The Zacks Computer-Peripheral Equipment industry players like Logitech (LOGI) , Immersion (IMMR) , Identiv (INVE) and TransAct Technologies (TACT) are well-poised to benefit from the growing demand for professional gaming accessories, touchscreen and wireless devices, smart glasses and RFID (Radio Frequency Identification) solutions. A continuously improving shipment of personal computers (PCs) bodes well for PC peripheral market prospects. Moreover, the solid demand for 3D-printed health equipment like fac ...

Core Viewpoint - TransAct Technologies Incorporated (TACT) has shown strong stock performance, with a 7.6% increase over the past month and a 52-week high of $4.9, outperforming the broader technology sector and peripheral equipment industry [1][2]. Financial Performance - The company has consistently exceeded earnings expectations, reporting an EPS of -$0.01 against a consensus estimate of -$0.05 in its last earnings report [2]. - For the current fiscal year, TransAct Technologies is projected to have an EPS of -$0.15 on revenues of $51.75 million, reflecting a 42.31% change in EPS and a 19.28% change in revenues. The next fiscal year is expected to see an EPS of -$0.07 on revenues of $55.7 million, indicating a year-over-year change of 53.33% in EPS and 7.63% in revenues [3]. Valuation Metrics - The stock has reached a 52-week high, prompting questions about its future valuation metrics [4]. - TransAct Technologies has a Value Score of C, while its Growth and Momentum Scores are both A, resulting in a combined VGM Score of A [6]. Zacks Rank - The company currently holds a Zacks Rank of 2 (Buy), attributed to rising earnings estimates [7]. - Given the Zacks Rank and Style Scores, TransAct Technologies appears to have potential for further stock price appreciation in the near term [8].

Technical Analysis - TransAct Technologies Incorporated (TACT) has reached a key level of support, indicated by a "golden cross" where its 50-day simple moving average has crossed above its 200-day simple moving average [1][2] - A golden cross is a bullish technical chart pattern that suggests a potential breakout, typically formed when a short-term moving average surpasses a long-term moving average [2] Price Movement - TACT shares have increased by 14.4% over the past four weeks, indicating positive momentum [4] - The company currently holds a 2 (Buy) rating on the Zacks Rank, suggesting it may be poised for further gains [4] Earnings Outlook - The earnings outlook for TACT is positive, with no downward revisions in earnings estimates over the past two months and one upward revision, leading to an increase in the Zacks Consensus Estimate [4][5] - Given the positive technical indicators and earnings estimate movements, TACT may present a compelling investment opportunity for future gains [5]

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements (unaudited)](index=4&type=section&id=Item%201%20Financial%20Statements%20(unaudited)) This section presents TransAct Technologies Inc.'s unaudited condensed consolidated financial statements and detailed explanatory notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (In thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------------ | | Cash and cash equivalents | $17,746 | $14,394 | | Accounts receivable, net | $7,805 | $6,507 | | Inventories | $12,968 | $16,161 | | Total current assets | $39,688 | $38,362 | | Total assets | $44,549 | $44,034 | | Revolving loan payable | $3,000 | $3,000 | | Total current liabilities | $12,885 | $12,884 | | Total liabilities | $13,264 | $13,401 | | Total shareholders' equity | $31,285 | $30,633 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations (In thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $13,798 | $11,599 | $26,851 | $22,286 | | Gross profit | $6,652 | $6,110 | $13,011 | $11,734 | | Operating loss | $(258) | $(438) | $(273) | $(1,739) | | Loss before income taxes | $(103) | $(405) | $(33) | $(1,718) | | Net loss | $(143) | $(319) | $(124) | $(1,355) | | Basic net loss per common share | $(0.01) | $(0.03) | $(0.01) | $(0.14) | | Diluted net loss per common share | $(0.01) | $(0.03) | $(0.01) | $(0.14) | [Condensed Consolidated Statements of Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Condensed Consolidated Statements of Comprehensive Loss (In thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(143) | $(319) | $(124) | $(1,355) | | Foreign currency translation adjustment, net of tax | $37 | $(3) | $53 | $(4) | | Comprehensive loss | $(106) | $(322) | $(71) | $(1,359) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (In thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $3,434 | $(854) | | Net cash used in investing activities | $(29) | $(243) | | Net cash used in financing activities | $(50) | $(71) | | Increase (decrease) in cash and cash equivalents | $3,352 | $(1,187) | | Cash and cash equivalents, end of period | $17,746 | $11,134 | [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Condensed Consolidated Statements of Changes in Shareholders' Equity (In thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------- | :----------------------------- | :----------------------------- | | Equity beginning balance | $30,633 | $39,414 | | Share-based compensation expense | $773 | $544 | | Net loss | $(124) | $(1,355) | | Foreign currency translation adjustment, net of tax | $53 | $(4) | | Equity ending balance | $31,285 | $38,528 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [Note 1. Basis of presentation](index=9&type=section&id=Note%201.%20Basis%20of%20presentation) The unaudited interim financial statements follow U.S. GAAP, with management affirming sufficient liquidity for **12 months** despite market slowdowns - The financial statements are unaudited and prepared under U.S. GAAP for interim reporting, not including all full-year disclosures[16](index=16&type=chunk) - Management believes the company has sufficient liquidity to fund operations, capital spending, and working capital for at least **12 months**, combining net cash from operations, cash and cash equivalents, and revolving credit facility availability[18](index=18&type=chunk) - A temporary slowdown in demand in the casino and gaming market, observed in **late 2023 and throughout 2024** due to customer excess inventory, impacted results[18](index=18&type=chunk) [Note 2. Significant accounting policies](index=10&type=section&id=Note%202.%20Significant%20accounting%20policies) Significant accounting policies are unchanged, and new accounting pronouncements are not expected to materially impact financial statements, though additional disclosures will result - No changes to significant accounting policies since the **2024 Form 10-K**[21](index=21&type=chunk) - ASU 2023-09 (Income Taxes) requires consistent categories and greater disaggregation in tax rate reconciliations and income taxes paid disclosures, effective for fiscal years beginning after **December 15, 2024**. The company does not expect a material impact[22](index=22&type=chunk) - ASU 2024-03 (Expense Disaggregation Disclosures) requires footnote disclosures on disaggregated information about specific income statement expense categories, effective for fiscal years beginning after **December 15, 2026**. Adoption is expected to result in additional disclosure but no impact on financial position, results of operations, or cash flows[23](index=23&type=chunk) [Note 3. Revenue](index=10&type=section&id=Note%203.