☒ | 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 |
7 |
Item 1B. |
Unresolved Staff Comments |
18 |
Item 2. |
Properties |
18 |
Item 3. |
Legal Proceedings |
18 |
Item 4. |
Mine Safety Disclosures |
18 |
PART II. |
||
Item 5. |
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
19 |
Item 6. |
[Reserved] |
19 |
Item 7. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
19 |
Item 7A. |
Quantitative and Qualitative Disclosures About Market Risk |
27 |
Item 8. |
Financial Statements and Supplementary Data |
28 |
Item 9. |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
28 |
Item 9A. |
Controls and Procedures |
28 |
Item 9B. |
Other Information |
28 |
Item 9C. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections |
28 |
PART III. |
||
Item 10. |
Directors, Executive Officers and Corporate Governance |
29 |
Item 11. |
Executive Compensation |
29 |
Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
29 |
Item 13. |
Certain Relationships and Related Transactions, and Director Independence |
29 |
Item 14. |
Principal Accounting Fees and Services |
29 |
PART IV. |
||
Item 15. |
Exhibits and Financial Statement Schedules |
30 |
Item 16. |
Form 10-K Summary |
32 |
SIGNATURES |
||
Signatures |
33 |
|
CONSOLIDATED FINANCIAL STATEMENTS |
||
Index to Consolidated Financial Statements |
F-1 |
● | Public Offerings – On August 16, 2021, the Company raised net proceeds of $11.2 million (including the exercise of the underwriters’ overallotment option on August 20, 2021), after deducting underwriting discounts, commissions and offering expenses, through an underwritten public offering and sold an aggregate of 842,375 shares of common stock. |
● | 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 8 for further details regarding the PPP Loan. |
● | Employee Retention Credit – Under the provisions of the CARES Act, the Company was 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 as a $1.5 million “Gain from employee retention credit” in the Consolidated Statement of Operations for the year ended December 31, 2021 and recorded a $1.5 million “Employee retention credit receivable” in the Consolidated Balance Sheets as of December 31, 2022 and December 31, 2021. We received these funds in the first quarter of 2023. |
● | 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 and on July 19, 2022, we entered into an amendment to extend the maturity of the facility to March 13, 2025. See Note 8 for further details regarding this facility. |
● | Reduced Capital Expenditures – We limited capital expenditures during 2020 and 2021 and gradually increased expenses during 2022 as our sales improved. |
Name |
Age |
Position |
||
Bart C. Shuldman |
65 |
Chief Executive Officer |
||
Steven A. DeMartino |
53 |
President, Chief Financial Officer, Treasurer and Secretary |
||
Tracey S. Winslow |
63 |
Chief Revenue Officer |
||
Brent Richtsmeier |
58 |
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 or at all; |
● | general economic and industry conditions, including inflation and changes in interest rates affecting returns on cash balances and investments, that affect customer demand; |
● | the dependence 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, inflation 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. |
● | 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. |
● | technologically advanced products that satisfy user demands; |
● | superior customer service; |
● | high levels of quality and reliability; and |
● | dependable and efficient distribution networks. |
● | accurately forecast our revenue and plan our operating expenses; |
● | increase the number of customers (and retain existing customers and their guests) using our platform; |
● | successfully compete with current and future competitors; |
● | successfully expand our market presence business in existing markets and enter new markets and geographies; |
● | maintain and enhance the value of our reputation and brand; |
● | adapt to rapidly evolving trends in the ways our customers interact with technology; |
● | timely respond to customer needs with technology developments that enable our products to evolve to meet the changing demands of the marketplace; |
● | avoid interruptions or disruptions in our service; |
● | manage the risk of loss relating to food safety issues if there is a failure of our offerings designed to help in part to help assure perishable goods are safely preserved; |
