U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
Table Trac, Inc.
(Name of Small Business Issuer in its charter)
Nevada 88-0336568
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4200 Kemrich
Minnetonka, Minnesota 55345
(Address of principal executive office) (Zip Code)
Issuer's telephone number (612) 939-9679
Securities to be registered under Section 12(g) of the Act:
Common Shares
Charles Clayton
527 Marquette
Minneapolis, Minnesota 55402
(612) 338-3738
(Agent for Service)
<PAGE>
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL:
Table Trac, Inc. (the "Company") is a Nevada Corporation, formed on
June 27, 1995, with principal offices in Minnetonka, Minnesota, at 4200 Kemrich.
The Company has developed and is commencing the commercialization of a
proprietary information and management system (Table Trac(TM)) that automates
and monitors the operations of casino table games. The general intent of Table
Trac is a system to acquire, evaluate, and provide immediate access to a new
level of detailed information which has never been available to managers before
now.
Until 1988 there were only two states that allowed legalized gambling.
In 1998 casino gambling is allowed in over 20 states, and large public
corporations manage most of the industry. Legalized gambling in the United
States has taken over as the top revenue earner for all forms of entertainment.
Most departments in the casino industry are already computerized. The
missing link is the table games. Casinos are still using methods for the
confirmation of table game activity that were used over 50 years ago, methods
which only loosely tie manager's estimates to the actual table cash count. This
method can not assure that every drop box dollar is actually counted, or makes
it to the casino's bank account. In today's business world, from the largest
corporation to the local convenience store, all cash transactions are recorded
and verified to the cash count. The Table Trac system brings the casino industry
up to today's computer technology.
The great majority of table games managers were trained in Atlantic
City and Nevada, using "up through the ranks" and "on the job" training methods.
With more casinos opening every week, the need for quality managers and
executives are at an all time high, and, as a result, those managers have been
spread thinly across the nation. The technology of Table Trac helps fill this
void by automating the business side of table games management.
Table Trac was created to provide casino management personnel with
ongoing, comprehensive information about the details of table game activity.
This information, presented in real time mode, links all aspects of actual table
play to responsible parties in the areas of pit operations, accounting, security
and casino management.
The information Table Trac provides complements existing accounting
reports and easily integrates with other casino data processing functions.
Furthermore, Table Trac can be custom-configured to accommodate a casino's
particular policies pertaining to access, either by user or department.
Table Trac is Unix-based and compatible with most hardware platforms.
Most important, it is reliable, secure, and user-friendly.
2
<PAGE>
The heart of the system is the patented (U.S. patent # 5,957,776) table
top hardware design which gathers table drop, inventories, dealer, floor
manager, player, security and drop box information using a dealer-activated
keypad, and on-table magnetic card reader. The dealer depresses various keys
that each correspond with the various denominations of bills being dropped into
the Drop box, and swipes his or others magnetic cards (just like your credit
cards) to send that information to the central computer. The use and operation
of Table Trac does not alter either the pace or routine of the game, which is
important to both management and customers.
Many casinos currently try to monitor these numbers using manager's
estimates with varying degrees of accuracy. The Table Trac system provides upper
management, for the first time, with those real time win/loss and drop figures,
and a verifiable check and balance for the count room. The system gives upper
management access to not only the table numbers by shift, but to data on
individual dealers and supervisors, which has game security value.
On a need-to-know basis, and at the discretion of management, users on
the system are able to view computer screens and know all the details of play of
(i) the entire casino table game status; (ii) the activities of a particular
pit; (iii) the details about a particular table; and, (iv) activity of a
particular dealer or pit boss. Casino defined events can trigger silent
surveillance alarms, and camera pan & zoom commands automatically.
TABLE TRAC INSTALLATIONS
Table Trac's Beta test site was installed in November of 1995, in a 12
table casino in Kenora, Ontario, Canada. This provided the system's first live
test, and it ran successfully from the time it was installed.
The first customer installation was in June of 1996, in a 10 table
casino in northern Minnesota. The system has been operational in that casino
since the date of installation, and the casino has added all of Table Trac's
features and services to their system.
The second customer installation was purchased by the same operator and
installed in its other casino in northern Minnesota in July of 1997. The two
installations were linked together in September of 1997. The player tracking
portion of the two systems is a first of its kind network, which allows players
to use a single club member's card to earn and redeem points at either casino.
The latest test installation is in the L.C.O. Casino in Hayward,
Wisconsin. This test installation was completed on May 26, 1999.
3
<PAGE>
AVAILABILITY OF TABLE TRAC:
Table Trac is available for an installation and monthly license fee
from the Company for casinos with a minimum number of tables. Base License
includes full installation, a custom casino system configuration, training, and
technical support during the life of the License agreement. Software upgrades
will be provided to casinos at the Company's cost of installation. Custom
screens and reports will be designed, if requested by the casino, at additional
cost.
MANUFACTURING CAPABILITIES
Table Trac has secured the manufacturing resources of Micro Dynamics,
Inc. of Eden Prairie MN. The president of Table Trac has worked with Micro
Dynamics on various projects over the last 9 years. Micro Dynamics is a custom
3rd party manufacturer of sophisticated electronics, with both through hole and
surface mount automated manufacturing technology capable of producing Table Trac
units at the rate of over 500 a day.
TRADEMARKS AND PATENTS
Table Trac's management has actively pursued trademark and patent
protection for the Company and its products. In the course of it existence,
Table Trac has spent in excess of $24,000 to secure those protections.
The Company filed its provisional patent application in August of 1995,
and filed its Final Application in August 1996. This application has been
approved and was issued on September 28, 1999, as patent number 5,957,776.
The Company filed to register its Trademark ("TABLE TRAC") in September
of 1996. The Mark was Published October 1997. The Mark received one objection by
Bally Gaming International in Feb of 1998. That objection was answered in May of
1998, and has now been settled, with no expense to the Company. The Trademark
was issued on September 7, 1999, as Trademark number 2,275,137.
RECENT DEVELOPMENTS
With the system developed, site tested, and commercial viability
established, the Company has turned its focus to sales and marketing. Mr. Thomas
Kozlowski has agreed to join Table Trac bringing over 20 years experience inside
the casino management community, and most importantly, within the table games
specialty of that industry. Mr. Kozlowski identified Table Trac as the
automation of the methods he personally taught and used himself to implement
internal controls and troubleshoot table games departments in his consulting
experience.
4
<PAGE>
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1997
Revenues increased in 1997 from $185 to $109,526. The reason is that
there was only interest income in 1996 and there were license fees, sales,
consulting fees and reimbursed expenses in 1997.
Cost of sales increased in 1997 from none in 1996 to $22,262 in 1997.
The reason is that there were no sales in 1996.
Operating expenses increased in 1997 to $246,945 from $131,035 in 1996
as a result of the increased business activity in 1997.
As a result there was a net loss in 1997 of $159,681, compared to a net
loss in 1996 of $130,850. The net loss per share in both years was $.06 due to
the increased number of shares in 1997.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1998.
Revenues increased in 1998 to $125,001 from $109,526 in 1997. There
were increased license fees, no sales, and increased consulting fees in 1998 to
account for the difference.
Costs of sales decreased in 1998 to $1,849 from $22,262 in 1997 as a
result of no sales in 1998.
Operating expenses decreased in 1998, to $153,347 from $246,945. The
major changes were no interest expense in 1998 and there were decreased
professional fees.
The result was that there was a net loss of $30,195 in 1998, compared
to a net loss of $159,681 in 1997. The net loss per share in 1998 was $.01
compared to a net loss per share of $.06 in 1997.
EIGHT MONTHS ENDED AUGUST 31, 1998 COMPARED TO EIGHT MONTHS ENDED AUGUST 31,
1999.
Revenues decreased in the eight months ended August 31, 1999 compared
to the same period in 1998 from $92,194 to $51,957. Time commitments relating to
the test installation precluded the Company from pursuing consulting engagements
in 1999. License fees and sales increased in 1999, but not enough to offset the
$83,615 in consulting fees in 1998.
Cost of goods sold was $28,252 in 1999, compared to none in 1998.
