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raw/filings/0001017303/2000/0000914039-01-000108/filing_metadata.csv

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+cik,ticker,company_name,form,filing_date,report_date,acceptance_datetime,accession_number,primary_document,primary_doc_description,size,is_xbrl,is_inline_xbrl,document_url,filing_index_url,year,fiscal_year,is_primary_filing
+0001017303,TACT,TRANSACT TECHNOLOGIES INC,10-K,2001-03-28,2000-12-31,2001-03-28T05:00:00.000Z,0000914039-01-000108,y46850e10-k.txt,FORM 10-K,222273,0,0,https://www.sec.gov/Archives/edgar/data/1017303/000091403901000108/y46850e10-k.txt,https://www.sec.gov/Archives/edgar/data/1017303/000091403901000108/,2000,2000,1

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+ITEM 1. BUSINESS.
+(A) GENERAL DEVELOPMENT OF BUSINESS
+TransAct began operating as a stand-alone business in August 1996 to
+operate the printer business that was formerly conducted by certain subsidiaries
+of Tridex Corporation. TransAct completed an initial public offering on August
+22, 1996. In April 1999, the Company formed and incorporated a new wholly-owned
+subsidiary, TransAct.Com. Through TransAct.com, the Company plans to explore
+leveraging its inkjet printing technology into the expanding online, e-commerce
+market.
+On February 15, 2001, the Company announced plans to establish a global
+engineering and manufacturing center at its Ithaca, NY facility. As part of this
+strategic decision, the Company will consolidate all manufacturing and
+engineering into its existing Ithaca, NY facility and close its Wallingford, CT
+facility by the end of 2001. Production is planned to continue at the
+Wallingford facility until the end of 2001, with individual product lines
+scheduled to move over the course of 2001. The closing of the Wallingford
+facility is expected to result in the termination of employment of approximately
+70 employees.
+(B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
+TransAct has assessed its operating and reportable segments and
+determined that it operates in one reportable segment, the design, development,
+manufacture and marketing of transaction-based printers and
+printer-related products.
+(C) NARRATIVE DESCRIPTION OF BUSINESS
+(i) PRINCIPAL PRODUCTS AND SERVICES
+TransAct designs, develops, manufactures and markets a broad array of
+transaction-based printers utilizing dot matrix, thermal and inkjet printing
+technology for applications requiring up to 60 character columns in each of its
+five vertical markets: POS, gaming and lottery, kiosk, financial services and
+Internet. The Company's printers are configurable, which offer customers the
+ability to choose from a variety of features and functions. Options typically
+include PC board configuration, paper cutting devices, paper handling capacities
+and number of print stations. In addition to its configurable printers, TransAct
+manufactures custom printers for certain OEM customers. In collaboration with
+these customers, the Company provides engineering and manufacturing expertise
+for the design and development of specialized printers.
+2
+3
+The Company also manufactures and sells document transport mechanisms
+which deliver the finished printed output to the consumer in unattended
+applications, such as ATMs and kiosks. In addition, the Company offers inkjet
+cartridges, printer ribbons, paper and replacement parts for all of its
+products.
+The Company provides customers with telephone sales and technical
+support, a personal account representative for orders, shipping and general
+information and expedited shipping for orders of its configurable and custom
+products. Technical and sales support personnel receive training in all of the
+Company's products and services manufactured at their facility. The Company's
+printers generally carry a one- or two-year limited warranty; extended
+warranties are available for purchase on selected printers to supplement the
+original warranty.
+(ii) STATUS OF PRODUCT REQUIRING MATERIAL INVESTMENT
+None.
+(iii) SOURCES AND AVAILABILITY OF RAW MATERIALS
+The principal materials used in manufacturing are copper wire, magnetic
+metals, injection molded plastic parts, formed metal parts and electronic
+components. Although the Company could experience temporary disruption if
+certain suppliers ceased doing business with the Company, the Company's
+requirements generally are available from a number of sources, except as
+described below.
+Okidata, Division of Oki America, Inc. ("Okidata") is the sole supplier
+for a printer component kit consisting of a printhead, control board and
+carriage (the "Oki Kit"), which is used in all of the Company's Ithaca(R) brand
+impact printers. The loss of the supply of Oki Kits would have a material
+adverse effect on the Company. TransAct has a supply agreement with Okidata to
+provide Oki Kits until May 2001 at a fixed price through May 2001. The Company
+and Okidata are currently negotiating for future supplies and pricing.
+Hewlett-Packard Company ("HP") is the sole supplier of inkjet cartridges which
+are used in all of the Company's inkjet printers. The loss of the supply of HP
+inkjet cartridges would have a material adverse effect on the sale of the
+Company's inkjet printers. TransAct has a supply agreement with HP to purchase
+inkjet cartridges until June 1, 2001 at a fixed price. The Company and HP are
+currently negotiating for future supplies and pricing. TransAct believes its
+relations with Okidata and HP are good and has received no indication that
+either of the supply agreements will not be renewed beyond the respective
+expiration dates of the current contracts. TransAct cannot be certain, however,
+that either of the supply agreements will be renewed, or if renewed, that the
+terms will be as favorable as those under the current contracts.
+(iv) PATENTS AND PROPRIETARY INFORMATION
+The Company owns several patents, one of which it considers material.
+That patent covers an automated paper cut-off device, which is a feature offered
+on certain of the Company's POS printers. The Company also has sought patent and
+other protection for certain design features of its new family of printers
+utilizing inkjet printing technology. The Company regards certain manufacturing
+processes and designs to be proprietary and attempts to protect them through
+employee and third-party nondisclosure agreements and similar means. It may be
+possible for unauthorized third parties to copy certain portions of the
+Company's products or to reverse engineer or otherwise obtain and use, to the
+Company's detriment, information that the Company regards as proprietary.
+Moreover, the laws of some foreign countries do not afford the same protection
+to the Company's proprietary rights as do United States laws. There can be no
+assurance that legal protections relied upon by the Company to protect its
+proprietary position will be adequate or that the Company's competitors will not
+independently develop technologies that are substantially equivalent or superior
+to the Company's technologies.
+3
+4
+(v), (vi) SEASONALITY AND PRACTICES RELATING TO WORKING CAPITAL ITEMS
+Retailers typically reduce purchases of new POS equipment in the fourth quarter,
+due to the increased volume of consumer transactions in that period, and the
+Company's sales of printers in the POS market historically have increased in the
+third quarter and decreased in the fourth quarter. However, the Company has not
+experienced material seasonality in its total net sales, due to offsetting sales
+in other markets.
+(vii) CERTAIN CUSTOMERS
+The Company has an OEM purchase agreement with GTECH Corporation
+("GTECH") to provide on-line lottery printers and spare parts, at prices to be
+negotiated, through July 2004. Firm purchase orders for printers may be placed
+annually by GTECH. For 2001, the Company has received an order for approximately
+$14,000,000 for delivery between May and December 2001. The Company also sells
+printers to GTECH for use in lottery terminals at grocery check-out lanes
+("in-lane lottery printers"). Sales to GTECH accounted for approximately 22.1%
+and 31.8% of net sales in 2000 and 1998, respectively. The Company made no
+on-line lottery printer shipments to GTECH during 1999. The Company also
+provides printers to ICL Pathway for use in the British Post Office. During
+2000, sales to ICL Pathway accounted for approximately 20.2% of net sales. The
+Company completed shipping printers to ICL Pathway for use in the British Post
+Office in February 2001 and no further shipments are expected. The Company had
+no sales to any one customer greater than 10% of net sales in 1999.
+(viii) BACKLOG
+The Company's backlog of firm orders was approximately $18,100,000 as
+of March 16, 2001 and $19,900,000 as of March 17, 2000. Based on customers'
+current delivery requirements, TransAct expects to fill its current backlog of
+approximately $18,100,000 during 2001.
+(ix) MATERIAL PORTION OF BUSINESS SUBJECT TO RENEGOTIATION OF PROFITS
+None.
+(x) COMPETITION
+The market for transaction-based printers is extremely competitive, and
+the Company expects such competition to intensify in the future. The Company
+competes with a number of companies, many of which have greater financial,
+technical and marketing resources than the Company. TransAct believes its
+ability to compete successfully depends on a number of factors both within and
+outside its control, including durability, reliability, quality, design
+capability, product customization, price, customer support, success in
+developing new products, manufacturing expertise and capacity, supply of
+component parts and materials, strategic relationships with suppliers, the
+timing of new product introductions by the Company and its competitors, general
+market and economic conditions and, in some cases, the uniqueness of its
+products.
+4
+5
+Three of the Company's competitors, Epson America, Inc., Axiohm
+Transaction Solutions and Star Micronics America, Inc. together control
+approximately 70% of the United States market for POS printers, a market in
+which the Company's strategy calls for increased market share. Another principal
+competitor in the POS market is Citizen -- CBM America Corporation. Certain
+competitors of the Company have greater financial resources, lower costs
+attributable to higher volume production and off-shore manufacturing locations,
+and offer lower prices than the Company from time to time.
+In the gaming and lottery, financial services and kiosk markets, no
+single supplier holds a dominant position. Certain of the Company's products
+sold for gaming and lottery, kiosk and financial service applications compete
+based upon the Company's ability to provide highly specialized products, custom
+engineering and ongoing technical support.
+The Company's strategy for competing in its markets is to continue to
+develop new products and product line extensions, to increase its geographic
+market penetration, and to take advantage of strategic relationships. The
+Company expects to particularly focus on gaining market acceptance for its new
+family of printers utilizing Hewlett Packard's inkjet printing technology.
+Although the Company believes that its products, operations and relationships
+provide a competitive foundation, there can be no assurance that the Company
+will compete successfully in the future.
+(xi) RESEARCH AND DEVELOPMENT ACTIVITIES
+The Company spent approximately $3,481,000, $3,235,000 and $3,642,000
+in 2000, 1999 and 1998, respectively, on engineering, design and product
+development efforts in connection with specialized engineering and design to
+introduce new products and to customize existing products. During 2001, the
+Company expects to focus the majority of its research and development activities
+on the development of (1) a family of printers for the POS market utilizing
+Hewlett Packard's inkjet printing technology and (2) new voucher-issuing
+printers for use in the casino market.
+(xii) ENVIRONMENT
+The Company is not aware of any material noncompliance with federal,
+state and local provisions which have been enacted or adopted regulating the
+discharge of materials into the environment, or otherwise relating to the
+protection of the environment.
+(xiii) EMPLOYEES
+As of March 16, 2001, TransAct Technologies and its subsidiaries
+employed 205 persons, of whom 190 were full-time and 15 were temporary
+employees. None of the Company's employees is unionized and the Company
+considers its relationships with its employees to be good.
+(D) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND
+EXPORT SALES
+The Company has foreign operations primarily from TransAct Technologies
+Ltd., a wholly-owned subsidiary located in the United Kingdom, which had sales
+to its customers of $11,164,000, $700,000 and $4,990,000 in 2000, 1999 and 1998,
+respectively. The Company had export sales to its customers from its domestic
+operations of approximately $5,156,000, $7,807,000, and $3,396,000 in 2000, 1999
+and 1998, respectively.
+5
+6
+(E) EXECUTIVE OFFICERS OF THE REGISTRANT AS OF DECEMBER 31, 2000
+Name Age Position
+---- --- --------
+Thomas R. Schwarz 64 Chairman of the Board
+Bart C. Shuldman 43 President, Chief Executive Officer and Director
+Richard L. Cote 59 Executive Vice President, Chief Financial Officer, Treasurer,
+Secretary and Director
+Mark B. Goebel 46 Senior Vice President - General Manger (Wallingford, CT facility)
+Michael S. Kumpf 51 Senior Vice President - Engineering
+Lucy H. Staley 50 Senior Vice President - General Manager (Ithaca, NY facility)
+James B. Stetson 43 Senior Vice President - Sales
+Catherine J. Dawson 33 Vice President - Marketing
+Steven A. DeMartino 31 Vice President and Corporate Controller
+THOMAS R. SCHWARZ, Chairman of the Board, has been a Director of the
+Company since its formation in June 1996. Mr. Schwarz was Chairman and Chief
+Executive Officer of Grossman's Inc., a retailer of building materials, from
+1990 until his retirement in 1994. Mr. Schwarz is a Director of Tridex,
+Foilmark, Inc., Tanaka Growth Fund, Lebhar-Friedman Publishing Company and
+Yorkshire Global Restaurants. In February 2001, Mr. Schwarz resigned from his
+position as Chairman of the Board, but remains a director of the Company.
+BART C. SHULDMAN has been Chief Executive Officer, President and a
+Director of the Company since its formation in June 1996. Previously, Mr.
+Shuldman served as President of Magnetec and later the combined operations of
+Magnetec and Ithaca from August 1993 until June 1996. In February 2001, Mr.
+Shuldman was elected Chairman of the Board.
+RICHARD L. COTE has been Executive Vice President, Chief Financial
+Officer, Treasurer, Secretary and a Director of the Company since its formation
+in June 1996. Prior thereto, he served as Senior Vice President and Chief
+Financial Officer of Tridex from September 1993 to June 1996.
+MARK B. GOEBEL, Senior Vice President - General Manager (Wallingford,
+CT facility), joined TransAct in November 1993 as Engineering Manager. From
+April 1994, Mr. Goebel served as Vice President-Engineering until he was
+appointed Senior Vice President of Engineering of Wallingford, and an officer of
+the Company, in January 2000. In November 2000, Mr. Goebel was named Senior Vice
+President - General Manager of the Wallingford, CT facility.
+MICHAEL S. KUMPF, Senior Vice President-Engineering since June 1996,
+served as Vice President of Engineering of Ithaca from 1991 until June 1996.
+LUCY H. STALEY, Senior Vice President-General Manager (Ithaca, NY
+facility) since June 1996, served as a Vice President of Ithaca from 1984 until
+June 1996.
+JAMES B. STETSON was appointed Senior Vice President of Worldwide Sales
+of the Company in February 2000, and served as Vice President of Sales, Latin
+America from October 1997 to February 2000. Prior to joining TransAct, Mr.
+Stetson served as Vice President and Sales Manager at Gekay Sales and Service
+Company from 1995 until October 1997.
+6
+7
+CATHERINE J. DAWSON joined TransAct in June 1998 as Vice President of
+Marketing, and was appointed an officer of the Company on January 1, 2000. Prior
+to joining TransAct, Ms. Dawson served as Product Marketing Manager for the
+visual systems division of 3M Corporation from March 1996 to March 1998, and as
+a Senior Marketing Analyst from June 1994 to March 1996.
+STEVEN A. DEMARTINO joined TransAct as Corporate Controller in August
+1996 and was appointed an officer of the Company in January 1998 and Vice
+President in December 1999. Prior to joining TransAct, Mr. DeMartino was a
+self-employed financial consultant from May 1996 to August 1996. Prior thereto,
+Mr. DeMartino, served as Controller of NER/Copart, Inc. from September 1994 to
+May 1996.