● | 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, inflation and rising interest rates and the ongoing economic impact of the COVID-19 pandemic; |
● | adverse business conditions faced by customers, or bankruptcies or store closures of our customers resulting from adverse economic conditions due to inflation, resurgences or new variants of 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 |
November 30, 2025 |
|||||
Doncaster, UK |
Sales office and service center |
6,000 |
Leased |
August 26, 2026 |
|||||
Macau, China |
Sales office |
180 |
Leased |
June 30, 2023 |
|||||
110,780 |
Year Ended |
Year Ended |
|||||||||||||||||||||||
(In thousands, except percentages) |
December 31, 2022 |
December 31, 2021 |
$ Change |
% Change |
||||||||||||||||||||
Food service technology (“FST”) |
$ |
12,364 |
21.3 |
% |
$ |
12,625 |
32.1 |
% |
$ |
($261 |
) |
(2.1 |
%) |
|||||||||||
POS automation |
10,659 |
18.3 |
% |
4,825 |
12.2 |
% |
$ |
5,834 |
120.9 |
% |
||||||||||||||
Casino and gaming |
30,029 |
51.7 |
% |
15,302 |
38.9 |
% |
$ |
14,727 |
96.2 |
% |
||||||||||||||
Printrex |
– |
– |
631 |
1.6 |
% |
$ |
(631 |
) |
(100.0 |
%) |
||||||||||||||
TSG |
5,087 |
8.7 |
% |
6,003 |
15.2 |
% |
$ |
(916 |
) |
(15.3 |
%) |
|||||||||||||
$ |
58,139 |
100.0 |
% |
$ |
39,386 |
100.0 |
% |
$ |
$18,753 |
47.6 |
% |
Year Ended |
Year Ended |
|||||||||||||||||||||||
(In thousands, except percentages) |
December 31, 2022 |
December 31, 2021 |
$ Change |
% Change |
||||||||||||||||||||
Food service technology |
$ |
12,364 |
21.3 |
% |
$ |
12,625 |
32.1 |
% |
$ |
($261 |
) |
(2.1 |
%) |
|||||||||||
POS automation |
10,659 |
18.3 |
% |
4,825 |
12.2 |
% |
$ |
5,834 |
120.9 |
% |
||||||||||||||
Casino and gaming |
30,029 |
51.7 |
% |
15,302 |
38.9 |
% |
$ |
14,727 |
96.2 |
% |
||||||||||||||
Printrex |
– |
– |
631 |
1.6 |
% |
$ |
(631 |
) |
(100.0 |
%) |
||||||||||||||
TSG |
5,087 |
8.7 |
% |
6,003 |
15.2 |
% |
$ |
(916 |
) |
(15.3 |
%) |
|||||||||||||
$ |
58,139 |
100.0 |
% |
$ |
39,386 |
100.0 |
% |
$ |
$18,753 |
47.6 |
% |
|||||||||||||
International* |
$ |
14,105 |
24.3 |
% |
$ |
6,986 |
17.7 |
% |
$ |
$7,119 |
101.9 |
% |
* | 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, 2022 |
December 31, 2021 |
$ Change |
% Change |
||||||||||||||||||||
Domestic |
$ |
11,602 |
93.8 |
% |
$ |
11,738 |
93.0 |
% |
$ |
(136 |
) |
(1.2 |
%) |
|||||||||||
International |
762 |
6.2 |
% |
887 |
7.0 |
% |
(125 |
) |
(14.1 |
%) |
||||||||||||||
$ |
12,364 |
100.0 |
% |
$ |
12,625 |
100.0 |
% |
$ |
(261 |
) |
(2.1 |
%) |
Year Ended |
Year Ended |
|||||||||||||||||||||||
(In thousands, except percentages) |
December 31, 2022 |
December 31, 2021 |
$ Change |
% Change |
||||||||||||||||||||
Hardware |
$ |
3,653 |
29.5 |
% |
$ |
5,226 |
41.4 |
% |
$ |
(1,573 |
) |
(30.1 |
%) |
|||||||||||
Software, labels and other recurring revenue |
8,711 |
70.5 |
% |
7,399 |
58.6 |
% |
1,312 |
17.7 |
% |
|||||||||||||||
$ |
12,364 |
100.0 |
% |
$ |
12,625 |
100.0 |
% |
$ |
(261 |
) |
2.1 |
% |
Year Ended |
Year Ended |
|||||||||||||||||||||||
(In thousands, except percentages) |
December 31, 2022 |
December 31, 2021 |
$ Change |
% Change |
||||||||||||||||||||
Domestic |
$ |
10,657 |
100.0 |
% |
$ |
4,817 |
99.8 |
% |
$ |
5,840 |
121.2 |
% |
||||||||||||
International |
2 |
– |
8 |
0.2 |
% |
(6 |
) |
(75.0 |
%) |
|||||||||||||||
$ |
10,659 |
100.0 |
% |
$ |
4,825 |
100.0 |
% |
$ |
5,834 |
120.9 |
% |
Year Ended |
Year Ended |
|||||||||||||||||||||||
(In thousands, except percentages) |
December 31, 2022 |
December 31, 2021 |
$ Change |
% Change |
||||||||||||||||||||
Domestic |
$ |
17,686 |
58.9 |
% |
$ |
10,173 |
66.5 |
% |
$ |
7,513 |
73.9 |
% |
||||||||||||
International |
12,343 |
41.1 |
% |
5,129 |
33.5 |
% |
7,214 |
140.7 |
% |
|||||||||||||||
$ |
30,029 |
100.0 |
% |
$ |
15,302 |
100.0 |
% |
$ |
14,727 |
96.2 |
% |
Year Ended |
Year Ended |
|||||||||||||||||||||||
(In thousands, except percentages) |
December 31, 2022 |
December 31, 2021 |
$ Change |
% Change |
||||||||||||||||||||
Domestic |
$ |
– |
0.0 |
% |
$ |
171 |
27.1 |
% |
$ |
(171 |
) |
100.0 |
% |
|||||||||||
International |
– |
0.0 |
% |
460 |
72.9 |
% |
(460 |
) |
100.0 |
% |
||||||||||||||
$ |
– |
0.0 |
% |
$ |
631 |
100.0 |
% |
$ |
(631 |
) |
100.0 |
% |
Year Ended |
Year Ended |
|||||||||||||||||||||||
(In thousands, except percentages) |
December 31, 2022 |
