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 September 30, 2010 or




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




Commission File Number:  
000-28383




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)




15612 Highway 7, Suite 331,
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  ̈ No  ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting 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





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
November 15, 2010, the registrant had outstanding 4,592,305 shares of common
stock, $.001 par value per share.








Table
Trac, Inc.




Index




PagePART
      I. FINANCIAL INFORMATIONItem
      1. Financial Statements
              2Item
      2. Management’s Discussion and Analysis of Financial Condition and Results
      of Operations
              10Item
      3. Quantitative and Qualitative Disclosures About Market
    Risk
              15Item
      4T. Controls and Procedures
              15PART
      II. OTHER INFORMATIONItem
      1. Legal Proceedings
              16Item
      1A. Risk Factors
              16Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
              16Item
      3. Defaults Upon Senior Securities
              16Item
      4. Submission of Matters to a Vote of Security Holders
              16Item
      5. Other Information
              16Item
      6. Exhibits
              17SIGNATURES
              17


1





PART
I. FINANCIAL INFORMATION




Item 1. Financial
Statements





TABLE
TRAC, INC.





CONTENTS





PageCONDENSED
      FINANCIAL STATEMENTSCondensed
      Balance Sheets
              3Condensed
      Statements of Operations
              4Condensed
      Statements of Cash Flows
              5Notes
      to Condensed Financial Statements
              6


2





TABLE
TRAC, INC.


CONDENSED
BALANCE SHEETS (Unaudited)




September 30,
                  2010
                
                
                December 31,
                  2009Cash
                
                $
                1,214,829
                
                
                $
                1,320,946Accounts
      receivable, net of allowance for doubtful accounts of $182,054 at
      September 30, 2010 and December 31, 2009
                
                
                691,997
                
                
                
                1,141,114Inventory
                
                
                254,942
                
                
                
                189,482Prepaid
      expenses
                
                
                122,303
                
                
                
                34,219Other
      current assets
                
                
                11,429
                
                
                
                5,039Income
      taxes receivable
                
                
                311,310
                
                
                
                172,434TOTAL
      CURRENT ASSETS
                
                
                2,606,810
                
                
                
                2,863,234Patent,
      net of accumulated amortization
                
                
                8,803
                
                
                
                9,826Property
      and equipment, net of accumulated depreciation
                
                
                51,406
                
                
                
                34,219System
      under rental program, net of accumulated depreciation
                
                
                21,783
                
                
                
                -Other
      long term assets
                
                
                2,060
                
                
                
                -Long-term
      accounts receivable – financed contracts
                
                
                465,797
                
                
                
                236,466TOTAL
      ASSETS
                
                $
                3,156,659
                
                
                $
                3,143,745LIABILITIES
      AND  STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIESAccounts
      payable
                
                $
                135,822
                
                
                $
                139,697Deferred
      revenue
                
                
                18,000
                
                
                
                -Deferred
      tax liability
                
                
                548,841
                
                
                
                574,000TOTAL
      CURRENT LIABILITIES
                
                
                702,663
                
                
                
                713,697LONG-TERM
      LIABILITIESDeferred
      tax liability
                
                
                9,000
                
                
                
                9,000TOTAL
      LIABILITIES
                
                
                711,663
                
                
                
                722,697STOCKHOLDERS'
      EQUITYCommon
      stock, 0.001 par value; 5,000,000 shares authorized: 4,254,805 and
      4,162,234 shares issued and outstanding at September 30, 2010 and December
      31, 2009, respectively
                
                
                4,255
                
                
                
                4,162Additional
      paid-in capital
                
                
                1,584,025
                
                
                
                1,404,619Retained
      earnings
                
                
                858,138
                
                
                
                1,013,6892,446,418
                
                
                
                2,422,470Treasury
      stock, 1,000 shares (at cost) at September 30, 2010 and December 31,
      2009
                
                
                (1,422
                )
                
                
                (1,422
                )TOTAL
      STOCKHOLDERS’ EQUITY
                
                
                2,444,996
                
                
                
                2,421,048TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
                
                $
                3,156,659
                
                
                $
                3,143,745





See
notes to condensed financial statements.


3





TABLE
TRAC, INC.


CONDENSED
STATEMENTS OF OPERATIONS (Unaudited)





Three Months Ended
                  September 30,
                
                
                Nine Months Ended
                  September 30,2010
                
                
                2009
                
                
                2010
                
                
                2009Revenues
                
                $
                959,102
                
                
                $
                471,847
                
                
                $
                1,784,089
                
                
                $
                2,582,404Cost
      of sales
                
                
                351,326
                
                
                
                106,849
                
                
                
                440,690
                
                
                
                541,590Gross
      profit
                
                
                607,776
                
                
                
                364,998
                
                
                
                1,343,399
                
                
                
                2,040,814Operating
      Expenses:Selling,
      general and administrative
                
                
                550,567
                
                
                
                626,974
                
                
                
                1,639,478
                
                
                
                1,705,774Bad
      debt expense - note receivable and related interest
    receivable
                
                
                -
                
                
                
                351,530
                
                
                
                -
                
                
                