Operating expenses increased to $155,594 in 1999 from $95,096 in 1998. The
biggest change in 1999 was sales and marketing of $93,437, compared to none in
1998.
5
<PAGE>
The result was that there was a net loss of $131,889 in the first eight
months of 1999 compared to a net loss of $2,902 in the same period of 1998. The
net loss per share for the period in 1999 was $.05, compared to a net loss per
share of $.00 in 1998.
LIQUIDITY AND CAPITAL RESOURCES
Table Trac, Inc. has historically had more expenses than income in each
year of its operations. The accumulated deficit from inception to December 31,
1998 was $391,668. It has been able to maintain a positive cash position solely
through financing activities.
The Company, however, is not capital intensive. The basic product of
the Company is its computer software developed by its President. All
manufacturing is done after an order is received by an outside manufacturer, so
there is little inventory held by the Company of its product. The installation
is done by the President, after an order is received. The office of the Company
is in the home of the President, and no rent is charged.
There are no known trends, events or uncertainties that are likely to
have a material impact on the short or long term liquidity. The primary source
of liquidity in the future will be increased sales. There are no material
commitments for capital expenditures. There are no known trends, events or
uncertainties reasonably expected to have a material impact on the net sales or
revenues or income from continuing operations. There are no significant elements
of income or loss that do not arise from continuing operations. There are no
seasonal aspects to the business of Table Trac, Inc.
YEAR 2000 COMPLIANCE
The computers used by the Company are year 2000 compliant. The software
developed by the Company is year 2000 compliant. Based on the assessments to
this date management believes that future costs relating to the year 2000 issue
will not have a material effect on its financial position, results of operations
or cash flows.
ITEM 3. DESCRIPTION OF PROPERTY
None
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
There are presently 2,919,462 shares of the Company's common shares
outstanding. The following table sets forth the information as to the ownership
of each person who, as of the date of this Offering Circular, owns of record, or
is
6
<PAGE>
known by the Company to own beneficially, more than five per cent of the
Company's common stock, and the officers and directors of the Company.
Shares of Percent of Ownership
Name Common Stock
- ---------------------------------------------------------------------------
Sally Hoehne (1) 1,229,100 47%
Joseph A. Nielsen 348,501 13%
Thomas Kozlowski (2) 60,000 2%
Directors and Officers 1,637,601 62%
as a group
(1) Sally Hoehne is the wife of the President of the Company Chad Hoehne.
(2) Mr. Kozlowski has options to purchase 175,000 shares of the Company at
a price of $.30 per share.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The executive officers and directors of the Company, with a brief
description are as follows:
Name Age Position
- ---- --- --------
Chad E. Hoehne 36 Chairman, President
Thomas P. Kozlowski 38 Vice President Sales and Marketing
Joseph A. Nielsen 44 Secretary
Chad E. Hoehne, Mr. Hoehne is the Chairman and President of the
Company. He has a BS degree in Business Administration from Mankato State
University. Mr. Hoehne was employed by Micro Control Company from 1985 to 1993,
he was the founder and President of Live Media Broadcast during 1993, he was the
Chief Financial Officer of IDC Holdings, Ltd. in 1994, and began work on the
Company in December, 1994.
Thomas P. Kozolowski, Mr. Kozolowski is Vice President of Sales and
Marketing. Mr. Kozolowski held various table games management positions at
7
<PAGE>
Resorts International, Sands, cruise liner "Galileo," and the six ship fleet of
High Seas Entertainment in Athens, Greece from 1978 to 1987 when he formed
Worldwide Gaming, a consulting firm for several casinos, specializing in
marketing and security control. He continued in this position until November,
1998 when he joined Table Trac.
Joseph A. Nielsen, Mr. Nielsen is the Secretary. Mr. Nielsen was a
securities broker for many years. Mr. Nielsen was self employed as a financial
consultant in 1993 until he joined with Mr. Hoehne to form the Company in 1994.
During 1996-1997 he was also a financial consultant to Equisure, Inc.
ITEM 6. EXECUTIVE COMPENSATION
Chad Hoehne, the President of the Company received compensation of
$36,024 in 1995, $20,000 in 1996, $46,398 in 1997 and $100,792 in 1998. Through
August 31, 1999 he has been paid $21,000.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Chad Hoehne, President of the Company, is the principle of CJSS
Investors, LLC. There have been consulting fees generated by Mr. Hoehne that
have been billed through CJSS Investors, LLC. Most of the revenue from the
consulting has been remitted to the Company from CJSS Investors, LLC. There is
no formal agreement between the Company and CJSS Investors, LLC for the
President to perform these services, or to remit proceeds to the Company.
ITEM 8. LEGAL PROCEEDINGS
None
ITEM 9. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The Company's common stock has not traded at this time.
There are 71 holders of the common stock of the Company. There have
never been any dividends, cash or otherwise, paid on the common shares of the
Company.
8
<PAGE>
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
Name Date Shares Cost
Tony Baker 6/95 92,250 $80.00
Willard Blake 11/95 20,500 $10.00
Steve Briemhurst 6/95 92,250 $80.00
David Colehour 6/95 20,500 $10.00
Dale Dockendorf 6/95 20,500 $10.00
Dick Farley 6/95 20,500 $10.00
Sally Hoehne 6/95 1,229,100 $570.00
Duane McFarland 6/95 20,500 $10.00
Dennis Miller 6/95 51,250 Services
Charles Clayton 5/97 51,250 Services
Lloyd Nelson 6/95 20,500 $10.00
Joseph Nielsen 6/95 348,501 $100.00
Janice Sparks 6/95 20,500 $10.00
Jodie Tuckner 6/95 20,500 $10.00
Dan Kaufman 5/97 20,000 Services
Katherine Dahlquist 5/97 5,000 $10,000.00
Helen Reierson 5/97 31,250 $35,000.00
Susan Stucke 5/97 13,750 $25,000.00
Robert Siqveland 5/97 12,500 Services
Joe Cumberland 5/97 15,000 $30,000.00
Harvey Vogel 5/97 12,500 $25,000.00
Douglas Evans 5/97 12,500 $25,000.00
Chris Schuneman 5/97 5,000 $10,000.00
Jeffrey Phelan 5/97 12,500 Services
Chad Hoehne 5/97 12,500 Services
Evelyn Nelson 6/95 20,500 $10.00
Peter Eckhoff 5/97 250 Services
Donald McKush 5/97 12,500 Services
Janell Rucci 5/97 2,500 $5,000.00
Mark Welsh 5/97 8,750 $10,000.00
Mitch Miller 5/97 7,500 $15,500.00
John Priscilla 5/97 124,999 $70,500.00
Virgil Miller 5/97 124,999 $70,500.00
Michael Costello 1/99 12,000 $6,000.00
Dale Bistodeau 1/99 20,000 $10,000.00
Duane McFarland 1/99 20,000 $10,000.00
Duane Speed 1/99 24,000 $12,000.00
David Ashfield 1/99 12,000 $6,000.00
Thomas Kozlowski 2/99 60,000 Services
Duane McFarland 4/99 20,000 $20,000.00
Michael Nelson 4/99 10,000 $10,000.00
Jerry Elliott 4/99 20,000 $20,000.00
9
<PAGE>
Michael Reichert 4/99 5,000 $5,000.00
Uniplan/Matrix, Inc. 4/99 2,000 $2,000.00
Ronald Crognale 4/99 5,000 $5,000.00
Judy Nelson 4/99 10,000 $10,000.00
Dale Bistodeau 4/99 10,000 $10,000.00
Ben Case 4/99 5,000 $5,000.00
Burdette Bernston 4/99 10,000 $10,000.00
Annemarie Bristow 4/99 2,363 $2,363.00
Eugene Mason 4/99 2,500 $2,500.00
Randy Boyd 4/99 1,000 $1,000.00
G. Christian Crosby 4/99 5,000 $5,000.00
Patricia King 4/99 6,000 $6,000.00
Robin Norton 5/99 2,000 $2,000.00
Lyle Maschoff 5/99 4,500 $4,500.00
Craig Geller 5/99 5,000 $5,000.00
Walter Schoenborn 5/99 2,500 $2,500.00
John Priscilla 5/99 10,450 Settlement
Virgil Miller 5/99 7,950 Settlement
James Thomas 6/99 10,000 $10,000.00
Glenn Baillie 6/99 5,000 $5,000.00
Gene Joseph 6/99 10,000 $10,000.00
Gordon Hamilton 6/99 5,000 $5,000.00
Fred Blum 7/99 2,000 $2,000.00
James Orr 7/99 10,000 $10,000.00
Michael Jordan 7/99 2,500 $2,500.00
Lyle Hicks 7/99 10,000 $10,000.00
Lyle Maschoff 7/99 2,000 $2,000.00
Dale Bistodeau 7/99 40,000 $40,000.00
Duane McFarland 7/99 15,000 $15,000.00
Kevin Foster 7/99 2,000 $2,000.00
Robert Schachtseneider 7/99 10,000 $10,000.00
Thomas Gitis 7/99 5,000 $5,000.00
David Epstein 7/99 2,500 $2,500.00
Edward B. Steffner 8/99 5,000 $5,000.00
John Egart 8/99 5,000 $5,000.00
John Kilby 8/99 1,500 $1,500.00
There was no underwriter on the sales of any of the securities, and no
commissions were paid, except for sales in 1999. The sales in 1999 were pursuant
to a private placement, and a commission of 10% was paid.