December 31, 2021 |
$ Change |
% Change |
||||||||||||||||||||
Domestic |
$ |
4,089 |
80.4 |
% |
$ |
5,501 |
91.6 |
% |
$ |
(1,412 |
) |
(25.7 |
%) |
|||||||||||
International |
998 |
19.6 |
% |
502 |
8.4 |
% |
496 |
98.8 |
% |
|||||||||||||||
$ |
5,087 |
100.0 |
% |
$ |
6,003 |
100.0 |
% |
$ |
(916 |
) |
(15.3 |
%) |
Year Ended December 31, |
Percent |
Percent of |
Percent of |
|||||||||||||||
2022 |
2021 |
Change |
Total Sales - 2022 |
Total Sales - 2021 |
||||||||||||||
$ |
24,412 |
$ |
15,382 |
58.7 |
% |
42.0 |
% |
39.1 |
% |
Year Ended December 31, |
Percent |
Percent of |
Percent of |
|||||||||||||||
2022 |
2021 |
Change |
Total Sales - 2022 |
Total Sales - 2021 |
||||||||||||||
$ |
8,570 |
$ |
7,475 |
14.6 |
% |
14.7 |
% |
19.0 |
% |
Year Ended December 31, |
Percent |
Percent of |
Percent of |
|||||||||||||||
2022 |
2021 |
Change |
Total Sales - 2022 |
Total Sales - 2021 |
||||||||||||||
$ |
11,326 |
$ |
7,658 |
47.9 |
% |
19.5 |
% |
19.4 |
% |
Year Ended December 31, |
Percent |
Percent of |
Percent of |
|||||||||||||||
2022 |
2021 |
Change |
Total Sales - 2022 |
Total Sales - 2021 |
||||||||||||||
$ |
12,193 |
$ |
9,626 |
26.7 |
% |
21.0 |
% |
24.4 |
% |
Year Ended December 31, |
Percent |
Percent of |
Percent of |
|||||||||||||||
2022 |
2021 |
Change |
Total Sales – 2022 |
Total Sales – 2021 |
||||||||||||||
$ |
(7,677 |
) |
$ |
(9,377 |
) |
(18.1 |
%) |
(13.2 |
%) |
(23.8 |
%) |
● | We reported a net loss of $5.9 million. |
● | Accounts receivable increased $6.4 million primarily due to increased sales volume during the fourth quarter of 2022. |
● | We reported a net loss of $4.0 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. |
● | Inventories decreased $3.4 million 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. |
● | 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. |
(i) |
The extension of the maturity date from March 13, 2023 to March 13, 2025; and |
(ii) |
The termination of the existing blocked account control agreement and entry into a new “springing” deposit account control agreement, permitting the Company to direct the use of funds in its deposit account until such time as (a) the sum of excess availability under the Siena Credit Facility and unrestricted cash is less than $5 million for 3 consecutive business days or (b) an event of default occurs and is continuing. |
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 |
156,000 |
$ |
10.09 |
– |
||||
2014 Equity Incentive Plan |
1,414,241 |
7.60 |
347,652 |
|||||
Total |
1,570,241 |
$ |
7.84 |
347,652 |
(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, 2022 and 2021 |
Consolidated Statements of Operations for the years ended December 31, 2022 and 2021 |
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2022 and 2021 |
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2022 and 2021 |
Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021 |
Notes to Consolidated Financial Statements |
2. | Schedules. |
3. | Exhibits |
Certificate of Incorporation of TransAct Technologies Incorporated (conformed copy) (incorporated by reference to Exhibit 3.2 of the Company’s Quarterly Report on Form 10-Q (SEC File No. 000-21121) filed with the SEC on August 18, 2022). |
|
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). |
|
3.2* |
Amended and Restated By-Laws of TransAct Technologies Incorporated. |
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 Non-statutory Stock Option Agreement (incorporated by reference to Exhibit 10.2 of the Company’s current Report on Form 8-K (SEC File No. 000-21121) filed with the SEC on May 19, 2014). |
10.6(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 (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 24, 2022). |
10.11(x) |
Second Amendment to Severance Agreement by and between TransAct and Steven A. DeMartino, effective April 29, 2021 (incorporated by reference to Exhibit 10.11 of the Company’s Annual Report on Form 10-K (SEC File No. 000-21121) filed with the SEC on March 24, 2022). |
Amended and Restated Employment Agreement, dated as of December 14, 2022, by and between TransAct Technologies Incorporated and Bart C. Shuldman (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (SEC File No. 000-21121) filed with the SEC on December 27, 2022). |
Cooperation Agreement, dated as of March 30, 2022, by and among TransAct Technologies Incorporated, 325 Capital Master Fund LP and Harbert Discovery Fund, L.P. (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 31, 2022). |