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+ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
+The information contained in "Certain Relationships and Related
+Transactions" of the Proxy Statement is hereby incorporated herein by reference.
+34
+35

raw/filings/0001017303/2000/0000914039-01-000108/rpt_disclosure.txt

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+CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
+On February 23, 1999, the Company loaned Bart C. Shuldman, the Chairman,
+Chief Executive Officer and President of the Company, $330,000 to fund his
+purchase in the market of 104,000 shares of the Company's common stock. Mr.
+Shuldman pledged 93,423 of the shares purchased with the loan proceeds and
+50,000 shares of restricted common stock as security for the promissory note.
+The principal and any unpaid interest under the note is due in a balloon payment
+five years after the date of the loan. The interest rate on the note is
+calculated based on the Company's average variable lending rate under its
+primary credit facility. Interest payments through December 31, 2001 have been
+added to principal, which was increased to $409,340 at that date. During 2002,
+interest will be compounded and added to principal monthly and be payable at
+maturity. Thereafter, it will accrue annually and be payable at maturity. At
+March 31, 2002, the aggregate amount outstanding under the loan was $415,253.
+6

raw/filings/0001017303/2001/0000914039-02-000121/filing_metadata.csv

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+cik,ticker,company_name,form,filing_date,report_date,acceptance_datetime,accession_number,primary_document,primary_doc_description,size,is_xbrl,is_inline_xbrl,document_url,filing_index_url,year,fiscal_year,is_primary_filing
+0001017303,TACT,TRANSACT TECHNOLOGIES INC,10-K,2002-03-29,2001-12-31,2002-03-29T05:00:00.000Z,0000914039-02-000121,y58940e10-k.txt,FORM 10-K,263685,0,0,https://www.sec.gov/Archives/edgar/data/1017303/000091403902000121/y58940e10-k.txt,https://www.sec.gov/Archives/edgar/data/1017303/000091403902000121/,2001,2001,1

raw/filings/0001017303/2001/0000914039-02-000121/item1.txt

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+ITEM 1. BUSINESS.
+(A) GENERAL DEVELOPMENT OF BUSINESS
+TransAct began operating as a stand-alone business in August 1996 to
+operate the printer business that was formerly conducted by certain subsidiaries
+of Tridex Corporation. TransAct completed an initial public offering on August
+22, 1996.
+In February 2001, the Company announced plans to establish a global
+engineering and manufacturing center at its Ithaca, NY facility. As part of this
+strategic decision, the Company undertook a plan to consolidate all
+manufacturing and engineering into its existing Ithaca, NY facility and close
+its Wallingford, CT facility (the "Consolidation"). The Company's technology
+shift to inkjet and thermal printing from dot matrix impact printing has
+dramatically reduced the labor content in printers, and therefore, lowers the
+required production capacity. As of December 31, 2001, substantially all
+Wallingford product lines were successfully transferred to Ithaca, NY. The
+Company expects to maintain one small component production line in Wallingford
+until May 2002, after which the manufacturing facility will be closed. The
+closing of the Wallingford facility is expected to result in the termination of
+employment of approximately 70 production, administrative and management
+employees.
+(B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
+TransAct has assessed its operating and reportable segments and has
+determined that it operates in one reportable segment, the design, development,
+manufacture and marketing of transaction-based printers and printer-related
+products.
+(C) NARRATIVE DESCRIPTION OF BUSINESS
+(i) PRINCIPAL PRODUCTS AND SERVICES
+TransAct designs, develops, manufactures and markets a broad array of
+transaction-based printers utilizing dot matrix, thermal and inkjet printing
+technology for applications requiring up to 60 character columns in each of the
+following vertical markets: POS, gaming and lottery, financial services and
+kiosk. The Company's printers are configurable and offer customers the ability
+to choose from a variety of features and functions. Options typically include PC
+board configuration, paper cutting devices, paper handling capacities and number
+of print stations. In addition to its configurable printers, TransAct
+manufactures custom printers for certain OEM customers. In collaboration with
+these customers, the Company provides engineering and manufacturing expertise
+for the design and development of specialized printers. In addition, the Company
+offers inkjet cartridges, printer ribbons, paper and replacement parts for all
+of its products.
+The Company provides customers with telephone sales and technical support,
+a personal account representative for orders, shipping and general information
+and expedited shipping for orders of its configurable and custom products.
+Technical and sales support personnel receive training in all of the Company's
+products and services manufactured at their facility. The Company's printers
+generally carry a one- or two-year limited warranty; extended warranties are
+available for purchase on selected printers to supplement the original warranty.
+Service contracts for the repair and maintenance of printers beyond the original
+warranty period are also available for purchase.
+(ii) STATUS OF PRODUCT REQUIRING MATERIAL INVESTMENT
+None.
+2
+(iii) SOURCES AND AVAILABILITY OF RAW MATERIALS
+The principal materials used in manufacturing are copper wire, magnetic
+metals, injection molded plastic parts, formed metal parts and electronic
+components. Although the Company could experience temporary disruption if
+certain suppliers ceased doing business with the Company, the Company's
+requirements generally are available from a number of sources, except as
+described below.
+Okidata Americas, Inc. ("Okidata"), is the sole supplier for a printer
+component kit consisting of a printhead, control board and carriage (the "Oki
+Kit"), which is used in all of the Company's Ithaca(R) brand impact printers.
+The loss of the supply of Oki Kits would have a material adverse effect on the
+Company. TransAct has a supply agreement with Okidata to provide Oki Kits until
+June 2003 at fixed prices through at least March 31, 2002. The Company and
+Okidata are currently negotiating for future pricing. Additionally,
+Hewlett-Packard Company ("HP") is the sole supplier of inkjet cartridges which
+are used in all of the Company's inkjet printers. The loss of the supply of HP
+inkjet cartridges would have a material adverse effect on the sale of the
+Company's inkjet printers. TransAct has a supply agreement with HP to purchase
+inkjet cartridges until June 1, 2002 at a fixed price. TransAct believes its
+relations with Okidata and HP are good and has received no indication that
+either of the supply agreements will not be renewed beyond the respective
+expiration dates of the current contracts. TransAct cannot be certain, however,
+that either of the supply agreements will be renewed, or if renewed, that the
+terms will be as favorable as those under the current contracts.
+(iv) PATENTS AND PROPRIETARY INFORMATION
+The Company owns several patents, three of which it considers material.
+The earliest expiration date of these patents is in 2008. The first patent
+covers an automated paper cut-off device, which is a feature offered on certain
+of the Company's POS printers; the second is a patent that relates to an
+automatic paper loader for a printer; and the third is a patent that covers a
+method for converting a full color image into a two-color image, plus a
+background color. The Company also has sought patent protection for certain
+design features of 1) printers using inkjet technology, 2) POS printers using
+thermal technology, and 3) thermal printers for use in casino slot machines. The
+Company regards certain manufacturing processes and designs to be proprietary
+and attempts to protect them through employee and third-party nondisclosure
+agreements and similar means. It may be possible for unauthorized third parties
+to copy certain portions of the Company's products or to reverse engineer or
+otherwise obtain and use, to the Company's detriment, information that the
+Company regards as proprietary. Moreover, the laws of some foreign countries do
+not afford the same protection to the Company's proprietary rights as do United
+States laws. There can be no assurance that legal protections relied upon by the
+Company to protect its proprietary position will be adequate or that the
+Company's competitors will not independently develop technologies that are
+substantially equivalent or superior to the Company's technologies.
+(v), (vi) SEASONALITY AND PRACTICES RELATING TO WORKING CAPITAL ITEMS
+Retailers typically reduce purchases of new POS equipment in the fourth
+quarter, due to the increased volume of consumer transactions in that period,
+and the Company's sales of printers in the POS market historically have
+increased in the third quarter and decreased in the fourth quarter. However, the
+Company has not experienced material seasonality in its total net sales, due to
+offsetting sales in other markets.
+(vii) CERTAIN CUSTOMERS
+The Company has an OEM purchase agreement with GTECH Corporation ("GTECH")
+to provide on-line lottery printers and spare parts, at prices to be negotiated,
+through December 31, 2004. Firm purchase orders for printers may be placed
+annually by GTECH. The Company has received orders for approximately $9,800,000
+worth of printers for delivery between January 2002 and February 2003. The
+Company also sells printers to GTECH for use in lottery terminals at grocery
+check-out lanes ("in-lane lottery printers"). Sales to GTECH accounted for
+approximately 33.0% and 22.1% of net sales in 2001 and 2000, respectively. The
+Company made no on-line lottery printer shipments and approximately $1,100,000
+of in-lane lottery printer shipments to GTECH during 1999. The Company also
+provides printers to ICL Pathway for use in the British Post Office. During
+2000, sales to ICL Pathway accounted for approximately 20.2% of net sales. The
+Company completed shipping printers to ICL Pathway for use in the British Post
+Office in February 2001 and no further shipments are expected. The Company had
+no sales to any one customer greater than 10% of net sales in 1999.
+(viii) BACKLOG
+The Company's backlog of firm orders was approximately $8,700,000 as of
+March 25, 2002 and $18,100,000 as of March 16, 2001, including approximately
+$6,600,000 and $7,800,000 to GTECH, respectively. Based on customers' current
+delivery requirements, TransAct expects to fill approximately $8,200,000 of its
+current backlog during 2002 and approximately $500,000 during 2003.
+3
+(ix) MATERIAL PORTION OF BUSINESS SUBJECT TO RENEGOTIATION OF PROFITS
+None.
+(x) COMPETITION
+The market for transaction-based printers is extremely competitive, and
+the Company expects such competition to intensify in the future. The Company
+competes with a number of companies, many of which have greater financial,
+technical and marketing resources than the Company. TransAct believes its
+ability to compete successfully depends on a number of factors both within and
+outside its control, including durability, reliability, quality, design
+capability, product customization, price, customer support, success in
+developing new products, manufacturing expertise and capacity, supply of
+component parts and materials, strategic relationships with suppliers, the
+timing of new product introductions by the Company and its competitors, general
+market and economic conditions and, in some cases, the uniqueness of its
+products.
+Three of the Company's competitors, Epson America, Inc., Axiohm
+Transaction Solutions and Star Micronics America, Inc. together control
+approximately 70% of the United States market for POS printers, a market in
+which the Company's strategy calls for increased market share. Another principal
+competitor in the POS market is Citizen -- CBM America Corporation. Certain
+competitors of the Company have greater financial resources, lower costs
+attributable to higher volume production and off-shore manufacturing locations,
+and offer lower prices than the Company from time to time.
+In the gaming and lottery, financial services and kiosk markets, no single
+supplier holds a dominant position. Certain of the Company's products sold for
+gaming and lottery, kiosk and financial services applications compete based upon
+the Company's ability to provide highly specialized products, custom engineering
+and ongoing technical support.
+The Company's strategy for competing in its markets is to continue to
+develop new products and product line extensions, to increase its geographic
+market penetration, and to take advantage of strategic relationships. The
+Company expects to particularly focus on (1) gaining market acceptance for its
+new family of printers utilizing Hewlett Packard's inkjet printing technology,
+(2) promoting its new line of slot machine printers into the gaming market and
+(3) expanding its consumables, spares and service business. Although the Company
+believes that its products, operations and relationships provide a competitive
+foundation, there can be no assurance that the Company will compete successfully
+in the future.
+(xi) RESEARCH AND DEVELOPMENT ACTIVITIES
+The Company spent approximately $3,070,000, $3,481,000 and $3,235,000 in
+2001, 2000 and 1999, respectively, on engineering, design and product
+development efforts in connection with specialized engineering and design to
+introduce new products and to customize existing products. During 2002, the
+Company expects to focus the majority of its research and development activities
+on the continuing development and enhancement of (1) its family of printers for
+the POS market utilizing inkjet and thermal printing technology and (2) its
+ticket-issuing printers for use in the casino market.
+(xii) ENVIRONMENT
+The Company is not aware of any material noncompliance with federal, state
+and local provisions that have been enacted or adopted regulating the discharge
+of materials into the environment, or otherwise relating to the protection of
+the environment.
+(xiii) EMPLOYEES
+As of March 15, 2002, TransAct Technologies and its subsidiaries employed
+176 persons, of whom 141 were full-time and 35 were temporary employees. None of
+the Company's employees is unionized and the Company considers its relationships
+with its employees to be good.
+(D) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
+SALES
+The Company has foreign operations primarily from TransAct Technologies
+Ltd., a wholly-owned subsidiary located in the United Kingdom, which had sales
+to its customers of $1,791,000, $11,164,000 (primarily to ICL Pathway for use in
+the British Post Office) and $700,000 in 2001, 2000 and 1999, respectively. The
+Company had export sales to its customers from its domestic operations of
+approximately $6,131,000, $5,156,000 and $7,807,000 in 2001, 2000 and 1999,
+respectively.
+4
+(E) EXECUTIVE OFFICERS OF THE REGISTRANT AS OF DECEMBER 31, 2001
+Name Age Position
+------------------- --- --------------------------------------------------
+Bart C. Shuldman 44 Chairman of the Board, President and Chief
+Executive Officer
+Richard L. Cote 60 Executive Vice President, Chief Financial Officer,
+Treasurer, Secretary and Director
+James B. Stetson 44 Executive Vice President - Sales and Marketing
+Steven A. DeMartino 32 Senior Vice President - Finance and Information
+Technology
+Mark B. Goebel 47 Senior Vice President - General Manager
+(Wallingford, CT facility)
+Michael S. Kumpf 52 Senior Vice President - Engineering
+Lucy H. Staley 51 Senior Vice President - General Manager (Ithaca,
+NY facility)
+BART C. SHULDMAN has been Chief Executive Officer, President and a
+Director of the Company since its formation in June 1996. Previously, Mr.
+Shuldman served as President of Magnetec and later the combined operations of
+Magnetec and Ithaca from August 1993 until June 1996. In February 2001, Mr.
+Shuldman was elected Chairman of the Board.
+RICHARD L. COTE has been Executive Vice President, Chief Financial
+Officer, Treasurer, Secretary and a Director of the Company since its formation
+in June 1996. Prior thereto, he served as Senior Vice President and Chief
+Financial Officer of Tridex from September 1993 to June 1996.
+JAMES B. STETSON was appointed Executive Vice President, Sales and
+Marketing in November 2001, and served as Senior Vice President of Worldwide
+Sales from February 2000 to November 2001, and Vice President of Sales, Latin
+America from October 1997 to February 2000. Prior to joining TransAct, Mr.
+Stetson served as Vice President and Sales Manager at Gekay Sales and Service
+Company from 1995 until October 1997.
+STEVEN A. DEMARTINO joined TransAct as Corporate Controller in August 1996
+and was appointed an officer of the Company in January 1998, Vice President in
+December 1999, and Senior Vice President, Finance and Information Technology in
+October 2001. Prior to joining TransAct, Mr. DeMartino was a self-employed
+financial consultant from May 1996 to August 1996. Prior thereto, Mr. DeMartino,
+served as Controller of NER/Copart, Inc. from September 1994 to May 1996.
+MICHAEL S. KUMPF, Senior Vice President-Engineering since June 1996,
+served as Vice President of Engineering of Ithaca from 1991 until June 1996. Mr.
+Kumpf was appointed Executive Vice President of Engineering in January 2002.
+MARK B. GOEBEL, Senior Vice President - General Manager (Wallingford, CT
+facility), served as Vice President-Engineering from April 1994 until he was
+appointed Senior Vice President of Engineering of Wallingford, and an officer of
+the Company, in January 2000. In November 2000, Mr. Goebel was named Senior Vice
+President - General Manager of the Wallingford, CT facility. As a result of the
+Consolidation, Mr. Goebel terminated employment with the Company on March 1,
+2002.
+LUCY H. STALEY, Senior Vice President-General Manager (Ithaca, NY
+facility) since June 1996, served as a Vice President of Ithaca from 1984 until
+June 1996. As a result of the Consolidation, Ms. Staley terminated employment
+with the Company on January 31, 2002.

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+ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
+The information contained in "Certain Relationships and Related
+Transactions" of the Proxy Statement is hereby incorporated herein by reference.
+33

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+CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
+On February 23, 1999, the Company loaned Bart C. Shuldman, the Chairman,
+Chief Executive Officer and President of the Company, $330,000 to fund his
+purchase in the market of 104,000 shares of the Company's common stock. Mr.
+Shuldman pledged 93,423 of the shares purchased with the loan proceeds and
+50,000 shares of restricted common stock as security for the promissory note.
+The principal and any unpaid interest under the note is due in a balloon payment
+five years after the date of the loan. The interest rate on the note is
+calculated based on the Company's average variable lending rate under its
+primary credit facility. Interest payments through December 31, 2001 have been
+added to principal, which was increased to $409,340 at that date. During 2002,
+interest will be compounded and added to principal monthly and be payable at
+maturity. Thereafter, it will accrue annually and be payable at maturity. At
+March 31, 2002, the aggregate amount outstanding under the loan was $415,253.
+6

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raw/filings/0001017303/2002/0000950123-03-003629/item1.txt

