|
)
|
(130
|
)
|
||||
Interest income
|
61
|
78
|
||||||
Other, net
|
(283
|
)
|
56
|
|||||
Gain from employee retention credit
|
1,500
|
–
|
||||||
Gain on forgiveness of long-term debt
|
2,173
|
–
|
||||||
3,294
|
4
|
|||||||
Loss before income taxes
|
(6,216
|
)
|
(8,169
|
)
|
||||
Income tax benefit
|
2,071
|
2,539
|
||||||
Net loss
|
$
|
(4,145
|
)
|
$
|
(5,630
|
)
|
||
Net loss per common share:
|
||||||||
Basic
|
$
|
(0.45
|
)
|
$
|
(0.72
|
)
|
||
Diluted
|
$
|
(0.45
|
)
|
$
|
(0.72
|
)
|
||
Shares used in per-share calculation:
|
||||||||
Basic
|
9,298
|
7,827
|
||||||
Diluted
|
9,298
|
7,827
|
Year Ended December 31,
|
||||||||
2021
|
2020
|
|||||||
Net loss
|
$
|
(4,145
|
)
|
$
|
(5,630
|
)
|
||
Foreign currency translation adjustment, net of tax
|
181
|
(7
|
)
|
|||||
Comprehensive loss
|
$
|
(3,964
|
)
|
$
|
(5,637
|
)
|
Common Stock
|
Additional
Paid-in
|
Retained
|
Treasury
|
Accumulated
Other
Comprehensive
|
Total
|
|||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
Stock
|
Income (Loss)
|
Equity
|
||||||||||||||||||||||
Balance, January 1, 2020
|
7,470,248
|
$
|
115
|
$
|
32,604
|
$
|
25,348
|
$
|
(32,110
|
)
|
$
|
(31
|
)
|
$
|
25,926
|
|||||||||||||
Issuance of common stock from exercise of stock options
|
62,500
|
1
|
374
|
–
|
–
|
–
|
375
|
|||||||||||||||||||||
Issuance of common stock on restricted stock units
|
32,725
|
–
|
–
|
–
|
–
|
–
|
–
|
|||||||||||||||||||||
Issuance of common stock, net of issuance cost
|
1,380,000
|
14
|
8,723
|
–
|
–
|
–
|
8,737
|
|||||||||||||||||||||
Relinquishment of stock awards and deferred stock units to pay withholding taxes
|
(14,088
|
)
|
–
|
(41
|
)
|
–
|
–
|
–
|
(41
|
)
|
||||||||||||||||||
Share-based compensation expense
|
–
|
–
|
876
|
–
|
–
|
–
|
876
|
|||||||||||||||||||||
Foreign currency translation adjustment, net of tax
|
–
|
–
|
–
|
–
|
–
|
(7
|
)
|
(7
|
)
|
|||||||||||||||||||
Net loss
|
–
|
–
|
–
|
(5,630
|
)
|
–
|
–
|
(5,630
|
)
|
|||||||||||||||||||
Balance, December 31, 2020
|
8,931,385
|
130
|
42,536
|
19,718
|
(32,110
|
)
|
(38
|
)
|
30,236
|
|||||||||||||||||||
Issuance of common stock from exercise of stock options
|
97,000
|
–
|
436
|
–
|
–
|
–
|
436
|
|||||||||||||||||||||
Issuance of common stock on restricted stock units
|
50,525
|
–
|
–
|
–
|
–
|
–
|
–
|
|||||||||||||||||||||
Issuance of common stock, net of issuance cost
|
842,375
|
9
|
11,201
|
–
|
–
|
–
|
11,210
|
|||||||||||||||||||||
Relinquishment of stock awards and deferred stock units to pay withholding taxes
|
(48,396
|
)
|
–
|
(133
|
)
|
–
|
–
|
–
|
(133
|
)
|
||||||||||||||||||
Share-based compensation expense
|
–
|
–
|
1,206
|
–
|
–
|
–
|
1,206
|
|||||||||||||||||||||
Foreign currency translation adjustment, net of tax
|
–
|
–
|
–
|
–
|
–
|
181
|
181
|
|||||||||||||||||||||
Net loss
|
–
|
–
|
–
|
(4,145
|
)
|
–
|
–
|
(4,145
|
)
|
|||||||||||||||||||
Balance, December 31, 2021
|
9,872,889
|
$
|
139
|
$
|
55,246
|
$
|
15,573
|
$
|
(32,110
|
)
|
$
|
143
|
$
|
38,991
|
Year Ended December 31,
|
||||||||
2021
|
2020
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$
|
(4,145
|
)
|
$
|
(5,630
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Share-based compensation expense
|
1,206
|
876
|
||||||
Depreciation and amortization
|
957
|
1,342
|
||||||
Deferred income tax benefit
|
(2,150
|
)
|
(367
|
)
|
||||
Loss on the sale of fixed assets
|
9
|
–
|
||||||
Foreign currency transaction losses (gains)
|
272
|
(58
|
)
|
|||||
Gain on forgiveness of long-term debt
|
(2,173
|
)
|
–
|
