10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

x   Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2017 or

¨   Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number:   000-32987

Table Trac, Inc.

(Exact Name of Registrant as Specified in its Charter)

Nevada	88-0336568
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

6101 Baker Road, Suite 206, Minnetonka, Minnesota 55345

(Address of Principal Executive Offices) (Zip Code)

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

N/A

(Former name, former address and former fiscal year, if changed since last report)

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 ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company, in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨ (Do not check if a smaller reporting company)	Smaller reporting company x
	Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ¨  No x

As of May 12, 2017, the registrant had outstanding 4,511,965 shares of common stock, $.001 par value per share.

Table Trac, Inc.

Index

	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 4. Controls and Procedures	13
PART II. OTHER INFORMATION
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds	14
Item 6. Exhibits	14
SIGNATURES	15

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

TABLE TRAC, INC.

CONTENTS

	Page
CONDENSED FINANCIAL STATEMENTS
Condensed Balance Sheets	4
Condensed Statements of Operations	5
Condensed Statements of Cash Flows	6
Notes to Condensed Financial Statements	7

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TABLE TRAC, INC.

CONDENSED BALANCE SHEETS

	March 31, 2017			December 31, 2016
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash	$	215,342		$	102,689
Accounts receivable, net of allowance for doubtful accounts of $200,266 at March 31, 2017 and December 31, 2016		2,709,261			2,807,323
Inventory		1,132,576			843,233
Prepaid expenses and other current assets		173,417			151,145
Income taxes receivable		25,340			175,856
TOTAL CURRENT ASSETS		4,255,936			4,080,246
LONG-TERM ASSETS
Patent, net		0			273
Property and equipment, net		28,271			33,426
Other long-term assets		1,032,748			1,291,519
Deferred tax asset		0			154,000
Long-term accounts receivable – financed contracts		1,172,385			1,421,330
TOTAL LONG-TERM ASSETS		2,233,404			2,900,548
TOTAL ASSETS	$	6,489,340		$	6,980,794
LIABILITIES AND  STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	381,724		$	473,336
Payroll liabilities		58,959			27,800
Current portion of note payable		7,096			7,096
Deferred revenue - short-term		41,810			30,960
Deferred tax liability		0			914,000
TOTAL CURRENT LIABILITIES		489,589			1,453,192
LONG-TERM LIABILITIES
Note payable, net of current portion		17,002			18,096
Deferred revenue - long-term		2,649,696			2,745,081
Deferred tax liability		693,000			0
TOTAL LIABILITIES		3,849,287			4,216,369
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value; 25,000,000 shares authorized:  4,656,734 shares issued, and 4,511,965 shares outstanding at March 31, 2017 and December 31, 2016		4,512			4,512
Additional paid-in capital		1,809,511			1,809,511
Retained earnings		972,390			1,096,762
		2,786,413			2,910,785
Treasury stock, 144,769 shares (at cost) at March 31, 2017 and December 31, 2016, respectively		(146,360	)		(146,360	)
TOTAL STOCKHOLDERS’ EQUITY		2,640,053			2,764,425
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	6,489,340		$	6,980,794

See notes to condensed unaudited financial statements.

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TABLE TRAC, INC.

CONDENSED STATEMENTS OF OPERATIONS (Unaudited)

	Three Months Ended March 31,
	2017			2016
Revenues	$	1,100,632		$	939,371
Cost of sales		321,066			99,586
Gross profit		779,566			839,785
Operating expenses:
Selling, general and administrative		1,000,140			1,051,495
Loss from operations		(220,574	)		(211,710	)
Loss on currency exchange		(3,138	)		(13,694	)
Interest income		33,340			19,550
Loss before taxes		(190,372	)		(205,854	)
Income tax benefit		(66,000	)		(69,000	)
Net loss	$	(124,372	)	$	(136,854	)
Net loss per share - basic and diluted	$	(0.03	)	$	(0.03	)
Weighted-average shares outstanding - basic and diluted		4,511,965			4,525,710

See notes to condensed unaudited financial statements.

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TABLE TRAC, INC.

CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)

	For the Three Months Ended March 31,
	2017			2016
OPERATING ACTIVITIES
Net loss	$	(124,372	)	$	(136,854	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		5,428			5,618
Deferred income taxes		(67,000	)		(69,000	)
Stock issued for services		0			6,375
Changes in operating assets and liabilities:
Accounts receivable		347,007			(108,423	)
Inventory		(289,343	)		(137,136	)
Prepaid expenses and other assets		236,499			(254,944	)
Accounts payable and accrued expenses		(91,612	)		66,712
Payroll liabilities		31,159			14,831
Deferred revenue		(84,535	)		696,868
Income taxes receivable		150,516			-
Net cash provided by operating activities		113,747			84,047
FINANCING ACTIVITIES
Payments on note payable		(1,094	)		(2,030	)
Repurchase of common stock		0			(9,200	)
Net cash used in financing activities		(1,094	)		(11,230	)
NET INCREASE IN CASH		112,653			72,817
CASH
Beginning of period		102,689			289,105
End of Period	$	215,342		$	361,922

See notes to condensed unaudited financial statements.

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TABLE TRAC, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

1.  Nature of Business and Summary of Significant Accounting Policies –

Basis of Presentation

The accompanying unaudited condensed financial statements of Table Trac, Inc. (the “Company,” or “Table Trac”) have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. The balance sheet as of March 31, 2017 and the statements of operations for the three months ended March 31, 2017 and 2016, and the statement of cash flows for the three months ending March 31, 2017 and 2016 are unaudited but include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial position at such date and the operating results and cash flows for those periods. Certain information normally included in financial statements and related footnotes prepared in accordance with generally accepted accounting principles has been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The accompanying financial statements should be read in conjunction with the financial statements and notes included in the Table Trac Annual Report on Form 10-K for the year ended December 31, 2016.

Nature of Business

Table Trac was formed under the laws of the State of Nevada in June 1995. The Company has its offices in Minnetonka, Minnesota. The Company has developed and sells an information and management system that automates and monitors various aspects of the operations of casinos.

Table Trac provides system sales and technical support to casinos. System sales include installation, custom casino system configuration, and training. In addition, license and technical support are provided under separate license and service contracts.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The Company uses estimates and assumptions in accounting for the following significant matters, among others: revenue recognition, realizability of accounts receivable, the valuation of deferred tax assets and liabilities, and deferred revenue and costs, and the valuation of inventory. Actual results could differ from those estimates.

Revenue Recognition

The Company derives revenues from the sales of systems, licenses and maintenance fees, and services, and rental agreements.

System Sales

Revenue from systems that have been demonstrated to meet customer specifications during installation is recognized when evidence of an arrangement exists, the product has been delivered, title and risk of loss have transferred to the customer and collection of the resulting receivable is reasonably assured. System sales, which are accounted for as multiple-element arrangements, include multiple products and/or services. For multiple-element arrangements, the Company allocates the revenue to each element based on the hierarchy of estimated selling price for the deliverables. The selling price for each deliverable will be based on vendor specific objective evidence (VSOE), Third Party Evidence (“TPE”) if VSOE is not available, or estimated selling price if neither VSOE nor TPE is available. The Company recognizes the associated revenue when all revenue recognition criteria have been met for each element. If there are contracts for which the Company does not have VSOE or TPE of all elements, the Company would follow the selling price hierarchy to allocate arrangement consideration.