|
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. |
‡ | These exhibits are furnished herewith. |
(b) |
Exhibits. |
(c) |
Financial Statement Schedules. |
TRANSACT TECHNOLOGIES INCORPORATED |
||
By: |
/s/ Bart C. Shuldman |
|
Name: |
Bart C. Shuldman |
|
Title: |
Chief Executive Officer |
Signature |
Title |
Date |
||||
/s/ Bart C. Shuldman |
Chief Executive Officer and Director |
March 27, 2023 |
||||
Bart C. Shuldman |
(Principal Executive Officer) |
|||||
/s/ Steven A. DeMartino |
President, Chief Financial Officer, Treasurer and Secretary |
March 27, 2023 |
||||
Steven A. DeMartino |
(Principal Financial Officer) |
|||||
/s/ William J. DeFrances |
Vice President and Chief Accounting Officer |
March 27, 2023 |
||||
William J. DeFrances |
(Principal Accounting Officer) |
|||||
/s/ Haydee Ortiz Olinger |
Chair of the Board |
March 27, 2023 |
||||
Haydee Ortiz Olinger |
||||||
/s/ John M. Dillon |
Director |
March 27, 2023 |
||||
John M. Dillon |
||||||
/s/ Audrey P. Dunning |
Director |
March 27, 2023 |
||||
Audrey P. Dunning |
||||||
/s/ Daniel M. Friedberg |
Director |
March 27, 2023 |
||||
Daniel M. Friedberg |
||||||
/s/ Randall S. Friedman |
Director |
March 27, 2023 |
||||
Randall S. Friedman |
||||||
/s/ Emanuel P. N. Hilario |
Director |
March 27, 2023 |
||||
Emanuel P.N. Hilario |
Consolidated Financial Statements |
||
Report of Independent Registered Public Accounting Firm (PCAOB ID ) |
F-2 |
|
Consolidated Balance Sheets as of December 31, 2022 and 2021 |
F-4 |
|
Consolidated Statements of Operations for the years ended December 31, 2022 and 2021 |
F-5 |
|
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2022 and 2021 |
F-6 |
|
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2022 and 2021 |
F-7 |
|
Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021 |
F-8 |
|
Notes to Consolidated Financial Statements |
F-9 |
December 31, 2022 |
December 31, 2021 |
|||||||
Assets: |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ |
7,946 |
$ |
19,457 |
||||
Accounts receivable, net |
13,927 |
7,593 |
||||||
Employee retention credit receivable |
1,500 |
1,500 |
||||||
Inventories |
12,028 |
7,711 |
||||||
Prepaid income taxes |
– |
137 |
||||||
Other current assets |
724 |
738 |
||||||
Total current assets |
36,125 |
37,136 |
||||||
Fixed assets, net |
2,781 |
2,684 |
||||||
Right-of-use asset |
2,488 |
2,553 |
||||||
Goodwill |
2,621 |
2,621 |
||||||
Deferred tax assets |
7,327 |
5,143 |
||||||
Intangible assets, net |
242 |
397 |
||||||
Other assets |
248 |
400 |
||||||
15,707 |
13,798 |
|||||||
Total assets |
$ |
51,832 |
$ |
50,934 |
||||
Liabilities and Shareholders’ Equity: |
||||||||
Current liabilities: |
||||||||
Current portion of revolving loan payable |
$ |
2,250 |
$ |
– |
||||
Accounts payable |
7,395 |
4,308 |
||||||
Accrued liabilities |
4,077 |
3,894 |
||||||
Lease liability |
875 |
789 |
||||||
Deferred revenue |
1,329 |
805 |
||||||
Total current liabilities |
15,926 |
9,796 |
||||||
Deferred revenue, net of current portion |
143 |
186 |
||||||
Lease liability, net of current portion |
1,683 |
1,781 |
||||||
Other liabilities |
218 |
187 |
||||||
2,044 |
2,154 |
|||||||
Total liabilities |
17,970 |
11,950 |
||||||
Commitments and contingencies (see Notes 9 and 14) |
||||||||
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, 2022 and 2021; 13,956,725 and 13,917,731 shares issued; 9,911,883 and 9,872,889 shares outstanding, at December 31, 2022 and 2021, respectively |
139 |
139 |
||||||
Additional paid-in capital |
56,282 |
55,246 |
||||||
Retained earnings |
9,630 |
15,566 |
||||||
Accumulated other comprehensive (loss) income, net of tax |
(79 |
) |
143 |
|||||
Treasury stock, 4,044,842 shares, at cost |
(32,110 |
) |
(32,110 |
) |
||||
Total shareholders’ equity |
33,862 |
38,984 |
||||||
Total liabilities and shareholders’ equity |
$ |
51,832 |
$ |
50,934 |
Years Ended December 31, |
||||||||
2022 |
2021 |
|||||||
Net sales |
$ |
58,139 |
$ |
39,386 |
||||
Cost of sales |
33,727 |
24,004 |
||||||
Gross profit |
24,412 |
15,382 |
||||||
Operating expenses: |
||||||||
Engineering, design and product development |
8,570 |
7,475 |
||||||
Selling and marketing |
11,326 |
7,658 |
||||||
General and administrative |
12,193 |
9,626 |
||||||
32,089 |
24,759 |
|||||||
Operating loss |
