Transact Technologies (TACT) risk factors, FY2025 10-K

What changed since the prior 10-K

New

• NewRisks Related to our Financial Condition and Future Operating Results

  We have a history of net losses, we anticipate making further investments in product development and we may not be able to achieve, maintain or increase profitability in future periods

  We reported net losses of $1.2 million in 2025 and $9.9 million in 2024, and further product development investments may prevent profitability.

• NewRisks Related to our Financial Condition and Future Operating Results

  Our operating results and financial condition may fluctuate

  Quarterly and annual operating results may fluctuate unpredictably, potentially depressing our common stock price if they miss market expectations.

• NewRisks Related to Product Development

  We may not realize the expected benefits of our acquisition of a perpetual license to the BOHA! source code within the anticipated time frame or at all

  We may fail to realize the expected benefits from acquiring a perpetual license to the BOHA! source code.

• NewRisks Related to Product Development

  On August 5, 2025, the Company entered into a Source Code Purchase and Perpetual License Agreement (the “License Agreement”) and a related Transition Statement of Work (together with the License Agreement, the “Source Code Transition Agreement”) with Avery Dennison

  We acquired a $2.55 million perpetual license for BOHA! source code from Avery Dennison, introducing various operational integration risks.

• NewRisks Related to Product Development

  The transition of the Code as contemplated by the Source Code Transition Agreement may require us to incur non-recurring and other charges, increase certain expenditures, and divert certain engineering resources and management attention to support the transition of the Code into the Company’s systems

  Transitioning the BOHA! Code from Avery Dennison may cause non-recurring charges, engineering distractions, service interruptions, or transition failures.

• NewRisks Related to Product Development

  Further, there can be no assurance that the Company will be successful in making any of the anticipated enhancements to the Code, that such enhancements will not result in defects in the Code, or that such enhancements will be well received by customers

  Enhancing the BOHA! Code or migrating to a directly managed cloud hosting provider could cause software defects, disruptions, or customer dissatisfaction.

• NewRisks Related to Product Development

  Our revenue and profitability depend on our ability to continue to develop or license, on a timely basis, new products and technologies which are free from hardware or software anomalies and cannot be fraudulently manipulated, and customer acceptance of such products

  Our FST revenue depends on developing secure, anomaly-free products and new technologies like artificial intelligence that customers will accept.

• NewRisks Related to Our Partners and Suppliers

  We rely on distributors and resellers to sell our products and services

  We rely on distributors and resellers to sell our products and services.

• NewRisks Related to Our Partners and Suppliers

  We use a variety of distribution channels, including OEMs and distributors, to market and sell our products and services. We may be adversely impacted by any conflicts that could arise between and among our various sales channels

  Channel conflicts among our various sales channels, credit risks, and changing demands from distributors could harm our business.

• NewRisks Related to Our Partners and Suppliers

  direct competition should a distributor or reseller decide to manufacture printers internally or source printers from a competitor

  Distributors or resellers could reduce purchases or start manufacturing competing printers internally, hurting our results.

• NewRisks Related to Our Operations

  Our FST business depends substantially on our customers renewing their subscriptions with the Company. Any decline in our customer renewals could harm our FST business, results of operations and financial condition

  A decline in customer subscription renewals could harm our FST business and financial condition.

• NewRisks Related to Our Operations

  Because we rely in part on revenue from subscription contracts and recognize revenue from subscription contracts over the term of the relevant subscription period, downturns or upturns in sales are not immediately reflected in full in our results of operations

  Because we recognize subscription revenue ratably over 12-month terms, sales downturns will not be fully reflected in our current-quarter results.