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The Company does offer its customers contracts with extended payment terms.  The Company must evaluate if any extended payment terms in the contract is an indicator of the revenue not being fixed or determinable.  Provided all other revenue recognition criteria have been satisfied, the Company recognizes the revenue if payment of a significant portion of the systems sales is due within 12 months of the delivery of the product.  The Company also analyzes its standard business practice of using long-term contracts and the history of collecting on extended payment term contracts without making concessions for determining if revenue should be recognized.  Revenue and associated costs of sales are deferred if contract terms exceed historical collection results or if a substantial portion of the contract is not due within 12 months after delivery of the product.  The Company analyzes each contract for proper revenue recognition based on that contract’s facts and circumstances.  Interest is recorded upon receipt to “interest income” on the statements of operations. 

Maintenance revenue

Maintenance revenue is recognized ratably over the contract period. The VSOE for maintenance is based upon the renewal rate for contracted services.

Service revenue

Service revenue is recognized after the services are performed and collection of the resulting receivable is reasonably assured. The VSOE for service revenue is established based upon actual selling prices for the services or prior similar arrangements.

Rental revenue

The Company may offer customers a rental contract.  Revenues are billed monthly on a per-game per-day basis. There is an option to purchase the system after the rental contract expires at a pre-determined residual value.

Deferred System Sales Costs

Deferred system sales costs consist of installed system costs incurred on participation-based contracts. These costs are recognized on a straight-line basis over the term of the contract which is generally 18-48 months beginning when revenues are generated. At the end of the contract period, the customer will usually receive title to the system. These costs are the most significant component of other long-term assets on the balance sheet, and are $1,032,748 and $1,291,519 as of March 31, 2017 and December 31, 2016, respectively.

Accounts Receivable / Allowance for Doubtful Accounts

Accounts receivable are initially recorded at the invoiced amount and carried on the balance sheet at net realizable value, which includes foreign currency translation as of each balance sheet date. Accounts receivable include unsecured regular customer receivables and unsecured amounts from financed contracts coming due within 12 months. Amounts from financed contracts due beyond 12 months are recorded as "Long-term accounts receivable – financed contracts."  Interest is recorded upon receipt to other income on the statements of operations. An allowance for doubtful accounts is recorded when the Company believes the amounts may not be collected. Management believes that receivables, net of the allowance for doubtful accounts, are fully collectible. Accounts receivable are written off when management determines collection is no longer likely. While the ultimate result may differ, management believes that any write-off not allowed for will not have a material impact on the Company's financial position.

Major Customers

The following tables summarize major customer information for the three months ended March 31, 2017 and 2016:

	For the Three Months Ended March 31
	2017						2016
	% Revenues			% AR			% Revenues			% AR
A		9.9	%		7.5	%		10.1	%		9.8	%
B		14.8	%		18.4	%		17.8	%		30.1	%
C		3.3	%		10.2	%		3.6	%		9.8	%
All Others		72.0	%		63.9	%		68.5	%		50.3	%
Total		100.0	%		100.0	%		100.0	%		100.0	%

The Company does derive a portion of its revenue from foreign customers. For the three month periods ending March 31, 2017 and 2016, sales to customers in South America represent 10.1% and 16.8% of total revenues, respectively.

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Inventory

Inventory, consisting of finished goods, is stated at the lower of cost or market. The average cost method, which approximates the first in, first out method, is used to value inventory. Inventory is reviewed annually for the lower of cost or net realizable value and obsolescence. Any material cost found to be above net realizable value or considered obsolete is written down accordingly. The inventory value as of March 31, 2017 was $1,132,576, which included work-in-process of $361,745. The Company had no obsolescence reserve at March 31, 2017 or December 31, 2016.

Research and Development

The Company expenses all costs related to research and development as incurred. Research and development expense was $7,733 and $3,865 for the three months ended March 31, 2017 and 2016, respectively. Research and development expenses are included in selling, general and administrative expenses on the statements of operations.

Recently Adopted Accounting Pronouncements

In July 2015, FASB issued ASU No. 2015-11, which amended Inventory (Topic 330) Related to Simplifying the Measurement of Inventory of the Accounting Standards Codification. The amended guidance applies to all inventory except that which is measured using last-in, first-out (LIFO) or the retail inventory method. Inventory measured using first-in, first-out (FIFO) or average cost is included in the new amendments. Inventory within the scope of the new guidance should be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. The Company adopted the guidance on January 1, 2017 and it did not have a material impact on its financial statements.

In November 2015, the FASB issued ASU No. 2015-17, Income Taxes: Balance Sheet Classification of Deferred Taxes, which simplifies the presentation of deferred taxes by requiring deferred tax assets and liabilities be classified as noncurrent on the balance sheet. As a result of our prospective adoption of this guidance on January 1, 2017, all deferred tax assets and liabilities have been classified as noncurrent on our condensed balance sheet at March 31, 2017, while our balance sheet at December 31, 2016 reflects classifications of deferred tax assets and liabilities in accordance with previous GAAP. The adoption of this guidance had no impact on our results of operations or cash flows.

2.  Accounts Receivable –

Accounts receivable consisted of the following at:

	March 31, 2017			December 31, 2016
Accounts receivable under normal 30 day terms	$	889,998		$	979,564
Financed contracts:
Current portion of long-term		2,019,529			2,028,025
Long-term, net of current portion		1,172,385			1,421,330
Total accounts receivable		4,081,912			4,428,919
Less allowance for doubtful accounts		(200,266	)		(200,266	)
Accounts receivable, net	$	3,881,646		$	4,228,653
Presented on the balance sheet as:
Accounts receivable, net	$	2,709,261		$	2,807,323
Long-term accounts receivable - financed contracts		1,172,385			1,421,330

The allowance for financed and trade receivable represents management’s estimate of probable losses in our trade and financed receivables as of the date of the financial statements. The allowance provides for probable losses that have been identified with specific customer relationships and for probable losses believed to be inherent of the trade and financed receivables, but that have not been specifically identified.

Accounts receivable includes financed contracts at March 31, 2017 and December 31, 2016 which are $3,191,914 and $3,449,355, respectively, with an offset accounting for deferred revenues on the balance sheets of $2,649,696 and $2,745,081, respectively.

A roll-forward of the Company’s allowance for doubtful accounts is as follows:

	March 31, 2017		December 31, 2016
Accounts receivable allowance, beginning of year	$	200,266	$	185,397
Provision adjustment		0		14,869
Write-off		0		0
Accounts receivable allowance, end of period	$	200,266	$	200,266

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The allowance for doubtful accounts is $200,266 for the trade receivables and $0 for the financed contracts at both March 31, 2017 and December 31, 2016.