(7,677 |
) |
(9,377 |
) |
||||
Interest and other income (expense): |
||||||||
Interest expense |
(208 |
) |
(157 |
) |
||||
Interest income |
– |
61 |
||||||
Other, net |
(16 |
) |
(283 |
) |
||||
Gain from employee retention credit |
– |
1,500 |
||||||
Gain on forgiveness of long-term debt |
– |
2,173 |
||||||
(224 |
) |
3,294 |
||||||
Loss before income taxes |
(7,901 |
) |
(6,083 |
) |
||||
Income tax benefit |
1,965 |
2,042 |
||||||
Net loss |
$ |
(5,936 |
) |
$ |
(4,041 |
) |
||
Net loss per common share: |
||||||||
Basic |
$ |
(0.60 |
) |
$ |
(0.43 |
) |
||
Diluted |
$ |
(0.60 |
) |
$ |
(0.43 |
) |
||
Shares used in per-share calculation: |
||||||||
Basic |
9,905 |
9,298 |
||||||
Diluted |
9,905 |
9,298 |
Years Ended December 31, |
||||||||
2022 |
2021 |
|||||||
Net loss |
$ |
(5,936 |
) |
$ |
(4,041 |
) |
||
Foreign currency translation adjustment, net of tax |
(222 |
) |
181 |
|||||
Comprehensive loss |
$ |
(6,158 |
) |
$ |
(3,860 |
) |
Common Stock |
Additional Paid-in |
Retained |
Treasury |
Accumulated Other Comprehensive |
Total |
|||||||||||||||||||||||
Shares |
Amount |
Capital |
Earnings |
Stock |
(Loss) Income |
Equity |
||||||||||||||||||||||
Balance, January 1, 2021 |
8,931,385 |
$ |
130 |
$ |
42,536 |
$ |
19,607 |
$ |
(32,110 |
) |
$ |
(38 |
) |
$ |
30,125 |
|||||||||||||
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 |
– |
– |
– |
(4,041 |
) |
– |
– |
(4,041 |
) |
|||||||||||||||||||
Balance, December 31, 2021 |
9,872,889 |
139 |
55,246 |
15,566 |
(32,110 |
) |
143 |
38,984 |
||||||||||||||||||||
Issuance of common stock from exercise of stock options |
17,500 |
– |
– |
– |
– |
– |
– |
|||||||||||||||||||||
Issuance of common stock on restricted stock units |
47,931 |
– |
– |
– |
– |
– |
– |
|||||||||||||||||||||
Relinquishment of stock awards and deferred stock units to pay withholding taxes |
(26,437 |
) |
– |
(119 |
) |
– |
– |
– |
(119 |
) |
||||||||||||||||||
Share-based compensation expense |
– |
– |
1,155 |
– |
– |
– |
1,155 |
|||||||||||||||||||||
Foreign currency translation adjustment, net of tax |
– |
– |
– |
– |
– |
(222 |
) |
(222 |
) |
|||||||||||||||||||
Net loss |
– |
– |
– |
(5,936 |
) |
– |
– |
(5,936 |
) |
|||||||||||||||||||
Balance, December 31, 2022 |
9,911,883 |
$ |
139 |
$ |
56,282 |
$ |
9,630 |
$ |
(32,110 |
) |
$ |
(79 |
) |
$ |
33,862 |
Years Ended December 31, |
||||||||
2022 |
2021 |
|||||||
Cash flows from operating activities: |
||||||||
Net loss |
$ |
(5,936 |
) |
$ |
(4,041 |
) |
||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
Share-based compensation expense |
1,155 |
1,206 |
||||||
Depreciation and amortization |
1,332 |
957 |
||||||
Deferred income tax benefit |
(2,141 |
) |
(2,121 |
) |
||||
Loss on the disposal of fixed assets |
2 |
9 |
||||||
Foreign currency transaction losses |
6 |
272 |
||||||
Gain on forgiveness of long-term debt |
– |
(2,173 |
) |
|||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
(6,421 |
) |
(4,217 |
) |
||||
Employee retention credit receivable |
– |
(1,500 |
) |
|||||
Inventories |
(4,378 |
) |
3,440 |
|||||
Prepaid income taxes |
137 |
2,210 |
||||||
Other current and long-term assets |
167 |
322 |
||||||
Accounts payable |
3,103 |
2,534 |
||||||
Accrued liabilities and other liabilities |
754 |
592 |
||||||
Net cash used in operating activities |
(12,220 |
) |
(2,510 |
) |
||||
Cash flows from investing activities: |
||||||||
Capital expenditures |
(1,299 |
) |
(1,384 |
) |
||||
Proceeds from the sale of fixed assets |
– |
8 |
||||||
Collection of note receivable |
– |
1,598 |
||||||
Net cash (used in) provided by investing activities |
(1,299 |
) |
222 |
|||||
Cash flows from financing activities: |
||||||||
Proceeds from bank borrowings |
2,250 |
– |
||||||
Proceeds from stock option exercises |
– |
436 |
||||||
Proceeds from the issuance of common stock |
– |
12,214 |
||||||
Payment of common stock issuance costs |
– |
(1,014 |
) |
|||||
Withholding taxes paid on stock issuance |
(119 |
) |
(133 |
) |
||||
Payment of bank financing costs |
(69 |
) |
(31 |
) |
||||
Net cash provided by financing activities |
2,062 |
11,472 |
||||||
Effect of exchange rate changes on cash and cash equivalents |
(54 |
) |
(86 |
) |
||||
(Decrease) increase in cash and cash equivalents |
(11,511 |
) |
9,098 |
|||||
Cash and cash equivalents, beginning of period |
19,457 |
10,359 |
||||||
Cash and cash equivalents, end of period |