The registrant believes that all transactions were transactions not
involving any public offering within the meaning of Section 4(2) of the
Securities Act of 1933, since (a) each of the transactions involved the offering
of such securities to a substantially limited number of persons; (b) each person
took the securities as an investment for his own account and not with a view to
distribution; (c) each person
10
<PAGE>
had access to information equivalent to that which would be included in a
registration statement on the applicable form under the Act; (d) each person had
knowledge and experience in business and financial matters to understand the
merits and risk of the investment; therefore no registration statement need be
in effect prior to such issuances.
ITEM 11. DESCRIPTION OF SECURITIES
The Company has authorized 5,000,000 shares of common stock, no par
value. Each holder of common stock has one vote per share on all matters voted
upon by the shareholders. Such voting rights are noncumulative so that
shareholders holding more than 50% of the outstanding shares of common stock are
able to elect all members of the Board of Directors. There are no preemptive
rights or other rights of subscription.
Each share of common stock is entitled to participate equally in
dividends as and when declared by the Board of Directors of the Company out of
funds legally available, and is entitled to participate equally in the
distribution of assets in the event of liquidation. All shares, when issued and
fully paid, are nonassessable and are not subject to redemption or conversion
and have no conversion rights.
Risk Factor - Penny Stock Regulation. Broker-dealer practices in
connection with transactions in "penny stocks" are regulated by certain penny
stock rules adopted by the Securities and Exchange Commission. Penny stock
generally are equity securities with a price of less than $5.00 (other than
securities registered on certain national securities exchanges or quoted on the
Nasdaq system, provided that current price and volume information with respect
to transactions in such securities is provided by the exchange or system). The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document that provides information about penny stocks and the risks
in the penny stock market. The broker-dealer must also provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction, and monthly account
statements showing the market value of each penny stock held in the customer's
account. In addition, the penny stock rules generally require that prior to a
transaction in a penny stock the broker-dealer make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. These
disclosure requirements may have the effect of reducing the level of trading
activity in the secondary market for a stock that becomes subject to the penny
stock rules. If the Company's securities become subject to the penny stock
rules, investors in this offering may find it more difficult to sell their
securities.
11
<PAGE>
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Nevada Statutes, contain an extensive indemnification provision which
requires mandatory indemnification by a corporation of any officer, director and
affiliated person who was or is a party, or who is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that he
is or was a member, director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a member, director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses, including attorneys' fees, and
against judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted,
or failed to act, in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. In some instances a court must approve such indemnification.
ITEM 13. FINANCIAL STATEMENTS
Please see the attached Financial Statements.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
(a) Please see the attached Financial Statements
(b) Exhibits:
3. Articles of Incorporation and bylaws
12
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned thereunto duly authorized.
Date: November 18, 1999 Table Trac, Inc.
____/s/____________________________
Chad E. Hoehne, President, Director
____/s/____________________________
Thomas P. Kozlowski, Vice President
____/s/____________________________
Joseph A. Nielsen, Secretary
13
<PAGE>
CALLAHAN, JOHNSTON & ASSOCIATES, LLC
CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS
INDEPENDENT AUDITORS' REPORT
To The Board of Directors and
Stockholders of Table Trac, Inc.
Minnetonka, Minnesota
We have audited the accompanying balance sheets of Table Trac, Inc. (a
development stage company) as of December 31, 1998 and 1997, and the related
statements of operations, stockholders' equity (deficit), and cash flows for the
years then ended and for the period from June 27, 1995 (inception), to December
31, 1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards, Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Table Trac, Inc. as of December
31, 1998 and 1997, and the results of its operations and its cash flows for the
years then ended and from June 27, 1995 (inception), to December 31, 1998, in
conformity with generally accepted accounting principles.
As described in Note 2 to the financial statements, the ultimate recoverability
of investments in the development stage and patent costs is dependent on future
profitable operations, which presently cannot be determined.
/s/ Callahan, Johnston & Associates, LLC
CALLAHAN, JOHNSTON & ASSOCIATES, LLC
Minneapolis, Minnesota
April 21, 1999
14
<PAGE>
TABLE TRAC, INC.
(A Development Stage Company)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
----------------------------- August 31, August 31,
1997 1998 1998 1999
--------- --------- ---------- ----------
(Unaudited) (Unaudited)
ASSETS
<S> <C> <C> <C> <C>
Current assets:
Cash $ 78 $ 9,008 $ 67 $128,941
Accounts receivable:
Trade 5,672 5,173 3,386 5,451
Refundable payroll taxes 1,106 1,106 1,106 --
Prepaid insurance -- 180 -- 180
-------- -------- -------- --------
Total current assets 6,856 15,467 4,559 134,572
-------- -------- -------- --------
Furniture and equipment 22,225 22,731 22,507 22,731
Less accumulated depreciation 9,165 14,840 12,948 18,623
-------- -------- -------- --------
Net fixed assets 13,060 7,891 9,559 4,108
-------- -------- -------- --------
Other assets:
Accounts receivable -
stockholders 37,590 25,840 39,140 43,680
Inventory 31,760 30,045 33,060 32,453
Organization costs, net of
accumulated amortization of
$735 in 1998 and $530 in 1997 495 290 358 154
Patent, net of accumulated
amortization $-0- in 1998
and 1997 14,958 21,732 18,312 23,607
-------- -------- -------- --------
Total other assets 84,803 77,907 90,870 99,894
-------- -------- -------- --------
- -------------------------------------------------------------------------------------------------------------------
Total assets $104,719 $101,265 $104,988 $238,574
======== ======== ======== ========
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of
these financial statements.
<PAGE>
TABLE TRAC, INC.
(A Development Stage Company)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
---------------------------- August 31, August 31,
1997 1998 1998 1999
--------- --------- --------- ---------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 1,356 $ 2,766 $ 2,656 $ 665
Accrued payroll and related 932 2,263 2,803 609
Notes payable - stockholders 50,000 50,000 50,000 50,000
Debentures payable - stockholders 75,000 72,500 72,500 72,500
Bridge financing -- 6,000 -- --
--------- --------- --------- ---------
Total current liabilities 124,788 133,529 127,959 123,774
--------- --------- --------- ---------
Stockholders' equity (deficit):
Common stock, no par value;
authorized 5,000,000 shares,
issued: 2,919,862 in 1999
(unaudited), 2,580,999
in 1998 and 2,562,999
in 1997 341,404 359,404 341,404 636,357
Deficit accumulated during
the development stage (361,473) (391,668) (364,375) (523,557)
--------- --------- --------- ---------
Total stockholders'
equity (deficit) (20,069) (32,264) (22,971) 114,800
--------- --------- --------- ---------
- -----------------------------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity
(deficit) $ 104,719 $ 101,265 $ 104,988 $ 238,574
========= ========= ========= =========
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of
these financial statements.
