-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BvyCMYTSzaHFfOzFx4GfJhK6Wvq/ej9JrzIIgeywM7Z1bALFYQJm09sBmv9o8cUf D8rVkQ3wsigqJSs0Km6pLw== 0000897101-00-000029.txt : 20000202 0000897101-00-000029.hdr.sgml : 20000202 ACCESSION NUMBER: 0000897101-00-000029 CONFORMED SUBMISSION TYPE: 10SB12G PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20000113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TABLE TRAC INC CENTRAL INDEX KEY: 0001090396 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10SB12G SEC ACT: SEC FILE NUMBER: 000-28383 FILM NUMBER: 506788 BUSINESS ADDRESS: STREET 1: 4200 KEMRICH CITY: MINNETONKA STATE: MN ZIP: 55345 BUSINESS PHONE: 6129391155 10SB12G 1 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) 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 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 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 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. 5 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 6 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 7 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. 8 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 9 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 10 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 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 12 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 13 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 TABLE TRAC, INC. (A Development Stage Company) BALANCE SHEETS
December 31, ---------------------------- November 30, November 30, 1997 1998 1998 1999 ------------ ------------ ------------ ------------ (Unaudited) (Unaudited) ASSETS ------ 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 ============ ============ ============ ============ - ---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. TABLE TRAC, INC. (A Development Stage Company) BALANCE SHEETS
December 31, ----------------------------- November 30, November 30, 1997 1998 1998 1999 ------------ ------------ ------------ ------------ (Unaudited) (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) ---------------------------------------------- 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 ============ ============ ============ ============ - --------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements. TABLE TRAC, INC. (A Development Stage Company) STATEMENTS OF OPERATIONS
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) 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 ============ ============ ============ ============ ============
The accompanying notes are an integral part of these financial statements. TABLE TRAC, INC. (A Development Stage Company) STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock Deficit -------------------------- During Number of Subscriptions Development Shares Amount Receivable Stage Total ---------- ---------- ------------- ----------- ---------- 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 ========== ========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements. TABLE TRAC, INC. (A Development Stage Company) STATEMENTS OF CASH FLOWS Increase (Decrease) in Cash
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) 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 ========== ========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements. 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) 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) 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) 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) 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) 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) 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) 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) 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) 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) 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) 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) 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. EX-3 2 ARTICLES OF INCORPORATION AND BYLAWS EXHBIT 3 EX-23 3 CONSENT OF INDEPENDENT AUDITORS 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 -----END PRIVACY-ENHANCED MESSAGE-----