$ |
7,946 |
$ |
19,457 |
||||
Supplemental cash flow information: |
||||||||
Interest paid |
$ |
129 |
$ |
76 |
||||
Income taxes paid |
62 |
57 |
||||||
Non-cash capital expenditure items |
54 |
82 |
● | Public Offering – On August 16, 2021, the Company raised net proceeds of $11.2 million (including the exercise of the underwriters overallotment option on August 20, 2021), after deducting underwriting discounts, commissions and offering expenses, through an underwritten public offering and sold an aggregate of 842,375 shares of common stock. |
● | 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 8 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 Sheet as of December 31, 2021 and 2022. We received these funds in the first quarter of 2023. |
● | On March 13, 2020, we entered into a Credit Facility with Siena Lending Group LLC that provides a revolving credit line of up to $10.0 million, subject to a borrowing base and on July 19, 2022, we entered into an amendment to extend the maturity of the facility to March 13, 2025. See Note 8 for further details regarding this facility. |
● | Reduced Capital Expenditures – We limited capital expenditures during 2020 and 2021 and gradually increased these expenditures during 2022 as sales improved. |
Years Ended December 31, |
||||||||
(In thousands) |
2022 |
2021 |
||||||
Balance, beginning of period |
$ |
219 |
$ |
220 |
||||
Additions charged to costs and expenses |
140 |
– |
||||||
Deductions |
(8 |
) |
(1 |
) |
||||
Balance, end of period |
$ |
351 |
$ |
219 |
Year Ended December 31, 2022 |
||||||||||||
(In thousands) |
United States |
International |
Total |
|||||||||
Food service technology |
$ |
11,602 |
$ |
762 |
$ |
12,364 |
||||||
POS automation |
10,657 |
2 |
10,659 |
|||||||||
Casino and gaming |
17,686 |
12,343 |
30,029 |
|||||||||
TransAct Services Group |
4,089 |
998 |
5,087 |
|||||||||
Total net sales |
$ |
44,034 |
$ |
14,105 |
$ |
58,139 |
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 |
December 31, |
||||||||
(In thousands) |
2022 |
2021 |
||||||
Unbilled receivables, current |
$ |
392 |
$ |
314 |
||||
Unbilled receivables, non-current |
163 |
308 |
||||||
Customer pre-payments |
(101 |
) |
(99 |
) |
||||
Deferred revenue, current |
(1,329 |
) |
(805 |
) |
||||
Deferred revenue, non-current |
(143 |
) |
(186 |
) |
||||
Net contract (liabilities) assets |
$ |
(1,018 |
) |
$ |
(468 |
) |
December 31, |
||||||||
2022 |
2021 |
|||||||
Chain Link Services |
– |
10 |
% |
|||||
International Gaming Technology (“IGT”) |
12 |
% |
3 |
% |
||||
NCR Corporation |
3 |
% |
11 |
% |
||||
The Bright Group |
11 |
% |
– |
December 31, |
||||||||
2022 |
2021 |
|||||||
IGT |
10 |
% |
9 |
% |
December 31, |
||||||||
(In thousands) |
2022 |
2021 |
* |
|||||
Raw materials and purchased component parts |
$ |
8,884 |
$ |
5,499 |
||||
Work-in-process |
– |
11 |
||||||
Finished goods |
3,144 |
2,201 |
||||||
$ |
12,028 |
$ |
7,711 |
* | see Note 16, Change in Accounting Principle |
December 31, |
||||||||
(In thousands) |
2022 |
2021 |
||||||
Tooling, machinery and equipment |
$ |
6,859 |
$ |
6,694 |
||||
Furniture and office equipment |
1,882 |
1,660 |
||||||
Computer software and equipment |
8,348 |
6,973 |
||||||
Leasehold improvements |
2,883 |
2,872 |
||||||
19,972 |
18,199 |
|||||||
Less: Accumulated depreciation and amortization |
(17,656 |
) |
(16,736 |
) |
||||
2,316 |
1,463 |
|||||||
Construction in-process |
465 |
1,221 |
||||||
$ |
2,781 |
$ |
2,684 |
December 31, |
||||||||||||||||
2022 |
2021 |
|||||||||||||||
(In thousands) |
Gross Amount |
Accumulated Amortization |
Gross Amount |
Accumulated Amortization |
||||||||||||
Purchased technology |
$ |
1,591 |
$ |
(1,349 |
) |
$ |
1,591 |
$ |
(1,195 |
) |
||||||
Patents |
15 |
(15 |
) |
15 |
(14 |
) |
||||||||||
Total |
$ |
1,606 |
$ |
(1,364 |
) |
$ |
1,606 |
$ |
(1,209 |
) |
December 31, |
||||||||
(In thousands) |
2022 |
2021 |
||||||
Salaries and compensation related |
$ |
2,744 |
$ |
2,854 |
||||
Taxes |
530 |
79 |
||||||
Professional and consulting |
371 |
285 |
||||||
Other |
432 |
676 |
||||||
$ |
4,077 |
$ |
3,894 |
(i) |
The extension of the maturity date from March 13, 2023 to March 13, 2025; and |
(ii) |