3.  Income Tax –

The Company accounts for income taxes by following the asset and liability approach to accounting for income taxes. Deferred tax assets and liabilities represent the future tax consequences of the differences between the financial statement carrying amounts of assets and liabilities versus the tax basis of assets and liabilities. Under this method, deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards. Deferred tax liabilities are recognized for taxable temporary differences. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The impact of the tax rate changes on deferred tax assets and liabilities is recognized in the year that the change is enacted. Management believes that any write-off not allowed for will not have a material impact on the Company's financial position.

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. Based on its evaluation, the Company believes that it has no significant unrecognized tax positions. The Company’s evaluation was performed for the tax years ended December 31, 2013 through 2016, which are the tax years that remain subject to examination by major tax jurisdictions as of March 31, 2017. The Company does not believe there will be any material changes in its unrecognized tax positions over the next 12 months.

The Company may from time to time be assessed interest or penalties by major tax jurisdictions, although any such assessments historically have been minimal and immaterial to its financial results. In accordance with current guidance, the Company classifies interest and penalties as income tax expense is incurred.

4.  Earnings (Loss) Per Share –

The Company computes earnings (loss) per share under two different methods, basic and diluted, and presents per-share data for all periods in which statements of operations are presented. Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock and common stock equivalents outstanding.

The following table provides a reconciliation of the numerators and denominators used in calculating basic and diluted loss per share for the three months ended March 31, 2017 and 2016:

	For the Three Months Ended March 31,
	2017			2016
Basic and diluted earnings per share calculation:
Net loss to common stockholders	$	(124,372	)	$	(136,854	)
Weighted average number of common shares outstanding		4,511,965			4,525,710
Basic and diluted net loss per share	$	(0.03	)	$	(0.03	)

5. Foreign Currency Exchange Rate Risk

The Company is exposed to foreign currency risks that arise from some of its foreign customers in Colombia, transacted in Colombia pesos. In addition, exchange rate fluctuations may cause our international results to fluctuate when translated into U.S. dollars. These risks may change over time as business practices evolve and could have an impact on the Company’s financial results in the future due to the long term nature of the Company’s accounts receivable in Colombia, which totaled approximately $291,000 and $384,000 at March 31, 2017 and December 31, 2016, respectively. The Company monitors its risk associated with the volatility of certain foreign currencies against the U.S. dollar.

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6. Commitment and Contingencies

The Company has an agreement with a contractor to design and execute on a sales and marketing strategy for the Company in key Latin American and Caribbean gaming jurisdictions. The agreement currently expires December 31, 2017, unless terminated earlier in accordance with the terms of the agreement. The remaining commitment as of March 31, 2017 is approximately $56,000.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations set forth below should be read in conjunction with our audited financial statements, and notes thereto, contained in our Form 10-K filed with the SEC on March 29, 2017 relating to our year ended December 31, 2016.

Forward-Looking Statements

Some of the statements made in this section of our report are forward-looking statements. These forward-looking statements generally relate to and are based upon our current plans, expectations, assumptions and projections about future events.  Our management currently believes that the various plans, expectations, and assumptions reflected in or suggested by these forward-looking statements are reasonable.  Nevertheless, all forward-looking statements involve risks and uncertainties and our actual actions or future results may be materially different from our plans, objectives or expectations, or our assumptions and projections underlying our present plans, objectives and expectations, which are expressed in this report.

In light of the foregoing, prospective investors are cautioned that the forward-looking statements included in this filing may ultimately prove to be inaccurate - even materially inaccurate.  Because of the significant uncertainties inherent in such forward-looking statements, the inclusion of such information should not be regarded as a representation or warranty by Table Trac or any other person that our objectives, plans, expectations or projections that are contained in this filing will be achieved in any specified time frame, if ever.

General Overview

Table Trac, Inc. is a Nevada corporation, formed on June 27, 1995, with principal offices in Minnetonka, Minnesota.

The Company has developed and patented (U.S. patent # 5,957,776) a proprietary information and management system (called our “Table Trac” system) that automates and monitors the operations of casino table game operations. In addition to its table games management system, Table Trac has been adding functionality to related casino system modules for guest rewards and loyalty club, marketing analysis, guest service, promotions, administration / management, vault / cage management and audit / accounting tasks. Aggregated together, all of these modules have become the “Casino Trac” product, a full-featured Casino Management System (CMS) offering what we believe to be a powerful combination of value, efficiency and reliability for casinos seeking to add or upgrade their casino systems.

The Company sells systems and technical support to casinos. The open architecture of the Table Trac system is designed to provide operators with a scalable and flexible system that can interconnect and operate with most third-party software or hardware. Key products and services include modules designed to drive player tracking programs and kiosk promotions, as well as vault and cage controls. The Company’s systems are designed to meet strict auditing, accounting and regulatory requirements applicable to the gaming industry. The Company has developed a patented, real-time system that automates and monitors the operations of casino gaming tables. The Company continues to increase its market share by expanding its product offerings to include new system features, and ancillary products.

During the first quarter of 2017, the Company delivered one casino management system, and was in the process of delivering five additional systems to new customers. At the end of the quarter, the Company had casino management systems, table games management systems and ancillary products installed with on-going support and maintenance contracts at 78 casinos worldwide.

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Discussion of Critical Accounting Policies

During the quarter, the Company adopted the guidance for Simplifying the Measurement of Inventory, and balance sheet classification of deferred taxes of the Accounting Standards Codification as detailed in Note 1 above.

Results of Operations - Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016

During the three months ended March 31, 2017, loss from operations was $220,754 compared to loss from operations of $211,710 for the three months ended March 31, 2016. The major components of revenues, cost of sales and selling, general and administrative expenses, and the reasons for changes in each, are discussed below.

Revenues

Revenues totaled $1,100,632 for the three months ended March 31, 2017 compared to $939,371 for the three months ended March 31, 2016.  The following table summarizes our revenues for the three months ended March 31, 2017 and 2016, respectively:

	Three Months Ended March 31,
	2017		2016		2017			2016
					(percent of revenues)
System sales	$	535,199	$	463,605		48.6	%		49.4	%
License and maintenance fees		545,620		463,653		49.6	%		49.4	%
Other sales		19,813		12,113		1.8	%		1.2	%
Total revenues	$	1,100,632	$	939,371		100.0	%		100.0	%

During the three months ended March 31, 2017, the Company delivered one system. During the same period in 2016, the Company delivered three systems, of which the revenues were deferred to future periods.

Cost of Sales

Cost of sales for the three months ended March 31, 2017 increased to $321,066 from $99,586 for the three months ended March 31, 2016.  The following table summarizes our cost of sales for the three months ended March 31, 2017 and 2016, respectively:

	Three Months Ended March 31,
	2017		2016		2017			2016
					(percent of revenues)
System sales	$	283,799	$	71,823		25.8	%		7.6	%
License and maintenance fees		26,761		25,886		2.4	%		2.8	%
Other sales		10,506		1,877		1.0	%		0.2	%
Total cost of sales	$	321,066	$	99,586		29.2	%		10.6	%
Gross profit	$	779,566	$	839,785		70.8	%		89.4	%

The Company's gross profit was 70.8% and 89.4% for the three months ended March 31, 2017 and 2016, respectively. This decrease is primarily due to the low mix of hardware sold with the systems during the three months ended March 31, 2016.