<PAGE>
TABLE TRAC, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Inception Eight Eight
(June 27, Month Month
Years Ended 1995) Period Period
December 31, To Ended Ended
-------------------------- December 31, Aug. 31, Aug. 31,
1997 1998 1998 1998 1999
--------- --------- ------------ --------- ---------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Revenues:
License fees $ 7,000 $ 15,351 $ 72,351 $ 8,579 $ 13,658
Sales 53,187 - 53,187 - 37,464
Consulting fees 44,225 109,388 153,613 83,615 -
Reimbursed expenses 5,114 262 5,376 - 165
Interest income - - 948 - 670
--------- --------- --------- --------- ---------
Total revenues 109,526 125,001 285,475 92,194 51,957
Cost of goods sold 22,262 1,849 24,111 - 28,252
--------- --------- --------- --------- ---------
Gross profit 87,264 123,152 261,364 92,194 23,705
--------- --------- --------- --------- ---------
Expense:
Amortization 205 205 735 137 541
Automobile 3,180 1,829 10,570 1,177 1,169
Commissions 2,528 1,560 4,088 920 1,480
Computer 724 859 3,715 525 1,434
Depreciation 5,572 5,674 14,840 3,783 3,783
Insurance 718 730 1,884 487 -
Interest 53,115 - 83,115 - 100
Office 969 2,380 8,905 731 3,553
Payroll and related 102,145 107,889 266,138 75,133 22,991
Postage and delivery 267 338 1,772 119 979
Professional fees 61,300 17,965 187,196 5,075 15,996
Research and development 2,617 54 10,623 54 1,000
Sales and marketing - 200 1,568 - 93,437
Telephone 8,397 8,086 26,216 5,427 8,396
Travel and entertainment 5,208 5,578 31,667 1,528 735
--------- --------- --------- --------- ---------
Total expense 246,945 153,347 653,032 95,096 155,594
--------- --------- --------- --------- ---------
Net income (loss) $(159,681) $ (30,195) $(391,668) $ (2,902) $(131,889)
========= ========= ========= ========= =========
Basic earnings (loss)
per share $ (.06) $ (.01) $ (.16) $ (.00) $ (.05)
========= ========= ========= ========= =========
Weighted average number of
shares outstanding 2,520,382 2,563,689 2,363,084 2,562,999 2,690,212
========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of
these financial statements.
<PAGE>
TABLE TRAC, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Common Stock Deficit
-------------------------- During
Number of Subscriptions Development
Shares Amount Receivable Stage Total
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Founders stock 1,660,500 $ 1,070 $ (170) $ - $ 900
Shares issued for technology rights 82,000 40 - - 40
Shares issued to debenture holders 205,000 100 - - 100
Stock issued for legal services and
organization costs 102,500 2,050 - - 2,050
1995 net loss - - - (70,942) (70,942)
--------- --------- --------- --------- ---------
Balance at December 31, 1995 2,050,000 3,260 (170) (70,942) (67,852)
Collection of subscription receivable - - 170 - 170
Shares issued to promissory
note holders 2,500 5,000 - - 5,000
Proceeds from stock sales in 1996 353,999 146,894 - - 146,894
1996 net loss - - - (130,850) (130,850)
--------- --------- --------- --------- ---------
2,406,499 155,154 - (201,792) (46,638)
Proceeds from stock sales in
January 1997 and February 1997 40,000 80,000 - - 80,000
Shares issued for services in May 1997 91,500 56,250 - - 56,250
Shares issued in lieu of interest on
notes payable - stockholders in
May 1997 25,000 50,000 - - 50,000
1997 net loss - - - (159,681) (159,681)
--------- --------- --------- --------- ---------
Balance at December 31, 1997 2,562,999 341,404 - (361,473) (20,069)
Shares issued part of bridge
financing in December 1998 18,000 18,000 - - 18,000
1998 net loss - - - (30,195) (30,195)
--------- --------- --------- --------- ---------
Balance at December 31, 1998 2,580,999 359,404 - (391,668) (32,264)
Shares issued in 1999 under bridge
financing in (unaudited) 6,000 6,000 - - 6,000
Shares issued for services in
February 1997 (unaudited) 60,000 60,000 - - 60,000
Shares issued in 1999 under Circular
504 offering, net of offering
expenses of $59,910 (unaudited) 272,863 212,953 - - 212,953
Net loss January 1, 1999 to August 31,
1999 (unaudited) - - - (131,889) (131,889)
--------- --------- --------- --------- ---------
Balance at August 31, 1999 (unaudited) 2,919,862 $ 636,357 $ - $(523,557) $ 114,800
========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of
these financial statements.
<PAGE>
TABLE TRAC, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash
<TABLE>
<CAPTION>
Inception Eight Eight
(June 27, Month Month
Years Ended 1995) Period Period
December 31, To Ended Ended
--------------------------- December 31, Aug. 31, Aug. 31,
1997 1998 1998 1998 1999
--------- --------- ------------ --------- --------
(Unaudited) (Unaudited)
Cash flows from operating activities:
<S> <C> <C> <C> <C> <C>
Net loss $(159,681) $(30,195) $(391,668) $(2,902) $(131,889)
Adjustments to reconcile net loss to
cash flows from operating activities:
Depreciation 5,572 5,674 14,840 3,783 3,783
Amortization 205 205 735 137 541
Stock issued for services 56,250 -- 57,275 -- 60,000
Stock issued for interest 50,000 -- 55,000 -- --
Accounts receivable (12,968) 12,249 (32,119) 454 (17,012)
Prepaid insurance -- (180) (180) -- --
Inventory 17,448 1,715 (30,045) (1,300) (2,408)
Checks written in excess of cash in bank (6,250) -- -- -- --
Accounts payable (13,720) 1,410 2,766 1,300 (2,101)
Accrued payroll and related 774 1,333 2,263 1,871 (2,263)
--------- -------- --------- ------- ---------
Net cash flows from operating activities (62,370) (7,789) (321,133) 3,343 (90,740)
--------- -------- --------- ------- ---------
Cash flows from investing activities:
Purchases of furniture and equipment (10,926) (507) (22,691) -- --
Incurrence of patent costs (4,193) (6,774) (21,732) (3,354) (2,280)
--------- -------- --------- ------- ---------
Net cash flows from investing activities (15,119) (7,281) (44,423) (3,354) (2,280)
--------- -------- --------- ------- ---------
Cash flows from financing activities:
Proceeds from common stock 80,000 18,000 246,064 -- 218,953
Proceeds from notes payable - stockholders -- -- 50,000 -- --
Proceeds from debentures
payable - stockholders -- -- 100,000 -- --
Repayments on debentures
payable stockholders (2,500) -- (27,500) -- --
Bridge financing, net -- 6,000 6,000 -- (6,000)
Proceeds on note payable - bank 10,000 -- 10,000 -- --
Repayment of note payable - bank (10,000) -- (10,000) -- --
--------- -------- --------- ------- ---------
Net cash flows from financing activities 77,500 24,000 374,564 -- 212,953
--------- -------- --------- ------- ---------
Increase (decrease) in cash 11 8,930 9,008 (11) 119,933
Cash - beginning of period 67 78 -- 78 9,008
--------- -------- --------- ------- ---------
Cash - end of period $ 78 $ 9,008 $ 9,008 $ 67 $ 128,941
========= ======== ========= ======= =========
</TABLE>
The accompanying notes are an integral part of
these financial statements.
<PAGE>
TABLE TRAC, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION (JUNE 27, 1995) TO
DECEMBER 31, 1998
AUGUST 31, 1999 (UNAUDITED)
1. Summary of Significant Accounting Policies and Other Information
----------------------------------------------------------------
Company
-------
Table Trac, Inc. was formed under the laws of the State of Nevada in
June 1995. The Corporation has its offices in Minnetonka, Minnesota. The
Company has developed and is beginning the commercialization of an
information and management system that automates various aspects of the
operations of casino table games, Table Trac(TM).
Table Trac is available for an installation and monthly license fee from
the Company for casinos with a minimum number of tables. Base license
includes all installation, a custom casino system configuration,
training, and technical support during the life of the License
agreement. Custom screens and reports will be designed, if requested by
the casino, at additional cost.