The termination of the existing blocked account control agreement and entry into a new “springing” deposit account control agreement, permitting the Company to direct the use of funds in its deposit account until such time as (a) the sum of excess availability under Siena Credit Facility (as amended) and unrestricted cash is less than $5 million for 3 consecutive business days or (b) an event of default occurs and is continuing. |
Year Ended December 31, |
||||||||
2022 |
2021 |
|||||||
Expected option term (in years) |
7.1 |
6.9 |
||||||
Expected volatility |
51.3 |
% |
50.5 |
% |
||||
Risk-free interest rate |
2.2 |
% |
1.2 |
% |
||||
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, 2021 |
1,269,355 |
$ |
9.18 |
155,225 |
$ |
10.28 |
||||||||||
Granted |
181,100 |
8.16 |
129,700 |
8.78 |
||||||||||||
Exercised |
(17,500 |
) |
6.70 |
(47,931 |
) |
10.22 |
||||||||||
Forfeited |
(49,250 |
) |
9.38 |
(22,708 |
) |
10.27 |
||||||||||
Expired |
(27,750 |
) |
8.51 |
– |
– |
|||||||||||
Outstanding at December 31, 2022 |
1,355,955 |
$ |
9.08 |
214,286 |
$ |
9.28 |
* | 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 |
1,355,955 |
$ |
9.08 |
$ |
224 |
5.0 |
971,865 |
$ |
9.23 |
$ |
93 |
3.7 |
||||||||||||||||||||
Restricted stock units |
145,687 |
– |
921 |
2.1 |
– |
– |
– |
– |
* | weighted average exercise price per share |
** | weighted-average contractual remaining term in years |
December 31, |
||||||||
(In thousands) |
2022 |
2021 |
||||||
Current: |
||||||||
Federal |
$ |
149 |
$ |
26 |
||||
State |
110 |
51 |
||||||
Foreign |
(83 |
) |
2 |
|||||
176 |
79 |
|||||||
Deferred: |
||||||||
Federal |
(1,924 |
) |
(2,057 |
) |
||||
State |
(217 |
) |
(62 |
) |
||||
Foreign |
– |
(2 |
) |
|||||
(2,141 |
) |
(2,121 |
) |
|||||
Income tax benefit |
$ |
(1,965 |
) |
$ |
(2,042 |
) |
December 31, |
||||||||
(In thousands) |
2022 |
2021 |
||||||
Deferred tax assets: |
||||||||
Federal net operating losses |
$ |
2,297 |
$ |
1,978 |
||||
Foreign net operating losses |
676 |
624 |
||||||
State net operating losses |
149 |
– |
||||||
Depreciation |
– |
306 |
||||||
Capitalized R&D expenses |
1,708 |
– |
||||||
Inventory reserves |
648 |
710 |
||||||
Deferred revenue |
41 |
24 |
||||||
Warranty reserve |
17 |
22 |
||||||
Stock compensation expense |
769 |
796 |
||||||
Other accrued compensation |
222 |
308 |
||||||
R&D credit carryforward |
1,238 |
901 |
||||||
Other liabilities and reserves |
463 |
250 |
||||||
Gross deferred tax assets |
8,228 |
5,919 |
||||||
Valuation allowance |
(656 |
) |
(733 |
) |
||||
Net deferred tax assets |
7,572 |
5,186 |
||||||
Deferred tax liabilities: |
||||||||
Depreciation |
196 |
– |
||||||
Other |
49 |
43 |
||||||
Net deferred tax liabilities |
245 |
43 |
||||||
Total net deferred tax assets |
$ |
7,327 |
$ |
5,143 |
Year Ended December 31, |
||||||||
(In thousands) |
2022 |
2021 |
||||||
Balance, beginning of period |
$ |
733 |
$ |
659 |
||||
Subtractions released to income tax provisions |
(77 |
) |
– |
|||||
Additions charged to income tax provision |
– |
74 |
||||||
Balance, end of period |
$ |
656 |
$ |
733 |
Year Ended December 31, |
||||||||
2022 |
2021 |
|||||||
Federal statutory rate |
21.0 |
% |
21.0 |
% |
||||
PPP loan forgiveness |
– |
7.4 |
||||||
R&D credit |
4.3 |
7.1 |
||||||
Stock award excess tax benefit |
– |
0.3 |
||||||
State income taxes, net of federal income taxes |
1.1 |
0.1 |
||||||
Business meals and entertainment |
– |
(0.2 |
) |
|||||
Miscellaneous permanent items |
– |
(0.3 |
) |
|||||
Uncertain tax positions |
(0.5 |
) |
(0.4 |
) |
||||
Stock option cancellations |
(1.9 |
) |
(0.6 |
) |
||||
Valuation allowance and tax accruals |
1.0 |
(1.2 |
) |
|||||
Other |
(0.1 |
) |
0.4 |
|||||
Effective tax rate |
24.9 |
% |
33.6 |
% |
December 31, |
||||||||
(In thousands) |
2022 |
2021 |
||||||
Balance, beginning of period |
$ |
144 |
$ |
121 |
||||
Tax positions taken during the current period |
26 |
47 |
||||||
Lapse of statute of limitations |
(28 |
) |
(24 |
) |
||||
Balance, end of period |
$ |
142 |
$ |
144 |
Years Ended December 31, |
||||||||
2022 |
2021 |
|||||||
Net loss |
$ |
(5,936 |
) |
$ |
(4,041 |
) |
||
Shares: |
||||||||
Basic: Weighted average common shares outstanding |
9,905 |
9,298 |
||||||
Add: Dilutive effect of outstanding equity awards as determined by the treasury stock method |
– |
– |
||||||
Diluted: Weighted average common and common equivalent shares outstanding |
9,905 |
9,298 |
||||||
Net loss per common share: |
||||||||
Basic |
$ |
(0.60 |
) |
$ |
(0.43 |
) |
||
Diluted |
(0.60 |
) |
(0.43 |
) |
Years Ended December 31, |