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+ITEM 1. BUSINESS.
+(A) GENERAL DEVELOPMENT OF BUSINESS
+TransAct was incorporated in June 1996 and began operating as a
+stand-alone business in August 1996 to operate the printer business that was
+formerly conducted by certain subsidiaries of Tridex Corporation. TransAct
+completed an initial public offering on August 22, 1996.
+In February 2001, the Company announced plans to establish a global
+engineering and manufacturing center at its Ithaca, NY facility. As part of this
+strategic decision, the Company undertook a plan to consolidate all
+manufacturing and engineering into its existing Ithaca, NY facility and close
+its Wallingford, CT facility (the "Consolidation"). The Company's technology
+shift to inkjet and thermal printing from dot matrix impact printing has
+dramatically reduced the labor content in its printers, and therefore, lowers
+the required production capacity. As of December 31, 2001, substantially all
+Wallingford product lines were successfully transferred to Ithaca, NY. The
+Company maintains a small component production line and service depot in
+Wallingford. The closing of the Wallingford facility resulted in the termination
+of employment of approximately 70 production, administrative and management
+employees.
+As a result of the Consolidation, the Company improved its gross margin
+and significantly reduced its operating expenses in 2002 compared to 2001, and
+lowered its operating income breakeven point from $54 million to $42 million in
+revenues. Management believes this will provide additional operating leverage in
+2003.
+(B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
+TransAct has assessed its operating and reportable segments and has
+determined that it operates in one reportable segment, the design, development,
+manufacture and marketing of transaction-based printers and printer-related
+products.
+(C) NARRATIVE DESCRIPTION OF BUSINESS
+(i) PRINCIPAL PRODUCTS AND SERVICES
+TransAct designs, develops, manufactures and markets a broad array of
+transaction-based printers utilizing inkjet, thermal and impact printing
+technology for applications requiring up to 60 character columns, primarily in
+the POS and gaming and lottery markets. The Company's printers are configurable
+and offer customers the ability to choose from a variety of features and
+functions. Options typically include PC board configuration, paper cutting
+devices, paper handling capacities and cabinetry color. In addition to its
+configurable printers, TransAct manufactures custom printers for certain OEM
+customers. In collaboration with these customers, the Company provides
+engineering and manufacturing expertise for the design and development of
+specialized printers. In addition, the Company offers inkjet cartridges, printer
+ribbons, paper and replacement parts for all of its products.
+The Company provides customers with telephone sales and technical
+support, a personal account representative for orders, shipping and general
+information and expedited shipping for orders of its configurable and custom
+products. Technical and sales support personnel receive training in all of the
+Company's products and services manufactured at their facility. The Company's
+printers generally carry a one- or two-year limited warranty; extended
+warranties are available for purchase on selected printers to supplement the
+original warranty. Service contracts for the repair and maintenance of printers
+beyond the original warranty period are also available for purchase.
+(ii) STATUS OF PRODUCT REQUIRING MATERIAL INVESTMENT
+None.
+2
+(iii) SOURCES AND AVAILABILITY OF RAW MATERIALS
+The principal materials used in manufacturing are inkjet, thermal and
+impact printheads, injection molded plastic parts, formed/stamped metal parts
+and electronic components. Although the Company could experience temporary
+disruption if certain suppliers ceased doing business with the Company, the
+Company's requirements generally are available from a number of sources, except
+as described below.
+Okidata Americas, Inc. ("Okidata"), is the sole supplier for a printer
+component kit consisting of a printhead, control board and carriage (the "Oki
+Kit"), which is used in all of the Company's Ithaca(R) brand impact printers.
+The loss of the supply of Oki Kits would have a material adverse effect on the
+Company. TransAct has a supply agreement with Okidata to provide Oki Kits until
+June 2003. Although prices under this agreement were fixed until March 2002, the
+Company continues to purchase supplies at these prices. The Company and Okidata
+are currently negotiating for future supplies and pricing.
+Additionally, Hewlett-Packard Company ("HP") is the sole supplier of
+inkjet cartridges that are used in all of the Company's inkjet printers. The
+loss of the supply of HP inkjet cartridges would have a material adverse effect
+on the sale of the Company's inkjet printers. TransAct has a supply agreement
+with HP to purchase inkjet cartridges until February 1, 2004 at fixed prices.
+TransAct believes its relations with Okidata and HP are good and has
+received no indication that either of the supply agreements will not be renewed
+beyond the respective expiration dates of the current contracts. TransAct cannot
+be certain, however, that either of the supply agreements will be renewed, or if
+renewed, that the terms will be as favorable as those under the current
+contracts.
+(iv) PATENTS AND PROPRIETARY INFORMATION
+The Company has significantly expanded its patent portfolio over the
+past two years, and expects to continue to do so in the future. The Company also
+believes its patent portfolio will provide additional opportunities to license
+its intellectual property in the future. The Company currently owns eight
+patents, four of which it considers material. The earliest expiration date of
+these eight patents is in 2008 with the latest expiration date in 2020. Of the
+material patents, one patent covers methods and apparatus for allowing a
+two-color printer to print images using single pass technology by printing
+during both forward and reverse movement of the print mechanism; another patent
+relates to TransAct's proprietary void and reprint receipt printing method which
+is used in certain of the Company's slot machine printers; and two other patents
+cover a method for converting a full color image into a two-color image, plus a
+background color. The Company also has sought patent protection for certain
+design features of 1) printers using inkjet technology, 2) POS printers using
+thermal technology, and 3) thermal printers for use in casino slot machines. The
+Company regards certain manufacturing processes and designs to be proprietary
+and attempts to protect them through employee and third-party nondisclosure
+agreements and similar means. It may be possible for unauthorized third parties
+to copy certain portions of the Company's products or to reverse engineer or
+otherwise obtain and use, to the Company's detriment, information that the
+Company regards as proprietary. Moreover, the laws of some foreign countries do
+not afford the same protection to the Company's proprietary rights as do United
+States laws. There can be no assurance that legal protections relied upon by the
+Company to protect its proprietary position will be adequate or that the
+Company's competitors will not independently develop technologies that are
+substantially equivalent or superior to the Company's technologies.
+(v), (vi)SEASONALITY AND PRACTICES RELATING TO WORKING CAPITAL ITEMS
+Retailers typically reduce purchases of new POS equipment in the fourth
+quarter, due to the increased volume of consumer transactions in that period,
+and the Company's sales of printers in the POS market historically have
+increased in the third quarter and decreased in the fourth quarter. However, the
+Company has not experienced material seasonality in its total net sales, due to
+offsetting sales in other markets.
+(vii) CERTAIN CUSTOMERS
+The Company has two OEM purchase agreements with GTECH Corporation
+("GTECH"). The first OEM purchase agreement ("GTECH Impact Printer Agreement")
+provides for the sale of impact on-line lottery printers and spare parts, at
+prices to be negotiated, through December 31, 2004. The second OEM purchase
+agreement ("GTECH Thermal Printer Agreement") provides for the sale of thermal
+on-line lottery printers and spares parts, at a fixed prices, through June 28,
+2007. Firm purchase orders for printers under either agreement may be placed
+annually by GTECH. Pursuant to orders placed under the GTECH Impact Printer
+Agreement during 2002, the Company has approximately $500,000 of impact printers
+remaining to be shipped during the first quarter of 2003. The Company does not
+expect any further shipments of impact on-line lottery printers in 2003 beyond
+the first quarter. Additionally, pursuant to the GTECH Thermal Printer
+Agreement, the Company has received an initial order for approximately
+$4,300,000 worth of thermal printers for delivery in 2003, beginning in the
+second quarter. The Company also sells printers to GTECH for use in lottery
+terminals at grocery store check-out lanes ("in-lane lottery printers"). Sales
+of in-lane lottery printes are project-oriented, and, as such, the Company
+cannot predict if
+3
+and when future sales may occur. Sales to GTECH accounted for approximately 27%,
+33% and 22% of net sales in 2002, 2001 and 2000, respectively.
+The Company also provides printers to ICL Pathway for use in the
+British Post Office. During 2000, sales to ICL Pathway accounted for
+approximately 20% of net sales. The Company completed shipping printers to ICL
+Pathway for use in the British Post Office in February 2001, and no further
+shipments are expected.
+(viii) BACKLOG
+The Company's backlog of firm orders was approximately $7,628,000 as of
+March 14, 2003 and $8,700,000 as of March 25, 2002, including approximately
+$4,300,000 and $6,600,000 to GTECH, respectively. Based on customers' current
+delivery requirements, TransAct expects to fill its entire current backlog
+during 2003.
+(ix) MATERIAL PORTION OF BUSINESS SUBJECT TO RENEGOTIATION OF
+PROFITS
+None.
+(x) COMPETITION
+The market for transaction-based printers is extremely competitive, and
+the Company expects such competition to intensify in the future. The Company
+competes with a number of companies, many of which have greater financial,
+technical and marketing resources than the Company. TransAct believes its
+ability to compete successfully depends on a number of factors both within and
+outside its control, including durability, reliability, quality, design
+capability, product customization, price, customer support, success in
+developing new products, manufacturing expertise and capacity, supply of
+component parts and materials, strategic relationships with suppliers, the
+timing of new product introductions by the Company and its competitors, general
+market, economic and political conditions and, in some cases, the uniqueness of
+its products.
+In the POS market, the Company's major competitors are, Epson America,
+Inc., Axiohm Transaction Solutions, Star Micronics America, Inc., Citizen -- CBM
+America Corporation, and Korean Printer Solutions (a spin-off company from
+Samsung). Together, these competitors comprise approximately 80% of the POS
+market segments into which the Company sells. Certain competitors of the Company
+have greater financial resources, lower costs attributable to higher volume
+production and off-shore manufacturing locations, and offer lower prices than
+the Company from time to time.
+In the lottery market (consisting principally of on-line lottery
+transaction printing), the Company holds a leading position, based largely on
+its long-term purchase agreements with GTECH, which controls approximately 70%
+of the worldwide on-line lottery market. The Company competes in this market
+based solely on its ability to provide specialized, custom-engineered products
+to GTECH.
+In the gaming market (consisting principally of video lottery terminals
+and slot machine transaction printing), the Company and its major competitor,
+Seiko Instruments Inc. (an affiliate of Seiko Epson Corporation), comprise a
+substantial portion of the market. The Company also competes, to a lesser
+extent, with JCM American Corporation and Money Controls, a division of Coin
+Acceptors, Inc. (Coinco). Certain of the Company's products sold for gaming
+applications compete based upon the Company's ability to provide highly
+specialized products, custom engineering and ongoing technical support.
+The Company's strategy for competing in its markets is to continue to
+develop new products and product line extensions, to increase its geographic
+market penetration, take advantage of strategic relationships, and to lower
+product costs by sourcing certain products overseas. The Company expects to
+particularly focus on (1) promoting its new line of slot machine printers into
+the gaming market, (2) increasing sales of its family of printers utilizing
+Hewlett Packard's inkjet printing technology, and (3) expanding its consumables,
+spare parts and service business. Although the Company believes that its
+products, operations and relationships provide a competitive foundation, there
+can be no assurance that the Company will compete successfully in the future.
+(xi) RESEARCH AND DEVELOPMENT ACTIVITIES
+The Company spent approximately $2,025,000, $3,070,000 and $3,481,000
+in 2002, 2001 and 2000, respectively, on engineering, design and product
+development efforts in connection with specialized engineering and design to
+introduce new products and to customize existing products. During 2003, the
+Company expects to focus the majority of its research and development activities
+on the development of a new thermal on-line lottery printer for GTECH, and on
+the continuing development and enhancement of (1) its family of printers for the
+POS market utilizing inkjet and thermal printing technology and (2) its
+ticket-issuing printers for use in the casino market.
+4
+(xii) ENVIRONMENT
+The Company is not aware of any material noncompliance with federal,
+state and local provisions that have been enacted or adopted regulating the
+discharge of materials into the environment, or otherwise relating to the
+protection of the environment.
+(xiii) EMPLOYEES
+As of March 14, 2003, TransAct Technologies and its subsidiaries
+employed 158 persons, of whom 136 were full-time and 22 were temporary
+employees. None of the Company's employees is unionized, and the Company
+considers its relationships with its employees to be good.
+(D) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
+SALES
+The Company has foreign operations primarily from TransAct Technologies
+Ltd., a wholly-owned subsidiary located in the United Kingdom, which had sales
+to its customers of $738,000, $1,791,000 and $11,164,000 (primarily to ICL
+Pathway for use in the British Post Office) in 2002, 2001 and 2000,
+respectively. The Company had export sales to its customers from its domestic
+operations of approximately $3,968,000, $6,131,000 and $5,156,000 in 2002, 2001
+and 2000, respectively.
+(E) EXECUTIVE OFFICERS OF THE REGISTRANT AS OF DECEMBER 31, 2002
+Name Age Position
+------------------------------------ ------------- -------------------------------------------------------------
+Bart C. Shuldman 45 Chairman of the Board, President and Chief Executive Officer
+Richard L. Cote 61 Executive Vice President, Chief Financial Officer, Treasurer,
+Secretary and Director
+James B. Stetson 45 Executive Vice President - Sales and Marketing
+Michael S. Kumpf 53 Executive Vice President - Engineering
+Steven A. DeMartino 33 Senior Vice President - Finance and Information Technology
+BART C. SHULDMAN has been Chief Executive Officer, President and a
+Director of the Company since its formation in June 1996. Previously, Mr.
+Shuldman served as President of Magnetec and later the combined operations of
+Magnetec and Ithaca from August 1993 until June 1996. In February 2001, Mr.
+Shuldman was elected Chairman of the Board.
+RICHARD L. COTE has been Executive Vice President, Chief Financial
+Officer, Treasurer, Secretary and a Director of the Company since its formation
+in June 1996. Prior thereto, he served as Senior Vice President and Chief
+Financial Officer of Tridex from September 1993 to June 1996.
+JAMES B. STETSON was appointed Executive Vice President, Sales and
+Marketing in November 2001, and served as Senior Vice President of Worldwide
+Sales from February 2000 to November 2001, and Vice President of Sales, Latin
+America from October 1997 to February 2000. Prior to joining TransAct, Mr.
+Stetson served as Vice President and Sales Manager at Gekay Sales and Service
+Company from 1995 until October 1997.
+MICHAEL S. KUMPF, was appointed Executive Vice President of Engineering
+in March 2002. He served as Senior Vice President-Engineering from June 1996 to
+March 2002 and Vice President of Engineering of Ithaca from 1991 until June
+1996.
+STEVEN A. DEMARTINO joined TransAct as Corporate Controller in August
+1996 and was appointed an officer of the Company in January 1998, Vice President
+in December 1999, and Senior Vice President, Finance and Information Technology
+in October 2001. Prior to joining TransAct, Mr. DeMartino was a self-employed
+financial consultant from May 1996 to August 1996. Prior thereto, Mr. DeMartino,
+served as Controller of NER/Copart, Inc. from September 1994 to May 1996.
+5

raw/filings/0001017303/2002/0000950123-03-003629/item13.txt

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+ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
+The information contained in "Certain Relationships and Related
+Transactions" of the Proxy Statement is hereby incorporated herein by reference.

raw/filings/0001017303/2002/0000950123-03-003629/rpt_disclosure.txt

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+- Review all related party transactions and potential conflict of interest
+situations.
+- Receive, and act upon as appropriate, the disclosures made by the Chief
+Executive Officer and the Chief Financial Officer concerning internal
+controls and fraud required by Rule 13a-14 of the Securities Exchange Act
+of 1934.
+A-1
+b. Financial Reporting
+Annually
+- Review the Company's annual financial statements included in Form 10-K
+and the Annual Report to Stockholders with the Company's financial
+management and independent accountants.
+- Discuss any significant financial judgments made in connection with the
+preparation of the Company's financial statements.
+- Obtain assurances from financial management that the financial statements
+contain no material misstatements, and obtain assurances from the
+independent accountants that, in the course of their audit, they learned
+of no material misstatement.
+- Consider prior to their adoption any material change in accounting
+principles by the Company, and report and make recommendations to the

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raw/filings/0001017303/2006/0000950123-07-003917/item1.txt