Selling, General and Administrative Expenses

For the three months ended March 31, 2017, selling, general and administrative expenses were $1,000,140 which is comparable to $1,051,495 for the same period in 2016.  

Interest Income

For the three months ended March 31, 2017, interest income was $33,340 compared to $19,550 for the same period in 2016.  This increase is primarily related to more signed contracts that have financed payment plans in the current period.

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Tax Provision

The income tax benefit for the three months ended March 31, 2017 was $66,000, which was calculated at a 34.7% effective rate, compared to an income tax benefit of $69,000 for the same period in 2016, which was calculated at a 33.5% effective rate.

Net Income (Loss)

Loss before taxes for the three months ended March 31, 2017, was $190,372 compared to loss before taxes of $205,854 for the same period in 2016. Net loss for the three months ended March 31, 2017 was $124,372 compared to net loss of $136,854 for the same period in 2016. The basic loss per share was $0.03 compared to loss per share of $0.03 for the three months ended March 31, 2017 and 2016, respectively. There were no outstanding options or commons stock equivalents for the three months ended March 31, 2017 and 2016, respectively.

Backlog

The Company’s backlog generally consists of incomplete system installations and expansion of offerings for currently installed and supported systems.

The Company had five projects in its backlog at March 31, 2017, which includes three projects that were in the process of a field trial.

The Company is currently serving gaming establishments in twelve U.S. states, as well as countries in Central and South America, and the Caribbean. The Company aims to pursue further opportunities and strategic partnerships.

Liquidity and Capital Resources

The increase in cash flows for the three months ended March 31, 2017, compared with the same period in 2016 is related primarily to collection of income tax receivable, offset by changes in other working capital items, primarily work-in-process.

We do not know of any trends, events or uncertainties that are likely to have a material impact on our short or long-term liquidity or our capital resources. We expect that our primary source of liquidity in both the short and long-term will be system sales and the resulting license and maintenance fees generated from existing systems. We anticipate we will be able to manage expenses and cash flow in order to satisfy our monthly expense obligations with cash flow from operations. We believe the Company has adequate cash for at least the next 12 months to meet its obligations and continue operations for both existing and future customers as well as ongoing sales efforts and product development.

Off-Balance Sheet Arrangements

The Company had no off-balance sheet arrangements as of March 31, 2017.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in our reports filed pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

As of March 31, 2017, our Chief Executive Officer / Chief Financial Officer carried out an evaluation of the effectiveness of our disclosure controls and procedures as such term is defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934. Based on that evaluation, our Chief Executive Officer / Chief Financial Officer concluded our disclosure controls and procedures were effective as of March 31, 2017.

- 13 -

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during our first quarter of our 2017 fiscal year that have materially affected, or are likely to materially affect, our internal control over financial reporting

PART II. OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Company Repurchases of Registered Common Stock

None

Item 6. Exhibits

Exhibit	Description
3.1	Articles of Incorporation, filed with the Nevada Secretary of State on June 2, 1995 (incorporated by reference to Exhibit 3 to the registrant’s registration statement on Form 10SB-12G filed on December 6, 1999).
3.2	Amendment to Articles of Incorporation, filed with the Nevada Secretary of State on January 26, 2012 (incorporated by reference to Exhibit 3.2 to the registrant’s annual report on Form 10-K filed on March 31, 2011).
3.3	Amended and Restated Bylaws (incorporated by reference to Exhibit 3.3 to the registrant’s annual report on Form 10-K filed on March 31, 2011).
31	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32	Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith ).
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

- 14 -

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: May 12, 2017

Table Trac, Inc.
(Registrant)
By:	/s/ Brian Hinchley
	Brian Hinchley (Principal Executive Officer and Principal Financial and Accounting Officer)

- 15 -

EX-31

EXHIBIT 31

SECTION 302 CERTIFICATION

I, Brian Hinchley, certify that:

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

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 12, 2017	/s/ Brian Hinchley
	Brian Hinchley
	Chief Executive and Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Table Trac, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brian Hinchley, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1 The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Brian Hinchley

Brian Hinchley

Chief Executive and Chief Financial Officer

May 12, 2017

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2017	May 12, 2017
Document Information [Line Items]
Entity Registrant Name	TABLE TRAC INC
Entity Central Index Key	0001090396
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	TBTC
Entity Common Stock, Shares Outstanding		4,511,965

XML

CONDENSED BALANCE SHEETS - USD ($)	Mar. 31, 2017	Dec. 31, 2016
CURRENT ASSETS
Cash	$ 215,342	$ 102,689
Accounts receivable, net of allowance for doubtful accounts of $200,266 at March 31, 2017 and December 31, 2016	2,709,261	2,807,323
Inventory	1,132,576	843,233
Prepaid expenses and other current assets	173,417	151,145
Income taxes receivable	25,340	175,856
TOTAL CURRENT ASSETS	4,255,936	4,080,246
LONG-TERM ASSETS
Patent, net	0	273
Property and equipment, net	28,271	33,426
Other long-term assets	1,032,748	1,291,519
Deferred tax asset	0	154,000
Long-term accounts receivable - financed contracts	1,172,385	1,421,330
TOTAL LONG-TERM ASSETS	2,233,404	2,900,548
TOTAL ASSETS	6,489,340	6,980,794
CURRENT LIABILITIES
Accounts payable and accrued expenses	381,724	473,336
Payroll liabilities	58,959	27,800
Current portion of note payable	7,096	7,096
Deferred revenue - short-term	41,810	30,960
Deferred tax liability	0	914,000
TOTAL CURRENT LIABILITIES	489,589	1,453,192
LONG-TERM LIABILITIES
Note payable, net of current portion	17,002	18,096
Deferred revenue - long-term	2,649,696	2,745,081
Deferred tax liability	693,000	0
TOTAL LIABILITIES	3,849,287	4,216,369
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value; 25,000,000 shares authorized: 4,656,734 shares issued, and 4,511,965 shares outstanding at March 31, 2017 and December 31, 2016	4,512	4,512
Additional paid-in capital	1,809,511	1,809,511
Retained earnings	972,390	1,096,762
Stockholders' Equity before Treasury Stock	2,786,413	2,910,785
Treasury stock, 144,769 shares (at cost) at March 31, 2017 and December 31, 2016, respectively	(146,360)	(146,360)
TOTAL STOCKHOLDERS’ EQUITY	2,640,053	2,764,425
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 6,489,340	$ 6,980,794

XML

CONDENSED BALANCE SHEETS (Parenthetical) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Allowance for doubtful accounts (in dollars)	$ 200,266	$ 200,266
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	25,000,000	25,000,000
Common stock, shares issued	4,656,734	4,656,734
Common stock, shares outstanding	4,511,965	4,511,965
Treasury stock, shares	144,769	144,769

