Tuesday, December 06, 2005
Table Trac (TBTC) more stuff
While Table Trac doesn't show the percent of revenues from one-time installations vs recurring maintanence revenue, you can get an idea of the continuous revenue stream by looking at the numbers in Q1 through Q3 of 2004. In the Q3 2005 results, they say:
They make a lot of money from installations, but not from recurring revenue. So unless this business captures a lot of casinos, it's not worth much. And even if they do capture a lot of casinos, they will have a lot more costly support infrastructure.
Table Trac doesn't release any more info than they have to. Directors and executives own 33% of the business. I consider that to be an optimum percentage. Unfortunately, it's nearly all in the hands of Chad and Sally Hoehne (Chad is CEO/Founder).
Chad develops the software, according to the 10-K for 2003. He also installs the systems, according to the securities registration.
Offices at 15612 Hwy 7 #250, Minnetonka, MN 55345
The new auditors are Carver Moquist & Associates. They rendered opinons in 2005 and 2004. They are accountants for BDC Capital (BDCI) which I looked at but not posted about (I don't think). Neither these, nor the next auditors are on the list of large auditors.
Callahan, Johnston & Associates did the audit in 2003. These people also audited Ballistic Recovery Systems (covered here earlier) but quit. They also quit here (see below).
The CFO resigned in 2003.
The first trial system (installed Dec 2003) had zero downtime and customer was pleased as of April of the next year.
They misspelled deferred as "deffered".
In Q4 2003, they secured $280,000 of contracts. Secured contracts and received deposits for 5 new systems, completed installation of one in December 2003. They anticipate the other 4 would be installed and recognized by Q1 2004. In Q1 2004, they had $274K revenue and they did install the 4 systems. Also existing customers purchased upgrades.
Private placement of stock in April 2003. 150K shares raising $12K dollars (8 cents a share). It was actually a convertable.
The only cash flow from investing was purchase of $5,637 of certificates of deposit.
Four customers were 98% of revenue in both 2002 and 2003.
They had a joint venture with Global Payment Technologies (GPTX) in July 2001. I couldn't find it in GPTX's financial statements, but it might have been too small.
In the Table Trac system, the dealers needs to use their own personal magnetic strip cards to be able to use the system.
The first beta test was actually in 1995, in a 12 table casino in Kenora, Ontario (not sure if this is it). It ran successfully from installation onward. Not sure if it's still in place, probably not. The first customer installation was June 1996, in a 10 table casino in northern MN. It has been running this whole time and the casino upgraded to additional features/services.
The next customer was the same operator, but in another casino in northern MN in July 1997. The two were linked in Sept 1997. This added the "first of its kind" player tracking. Players could use a single club member's card to earn and redeem points at either casino.
Another install (not sure if it was next) was in L.C.O. Casino in Hayward, Wisc completed on May 26, 1999. They mention the Table Trac system.
Tom Kozlowski joined the company (he is now gone, without any mention?), he had lots of casino management experience.
Joeseph A. Nielsen owned 13% (348K shares).
Finally, a related party transaction:
They list all the equity transactions which include a surprising number of people. Here are some notables:
That last one listed was a good deal for Sally. It's listed as a related party transaction in Note 3.
All the services in 1995 were "legal services and organizational costs". The 1997 services aren't spelled out. The equity statement only shows 91,500 shares issued for services in 1997 which doesn't match the number above. There were also 25K shares issued in lieu of interest in 1997. There was a 1999 circular offering of 273K shares.
5 million shares authorized, no par value. One share, one vote.
Depreciation expenses were $4,888 in 1999, $5,674 in 1998, etc.
Organization costs are amortized over 60 months, straight-line.
AR was 100% due from one customer.
At the time, the Company received office space and furniture from the CEO at no cost.
Revenues for the three months ended June 30 increased to $462,299 in 2005 from $117,971 in 2004. One new system installation in the third quarter accounted for the increase in revenues. Cost of sales for the three months ended September 30 increased in 2005 to $114,492 from $9,644 in 2004 as a result of new systems installations in 2005.
THIS IS THE KEY PIECE OF INFORMATION
That $118K of revenue in 2004 in the statement above included upgrades from existing customers according to the Q3 2004 statement. The Q2 2004 results show revenues solely from recurring streams: $48K for 7 casinos at 88% gross margins. SG&A was at $110K. With 10 casinos, we would only expect to see about $68K recurring revenue per quarter and they'd be losing money.They make a lot of money from installations, but not from recurring revenue. So unless this business captures a lot of casinos, it's not worth much. And even if they do capture a lot of casinos, they will have a lot more costly support infrastructure.
Table Trac doesn't release any more info than they have to. Directors and executives own 33% of the business. I consider that to be an optimum percentage. Unfortunately, it's nearly all in the hands of Chad and Sally Hoehne (Chad is CEO/Founder).
Chad develops the software, according to the 10-K for 2003. He also installs the systems, according to the securities registration.