Revenue Recognition
-------------------
Revenues are recorded at the time of shipment of products or performance
of services. Monthly license fees are recorded over the lives of the
respective contracts or as earned.
Furniture and Equipment
-----------------------
Furniture and equipment are recorded at cost. Depreciation is calculated
using the straight-line method over the estimated useful lives of two to
five years. Expenditures for maintenance and repairs are charged to
operations when incurred. Deduction is made for retirements resulting
from renewals or betterments.
Depreciation expense was $3,783 in 1999 (unaudited), $5,674 in 1998,
$5,572 in 1997, $2,872 in 1996 and $14,840 from inception to December
31, 1998.
(Continued)
<PAGE>
TABLE TRAC, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION (JUNE 27, 1995) TO
DECEMBER 31, 1998
AUGUST 31, 1999 (UNAUDITED)
1. Summary of Significant Accounting Policies and Other Information
----------------------------------------------------------------
(Continued)
Intangible Assets
-----------------
Organization costs are carried at cost and are being amortized over
sixty months using the straight-line method.
Patents are carried at cost and will be amortized over seventeen years
using the straight-line method commencing in July 1999.
Stock-Based Consideration
-------------------------
The Company has applied the fair value-based method of accounting for
employee and nonemployee stock-based consideration and/or compensation
in accordance with FASB Statement 123.
Income Taxes
------------
Through December 31, 1998 the Company was treated as a Subchapter S
corporation whereby revenues and expenses flowed through to stockholders
for inclusion on their individual returns. Accordingly, no income tax
provision has been provided in the accompanying financial statements
from inception through December 31, 1998
The Company terminated its S election in 1999 (unaudited).
Concentrations, Risks and Uncertainties
---------------------------------------
Use of Estimates
----------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and reported
amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
(Continued)
<PAGE>
TABLE TRAC, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION (JUNE 27, 1995) TO
DECEMBER 31, 1998
AUGUST 31, 1999 (UNAUDITED)
1. Summary of Significant Accounting Policies and Other Information
----------------------------------------------------------------
(Continued)
Concentrations, Risks and Uncertainties (Continued)
---------------------------------------
Accounts Receivable - Stockholders
----------------------------------
Accounts receivable - stockholders consists of amounts advanced to
the Company's President and one former employee of the Company.
These amounts are noninterest bearing, unsecured, and due on
demand. The Company feels all amounts are collectible. While the
ultimate amount collectible may differ, management believes that
any collection loss will not have a material impact on the
Company's financial position. Due to uncertainties in the
collection process, however, it is at least reasonably possible
that management's estimate of the collectibility will change during
the next year. That amount cannot be estimated.
Inventory
---------
Inventory is recorded at the lower of cost (determined on a
first-in, first-out basis) or market. Inventory levels
significantly exceed the Company's current requirements. The
Company is currently offering shares for sale to raise monies for
sales and marketing. The Company believes that these efforts will
be successful and that inventory will be realized in the normal
course of operations. No estimate can be made of the range of loss
that is reasonably possible should the Company be unsuccessful.
(Continued)
<PAGE>
TABLE TRAC, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION (JUNE 27, 1995) TO
DECEMBER 31, 1998
AUGUST 31, 1999 (UNAUDITED)
1. Summary of Significant Accounting Policies and Other Information
----------------------------------------------------------------
(Continued)
Concentrations, Risks and Uncertainties (Continued)
---------------------------------------
Customer Concentrations and Receivables
---------------------------------------
The Company sells to domestic companies and grants limited
uncollateralized credit to customers based on credit worthiness.
From inception to December 31, 1998, one major customer comprised
100% of the Company's revenues from installation and licensing fees
from installations of the Company's Table Trac(TM) system. See
Note 9.
Consulting services performed by the Company's President are
performed and billed almost exclusively through CJSS Investors, a
related party. CJSS Investors, in turn, remits all or a portion of
these revenues to the Company to compensate the Company for
services provided by its President. No formal agreement exists
requiring CJSS Investors to continue to utilize the Company's
President to perform these consulting services or to compensate the
Company for services that are provided.
Contingent Debenture Interest
-----------------------------
As discussed in Note 5, payment of interest on the debentures is
contingent on the Company achieving profitable operations. It is
reasonably possible the Company will achieve profitable operations
and this $72,500 obligation will be incurred.
(Continued)
<PAGE>
TABLE TRAC, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION (JUNE 27, 1995) TO
DECEMBER 31, 1998
AUGUST 31, 1999 (UNAUDITED)
1. Summary of Significant Accounting Policies and Other Information
----------------------------------------------------------------
(Continued)
Concentrations, Risks and Uncertainties (Continued)
---------------------------------------
Competition
-----------
The Company is unaware of any competitor actively pursuing its
target market; however, many of the Company's likely competitors
have substantially greater resources and experience than the
Company.
Supplier Concentration
----------------------
The Company maintains one relationship for manufacture of Table
Trac units. The Company is aware of other local electronic
manufacturers offering equivalent manufacturing capability whose
services the Company could readily hire if this primary supplier
fails.
Key Personnel
-------------
Marketing efforts, consulting services and technical and
administrative efforts of the Company's President have accounted
for 100% of the Company's revenues inception to date. No employment
agreement exists with the Company's President.
(Continued)
<PAGE>
TABLE TRAC, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION (JUNE 27, 1995) TO
DECEMBER 31, 1998
AUGUST 31, 1999 (UNAUDITED)
1. Summary of Significant Accounting Policies and Other Information
----------------------------------------------------------------
(Continued)
Earnings Per Share
------------------
The Company has implemented FASB 128: Earnings Per Share. FASB 128
replaces the presentation of primary EPS with basic EPS. Basic EPS
excludes dilution and is computed by diving net income by the
weighted-average number of common shares outstanding for the year.
Dilutes EPS reflects the potential dilution from stock options and is
computed using the treasury stock method. Under the treasury stock
method stock options are assumed to have been exercised at the
beginning of the period if the exercise price exceeds the average
market price during the period. There were no options outstanding at
December 31, 1998, and accordingly, only basic earnings per share is
presented in the accompanying financial statements.
Outstanding Weighted
--------------------- Average
Shares Days Shares
------ ---- ------
6/27/95 to 12/31/98 2,050,000 1,283 2,050,000
8/4/96 to 12/31/98 2,500 880 1,715
9/4/96 to 12/31/98 353,999 849 234,252
1/21/97 to 12/31/98 15,000 710 8,301
2/17/97 to 12/31/98 12,500 683 6,654
2/19/97 to 12/31/98 12,500 681 6,635
5/1/97 to 12/31/98 91,500 610 43,503
5/4/97 to 12/31/98 25,000 607 11,828
12/18/98 to 12/31/98 18,000 14 196
--------- ---------
Inception to 12/31/98 2,580,999 2,363,084
========= =========
(Continued)
<PAGE>
TABLE TRAC, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION (JUNE 27, 1995) TO
DECEMBER 31, 1998
AUGUST 31, 1999 (UNAUDITED)
1. Summary of Significant Accounting Policies and Other Information
----------------------------------------------------------------
(Continued)
Earnings Per Share (Continued)
------------------
Weighted-average shares for basic EPS
At December 31, 1996 2,166,440
=========
At December 31, 1997 2,520,382
=========
At December 31, 1998 2,563,689
=========
At August 31, 1998 (unaudited) 2,562,999
=========
At August 31, 1999 (unaudited) 2,690,212
=========
Inception (June 27, 1995) to December 31, 1998 2,363,084
=========
Inception (June 27, 1995) to
August 31, 1999 (unaudited) 2,415,175
=========
Advertising Expenses
--------------------
Advertising expenses are included in sales and marketing expenses
in the accompanying financial statements and are recognized in the
period incurred. Advertising expenses totaled $-0- in 1999
(unaudited), $200 in 1998, $-0- in 1997, and $1,568 from inception
to December 31, 1998.
2. Development Stage Company
- -- -------------------------
From inception to December 31, 1998, the Company is deemed to be in the
development stage. To date the Company has devoted the majority of its
efforts to: raising capital; research and development and patenting of
its Table Trac(TM) system; establishing sources of supply; and
developing markets. Planned principal operations have commenced, but
there have not been significant revenues from installation and licensing
fees from the Table Trac(TM) system to date. The Company sees consulting
services as incidental to the Company's primary purposes.