|||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(4,217
|
)
|
2,975
|
|||||
Employee retention credit receivable
|
(1,500
|
)
|
–
|
|||||
Inventories
|
3,573
|
876
|
||||||
Prepaid income taxes
|
2,210
|
(2,226
|
)
|
|||||
Other current and long-term assets
|
322
|
(198
|
)
|
|||||
Accounts payable
|
2,534
|
(1,276
|
)
|
|||||
Accrued liabilities and other liabilities
|
592
|
176
|
||||||
Net cash used in operating activities
|
(2,510
|
)
|
(3,510
|
)
|
||||
Cash flows from investing activities:
|
||||||||
Capital expenditures
|
(1,384
|
)
|
(744
|
)
|
||||
Proceeds from the sale of fixed assets
|
8
|
–
|
||||||
Collection (issuance) of note receivable
|
1,598
|
(600
|
)
|
|||||
Net cash provided by (used in) investing activities
|
222
|
(1,344
|
)
|
|||||
Cash flows from financing activities:
|
||||||||
Revolving credit line borrowings
|
–
|
2,756
|
||||||
Revolving credit line payments
|
–
|
(2,756
|
)
|
|||||
Long-term debt borrowings
|
–
|
2,173
|
||||||
Proceeds from stock option exercises
|
436
|
375
|
||||||
Proceeds from the issuance of common stock
|
12,214
|
9,798
|
||||||
Payment of common stock issuance costs
|
(1,014
|
)
|
(1,061
|
)
|
||||
Withholding taxes paid on stock issuance
|
(133
|
)
|
(41
|
)
|
||||
Payment of bank financing costs
|
(31
|
)
|
(213
|
)
|
||||
Net cash provided by financing activities
|
11,472
|
11,031
|
||||||
Effect of exchange rate changes on cash and cash equivalents
|
(86
|
)
|
(21
|
)
|
||||
Increase in cash and cash equivalents
|
9,098
|
6,156
|
||||||
Cash and cash equivalents, beginning of period
|
10,359
|
4,203
|
||||||
Cash and cash equivalents, end of period
|
$
|
19,457
|
$
|
10,359
|
||||
Supplemental cash flow information:
|
||||||||
Interest paid
|
$
|
76
|
$
|
64
|
||||
Income taxes paid
|
57
|
46
|
||||||
Non-cash capital expenditure items
|
82
|
25
|
● |
Public Offering – On October 16, 2020 and August 16, 2021, the Company raised net proceeds of
$8.7 million and $11.2 million (including the exercise of the underwriters
overallotment options on October 16, 2020 and August 20, 2021), respectively, after deducting underwriting discounts, commissions and offering expenses, through
underwritten public offerings and sold an aggregate of 1,380,000 and 842,375 shares of common
stock, respectively.
|
● |
PPP Loan – On May 1, 2020, the Company was granted a $2.2 million loan (the “PPP Loan”) under the Paycheck Protection Program
(the “PPP”) administered by the Small Business Administration (“SBA”) established under Division A, Title I of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, which enabled us to return employees we furloughed earlier in
2020 to full time employment and to restore employees to full pay following certain pay cuts. On July 8, 2021, we received notice that the PPP Loan
had been forgiven as of July 1, 2021. See Note 9 for further details regarding the PPP Loan.
|
● |
Employee Retention Credit – Under the provisions of the CARES Act, the Company is
eligible for a refundable employee retention credit subject to certain criteria. In connection with the CARES Act, the Company recognized the employee retention credit during the fourth quarter of 2021 and recorded $1.5 million as “Gain from employee retention credit” in the Consolidated Statement of Operations for the year ended December 31, 2021 and the
related receivable as “Employee retention credit receivable” in the Consolidated Balance Sheets as of December 31, 2021. We expect to receive these funds during 2022.