@@ -0,0 +1,314 @@
+ITEM 1. BUSINESS.
+THE COMPANY
+TransAct was incorporated in June 1996 and began operating as a stand-alone
+business in August 1996 as a spin-off of the printer business that was formerly
+conducted by certain subsidiaries of Tridex Corporation. We completed an initial
+public offering on August 22, 1996.
+TransAct Technologies Incorporated ("TransAct" or the "Company") designs,
+develops, assembles, markets and services world-class transaction printers under
+the Epic(TM) and Ithaca(R) brand names. Known and respected worldwide for
+innovative designs and real-world service reliability, our impact, thermal and
+inkjet printers generate top-quality transaction records such as receipts,
+tickets, coupons, register journals and other documents. We focus on two core
+markets: (1) point-of-sale ("POS") and banking and (2) gaming and lottery. We
+sell our products to original equipment manufacturers ("OEMs"), value-added
+resellers ("VARs"), selected distributors, as well as directly to end-users. Our
+product distribution spans across the Americas, Europe, the Middle East, Africa,
+Asia, Australia, the Caribbean Islands and the South Pacific. In addition, we
+have a strong focus on the after-market side of the business, with a growing
+commitment to printer service, supplies and spare parts. We have one primary
+operating facility located in Ithaca, NY, five sales offices located in the
+United States (including our global gaming and lottery headquarters and western
+region service center in Las Vegas, NV), and a European sales and service center
+in the United Kingdom. Our executive offices and eastern region service center
+are located at 7 Laser Lane, Wallingford, CT 06492, with a telephone number of
+(203) 859-6800.
+FINANCIAL INFORMATION ABOUT SEGMENTS
+We have determined that we operate in one reportable segment, the design,
+development, assembly and marketing of transaction printers and printer-related
+service, supplies and spare parts.
+PRODUCTS AND SERVICES
+Printers
+TransAct designs, develops, assembles and markets a broad array of
+transaction-based printers utilizing inkjet, thermal and impact printing
+technology for applications requiring up to 60 character columns, primarily in
+the POS and banking, and gaming and lottery markets. Our printers are
+configurable and offer customers the ability to choose from a variety of
+features and functions. Options typically include interface configuration, paper
+cutting devices, paper handling capacities and cabinetry color. In addition to
+our configurable printers, we design and assemble custom printers for certain
+OEM customers. In collaboration with these customers, we provide engineering and
+manufacturing expertise for the design and development of specialized printers.
+POS and banking: Our POS and banking printers include hundreds of optional
+configurations that can be selected to meet particular customer needs. We
+believe that this is a significant competitive strength, as it allows us to
+satisfy a wide variety of printing applications that our customers request. In
+the POS market, we sell several models of printers utilizing inkjet, thermal and
+impact printing technology. Our printers are used primarily by retailers in the
+hospitality, restaurant (including fine dining, casual dining, and fast food)
+and specialty retail industries to print receipts for consumers, validate
+checks, or print on other inserted media. We also sell printers that are used by
+banks, credit unions and other financial institutions to print and/or validate
+receipts at bank teller stations.
+Gaming and lottery: In the lottery portion of our gaming and lottery
+market, we supply lottery printers to GTECH, our largest customer and the
+world's largest provider of lottery terminals, with an approximate 70% market
+share. These printers are designed for high-volume, high-speed printing of
+lottery tickets for various lottery applications.
+In the gaming portion of our gaming and lottery market, we sell several
+models of printers used in slot machines and video lottery terminals that print
+tickets instead of issuing coins at casinos, racetracks and other gaming
+establishments worldwide. These printers utilize thermal printing technology and
+can print tickets in monochrome or two-color (depending upon the model), and
+offer various other features such as jam resistant bezels and a dual port
+interface that will allow casinos to print coupons/promotions. In addition, we
+sell printers using thermal and impact printing technology for use in non-casino
+gaming establishments, including game types such as Amusements with Prizes
+("AWP"), Skills with Prizes ("SWP"), Video lottery terminals ("VLT"), Fixed Odds
+Betting Terminals ("FOBT") and other off-premise gaming type machines around the
+world.
+TransAct Services Group
+Through our TransAct Services Group, we proactively market the sale of
+consumable products (including inkjet cartridges, ribbons and receipt paper),
+replacement parts and maintenance services for all of our products. Our
+maintenance services include the sale of extended warranties, multi-year
+maintenance contracts, 24-hour guaranteed replacement product service TransAct
+Xpress(SM), and other repair services for our printers. Within the United
+States, we provide repair services
+3
+through our eastern region service center in Wallingford, CT and our western
+region service center in Las Vegas, NV. Internationally, we provide repair
+services through our European service center located in Doncaster, United
+Kingdom, and through partners strategically located around the world.
+We also provide customers with telephone sales and technical support, and a
+personal account representative to handle orders, shipping and general
+information. Technical and sales support personnel receive training on all of
+our manufactured products and our services.
+Product Warranty
+Our printers generally carry up to a two-year limited warranty against
+defects in material and workmanship. Defective equipment may be returned to any
+of our service centers, or our manufacturing facility in Ithaca, NY for
+newly-released printers only, for repair or replacement during the applicable
+warranty period.
+PRODUCTION, MANUFACTURING AND SOURCES AND AVAILABILITY OF RAW MATERIALS
+We design our products to optimize product performance, quality,
+reliability and durability. These designs combine cost efficient materials,
+sourcing and assembly methods with high standards of workmanship. We finalize
+assembly of our products in our Ithaca, NY facility largely on a
+configure-to-order basis using components that have been sourced from around the
+world. Our manufacturing engineers work closely with our new product engineers
+and vendors during the development of new products. As a result, this
+collaboration increases manufacturing efficiency by specifying materials and
+designing manufacturing processes in conjunction with new product design.
+We procure component parts and subassemblies for use in the manufacture and
+assembly of our products. Critical component parts and subassemblies include
+inkjet, thermal and impact printheads, printing/cutting mechanisms, power
+supplies, motors, injection molded plastic parts, circuit boards and electronic
+components, which are obtained from domestic and foreign suppliers at
+competitive prices. In addition, we have begun to procure fully assembled
+printers from a foreign supplier. We typically strive to maintain more than one
+source for our component parts, subassemblies and fully assembled printers to
+reduce the risk of parts shortages or unavailability. However, we could
+experience temporary disruption if certain suppliers ceased doing business with
+us, as described below.
+Okidata Americas, Inc. ("Okidata"), is the sole supplier for an impact
+printer component kit consisting of a printhead, control board and carriage (the
+"Oki Kit"), that is used in all of our Ithaca(R) brand impact printers. The loss
+of the supply of Oki Kits would have a material adverse effect on TransAct.
+However, sales of impact printers continue to decline as sales of these printers
+are replaced by sales of thermal and inkjet printers. As such, we believe that
+any possible loss of supply of Oki Kits will have less of an impact on TransAct
+in 2007 and beyond. Although we do not have a supply agreement with Okidata, our
+relationship with Okidata remains strong and we have no reason to believe that
+Okidata will discontinue its supply of Oki Kits to us or that their terms to us
+will be any less favorable than they have been historically.
+Hewlett-Packard Company ("HP") is the sole supplier of inkjet cartridges
+that are used in all of our inkjet printers. The loss of the supply of HP inkjet
+cartridges would have a material adverse effect on the sale of our inkjet
+printers. Prior to February 2006, we had a supply agreement with HP to purchase
+inkjet cartridges at fixed prices. This agreement expired on February 1, 2006
+and was not renewed, as HP informed us that they no longer maintain supply
+agreements for these inkjet cartridges; however, we continue to purchase inkjet
+cartridges from HP. Although we no longer have a supply agreement with HP, our
+relationship with HP remains strong and we have no reason to believe that HP
+will discontinue its supply of inkjet cartridges to us. The inkjet cartridges we
+purchase from HP are used not only in our inkjet printers for the POS and
+banking market, but also in other manufacturer's printing devices across several
+other markets.
+We currently buy substantially all of our thermal print mechanisms, an
+important component of our thermal printers, from one supplier. Although we
+believe that other suppliers could provide similar thermal print mechanisms on
+comparable terms, a change in suppliers could cause a delay in manufacturing and
+possible loss of sales which may have a material adverse effect on our operating
+results.
+4
+PATENTS AND PROPRIETARY INFORMATION
+We have significantly expanded our patent portfolio over the past six
+years, and expect to continue to do so in the future. We also believe our patent
+portfolio could provide additional opportunities to license our intellectual
+property in the future. We hold 21 United States and nine foreign patents and
+have nine United States and 19 foreign patent applications pending pertaining to
+our products. The duration of these patents range from 11 to 18 years. The
+expiration of any individual patent would not have a significant negative impact
+on our business. We regard certain manufacturing processes and designs to be
+proprietary and attempt to protect them through employee and third-party
+nondisclosure agreements and similar means. It may be possible for unauthorized
+third parties to copy certain portions of our products or to reverse engineer or
+otherwise obtain and use, to our detriment, information that we regard as
+proprietary. Moreover, the laws of some foreign countries do not afford the same
+protection to our proprietary rights as do United States laws. There can be no
+assurance that legal protections relied upon by the Company to protect our
+proprietary position will be adequate or that our competitors will not
+independently develop technologies that are substantially equivalent or superior
+to our technologies.
+During 2004, we signed a cross licensing agreement with Seiko Epson. Under
+the agreement, Seiko Epson received a license to three of our patents, and we
+received a license to eighteen of Seiko Epson's patents relating to printing
+applications for the point of sale and banking markets. In addition, we agreed
+to pay $900,000 as a royalty for the usage of certain Seiko Epson technology
+prior to January 1, 2003, which was paid in full by January 2005. Under the
+agreement, we continue to pay royalties on a quarterly basis related to the
+sales of licensed printers, which is reflected in cost of sales.
+SEASONALITY
+Retailers typically reduce purchases of new POS equipment in the fourth
+quarter, due to the increased volume of consumer transactions in that holiday
+period, and our sales of printers in the POS market historically have increased
+in the third quarter and decreased in the fourth quarter. Similarly,
+installations of lottery terminals are typically reduced in the fourth quarter,
+resulting in decreased sales of lottery printers.
+CERTAIN CUSTOMERS
+We currently have an ongoing OEM purchase agreement, as amended in February
+2006, (the "GTECH Thermal Printer Agreement") with GTECH Corporation ("GTECH")
+that provides for the sale of thermal on-line lottery printers and spare parts,
+at fixed prices, through June 28, 2012. Firm purchase orders for printers under
+the GTECH Thermal Printer Agreement may be placed as required by GTECH. Prior to
+this agreement, we had a purchase agreement with GTECH that provided for the
+sale of impact on-line lottery printers and spare parts through December 31,
+2004. Because our new thermal on-line lottery printer is a replacement for our
+impact on-line printer, we do not expect any further shipments of impact on-line
+lottery printers. However, we do expect to continue to sell spare parts to GTECH
+for the remaining installed base of impact on-line lottery printers, although we
+expect such sales to decline as the installed base of impact on-line lottery
+printers are replaced with our thermal printer.
+BACKLOG
+Our backlog of firm orders was approximately $4,300,000 as of February 28,
+2007, compared to $8,300,000 as of February 28, 2006. Based on customers'
+current delivery requirements, we expect to ship our entire current backlog
+during 2007.
+COMPETITION
+The market for transaction-based printers is extremely competitive, and we
+expect such competition to continue in the future. We compete with a number of
+companies, many of which have greater financial, technical and marketing
+resources than us. We believe our ability to compete successfully depends on a
+number of factors both within and outside our control, including durability,
+reliability, quality, design capability, product customization, price, customer
+support, success in developing new products, manufacturing expertise and
+capacity, supply of component parts and materials, strategic relationships with
+suppliers, the timing of new product introductions by us and our competitors,
+general market, economic and political conditions and, in some cases, the
+uniqueness of our products.
+In the POS and banking market, our major competitor is Epson America, Inc.,
+which holds a dominant market position of the POS markets into which we sell. We
+also compete, to a much lesser extent, with Transaction Printer Group, Star
+Micronics America, Inc., Citizen -- CBM America Corporation, Pertech Resources,
+Inc. and Samsung/Bixolon. Certain competitors of ours have greater financial
+resources, lower costs attributable to higher volume production and sometimes
+offer lower prices than us.
+In the lottery market (consisting principally of on-line lottery
+transaction printing), we hold a leading position, based largely on our
+long-term purchase agreement with GTECH, which holds approximately 70% market
+share of the worldwide on-line lottery market. We compete in this market based
+solely on our ability to provide specialized, custom-engineered products to
+GTECH.
+5
+In the gaming market (consisting principally of slot machine and video
+lottery terminal transaction printing), we compete with several companies
+including FutureLogic, Inc., Nanoptix, Inc., Custom Engineering SPA and others.
+Certain of our products sold for gaming applications compete based upon our
+ability to provide highly specialized products, custom engineering and ongoing
+technical support.
+The TransAct Services Group business is highly fragmented, and we compete
+with numerous competitors of various sizes depending on the geographic area.
+Our strategy for competing in our markets is to continue to develop new
+products and product line extensions, to increase our geographic market
+penetration, to take advantage of strategic relationships, and to lower product
+costs by sourcing certain products overseas. Although we believe that our
+products, operations and relationships provide a competitive foundation, there
+can be no assurance that we will compete successfully in the future. In
+addition, our products utilize certain inkjet, thermal and impact printing
+technology. If other technologies, or variations to existing technologies were
+to evolve or become available to us, it is possible that we would incorporate
+these technologies into our products. Alternatively, if such technologies were
+to evolve or become available to our competitors, our products could become
+obsolete, which would have a significant negative impact on our business.
+RESEARCH AND DEVELOPMENT ACTIVITIES
+We spent approximately $2,824,000, $2,726,000 and $2,715,000 in 2006, 2005
+and 2004, respectively, on engineering, design and product development efforts
+in connection with specialized engineering and design to introduce new products
+and to customize existing products.
+ENVIRONMENT
+We are not aware of any material noncompliance with federal, state and
+local provisions that have been enacted or adopted regulating the discharge of
+materials into the environment, or otherwise relating to the protection of the
+environment.
+EMPLOYEES
+As of February 28, 2007, TransAct and our subsidiaries employed 185
+persons, of whom 172 were full-time and 13 were temporary employees. None of our
+employees are unionized, and we consider our relationships with our employees to
+be good.
+FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS
+We have foreign operations primarily from TransAct Technologies Ltd., a
+wholly-owned subsidiary located in the United Kingdom, which had sales to its
+customers of $2,722,000, $2,181,000, and $1,000,000, (primarily for the service
+of printers used in the British Post Office) in 2006, 2005 and 2004,
+respectively. We had export sales from our domestic operations of approximately
+$11,416,000, $10,137,000 and $5,423,000 in 2006, 2005 and 2004, respectively.
+Total international sales, which include sales from our foreign subsidiary and
+export sales from our domestic operations, were approximately $14,138,000,
+$12,318,000 and $6,423,000 in 2006, 2005 and 2004, respectively.
+ADDITIONAL INFORMATION
+We make available free of charge through our internet website,
+WWW.TRANSACT-TECH.COM, our annual report on Form 10-K, quarterly reports on Form
+10-Q, current reports on Form 8-K, and all amendments to those reports as soon
+as reasonably practicable after such material is electronically filed with or
+furnished to the SEC.
+We maintain a Code of Business Conduct that includes our code of ethics
+that is applicable to all employees, including our Chief Executive Officer,
+Chief Financial Officer and Controller. This Code, which requires continued
+observance of high ethical standards such as honesty, integrity and compliance
+with the law in the conduct of our business, is available for public access on
+our internet website. Any person may request a copy of our Code of Business
+Conduct free of charge by calling (203) 859-6800.
+EXECUTIVE OFFICERS OF THE REGISTRANT
+The following list is included as an unnumbered item in Part I of this
+Report in lieu of being included in the Proxy Statement for the Annual Meeting
+of Stockholders to be held on May 15, 2007.
+6
+The following is a list of the names and ages of all executive officers of the
+registrant, indicating all positions and offices with the registrant held by
+each such person and each person's principal occupations and employment during
+at least the past five years.
+Name Age Position
+---- --- ----------------------------------------------------------------
+Bart C. Shuldman 49 Chairman of the Board, President and Chief Executive Officer
+Steven A. DeMartino 37 Executive Vice President, Chief Financial Officer, Treasurer and
+Secretary
+Michael S. Kumpf 57 Executive Vice President - Engineering
+BART C. SHULDMAN has been Chief Executive Officer, President and a Director
+of the Company since its formation in June 1996. Previously, Mr. Shuldman served
+as President of Magnetec and later the combined operations of Magnetec and
+Ithaca Peripherals from August 1993 until June 1996. In February 2001, Mr.
+Shuldman was elected Chairman of the Board.
+STEVEN A. DEMARTINO was named as TransAct's Executive Vice President, Chief
+Financial Officer, Treasurer and Secretary on June 1, 2004. Previously, Mr.
+DeMartino served as Senior Vice President, Finance and Information Technology
+from October 2001 to May 2004, Vice President and Corporate Controller from
+January 1998 to October 2001, and Corporate Controller from August 1996 to
+December 1997. Prior to joining TransAct, Mr. DeMartino was a self-employed
+financial consultant from May 1996 to August 1996. Prior to that, Mr. DeMartino
+served as Controller of Copart, Inc. from September 1994 to May 1996. Mr.
+DeMartino is a certified public accountant.
+MICHAEL S. KUMPF was appointed Executive Vice President of Engineering in
+March 2002. He served as Senior Vice President, Engineering from June 1996 to
+March 2002 and Vice President, Engineering of Ithaca Peripherals from 1991 until
+June 1996.

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+ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
+The information contained in "Certain Relationships and Related
+Transactions" of the Proxy Statement is hereby incorporated herein by reference.