(Continued)
<PAGE>
TABLE TRAC, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION (JUNE 27, 1995) TO
DECEMBER 31, 1998
AUGUST 31, 1999 (UNAUDITED)
2. Development Stage Company (Continued)
-------------------------
The Company is presently attempting to raise $900,000 through a Circular
504 offering. If successful, the Company will use approximately $810,000
in net proceeds, if all shares are sold, to provide: $400,000 for sales
and marketing; and $410,000 in working capital. The Company feels these
efforts will allow it to successfully market to and expand its casino
customer base. Ultimately the Company feels it will be able to: gain
acceptance by the casinos; install and license its Table Trac(TM)
system; and achieve profitable operations and thereby realize assets and
settle obligations in the normal course of operations. No estimate can
be made of the range of loss that is reasonably possible should the
Company be unsuccessful.
Gross proceeds of $272,863 (unaudited) have been raised under this
offering. Offering costs of $59,910 (unaudited) have been incurred with
respect to this offering.
3. Related Party Transactions
--------------------------
Common Stock Issued for Contributed Assets
------------------------------------------
A designate of the Company's founder and President received 1,230,000
shares of common stock upon formation of the Company in exchange for
$570 and the President's assignment of the software for the Table Trac
system which he had developed to date and all design work and concept
development, including all future rights, title and interest to
inventions, improvements and application of and to certain Letters of
Patent to be obtained. Assets received were valued at their fair value
of $30 at the date of assignment.
(Continued)
<PAGE>
TABLE TRAC, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION (JUNE 27, 1995) TO
DECEMBER 31, 1998
AUGUST 31, 1999 (UNAUDITED)
3. Related Party Transactions (Continued)
--------------------------
Other Rent
----------
The Company currently receives office space and use of certain furniture
from its President and largest stockholder under a month-to-month
agreement at no cost. No value has been reflected for this donated
rentals in the accompanying financial statements.
4. Notes Payable - Stockholders
----------------------------
In September 1996, the Company entered into two $25,000 promissory
notes. As an inducement to loan the Company these monies each of the
note holders was also granted 1,250, post split, shares of the Company's
common stock. In 1997, the Company settled all interest ultimately owing
relating to these notes by granting each note holder 12,500, post split,
shares of the Company's common stock.
The notes payable - stockholders are currently noninterest bearing,
unsecured, and due on demand.
5. Debentures Payable - Stockholders
---------------------------------
In 1995, the Company sold $10,000 debentures to ten individuals. Each
debenture holder also received the right to subscribe to 20,500, post
splits, shares of the Company's common stock for $10. Each of these
debenture holders exercised their stock rights and 205,000, post splits,
shares were issued under these agreements. These debentures are
unsecured and bear simple interest at a rate of 100%, once, for the life
of the debentures. Payment of this interest on these debentures is
contingent on future earnings. Repayment of these debentures, including
interest, was scheduled to occur from June 1996 to May 1997. Scheduled
payments were made from June 1996 to September 1996. Subsequent to that
date, cash flows have prohibited all but one partial payment in March
1997.
(Continued)
<PAGE>
TABLE TRAC, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION (JUNE 27, 1995) TO
DECEMBER 31, 1998
AUGUST 31, 1999 (UNAUDITED)
5. Debentures Payable - Stockholders (Continued)
---------------------------------
These debentures are currently due and are reflected as current in the
accompanying financial statements. If the Company is successful in
achieving profitable operations, it will further be obligated to pay the
contingent debenture interest.
Debenture principal due $ 72,500
Contingent debenture interest 72,500
---------
Potential obligation $ 145,000
=========
At December 31, 1998, it is at least reasonably possible the Company
will achieve profitable operations and will be required to settle the
potential obligation of $145,000.
6. Bridge Financing
----------------
In December 1998, the Company borrowed $6,000 as bridge financing toward
its proposed Circular 504 offering. This amount was unsecured,
noninterest bearing, and repaid in 1999 from proceeds from this
offering.
7. Common Stock
------------
On July 10, 1996, the Company approved a 41-for-1 split of its common
stock. On February 5, 1999, the Company approved a 1-for-2 reverse stock
split. All references to number of shares, except for shares authorized,
have been adjusted to reflect these splits on a retroactive basis.
(Continued)
<PAGE>
TABLE TRAC, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION (JUNE 27, 1995) TO
DECEMBER 31, 1998
AUGUST 31, 1999 (UNAUDITED)
8. Supplemental Cash Flow Information
----------------------------------
Cash paid during the year for:
August 31,
-----------------
1997 1998 1999 1998
---- ---- ---- ----
(Unaudited)
-----------------
Interest $ - $ - $100 $ -
==== ==== ==== ====
Income taxes $ - $ - $ - $ -
==== ==== ==== ====
Summary of Non Cash Activity:
The Company issued 82,000 shares of additional founders' common stock
for technology valued at $40.
The Company issued 102,500 shares of common stock for legal fees and
organizational fees valued at $2,050.
Inception to December 31, 1998, the Company has issued 27,500 shares of
common stock in lieu of interest on the notes payable stockholders.
Interest expense of $55,000 was recorded relating to these issuances.
Inception to December 31, 1998, the Company has issued 151,500 shares of
common stock in lieu of compensation. Expense of $117,565 was recorded
relating to these issuances. Inception to August 31, 1999, the Company
has issued 211,500 (unaudited) shares of common stock in lieu of
compensation. Expense of $177,565 (unaudited) was recorded relating to
these issuances.
9. Subsequent Events
-----------------
Bridge Financing
----------------
In January 1999, the Company issued 6,000 shares of its common stock for
$6,000 as bridge financing toward its proposed Circular 504 offering.
(Continued)
<PAGE>
TABLE TRAC, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION (JUNE 27, 1995) TO
DECEMBER 31, 1998
AUGUST 31, 1999 (UNAUDITED)
9. Subsequent Events (Continued)
-----------------
Circular 504 Offering
---------------------
Effective February 22, 1999, the Company commenced a Circular 504
offering to sell on a "best efforts basis" up to 900,000 shares of the
Company's common stock at $1.00 per share. Net proceeds to the Company
are approximated at $810,000 and will be used as follows:
Sales and marketing $ 400,000
Working capital 410,000
---------
$ 810,000
=========
As a part of this offering the Company will grant an option to its
underwriter to purchase up to 90,000 shares of common stock exercisable
at $1.25 per share on the basis of one warrant for each 10 shares sold.
Gross proceeds of $272,863 (unaudited) have been raised under this
offering. Offering costs of $59,910 (unaudited) have been incurred with
respect to this offering.
Employment Agreement / Exclusive World Wide Marketing Rights
------------------------------------------------------------
On February 23, 1999, the Company entered into an employment agreement
with its Vice President of Marketing which grants this individual
exclusive world wide marketing rights to the Company's products. This
agreement will remain in force provided this individual meets
performance goals as outlined in the agreement. A signing bonus of
60,000 shares of the Company's common stock, post splits, was issued as
a part of this agreement. The Company also granted an option to this
employee to purchase 175,000 shares of its common stock at $.30 per
share, with exercise rights beginning February 23, 2000 and ending
August 30, 2007.
(Continued)
<PAGE>
TABLE TRAC, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION (JUNE 27, 1995) TO
DECEMBER 31, 1998
AUGUST 31, 1999 (UNAUDITED)
9. Subsequent Events (Continued)
-----------------
Patent Approval
---------------
In March 1999, the Company received approval for its table game control
system patent. Management feels strongly that the extent of the patent
will enable the Company to adequately protect its technology. Copies of
this patent may be obtained from the U.S. Department of Commerce, Patent
and Trademark Office, 2900 Crystal Drive, Arlington, VA 22202,
Application Serial Number 08/689, 351.
Test Installation
-----------------
In May 1999, the Company automated the table games and player tracking
systems for a Wisconsin casino on a trial basis running through
September 1, 1999. Final acceptance of these systems by this casino
would significantly expand the Company's customer base and revenues.