|
● |
New Credit Facility – On March 13, 2020, we entered into a new credit facility with Siena
Lending Group LLC that provides a revolving credit line of up to $10.0 million, subject to a borrowing base.
|
● |
Reduced Capital Expenditures – We limited capital expenditures during 2020 and gradually increased expenses during 2021 as our sales improved.
|
Year Ended December 31,
|
||||||||
(In thousands)
|
2021
|
2020
|
||||||
Balance, beginning of period
|
$
|
220
|
$
|
221
|
||||
Additions charged to costs and expenses
|
–
|
1
|
||||||
Deductions
|
(1
|
)
|
(2
|
)
|
||||
Balance, end of period
|
$
|
219
|
$
|
220
|
Year Ended December 31, 2021
|
||||||||||||
(In thousands)
|
United States
|
International
|
Total
|
|||||||||
Food service technology
|
$
|
11,738
|
$
|
887
|
$
|
12,625
|
||||||
POS automation
|
4,817
|
8
|
4,825
|
|||||||||
Casino and gaming
|
10,173
|
5,129
|
15,302
|
|||||||||
Printrex
|
171
|
460
|
631
|
|||||||||
TransAct Services Group
|
5,501
|
502
|
6,003
|
|||||||||
Total net sales
|
$
|
32,400
|
$
|
6,986
|
$
|
39,386
|
Year Ended December 31, 2020
|
||||||||||||
(In thousands)
|
United States
|
International
|
Total
|
|||||||||
Food service technology
|
$
|
6,956
|
$
|
778
|
$
|
7,734
|
||||||
POS automation
|
3,763
|
7
|
3,770
|
|||||||||
Casino and gaming
|
6,852
|
4,127
|
10,979
|
|||||||||
Lottery
|
817
|
–
|
817
|
|||||||||
Printrex
|
83
|
217
|
300
|
|||||||||
TransAct Services Group
|
6,262
|
733
|
6,995
|
|||||||||
Total net sales
|
$
|
24,733
|
$
|
5,862
|
$
|
30,595
|
December 31,
|
||||||||
(In thousands)
|
2021
|
2020
|
||||||
Unbilled receivables, current
|
$
|
314
|
$
|
290
|
||||
Unbilled receivables, non-current
|
308
|
591
|
||||||
Customer pre-payments
|
(99
|
)
|
(216
|
)
|
||||
Deferred revenue, current
|
(805
|
)
|
(504
|
)
|
||||
Deferred revenue, non-current
|
(186
|
)
|
(111
|
)
|
||||
Net contract (liabilities) assets
|
$
|
(468
|
)
|
$
|
50
|
December 31,
|
||||||||
2021
|
2020
|
|||||||
Chain Link Services
|
10
|
%
|
–
|
|||||
International Gaming Technology (“IGT”)
|
3
|
%
|
11
|
%
|
||||
NCR Corporation
|
11
|
%
|
2
|
%
|
December 31,
|
||||||||
2021
|
2020
|
|||||||
IGT
|
9
|
%
|
15
|
%
|
December 31,
|
||||||||
(In thousands)
|
2021
|
2020
|
||||||
Balance, beginning of period
|
$
|
140
|
$
|
215
|
||||
Warranties issued
|
44
|
56
|
||||||
Warranty settlements
|
(83
|
)
|
(131
|
)
|
||||
Balance, end of period
|
$
|
101
|
$
|
140
|
December 31,
|
||||||||
(In thousands)
|
2021
|
2020
|
||||||
Raw materials and purchased component parts
|
$
|
6,479
|
$
|
5,467
|
||||
Work-in-process
|
11
|
–
|
||||||
Finished goods
|
1,230
|
5,819
|
||||||
$
|
7,720
|
$
|
11,286
|
December 31,
|
||||||||
(In thousands)
|
2021
|
2020
|
||||||
Tooling, machinery and equipment
|
$
|
6,694
|
$
|
9,508
|
||||
Furniture and office equipment
|
1,660
|
1,706
|
||||||
Computer software and equipment
|
6,973
|
7,364
|
||||||
Leasehold improvements
|
2,872
|
2,873
|
||||||
18,199
|
21,451
|
|||||||
Less: Accumulated depreciation and amortization
|
(16,736
|
)
|
(19,979
|
)
|
||||
1,463
|
1,472
|
|||||||
Construction in-process
|
1,221
|
478
|
||||||
$
|
2,684
|
$
|
1,950
|
December 31,
|
||||||||||||||||
2021
|
2020
|
|||||||||||||||
(In thousands)
|
Gross Amount
|
Accumulated Amortization
|
Gross Amount
|
Accumulated Amortization
|