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+ITEM 9A. CONTROLS AND PROCEDURES
+Attached as exhibits to this Form 10-K are certifications of our Chief
+Executive Officer (CEO) and Chief Financial Officer (CFO), which are required in
+accordance with Rule 13a-14 of the Securities Exchange Act of 1934, as amended
+(the Exchange Act). This "Controls and Procedures" section includes information
+concerning the controls and controls evaluation referred to in the
+certifications. Part II, Item 8 of this Form 10-K sets forth the report of
+PricewaterhouseCoopers LLP, our independent registered public accounting firm,
+regarding its audit of TransAct's internal control over financial reporting as
+of December 31, 2006 and of management's assessment of internal control over
+financial reporting as of December 31, 2006 set forth below in this section.
+This section should be read in conjunction with the CEO and CFO certifications
+and the PricewaterhouseCoopers LLP report for a more complete understanding of
+the topics presented.
+EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
+We conducted an evaluation of the effectiveness of the design and operation
+of our "disclosure controls and procedures" ("Disclosure Controls") for the
+period covered by this Form 10-K. The controls evaluation was conducted under
+the supervision and with the participation of management, including our CEO and
+CFO. Disclosure Controls are controls and procedures designed to reasonably
+assure that information required to be disclosed in our reports filed under the
+Exchange Act, such as this Form 10-K, is recorded, processed, summarized and
+reported within the time periods specified in the U.S. Securities and Exchange
+Commission's (SEC's) rules and forms. Disclosure Controls are also designed to
+reasonably assure that such information is accumulated and communicated to our
+management, including the CEO and CFO, as appropriate to allow timely decisions
+regarding required disclosure. Our quarterly evaluation of Disclosure Controls
+includes an evaluation of some components of our internal control over financial
+reporting, and internal control over financial reporting is also separately
+evaluated on an annual basis for purposes of providing the management report
+which is set forth below.
+The evaluation of our Disclosure Controls included a review of the
+controls' objectives and design, the company's implementation of the controls
+and the effect of the controls on the information generated for use in this Form
+10-K. In the course of the controls evaluation, we review data errors, control
+problems or acts of fraud, if any, and seek to confirm that appropriate
+corrective actions, including process improvements, are being undertaken. This
+type of evaluation is performed on a quarterly basis so that the conclusions of
+management, including the CEO and CFO, concerning the effectiveness of the
+Disclosure Controls can be reported in our periodic reports on Form 10-Q and
+Form 10-K. Many of the components of our Disclosure Controls are also evaluated
+on an ongoing basis by personnel in our finance organization. The overall goals
+of these various evaluation activities are to monitor our Disclosure Controls,
+and to modify them as necessary. Our intent is to maintain the Disclosure
+Controls as dynamic systems that change as conditions warrant.
+Based upon the evaluation of the controls, our CEO and CFO have concluded
+that, as of the end of the period covered by this Form 10-K, our Disclosure
+Controls were effective to provide reasonable assurance that information
+required to be disclosed in our Exchange Act reports is recorded, processed,
+summarized and reported within the time periods specified by the SEC, and that
+material information relating to TransAct and our consolidated subsidiaries is
+made known to management, including the CEO and CFO, particularly during the
+period when our periodic reports are being prepared.
+CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
+The implementation of our new accounting system, completed effective
+January 8, 2007, required us to modify and add certain internal controls and
+processes and procedures. Otherwise, no change in our internal control over
+financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the
+Exchange Act) occurred during the three months ended December 31, 2006 that has
+materially affected, or is reasonably likely to materially affect, our internal
+control over financial reporting.
+MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
+Our management is responsible for establishing and maintaining adequate
+internal control over financial reporting to provide reasonable assurance
+regarding the reliability of our financial reporting and the preparation of
+financial statements for external purposes in accordance with generally accepted
+accounting principles. Internal control over financial reporting includes those
+policies and procedures that (i) pertain to the maintenance of records that in
+reasonable detail accurately and fairly reflect the transactions and
+dispositions of the assets of the company; (ii) provide reasonable assurance
+that transactions are recorded as necessary to permit preparation of financial
+statements in accordance with generally accepted accounting principles, and that
+receipts and expenditures of the company are being made only in accordance with
+authorizations of management and directors of the company; and (iii) provide
+reasonable assurance regarding prevention or timely detection of unauthorized
+acquisition, use or disposition of the company's assets that could have a
+material effect on the financial statements.
+52
+Management assessed our internal control over financial reporting as of
+December 31, 2006. Management based its assessment on criteria established in
+Internal Control-Integrated Framework issued by the Committee of Sponsoring
+Organizations of the Treadway Commission (COSO).
+Based on our assessment, management has concluded that our internal control
+over financial reporting was effective as of December 31, 2006 based on the COSO
+criteria identified above, to provide reasonable assurance regarding the
+reliability of financial reporting and the preparation of financial statements
+for external reporting purposes in accordance with generally accepted accounting
+principles.
+Our management's assessment of the effectiveness of the Company's internal
+control over financial reporting as of December 31, 2006 has been audited by
+PricewaterhouseCoopers LLP, an independent registered public accounting firm, as
+stated in their report which appears herein.
+INHERENT LIMITATIONS ON EFFECTIVENESS OF CONTROLS
+A control system, no matter how well designed and operated, can provide
+only reasonable, not absolute, assurance that the control system's objectives
+will be met. The design of a control system must reflect the fact that there are
+resource constraints, and the benefits of controls must be considered relative
+to their costs. Further, because of the inherent limitations in all control
+systems, no evaluation of controls can provide absolute assurance that
+misstatements due to error or fraud will not occur or that all control issues
+and instances of fraud, if any, within the company have been detected.
+These inherent limitations include the realities that judgments in
+decision-making can be faulty and that breakdowns can occur because of simple
+errors or mistakes. Controls can also be circumvented by the individual acts of
+some persons, by collusion of two or more people, or by management override of
+the controls. The design of any system of controls is based in part on certain
+assumptions about the likelihood of future events, and there can be no assurance
+that any design will succeed in achieving its stated goals under all potential
+future conditions. Projections of any evaluation of controls effectiveness to
+future periods are subject to risks. Over time, controls may become inadequate
+because of changes in conditions or deterioration in the degree of compliance
+with policies or procedures.
+PART III

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+CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
+The Company maintains policies that relate to the identification, review
+and approval of related party transactions. As part of a review of possible
+related person transactions, the Company annually distributes and collects
+questionnaires that solicit information about any direct or indirect
+transactions with the Company from each of our directors and officers.
+Our Standards of Business Conduct require all directors, officers and
+employees to avoid any situation that involves an actual or apparent conflict of
+interest in personal and professional relationships or with their duty to, or
+with any interest of, the Company. Under the Standards of Business Conduct,
+situations that involve, or may reasonably be inferred to involve, a conflict
+between a director, officer or employee's personal interests and the interests
+of the Company should be disclosed to the Chair of the Audit Committee. No
+related party transaction shall be approved or ratified if such transaction is
+contrary to the best interests of the Company.
+From January 1, 2006 to the date of this proxy statement, there have not
+been any transactions of the type described in Item 404 of Regulation S-K, and
+currently no such transactions are proposed.

raw/filings/0001017303/2008/0001017303-09-000003/filing_metadata.csv

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+Item 1. Business. 
+The
+Company 
+TransAct
+Technologies Incorporated (“TransAct” or the “Company”) was incorporated in June
+1996 and began operating as a stand-alone business in August 1996 as a spin-off
+of the printer business that was formerly conducted by certain subsidiaries of
+Tridex Corporation. We completed an initial public offering on August
+22, 1996. 
+TransAct
+designs, develops, assembles, markets and services world-class transaction
+printers under the Epic and Ithaca® brand
+names. Known and respected worldwide for innovative designs and
+real-world service reliability, our thermal, inkjet and impact printers generate
+top-quality transaction records such as receipts, tickets, coupons, register
+journals and other documents. We focus on three core markets: (1)
+banking and point-of-sale (“POS”), (2) casino and gaming and (3)
+lottery. We sell our products to original equipment manufacturers
+("OEMs"), value-added resellers ("VARs"), selected distributors, as well as
+directly to end-users. Our product distribution spans across the
+Americas, Europe, the Middle East, Africa, Asia, Australia, the Caribbean
+Islands and the South Pacific. In addition, we have a strong focus on
+the after-market side of the business, through
+our TransAct Services Group, with a growing commitment to printer
+service, supplies and spare parts. We have one primary operating
+facility located in Ithaca, NY, our printer sales headquarters and western
+region service center in Las Vegas, NV, an eastern region service center located
+in New Britain, CT, a European sales and service center in the United Kingdom,
+and a sales office located in Macau and two other sales offices located in the
+United States. Our executive offices are located at
+One Hamden Center, 2319 Whitney Avenue, Suite 3B, Hamden, CT, 06518,
+with a telephone number of (203) 859-6800. 
+Financial
+Information about Segments 
+We have
+determined that we operate in one reportable segment, the design, development,
+assembly and marketing of transaction printers and printer-related service,
+supplies and spare parts. 
+Products
+and Services 
+Printers 
+TransAct
+designs, develops, assembles and markets a broad array of transaction-based
+printers utilizing inkjet, thermal and impact printing technology for
+applications requiring up to 60 character columns, primarily in the banking,
+POS, casino, gaming and lottery markets. Our printers are
+configurable and offer customers the ability to choose from a variety of
+features and functions. Options typically include interface
+configuration, paper cutting devices, paper handling capacities and cabinetry
+color. In addition to our configurable printers, we design and
+assemble custom printers for certain OEM customers. In collaboration
+with these customers, we provide engineering and manufacturing expertise for the
+design and development of specialized printers. 
+Banking
+and POS: Our banking and POS printers include hundreds of optional
+configurations that can be selected to meet particular customer
+needs. We believe that this is a significant competitive strength, as
+it allows us to satisfy a wide variety of printing applications that our
+customers request. In the banking market, we sell printers that are
+used by banks, credit unions and other financial institutions to print and/or
+validate receipts at bank teller stations. In the POS market, we sell
+several models of printers utilizing inkjet, thermal and impact printing
+technology. Our printers are used primarily by retailers in the
+restaurant (including fine dining, casual dining, and fast food), hospitality,
+and specialty retail industries to print receipts for consumers, validate
+checks, or print on other inserted media. 
+Lottery: We
+supply lottery printers to Lottomattica’s GTECH Corporation (“GTECH”),
+our largest customer and the world’s largest provider of lottery
+terminals, with an approximate 70% market share. These printers are
+designed for high-volume, high-speed printing of lottery tickets for various
+lottery applications. 
+Casino
+and gaming: We sell several models of printers used in slot machines
+and video lottery terminals that print tickets or receipts instead of issuing
+coins at casinos, racetracks and other gaming establishments
+worldwide. These printers utilize thermal printing technology and can
+print tickets or receipts in monochrome or two-color (depending upon the model),
+and offer various other features such as jam resistant bezels and a dual port
+interface that will allow casinos to print coupons/promotions. In
+addition, we sell printers using thermal and impact printing technology for use
+in non-casino establishments, including game types such as Amusements with
+Prizes (“AWP”), Skills with Prizes (“SWP”), Video lottery terminals (“VLT”),
+Fixed Odds Betting Terminals (“FOBT”) and other off-premise gaming type machines
+around the world. 
+TransAct
+Services Group 
+Through
+our TransAct Services Group, we proactively market the sale of consumable
+products (including inkjet cartridges, ribbons,
+receipt paper and other transaction supplies ), replacement parts and
+maintenance services for all of our products and certain competitor’s
+products. Our maintenance services include the sale of extended
+warranties, multi-year maintenance contracts, 24-hour guaranteed replacement
+product service TransAct Xpress SM ,
+and other repair services for our printers. Within the United States,
+we provide repair services through our eastern region service center in New
+Britain, CT and our western region service center in Las Vegas,
+NV. Internationally, we provide repair services through our European
+service center located in Doncaster, United Kingdom, and through partners
+strategically located around the world. 
+1 
+Table of Contents 
+We also
+provide customers with telephone sales and technical support, and a personal
+account representative to handle orders, shipping and general
+information. Technical and sales support personnel receive training
+on all of our manufactured products and our services. 
+In
+addition to personalized telephone and technical support, we also market and
+sell consumable products 24 hours a day, seven days a week, via our online
+webstore www.transactsupplies.com . 
+Product
+Warranty 
+Our
+printers generally carry up to a two-year limited warranty against defects in
+material and workmanship. Defective equipment may be returned to any
+of our service centers, or our assembly facility in Ithaca, NY for
+newly-released printers only, for repair or replacement during the applicable
+warranty period. 
+Production,
+Manufacturing and Sources and Availability of Raw Materials 
+We design
+our products to optimize product performance, quality, reliability and
+durability. These designs combine cost efficient materials, sourcing
+and assembly methods with high standards of workmanship. During 2008,
+we began a program to transfer final assembly for approximately 70% of our total
+printer production to a third-party contract manufacturer in China by the end of
+2009. As of December 31, 2008, we had transferred approximately
+30% of our total production to this contract manufacturer, and we expect the
+remaining 40% to be transferred during 2009. Over the remainder of
+2009, we will continue to finalize assembly for some of our products in our
+Ithaca, NY facility largely on a configure-to-order basis using components and
+subassemblies that have been sourced from vendors or contract manufacturers
+around the world. However, we plan to decrease in-house printer
+production in Ithaca, NY by printer model as the assembly of that printer model
+is transferred to our contract manufacturer. 
+We
+procure component parts and subassemblies for use in the assembly of our
+products in Ithaca, NY. Critical component parts and subassemblies
+include inkjet, thermal and impact printheads, printing/cutting mechanisms,
+power supplies, motors, injection molded plastic parts, circuit boards and
+electronic components, which are obtained from domestic and foreign suppliers at
+competitive prices. With the transition of 70% of our production to
+our contract manufacturer, during 2009 we expect purchases of component parts
+will decline, while purchases of fully-assembled printers will increase, as
+in-house printer assembly in Ithaca, NY declines and assembly by our contract
+manufacturer increases. Furthermore, during this transition, we
+expect inventories to temporarily rise, as we plan to increase our stocking
+levels to ensure product availability to meet our customers’
+demands. We typically strive to maintain more than one source for our
+component parts, subassemblies and fully assembled printers to reduce the risk
+of parts shortages or unavailability. However, we could experience
+temporary disruption if certain suppliers ceased doing business with us, as
+described below. 
+We
+currently buy substantially all of our thermal print mechanisms, an important
+component of our thermal printers, and fully assembled printers for several of
+our printer models, from one foreign contract manufacturer. Although
+we believe that other contract manufacturers could provide similar thermal print
+mechanisms or fully assembled printers, on comparable terms, a change in
+contract manufacturers could cause a delay in manufacturing and possible loss of
+sales, which may have a material adverse effect on our operating
+results. 
+Hewlett-Packard
+Company (“HP”) is the sole supplier of inkjet cartridges that are used in all of
+our inkjet printers. The loss of the supply of HP inkjet cartridges
+would have a material adverse effect on the sale of our inkjet
+printers. Prior to February 2006, we had a supply agreement with HP
+to purchase inkjet cartridges at fixed prices. This agreement expired
+on February 1, 2006 and was not renewed, as HP informed us that they no longer
+maintain supply agreements for these inkjet cartridges; however, we continue to
+purchase inkjet cartridges from HP. Although we no longer have a
+supply agreement with HP, our relationship with HP remains strong and we have no
+reason to believe that HP will discontinue its supply of inkjet cartridges to
+us. The inkjet cartridges we purchase from HP are used not only in
+our inkjet printers for the banking and POS market, but also in other
+manufacturer’s printing devices across several other markets. 
+Okidata
+Americas, Inc. (“Okidata”) is the sole supplier for an impact printer component
+kit consisting of a printhead, control board and carriage (the “Oki Kit”) that
+is used in all of our Ithaca â brand impact
+printers. The loss of the supply of Oki Kits would have a material
+adverse effect on TransAct. However, sales of impact printers
+continue to decline as sales of these printers are replaced by sales of thermal
+and inkjet printers. As such,
+we believe that any possible loss of supply of Oki Kits will continue to have
+less of an impact on TransAct in 2009 and beyond. Although we do not
+have a supply agreement with Okidata, our relationship with Okidata remains
+strong and we have no reason to believe that Okidata will discontinue its supply
+of Oki Kits to us during 2009 or that their terms to us will be any less
+favorable than they have been historically. 
+2 
+Table of Contents 
+Patents
+and Proprietary Information 
+We have
+significantly expanded our patent portfolio since 2002, and expect to continue
+to do so in the future. We also believe our patent portfolio could
+provide additional opportunities to license our intellectual property in the
+future. We hold 23 United States and 19 foreign patents and have 8
+United States and 72 foreign patent applications pending pertaining to our
+products. The duration of these patents range from 10 to 18
+years. The expiration of any individual patent would not have a
+significant negative impact on our business. We regard certain
+manufacturing processes and designs to be proprietary and attempt to protect
+them through employee and third-party nondisclosure agreements and similar
+means. It may be possible for unauthorized third parties to copy
+certain portions of our products or to reverse engineer or otherwise obtain and
+use, to our detriment, information that we regard as
+proprietary. Moreover, the laws of some foreign countries do not
+afford the same protection to our proprietary rights as do United States laws.
+There can be no assurance that legal protections relied upon by the Company to
+protect our proprietary position will be adequate or that our competitors will
+not independently develop technologies that are substantially equivalent or
+superior to our technologies. 
+Seasonality 
+Retailers
+typically reduce purchases of new POS equipment in the fourth quarter, due to
+the increased volume of consumer transactions in that holiday period, and our
+sales of printers in the POS market historically have increased in the third
+quarter and decreased in the fourth quarter. Similarly, installations
+of lottery terminals are typically reduced in the fourth quarter, resulting in
+decreased sales of lottery printers. 
+Certain
+Customers 
+We
+currently have an ongoing OEM purchase agreement, as amended in February 2006
+(the “GTECH Thermal Printer Agreement”) with GTECH that provides for the sale of
+thermal on-line lottery printers and spare parts, at fixed prices, through June
+28, 2012. During 2008, sales to GTECH accounted for 28% of our net
+sales, and no other customer individually accounted for more than 10% of total
+net product sales. Firm purchase orders for printers under the GTECH
+Thermal Printer Agreement may be placed as required by GTECH. Prior
+to this agreement, we had a purchase agreement with GTECH that provided for the
+sale of impact on-line lottery printers and spare parts through December 31,
+2004. Because our new thermal on-line lottery printer is a
+replacement for our impact on-line printer, we do not expect any further
+shipments of impact on-line lottery printers. However, we do expect
+to continue to sell spare parts to GTECH for the remaining installed base of
+impact on-line lottery printers, although we expect such sales to decline as the
+installed base of impact on-line lottery printers are replaced with our thermal
+printer. 
+Backlog 
+Our
+backlog of firm orders was approximately $9,994,000 as of February 28,
+2009, compared to $9,123,000 as of February 29, 2008. Based on
+customers’ current delivery requirements, we expect to ship our entire current
+backlog during 2009. 
+Competition 
+The
+market for transaction-based printers is extremely competitive, and we expect
+such competition to continue in the future. We compete with a number of
+companies, many of which have greater financial, technical and marketing
+resources than us. We believe our ability to compete successfully depends on a
+number of factors both within and outside our control, including durability,
+reliability, quality, design capability, product customization, price, customer
+support, success in developing new products, manufacturing expertise and
+capacity, supply of component parts and materials, strategic relationships with
+suppliers, the timing of new product introductions by us and our competitors,
+general market, economic and political conditions and, in some cases, the
+uniqueness of our products. 
+In the
+banking and POS market, our major competitor is Epson America, Inc., which holds
+a dominant market position of the POS markets into which we sell. We
+also compete, to a much lesser extent, with Transaction Printer Group, Star
+Micronics America, Inc., Citizen -- CBM America Corporation, Pertech Resources,
+Inc., Addmaster, and Samsung/Bixolon. Certain competitors of ours
+have greater financial resources, lower costs attributable to higher volume
+production and sometimes offer lower prices than us. 
+In the
+lottery market (consisting principally of on-line lottery transaction printing),
+we hold a leading position, based largely on our long-term purchase agreement
+with GTECH, which holds approximately 70% market share of the worldwide on-line
+lottery market. We compete in this market based solely on our ability
+to provide specialized, custom-engineered products to GTECH. 
+In the
+casino and gaming market (consisting principally of slot machine and video
+lottery terminal transaction printing), we compete with several companies
+including FutureLogic, Inc., Nanoptix, Inc., Custom Engineering SPA and
+others. Certain of our products sold for casino and gaming
+applications compete based upon our ability to provide highly specialized
+products, custom engineering and ongoing technical support. 
+The
+TransAct Services Group business is highly fragmented, and we compete with
+numerous competitors of various sizes depending on the geographic
+area. 
+3 
+Table of Contents 
+Our
+strategy for competing in our markets is to continue to develop new products and
+product line extensions, to increase our geographic market penetration, to take
+advantage of strategic relationships, and to lower product costs by sourcing
+certain products overseas. Although we believe that our products,
+operations and relationships provide a competitive foundation, there can be no
+assurance that we will compete successfully in the future. In
+addition, our products utilize certain inkjet, thermal and impact printing
+technology. If other technologies, or variations to existing
+technologies were to evolve or become available to us, it is possible that we
+would incorporate these technologies into our
+products. Alternatively, if such technologies were to evolve or
+become available to our competitors, our products could become obsolete, which
+would have a significant negative impact on our business. 
+Research
+and Development Activities 
+We spent
+approximately $2,942,000, $3,129,000 and $2,824,000 in 2008, 2007 and 2006,
+respectively, on engineering, design and product development efforts in
+connection with specialized engineering and design to introduce new products and
+to customize existing products. 
+Environment 
+We are
+not aware of any material noncompliance with federal, state and local provisions
+that have been enacted or adopted regulating the discharge of materials into the
+environment, or otherwise relating to the protection of the
+environment. 
+Employees 
+As of
+February 28, 2009, TransAct and our subsidiaries employed 151 persons, of whom
+150 were full-time and 1 was a temporary employee. None of our
+employees are unionized, and we consider our relationships with our employees to
+be good. 
+Financial
+Information About Geographic Areas 
+We have
+foreign operations primarily from TransAct Technologies Ltd., a wholly-owned
+subsidiary located in the United Kingdom, which had sales to its customers of
+$120,000, $2,121,000 and $2,722,000 in 2008, 2007 and 2006,
+respectively. We had export sales from our domestic operations of
+approximately $10,006,000, $8,674,000 and $11,416,000 in 2008, 2007 and 2006,
+respectively. Total international sales, which include sales from our
+foreign subsidiary and export sales from our domestic operations, were
+approximately $10,126,000, $10,795,000 and $14,138,000 in 2008, 2007 and 2006,
+respectively. 
+Additional
+Information 
+We make
+available free of charge through our internet website, www.transact-tech.com ,
+our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports
+on Form 8-K, and all amendments to those reports as soon as reasonably
+practicable after such material is electronically filed with or furnished to the
+SEC. 
+We
+maintain a Code of Business Conduct that includes our code of ethics that is
+applicable to all employees, including our Chief Executive Officer, Chief
+Financial Officer and Controller. This Code, which requires continued
+observance of high ethical standards such as honesty, integrity and compliance
+with the law in the conduct of our business, is available for public access on
+our internet website. Any person may request a copy of our Code of
+Business Conduct free of charge by calling (203) 859-6800. 
+Executive
+Officers of the Registrant 
+The
+following list is included as an unnumbered item in Part I of this Report in
+lieu of being included in the Proxy Statement for the Annual Meeting of
+Stockholders to be held on May 28 , 2009 . 
+The
+following is a list of the names and ages of all executive officers of the
+registrant, indicating all positions and offices with the registrant held by
+each such person and each person’s principal occupations and employment during
+at least the past five years. 
+Name 
+Age 
+Position 
+Bart
+C. Shuldman 
+51 
+Chairman
+of the Board, President and Chief Executive Officer 
+Steven
+A. DeMartino 
+39 
+Executive
+Vice President, Chief Financial Officer, Treasurer and
+Secretary 
+Michael
+S. Kumpf 
+59 
+Executive
+Vice President-Engineering 
+James
+B. Stetson 
+52 
+Senior
+Vice President and Business Manager of the TransAct Services
+Group 
+Tracey
+S. Chernay 
+49 
+Senior
+Vice President-Sales and Marketing 
+Andrew
+Hoffman 
+51 
+Senior
+Vice
+President-Operations 
+Bart C.
+Shuldman has been Chief Executive Officer, President and a Director of the
+Company since its formation in June 1996. In February 2001, Mr.
+Shuldman was elected Chairman of the Board. 
+Steven A.
+DeMartino was named as TransAct’s Executive Vice President, Chief Financial
+Officer, Treasurer and Secretary on June 1, 2004. Previously, Mr.
+DeMartino served as Senior Vice President, Finance and Information Technology
+from October 2001 to May 2004, Vice President and Corporate Controller from
+January 1998 to October 2001, and Corporate Controller from August 1996 to
+December 1997. Mr. DeMartino is a certified public
+accountant. 
+4 
+Table of Contents 
+Michael
+S. Kumpf was appointed Executive Vice President of Engineering in March
+2002. He served as Senior Vice President, Engineering from June 1996
+to March 2002. 
+James B.
+Stetson was appointed Senior Vice President and Business Manager of TransAct
+Services Group in January 2005. Previously, Mr. Stetson held the
+position of Executive Vice President of Sales and Marketing from February 2000
+to December 2004, and Vice President of Latin American Sales from October 1997
+to February 2000. 
+Tracey S.
+Chernay was appointed Senior Vice President, Sales and Marketing in June 2007,
+with responsibility for the sales and marketing of all TransAct printer products
+worldwide. Previously Ms. Chernay served as Sr. Vice President,
+Marketing & Sales, POS & Banking with the Company from July 2006 to June
+2007, and joined TransAct in May of 2005 as Senior Vice President,
+Marketing. Prior to joining TransAct, Ms. Chernay was employed with
+Xerox Corporation where she held the role of Manager, Worldwide Marketing since
+2003, and Manager, Sales Operations from 2000 to 2002. She joined
+Xerox Corporation in 1983. 
+Andrew
+Hoffman was appointed Senior Vice President, Operations for TransAct worldwide
+in November 2004. He served as Vice President, Operations from
+September 1994 to November 2004.