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
To The Board of Directors and
Stockholders of Table Trac, Inc.
Minnetonka, Minnesota
We hereby consent to use of the audited balance sheets of Table Trac, Inc. (a
development stage company) as of December 31, 1998 and 1997, and the related
statements of operations, stockholders' equity (deficit), and cash flows for the
years then ended and for the period from June 27, 1995 (inception), to December
31, 1998 in the Form 10 filing.
/s/ Callahan, Johnston & Associates, LLC
CALLAHAN, JOHNSTON & ASSOCIATES, LLC
Minneapolis, Minnesota
April 21, 1999
EXHIBIT 3.
SECRETARY OF STATE OF THE
STATE OF NEVADA ARTICLES
JUN 27 1995 OF
INCORPORATION
No. 10678-95 TABLE TRAC, INC.
DEAN HELLER SECRETARY OF STATE A Nevada Corporation
I, the undersigned, being the original incorporator herein named, for
the purpose of forming a corporation under Chapter 78 of the Nevada Revised
Status, do make and file these Articles of Incorporation hereby declaring and
certifying that these facts herein stated are true:
ARTICLE I.
NAME
The name of the corporation is TABLE TRAC, INC.
ARTICLE II.
PURPOSE
The purpose of this corporation is to engage in any lawful activity.
ARTICLE III.
RESIDENT AGENT & REGISTERED OFFICE
Section 3.01 Resident Agent. The name and address of the resident agent for
service of process is the Law Offices of Albert D. Massi, Esquire, 3202 West
Charleston Blvd., Las Vegas, Nevada 89102.
Section 3.02 Registered Office. The address of its registered office is 3202
West Charleston Blvd., Las Vegas, Nevada 89102.
Section 3.03 Other Offices. The corporation may also maintain offices for the
transaction of any business at such other places within or without the State of
Nevada as it may from time to time determine. Corporate business of every kind
and nature may be conducted, and meeting of directors and stockholders held
outside the State of Nevada with the same effect as if in the State of Nevada.
<PAGE>
ARTICLE IV.
SHARES OF STOCK
The amount of the total authorized capital stock of this corporation is 2500
shares with no par value. The initial number of stockholders shall be less than
fifteen (15).
The capital stock of the Corporation after the amount of subscription price has
been paid, shall not be subject to pay the debts of the Corporation, and no
capital issued as fully paid up shall never be assessable or assessed.
ARTICLE V.
DIRECTORS
Section 5.01 GOVERNING BOARD. The members of the governing board of the
Corporation shall be styled as Directors.
Section 5.02 INITIAL BOARD OF DIRECTORS. The initial Board of Directors shall
consist of two (2) members. The names and addresses of the initial Directors are
as follows:
Name Address
Chad Hoehne 4200 Kemrich Circle
Minnetonka, MN 55345
Joseph Nielson 2264 Boulder Ridge Lane
Woodbury, MN 55125
These individuals shall serve as Directors until the First Annual Meeting of the
stockholders or until their successors shall have been elected and qualified.
Section 5.03 Change in Number of Directors. The number of specific or total
Directors may be increased or decreased by a duly adopted amendment to the
By-Laws of the Corporation.
ARTICLE VI.
INCORPORATOR AND SHAREHOLDERS
The name and address of the incorporator is DENNIS J. MILLER, ESQUIRE, 5700
Corporate Drive, Suite 850, Pittsburgh, Pennsylvania 15237. The names and
addresses of the shareholders are:
Chad Hoehne 4200 Kemrich Circle
Minnetonka, MN 55345
<PAGE>
Joseph Neilson 2264 Older Ridge Lane
Woodbury, MN 55125
ARTICLE VII.
DIRECTORS` AND OFFICERS' LIABILITY
A Director or Officer of the Corporation shall not be personally liable to this
Corporation or its stockholders for damages for breach of fiduciary duty as a
Director or Officer, but this Article shall not eliminate or limit the liability
of a Director or Officer, for (1) acts or omissions which involve intentional
misconduct, fraud or a knowing violation of law, or (2) the payment of
distributions in violation of N.R.S. 78.300. Any repeal or modification of this
Article by the stockholders of the Corporation shall be prospective only, and
shall not adversely affect any limitation on the personal liability of a
Director or Officer of the Corporation for acts or omissions prior to such
repeal or modification.
ARTICLE VIII.
INDEMNITY
Every person who was or is a party to, or is threatened to be made a party to,
or is involved in any action, suit or proceeding, whether civil or criminal,
administrative or investigative, by reason of the fact that he, or a person of
whom he is the legal representative, is or was a Director or Officer of the
Corporation, or is or was serving at the request of the Corporation, or as its
representative in a partnership, joint venture, trust or other enterprise, shall
be held harmless to the fullest extent legally permissible under the laws of the
State of Nevada from time to time against all expenses, liability and loss
(including attorneys' fees, judgment, fines and amounts paid or to be paid in
settlement) reasonable incurred or suffered by him in connection herewith. Such
right to indemnification shall be a contract right, which may be enforced in any
manner desired by such person. The expenses of Officers and Directors incurred
and in advance of the final disposition of the action, suit or proceeding, upon
receipt of an undertaking by or on behalf of the Director or Officer to repay
the amount if it is ultimately determined by a Court of competent jurisdiction
that he is not entitled to be indemnified by the Corporation. Such right of
indemnification shall not be exclusive of any other right which such Directors,
Officers or representatives may have or hereafter acquire, and, without limiting
the generality of such statement, they shall be entitled to their respective
rights of indemnification under any By-Law, agreement, vote of stockholders,
provision of law, or otherwise, as well as their rights under this Article.
<PAGE>
Without limiting the application of the foregoing, the Board of Directors may
adopt ByLaws from time to time with respect to indemnification, to provide at
all times the fullest indemnification permitted by the laws of the State of
Nevada, and may cause the Corporation to purchase and maintain insurance on
behalf of any person who is or was a Director or Officer of the Corporation as
Director or Officer of another Corporation, or as its representative in a
partnership, joint venture, trust or other enterprises against such person and
incurred in any such capacity or arising out of such status, whether or not the
Corporation would have the power to indemnify such person.
The indemnification provided in this Article shall continue as to a person who
has ceased to be a Director , Officer , employee or agent, and shall inure to
the benefit of the heirs, executors and administrators of such person.
ARTICLE IX
AMENDMENTS
This Corporation reserves the right to amend, alter, change or repeal any
provision contained in these Articles of Incorporation or its By-Laws, in the
manner now or hereafter prescribed by statute or by these Articles of
Incorporation or said By-Laws, and all rights conferred upon by the stockholders
are granted subject to this reservation.
ARTICLE X.
POWERS OF DIRECTORS
In furtherance, and not in limitation of the powers conferred by statute, the
Board of Directors is expressly authorized:
(a) Subject to the By-Laws, if any, adopted by the stockholders, to
make, alter or repeal the By-Laws of the Corporation;
(b) To authorize and cause to be executed mortgages and liens, with or
without limit to amount, upon the real and personal property of the Corporation;
(c) To authorize the guarantee by the Corporation of securities,
evidences of indebtedness and obligations of other persons, corporations and
businesses;
(d) To set apart out of any of the funds of the Corporation available
for dividends a reserve or reserves for any proper purpose and to abolish any
such reserve; and
<PAGE>
(e) By resolution adopted by a majority of the whole Board, to
designate one or more committees, each committee to consist of one or more of
the Directors of the Corporation, which, to the extent provided in the
resolution or in the By-Laws of the Corporation, shall have and may exercise the
powers of the Board of Directors in the management of the business and affairs
of the Corporation, and may authorize the seal of the Corporation to be affixed
to all papers which may require it. Such committee or committees shall have name
or names as may be stated in the By-Laws of the Corporation or as may be
determined from time to time by resolution adopted by the Board of Directors.
All corporate powers of the Corporation shall be exercised by the Board of
Directors except as otherwise provided herein or by law.
IN WITNESS WHEREOF, I have set my hand and seal this 2nd day of June,
1995, hereby declaring and certifying that the facts stated herein above are
true.