XML

CONDENSED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Revenues	$ 1,100,632	$ 939,371
Cost of sales	321,066	99,586
Gross profit	779,566	839,785
Operating expenses:
Selling, general and administrative	1,000,140	1,051,495
Loss from operations	(220,574)	(211,710)
Loss on currency exchange	(3,138)	(13,694)
Interest income	33,340	19,550
Loss before taxes	(190,372)	(205,854)
Income tax benefit	(66,000)	(69,000)
Net loss	$ (124,372)	$ (136,854)
Net loss per share - basic and diluted (in dollar per share)	$ (0.03)	$ (0.03)
Weighted-average shares outstanding - basic and diluted (in shares)	4,511,965	4,525,710

XML

CONDENSED STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
OPERATING ACTIVITIES
Net loss	$ (124,372)	$ (136,854)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	5,428	5,618
Deferred income taxes	(67,000)	(69,000)
Stock issued for services	0	6,375
Changes in operating assets and liabilities:
Accounts receivable	347,007	(108,423)
Inventory	(289,343)	(137,136)
Prepaid expenses and other assets	236,499	(254,944)
Accounts payable and accrued expenses	(91,612)	66,712
Payroll liabilities	31,159	14,831
Deferred revenue	(84,535)	696,868
Income taxes receivable	150,516	0
Net cash provided by operating activities	113,747	84,047
FINANCING ACTIVITIES
Payments on note payable	(1,094)	(2,030)
Repurchase of common stock	0	(9,200)
Net cash used in financing activities	(1,094)	(11,230)
NET INCREASE IN CASH	112,653	72,817
CASH
Beginning of period	102,689	289,105
End of Period	$ 215,342	$ 361,922

XML

Nature of Business and Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block]

1.  Nature of Business and Summary of Significant Accounting Policies –

Basis of Presentation

The accompanying unaudited condensed financial statements of Table Trac, Inc. (the “Company,” or “Table Trac”) have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. The balance sheet as of March 31, 2017 and the statements of operations for the three months ended March 31, 2017 and 2016, and the statement of cash flows for the three months ending March 31, 2017 and 2016 are unaudited but include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial position at such date and the operating results and cash flows for those periods. Certain information normally included in financial statements and related footnotes prepared in accordance with generally accepted accounting principles has been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The accompanying financial statements should be read in conjunction with the financial statements and notes included in the Table Trac Annual Report on Form 10-K for the year ended December 31, 2016.

Nature of Business

Table Trac was formed under the laws of the State of Nevada in June 1995. The Company has its offices in Minnetonka, Minnesota. The Company has developed and sells an information and management system that automates and monitors various aspects of the operations of casinos.

Table Trac provides system sales and technical support to casinos. System sales include installation, custom casino system configuration, and training. In addition, license and technical support are provided under separate license and service contracts.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The Company uses estimates and assumptions in accounting for the following significant matters, among others: revenue recognition, realizability of accounts receivable, the valuation of deferred tax assets and liabilities, and deferred revenue and costs, and the valuation of inventory. Actual results could differ from those estimates.

 

Revenue Recognition

The Company derives revenues from the sales of systems, licenses and maintenance fees, and services, and rental agreements.

System Sales

Revenue from systems that have been demonstrated to meet customer specifications during installation is recognized when evidence of an arrangement exists, the product has been delivered, title and risk of loss have transferred to the customer and collection of the resulting receivable is reasonably assured. System sales, which are accounted for as multiple-element arrangements, include multiple products and/or services. For multiple-element arrangements, the Company allocates the revenue to each element based on the hierarchy of estimated selling price for the deliverables. The selling price for each deliverable will be based on vendor specific objective evidence (VSOE), Third Party Evidence (“TPE”) if VSOE is not available, or estimated selling price if neither VSOE nor TPE is available. The Company recognizes the associated revenue when all revenue recognition criteria have been met for each element. If there are contracts for which the Company does not have VSOE or TPE of all elements, the Company would follow the selling price hierarchy to allocate arrangement consideration.

The Company does offer its customers contracts with extended payment terms.  The Company must evaluate if any extended payment terms in the contract is an indicator of the revenue not being fixed or determinable.  Provided all other revenue recognition criteria have been satisfied, the Company recognizes the revenue if payment of a significant portion of the systems sales is due within 12 months of the delivery of the product.  The Company also analyzes its standard business practice of using long-term contracts and the history of collecting on extended payment term contracts without making concessions for determining if revenue should be recognized.  Revenue and associated costs of sales are deferred if contract terms exceed historical collection results or if a substantial portion of the contract is not due within 12 months after delivery of the product.  The Company analyzes each contract for proper revenue recognition based on that contract’s facts and circumstances.  Interest is recorded upon receipt to “interest income” on the statements of operations. 

Maintenance revenue

Maintenance revenue is recognized ratably over the contract period. The VSOE for maintenance is based upon the renewal rate for contracted services.

Service revenue

Service revenue is recognized after the services are performed and collection of the resulting receivable is reasonably assured. The VSOE for service revenue is established based upon actual selling prices for the services or prior similar arrangements.

Rental revenue

The Company may offer customers a rental contract.  Revenues are billed monthly on a per-game per-day basis. There is an option to purchase the system after the rental contract expires at a pre-determined residual value.

Deferred System Sales Costs

Deferred system sales costs consist of installed system costs incurred on participation-based contracts. These costs are recognized on a straight-line basis over the term of the contract which is generally 18-48 months beginning when revenues are generated. At the end of the contract period, the customer will usually receive title to the system. These costs are the most significant component of other long-term assets on the balance sheet, and are $1,032,748 and $1,291,519 as of March 31, 2017 and December 31, 2016, respectively.

Accounts Receivable / Allowance for Doubtful Accounts

Accounts receivable are initially recorded at the invoiced amount and carried on the balance sheet at net realizable value, which includes foreign currency translation as of each balance sheet date. Accounts receivable include unsecured regular customer receivables and unsecured amounts from financed contracts coming due within 12 months. Amounts from financed contracts due beyond 12 months are recorded as "Long-term accounts receivable – financed contracts."  Interest is recorded upon receipt to other income on the statements of operations. An allowance for doubtful accounts is recorded when the Company believes the amounts may not be collected. Management believes that receivables, net of the allowance for doubtful accounts, are fully collectible. Accounts receivable are written off when management determines collection is no longer likely. While the ultimate result may differ, management believes that any write-off not allowed for will not have a material impact on the Company's financial position.

 

Major Customers

The following tables summarize major customer information for the three months ended March 31, 2017 and 2016:

	For the Three Months Ended March 31
	2017						2016
	% Revenues			% AR			% Revenues			% AR
A		9.9	%		7.5	%		10.1	%		9.8	%
B		14.8	%		18.4	%		17.8	%		30.1	%
C		3.3	%		10.2	%		3.6	%		9.8	%
All Others		72.0	%		63.9	%		68.5	%		50.3	%
Total		100.0	%		100.0	%		100.0	%		100.0	%

The Company does derive a portion of its revenue from foreign customers. For the three month periods ending March 31, 2017 and 2016, sales to customers in South America represent 10.1% and 16.8% of total revenues, respectively.