%20Revenue) Revenue disaggregation shows growth in Food Service Technology and Casino and Gaming, with contract liabilities increasing and remaining performance obligations at **$6.4 million** Net Sales by Market Type and Geography (In thousands) | Market Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Food service technology | $4,761 | $4,178 | $9,669 | $7,478 | | POS automation | $590 | $1,151 | $1,208 | $1,802 | | Casino and gaming | $7,629 | $5,359 | $14,348 | $11,055 | | TransAct Services Group | $818 | $911 | $1,626 | $1,951 | | **Total net sales** | **$13,798** | **$11,599** | **$26,851** | **$22,286** | | United States | $11,482 | $8,819 | $22,228 | $16,584 | | International | $2,316 | $2,780 | $4,623 | $5,702 | Total Net Contract Liabilities (In thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------------ | | Unbilled receivables, current | $59 | $106 | | Unbilled receivables, net of current portion | $10 | $32 | | Customer pre-payments | $(339) | $(164) | | Deferred revenue, current | $(1,162) | $(1,107) | | Deferred revenue, net of current portion | $(333) | $(246) | | **Total net contract liabilities**| **$(1,765)** | **$(1,379)** | - As of **June 30, 2025**, remaining performance obligations totaled **$6.4 million**, with **$6.1 million** expected to be recognized within the next **12 months**[30](index=30&type=chunk) [Note 4. Inventories](index=11&type=section&id=Note%204.%20Inventories) Inventory primarily comprises raw materials and finished goods, totaling **$12.97 million** as of **June 30, 2025** Components of Inventories (In thousands) | Component | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------------ | | Raw materials and purchased component parts | $6,353 | $8,413 | | Finished goods | $6,615 | $7,748 | | **Total inventories** | **$12,968** | **$16,161** | [Note 5. Borrowings](index=12&type=section&id=Note%205.%20Borrowings) The Siena Credit Facility provides a **$10.0 million** revolving credit line, with **$3.0 million** outstanding and **$1.6 million** available, and the company is in compliance - The Siena Credit Facility provides a revolving credit line of up to **$10.0 million**, secured by company assets[32](index=32&type=chunk) - As of **June 30, 2025**, outstanding borrowings were **$3.0 million** at an interest rate of **9.25%**, with **$1.6 million** of net borrowing capacity available[35](index=35&type=chunk) - The company has remained in compliance with its excess availability covenant (**$750 thousand minimum**) through **June 30, 2025**[33](index=33&type=chunk) [Note 6. Segment reporting](index=12&type=section&id=Note%206.%20Segment%20reporting) TransAct operates as a single segment, focusing on software-driven technology and printing solutions, with performance assessed using consolidated financial measures - TransAct operates as a single operating and reportable segment: design, development, and marketing of software-driven technology and printing solutions[36](index=36&type=chunk) - Key performance measures used by management include sales, gross margin percentage, net income, EBITDA, and adjusted EBITDA[38](index=38&type=chunk) EBITDA and Adjusted EBITDA Reconciliation (In thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(143) | $(319) | $(124) | $(1,355) | | Interest income, net | $(40) | $(26) | $(62) | $(74) | | Income tax expense (benefit)| $40 | $(86) | $91 | $(363) | | Depreciation and amortization | $171 | $241 | $344 | $636 | | **EBITDA** | **$28** | **$(190)** | **$249** | **$(1,156)** | | Share-based compensation | $450 | $279 | $773 | $544 | | **Adjusted EBITDA** | **$478** | **$89** | **$1,022** | **$(612)** | [Note 7. Earnings per share](index=14&type=section&id=Note%207.%20Earnings%20per%20share) Basic and diluted net loss per share improved to **$(0.01)** for both periods, with anti-dilutive stock awards excluded due to net losses Net Loss Per Common Share (In thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(143) | $(319) | $(124) | $(1,355) | | Basic EPS | $(0.01) | $(0.03) | $(0.01) | $(0.14) | | Diluted EPS | $(0.01) | $(0.03) | $(0.01) | $(0.14) | | Basic shares outstanding | 10,085 | 9,997 | 10,064 | 9,985 | | Diluted shares outstanding | 10,085 | 9,997 | 10,064 | 9,985 | - **1.8 million** and **1.7 million** anti-dilutive stock awards were excluded from EPS computation for the three and six months ended **June 30, 2025**, respectively, due to net losses[45](index=45&type=chunk) [Note 8. Leases](index=14&type=section&id=Note%208.%20Leases) Operating lease expense was **$518 thousand** for H1 2025, with lease liabilities decreasing to **$703 thousand** and a weighted average term of **0.8 years** - Operating lease expense for the six months ended **June 30, 2025**, was **$518 thousand**, reported across cost of sales and operating expenses[47](index=47&type=chunk) Operating Lease Information (In thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------------ | | Weighted average remaining lease term (in years) | **0.8** | **1.2** | | Weighted average discount rate | **8.2%** | **7.7%** | | Total lease liabilities | **$703** | **$1,186** | Operating Cash Outflows from Leases (In thousands) | Period | Operating Cash Outflows | | :-------------------- | :---------------------- | | Six Months Ended June 30, 2025 | **$526** | | Six Months Ended June 30, 2024 | **$510** | [Note 9. Income taxes](index=15&type=section&id=Note%209.%20Income%20taxes) Income tax expense was **$40 thousand** for Q2 and **$91 thousand** for H1 2025, with high effective rates due to near-breakeven losses and a full valuation allowance Income Tax Expense (Benefit) and Effective Tax Rate | Period | Income Tax Expense (Benefit) | Effective Tax Rate | | :-------------------------------- | :--------------------------- | :----------------- | | Three Months Ended June 30, 2025 | **$40 thousand** | **38.8%** | | Three Months Ended June 30, 2024 | **$86 thousand** (benefit) | **(21.2%)** | | Six Months Ended June 30, 2025 | **$91 thousand** | **275.8%** | | Six Months Ended June 30, 2024 | **$363 thousand** (benefit) | **(21.1%)** | - The unusually high effective tax rates are due to near-breakeven pre-tax losses and tax expense only from UK earnings and minimum required U.S. state taxes[51](index=51&type=chunk) - A full valuation allowance of **$8.3 million** was maintained against net deferred income tax assets as of **June 30, 2025**, first recognized in **Q4 2024**[52](index=52&type=chunk)[53](index=53&type=chunk) [Note 10. Subsequent events](index=16&type=section&id=Note%2010.