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.
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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.
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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.
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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.
ELEVEN MONTHS ENDED NOVEMBER 30, 1998 COMPARED TO ELEVEN MONTHS ENDED NOVEMBER
30, 1999.
Revenues decreased in the eleven months ended November 30, 1999
compared to the same period in 1998 from $115,910 to $57,223. License fees and
sales increased in 1999, but not enough to offset the $101,900 in consulting
fees in 1998.
Cost of goods sold was $26,177 in 1999, compared to $1,145 in 1998.
Operating expenses increased to $14,721 in 1999 from $128,357 in 1998. The
biggest change in 1999 was sales and marketing of $47,182, compared to $200 in
1998.
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The result was that there was a net loss of $109,675 in the first
eleven months of 1999 compared to a net loss of $13,592 in the same period of
1998. The net loss per share for the period in 1999 was $.04, compared to a net
loss per share of $.01 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 2,859,862 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
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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)
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. Kozlowski, Mr. Kozlowski is Vice President of Sales and
Marketing. Mr. Kozolowski held various table games management positions at
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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 $33,000.
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.
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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
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
Michael Reichert 4/99 5,000 $5,000.00
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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 had access to information equivalent to that which
would be included in a
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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.
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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
23. Consent of Independent Auditors
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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: Table Trac, Inc.
/s/
-----------------------------------
Chad E. Hoehne, President, Director
/s/
-----------------------------------
Thomas P. Kozlowski, Vice President
/s/
-----------------------------------
Joseph A. Nielsen, Secretary
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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, except for Footnote 9, Part C., as to which
the date is December 29, 1999
<PAGE>
TABLE TRAC, INC.
(A Development Stage Company)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
---------------------------- November 30, November 30,
1997 1998 1998 1999
------------ ------------ ------------ ------------
(Unaudited) (Unaudited)
ASSETS
------
<S> <C> <C> <C> <C>
Current assets:
Cash $ 78 $ 9,008 $ 67 $ 84,905
Accounts receivable:
Trade 5,672 5,173 3,430 4,131
Refundable payroll taxes 1,106 1,106 1,106 --
Prepaid expenses -- 180 -- 3,042
------------ ------------ ------------ ------------
Total current assets 6,856 15,467 4,603 92,078
------------ ------------ ------------ ------------
Furniture and equipment 22,225 22,731 22,507 22,731
Less accumulated depreciation 9,165 14,840 14,368 19,728
------------ ------------ ------------ ------------
Net fixed assets 13,060 7,891 8,139 3,003
------------ ------------ ------------ ------------
Other assets:
Accounts receivable -
stockholders 37,590 25,840 25,640 38,430
Inventory 31,760 30,045 32,534 40,827
Organization costs, net of
accumulated amortization of
$735 in 1998 and $530 in 1997 495 290 307 103
Patent, net of accumulated
amortization $-0- in 1998
and 1997 14,958 21,732 18,312 23,254
------------ ------------ ------------ ------------
Total other assets 84,803 77,907 76,793 102,614
------------ ------------ ------------ ------------
- ---------------------------------------------------------------------------------------------------
Total assets $ 104,719 $ 101,265 $ 89,535 $ 197,695
============ ============ ============ ============
- ---------------------------------------------------------------------------------------------------
</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,
----------------------------- November 30, November 30,
1997 1998 1998 1999
------------ ------------ ------------ ------------
(Unaudited) (Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
<S> <C> <C> <C> <C>
Current liabilities:
Accounts payable $ 1,356 $ 2,766 $ 696 $ 581
Accrued payroll and related 932 2,263 -- --
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 124,788 133,529 123,196 123,081
------------ ------------ ------------ ------------
Stockholders' equity (deficit):
Common stock, no par value;
authorized 5,000,000 shares,
issued: 2,859,862 in 1999
(unaudited), 2,580,999
in 1998 and 2,562,999
in 1997 341,404 359,404 341,404 575,957
Deficit accumulated during