Offices at 15612 Hwy 7 #250, Minnetonka, MN 55345
The new auditors are Carver Moquist & Associates. They rendered opinons in 2005 and 2004. They are accountants for BDC Capital (BDCI) which I looked at but not posted about (I don't think). Neither these, nor the next auditors are on the list of large auditors.
Callahan, Johnston & Associates did the audit in 2003. These people also audited Ballistic Recovery Systems (covered here earlier) but quit. They also quit here (see below).
The CFO resigned in 2003.
Let's look at the 10-K for 2003.
At the end of the 2003, they had contracts with 7 casinos (MN and WS). They had 3 employees (no change).The first trial system (installed Dec 2003) had zero downtime and customer was pleased as of April of the next year.
They misspelled deferred as "deffered".
In Q4 2003, they secured $280,000 of contracts. Secured contracts and received deposits for 5 new systems, completed installation of one in December 2003. They anticipate the other 4 would be installed and recognized by Q1 2004. In Q1 2004, they had $274K revenue and they did install the 4 systems. Also existing customers purchased upgrades.
In our current report dated October 31, 2003, we reported that our independent auditors, Callahan, Johnston & Associates, LLC. choose not to stand for election in 2004, due to their choice to leave public company audits.Between the two 10-K statements, no insiders sold or bought any stock.
Private placement of stock in April 2003. 150K shares raising $12K dollars (8 cents a share). It was actually a convertable.
The only cash flow from investing was purchase of $5,637 of certificates of deposit.
Four customers were 98% of revenue in both 2002 and 2003.
They had a joint venture with Global Payment Technologies (GPTX) in July 2001. I couldn't find it in GPTX's financial statements, but it might have been too small.
Most departments in the casino industry are already computerized. TheMY OPINION: The real intent of Table Trac is 1) the same as the purpose of steamships over sailing ships: get rid of the high expertise needed to do operations (I think I read that in a Peter Drucker book), 2) give management better visibility into what's going on at the table, 3) use database methods of measuring and tracking what's going on with each dealer, player, table, etc.
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.
In the Table Trac system, the dealers needs to use their own personal magnetic strip cards to be able to use the system.
The first beta test was actually in 1995, in a 12 table casino in Kenora, Ontario (not sure if this is it). It ran successfully from installation onward. Not sure if it's still in place, probably not. The first customer installation was June 1996, in a 10 table casino in northern MN. It has been running this whole time and the casino upgraded to additional features/services.
The next customer was the same operator, but in another casino in northern MN in July 1997. The two were linked in Sept 1997. This added the "first of its kind" player tracking. Players could use a single club member's card to earn and redeem points at either casino.
Another install (not sure if it was next) was in L.C.O. Casino in Hayward, Wisc completed on May 26, 1999. They mention the Table Trac system.
Our new TABLE TRAC® system lets you earn points at the tables, as well as the slots.We are pleased to announce that our 3-Card Poker, Let It Ride, Craps & Roulette are up and running. Craps & Roulette are open Wednesdays thru Sundays 6 p.m. to closing.Table Trac used Micro Dynamics Inc. of Eden Prairie, MN as the manufacturer, which is the same company where the CEO had worked. Founded in 1981 by Glen Shiflet and Mike Brown as an engineering services company, then became a manufacturer. I didn't see anything about Table Trac in their newsletters, but that's to be expected.
Tom Kozlowski joined the company (he is now gone, without any mention?), he had lots of casino management experience.
Mr. Kozlowski is Vice President of Sales and Marketing. Mr. Kozolowski held various table games management positions at 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.Sally Hoehne owned 47% of the company at this time, but she was already married to Chad.
Joeseph A. Nielsen owned 13% (348K shares).
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.
Finally, a related party transaction:
Chad Hoehne, President of the Company, is the principle [sic] 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.
They list all the equity transactions which include a surprising number of people. Here are some notables:
John Priscilla 5/99 10,450 Settlement
Virgil Miller 5/99 7,950 Settlement
Peter Eckhoff 5/97 250 Services
Donald McKush 5/97 12,500 Services
Jeffrey Phelan 5/97 12,500 Services
Chad Hoehne 5/97 12,500 Services
Robert Siqveland 5/97 12,500 Services
Dan Kaufman 5/97 20,000 Services
Charles Clayton 5/97 51,250 Services
Dennis Miller 6/95 51,250 Services
Sally Hoehne 6/95 1,229,100 $570.00
That last one listed was a good deal for Sally. It's listed as a related party transaction in Note 3.
All the services in 1995 were "legal services and organizational costs". The 1997 services aren't spelled out. The equity statement only shows 91,500 shares issued for services in 1997 which doesn't match the number above. There were also 25K shares issued in lieu of interest in 1997. There was a 1999 circular offering of 273K shares.
5 million shares authorized, no par value. One share, one vote.
Depreciation expenses were $4,888 in 1999, $5,674 in 1998, etc.
Organization costs are amortized over 60 months, straight-line.
AR was 100% due from one customer.
At the time, the Company received office space and furniture from the CEO at no cost.
// posted by Bruce @ 7:06 PM 