• NewRisks Related to Our Operations

  Our calculation of recurring revenue and average revenue per unit (“ARPU”) may differ from how other SaaS-based companies calculate such metrics; our definitions include sales of our consumable labels, which generally fluctuate from period to period

• NewRisks Related to Our Operations

  Overestimates or underestimates in our manufacturing forecasts could cause us to hold insufficient or excess inventory or result in delays in the manufacturing and delivery of our products, which could interfere with our ability to retain orders or provide services to our customers

• NewRisks Related to Our Operations

  We depend on key personnel, the loss of whom could have a material adverse impact on our business

• NewRisks Related to Our Operations

  Our ability to recruit, retain, and develop qualified personnel is critical to our success and growth

• NewRisks Related to Our Operations

  If we fail to offer high quality support, our business and reputation could suffer

• NewRisks Related to Our Operations

  We experience elements of seasonal fluctuations in the FST and POS markets which could cause our stock price to fluctuate

• NewRisks Related to Competition, Sales and Marketing

  We compete in highly competitive markets, which are likely to become more competitive. Competitors may be able to respond more quickly to new or emerging technology and changes in customer requirements

• NewRisks Related to Competition, Sales and Marketing

  Our FST market operates in an emerging and evolving industry, which makes it difficult to evaluate the future prospects of this market

• NewRisks Related to Intellectual Property and Data Security

  Cybersecurity and privacy breaches, cyber-attacks, or other disruptions could expose us to liability, affect our business, and damage our reputation

• NewRisks Related to Intellectual Property and Data Security

  The inability to protect our intellectual property rights could harm our reputation, damage our business or interfere with our competitive position

• NewRisks Related to Intellectual Property and Data Security

  Prosecuting or defending against intellectual property litigation could be time consuming and costly, and claims that we have infringed upon the intellectual property rights of others could impede our business and put us at a competitive disadvantage

• NewRisks Related to Intellectual Property and Data Security

  We may face difficulty keeping up with market developments in artificial intelligence and machine learning, and any such developments may be subject to rapidly evolving and extensive regulation

• NewRisks Related to Our Customers

  We are dependent on sales to one large customer; the loss of this customer or reduction in orders from this customer could materially affect our sales

• NewRisks Related to Our International Operations

  economic uncertainties and adverse economic conditions (including inflation and recession)

• NewRisks Related to Global Political and Economic Conditions

  We purchase component parts and labels from third-party and sole-source suppliers, and any interference with this supply chain may impact our ability to manufacture and sell our products

• NewRisks Related to Global Political and Economic Conditions

  Catastrophic events, political unrest or a downturn in economic conditions may disrupt our business

• NewRisks Related to Strategic Transactions and Business Growth

  We may not be able to successfully identify and execute future acquisitions, dispositions or other strategic transactions or to successfully manage the impacts of such transactions on our operations

• NewRisks Related to Regulations, Taxation, Governance and the Environment

  We recorded a full valuation allowance on the value of our net deferred tax assets in the United States, and we expect to maintain that full valuation allowance on such assets until we are able to demonstrate a consistent pattern of profitability

• NewRisks Related to Regulations, Taxation, Governance and the Environment

  Changes in tax rates or tax liabilities could affect results

• NewRisks Related to our Indebtedness

  The agreement governing our credit facility contains restrictions and limitations that could significantly affect our ability to operate our business, as well as significantly affect our liquidity

• NewRisks Related to our Indebtedness

  dissolve, divide, change our line of business or cease or suffer a disruption to all or a material portion of our business

• NewRisks Related to our Indebtedness

  General economic conditions could have a material adverse effect on our business, operating results and financial condition

• NewRisks Related to our Indebtedness

  Our stock price may fluctuate significantly

• NewRisks Related to our Indebtedness

  unfavorable or reduced analyst coverage

• NewRisks Related to our Indebtedness

  Unfavorable analyst coverage or a reduction in analyst coverage of our common stock may adversely affect the price of our common stock

• NewRisks Related to our Indebtedness

  Our common stock is thinly traded, and investors may be unable to sell their shares at their desired prices, or at all, and sales of large blocks of shares may adversely affect the price of our common stock

• NewRisks Related to our Indebtedness

  If we raise additional capital in the future, existing stockholder ownership interest in the Company could be diluted or otherwise adversely impacted, and future sales of our common stock or other financing arrangements may cause our stock price to decline

• NewRisks Related to our Indebtedness

  We do not intend to pay dividends for the foreseeable future, so investors must rely on price appreciation to realize a gain on their investment

• NewRisks Related to our Indebtedness

  The Company’s goodwill may become impaired, which could require a significant charge to earnings be recognized

• NewRisks Related to our Indebtedness

  We cannot provide any assurance that current laws, or any laws enacted in the future, will not have a material adverse effect on our business

• NewRisks Related to our Indebtedness

  We are a “smaller reporting company,” as defined in Item 10(f)(1) of Regulation S-K. As a smaller reporting company, we take advantage of specified scaled disclosures and other requirements that are otherwise applicable generally to public companies

Dropped

• Dropped

  Operating 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

  Operating activities and cash flow factors for 2024.