 

Inventory

Inventory, consisting of finished goods, is stated at the lower of cost or market. The average cost method, which approximates the first in, first out method, is used to value inventory. Inventory is reviewed annually for the lower of cost or net realizable value and obsolescence. Any material cost found to be above net realizable value or considered obsolete is written down accordingly. The inventory value as of March 31, 2017 was $1,132,576, which included work-in-process of $361,745. The Company had no obsolescence reserve at March 31, 2017 or December 31, 2016.

 

Research and Development

The Company expenses all costs related to research and development as incurred. Research and development expense was $7,733 and $3,865 for the three months ended March 31, 2017 and 2016, respectively. Research and development expenses are included in selling, general and administrative expenses on the statements of operations.

Recently Adopted Accounting Pronouncements

In July 2015, FASB issued ASU No. 2015-11, which amended Inventory (Topic 330) Related to Simplifying the Measurement of Inventory of the Accounting Standards Codification. The amended guidance applies to all inventory except that which is measured using last-in, first-out (LIFO) or the retail inventory method. Inventory measured using first-in, first-out (FIFO) or average cost is included in the new amendments. Inventory within the scope of the new guidance should be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. The Company adopted the guidance on January 1, 2017 and it did not have a material impact on its financial statements.

In November 2015, the FASB issued ASU No. 2015-17,  Income Taxes: Balance Sheet Classification of Deferred Taxes, which simplifies the presentation of deferred taxes by requiring deferred tax assets and liabilities be classified as noncurrent on the balance sheet. As a result of our prospective adoption of this guidance on January 1, 2017, all deferred tax assets and liabilities have been classified as noncurrent on our condensed balance sheet at March 31, 2017, while our balance sheet at December 31, 2016 reflects classifications of deferred tax assets and liabilities in accordance with previous GAAP. The adoption of this guidance had no impact on our results of operations or cash flows.

XML

Accounts Receivable

3 Months Ended

Mar. 31, 2017

Receivables [Abstract]

Accounts Receivable [Text Block]

2.  Accounts Receivable –

Accounts receivable consisted of the following at:

	March 31, 2017		December 31, 2016
Accounts receivable under normal 30 day terms	$	889,998	$	979,564
Financed contracts:
Current portion of long-term		2,019,529		2,028,025
Long-term, net of current portion		1,172,385		1,421,330
Total accounts receivable		4,081,912		4,428,919
Less allowance for doubtful accounts		(200,266)		(200,266)
Accounts receivable, net	$	3,881,646	$	4,228,653
Presented on the balance sheet as:
Accounts receivable, net	$	2,709,261	$	2,807,323
Long-term accounts receivable - financed contracts		1,172,385		1,421,330

The allowance for financed and trade receivable represents management’s estimate of probable losses in our trade and financed receivables as of the date of the financial statements. The allowance provides for probable losses that have been identified with specific customer relationships and for probable losses believed to be inherent of the trade and financed receivables, but that have not been specifically identified.

Accounts receivable includes financed contracts at March 31, 2017 and December 31, 2016 which are $3,191,914 and $3,449,355, respectively, with an offset accounting for deferred revenues on the balance sheets of $2,649,696 and $2,745,081, respectively.

A roll-forward of the Company’s allowance for doubtful accounts is as follows:

	March 31, 2017		December 31, 2016
Accounts receivable allowance, beginning of year	$	200,266	$	185,397
Provision adjustment		0		14,869
Write-off		0		0
Accounts receivable allowance, end of period	$	200,266	$	200,266

The allowance for doubtful accounts is $200,266 for the trade receivables and $0 for the financed contracts at both March 31, 2017 and December 31, 2016.

XML

Income Tax

3 Months Ended

Mar. 31, 2017

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

3. Income Tax –

The Company accounts for income taxes by following the asset and liability approach to accounting for income taxes. Deferred tax assets and liabilities represent the future tax consequences of the differences between the financial statement carrying amounts of assets and liabilities versus the tax basis of assets and liabilities. Under this method, deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards. Deferred tax liabilities are recognized for taxable temporary differences. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The impact of the tax rate changes on deferred tax assets and liabilities is recognized in the year that the change is enacted. Management believes that any write-off not allowed for will not have a material impact on the Company's financial position.

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. Based on its evaluation, the Company believes that it has no significant unrecognized tax positions. The Company’s evaluation was performed for the tax years ended December 31, 2013 through 2016, which are the tax years that remain subject to examination by major tax jurisdictions as of March 31, 2017. The Company does not believe there will be any material changes in its unrecognized tax positions over the next 12 months.

The Company may from time to time be assessed interest or penalties by major tax jurisdictions, although any such assessments historically have been minimal and immaterial to its financial results. In accordance with current guidance, the Company classifies interest and penalties as income tax expense is incurred.

XML

Earnings (Loss) Per Share

3 Months Ended

Mar. 31, 2017

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

4.  Earnings (Loss) Per Share –

The Company computes earnings (loss) per share under two different methods, basic and diluted, and presents per-share data for all periods in which statements of operations are presented. Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock and common stock equivalents outstanding.

The following table provides a reconciliation of the numerators and denominators used in calculating basic and diluted loss per share for the three months ended March 31, 2017 and 2016:

	For the Three Months Ended
	March 31,
	2017		2016
Basic and diluted earnings per share calculation:
Net loss to common stockholders	$	(124,372)	$	(136,854)
Weighted average number of common shares outstanding		4,511,965		4,525,710
Basic and diluted net loss per share	$	(0.03)	$	(0.03)

XML

Foreign Currency Exchange Rate Risk

3 Months Ended

Mar. 31, 2017

Foreign Currency [Abstract]

Foreign Currency Disclosure [Text Block]

5. Foreign Currency Exchange Rate Risk

The Company is exposed to foreign currency risks that arise from some of its foreign customers in Colombia, transacted in Colombia pesos. In addition, exchange rate fluctuations may cause our international results to fluctuate when translated into U.S. dollars. These risks may change over time as business practices evolve and could have an impact on the Company’s financial results in the future due to the long term nature of the Company’s accounts receivable in Colombia, which totaled approximately $291,000 and $384,000 at March 31, 2017   and December 31, 2016, respectively. The Company monitors its risk associated with the volatility of certain foreign currencies against the U.S. dollar.

XML

Commitment and Contingencies

3 Months Ended

Mar. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

6. Commitment and Contingencies

The Company has an agreement with a contractor to design and execute on a sales and marketing strategy for the Company in key Latin American and Caribbean gaming jurisdictions. The agreement currently expires December 31, 2017, unless terminated earlier in accordance with the terms of the agreement. The remaining commitment as of March 31, 2017 is approximately $56,000.

