10QSB 1 tt2004q2.htm TABLE TRAC INC 2004 2ND QTR 10QSB

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549


Form 10-QSB

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2004

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________to _____________

Commission File Number 0-28383

Table Trac, Inc.
(Exact name of small business issuer as specified in its charter)

Nevada - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - 88-0336568
(State or other jurisdiction of Incorporation or organization) -- - -(IRS Employer Identification No.)

15612 Highway 7,
Suite 250 Minnetonka,
Minnesota 55345
(Address of principal executive offices)

(952) 548-8877
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes X No --

3,831,534 Shares Of Common Stock were outstanding as of June 30, 2004

Table Trac, Inc.

I N D E X
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of June 30, 2004 (unaudited)
and December 31, 2003 (audited)
Statements of Operations for the three months
and six months ended June 30, 2004 and 2003 (unaudited)

Statements of Cash Flows for the six
months ended June 30, 2004 and 2003 (unaudited)
Selected Notes to Financial Statements (unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES

Part I. FINANCIAL INFORMATION

Item I. FINANCIAL STATEMENTS

Table Trac, Inc.
Balance Sheet

        June 30, 2004 (unaudited)   December 31, 2003 (audited)
                           ASSETS            
Current Assets:            
  Cash   $ 18,813 $ 16,594
  Accounts receivable, net     20,818   5,034
  Prepaid expenses     2,400   2,400
  Inventory     415   1,195
             
    Total current assets   42,446   25,223
             
Other assets, net       17,056   17,738
             
             
    Total assets $ 59,502 $ 42,961
             
             
LIABILITIES AND STOCKHOLDERS' DEFICIT            
             
Current Liabilities:            
  Deferred revenue   $ - $ 88,583
  Demand notes payable          
  Accounts payable     5,652   3,868
  Accrued expenses:          
    Payroll and payroll taxes   1,089   3,843
    Other        
             
    Total current liabilities   6,741   96,294
             
    Total liabilities   6,741   96,294
             
Stockholders' Equity:            
  Common stock, no par or stated value; 5,000,000 shares authorized: 3,831,534 and 3,619,034 shares issued and outstanding at June 30,2004 and December 31,2003,respectively   1,302,302   1,302,302
  Accumulated deficit     (1,249,541)   (1,355,635)
             
Stockholders' equity       52,761   (53,333)
             
  Total liabilities and stockholders’ deficit   $ 59,502 $ 42,961

Table Trac, Inc.
Statements of Operations
(Unaudited)

        Three Months Ended
June 30      		   Six Months Ended
June 30      
      2004     2003   2004      2003
                         
Revenues     $ 48,283   $ 37,771 $ 322,540   $ 81,077
                         
Cost of Sales       5,989     0   24,735     853
                         
Gross Profit       42,294     37,771   297,805     80,224
                         
Expenses:                        
  Selling, general and administrative     109,891     43,484   191,343 -   86,280
                         
    Total operating expense   109,891     43,484   191,343     86,280
                         
    Operating loss   (67,597)     (5,713)   106,462     (6,056)
                         
Other income (expense)                        
  Interest Income         89   -   146
  Interest Expense     349     -   368     -
                         
Net loss     $ (67,946)   $ (5,624) $ 106,094   $ (5,910)
                         
Net loss per basic and diluted common share     $ (0.018)   $ (0.002) $ 0.028   $ (0.002)
                         
                       
Weighted average common shares     3,831,534     3,619,034   3,831,534     3,619,034

Table Trac, Inc.
Statements of Cash Flows
(Unaudited)

    Six Months Ended
June 30
     2004     2003
       
Cash flow from operating activities:          
Net gain (loss)   $ 106,094 $ (5,910)
Adjustments to reconcile net loss to net cash from operating activities:          
         
  Depreciation and amortization   682   683
Changes in operating assets and liabilities:          
  Accounts receivable   (15,784)   (2,673)
  Prepaid expenses   -   -
  Accounts payable   1,784   1,418
  Inventory   780   (4)
  Other assets   -   1000
  Deferred revenue   (88,583)   -
  Other   (2,754)   985
           
Net cash used by operating activities     2,219   (4,501)
           
Cash flow from financing activities:          
Proceeds from stock subscriptions     -   12,000
           
Net cash provided by financing activities     -   12,000
           
Increase in cash     2,219   7,499
Cash at beginning of period     16,594   5,720
           
Cash at end of period   $ 18,813 $ 13,219

Table Trac, Inc.
SELECTED NOTES TO FINANCIAL STATEMENTS
June 30, 2004

Note 1. Condensed Financial Statements:


The condensed balance sheet as of June 30, 2004, the statement of operations and cash flows for the periods ended June 30, 2004 and 2003 have been prepared by the Company, without audit. In the opinion of management, all adjustments (which include normal recurring adjustments and adjustments to revenues for compliance with the company's revenue recognition policy) necessary to present fairly the financial position, results of operations and changes in cash flows at June 30, 2004 and for all periods presented have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2003 audited financial statements filed on form 10-KSB. The results of operations for the period ended June 30, 2004 are not necessarily indicative of the operating results for the full year.

Note 2. Revenue Recognition:

The Company derives revenues from the sale of systems, license and maintenance and services.