the development stage (361,473) (391,668) (375,065) (501,343)
------------ ------------ ------------ ------------
Total stockholders'
equity (deficit) (20,069) (32,264) (33,661) 74,614
------------ ------------ ------------ ------------
- --------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity
(deficit) $ 104,719 $ 101,265 $ 89,535 $ 197,695
============ ============ ============ ============
- --------------------------------------------------------------------------------------------------------
</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 Eleven Eleven
(June 27, Month Month
Years Ended 1995) Period Period
December 31, To Ended Ended
----------------------------- December 31, Nov. 30, Nov. 30,
1997 1998 1998 1998 1999
------------ ------------ ------------ ------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Revenues:
License fees $ 7,000 $ 15,351 $ 72,351 $ 13,658 $ 20,184
Sales 53,187 -- 53,187 -- 35,777
Consulting fees 44,225 109,388 153,613 101,990 --
Reimbursed expenses 5,114 262 5,376 262 182
Interest income -- -- 948 -- 1,080
------------ ------------ ------------ ------------ ------------
Total revenues 109,526 125,001 285,475 115,910 57,223
Cost of goods sold 22,262 1,849 24,111 1,145 26,177
------------ ------------ ------------ ------------ ------------
Gross profit 87,264 123,152 261,364 114,765 31,046
------------ ------------ ------------ ------------ ------------
Expense:
Amortization 205 205 735 188 945
Automobile 3,180 1,829 10,570 1,523 2,929
Commissions 2,528 1,560 4,088 1,400 1,480
Computer 724 859 3,715 809 1,802
Depreciation 5,572 5,674 14,840 5,202 4,888
Insurance 718 730 1,884 669 --
Interest 53,115 -- 83,115 -- 100
Office 969 2,380 8,905 2,182 2,586
Payroll and related 102,145 107,889 266,138 95,335 35,919
Postage and delivery 267 338 1,772 335 1,039
Professional fees 61,300 17,965 187,196 9,575 25,590
Research and development 2,617 54 10,623 54 1,475
Sales and marketing -- 200 1,568 200 47,182
Telephone 8,397 8,086 26,216 6,934 12,826
Travel and entertainment 5,208 5,578 31,667 3,951 1,960
------------ ------------ ------------ ------------ ------------
Total expense 246,945 153,347 653,032 128,357 140,721
------------ ------------ ------------ ------------ ------------
Net income (loss) $ (159,681) $ (30,195) $ (391,668) $ (13,592) $ (109,675)
============ ============ ============ ============ ============
Basic earnings (loss)
per share $ (.06) $ (.01) $ (.01) $ (.01) $ (.04)
============ ============ ============ ============ ============
Weighted average number of
shares outstanding 2,520,382 2,563,689 2,363,084 2,562,999 2,736,434
============ ============ ============ ============ ============
</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 January 1999(unaudited) 6,000 6,000 -- -- 6,000
Shares issued in 1999 under Circular
504 offering, net of offering
expenses of $62,310 (unaudited) 272,863 210,553 -- -- 210,553
Net loss January 1, 1999 to November 30,
1999 (unaudited) -- -- -- (109,675) (109,675)
---------- ---------- ---------- ---------- ----------
Balance at November 30, 1999 (unaudited) 2,859,862 $ 575,957 $ -- $ (501,343) $ 74,614
========== ========== ========== ========== ==========
</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 Eleven Eleven
(June 27, Month Month
Years Ended 1995) Period Period
December 31, To Ended Ended
------------------------- December 31, Nov. 30, Nov. 30,
1997 1998 1998 1998 1999
---------- ---------- ------------ ---------- ----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (159,681) $ (30,195) $ (391,668) $ (13,592) $ (109,675)
Adjustments to reconcile net loss to
cash flows from operating activities:
Depreciation 5,572 5,674 14,840 5,202 4,888
Amortization 205 205 735 188 945
Stock issued for services 56,250 -- 57,275 -- --
Stock issued for interest 50,000 -- 55,000 -- --
Accounts receivable (12,968) 12,249 (32,119) 14,192 (10,442)
Prepaid insurance -- (180) (180) -- (2,862)
Inventory 17,448 1,715 (30,045) (774) (10,782)
Checks written in excess of cash in bank (6,250) -- -- -- --
Accounts payable (13,720) 1,410 2,766 (659) (2,185)
Accrued payroll and related 774 1,333 2,263 (932) (2,263)
---------- ---------- ---------- ---------- ----------
Net cash flows from operating activities (62,370) (7,789) (321,133) 3,625 (132,376)
---------- ---------- ---------- ---------- ----------
Cash flows from investing activities:
Purchases of furniture and equipment (10,926) (507) (22,691) (282) --
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) (3,636) (2,280)
---------- ---------- ---------- ---------- ----------
Cash flows from financing activities:
Proceeds from common stock 80,000 18,000 246,064 -- 216,553
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 -- 210,553
---------- ---------- ---------- ---------- ----------
Increase (decrease) in cash 11 8,930 9,008 (11) 75,897
Cash - beginning of period 67 78 -- 78 9,008
---------- ---------- ---------- ---------- ----------
Cash - end of period $ 78 $ 9,008 $ 9,008 $ 67 $ 84,905
========== ========== ========== ========== ==========
</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
NOVEMBER 30, 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 $4,888 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
NOVEMBER 30, 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.