XML

Nature of Business and Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies [Text Block]

Basis of Presentation

The accompanying unaudited condensed financial statements of Table Trac, Inc. (the “Company,” or “Table Trac”) have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. The balance sheet as of March 31, 2017 and the statements of operations for the three months ended March 31, 2017 and 2016, and the statement of cash flows for the three months ending March 31, 2017 and 2016 are unaudited but include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial position at such date and the operating results and cash flows for those periods. Certain information normally included in financial statements and related footnotes prepared in accordance with generally accepted accounting principles has been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The accompanying financial statements should be read in conjunction with the financial statements and notes included in the Table Trac Annual Report on Form 10-K for the year ended December 31, 2016.

Business Description and Accounting Policies [Text Block]

Nature of Business

Table Trac was formed under the laws of the State of Nevada in June 1995. The Company has its offices in Minnetonka, Minnesota. The Company has developed and sells an information and management system that automates and monitors various aspects of the operations of casinos.

Table Trac provides system sales and technical support to casinos. System sales include installation, custom casino system configuration, and training. In addition, license and technical support are provided under separate license and service contracts.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The Company uses estimates and assumptions in accounting for the following significant matters, among others: revenue recognition, realizability of accounts receivable, the valuation of deferred tax assets and liabilities, and deferred revenue and costs, and the valuation of inventory. Actual results could differ from those estimates.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

The Company derives revenues from the sales of systems, licenses and maintenance fees, and services, and rental agreements.

System Sales

Revenue from systems that have been demonstrated to meet customer specifications during installation is recognized when evidence of an arrangement exists, the product has been delivered, title and risk of loss have transferred to the customer and collection of the resulting receivable is reasonably assured. System sales, which are accounted for as multiple-element arrangements, include multiple products and/or services. For multiple-element arrangements, the Company allocates the revenue to each element based on the hierarchy of estimated selling price for the deliverables. The selling price for each deliverable will be based on vendor specific objective evidence (VSOE), Third Party Evidence (“TPE”) if VSOE is not available, or estimated selling price if neither VSOE nor TPE is available. The Company recognizes the associated revenue when all revenue recognition criteria have been met for each element. If there are contracts for which the Company does not have VSOE or TPE of all elements, the Company would follow the selling price hierarchy to allocate arrangement consideration.

The Company does offer its customers contracts with extended payment terms.  The Company must evaluate if any extended payment terms in the contract is an indicator of the revenue not being fixed or determinable.  Provided all other revenue recognition criteria have been satisfied, the Company recognizes the revenue if payment of a significant portion of the systems sales is due within 12 months of the delivery of the product.  The Company also analyzes its standard business practice of using long-term contracts and the history of collecting on extended payment term contracts without making concessions for determining if revenue should be recognized.  Revenue and associated costs of sales are deferred if contract terms exceed historical collection results or if a substantial portion of the contract is not due within 12 months after delivery of the product.  The Company analyzes each contract for proper revenue recognition based on that contract’s facts and circumstances.  Interest is recorded upon receipt to “interest income” on the statements of operations. 

Maintenance revenue

Maintenance revenue is recognized ratably over the contract period. The VSOE for maintenance is based upon the renewal rate for contracted services.

Service revenue

Service revenue is recognized after the services are performed and collection of the resulting receivable is reasonably assured. The VSOE for service revenue is established based upon actual selling prices for the services or prior similar arrangements.

Rental revenue

The Company may offer customers a rental contract.  Revenues are billed monthly on a per-game per-day basis. There is an option to purchase the system after the rental contract expires at a pre-determined residual value.

Deferred System Sales Costs [Policy Text Block]

Deferred System Sales Costs

Deferred system sales costs consist of installed system costs incurred on participation-based contracts. These costs are recognized on a straight-line basis over the term of the contract which is generally 18-48 months beginning when revenues are generated. At the end of the contract period, the customer will usually receive title to the system. These costs are the most significant component of other long-term assets on the balance sheet, and are $1,032,748 and $1,291,519 as of March 31, 2017 and December 31, 2016, respectively.

Receivables, Trade and Other Accounts Receivable, Allowance for Doubtful Accounts, Policy [Policy Text Block]

Accounts Receivable / Allowance for Doubtful Accounts

Accounts receivable are initially recorded at the invoiced amount and carried on the balance sheet at net realizable value, which includes foreign currency translation as of each balance sheet date. Accounts receivable include unsecured regular customer receivables and unsecured amounts from financed contracts coming due within 12 months. Amounts from financed contracts due beyond 12 months are recorded as "Long-term accounts receivable – financed contracts."  Interest is recorded upon receipt to other income on the statements of operations. An allowance for doubtful accounts is recorded when the Company believes the amounts may not be collected. Management believes that receivables, net of the allowance for doubtful accounts, are fully collectible. Accounts receivable are written off when management determines collection is no longer likely. While the ultimate result may differ, management believes that any write-off not allowed for will not have a material impact on the Company's financial position.

Major Customers, Policy [Policy Text Block]

Major Customers

The following tables summarize major customer information for the three months ended March 31, 2017 and 2016:

	For the Three Months Ended March 31
	2017						2016
	% Revenues			% AR			% Revenues			% AR
A		9.9	%		7.5	%		10.1	%		9.8	%
B		14.8	%		18.4	%		17.8	%		30.1	%
C		3.3	%		10.2	%		3.6	%		9.8	%
All Others		72.0	%		63.9	%		68.5	%		50.3	%
Total		100.0	%		100.0	%		100.0	%		100.0	%

The Company does derive a portion of its revenue from foreign customers. For the three month periods ending March 31, 2017 and 2016, sales to customers in South America represent 10.1% and 16.8% of total revenues, respectively.

Inventory, Policy [Policy Text Block]

Inventory

Inventory, consisting of finished goods, is stated at the lower of cost or market. The average cost method, which approximates the first in, first out method, is used to value inventory. Inventory is reviewed annually for the lower of cost or net realizable value and obsolescence. Any material cost found to be above net realizable value or considered obsolete is written down accordingly. The inventory value as of March 31, 2017 was $1,132,576, which included work-in-process of $361,745. The Company had no obsolescence reserve at March 31, 2017 or December 31, 2016.

Research and Development Expense, Policy [Policy Text Block]

Research and Development

The Company expenses all costs related to research and development as incurred. Research and development expense was $7,733 and $3,865 for the three months ended March 31, 2017 and 2016, respectively. Research and development expenses are included in selling, general and administrative expenses on the statements of operations.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Adopted Accounting Pronouncements

In July 2015, FASB issued ASU No. 2015-11, which amended Inventory (Topic 330) Related to Simplifying the Measurement of Inventory of the Accounting Standards Codification. The amended guidance applies to all inventory except that which is measured using last-in, first-out (LIFO) or the retail inventory method. Inventory measured using first-in, first-out (FIFO) or average cost is included in the new amendments. Inventory within the scope of the new guidance should be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. The Company adopted the guidance on January 1, 2017 and it did not have a material impact on its financial statements.