%20Subsequent%20events) Subsequent events include new tax laws, a **19%** U.S. tariff on Thai goods, and the acquisition of the BOHA! software source code for **$2.55 million** plus transition fees - The U.S. President signed the One Big Beautiful Bill Act (OBBBA) on **July 4, 2025**, introducing federal tax law changes, which the company does not anticipate will have a material impact due to its current tax positions[55](index=55&type=chunk)[56](index=56&type=chunk) - A U.S. tariff of **19%** on goods imported from Thailand was announced on **July 30, 2025**, effective **August 7, 2025**, which is expected to impact certain goods assembled by the company's manufacturer in Thailand[57](index=57&type=chunk) - On **August 6, 2025**, the company acquired a perpetual, royalty-free license to the BOHA! software source code for **$2.55 million**, plus approximately **$1.0 million** in professional services fees for transition, with hosting expected to go live in **early 2027**[58](index=58&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and operations, covering key drivers, market trends, the BOHA! software acquisition, tariff impacts, and detailed revenue and expense analysis [Forward-Looking Statements](index=17&type=section&id=Forward-Looking%20Statements) This section cautions on forward-looking statements, detailing risks like economic conditions, supply chain disruptions, inflation, and market competition - Forward-looking statements are subject to risks and uncertainties, including adverse economic conditions, supply chain disruptions, inflation, and geopolitical conflicts[60](index=60&type=chunk)[62](index=62&type=chunk) - Other significant factors include difficulties in manufacturing, price increases, decreased availability of components, ability to develop new products, and risks associated with the BOHA! software acquisition and foreign operations[62](index=62&type=chunk) [Overview](index=18&type=section&id=Overview) TransAct leads in software-driven technology and printing solutions for food service, POS automation, and casino/gaming, operating as a single segment with global product sales - TransAct is a global leader in software-driven technology and printing solutions for food service technology, POS automation, and casino and gaming markets[63](index=63&type=chunk) - The company's BOHA! products automate back-of-house operations in food service, while thermal printers generate labels, coupons, and transaction records[63](index=63&type=chunk) - TransAct operates in a single reportable segment, with its chief operating decision-makers using a consolidated approach to assess performance and allocate resources[63](index=63&type=chunk) [Recent Developments](index=18&type=section&id=Recent%20Developments) TransAct acquired a perpetual, royalty-free license to the BOHA! software source code for **$2.55 million** plus **$1.0 million** in transition fees, enabling independent hosting by **early 2027** - On **August 6, 2025**, TransAct acquired a perpetual and royalty-free license to the BOHA! software source code from Avery Dennison[65](index=65&type=chunk) - Total consideration for the acquisition was **$2.55 million**, plus approximately **$1.0 million** in professional services fees for transition services[65](index=65&type=chunk) - TransAct will host the code in its own environment, expected to go live in **early 2027**, allowing for independent use, modification, and distribution[65](index=65&type=chunk) [Current Business and Economic Trends](index=18&type=section&id=Current%20Business%20and%20Economic%20Trends) Casino and gaming sales are normalizing in **2025**, but new **19%** U.S. tariffs on Thai goods, effective **August 7, 2025**, will impact results, with price increases planned for mitigation - The casino and gaming market is expected to return to more normalized sales levels in **2025**, as significant domestic customers have sold through excess inventory[66](index=66&type=chunk) - A U.S. tariff of **19%** on goods imported from Thailand will be effective **August 7, 2025**, impacting products assembled by the company's manufacturer[68](index=68&type=chunk)[69](index=69&type=chunk) - The company plans to mitigate tariff impacts by raising prices to customers, but cannot assure all costs will be passed on[69](index=69&type=chunk) [Balance Sheet, Cash Flow and Liquidity](index=19&type=section&id=Balance%20Sheet,%20Cash%20Flow%20and%20Liquidity) Cost reduction initiatives are expected to yield **$2 million** in **2025** savings, with inventory reduction benefiting cash flow; management deems resources sufficient for **12 months** despite uncertainties - A cost reduction initiative in **Q2 2024** is expected to yield approximately **$2 million** in annualized savings in **2025**[72](index=72&type=chunk) - Inventory levels were reduced by approximately **$3.2 million** in the first half of **2025**, benefiting cash flow and liquidity[72](index=72&type=chunk) - Management believes current cost-cutting efforts and liquidity measures will be sufficient, but acknowledges the uncertain ultimate impact of global economic conditions[73](index=73&type=chunk) [Critical Accounting Estimates](index=19&type=section&id=Critical%20Accounting%20Estimates) Critical accounting estimates, including revenue recognition, accounts receivable, and deferred tax assets, remain materially unchanged since the **2024 Form 10-K** - Critical accounting estimates include revenue recognition, accounts receivable, inventory obsolescence, goodwill and intangible assets, valuation of deferred tax assets and liabilities, and share-based compensation[74](index=74&type=chunk) - There have been no material changes in critical accounting estimates from the information presented in the **2024 Form 10-K**[74](index=74&type=chunk) [Results of Operations: Three months ended June 30, 2025 compared to three months ended June 30, 2024](index=20&type=section&id=Results%20of%20Operations:%20Three%20months%20ended%20June%2030,%202025%20compared%20to%20three%20months%20ended%20June%2030,%202024) Net sales increased **19%** to **$13.8 million**, driven by FST and Casino/Gaming; gross margin declined to **48%**, but operating loss narrowed, and net loss decreased to **$(143) thousand** [Net Sales](index=20&type=section&id=Net%20Sales_Q2) Net Sales by Market (Three Months Ended June 30, In thousands) | Market | 2025 Sales | 2025 % of Total | 2024 Sales | 2024 % of Total | $ Change | % Change | | :---------------------- | :----------- | :-------------- | :----------- | :-------------- | :------- | :------- | | Food service technology | $4,761 | **34.5%** | $4,178 | **36.0%** | $583 | **14.0%** | | POS automation | $590 | **4.3%** | $1,151 | **9.9%** | $(561) | **(48.7%)** | | Casino and gaming | $7,629 | **55.3%** | $5,359 | **46.2%** | $2,270 | **42.4%** | | TransAct Services Group | $818 | **5.9%** | $911 | **7.9%** | $(93) | **(10.2%)** | | **Total net sales** | **$13,798** | **100.0%** | **$11,599** | **100.0%** | **$2,199** | **19.0%** | | International | $2,316 | **16.8%** | $2,780 | **24.0%** | $(464) | **(16.7%)** | - Printer, terminal, and other hardware unit sales volume increased **21%** to approximately **26,300 units**, driven by **40% growth** in casino and gaming and **41%** in FST hardware[76](index=76&type=chunk) - The average selling price of hardware increased **5%** due to increased costs from U.S. tariffs passed on to customers[76](index=76&type=chunk) [Food service technology ("FST")](index=20&type=section&id=Food%20service%20technology%20(%22FST%22)_Q2) FST Sales by Type (Three Months Ended June 30, In thousands) | FST Sales Type | 2025 Sales | 2025 % of Total | 2024 Sales | 2024 % of Total | $ Change | % Change | | :------------------------------ | :----------- | :-------------- | :----------- | :-------------- | :------- | :------- | | Hardware | $1,802 | **37.8%** | $1,402 | **33.6%** | $400 | **28.5%** | | Software, labels and other recurring revenue | $2,959 | **62.2%** | $2,776 | **66.4%** | $183 | **6.6%** | | **Total FST sales** | **$4,761** | **100.0%** | **$4,178** | **100.0%** | **$583** | **14.0%** | - Domestic hardware sales increased **28.5%**, driven by Workstation sales to a new sushi customer and BOHA! Terminal 2 sales to existing customers[79](index=79&type=chunk) - Despite the loss of a significant customer (approx. **$300k** in **Q2 2024** sales), FST software, labels, and other recurring revenue increased **6.6%**, primarily due to label sales to the new sushi customer[79](index=79&type=chunk)[80](index=80&type=chunk) [POS automation](index=21&type=section&id=POS%20automation_Q2) POS Automation Sales (Three Months Ended June 30, In thousands) | POS Automation Sales | 2025 Sales | 2025 % of Total | 2024 Sales | 2024 % of Total | $ Change | % Change | | :--------------------- | :----------- | :-------------- | :----------- | :-------------- | :------- | :------- | | Domestic | $585 | **99.2%** | $1,151 | **100.0%** | $(566) | **(49.2%)** | | International | $5 | **0.8%** | $0 | **0.0%** | $5 | - | | **Total POS automation sales** | **$590** | **100.0%** | **$1,151** | **100.0%** | **$(561)** | **(48.7%)**| - The **49% decline** in POS automation sales was largely due to competitive pressure and a reduction in average selling prices[83](index=83&type=chunk) [Casino and gaming](index=22&type=section&id=Casino%20and%20gaming_Q2) Casino and Gaming Sales (Three Months Ended June 30, In thousands) | Casino and Gaming Sales | 2025 Sales | 2025 % of Total | 2024 Sales | 2024 % of Total | $ Change | % Change | | :------------------------ | :----------- | :-------------- | :----------- | :-------------- | :------- | :------- | | Domestic | $5,959 | **78.1%** | $3,178 | **59.3%** | $2,781 | **87.5%** | | International | $1,670 | **21.9%** | $2,181 | **40.7%** | $(511) | **(23.4%)** | | **Total casino and gaming sales** | **$7,629** | **100.0%** | **$5,359** | **100.0%** | **$2,270** | **42.4%** | - Domestic sales increased **88%** as major customers normalized ordering after working through excess inventory accumulated during the supply chain crisis[85](index=85&type=chunk) - Sales also benefited from a new OEM customer for charitable gaming establishments[85](index=85&type=chunk) - International sales decreased **23%** due to a significant European OEM still working down overstocked inventory[86](index=86&type=chunk) [TransAct Services Group ("TSG")](index=22&type=section&id=TransAct%20Services%20Group%20(%22TSG%22)_Q2) TSG Sales (Three Months Ended June 30, In thousands) | TSG Sales | 2025 Sales | 2025 % of Total | 2024 Sales | 2024 % of Total | $ Change | % Change | | :---------- | :----------- | :-------------- | :----------- | :-------------- | :------- | :------- | | Domestic | $584 | **71.4%** | $711 | **78.0%** | $(127) | **(17.9%)** | | International | $234 | **28.6%** | $200 | **22.0%** | $34 | **17.0%** | | **Total TSG sales** | **$818** | **100.0%** | **$911** | **100.0%** | **$(93)** | **(10.2%)**| - Domestic revenue decreased due to lower sales of legacy replacement parts for lottery printers and legacy consumables[87](index=87&type=chunk) - The company expects TSG sales to be lower in **2025**, with plans to cease selling all remaining legacy consumable products by the end of **2025**[88](index=88&type=chunk) [Gross Profit](index=23&type=section&id=Gross%20Profit_Q2) Gross Profit (Three Months Ended June 30, In thousands) | Metric | 2025 | 2024 | % Change | 2025 % of Sales | 2024 % of Sales | | :--------- | :--- | :--- | :------- | :-------------- | :-------------- | | Gross profit | $6,652 | $6,110 | **8.9%** | **48.2%** | **52.7%** | - Gross margin declined **450 basis points** to **48%** due to higher sales of lower-margin BOHA! hardware products, increased overhead costs, inflation, and competitive pricing in POS automation[89](index=89&type=chunk) - Gross margin for **2025** is expected to remain in the **mid-to high-40s range**[90](index=90&type=chunk) [Operating Expenses - Engineering, Design and Product Development](index=23&type=section&id=Operating%20Expenses%20-%20Engineering,%20Design%20and%20Product%20Development_Q2) Engineering, Design and Product Development Expenses (Three Months Ended June 30, In thousands) | Metric | 2025 | 2024 | % Change | 2025 % of Sales | 2024 % of Sales | | :---------------------------------------- | :--- | :--- | :------- | :-------------- | :-------------- | | Engineering, design and product development | $1,725 | $1,799 | **(4.1%)** | **12.5%** | **15.5%** | - Expenses decreased **4%** due to cost reduction initiatives from **Q2 2024**, including reduced contracted software development, partially offset by higher incentive compensation[90](index=90&type=chunk) [Operating Expenses - Selling and Marketing](index=23&type=section&id=Operating%20Expenses%20-%20Selling%20and%20Marketing_Q2) Selling and Marketing Expenses (Three Months Ended June 30, In thousands) | Metric | 2025 | 2024 | % Change | 2025 % of Sales | 2024 % of Sales | | :-------------------- | :--- | :--- | :------- | :-------------- | :-------------- | | Selling and marketing | $2,103 | $2,197 | **(4.3%)** | **15.2%** | **18.9%** | - Expenses decreased **4%** due to cost reduction initiatives (reduced headcount, trade show, marketing), partially offset by higher go-to-market strategy costs and incentive compensation[91](index=91&type=chunk) [Operating Expenses - General and Administrative](index=24&type=section&id=Operating%20Expenses%20-%20General%20and%20Administrative_Q2) General and Administrative Expenses (Three Months Ended June 30, In thousands) | Metric | 2025 | 2024 | % Change | 2025 % of Sales | 2024 % of Sales | | :-------------------------- | :--- | :--- | :------- | :-------------- | :-------------- | | General and administrative | $3,082 | $2,552 | **20.8%** | **22.3%** | **22.0%** | - Expenses increased **21%** primarily due to higher incentive and stock-based compensation, partially offset by cost reduction initiatives[92](index=92&type=chunk) [Operating Loss](index=24&type=section&id=Operating%20Loss_Q2) Operating Loss (Three Months Ended June 30, In thousands) | Metric | 2025 | 2024 | % Change | 2025 % of Sales | 2024 % of Sales | | :------------- | :--- | :--- | :------- | :-------------- | :-------------- | | Operating loss | $(258) | $(438) | **41.1%** | **(1.9%)** | **(3.8%)** | - Operating loss decreased by **$180 thousand**, driven by a **19% increase** in sales and a **$542 thousand increase** in gross profit, despite a **6% increase** in operating expenses[93](index=93&type=chunk) [Interest, net](index=24&type=section&id=Interest,%20net_Q2) - Net interest income increased to **$40 thousand** from **$26 thousand**, primarily due to higher levels of invested cash[94](index=94&type=chunk) - Minimum outstanding borrowings under the credit facility were **$3 million** in **Q2 2025**, up from **$2.25 million** in **Q2 2024**[94](index=94&type=chunk) [Other, net](index=24&type=section&id=Other,%20net_Q2) - Other net income increased significantly to **$115 thousand** from **$7 thousand**, primarily due to foreign exchange gains[95](index=95&type=chunk) [Income Taxes](index=24&type=section&id=Income%20Taxes_Q2) - Income tax expense was **$40 thousand** (**38.8%** effective rate) in **Q2 2025**, compared to a benefit of **$86 thousand** (**-21.2%** effective rate) in **Q2 2024**[96](index=96&type=chunk) - The high effective tax rate is due to near-breakeven pre-tax losses and a full valuation allowance against U.S. deferred taxes, meaning no U.S. federal tax benefits were recorded for losses[96](index=96&type=chunk) [Net Loss](index=24&type=section&id=Net%20Loss_Q2) - Net loss decreased to **$(143) thousand**, or **$(0.01)** per diluted share, from **$(319) thousand**, or **$(0.03)** per diluted share, in the prior year[97](index=97&type=chunk) [Results of Operations: Six Months Ended June 30, 2025 compared to six months ended June 30, 2024](index=25&type=section&id=Results%20of%20Operations:%20Six%20Months%20Ended%20June%2030,%202025%20compared%20to%20six%20months%20ended%20June%2030,%202024) Net sales increased **21%** to **$26.9 million**, driven by FST and Casino/Gaming; gross margin declined to **49%**, but operating loss significantly narrowed by **84%**, and net loss decreased to **$(124) thousand** [Net Sales](index=25&type=section&id=Net%20Sales_H1) Net Sales by Market (Six Months Ended June 30, In thousands) | Market | 2025 Sales | 2025 % of Total | 2024 Sales | 2024 % of Total | $ Change | % Change | | :---------------------- | :----------- | :-------------- | :----------- | :-------------- | :------- | :------- | | FST | $9,669 | **36.0%** | $7,478 | **33.5%** | $2,191 | **29.3%** | | POS automation | $1,208 | **4.5%** | $1,802 | **8.1%** | $(594) | **(33.0%)** | | Casino and gaming | $14,348 | **53.4%** | $11,055 | **49.6%** | $3,293 | **29.8%** | | TSG | $1,626 | **6.1%** | $1,951 | **8.8%** | $(325) | **(16.7%)** | | **Total net sales** | **$26,851** | **100.0%** | **$22,286** | **100.0%** | **$4,565** | **20.5%** | | International | $4,623 | **17.2%** | $5,702 | **25.6%** | $(1,079) | **(18.9%)** | - Printer, terminal, and other hardware sales unit volume increased **24%** to approximately **51,000 units**, driven by **32% growth** in casino and gaming and **82%** in FST[99](index=99&type=chunk) - The average selling price of hardware increased **5%** due to increased costs from U.S. tariffs passed on to customers[99](index=99&type=chunk) [Food service technology](index=25&type=section&id=Food%20service%20technology_H1) FST Sales by Type (Six Months Ended June 30, In thousands) | FST Sales Type | 2025 Sales | 2025 % of Total | 2024 Sales | 2024 % of Total | $ Change | % Change | | :------------------------------ | :----------- | :-------------- | :----------- | :-------------- | :------- | :------- | | Hardware | $4,054 | **41.9%** | $2,295 | **30.7%** | $1,759 | **76.6%** | | Software, labels and other recurring revenue | $5,615 | **58.1%** | $5,183 | **69.3%** | $432 | **8.3%** | | **Total FST sales** | **$9,669** | **100.0%** | **$7,478** | **100.0%** | **$2,191** | **29.3%** | - Hardware sales increased **77%**, driven by Workstation sales to a new sushi customer and BOHA! Terminal 2 sales to existing customers[100](index=100&type=chunk) - Despite the loss of a significant customer (approx. **$600k** in **H1 2024** sales), FST labels and other recurring revenue increased **8.3%**, primarily due to label sales to the new sushi customer[100](index=100&type=chunk)[101](index=101&type=chunk) [POS automation](index=26&type=section&id=POS%20automation_H1) POS Automation Sales (Six Months Ended June 30, In thousands) | POS Automation Sales | 2025 Sales | 2025 % of Total | 2024 Sales | 2024 % of Total | $ Change | % Change | | :--------------------- | :----------- | :-------------- | :----------- | :-------------- | :------- | :------- | | Domestic | $1,203 | **99.6%** | $1,802 | **100.0%** | $(599) | **(33.2%)** | | International | $5 | **0.4%** | $0 | **0.0%** | $5 | - | | **Total POS automation sales** | **$1,208** | **100.0%** | **$1,802** | **100.0%** | **$(594)** | **(33.0%)**| - Sales decreased **33%** due to competitive pressure and a reduction in average selling prices[102](index=102&type=chunk) [Casino and gaming](index=26&type=section&id=Casino%20and%20gaming_H1) Casino and Gaming Sales (Six Months Ended June 30, In thousands) | Casino and Gaming Sales | 2025 Sales | 2025 % of Total | 2024 Sales | 2024 % of Total | $ Change | % Change | | :------------------------ | :----------- | :-------------- | :----------- | :-------------- | :------- | :------- | | Domestic | $10,781 | **75.1%** | $6,416 | **58.0%** | $4,365 | **68.0%** | | International | $3,567 | **24.9%** | $4,639 | **42.0%** | $(1,072) | **(23.1%)** | | **Total casino and gaming sales** | **$14,348** | **100.0%** | **$11,055** | **100.0%** | **$3,293** | **29.8%** | - Domestic sales increased **68%** as major customers normalized ordering after working through excess inventory[103](index=103&type=chunk) - Sales also benefited from a new OEM customer for charitable gaming establishments[103](index=103&type=chunk) - International sales decreased **23%** due to a significant European OEM still working down overstocked inventory, expected to resume ordering late **H2 2025**[104](index=104&type=chunk) [TSG](index=26&type=section&id=TSG_H1) TSG Sales (Six Months Ended June 30, In thousands) | TSG Sales | 2025 Sales | 2025 % of Total | 2024 Sales | 2024 % of Total | $ Change | % Change | | :---------- | :----------- | :-------------- | :----------- | :-------------- | :------- | :------- | | Domestic | $1,268 | **78.0%** | $1,564 | **80.2%** | $(296) | **(18.9%)** | | International | $358 | **22.0%** | $387 | **19.8%** | $(29) | **(7.5%)** | | **Total TSG sales** | **$1,626** | **100.0%** | **$1,951** | **100.0%** | **$(325)** | **(16.7%)**| - Domestic revenue decreased due to lower sales of legacy replacement parts for lottery printers and legacy consumables[105](index=105&type=chunk) - The company expects TSG sales to be lower in **2025**, with plans to cease selling all remaining legacy consumable products by the end of **2025**[106](index=106&type=chunk) [Gross Profit](index=27&type=section&id=Gross%20Profit_H1) Gross Profit (Six Months Ended June 30, In thousands) | Metric | 2025 | 2024 | % Change | 2025 % of Sales | 2024 % of Sales | | :--------- | :---- | :---- | :------- | :-------------- | :-------------- | | Gross profit | $13,011 | $11,734 | **10.9%** | **48.5%** | **52.7%** | - Gross margin declined **420 basis points** to **49%** due to higher sales of lower-margin BOHA! hardware products, increased overhead costs, inflation, and competitive pricing in POS automation[107](index=107&type=chunk) - Gross margin for **2025** is expected to remain in the **mid-to high-40s range**[108](index=108&type=chunk) [Operating Expenses - Engineering, Design and Product Development](index=27&type=section&id=Operating%20Expenses%20-%20Engineering,%20Design%20and%20Product%20Development_H1) Engineering, Design and Product Development Expenses (Six Months Ended June 30, In thousands) | Metric | 2025 | 2024 | % Change | 2025 % of Sales | 2024 % of Sales | | :---------------------------------------- | :--- | :--- | :------- | :-------------- | :-------------- | | Engineering, design and product development | $3,360 | $3,765 | **(10.8%)** | **12.5%** | **16.9%** | - Expenses decreased **11%** due to cost reduction initiatives from **Q2 2024**, including reduced contracted software development, partially offset by higher incentive compensation[108](index=108&type=chunk) [Operating Expenses - Selling and Marketing](index=27&type=section&id=Operating%20Expenses%20-%20Selling%20and%20Marketing_H1) Selling and Marketing Expenses (Six Months Ended June 30, In thousands) | Metric | 2025 | 2024 | % Change | 2025 % of Sales | 2024 % of Sales | | :-------------------- | :--- | :--- | :------- | :-------------- | :-------------- | | Selling and marketing | $4,188 | $4,280 | **(2.1%)** | **15.6%** | **19.2%** | - Expenses decreased **2%** due to cost reduction initiatives (reduced headcount, trade show, marketing), partially offset by higher go-to-market strategy costs and incentive compensation[109](index=109&type=chunk) [Operating Expenses - General and Administrative](index=27&type=section&id=Operating%20Expenses%20-%20General%20and%20Administrative_H1) General and Administrative Expenses (Six Months Ended June 30, In thousands) | Metric | 2025 | 2024 | % Change | 2025 % of Sales | 2024 % of Sales | | :-------------------------- | :--- | :--- | :------- | :-------------- | :-------------- | | General and administrative | $5,736 | $5,428 | **5.7%** | **21.4%** | **24.4%** | - Expenses increased **6%** primarily due to higher incentive and stock-based compensation, partially offset by cost reduction initiatives[110](index=110&type=chunk) [Operating Loss](index=27&type=section&id=Operating%20Loss_H1) Operating Loss (Six Months Ended June 30, In thousands) | Metric | 2025 | 2024 | % Change | 2025 % of Sales | 2024 % of Sales | | :------------- | :---- | :---- | :------- | :-------------- | :-------------- | | Operating loss | $(273) | $(1,739) | **84.3%** | **(1.0%)** | **(7.8%)** | - Operating loss decreased by **$1.5 million**, or **84%**, driven by a **21% increase** in sales and a **$1.3 million increase** in gross profit, alongside a **1% decrease** in operating expenses[111](index=111&type=chunk) [Interest, net](index=29&type=section&id=Interest,%20net_H1) - Net interest income decreased to **$62 thousand** from **$74 thousand**, despite higher invested cash, due to increased interest expense on higher minimum required borrowings (**$3 million** in **H1 2025** vs **$2.25 million** in **H1 2024**)[112](index=112&type=chunk) [Other, net](index=29&type=section&id=Other,%20net_H1) - Other net income shifted to **$178 thousand** from an expense of **$(53) thousand**, primarily due to foreign exchange gains[113](index=113&type=chunk) [Income Taxes](index=29&type=section&id=Income%20Taxes_H1) - Income tax expense was **$91 thousand** (**275.8%** effective rate) in **H1 2025**, compared to a benefit of **$363 thousand** (**-21.1%** effective rate) in **H1 2024**[114](index=114&type=chunk) - The high effective tax rate is due to near-breakeven pre-tax losses and a full valuation allowance against U.S. deferred taxes, meaning no U.S. federal tax benefits were recorded for losses[114](index=114&type=chunk) [Net Loss](index=29&type=section&id=Net%20Loss_H1) - Net loss decreased to **$(124) thousand**, or **$(0.01)** per diluted share, from **$(1.4 million)**, or **$(0.14)** per diluted share, in the prior year[115](index=115&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and cash equivalents increased by **$3.4 million** to **$17.7 million**, driven by operations and inventory reduction; management believes liquidity is sufficient for **12 months** despite uncertainties [Cash Flow](index=29&type=section&id=Cash%20Flow) - Cash and cash equivalents increased by **$3.4 million** (**23%**) to **$17.7 million** as of **June 30, 2025**[116](index=116&type=chunk) - Cash provided by operating activities was **$3.4 million** in **H1 2025**, a significant improvement from **$0.9 million** used in **H1 2024**[117](index=117&type=chunk) - Operating cash flow benefited from a **$3.4 million decrease** in inventories, partially offset by a **$1.2 million increase** in accounts receivable[119](index=119&type=chunk) [Resource Sufficiency](index=30&type=section&id=Resource%20Sufficiency) - Management believes that cash and cash equivalents, expected cash flows from operating activities, and available borrowings under the credit facility will provide sufficient resources for the next **twelve months**[121](index=121&type=chunk) - The company continues to monitor cash generation, usage, and preservation, including working capital management, given uncertainties related to tariffs and general economic conditions[120](index=120&type=chunk) [Credit Facility](index=30&type=section&id=Credit%20Facility) - The Siena Credit Facility provides a revolving credit line of up to **$10.0 million**, with **$3.0 million** outstanding at an interest rate of **9.25%** as of **June 30, 2025**[122](index=122&type=chunk)[125](index=125&type=chunk) - The company had **$1.6 million** of net borrowing capacity available under the facility and remained in compliance with its excess availability covenant through **June 30, 2025**[123](index=123&type=chunk)[125](index=125&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, TransAct Technologies Inc. is exempt from detailed market risk disclosures - TransAct is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[126](index=126&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of **June 30, 2025**, with no material changes in internal control over financial reporting during the quarter [Evaluation of Disclosure Controls and Procedures](index=30&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Management, with CEO and CFO participation, evaluated the effectiveness of disclosure controls and procedures as of **June 30, 2025**[127](index=127&type=chunk) - It was concluded that disclosure controls and procedures were effective at the reasonable assurance level[127](index=127&type=chunk) [Changes in Internal Control Over Financial Reporting](index=31&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - No material changes in internal control over financial reporting occurred during the fiscal quarter ended **June 30, 2025**[128](index=128&type=chunk) PART II - Other Information [Item 1. Legal Proceedings](index=31&type=section&id=Item%201%20Legal%20Proceedings) No material pending or contemplated legal proceedings are known as of **June 30, 2025** - As of **June 30, 2025**, the company is unaware of any material pending legal proceedings or any material legal proceedings contemplated by government authorities[129](index=129&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A%20Risk%20Factors) Updated risk factors include challenges with the BOHA! software source code acquisition, dependence on a **single manufacturer in Thailand**, and increased costs from new U.S. tariffs - New risks include potential difficulties in realizing expected benefits from