In accordance with Statement of Financial Accounting Standards No. 121,
ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVES ASSETS AND FOR LONG-LIVES
ASSETS TO BE DISPOSED OF, the Company reviews its long-lives assets and
intangibles related to those assets periodically to determine potential
impairment by comparing the carrying value of the long-lives assets
outstanding with estimated future cash flows expected to result from
the use of the assets, including cash flows from disposition. Should
the sum of the expected future cash flows be less than the carrying
value, the Company would recognize an impairment loss. An impairment
loss would be measured by comparing the amount by which the carrying
value exceeds the fair value of the long-lived assets and intangibles.
To date, management has determined that no impairment of long-lived
assets exists.
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.
(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
NOVEMBER 30, 1999 (UNAUDITED)
1. Summary of Significant Accounting Policies and
Other Information (Continued)
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.
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.
(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
NOVEMBER 30, 1999 (UNAUDITED)
1. Summary of Significant Accounting Policies and
Other Information (Continued)
Concentrations, Risks and Uncertainties (Continued)
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.
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.
(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
NOVEMBER 30, 1999 (UNAUDITED)
1. Summary of Significant Accounting Policies and
Other Information (Continued)
Concentrations, Risks and Uncertainties (Continued)
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.
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
NOVEMBER 30, 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
NOVEMBER 30, 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 November 30, 1998 (unaudited) 2,562,999
=========
At November 30, 1999 (unaudited) 2,736,434
=========
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
NOVEMBER 30, 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 $62,310 (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
NOVEMBER 30, 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
NOVEMBER 30, 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
NOVEMBER 30, 1999 (UNAUDITED)
8. Supplemental Cash Flow Information
Cash paid during the year for:
November 30,
------------
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 November 30, 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
A. 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
NOVEMBER 30, 1999 (UNAUDITED)
9. Subsequent Events (Continued)
B. 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 $62,310 (unaudited) have been incurred with
respect to this offering.
C. 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. This agreement was
modified by an amendment dated December 29, 1999. The Company granted
an option to this employee to purchase 350,000 shares of its common
stock at $.15 per share, with exercise rights beginning December 29,
2000 and ending August 30, 2007. Employee shall have the right to
exercise the option immediately should the Company enter into a binding
letter of intent for the sale of all or substantially all of the
Company.
(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
NOVEMBER 30, 1999 (UNAUDITED)
9. Subsequent Events (Continued)
D. 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.
E. 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.
EXHBIT 3
<TO COME>
EXHIBIT 23
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 financial statements of Table Trac, Inc.
(a development stage company) as of December 31, 1998 and 1997, and for the
years then ended in the Form 10 filing. These financial statements were audited
by us as indicated in our report dated April 21, 1999.
/s/ Callahan, Johnston & Associates, LLC
CALLAHAN, JOHNSTON & ASSOCIATES, LLC
Minneapolis, Minnesota
January 13, 2000