||||||||||||
Purchased technology
|
$
|
1,591
|
$
|
(1,195
|
)
|
$
|
2,526
|
$
|
(1,975
|
)
|
||||||
Customer relationships
|
–
|
–
|
1,300
|
(1,300
|
)
|
|||||||||||
Trademark
|
–
|
–
|
480
|
(450
|
)
|
|||||||||||
Covenant not to compete
|
–
|
–
|
146
|
(146
|
)
|
|||||||||||
Patents
|
15
|
(14
|
)
|
56
|
(54
|
)
|
||||||||||
Other
|
–
|
–
|
80
|
(80
|
)
|
|||||||||||
Total
|
$
|
1,606
|
$
|
(1,209
|
)
|
$
|
4,588
|
$
|
(4,005
|
)
|
December 31,
|
||||||||
(In thousands)
|
2021
|
2020
|
||||||
Salaries and compensation related
|
$
|
2,854
|
$
|
2,328
|
||||
Warranty
|
79
|
112
|
||||||
Professional and consulting
|
285
|
257
|
||||||
Other
|
676
|
968
|
||||||
$
|
3,894
|
$
|
3,665
|
December 31,
|
||||||||
2021
|
2020
|
|||||||
Expected option term (in years)
|
6.9
|
7.0
|
||||||
Expected volatility
|
50.5
|
%
|
41.7
|
%
|
||||
Risk-free interest rate
|
1.2
|
%
|
0.9
|
%
|
||||
Dividend yield
|
0.0
|
%
|
0.0
|
%
|
Stock Options
|
Restricted Stock Units
|
|||||||||||||||
Number of Shares
|
Average Price*
|
Number of Units
|
Average Price**
|
|||||||||||||
Outstanding at December 31, 2020
|
1,287,605
|
$
|
8.98
|
110,550
|
$
|
10.30
|
||||||||||
Granted
|
153,000
|
10.55
|
95,200
|
10.27
|
||||||||||||
Exercised
|
(97,000
|
)
|
8.47
|
(50,525
|
)
|
10.29
|
||||||||||
Forfeited
|
(45,750
|
)
|
8.87
|
–
|
–
|
|||||||||||
Expired
|
(28,500
|
)
|
10.22
|
–
|
–
|
|||||||||||
Outstanding at December 31, 2021
|
1,269,355
|
$
|
9.18
|
155,225
|
$
|
10.28
|
* |
weighted average exercise price per share
|
** |
weighted average grant stock price per share
|
Equity Awards Vested and Expected to Vest
|
Equity Awards That Are Exercisable
|
|||||||||||||||||||||||||||||||
Awards
|
Average Price*
|
Aggregate Intrinsic Value
|
Remaining Term**
|
Awards
|
Average Price*
|
Aggregate Intrinsic Value
|
Remaining Term**
|
|||||||||||||||||||||||||
Stock Options
|
1,269,355
|
$
|
9.18
|
$
|
2,662
|
5.6
|
856,723
|
$
|
9.00
|
$
|
1,982
|
4.1
|
||||||||||||||||||||
Restricted stock units
|
132,518
|
–
|
1,444
|
2.2
|
–
|
–
|
–
|
–
|
* |
weighted average exercise price per share
|
** |
weighted-average contractual remaining term in years
|
December 31,
|
||||||||
(In thousands)
|
2021
|
2020
|
||||||
Current:
|
||||||||
Federal
|
$
|
26
|
$
|
(2,141
|
)
|
|||
State
|
51
|
17
|
||||||
Foreign
|
2
|
(48
|
)
|
|||||
79
|
(2,172
|
)
|
||||||
Deferred:
|
||||||||
Federal
|
(2,086
|
)
|
(483
|
)
|
||||
State
|
(62
|
)
|
(36
|
)
|
||||
Foreign
|
(2
|
)
|
152
|
|||||
(2,150
|
)
|
(367
|
)
|
|||||
Income tax benefit
|
$
|
(2,071
|
)
|
$
|
(2,539
|
)
|
December 31,
|
||||||||
(In thousands)
|
2021
|
2020
|
||||||
Deferred tax assets:
|
||||||||
Federal net operating losses
|
$
|
1,976
|
$
|
–
|
||||
Foreign net operating losses
|
624
|
563
|
||||||
Depreciation
|
306
|
302
|
||||||
Inventory reserves
|
710
|
719
|
||||||
Deferred revenue
|
24
|
47
|
||||||
Warranty reserve
|
22
|
31
|
||||||
Stock compensation expense
|
796
|
731
|
||||||
Other accrued compensation
|
308
|
388
|
||||||
R&D credit carryforward
|
901
|
460
|
||||||
Other liabilities and reserves
|
250
|
394
|
||||||
Gross deferred tax assets
|
5,917
|
3,635
|
||||||
Valuation allowance
|
(733
|
)
|
(659
|
)
|
||||
Net deferred tax assets
|
5,184
|
2,976
|
||||||
Deferred tax liabilities:
|
||||||||
Other
|
43
|
37
|
||||||