-------------------------------------
DENNIS J. MILLER, Incorporator
ACKNOWLEDGEMENT
COMMONWEALTH OF PENNSYLVANIA :
: SS:
COUNTY OF ALLEGHENY :
On this 2ND. day of June, 1995, personally appeared before me, a Notary Public,
DENNIS J. MILLER, who acknowledged to me that he executed the foregoing
instrument.
NOTARIAL SEAL
COLLEEN R DOUGLAS, NOTARY PUBLIC
ROSS TWP. ALLEGHENY COUNTY,
MY commission expires APRIL 27 1996
<PAGE>
(SEAL)
<PAGE>
<TABLE>
<S> <C> <C>
Dean Heller STATE OF NEVADA TELEPHONE 702-697.5203
SECRETARY OF STATE OFFICE OF THE SECRETARY OF STATE Fax 762.687.3471
101 N. CARSON ST., STE.3 Web site http//sos.state.nv.us
CARSON CITY. NEVADA 89701-4786 FILING Fee.
</TABLE>
CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION
-----------------------------------------------------
FOR. PROFIT NEVADA CORPORATIONS
-------------------------------
(PURSUANT TO NRS 78.385 AND 78.390 - AFTER ISSUANCE OF STOCK)
- REMIT IN DUPLICATE -
1. Name of corporation: TABLE TRAC, INC.
2. The Articles have been amended as follows (provide article numbers, if
available):
IV. The amount of the total authorized capital stock of this corporation is
5,000,000 shares with no par value. The initial number of stockholders shall be
less than fifteen (15). The capital stock of the Corporation after the amount of
subscription price has been paid, shall not be subject to pay the debts of the
Corporation, and no capital issued as fully paid up shall never be assessable or
assessed.
3. The vote by which the stockholders holding shares in the corporation
entitling them to exercise at least a majority of the voting power, or such
greater proportion of the voting power as may be required in the case of a vote
by classes or series, or as may be required by the provisions of the articles of
incorporation have voted in favor of the amendment is:--. adopted.
4 Signatures:
President or Vice President Secretary or Asst. Secretary
(acknowledgement required) (acknowledgement not required)
State of: MN
Country of: Hennepin
This instrument was acknowledged before me on
May 7th, 1999, by
Chad Hoehne (name of person)
as President
as designated to sign this certificate
of TABLE TRAC, INC
Notary Signature CATHERINE C. MCLAUGHLIN, notary public Minnesota,
CARVER COUNTY, My Comm. Expires Jan 31, 2000
*If any proposed amendment would alter or change any preference or any relative
or other right given to any class or series of outstanding shares, then the
amendment must be approved by the vote, in addition to the affirmative vote
otherwise required, of the holders of shares representing a majority of the
voting power of each class or series affected by the amendment regardless of
limitations or restrictions on the voting power thereof.
IMPORTANT: Failure to include any of the above information and remit the proper
fees may cause this filing to be rejected.
<PAGE>
BY-LAWS
OF
TABLE TRAC, INC.
ARTICLE I
MEETINGS OF SHAREHOLDERS
1.1 Regular Meetings. Regular meetings of shareholders may be called by the
Chief Executive Officer, the Secretary, the Board of Directors, or by
shareholder demanded in accordance with Nevada Statutes No meeting
shall be designated a regular meeting unless specifically described as
such in the notice of meeting or unless all the shareholders are
present in person or by proxy, and none of them objects to this
designation.
1.2 Special Meetings. Special meetings of the shareholders may be called
for any purpose or purposes at any time by the Chief Executive Officer,
Chief Financial Officer, two or more directors, or by shareholder
demand in accordance with Nevada Statutes.
1.3 Time and Place of Shareholder Meeting. Except as otherwise provided by
statute, any meeting of shareholders shall be held on the date and at
the time and place fixed by the Chief Executive Officer or the Board of
Directors of the corporation.
1.4 Notice of Shareholder Meeting. Except as otherwise provided by statute,
written notice of the date, time, and place of any meeting of
shareholders shall be given to every holder of voting shares at such
address as appears on the stock book of the corporation at least five
days prior to the meeting if by mail, or two days prior to the meeting
if by telex, telegram, or in person.
1.5 Voting. Except where a greater percentage is required by statute, the
shareholders shall take action by the affirmative vote of the holders
of a majority of the votes of the shares present.
1
<PAGE>
ARTICLE II
DIRECTORS
2.1 Number, Term of Office. The number of directors of the corporation
shall be as determined from time to time by the shareholders. Directors
need not be shareholders. Each director shall hold office for an
indefinite term, not to exceed five years, that expires at the regular
meeting of shareholders next held after the director's election and
until a successor is elected and has qualified, or until the earlier
death, resignation, removal, or disqualification of the director.
2.2 Removal. The Board of Directors or the shareholders may remove any
director of the corporation at any time, for cause or without cause.
New directors may be elected at a meeting at which directors are
removed.
2.3 Board Meetings, Notice. The Chief Executive Officer (if a director),
the Chairman of the Board of Directors (if one is elected) or Directors
comprising at least one third of the number of directors then in office
may call a Board meeting by giving five days notice if by mail, or two
days notice if by telephone, telex, telegram, or in person, to all
directors of the day or date and time of the meeting. Meetings of the
Board of Directors may be held at the day or date, time, and place, as
shall be determined by the Board. If the day or date, time, and place
have been announced at a previous meeting of the Board, or if a meeting
schedule is adopted by the Board, no notice is required. In absence of
a designation by the Board of Directors, Board meetings shall be held
at the principal executive offices of the corporation.
2.4 (a) Advance Written Consent or Opposition. Any member of the Board or a
committee thereof, as the case may be, may give advance written consent
or opposition to a proposal to be acted on at a Board or committee
meeting. If a director or committee member is not present at the
meeting, advance written consent or opposition to a proposal does not
constitute presence for the purpose of determining whether a quorum
exists, but such advance written consent or opposition shall be a vote
in favor of or against the proposal or resolution acted upon at the
meeting is substantially the same or has substantially the same effect
as the proposal or resolution to which the member of the Board or
committee has consented or objected.
(b) Action Without Meeting. Any action, other than an action requiring
shareholder approval, may be taken by written action signed by the
number of directors that would be required to take the same action at a
meeting of the Board at which all directors were present. An action
2
<PAGE>
requiring shareholder approval required or permitted to be taken at a
board meeting may be taken by written action signed by all the
directors. Any such written action is effective when signed by the
required number of directors, unless a different effective time is
provided in the written action. When written action is taken by less
than all directors, all directors shall be notified immediately of its
text and effective date. Failure to provide the notice does not
invalidate the written action. A director who does not sign or consent
to the written action has no liability for the action or actions taken.
ARTICLE III
OFFICERS
3.1 Election; Term of Office; Removal. The Board of Directors shall elect a
Chief Executive Officer and Chief Financial Officer, and may elect such
other officers as it may deem necessary for the operation and
management of the corporation, each of whom shall have the duties and
responsibilities incident to the offices which they hold or as
determined by the Board. Officers need not be directors or
shareholders. Without limiting the foregoing, the Board may elect a
Chairman of the Board, President, one or more Vice Presidents, a
Treasurer, a Secretary and such assistant officers as it may designate
with titles to describe their duties, functions or special
responsibilities. Officers shall hold office at the will of the Board
for an indefinite term until their successors are elected and
qualified. Any officer elected or appointed by the Board of Directors
may be removed by the Board at any time with or without cause.
ARTICLE IV
AMENDMENTS
4.1 Subject to the power of shareholders to adopt, amend, or repeal these
Bylaws as provided in Nevada Statutes any Bylaw may be amended or
repealed by the Board of Directors at any meeting, provided that, after
adoption of the initial Bylaws, the Board shall not adopt, amend, or
repeal a Bylaw fixing a quorum for meetings of shareholders,
prescribing procedures for removing directors or filling vacancies in
the Board, or fixing the number of directors or their classifications,
qualifications, or terms of office. The Board may adopt or amend a
Bylaw to increase the number of directors.
3
<PAGE>
ARTICLE V
INDEMNIFICATION
5.1 The corporation shall indemnify persons for such expenses and
liabilities in such manner, under such circumstances, and to the extent
required by Nevada Statutes.
4