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+Item 13. Certain Relationships and Related Transactions, and
+Director Independence. 
+The
+information in response to this item is incorporated by reference from the Proxy
+Statement section entitled “Certain Relationships and Related
+Transactions.”

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+Item 9A. Controls and Procedures . 
+Attached
+as exhibits to this Form 10-K are certifications of our Chief Executive Officer
+(“CEO”) and Chief Financial Officer (“CFO”), which are required in accordance
+with Rule 13a-14 of the Securities Exchange Act of 1934, as amended (the
+Exchange Act). This “Controls and Procedures” section includes
+information concerning the controls and controls evaluation referred to in the
+certifications. Part II, Item 8 of this Form 10-K sets forth the
+report of PricewaterhouseCoopers LLP, our independent registered public
+accounting firm, regarding its audit of TransAct’s internal control over
+financial reporting as of December 31, 2008. This section should be read
+in conjunction with the CEO and CFO certifications and the
+PricewaterhouseCoopers LLP report for a more complete understanding of the
+topics presented. 
+Evaluation
+of Disclosure Controls and Procedures 
+As of
+December 31, 2008, the Company, with the participation of its CEO and CFO
+conducted an evaluation of the effectiveness of the design and operation of the
+Company’s disclosure controls and procedures pursuant to Rule 13a-15 under the
+Securities Exchange Act of 1934 (the “Exchange Act”). Based on that
+evaluation, our CEO and CFO concluded that the Company’s disclosure controls and
+procedures (as defined in Rule 13a-15 of the Exchange Act) are
+effective. 
+Management’s
+Report on Internal Control Over Financial Reporting 
+Our
+management is responsible for establishing and maintaining adequate internal
+control over financial reporting to provide reasonable assurance regarding the
+reliability of our financial reporting and the preparation of financial
+statements for external purposes in accordance with generally accepted
+accounting principles. Internal control over financial reporting
+includes those policies and procedures that (i) pertain to the maintenance of
+records that in reasonable detail accurately and fairly reflect the transactions
+and dispositions of the assets of the company; (ii) provide reasonable assurance
+that transactions are recorded as necessary to permit preparation of financial
+statements in accordance with generally accepted accounting principles, and that
+receipts and expenditures of the company are being made only in accordance with
+authorizations of management and directors of the company; and (iii) provide
+reasonable assurance regarding prevention or timely detection of unauthorized
+acquisition, use or disposition of the company’s assets that could have a
+material effect on the financial statements. 
+Management
+assessed our internal control over financial reporting as of December 31, 2008.
+Management based its assessment on criteria established in Internal
+Control–Integrated Framework issued by the Committee of Sponsoring Organizations
+of the Treadway Commission (“COSO”). 
+Based on
+our assessment, management has concluded that our internal control over
+financial reporting was effective as of December 31, 2008. 
+The
+effectiveness of the Company’s internal control over financial reporting as of
+December 31, 2008, has been audited by PricewaterhouseCoopers LLP, an
+independent registered public accounting firm, as stated in their report which
+appears herein. 
+Inherent
+Limitations on Effectiveness of Controls 
+A control
+system, no matter how well designed and operated, can provide only reasonable,
+not absolute, assurance that the control system’s objectives will be
+met. The design of a control system must reflect the fact that there
+are resource constraints, and the benefits of controls must be considered
+relative to their costs. Further, because of the inherent limitations
+in all control systems, no evaluation of controls can provide absolute assurance
+that misstatements due to error or fraud will not occur or that all control
+issues and instances of fraud, if any, within the company have been
+detected. 
+These inherent limitations include
+the realities that judgments in decision-making can be faulty and that
+breakdowns can occur because of simple errors or mistakes. Controls
+can also be circumvented by the individual acts of some persons, by collusion of
+two or more people, or by management override of the controls. The
+design of any system of controls is based in part on certain assumptions about
+the likelihood of future events, and there can be no assurance that any design
+will succeed in achieving its stated goals under all potential future
+conditions. Projections of any evaluation of controls effectiveness to
+future periods are subject to risks. Over time, controls may become
+inadequate because of changes in conditions or deterioration in the degree of
+compliance with policies or procedures.

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+approval of related party transactions. As part of a review of
+possible related person transactions, the Company annually distributes and
+collects questionnaires that solicit information about any direct or indirect
+transactions with the Company from each of our directors and
+officers. 
+Our
+Standards of Business Conduct require all directors, officers and employees to
+avoid any situation that involves an actual or apparent conflict of interest in
+personal and professional relationships or with their duty to, or with any
+interest of, the Company. Under the Standards of Business Conduct,
+situations that involve, or may reasonably be inferred to involve, a conflict
+between a director, officer or employee’s personal interests and the interests
+of the Company should be disclosed to the Chair of the Audit
+Committee. The Audit Committee is then
+responsible for reviewing the related party transaction. No
+related party transaction shall be approved or ratified if such transaction is
+contrary to the best interests of the Company. In determining whether to approve or ratify a related
+party transaction, the Audit Committee takes into account such factors as it
+deems appropriate, which may include whether the interested transaction is on
+terms no less favorable than terms generally available to an unaffiliated third
+party under the same or similar circumstances and the extent of the related
+person’s interest in the transaction . 
+From
+January 1, 2008 to the date of this proxy statement, there have not been any
+transactions of the type described in Item 404 of Regulation S-K, and currently
+no such transactions are proposed. 
+CORPORATE
+GOVERNANCE 
+The
+Company strives to maintain corporate governance practices that benefit the
+long-term interests of the Company’s stockholders by clearly outlining the
+Company’s duties and responsibilities, providing a framework for active and
+fruitful discussions among the members of the Board of Directors and between the
+Board and management, and avoiding conflicts of interest and other legal and
+ethical problems. Accordingly, the Company’s corporate governance practices are
+designed not only to satisfy regulatory requirements, but also to provide for
+effective management of the Company. 
+3 
+Information
+on the Company’s corporate governance practices is available to the public under
+“Corporate Governance” on the Company’s website at www.transact-tech.com. The
+information on the website includes the Company’s Corporate Governance
+Principles, the charters of each of the Company’s Committees, and the Company’s
+Standards of Business Conduct, which includes a code of ethics applicable to the
+officers responsible for financial reporting, the Chief Executive Officer, Chief
+Financial Officer and Controller. The Company encourages its
+directors to attend all Board meetings as well as the Annual
+Meeting. One of the directors attended the Company’s 2008 Annual
+Meeting. Each director attended at least 90% of the Company’s Board
+meetings held in 2008 and 100% of applicable Committee meetings. 
+Board
+Size 
+The