Net deferred tax liabilities
|
43
|
37
|
||||||
Total net deferred tax assets
|
$
|
5,141
|
$
|
2,939
|
Year Ended December 31,
|
||||||||
(In thousands)
|
2021
|
2020
|
||||||
Balance, beginning of period
|
$
|
659
|
$
|
444
|
||||
Additions charged to income tax provision
|
74
|
215
|
||||||
Balance, end of period
|
$
|
733
|
$
|
659
|
Year Ended December 31,
|
||||||||
2021
|
2020
|
|||||||
Federal statutory rate
|
21.0
|
%
|
21.0
|
%
|
||||
PPP loan forgiveness
|
7.4
|
–
|
||||||
R&D credit
|
7.1
|
4.2
|
||||||
Stock award excess tax benefit
|
0.3
|
(0.3
|
)
|
|||||
State income taxes, net of federal income taxes
|
0.1
|
0.2
|
||||||
U.S. corporate tax rate change
|
–
|
9.5
|
||||||
Business meals and entertainment
|
(0.2
|
)
|
0.1
|
|||||
Miscellaneous permanent items
|
(0.3
|
)
|
–
|
|||||
Uncertain tax positions
|
(0.4
|
)
|
(0.2
|
)
|
||||
Stock option cancellations
|
(0.6
|
)
|
(0.5
|
)
|
||||
Valuation allowance and tax accruals
|
(1.2
|
)
|
(2.6
|
)
|
||||
Other
|
0.1
|
(0.3
|
)
|
|||||
Effective tax rate
|
33.3
|
%
|
31.1
|
%
|
December 31,
|
||||||||
(In thousands)
|
2021
|
2020
|
||||||
Balance, beginning of period
|
$
|
121
|
$
|
107
|
||||
Tax positions taken during the current period
|
47
|
41
|
||||||
Lapse of statute of limitations
|
(24
|
)
|
(27
|
)
|
||||
Balance, end of period
|
$
|
144
|
$
|
121
|
Year Ended December 31,
|
||||||||
2021
|
2020
|
|||||||
Net loss
|
$
|
(4,145
|
)
|
$
|
(5,630
|
)
|
||
Shares:
|
||||||||
Basic: Weighted average common shares outstanding
|
9,298
|
7,827
|
||||||
Add: Dilutive effect of outstanding equity awards as determined by the treasury stock
method
|
–
|
–
|
||||||
Diluted: Weighted average common and common equivalent shares outstanding
|
9,298
|
7,827
|
||||||
Net loss per common share:
|
||||||||
Basic
|
$
|
(0.45
|
)
|
$
|
(0.72
|
)
|
||
Diluted
|
(0.45
|
)
|
(0.72
|
)
|
Year Ended December 31,
|
||||||||
2021
|
2020
|
|||||||
Operating cash outflows from leases
|
$
|
982
|
$
|
1,040
|
Year Ended December 31,
|
||||||||
2021
|
2020
|
|||||||
Weighted average remaining lease term (in years)
|
3.5
|
4.9
|
||||||
Weighted average discount rate
|
4.4
|
%
|
4.1
|
%
|
December 31, 2021
|
||||
2022
|
$
|
886
|
||
2023
|
721
|
|||
2024
|
721
|
|||
2025
|
426
|
|||
2026
|
23
|
|||
Total undiscounted lease payments
|
2,777
|
|||
Less imputed interest
|
207
|
|||
Total lease liabilities
|
$
|
2,570
|
Quarter Ended
|
||||||||||||||||
(In thousands, except per share amounts)
|
March 31
|
June 30
|
September 30
|
December 31
|
||||||||||||
2021:
|
||||||||||||||||
Net sales
|
$
|
8,301
|
$
|
9,325
|
$
|
10,637
|
$
|
11,123
|
||||||||
Gross profit
|
3,189
|
3,325
|
4,317
|
4,418
|
||||||||||||
Net (loss) income
|
(2,206
|
)
|
(2,114
|
)
|
910
|
(735
|
)
|
|||||||||
Net (loss) income per common share:
|
||||||||||||||||
Basic
|
(0.25
|
)
|
(0.24
|
)
|
0.10
|
(0.07
|
)
|
|||||||||
Diluted
|
(0.25
|
)
|
(0.24
|
)
|
0.09
|
(0.07
|
)
|
|||||||||
2020:
|
||||||||||||||||
Net sales
|
$
|
10,247
|
$
|
5,285
|
$
|
7,300
|
$
|
7,763
|
||||||||
Gross profit
|
4,918
|
2,290
|
3,349
|
2,372
|
||||||||||||
Net loss
|
(992
|
)
|
(1,853
|
)
|
(867
|
)
|
(1,918
|
)
|
||||||||
Net loss per common share:
|
||||||||||||||||
Basic
|
(0.13
|
)
|
(0.25
|
)
|
(0.11
|
)
|
(0.22
|
)
|
||||||||
Diluted
|
(0.13
|
)
|
(0.25
|
)
|
(0.11
|
)
|
(0.22
|
)
|
1.