System sales: Revenue from systems that have been demonstrated to meet customer specifications during installation is recognized when the product has been installed, title and risk of loss have transferred to the customer and collection of the resulting receivable is probable.

System sales are accounted for as multiple-element arrangements. In transactions that include multiple products and/or services, the Company allocates the revenue to each element based on their relative fair value (or in the absence of fair value, the residual method) and recognizes the associated revenue when all revenue recognition criteria have been met for each element.

License and maintenance revenue: Software and maintenance revenue are recognized ratably over the contract period.

Service revenue: Service revenue is recognized after the services are performed and collection of the resulting receivable is probable.

Note 3. Customer Concentration: Seven customers comprised 95% of the Company's revenues for the six months ended June 30, 2004.

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Business Overview:

Table Trac, Inc.'s patented real-time management system product automates and monitors the operations of casino table games (blackjack, craps, etc.) The Table Trac(TM) system (patent number 5,957,776) is available for an installation and monthly license fee from the Company. The system is operating in 7 Midwest casinos. The Company's primary mission is to provide a high level of support for its customers systems in the field. Continued efforts to expand the Company's sales through marketing are ongoing. Development to expand the products offered, and expand the functionality of existing products have been ongoing. Management continues its belief that revenues from the development efforts on new product offerings will be realized before the end of 2004.

Results of Operations:

Revenues for the three months ended June 30 increased to $48,283 in 2004 from $37,771 in 2003. License and maintenance fees on the new systems installed in the first quarter accounted for the increase in revenues. Cost of sales for the three months ended June 30 increased in 2004 to $5,989 from $0 in 2003 as a result of increased software license costs to maintain existing systems in 2004. This cost to maintain existing systems is not a normal quarterly expense and should not be incurred again for several years. Operating expenses for the three months ended June 30 increased in 2004, to $109,891 from $43,484. The major changes were increased payroll, employee benefit and sales expenses in 2004 compared to 2003. The result was that there was a net loss of $67,946 for the three months ended June 30, 2004 compared to a net loss of $5,624, for the three months ended Jun 30, 2003. The net loss per share was $0.018 for the three months ended June 30, 2004, compared to a net loss per share of $0.0002 for the three months ended June 30, 2003.

Revenues for the six months ended June 30 increased to $322,540 in 2004 from $81,077 in 2003. Four system installations accounted for the majority of the increase along with increased license and maintenance fees. The most significant portion, $209,931 was from the addition of two new casino customers and systems sales with existing customers purching upgrades of Table Trac's latest product. Cost of sales for the six months ended June 30 increased in 2004 to $24,735 from $853 in 2003 as a result of systems sales and increased software license costs to maintain existing systems in 2004. Operating expenses in the six months ended June 30 increased in 2004, to $191,343 from $86,280. The major changes were increased payroll, employee benefit and sales expenses in 2004 compared to 2003. The result was net income of $106,094 for the six months ended June 30, 2004 compared to a net loss of ($5,910) for the six months ended June 30, 2003. The net income per share was $0.028 for the first six months ended June 30, 2004, compared to a net loss per share of $0.0002 for the six months ended June 30, 2003.

Liquidity and Capital Resources:

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 both the short term and the long term will be sales. Management has been able to manage its expenses and cash flows for the swings in cash flows the Company has experienced so that monthly obligations are met by revenues from existing contracts. Management believes that the Company has adequate cash to meet its obligations and continue operations for both existing customer contracts and ongoing product development.

Safe Harbor:

The Private Securities Litigation Reform Act of 1995 provides "safe harbor" for forward-looking statements. Certain information included in this Form 10-QSB and other materials filed or to be filed by the Company with the Securities and Exchange Commission (as well as information included in oral statements or other written statements made or to be made by the Company) contain statements that are forward-looking, such as statements relating to plans for sales and marketing, liquidity, and other business activities and developments. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made by or on behalf of the Company. These risks and uncertainties include, but are not limited to, dependence on a limited number of customers, general economic conditions, or changes in federal or state laws or regulations.

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

None.

ITEM 3. CONTROLS AND PROCEDURES

The President and Chief Executive Officer and of the Company have concluded based on their evaluation as of the period covered by this Report, that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports filed or submitted by it under the Securities Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company's management, including the president, as appropriate to allow timely decisions regarding required disclosure.

There were no significant changes in the Company's internal controls or, to our knowledge, in other factors that could significantly affect these internal controls subsequent to the date of such evaluation.

ITEM 6. Exhibits and Reports on Form 8-K

None.

SIGNATURE

In accordance with the requirements of the Exchange Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Table Trac, Inc.
Date August 11, 2004
By: /s/ Chad Hoehne
President CEO

CERTIFICATIONS

I, Chad Hoehne, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Table Trac, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6. I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: August 11, 2004
Signed: /s/Chad Hoehne
Name Chad Hoehne
Title: Chief Executive Officer and principal financial officer

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Chad Hoehne, the Chief Executive Officer and principal financial officer of Table Trac, Inc. (the "Company") in compliance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify that, the Company's Quarterly Report on Form 10-QSB for the period ended June 30, 2004 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 11, 2004
Signed: /s/Chad Hoehne
Name Chad Hoehne
Title: Chief Executive Officer and principal financial officer