the BOHA! source code acquisition, including challenges in timely delivery, transition services, and potential defects in the code[131](index=131&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk) - The company remains dependent on a **single manufacturer in Thailand** for substantially all printer and terminal manufacturing and assembly[139](index=139&type=chunk)[140](index=140&type=chunk) - A **19%** U.S. tariff on goods imported from Thailand, effective **August 7, 2025**, poses risks of increased costs, pricing pressures, and supply chain disruptions[141](index=141&type=chunk)[142](index=142&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported - No unregistered sales of equity securities or use of proceeds to report[145](index=145&type=chunk) [Item 3. Defaults Upon Senior Securities](index=33&type=section&id=Item%203%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported - No defaults upon senior securities to report[145](index=145&type=chunk) [Item 4. Mine Safety Disclosures](index=33&type=section&id=Item%204%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[145](index=145&type=chunk) [Item 5. Other Information](index=33&type=section&id=Item%205%20Other%20Information) No other material information to report, including no **Rule 10b5-1 trading arrangements** adopted or terminated by directors or officers - No director or officer adopted or terminated a "**Rule 10b5-1 trading arrangement**" or a "**non-Rule 10b5-1 trading arrangement**" during the three months ended **June 30, 2025**[146](index=146&type=chunk) [Item 6. Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including corporate documents and key agreements - Exhibits include the Certificate of Incorporation, Amended and Restated By-Laws, Source Code Purchase and Perpetual License Agreement, and certifications by the CEO and CFO[147](index=147&type=chunk) [SIGNATURES](index=36&type=section&id=SIGNATURES) The report is duly signed by Steven A. DeMartino (President, CFO) and William J. DeFrances (VP, Chief Accounting Officer) - The report is signed by Steven A. DeMartino (President, CFO, Treasurer, and Secretary) and William J. DeFrances (VP and Chief Accounting Officer) on **August 11, 2025**[152](index=152&type=chunk)

Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Strategy - Momentum investors often face challenges in determining the right entry point, as stocks may lose momentum when their valuations exceed future growth potential [2] - Investing in bargain stocks that exhibit recent price momentum can be a safer strategy, utilizing tools like the Zacks Momentum Style Score to identify promising stocks [3] Group 2: TransAct Technologies Incorporated (TACT) - TACT has shown a four-week price change of 2.9%, indicating growing investor interest [4] - The stock has gained 5.3% over the past 12 weeks and has a beta of 1.27, suggesting it moves 27% more than the market [5] - TACT has a Momentum Score of A, indicating a favorable time to invest [6] - The stock has a Zacks Rank 2 (Buy) due to upward revisions in earnings estimates, which attract more investors [7] - TACT is trading at a Price-to-Sales ratio of 0.83, suggesting it is undervalued at 83 cents for each dollar of sales [7] Group 3: Additional Investment Opportunities - Besides TACT, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting further investment opportunities [8] - The Zacks Premium Screens offer over 45 different strategies tailored to various investing styles, aimed at outperforming the market [9]

Financial Data and Key Metrics Changes - Total net sales for Q2 2025 were $13.8 million, up 6% sequentially and 19% year over year from $11.6 million [23] - Adjusted EBITDA for the quarter was positive at $478,000, an increase from $89,000 in the prior year period [30] - Gross margin for Q2 was 48.2%, down from 52.7% in the prior year period, attributed to a higher mix of lower-margin FST hardware sales [27] Business Line Data and Key Metrics Changes - Food Service Technology (FST) revenue rose to $4.8 million, up 14% year over year, with recurring FST revenue climbing to $3 million, showing solid gains [13][23] - Casino and gaming revenue reached $7.6 million, up 42% year over year and 14% sequentially, driven by improved market demand and new OEM partnerships [16][26] - POS automation sales declined 49% year over year to $590,000, expected to remain in the $500,000 to $600,000 range per quarter [26] Market Data and Key Metrics Changes - The casino and gaming market is experiencing a rebound, with normalized buying levels from major OEMs and new opportunities in non-casino charitable gaming applications [16][18] - The FST market is seeing strong momentum, with a focus on operational efficiency and sales process improvements contributing to positive results [14][20] Company Strategy and Development Direction - The company has acquired a perpetual license for the BOHA! software source code for $2.55 million, which is expected to generate significant benefits and cost savings in the future [8][12] - The strategy includes a "land and expand" approach to client acquisition, focusing on smaller initial sales with the potential for future expansions [15][37] - Management emphasizes disciplined investments and execution of the corporate plan to maximize shareholder value [20][21] Management's Comments on Operating Environment and Future Outlook - Management is optimistic about the company's trajectory, expecting continued growth in FST and stability in the casino and gaming sectors [21][22] - The company raised its full-year revenue guidance to between $49 million and $53 million, reflecting confidence in ongoing market demand [21] - Management acknowledges the need to monitor broader economic factors affecting the casino and gaming industry but does not foresee long-term concerns [20] Other Important Information - The company expects to capitalize $3.55 million of the acquisition costs and begin amortizing it in early 2027 [12][31] - The balance sheet remains solid, with cash and cash equivalents of nearly $18 million at the end of Q2 [30] Q&A Session Summary Question: Satisfaction with FST sales excluding QSR - Management expressed excitement about progress in selling to newer client bases and emphasized the importance of customer engagement and sales training [34][36] Question: Potential for adding software components to QSR sales - Management confirmed ongoing discussions about adding software components to terminal sales for large QSRs [39][40] Question: Market share gains in casino and gaming - Management indicated a focus on gradually eroding competitors' market positions and emphasized the importance of being present in new opportunities [41][42]

Exhibit 10.1 Certain information in this document (indicated by "[***]") has been excluded pursuant to Item 601(b)(10)(iv) of Regulation S-K because it is not material and is the type that the registrant treats as private or confidential. SOURCE CODE PURCHASE AND PERPETUAL LICENSE AGREEMENT THIS SOURCE CODE PURCHASE AND PERPETUAL LICENSE AGREEMENT (hereinafter the "Agreement") is entered into as of this 5th day of August, 2025 (hereinafter the "Effective Date"), by and between Avery Dennison Corporation (he ...