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+Item 1. Business. 
+The Company 
+TransAct Technologies Incorporated (“TransAct” or the “Company”) was incorporated in June 1996 and began operating as a stand-alone business in August 1996 as a spin-off of the printer business that was formerly conducted by certain subsidiaries of Tridex Corporation. We completed an initial public offering on August 22, 1996. 
+TransAct designs, develops, assembles, markets and services world-class transaction printers under the Epic and Ithaca® brand names. Known and respected worldwide for innovative designs and real-world service reliability, our thermal, inkjet and impact printers generate top-quality transaction records such as receipts, tickets, coupons, register journals and other documents. We focus on the following core markets: banking and point-of-sale (“POS”), casino and gaming, and lottery. We sell our products to original equipment manufacturers ("OEMs"), value-added resellers ("VARs"), selected distributors, as well as directly to end-users. Our product distribution spans across the Americas, Europe, the Middle East, Africa, Asia, Australia, the Caribbean Islands and the South Pacific. Beyond printers, TransAct provides printing supplies to the full transaction printer market. Through our TransAct Services Group (“TSG”) we provide a complete range of supplies and consumables items used in the printing and scanning activities of customers in the hospitality, banking, retail, gaming, and government markets. Through our webstore, www.transactsupplies.com , and our direct selling team, we address the on-line demand for these products. We have one primary operating facility and eastern region service center located in Ithaca, NY, our printer sales headquarters and western region service center in Las Vegas, NV, a printhead manufacturing and repair center located in New Britain, CT, a European sales and service center in the United Kingdom, a sales office located in Macau and two other sales offices located in the United States. Our executive offices are located at One Hamden Center, 2319 Whitney Avenue, Suite 3B, Hamden, CT, 06518, with a telephone number of (203) 859-6800. 
+Financial Information about Segments 
+We operate in one reportable segment, the design, development, assembly and marketing of transaction printers and printer-related service, supplies and spare parts. 
+Products, Services and Distribution Methods 
+Printers 
+TransAct designs, develops, assembles and markets a broad array of transaction-based printers utilizing inkjet, thermal and impact printing technology for applications requiring up to 60 character columns, primarily in the banking, POS, casino, gaming and lottery markets. Our printers are configurable and offer customers the ability to choose from a variety of features and functions. Options typically include interface configuration, paper cutting devices, paper handling capacities and cabinetry color. In addition to our configurable printers, we design and assemble custom printers for certain OEM customers. In collaboration with these customers, we provide engineering and manufacturing expertise for the design and development of specialized printers. 
+Banking and POS: Our banking and POS printers include hundreds of optional configurations that can be selected to meet particular customer needs. We believe that this is a significant competitive strength, as it allows us to satisfy a wide variety of printing applications that our customers request. In the banking market, we sell printers that are used by banks, credit unions and other financial institutions to print and/or validate receipts at bank teller stations. In the POS market, we sell several models of printers utilizing inkjet, thermal and impact printing technology. Our printers are used primarily by retailers in the restaurant (including fine dining, casual dining, and fast food), hospitality, and specialty retail industries to print receipts for consumers, validate checks, or print on linerless labels or other inserted media. In the POS market, we primarily sell our products through a network of domestic and international distributors and resellers. We us an internal sales force to manage sales through our distributors and resellers, as well as to solicit sales directly from end-users. In the banking market, we primarily sell our products directly to end-user banks and financial institutions through the use of a dedicated internal sales force. 
+Lottery: We supply lottery printers to Lottomattica’s GTECH Corporation (“GTECH”), our largest customer and the world’s largest provider of lottery terminals, with an approximate 70% market share. These printers are designed for high-volume, high-speed printing of lottery tickets for various lottery applications. Sales of our lottery products are made directly to GTECH and managed by an internal sales representative. 
+Casino and gaming: We sell several models of printers used in slot machines and video lottery terminals that print tickets or receipts instead of issuing coins at casinos, racetracks and other gaming establishments worldwide. These printers utilize thermal printing technology and can print tickets or receipts in monochrome or two-color (depending upon the model), and offer various other features such as jam resistant bezels and a dual port interface that will allow casinos to print coupons/promotions. In addition, we sell printers using thermal and impact printing technology for use in non-casino establishments, including game types such as Amusements with Prizes (“AWP”), Skills with Prizes (“SWP”), Video lottery terminals (“VLT”), Fixed Odds Betting Terminals (“FOBT”) and other off-premise gaming type machines around the world. We sell our products primarily to (1) slot machine manufacturers, who incorporate our printers into slot machines and, in turn, sell completed slot machines directly to casinos and other gaming establishments and (2) through three regional distributors (one in the United States and Asia, one in Europe and Africa, and one in Australia). We also maintain a dedicated sales force to solicit sales from slot manufacturers and casinos, as well as manage sales through our distributors. 
+1 
+Table of Contents 
+TSG 
+Through TSG, we proactively market the sale of consumable products (including inkjet cartridges, ribbons, receipt paper and other transaction supplies), replacement parts and maintenance services for all of our products and certain competitor’s products. Our maintenance services include the sale of extended warranties, multi-year maintenance contracts, 24-hour guaranteed replacement product service called TransAct Xpress SM , and other repair services for our printers. Within the United States, we provide repair services through our eastern region service center in Ithaca, NY and our western region service center in Las Vegas, NV. Internationally, we provide repair services through our European service center located in Doncaster, United Kingdom, and through partners strategically located around the world. 
+We also provide customers with telephone sales and technical support, and a personal account representative to handle orders, shipping and general information. Technical and sales support personnel receive training on all of our manufactured products and our services. 
+In addition to personalized telephone and technical support, we also market and sell consumable products 24 hours a day, seven days a week, via our online webstore www.transactsupplies.com . 
+Sources and Availability of Raw Materials 
+We design our products to optimize product performance, quality, reliability and durability. These designs combine cost efficient materials, sourcing and assembly methods with high standards of workmanship. During 2009, we completed a program to transfer final assembly for approximately 70% of our total printer production to a third-party contract manufacturer in China. We continue to perform final assembly for the remaining 30% of our products in our Ithaca, NY facility largely on a configure-to-order basis using components and subassemblies that have been sourced from vendors and contract manufacturers around the world. 
+We procure component parts and subassemblies for use in the assembly of our products in Ithaca, NY. Critical component parts and subassemblies include inkjet, thermal and impact printheads, printing/cutting mechanisms, power supplies, motors, injection molded plastic parts, circuit boards and electronic components, which are obtained from domestic and foreign suppliers at competitive prices. As a result of transitioning 70% of our production to our contract manufacturer, 2009 purchases of component parts declined, while purchases of fully-assembled printers increased, due to the decline of in-house printer assembly in Ithaca, NY and the increase of assembly by our contract manufacturer. We typically strive to maintain more than one source for our component parts, subassemblies and fully assembled printers to reduce the risk of parts shortages or unavailability. However, we could experience temporary disruption if certain suppliers ceased doing business with us, as described below. 
+We currently buy substantially all of our thermal print mechanisms, an important component of our thermal printers, and fully assembled printers for several of our printer models, from one foreign contract manufacturer. Although we believe that other contract manufacturers could provide similar thermal print mechanisms or fully assembled printers, on comparable terms, a change in contract manufacturers could cause a delay in manufacturing and possible loss of sales, which may have a material adverse effect on our operating results. Although we do not have a supply agreement with our foreign contract manufacturer, our relationship with them remains strong and we have no reason to believe that they will discontinue their supply of thermal print mechanisms to us during 2010 or that their terms to us will be any less favorable than they have been historically. 
+Hewlett-Packard Company (“HP”) is the sole supplier of inkjet cartridges that are used in all of our inkjet printers. In addition, we also sell a substantial number of HP inkjet cartridges as a consumable product through TSG. The loss of the supply of HP inkjet cartridges would have a material adverse effect on both the sale of our inkjet printers and TSG consumable products. Our relationship with HP remains strong and we have no reason to believe that HP will discontinue its supply of inkjet cartridges to us or that their terms to us will be any less favorable than they have been historically. The inkjet cartridges we purchase from HP are used not only in our inkjet printers for the banking and POS market, but also in other manufacturer’s printing devices across several other markets. 
+Okidata Americas, Inc. (“Okidata”) is the sole supplier for an impact printer component kit consisting of a printhead, control board and carriage (the “Oki Kit”) that is used in all of our Ithaca â brand impact printers. The loss of the supply of Oki Kits would have a material adverse effect on us. However, sales of impact printers continue to decline as sales of these printers are replaced by sales of thermal and inkjet printers. As such, we believe that any possible loss of supply of Oki Kits will continue to have less of an impact on us in 2010 and beyond. Although we do not have a supply agreement with Okidata, our relationship with Okidata remains strong and we have no reason to believe that Okidata will discontinue its supply of Oki Kits to us during 2010 or that their terms to us will be any less favorable than they have been historically. 
+Patents and Proprietary Information 
+We have significantly expanded our patent portfolio since 2002, and expect to continue to do so in the future. We also believe our patent portfolio could provide additional opportunities to license our intellectual property in the future. We hold 24 United States and 27 foreign patents and have 9 United States and 54 foreign patent applications pending pertaining to our products. The duration of these patents range from 8 to 16 years. The expiration of any individual patent would not have a significant negative impact on our business. We regard certain 
+manufacturing processes and designs to be proprietary and attempt to protect them through employee and third-party nondisclosure agreements and similar means. It may be possible for unauthorized third parties to copy certain portions of our products or to reverse engineer or otherwise 
+2 
+Table of Contents 
+obtain and use, to our detriment, information that we regard as proprietary. Moreover, the laws of some foreign countries do not afford the same protection to our proprietary rights as do the laws of the United States. There can be no assurance that legal protections relied upon by the Company to protect our proprietary position will be adequate or that our competitors will not independently develop technologies that are substantially equivalent or superior to our technologies. 
+Seasonality 
+Retailers typically reduce purchases of new POS equipment in the fourth quarter due to the increased volume of consumer transactions in that holiday period, and our sales of printers in the POS market historically have increased in the third quarter and decreased in the fourth quarter. Similarly, installations of lottery terminals are typically reduced in the fourth quarter, resulting in decreased sales of lottery printers. 
+Working Capital 
+Inventory, accounts receivable, and accounts payable levels, payment terms, and where applicable, return policies are in accordance with the general practices of the industry and standard business procedures. See also Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 
+Certain Customers 
+GTECH is our most significant customer. We currently have an ongoing OEM purchase agreement, as amended in February 2006 (the “GTECH Thermal Printer Agreement”) with GTECH that provides for the sale of thermal on-line lottery printers and spare parts, at fixed prices, through June 28, 2012. In December 2009, we signed a new five-year agreement effective November 20, 2009, with GTECH (the “GTECH New Thermal Printer Agreement”). Under the terms of the new agreement, we will provide GTECH with their next generation thermal lottery printers for various lottery applications. The terms of the new agreement require that GTECH exclusively purchase all of its requirements for thermal on-line lottery printers from us and that we exclusively sell such printers to GTECH. The exclusivity period will extend for four years from the start of production of the new printer, which is expected to commence in the fall of 2010. 
+Sales to GTECH and other customers representing 10% or more of our total net sales were as follows: 
+Year ended December 31, 
+2009 
+2008 
+2007 
+GTECH 
+19 
+% 
+28 
+% 
+14 
+% 
+Customer A 
+10 
+% 
+* 
+10 
+% 
+Customer B 
+12 
+% 
+* 
+* 
+* Customers represented less than 10% of total net sales 
+Backlog 
+Our backlog of firm orders was approximately $6,976,000 as of February 26, 2010, compared to $9,994,000 as of February 28, 2009. Based on customers’ current delivery requirements, we expect to ship our entire current backlog during 2010. 
+Competition 
+The market for transaction-based printers is extremely competitive, and we expect such competition to continue in the future. We compete with a number of companies, many of which have greater financial, technical and marketing resources than us. We believe our ability to compete successfully depends on a number of factors both within and outside our control, including durability, reliability, quality, design capability, product customization, price, customer support, success in developing new products, manufacturing expertise and capacity, supply of component parts and materials, strategic relationships with suppliers, the timing of new product introductions by us and our competitors, general market, economic and political conditions and, in some cases, the uniqueness of our products. 
+In the banking and POS market, our major competitor is Epson America, Inc., which holds a dominant market position of the POS markets into which we sell. We also compete, to a much lesser extent, with Transaction Printer Group, Star Micronics America, Inc., Citizen -- CBM America Corporation, Pertech Resources, Inc., Addmaster, and Samsung/Bixolon. Certain competitors of ours have greater financial resources, lower costs attributable to higher volume production and sometimes offer lower prices than us. 
+In the lottery market (consisting principally of on-line lottery transaction printing), we hold a leading position, based largely on our long-term purchase agreements with GTECH, which holds approximately 70% market share of the worldwide on-line lottery market. We compete in this market based solely on our ability to provide specialized, custom-engineered products to GTECH. 
+In the casino and gaming market (consisting principally of slot machine and video lottery terminal transaction printing), we compete with several companies including FutureLogic, Inc., Nanoptix, Inc., Custom Engineering SPA and others. Certain of our products sold for casino and gaming applications compete based upon our ability to provide highly specialized products, custom engineering and ongoing technical support. 
+3 
+Table of Contents 
+The TSG business is highly fragmented, and we compete with numerous competitors of various sizes, including internet resellers, depending on the geographic area. 
+Our strategy for competing in our markets is to continue to develop new products and product line extensions, to increase our geographic market penetration, to take advantage of strategic relationships, and to lower product costs by sourcing certain products overseas. Although we believe that our products, operations and relationships provide a competitive foundation, there can be no assurance that we will compete successfully in the future. In addition, our products utilize certain inkjet, thermal and impact printing technology. If other technologies, or variations to existing technologies, were to evolve or become available to us, it is possible that we would incorporate these technologies into our products. Alternatively, if such technologies were to evolve or become available to our competitors, our products could become obsolete, which would have a significant negative impact on our business. 
+Research and Development Activities 
+Research, development, and engineering expenditures represent costs incurred in the experimental or laboratory sense aimed at discovery and/or application of new knowledge in developing a new product or process, or in bringing about significant improvement in an existing product or process. We spent approximately $2,788,000, $2,942,000 and $3,129,000 in 2009, 2008 and 2007, respectively, on engineering, design and product development efforts in connection with specialized engineering and design to introduce new products and to customize or improve existing products. 
+Environment 
+We are not aware of any material noncompliance with federal, state and local provisions that have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment. 
+Employees 
+As of February 26, 2010, TransAct and our subsidiaries employed 143 persons, of whom 140 were full-time and 3 were temporary employees. None of our employees are unionized, and we consider our relationships with our employees to be good. 
+Financial Information About Geographic Areas 
+For financial information regarding our geographic areas see Note 16 – Geographic Area Information in the Notes to the Consolidated Financial Statements. 
+Available Information 
+We make available free of charge through our internet website, www.transact-tech.com , our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. You may read and copy any materials filed with the Securities and Exchange Commission at the Securities and Exchange Commission’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the Securities and Exchange Commission at 1-800-SEC-0330. This information is also available at www.sec.gov. The reference to these website addresses does not constitute incorporation by reference of the information contained on the websites and should not be considered part of this document. 
+We maintain a Code of Business Conduct that includes our code of ethics that is applicable to all employees, including our Chief Executive Officer, Chief Financial Officer and Controller. This Code, which requires continued observance of high ethical standards such as honesty, integrity and compliance with the law in the conduct of our business, is available for public access on our internet website. Any person may request a copy of our Code of Business Conduct free of charge by calling (203) 859-6800.

raw/filings/0001017303/2009/0001017303-10-000006/item13.txt

@@ -0,0 +1,2 @@
+Item 13. Certain Relationships and Related Transactions, and Director Independence. 
+The information in response to this item is incorporated by reference from the Proxy Statement section entitled “Certain Relationships and Related Transactions.”

raw/filings/0001017303/2009/0001017303-10-000006/item9a.txt

@@ -0,0 +1,9 @@
+Item 9A. Controls and Procedures. 
+Attached as exhibits to this Form 10-K are certifications of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), which are required in accordance with Rule 13a-14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This “Controls and Procedures” section includes information concerning the controls and controls evaluation referred to in the certifications. Part II, Item 8 of this Form 10-K sets forth the report of PricewaterhouseCoopers LLP, our independent registered public accounting firm, regarding its audit of TransAct’s internal control over financial reporting as of December 31, 2009. This section should be read in conjunction with the CEO and CFO certifications and the PricewaterhouseCoopers LLP report for a more complete understanding of the topics presented. 
+Evaluation of Disclosure Controls and Procedures 
+As of December 31, 2009, the Company, with the participation of its CEO and CFO conducted an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 (the “Exchange Act”). Based on that evaluation, our CEO and CFO concluded that the Company’s disclosure controls and procedures (as defined in Rule 13a-15 of the Exchange Act) were effective as of December 31, 2009. There has been no change in the Company’s internal control over financial reporting during the quarter ended December 31, 2009 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. 
+Management’s Report on Internal Control Over Financial Reporting 
+Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. 
+Management assessed our internal control over financial reporting as of December 31, 2009. Management based its assessment on criteria established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). 
+Based on our assessment, management has concluded that our internal control over financial reporting was effective as of December 31, 2009. 
+The effectiveness of the Company’s internal control over financial reporting as of December 31, 2009, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

raw/filings/0001017303/2009/0001017303-10-000006/rpt_disclosure.txt

@@ -0,0 +1,4 @@
+CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 
+The Company maintains policies that relate to the identification, review and approval of related party transactions. As part of a review of possible related person transactions, the Company annually distributes and collects questionnaires that solicit information about any direct or indirect transactions with the Company from each of our directors and officers. 
+Our Standards of Business Conduct require all directors, officers and employees to avoid any situation that involves an actual or apparent conflict of interest in personal and professional relationships or with their duty to, or with any interest of, the Company. Under the Standards of Business Conduct, situations that involve, or may reasonably be inferred to involve, a conflict between a director, officer or employee’s personal interests and the interests of the Company should be disclosed to the Chair of the Audit Committee. The Audit Committee is then responsible for reviewing the related party transaction. No related party transaction shall be approved or ratified if such transaction is contrary to the best interests of the Company. In determining whether to approve or ratify a related party transaction, the Audit Committee takes into account such factors as it deems appropriate, which may include whether the interested transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person’s interest in the transaction. 
+From January 1, 2009 to the date of this proxy statement, there have not been any transactions subject to the Company’s related party transaction policy or of the type described in Item 404 of Regulation S-K, and currently no such transactions are proposed.