In November 2015, the FASB issued ASU No. 2015-17,  Income Taxes: Balance Sheet Classification of Deferred Taxes, which simplifies the presentation of deferred taxes by requiring deferred tax assets and liabilities be classified as noncurrent on the balance sheet. As a result of our prospective adoption of this guidance on January 1, 2017, all deferred tax assets and liabilities have been classified as noncurrent on our condensed balance sheet at March 31, 2017, while our balance sheet at December 31, 2016 reflects classifications of deferred tax assets and liabilities in accordance with previous GAAP. The adoption of this guidance had no impact on our results of operations or cash flows.

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Nature of Business and Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Revenue from External Customers by Geographic Areas [Table Text Block]

The following tables summarize major customer information for the three months ended March 31, 2017 and 2016:

	For the Three Months Ended March 31
	2017						2016
	% Revenues			% AR			% Revenues			% AR
A		9.9	%		7.5	%		10.1	%		9.8	%
B		14.8	%		18.4	%		17.8	%		30.1	%
C		3.3	%		10.2	%		3.6	%		9.8	%
All Others		72.0	%		63.9	%		68.5	%		50.3	%
Total		100.0	%		100.0	%		100.0	%		100.0	%

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Accounts Receivable (Tables)

3 Months Ended

Mar. 31, 2017

Receivables [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

Accounts receivable consisted of the following at:

	March 31, 2017		December 31, 2016
Accounts receivable under normal 30 day terms	$	889,998	$	979,564
Financed contracts:
Current portion of long-term		2,019,529		2,028,025
Long-term, net of current portion		1,172,385		1,421,330
Total accounts receivable		4,081,912		4,428,919
Less allowance for doubtful accounts		(200,266)		(200,266)
Accounts receivable, net	$	3,881,646	$	4,228,653
Presented on the balance sheet as:
Accounts receivable, net	$	2,709,261	$	2,807,323
Long-term accounts receivable - financed contracts		1,172,385		1,421,330

Schedule of Allowance Accounts Receivable [Table Text Block]

A roll-forward of the Company’s allowance for doubtful accounts is as follows:

	March 31, 2017		December 31, 2016
Accounts receivable allowance, beginning of year	$	200,266	$	185,397
Provision adjustment		0		14,869
Write-off		0		0
Accounts receivable allowance, end of period	$	200,266	$	200,266

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Earnings (Loss) Per Share (Tables)

3 Months Ended

Mar. 31, 2017

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

The following table provides a reconciliation of the numerators and denominators used in calculating basic and diluted loss per share for the three months ended March 31, 2017 and 2016:

	For the Three Months Ended
	March 31,
	2017		2016
Basic and diluted earnings per share calculation:
Net loss to common stockholders	$	(124,372)	$	(136,854)
Weighted average number of common shares outstanding		4,511,965		4,525,710
Basic and diluted net loss per share	$	(0.03)	$	(0.03)

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Nature of Business and Summary of Significant Accounting Policies (Details)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Sales Revenue, Net [Member]
Revenue, Major Customer [Line Items]
% Sales and % AR	100.00%	100.00%
Sales Revenue, Net [Member] | Customer A [Member]
Revenue, Major Customer [Line Items]
% Sales and % AR	9.90%	10.10%
Sales Revenue, Net [Member] | Customer B [Member]
Revenue, Major Customer [Line Items]
% Sales and % AR	14.80%	17.80%
Sales Revenue, Net [Member] | Customer C [Member]
Revenue, Major Customer [Line Items]
% Sales and % AR	3.30%	3.60%
Sales Revenue, Net [Member] | All Others [Member]
Revenue, Major Customer [Line Items]
% Sales and % AR	72.00%	68.50%
Accounts Receivable [Member]
Revenue, Major Customer [Line Items]
% Sales and % AR	100.00%	100.00%
Accounts Receivable [Member] | Customer A [Member]
Revenue, Major Customer [Line Items]
% Sales and % AR	7.50%	9.80%
Accounts Receivable [Member] | Customer B [Member]
Revenue, Major Customer [Line Items]
% Sales and % AR	18.40%	30.10%
Accounts Receivable [Member] | Customer C [Member]
Revenue, Major Customer [Line Items]
% Sales and % AR	10.20%	9.80%
Accounts Receivable [Member] | All Others [Member]
Revenue, Major Customer [Line Items]
% Sales and % AR	63.90%	50.30%

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Nature of Business and Summary of Significant Accounting Policies (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Summary Of Significant Accounting Policies [Line Items]
Research and Development Expense	$ 7,733	$ 3,865
Inventory, Net, Total	1,132,576		$ 843,233
Inventory, Work in Process, Gross	361,745
Other Assets, Noncurrent	$ 1,032,748		$ 1,291,519
Sales Revenue, Net [Member]
Summary Of Significant Accounting Policies [Line Items]
Concentration Risk, Percentage	100.00%	100.00%
Sales Revenue, Net [Member] | Foreign Customers [Member]
Summary Of Significant Accounting Policies [Line Items]
Concentration Risk, Percentage	10.10%	16.80%

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Accounts Receivable (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable under normal 30 day terms	$ 889,998	$ 979,564
Financed contracts:
Current portion of long-term	2,019,529	2,028,025
Long-term, net of current portion	1,172,385	1,421,330
Total accounts receivable	4,081,912	4,428,919
Less allowance for doubtful accounts	(200,266)	(200,266)
Accounts receivable, net	3,881,646	4,228,653
Presented on the balance sheet as:
Accounts receivable, net	2,709,261	2,807,323
Long-term accounts receivable - financed contracts	$ 1,172,385	$ 1,421,330

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Accounts Receivable (Details 1) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable allowance, beginning of year	$ 200,266	$ 185,397
Provision adjustment	0	14,869
Write-off	0	0
Accounts receivable allowance, end of period	$ 200,266	$ 200,266

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Accounts Receivable (Details Textual) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for Doubtful Accounts Receivable, Current	$ 200,266	$ 200,266
Accounts Receivable, Net, Current, Total	2,709,261	2,807,323
Deferred Revenue, Noncurrent	2,649,696	2,745,081
Trade Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for Doubtful Accounts Receivable, Current	200,266
Financing Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for Doubtful Accounts Receivable, Current	0	0
Accounts Receivable, Net, Current, Total	$ 3,191,914	$ 3,449,355

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Earnings (Loss) Per Share (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Basic and diluted earnings per share calculation:
Net loss to common stockholders	$ (124,372)	$ (136,854)
Weighted average number of common shares outstanding	4,511,965	4,525,710
Basic and diluted net loss per share	$ (0.03)	$ (0.03)

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Foreign Currency Exchange Rate Risk (Details Textual) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts Receivable, Gross, Noncurrent	$ 1,172,385	$ 1,421,330
Columbia [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts Receivable, Gross, Noncurrent	$ 291,000	$ 384,000

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Commitment and Contingencies (Details Textual)	Mar. 31, 2017 USD ($)
Other Commitments [Line Items]
Other Commitment, Total	$ 56,000