|
Deleting clause (D) in Subsection 1(d) and replacing it with the following text:
|
2.
|
Adding a new Subsection 1(e) immediately following Subsection 1(d), to read as follows:
|
3.
|
Adding the following sentence at the end of Subsection 2(b):
|
4.
|
Adding the following text at the end of Subsection 2(c):
|
5.
|
Adding a new Section 11 immediately following Section 10, to read as follows:
|
6.
|
Adding a new Section 12 immediately following new Section 11, to read as follows:
|
1.
|
Amendment
of the Agreement. The Agreement is hereby amended solely to make the following changes:
|
a.
|
Clause (iii) of Section 2(a) of the Agreement shall be deleted and replaced in its entirety with the
following text:
|
b.
|
Clause (iii) of Section 2(b) of the Agreement shall be deleted and replaced in its entirety with the
following text:
|
2.
|
Reference
to and Effect on the Agreement. On and after the date of this Amendment, each reference in the Agreement to “this
Agreement,” “hereunder,” “hereof” or words of like import referring to the Agreement shall mean and be a reference to the Agreement, as amended by this Amendment. The Agreement, as specifically amended by this Amendment, is and shall
continue to be in full force and effect and is hereby in all respects ratified and confirmed.
|
3.
|
Governing
Law/Jurisdiction. This Amendment shall be governed by and interpreted and governed in accordance with the laws of the
State of Connecticut. The parties agree that this Amendment was made and entered into in Connecticut and each party hereby consents to the jurisdiction of a competent court in Connecticut to hear any dispute arising out of this Agreement.
|
4.
|
Headings. The Section headings used herein are for convenience of reference only, are not part of this Amendment and are not to affect the
construction of, or to be taken into consideration in interpreting, this Amendment.
|
5.
|
Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which
when so executed and delivered shall be deemed to be an original, but all of which when taken together shall constitute a single instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or any
other electronic transmission (including, without limitation, DocuSign, shall be effective as delivery of an original executed counterpart hereof.
|
TRANSACT TECHNOLOGIES INCORPORATED:
By: /s/ Bart C. Shuldman
Name: Bart C. Shuldman
Title: Chief Executive Officer
|
|
EXECUTIVE:
/s/ Steven A. DeMartino
STEVEN A. DEMARTINO
|
|
1. |
I have reviewed this Annual Report on Form 10-K of TransAct Technologies Incorporated;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the
registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's
auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely
affect the registrant's ability to record, process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial
reporting.
|
|
|
/s/ Bart C. Shuldman
|
|
Bart C. Shuldman
|
|
Chairman and Chief Executive Officer
|
|
1. |
I have reviewed this Annual Report on Form 10-K of TransAct Technologies Incorporated;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the
registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's
auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely
affect the registrant's ability to record, process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial
reporting.
|
|
|
/s/ Steven A. DeMartino
|
|
Steven A. DeMartino
President, Chief Financial Officer, Treasurer and Secretary
|
|
(1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
/s/ Bart C. Shuldman
|
|
Bart C. Shuldman
Chairman and Chief Executive Officer
|
|
|
|
/s/ Steven A. DeMartino
|
|
Steven A. DeMartino
President, Chief Financial Officer, Treasurer and Secretary
|
|