raw/filings/0001017303/2010/0001017303-11-000006/filing_metadata.csv

@@ -0,0 +1,2 @@
+cik,ticker,company_name,form,filing_date,report_date,acceptance_datetime,accession_number,primary_document,primary_doc_description,size,is_xbrl,is_inline_xbrl,document_url,filing_index_url,year,fiscal_year,is_primary_filing
+0001017303,TACT,TRANSACT TECHNOLOGIES INC,10-K,2011-03-18,2010-12-31,2011-03-18T19:42:34.000Z,0001017303-11-000006,form10k.htm,FORM 10-K,1847010,0,0,https://www.sec.gov/Archives/edgar/data/1017303/000101730311000006/form10k.htm,https://www.sec.gov/Archives/edgar/data/1017303/000101730311000006/,2010,2010,1

raw/filings/0001017303/2010/0001017303-11-000006/item1.txt

@@ -0,0 +1,81 @@
+Item 1. Business. 
+The Company 
+TransAct Technologies Incorporated (“TransAct” or the “Company”) was incorporated in June 1996 and began operating as a stand-alone business in August 1996 as a spin-off of the printer business that was formerly conducted by certain subsidiaries of Tridex Corporation. We completed an initial public offering on August 22, 1996. 
+TransAct designs, develops, assembles, markets and services world-class transaction-based printers under the Epic and Ithaca® brand names. Known and respected worldwide for innovative designs and real-world service reliability, our thermal, inkjet and impact printers generate top-quality transaction records such as receipts, tickets, coupons, register journals and other documents. We focus on the following core markets: banking and point-of-sale (“POS”), casino and gaming, and lottery. We sell our products to original equipment manufacturers ("OEMs"), value-added resellers ("VARs"), selected distributors, as well as directly to end-users. Our product distribution spans across the Americas, Europe, the Middle East, Africa, Asia, Australia, Latin America, the Caribbean Islands and the South Pacific. Beyond printers, TransAct is a leader in providing printing supplies to the full transaction printer market. Through our TransAct Services Group (“TSG”) we provide a complete range of supplies and consumables used in the printing and scanning activities of customers in the hospitality, banking, retail, gaming, and government markets. Through our webstore, www.transactsupplies.com , and our direct selling team, we address the on-line demand for these products. We have one primary operating facility and eastern region service center located in Ithaca, NY, our printer sales headquarters and western region service center in Las Vegas, NV, a printhead manufacturing and repair center located in New Britain, CT, a European sales and service center in the United Kingdom, a sales office located in Macau and two other sales offices located in the United States. Our executive offices are located at One Hamden Center, 2319 Whitney Avenue, Suite 3B, Hamden, CT, 06518, with a telephone number of (203) 859-6800. 
+Financial Information about Segments 
+We operate in one reportable segment, the design, development, assembly and marketing of transaction-based printers and printer-related service, supplies and spare parts. 
+Products, Services and Distribution Methods 
+Printers 
+TransAct designs, develops, assembles and markets a broad array of transaction-based printers utilizing inkjet, thermal and impact printing technology for applications requiring up to 60 character columns, primarily in the banking, POS, casino, gaming and lottery markets. Our printers are configurable and offer customers the ability to choose from a variety of features and functions. Options typically include interface configuration, paper cutting devices, paper handling capacities and cabinetry color. In addition to our configurable printers, we design and assemble custom printers for certain OEM customers. In collaboration with these customers, we provide engineering and manufacturing expertise for the design and development of specialized printers. 
+Banking and POS: Our banking and POS printers include hundreds of optional configurations that can be selected to meet particular customer needs. We believe that this is a significant competitive strength, as it allows us to satisfy a wide variety of printing applications that our customers request. In the banking market, we sell printers that are used by banks, credit unions and other financial institutions to print and/or validate receipts at bank teller stations. In the POS market, we sell several models of printers utilizing inkjet, thermal and impact printing technology. Our printers are used primarily by retailers in the restaurant (including fine dining, casual dining, and fast food), hospitality, and specialty retail industries to print receipts for consumers, validate checks, or print on linerless labels or other inserted media. In the POS market, we primarily sell our products through a network of domestic and international distributors and resellers. We use an internal sales force to manage sales through our distributors and resellers, as well as to solicit sales directly from end-users. In the banking market, we primarily sell our products directly to end-user banks and financial institutions through the use of our internal sales force. 
+Lottery: We supply lottery printers to Lottomattica’s GTECH Corporation (“GTECH”), our largest customer and the world’s largest provider of lottery terminals. These printers are designed for high-volume, high-speed printing of lottery tickets for various lottery applications. Sales of our lottery products are made directly to GTECH and managed by an internal sales representative. 
+Casino and gaming: We sell several models of printers used in slot machines and video lottery terminals that print tickets or receipts instead of issuing coins at casinos, racetracks and other gaming establishments worldwide. These printers utilize thermal printing technology and can print tickets or receipts in monochrome or two-color (depending upon the model), and offer various other features such as jam resistant bezels and a dual port interface that allows casinos to print coupons and promotions. In addition, we sell printers using thermal and impact printing technology for use in non-casino establishments, including game types such as Amusements with Prizes (“AWP”), Skills with Prizes (“SWP”), Video lottery terminals (“VLT”), Fixed Odds Betting Terminals (“FOBT”) and other off-premise gaming type machines around the world. We sell our products primarily to (1) slot machine manufacturers, who incorporate our printers into slot machines and, in turn, sell completed slot machines directly to casinos and other gaming establishments and (2) through regional distributors (four in the United States and Asia, one in Europe and Africa, two in Latin America and one in Australia). We also maintain a dedicated internal sales force to solicit sales from slot manufacturers and casinos, as well as to manage sales through our distributors. 
+1 
+Table of Contents 
+TSG 
+Through TSG, we proactively market the sale of consumable products (including inkjet cartridges, ribbons, receipt paper and other transaction supplies), replacement parts and maintenance services for all of our products and certain competitor’s products. Our maintenance services include the sale of extended warranties, multi-year maintenance contracts, 24-hour guaranteed replacement product service called TransAct Xpress SM , and other repair services for our printers. Within the United States, we provide repair services through our eastern region service center in Ithaca, NY and our western region service center in Las Vegas, NV. Internationally, we provide repair services through our European service center located in Doncaster, United Kingdom, and through partners strategically located around the world. 
+We also provide customers with telephone sales and technical support, and a personal account representative to handle orders, shipping and general information. Technical and sales support personnel receive training on all of our manufactured products and our services. 
+In addition to personalized telephone and technical support, we also market and sell consumable products 24 hours a day, seven days a week, via our online webstore www.transactsupplies.com . 
+Sources and Availability of Raw Materials 
+We design our products to optimize product performance, quality, reliability and durability. These designs combine cost efficient materials, sourcing and assembly methods with high standards of workmanship. During 2009, we completed a program to transfer final assembly for approximately 70% of our total printer production to a third-party contract manufacturer in China. We continue to perform final assembly for the remaining 30% of our products in our Ithaca, NY facility largely on a configure-to-order basis using components and subassemblies that have been sourced from vendors and contract manufacturers around the world. 
+We procure component parts and subassemblies for use in the assembly of our products in Ithaca, NY. Critical component parts and subassemblies include inkjet, thermal and impact printheads, printing/cutting mechanisms, power supplies, motors, injection molded plastic parts, circuit boards and electronic components, which are obtained from domestic and foreign suppliers at competitive prices. As a result of the majority of our production being performed by our contract manufacturer, purchases of component parts have declined while purchases of fully-assembled printers produced by our contract manufacturer have increased. We typically strive to maintain more than one source for our component parts, subassemblies and fully assembled printers to reduce the risk of parts shortages or unavailability. However, we could experience temporary disruption if certain suppliers ceased doing business with us, as described below. 
+We currently buy substantially all of our thermal print mechanisms, an important component of our thermal printers, and fully assembled printers for several of our printer models, from one foreign contract manufacturer. Although we believe that other contract manufacturers could provide similar thermal print mechanisms or fully assembled printers, on comparable terms, a change in contract manufacturers could cause a delay in manufacturing and possible loss of sales, which may have a material adverse effect on our operating results. Although we do not have a supply agreement with our foreign contract manufacturer, our relationship with them remains strong and we have no reason to believe that they will discontinue their supply of thermal print mechanisms to us during 2011 or that their terms to us will be any less favorable than they have been historically. 
+Hewlett-Packard Company (“HP”) is the sole supplier of inkjet cartridges that are used in all of our inkjet printers. In addition, we also sell a substantial number of HP inkjet cartridges as a consumable product through TSG. Although other inkjet cartridges that are compatible with the HP inkjet cartridge are available, the loss of the supply of HP inkjet cartridges could have a material adverse effect on both the sale of our inkjet printers and TSG consumable products. Our relationship with HP remains strong and we have no reason to believe that HP will discontinue its supply of inkjet cartridges to us or that their terms to us will be any less favorable than they have been historically. The inkjet cartridges we purchase from HP are used not only in our inkjet printers for the banking and POS market, but also in other manufacturer’s printing devices across several other markets. 
+Patents and Proprietary Information 
+We have significantly expanded our patent portfolio since 2002, and expect to continue to do so in the future. We also believe our patent portfolio could provide additional opportunities to license our intellectual property in the future. We hold 25 United States and 26 foreign patents and have 14 United States and 28 foreign patent applications pending pertaining to our products. The duration of these patents range from 7 to 15 years. The expiration of any individual patent would not have a significant negative impact on our business. We regard certain 
+manufacturing processes and designs to be proprietary and attempt to protect them through employee and third-party nondisclosure agreements and similar means. It may be possible for unauthorized third parties to copy certain portions of our products or to reverse engineer or otherwise obtain and use, to our detriment, information that we regard as proprietary. Moreover, the laws of some foreign countries do not afford the same protection to our proprietary rights as do the laws of the United States. There can be no assurance that legal protections relied upon by the Company to protect our proprietary position will be adequate or that our competitors will not independently develop technologies that are substantially equivalent or superior to our technologies. 
+2 
+Table of Contents 
+Seasonality 
+Retailers typically reduce purchases of new POS equipment in the fourth quarter due to the increased volume of consumer transactions in that holiday period, and our sales of printers in the POS market historically have increased in the third quarter and decreased in the fourth quarter. Similarly, installations of lottery terminals are typically reduced in the fourth quarter, resulting in decreased sales of lottery printers. 
+Working Capital 
+Inventory, accounts receivable, and accounts payable levels, payment terms, and where applicable, return policies are in accordance with the general practices of the industry and standard business procedures. See also Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 
+Certain Customers 
+GTECH is our most significant customer. We currently have an ongoing OEM purchase agreement, as amended in February 2006 (the “GTECH Thermal Printer Agreement”) with GTECH that provides for the sale of thermal on-line lottery printers and spare parts, at fixed prices, through June 28, 2012. In December 2009, we signed a new five-year agreement effective November 20, 2009, with GTECH (the “GTECH New Thermal Printer Agreement”). Under the terms of the new agreement, we will provide GTECH with their next generation thermal lottery printers for various lottery applications. The terms of the new agreement require that GTECH exclusively purchase all of its requirements for thermal on-line lottery printers from us and that we exclusively sell such printers to GTECH. The exclusivity period will extend for four years from the start of production of the new printer, which began in January 2011. 
+Sales to GTECH and other customers representing 10% or more of our total net sales were as follows: 
+Year ended December 31, 
+2010 
+2009 
+2008 
+GTECH 
+12 
+% 
+19 
+% 
+28 
+% 
+Customer A 
+14 
+% 
+10 
+% 
+* 
+Customer B 
+* 
+12 
+% 
+* 
+* Customers represented less than 10% of total net sales 
+Backlog 
+Our backlog of firm orders was approximately $12,764,000 as of February 28, 2011, compared to $6,976,000 as of February 26, 2010. Based on customers’ current delivery requirements, we expect to ship our entire current backlog during 2011. 
+Competition 
+The market for transaction-based printers is extremely competitive, and we expect such competition to continue in the future. We compete with a number of companies, many of which have greater financial, technical and marketing resources than us. We believe our ability to compete successfully depends on a number of factors both within and outside our control, including durability, reliability, quality, design capability, product customization, price, customer support, success in developing new products, manufacturing expertise and capacity, supply of component parts and materials, strategic relationships with suppliers, the timing of new product introductions by us and our competitors, general market, economic and political conditions and, in some cases, the uniqueness of our products. 
+In the banking and POS market, our major competitor is Epson America, Inc., which holds a dominant market position of the POS markets into which we sell. We also compete, to a much lesser extent, with Transaction Printer Group, Star Micronics America, Inc., Citizen -- CBM America Corporation, Pertech Resources, Inc., Addmaster, and Samsung/Bixolon. Certain competitors of ours have greater financial resources, lower costs attributable to higher volume production and sometimes offer lower prices than us. 
+In the lottery market (consisting principally of on-line lottery transaction printing), we hold a leading position, based largely on our long-term purchase agreements with GTECH. We compete in this market based solely on our ability to provide specialized, custom-engineered products to GTECH. 
+In the casino and gaming market (consisting principally of slot machine and video lottery terminal transaction printing), we compete with several companies including FutureLogic, Inc., Nanoptix, Inc., Custom Engineering SPA and others. Certain of our products sold for casino and gaming applications compete based upon our ability to provide highly specialized products, custom engineering and ongoing technical support. 
+The TSG business is highly fragmented, and we compete with numerous competitors of various sizes, including internet resellers, depending on the geographic area. 
+3 
+Table of Contents 
+Our strategy for competing in our markets is to continue to develop new products and product line extensions, to increase our geographic market penetration, to take advantage of strategic relationships, and to lower product costs by sourcing certain products overseas. Although we believe that our products, operations and relationships provide a competitive foundation, there can be no assurance that we will compete successfully in the future. In addition, our products utilize certain inkjet, thermal and impact printing technology. If other technologies, or variations to existing technologies, were to evolve or become available to us, it is possible that we would incorporate these technologies into our products. Alternatively, if such technologies were to evolve or become available to our competitors, our products could become obsolete, which would have a significant negative impact on our business. 
+Research and Development Activities 
+Research, development, and engineering expenditures represent costs incurred in the experimental or laboratory sense aimed at discovery and/or application of new knowledge in developing a new product or process, or in bringing about significant improvement in an existing product or process. We spent approximately $3,000,000, $2,788,000 and $2,942,000 in 2010, 2009 and 2008, respectively, on engineering, design and product development efforts in connection with specialized engineering and design to introduce new products and to customize or improve existing products. 
+Costs incurred in researching and developing a computer software product are charged to expense until technological feasibility has been established for the product. Once technological feasibility is established, all material software costs are capitalized within Intangible and other assets in our consolidated balance sheet until the product is available for general release to customers. Judgment is required in determining when technological feasibility of a product is established. We have determined that technological feasibility for our software products is reached after all high-risk development issues have been documented in a formal detailed plan design. The amortization of these costs will be included in cost of revenue over the estimated life of the product. During 2010 we began the development of a new software product that enables casino customers to print coupons and promotions at the slot machine. As of December 31, 2010, we have capitalized $130,000 of developments costs for such software; there has been no amortization of capitalized software development costs. 
+Environment 
+We are not aware of any material noncompliance with federal, state and local provisions that have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment. 
+Employees 
+As of February 28, 2011, TransAct and our subsidiaries employed 124 persons, of whom 123 were full-time and one was a temporary employee. None of our employees are unionized, and we consider our relationships with our employees to be good. 
+Financial Information About Geographic Areas 
+For financial information regarding our geographic areas see Note 16 – Geographic Area Information in the Notes to the Consolidated Financial Statements. Risks attendant to our foreign operations are described in Item 1A below. 
+Available Information 
+We make available free of charge through our internet website, www.transact-tech.com , our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. You may read and copy any materials filed with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. This information is also available at www.sec.gov. The reference to these website addresses does not constitute incorporation by reference of the information contained on the websites and should not be considered part of this document. 
+We maintain a Code of Business Conduct that includes our code of ethics that is applicable to all employees, including our Chief Executive Officer, Chief Financial Officer and Controller. This Code, which requires continued observance of high ethical standards such as honesty, integrity and compliance with the law in the conduct of our business, is available for public access on our internet website. Any person may request a copy of our Code of Business Conduct free of charge by calling (203) 859-6800.

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+Item 13. Certain Relationships and Related Transactions, and Director Independence. 
+The information in response to this item is incorporated by reference from the Proxy Statement section entitled “Certain Relationships and Related Transactions.”

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+Item 9A. Controls and Procedures. 
+Attached as exhibits to this Form 10-K are certifications of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), which are required in accordance with Rule 13a-14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This “Controls and Procedures” section includes information concerning the controls and controls evaluation referred to in the certifications. 
+Evaluation of Disclosure Controls and Procedures 
+As of December 31, 2010, the Company, with the participation of its CEO and CFO conducted an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 (the “Exchange Act”). Based on that evaluation, our CEO and CFO concluded that the Company’s disclosure controls and procedures (as defined in Rule 13a-15 of the Exchange Act) were effective as of December 31, 2010. There has been no change in the Company’s internal control over financial reporting during the quarter ended December 31, 2010 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. 
+Management’s Annual Report on Internal Control Over Financial Reporting 
+Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. 
+Management assessed our internal control over financial reporting as of December 31, 2010. Management based its assessment on criteria established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). 
+Based on our assessment, management has concluded that our internal control over financial reporting was effective as of December 31, 2010. 
+This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

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+CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 
+The Company maintains policies that relate to the identification, review and approval of related party transactions. As part of a review of possible related person transactions, the Company annually distributes and collects questionnaires that solicit information about any direct or indirect transactions with the Company from each of our directors and officers. 
+Our Standards of Business Conduct require all directors, officers and employees to avoid any situation that involves an actual or apparent conflict of interest in personal and professional relationships or with their duty to, or with any interest of, the Company. Under the Standards of Business Conduct, situations that involve, or may reasonably be inferred to involve, a conflict between a director, officer or employee’s personal interests and the interests of the Company should be disclosed to the Chair of the Audit Committee. The Audit Committee is then responsible for reviewing the related party transaction. No related party transaction shall be approved or ratified if such transaction is contrary to the best interests of the Company. In determining whether to approve or ratify a related party transaction, the Audit Committee takes into account such factors as it deems appropriate, which may include whether the interested transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person’s interest in the transaction. 
+From January 1, 2010 to the date of this proxy statement, there have not been any transactions subject to the Company’s related party transaction policy or of the type described in Item 404 of Regulation S-K, and currently no such transactions are proposed.