Transact Technologies (TACT) risk factors, FY2024 10-K

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1. 01Operating activities: The following significant factors primarily affected our cash provided by operating activities of $1.8 million in 2024 as compared to cash provided by operating activities of $5.5 million in 2023
2. 02Accounts receivable decreased $3.3 million primarily due to lower sales volume in 2024
3. 03Accrued liabilities and other liabilities decreased $1.8 million due to lower employee bonus and payroll accruals in 2024 compared to 2023
4. 04Accounts receivable decreased $4.2 million primarily due to decreased sales volume during the fourth quarter of 2023
5. 05Investing activities: Our capital expenditures were $0.3 million and $0.9 million in 2024 and 2023, respectively. Expenditures for both years were related to new product tooling and computer and networking equipment
6. 06Credit Facility and Borrowings
7. 07As of December 31, 2024, we had $3.0 million of outstanding borrowings under the Siena Credit Facility and $3.2 million of net borrowing capacity available under the Siena Credit Facility
8. 08Financial Statements and Supplementary Data
9. 09Evaluation of Disclosure Controls and Procedures
10. 10December 31, 2024. Based on this evaluation of our disclosure controls and procedures as of December 31, 2024, our CEO and CFO concluded that, as of December 31, 2024, our disclosure controls and procedures were effective at the reasonable assurance level
11. 11Management’s Annual Report on Internal Control Over Financial Reporting
12. 12Changes in Internal Control over Financial Reporting
13. 13Directors, Executive Officers and Corporate Governance
14. 14Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
15. 15Equity Compensation Plan Information
16. 16Certain Relationships and Related Transactions, and Director Independence
17. 17Principal Accountant Fees and Services
18. 18Exhibits and Financial Statement Schedules
19. 19Certificate 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)
20. 20Certification 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
21. 21Opinion on the Financial Statements
22. 22Valuation of Inventories - Excess and Obsolete Inventory Reserve
23. 23Evaluation of the Realizability of Deferred Tax Assets
24. 24The following are the primary procedures we performed to address this critical audit matter
25. 25Evaluated the Company’s projected revenue and net income (loss) growth rates used to project future taxable income by comparing them to (1) historical and projected growth rates of peer entities and (2) historical growth rates of the Company
26. 26Commitments and contingencies (see Notes 9 and 15)
27. 27Preferred stock, Series A, $0.01 par value, 200,000 authorized, none issued and outstanding
28. 28Foreign currency transaction losses (gains)
29. 29Net cash used in investing activities
30. 301. Description of business
31. 31Use of Assumptions and Estimates
32. 32As a smaller reporting company, as defined in Item 10(f)(1) of Regulation S-K, we may choose to prepare our disclosures relying on certain scaled disclosure requirements for smaller reporting companies in Regulation S-K and in Article 8 of Regulation S-X
33. 332. Summary of significant accounting policies
34. 34Certain amounts for prior years have been reclassified to conform to the current year presentation
35. 35Accounts receivable and credit losses: The Company records accounts receivable when the right to consideration becomes unconditional. We establish an allowance for expected credit losses to ensure trade receivables are valued appropriately
36. 36Disaggregation of revenue
37. 37Remaining performance obligations
38. 38Concentration of credit risk: Financial instruments that potentially expose us to concentrations of credit risk are limited to cash and cash equivalents held by our banks in excess of insured limits and accounts receivable
39. 39International Gaming Technology (“IGT”)
40. 405. Intangible assets, net
41. 418. Retirement savings plan
42. 4210. Stock incentive plans
43. 43Expected Option Term - This is the weighted average period of time over which the options granted are expected to remain outstanding giving consideration to our historical exercise patterns. Options granted have a maximum term of ten years and an increase in the expected term will increase compensation expense
44. 44Dividend Yield –The dividend yield is calculated by dividing the annual dividend declared per common share by the weighted average market value of our common stock on the date of grant. An increase in the dividend yield will decrease compensation expense
45. 45weighted average grant stock price per share
46. 46weighted-average contractual remaining term in years
47. 47Foreign-derived intangible income deduction
48. 48We recognize interest and penalties related to uncertain tax positions in the income tax provision
49. 4913. Stock repurchase program
50. 5016. Quarterly results of operations (unaudited)
51. 5117. Related party transactions