Industry Overview - The Zacks Computer-Peripheral Equipment industry includes companies that provide input, output, and storage devices, such as keyboards, mice, LCD panels, smart glasses, and gaming accessories [3] - The industry is characterized by intense competition, driving innovation and product relevance among participants [3] Current Trends - There is a shift in consumer preference from mobile gaming to professional gaming, which is expected to drive growth in the gaming peripherals market [4] - The 3D printing market is seen as a long-term investment opportunity, with increasing adoption across various sectors, including medical and automotive [4] - The expansion into price-sensitive regions like Asia Pacific and the Middle East & Africa is anticipated to enhance growth prospects [5] Demand and Market Dynamics - Improving commercial PC demand is likely to benefit the computer peripherals industry, particularly with the upcoming end of Microsoft's Windows 10 support in October 2025 [6] - The industry is currently facing macroeconomic challenges, including high inflation and interest rates, which are dampening IT spending and consumer demand [2][7] Financial Performance - The Zacks Computer-Peripheral Equipment industry has underperformed the S&P 500 and the broader technology sector, declining by 7.1% over the past 12 months [13] - The industry is trading at a forward 12-month price-to-sales (P/S) ratio of 0.62X, significantly lower than the S&P 500's 5.28X and the technology sector's 6.65X [16] Company Highlights - **TransAct Technologies**: Focuses on transaction-based printers and is benefiting from increased demand amid digital transformation. The Zacks Consensus Estimate for 2025 indicates a loss of 19 cents per share, an improvement from previous estimates [20][22] - **Immersion**: A leader in haptic technology with a strong patent portfolio, integrated into over three billion devices. The Zacks Consensus Estimate for fiscal 2026 earnings is 42 cents per share, unchanged over the past 60 days [25][27] - **LG Display**: Manufactures display panels with healthy demand from PC vendors. The Zacks Consensus Estimate for 2025 earnings is 25 cents per share, remaining stable over the past 60 days [30][32]

Group 1 - Momentum investing contrasts with the traditional strategy of "buy low and sell high," focusing instead on "buying high and selling higher" [1] - Identifying the right entry point for fast-moving stocks can be challenging, as they may lose momentum if future growth does not justify their high valuations [1] - Investing in bargain stocks that have recently shown price momentum may be a safer strategy [2] Group 2 - TransAct Technologies Incorporated (TACT) is highlighted as a strong candidate for investment due to its recent price momentum, with a four-week price change of 0.5% [3] - TACT has gained 2.8% over the past 12 weeks, indicating its ability to deliver positive returns over a longer timeframe [4] - The stock has a Momentum Score of A, suggesting it is an opportune time to invest [5] Group 3 - TACT has received a Zacks Rank 1 (Strong Buy) due to upward revisions in earnings estimates, which attract more investor interest [6] - The stock is trading at a Price-to-Sales ratio of 0.82, indicating it is reasonably valued at 82 cents for each dollar of sales [6] - TACT is positioned for significant growth potential, supported by its fast-paced momentum characteristics [7]

[Part I - Financial Information](index=4&type=section&id=PART%20I%20-%20Financial%20Information) [Financial Statements (Unaudited)](index=4&type=section&id=Item%201%20Financial%20Statements) TransAct Technologies reported Q1 2025 net sales of $13.1 million and net income of $19 thousand, a significant improvement from prior year's net loss, with total assets at $44.2 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $14,178 | $14,394 | | Total current assets | $38,918 | $38,362 | | Total assets | $44,164 | $44,034 | | Total current liabilities | $12,752 | $12,884 | | Total liabilities | $13,223 | $13,401 | | Total shareholders' equity | $30,941 | $30,633 | Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Account | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net sales | $13,053 | $10,687 | | Gross profit | $6,359 | $5,624 | | Operating loss | $(15) | $(1,301) | | Net income (loss) | $19 | $(1,036) | | Basic EPS | $0.00 | $(0.10) | | Diluted EPS | $0.00 | $(0.10) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(161) | $(1,490) | | Net cash used in investing activities | $(10) | $(106) | | Net cash used in financing activities | $(50) | $(71) | | Decrease in cash and cash equivalents | $(216) | $(1,690) | | Cash and cash equivalents, end of period | $14,178 | $10,631 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Q1 2025 revenue grew **22.1%** driven by strong FST and Casino/Gaming sales, while gross margin declined due to product mix, and operating expenses decreased, leading to a near break-even operating loss [Results of Operations](index=20&type=section&id=Results%20of%20Operations) Q1 2025 net sales increased **22.1%** to **$13.1 million**, primarily from FST and Casino/Gaming growth, while gross margin declined due to product mix, and operating expenses decreased, significantly reducing the operating loss Net Sales by Market (in thousands) | Market | Q1 2025 Sales | Q1 2024 Sales | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Food service technology (FST) | $4,908 | $3,300 | $1,608 | 48.7% | | POS automation | $618 | $651 | $(33) | (5.1%) | | Casino and gaming | $6,719 | $5,696 | $1,023 | 18.0% | | TransAct Services Group (TSG) | $808 | $1,040 | $(232) | (22.3%) | | **Total Net Sales** | **$13,053** | **$10,687** | **$2,366** | **22.1%** | - FST sales growth was driven by a **152% increase** in hardware sales, primarily BOHA! Terminal 2 units to a large convenience store, an international QSR, and a new sushi customer, offsetting the loss of a significant customer who contributed approximately **$300 thousand** in revenue in Q1 2024[73](index=73&type=chunk)[74](index=74&type=chunk) - Domestic casino and gaming sales rose **49%** as major customers resumed normal ordering after depleting excess inventory built up during the supply chain crisis, with a new OEM customer for charitable gaming also contributing to sales[79](index=79&type=chunk) - Gross margin decreased by **390 basis points** to **48.7%** in Q1 2025, largely due to a higher mix of BOHA! hardware sales which have lower margins than casino and gaming products[82](index=82&type=chunk) - Operating expenses decreased by **$551 thousand (8%)** year-over-year, reflecting the impact of cost reduction initiatives started in late 2023 and Q2 2024[87](index=87&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and equivalents decreased to **$14.2 million** in Q1 2025, with improved operating cash flow, and the company maintains a **$3.0 million** credit facility, believing resources are sufficient for future liquidity needs - Cash used in operating activities improved significantly to **$161 thousand** in Q1 2025 from **$1.5 million** in Q1 2024, primarily due to a **$2.5 million** increase in accounts receivable offset by a **$1.8 million** decrease in inventories[92](index=92&type=chunk)[98](index=98&type=chunk) - As of March 31, 2025, the company had **$3.0 million** in outstanding borrowings under its Siena Credit Facility at an interest rate of **9.25%**, with an additional **$3.3 million** of net borrowing capacity available[100](index=100&type=chunk) - The company expects more normalized sales in the casino and gaming market in 2025 after customers worked through excess inventory in 2024, and management believes existing resources are sufficient for the next twelve months despite uncertainties from tariffs and economic conditions[94](index=94&type=chunk)[95](index=95&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=26&type=section&id=Item%203%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is a smaller reporting company and is not required to provide information for this item - As a smaller reporting company defined in Item 10(f)(1) of Regulation S-K, TransAct is not required to provide information under this item[101](index=101&type=chunk) [Controls and Procedures](index=26&type=section&id=Item%204%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of March 31, 2025, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level[102](index=102&type=chunk) - No change in internal control over financial reporting occurred during the fiscal quarter ended March 31, 2025, that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting[103](index=103&type=chunk) [Part II - Other Information](index=26&type=section&id=PART%20II%20-%20Other%20Information) [Legal Proceedings](index=26&type=section&id=Item%201%20Legal%20Proceedings) As of March 31, 2025, the company is not aware of any material pending legal proceedings or any material legal proceedings contemplated by government authorities - The company is unaware of any material pending legal proceedings as of March 31, 2025[104](index=104&type=chunk) [Risk Factors](index=26&type=section&id=Item%201A%20Risk%20Factors) The company faces material risks from its dependence on a single Thai manufacturer, exacerbated by new U.S. tariffs on goods from Thailand, potentially increasing costs and disrupting supply - The company is dependent on a single contract manufacturer in Thailand for the assembly of substantially all its printers and terminals, creating significant concentration risk[106](index=106&type=chunk)[107](index=107&type=chunk) - On April 2, 2025, the U.S. government imposed a **10% tariff** on goods imported from Thailand, effective April 5, 2025, with a potential **36% reciprocal tariff** announced but subsequently suspended until July 2025[108](index=108&type=chunk) - These tariffs and potential trade policy changes could lead to additional costs, pricing pressures, and supply chain disruptions that the company may not be able to fully mitigate by raising prices or changing its supply chain[108](index=108&type=chunk)[109](index=109&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=27&type=section&id=Item%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) None reported for the period - None[111](index=111&type=chunk) [Other Information](index=27&type=section&id=Item%205%20Other%20Information) During the three months ended March 31, 2025, no director or officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement" during the first quarter of 2025[113](index=113&type=chunk) [Exhibits](index=28&type=section&id=Item%206%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO pursuant to the Sarbanes-Oxley Act and Inline XBRL data files