||||||||
2022 |
2021 |
|||||||
Operating cash outflows from leases |
$ |
967 |
$ |
982 |
Years Ended December 31, |
||||||||
2022 |
2021 |
|||||||
Weighted average remaining lease term (in years) |
2.7 |
3.5 |
||||||
Weighted average discount rate |
4.5 |
% |
4.4 |
% |
December 31, 2022 |
||||
2023 |
$ |
972 |
||
2024 |
1,022 |
|||
2025 |
710 |
|||
2026 |
20 |
|||
Total undiscounted lease payments |
2,724 |
|||
Less imputed interest |
166 |
|||
Total lease liabilities |
$ |
2,558 |
Quarter Ended |
||||||||||||||||
(In thousands, except per share amounts) |
March 31 |
June 30 |
September 30 |
December 31 |
||||||||||||
2022: |
||||||||||||||||
Net sales |
$ |
9,702 |
$ |
12,623 |
$ |
17,856 |
$ |
17,958 |
||||||||
Gross profit |
2,566 |
5,434 |
8,193 |
8,219 |
||||||||||||
Net (loss) income |
(4,348 |
) |
(2,376 |
) |
528 |
260 |
||||||||||
Net (loss) income per common share: |
||||||||||||||||
Basic |
(0.44 |
) |
(0.24 |
) |
0.05 |
0.03 |
||||||||||
Diluted |
(0.44 |
) |
(0.24 |
) |
0.05 |
0.03 |
||||||||||
2021: |
||||||||||||||||
Net sales |
$ |
8,301 |
$ |
9,325 |
$ |
10,637 |
$ |
11,123 |
||||||||
Gross profit |
3,339 |
3,432 |
4,305 |
4,306 |
||||||||||||
Net (loss) income |
(2,089 |
) |
(2,030 |
) |
901 |
(823 |
) |
|||||||||
Net (loss) income per common share: |
||||||||||||||||
Basic |
(0.23 |
) |
(0.23 |
) |
0.10 |
(0.08 |
) |
|||||||||
Diluted |
(0.23 |
) |
(0.23 |
) |
0.09 |
(0.08 |
) |
December 31, 2021 |
||||||||||||
Under FIFO Cost |
Under Average Cost |
Effect of Change |
||||||||||
Inventories |
$ |
7,720 |
$ |
7,711 |
$ |
(9 |
) |
|||||
Deferred tax assets |
5,141 |
5,143 |
2 |
|||||||||
Retained earnings |
15,573 |
15,566 |
(7 |
) |
Three months ended December 31, 2021 |
Year ended December 31, 2021 |
|||||||||||||||||||||||
Under FIFO Cost |
Under Average Cost |
Effect of Change |
Under FIFO Cost |
Under Average Cost |
Effect of Change |
|||||||||||||||||||
Cost of sales |
$ |
6,705 |
$ |
6,817 |
$ |
112 |
$ |
24,137 |
$ |
24,004 |
$ |
(133 |
) |
|||||||||||
Gross profit |
4,418 |
4,306 |
(112 |
) |
15,249 |
15,382 |
133 |
|||||||||||||||||
Operating loss |
(2,485 |
) |
(2,597 |
) |
(112 |
) |
(9,510 |
) |
(9,377 |
) |
133 |
|||||||||||||
Loss before income taxes |
(1,124 |
) |
(1,236 |
) |
(112 |
) |
(6,216 |
) |
(6,083 |
) |
133 |
|||||||||||||
Income tax benefit |
389 |
413 |
24 |
2,071 |
2,042 |
(29 |
) |
|||||||||||||||||
Net loss |
(735 |
) |
(823 |
) |
(88 |
) |
(4,145 |
) |
(4,041 |
) |
104 |
|||||||||||||
Net loss per common share: |
||||||||||||||||||||||||
Basic |
$ |
(0.07 |
) |
$ |
(0.08 |
) |
$ |
(0.01 |
) |
$ |
(0.45 |
) |
$ |
(0.43 |
) |
$ |
0.02 |
|||||||
Diluted |
$ |
(0.07 |
) |
$ |
(0.08 |
) |
$ |
(0.01 |
) |
$ |
(0.45 |
) |
$ |
(0.43 |
) |
$ |
0.02 |
|||||||
Shares used in per-share calculation: |
||||||||||||||||||||||||
Basic |
9,848 |
9,848 |
9,298 |
9,298 |
||||||||||||||||||||
Diluted |
9,848 |
9,848 |
9,298 |
9,298 |
Three months ended December 31, 2021 |
Year ended December 31, 2021 |
|||||||||||||||||||||||
Under FIFO Cost |
Under Average Cost |
Effect of Change |
Under FIFO Cost |
Under Average Cost |
Effect of Change |
|||||||||||||||||||
Net loss |
$ |
(735 |
) |
$ |
(823 |
) |
$ |
(88 |
) |
$ |
(4,145 |
) |
$ |
(4,041 |
) |
$ |
104 |
|||||||
Comprehensive loss |
(662 |
) |
(750 |
) |
(88 |
) |
(3,964 |
) |
(3,860 |
) |
104 |
Year ended December 31, 2021 |
||||||||||||
Under FIFO Cost |
Under Average Cost |
Effect of Change |
||||||||||
Net loss |
$ |
(4,145 |
) |
$ |
(4,041 |
) |
$ |
104 |
||||
Deferred income tax benefit |
(2,150 |
) |
(2,121 |
) |
29 |
|||||||
Inventories |
3,573 |
3,440 |
(133 |
) |
Three months ended December 31, 2021 |
Year ended December 31, 2021 |
|||||||||||||||||||||||
Under FIFO Cost |
Under Average Cost |
Effect of Change |
Under FIFO Cost |
Under Average Cost |
Effect of Change |
|||||||||||||||||||
Equity beginning balance |
$ |
39,280 |
$ |
39,361 |
$ |
81 |
$ |
30,236 |
$ |
30,125 |
$ |
(111 |
) |
|||||||||||
Retained earnings - beginning of period |
16,308 |
16,389 |
81 |
19,718 |
19,607 |
(111 |
) |
|||||||||||||||||
Net loss |
(735 |
) |
(823 |
) |
(88 |
) |
(4,145 |
) |
(4,041 |
) |
104 |
|||||||||||||
Retained earnings - end of period |
15,573 |
15,566 |
(7 |
) |
15,573 |
15,566 |
(7 |
) |
||||||||||||||||
Equity ending balance |
38,991 |
38,984 |
(7 |
) |
38,991 |
38,984 |
(7 |
) |
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 |