• Dropped

  Accounts receivable decreased $3.3 million primarily due to lower sales volume in 2024

  Accounts receivable and inventory changes in 2024.

• Dropped

  Accrued liabilities and other liabilities decreased $1.8 million due to lower employee bonus and payroll accruals in 2024 compared to 2023

  Accrued liabilities and 2023 net income details.

• Dropped

  Accounts receivable decreased $4.2 million primarily due to decreased sales volume during the fourth quarter of 2023

  Accounts receivable and inventory trends in 2023.

• Dropped

  Investing 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

  Capital expenditures and macroeconomic supply chain impacts.

• Dropped

  Credit Facility and Borrowings

  Terms of the Siena Credit Facility with Siena Lending Group.

• Dropped

  As 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

  Borrowing capacity and shareholders equity decreases.

• Dropped

  Financial Statements and Supplementary Data

  Financial statements and supplementary data index.

• Dropped

  Evaluation of Disclosure Controls and Procedures

  Evaluation of disclosure controls and procedures.

• Dropped

  December 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

  CEO and CFO conclusions on disclosure controls.

• Dropped

  Management’s Annual Report on Internal Control Over Financial Reporting

  Management report on internal control over financial reporting.

• Dropped

  Changes in Internal Control over Financial Reporting

  Changes in internal control over financial reporting.

• Dropped

  Directors, Executive Officers and Corporate Governance

• Dropped

  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

• Dropped

  Equity Compensation Plan Information

• Dropped

  Certain Relationships and Related Transactions, and Director Independence

• Dropped

  Principal Accountant Fees and Services

• Dropped

  Exhibits and Financial Statement Schedules

• Dropped

  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)

• Dropped

  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

• Dropped

  Opinion on the Financial Statements

• Dropped

  Valuation of Inventories - Excess and Obsolete Inventory Reserve

• Dropped

  Evaluation of the Realizability of Deferred Tax Assets

• Dropped

  The following are the primary procedures we performed to address this critical audit matter

• Dropped

  Evaluated 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

• Dropped

  Commitments and contingencies (see Notes 9 and 15)

• Dropped

  Preferred stock, Series A, $0.01 par value, 200,000 authorized, none issued and outstanding

• Dropped

  Foreign currency transaction losses (gains)

• Dropped

  Net cash used in investing activities

• Dropped

  1. Description of business

• Dropped

  Use of Assumptions and Estimates

• Dropped

  As 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

• Dropped

  2. Summary of significant accounting policies

• Dropped

  Certain amounts for prior years have been reclassified to conform to the current year presentation

• Dropped

  Accounts 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

• Dropped

  Disaggregation of revenue

• Dropped

  Remaining performance obligations

• Dropped

  Concentration 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

• Dropped

  International Gaming Technology (“IGT”)

• Dropped

  5. Intangible assets, net

• Dropped

  8. Retirement savings plan

• Dropped

  10. Stock incentive plans

• Dropped

  Expected 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

• Dropped

  Dividend 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

• Dropped

  weighted average grant stock price per share

• Dropped

  weighted-average contractual remaining term in years

• Dropped

  Foreign-derived intangible income deduction

• Dropped

  We recognize interest and penalties related to uncertain tax positions in the income tax provision

• Dropped

  13. Stock repurchase program

• Dropped

  16. Quarterly results of operations (unaudited)

• Dropped

  17. Related party transactions

All 43 risk factors

Headings as the filing states them, in filing order.

Other Transact Technologies 10-Ks

• FY2024 10-K risk factors

  51 risks

  TransAct Technologies faces risks regarding operating cash flow volatility, customer concentration with major gaming companies, and maintaining sufficient credit facility borrowing capacity.

  Filed Mar 24, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.