TACT

Strategic Transition & Business Model Shift

• The company's core long-term strategy is to transition FST from a hardware-focused business to a high-margin, recurring revenue model centered on software. The historical practice of bundling free software to close hardware sales has been ended, and the company now explicitly charges for software to capture fair market value.
• The long-term target is to reach $100-$200 per machine per month in recurring software-related revenue for the growing BOHA installed base, which management states has significant potential value upside.

FST Operational Progress

• Completed migration of the BOHA platform from legacy hosted infrastructure to Microsoft Azure, launching a new enterprise-grade BOHA SaaS platform. This improves scalability, security, performance, uptime, and disaster recovery, enables faster product innovation and seamless third-party integrations, and supports future AI-enhanced workflows.
• 1,900 BOHA units were sold in Q2, with demand driven primarily by upgrade orders from the large installed base of older Accudate and Terminal 1 systems. Management views this multi-year conversion cycle as a sustained growth opportunity.
• The revised go-to-market strategy and revitalized sales/marketing teams have begun driving increased FST sales, aligning with the company's "land and expand" growth approach.
• Labels remain a key part of FST strategy: they improve customer retention, increase customer intimacy, and grow alongside the expanding terminal base, alongside software revenue.

Strategic Review of Casino and Gaming

• The Board of Directors has initiated a formal strategic review of the casino and gaming business, with Bank of America Securities engaged as financial advisor due to their industry expertise and existing relationship with the company.
• The review will explore strategic options to maximize shareholder value, leveraging the current strength of the casino/gaming market. It may also evaluate broader corporate strategic alternatives if deemed value-accretive. No public timeline has been set, and no assurance of a transaction is provided.
• The casino and gaming business operates as a stable profitable cash cow, while the FST segment has a much larger total addressable market (reaching an estimated $18 billion by 2032-2033) and clear growth roadmap, creating a need to evaluate optimal capital allocation.

Financial & Organizational Updates

• New CFO Troy Ingianni joined the company on July 1, 2026, bringing over 25 years of global financial leadership experience. Management believes he will strengthen the company's financial foundation to support growth.
• Gross margin for Q2 2026 was 50.2%, up 200 basis points year-over-year and flat sequentially from Q1 2026. Full-year 2026 gross margin is expected to remain in the mid-to-high 40% range.
• Total operating expenses increased 2% year-over-year: R&D expenses fell 29% due to capitalization of in-housed BOHA software development costs, selling and marketing expenses rose 30% due to new hires, trade show activity, and commission expenses, and G&A expenses were flat year-over-year.
• The company maintains a strong balance sheet with $19.4 million in cash and cash equivalents, and minimal revolver balances for maximum financial flexibility.

• Full year 2026 net sales guidance is maintained at a range of $55 million to $57 million.
• Full year 2026 adjusted EBITDA guidance was upwardly revised from the prior range to a new range of $1.5 million to $2.0 million, driven by stronger than expected first half 2026 adjusted EBITDA of $1.9 million.

Overall company total net sales for Q2 2026 were $13.9 million, up slightly from $13.8 million in Q2 2025. After excluding a $1 million negative impact from tariff-related customer refunds required by a U.S. Supreme Court ruling, adjusted net sales were $14.9 million, up 8% year-over-year. Adjusted EBITDA for Q2 2026 was $514,000, compared to $478,000 in Q2 2025; year-to-date adjusted EBITDA through the first half of 2026 was $1.9 million.

1. Food Service Technology (FST): Q2 2026 revenue was $5.2 million, up 9% year-over-year and 10% sequentially. This segment contributed 37.4% of total reported Q2 2026 net sales. Recurring FST revenue (software, services, labels) reached $3.4 million, up 13% year-over-year, while software revenue alone grew 47% year-over-year. The company sold 1,900 BOHA terminal units in the quarter, bringing total 2026 year-to-date unit sales to 3,270, with total online installed base reaching nearly 22,000 units, up 33% year-over-year.

2. Casino and Gaming: Q2 2026 reported revenue was $7.3 million, down 4% year-over-year. After excluding the $1 million tariff-related impact, adjusted revenue was $8.3 million, up approximately 9% year-over-year. This segment contributed 52.5% of total reported Q2 2026 net sales. The Epic TR80 roll-fed printer continued to gain international traction in gaming betting kiosk applications.

3. POS Automation: Q2 2026 revenue was $619,000, up 5% year-over-year, contributing 4.5% of total reported Q2 2026 net sales. Sales remain stable at a normalized ~$600,000 per quarter.

4. Transact Services Group (TSG): Q2 2026 revenue was $838,000, up 3% year-over-year, contributing 6% of total reported Q2 2026 net sales. Growth was driven by higher service revenue for legacy lottery printers, partially offset by declining spares/accessory revenue as the legacy install base naturally shrinks.

• There is no assurance that the ongoing strategic review of the casino and gaming business will result in any transaction or value-enhancing strategic outcome.
• The FST recurring revenue transition is still in early stages, with evolving business practices and unproven long-term monetization metrics. The company is still developing standardized reporting for core software growth metrics, creating near-term uncertainty around performance tracking.
• The U.S. Supreme Court's tariff ruling created mandatory customer refund obligations that reduced Q2 2026 reported revenue by $1 million and adjusted EBITDA by $400,000. While 80% of expected government refunds have been received as of the call, remaining refunds are still pending.

Q: What changed since the prior discontinued strategic review of the casino and gaming business, why launch it now, and can management share the segment's EBITDA for valuation? / A: The prior review was conducted during a period of post-pandemic market turbulence, supply chain disruptions, and demand whipsaws after casino OEMs overpurchased inventory. The casino and gaming business has now stabilized and recovered, making this the right time to evaluate options. The company’s small position in the large casino market and the far larger addressable market opportunity for FST create a need to assess optimal capital allocation for shareholder value. Management plans to clarify segment profitability in the future.

Q: If the casino business (which currently provides cash backing for FST growth) is sold, does FST have sufficient capital to grow and reach cash flow break-even with existing cash on hand? / A: Management confirmed that the answer is yes; FST has enough capital on hand to fund its growth and reach cash flow break-even even if the casino business is monetized.

Q: Does the company now bundle software packages with new BOHA terminal sales, and what are the pricing economics of these bundles? / A: Yes, the company now bundles paid software with all new BOHA sales, after ending the prior practice of giving software away for free. Pricing varies by the modules a customer needs: basic bundles start at $75-$90 per month, while full feature bundles can reach $300-$400 per month per unit, depending on the customer’s size and needs. The sales team structures packages on a case-by-case basis, and uptake of paid software has been strong to date. The company will begin sharing more detailed standardized software metrics in future calls.