                351,530Income
      (loss) from operations
                
                
                57,209
                
                
                
                (613,506
                )
                
                
                (296,079
                )
                
                
                (16,490
                )Interest
      income
                
                
                10,058
                
                
                
                51,051
                
                
                
                45,528
                
                
                
                136,803Net
      income (loss) before taxes
                
                
                67,267
                
                
                
                (562,455
                )
                
                
                (250,551
                )
                
                
                120,313Income
      tax expense (benefit)
                
                
                23,415
                
                
                
                (207,997
                )
                
                
                (95,000
                )
                
                
                53,553Net
      income (loss)
                
                $
                43,852
                
                
                $
                (354,458
                )
                
                $
                (155,551
                )
                
                $
                66,760Basic
      earnings (loss) per common share
                
                $
                0.01
                
                
                $
                (0.09
                )
                
                $
                (0.04
                )
                
                $
                0.02Weighted-average
      basic shares outstanding
                
                
                4,254,533
                
                
                
                4,162,234
                
                
                
                4,210,169
                
                
                
                4,162,234Diluted
      earnings (loss) per common share
                
                $
                0.01
                
                
                $
                (0.09
                )
                
                $
                (0.04
                )
                
                $
                0.01Weighted-average
      diluted shares outstanding
                
                
                4,567,217
                
                
                
                4,162,234
                
                
                
                4,210,169
                
                
                
                4,478,587





See
notes to condensed financial statements.


4





TABLE
TRAC, INC.


CONDENSED
STATEMENTS OF CASH FLOW (Unaudited)




Nine Months Ended
                  September 30,2010
                
                
                2009OPERATING
      ACTIVITIESNet
      income (loss)
                
                $
                (155,551
                )
                
                $
                66,760Adjustments
      to reconcile net income (loss) to net cash provided by operating
      activities:Depreciation
      and amortization
                
                
                16,735
                
                
                
                5,580Deferred
      income taxes
                
                
                (25,159
                )
                
                
                (9,000
                )Allowance
      for doubtful accounts receivable
                
                
                -
                
                
                
                144,383Allowance
      for uncollectible note and related interest receivable
                
                
                -
                
                
                
                351,530Stock
      issued for services
                
                
                70,999
                
                
                
                51,631Restricted
      stock issued for services
                
                
                25,522
                
                
                
                -Changes
      in operating assets and liabilitiesAccounts
      receivable
                
                
                219,786
                
                
                
                219,958Interest
      receivable
                
                
                -
                
                
                
                (101,530
                )Inventory
                
                
                (65,460
                )
                
                
                81,939Prepaid
      expenses and other assets
                
                
                (11,496
                )
                
                
                (22,862
                )Deferred
      system sales costs
                
                
                -
                
                
                
                (69,099
                )Accounts
      payable
                
                
                (3,875
                )
                
                
                (158,413
                )Accrued
      expenses
                
                
                -
                
                
                
                (31,862
                )Deferred
      revenue
                
                
                18,000
                
                
                
                (389,297
                )Income
      taxes receivable / payable
                
                
                (138,876
                )
                
                
                (110,434
                )Net
      cash provided by (used in) operating activities
                
                
                (49,375
                )
                
                
                29,284INVESTING
      ACTIVITIESIssuance
      of note receivable
                
                
                -
                
                
                
                (250,000
                )Purchase
      of domain name
                
                
                (2,060
                )
                
                
                -Purchase
      of property & equipment
                
                
                (31,753
                )
                
                
                -Purchase
      of system under rental program
                
                
                (22,929
                )
                
                
                -Net
      cash used in investing activities
                
                
                (56,742
                )
                
                
                (250,000
                )FINANCING
      ACTIVITIESRepurchase
      of Company stock
                
                
                -
                
                
                
                (942
                )Net
      cash used in financing activities
                
                
                -
                
                
                
                (942
                )NET
      INCREASE (DECREASE) IN CASH
                
                
                (106,117
                )
                
                
                (221,658
                )CASHBeginning
      of period
                
                
                1,320,946
                
                
                
                1,212,953End
      of period
                
                $
                1,214,829
                
                
                $
                991,295Non-cash
      investing and financing:Common
      stock issued for future services
                
                $
                118,249
                
                
                $
                -Restricted
      stock issued for future services
                
                $
                61,250
                
                
                $
                -





See
notes to condensed financial statements.


5




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 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 September 30, 2010 and the statements of
operations and cash flows for the three and nine months ended September 30, 2010
and 2009 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,
2009.





Nature of
Business




Table
Trac, Inc. (the Company) was formed under the laws of the State if Nevada in
June 1995.  The Corporation has its offices in Minnetonka,
Minnesota.  Table Trac develops and sells casino management systems
(Casino TracTM, a state-of-the-art suite of casino management tools) that
automate and monitor the operations of a casino. Today, Table Trac’s gaming
systems have processed millions of gaming transactions at numerous casinos and
tribal gaming entities across the United States and in Central and South
America.





Table
Trac provides system sales and technical support to casinos. Table Trac’s
open-architecture is designed to provide operators with a scalable and flexible
system that can interconnect and operate with any 3rd 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. Table Trac’s systems meet the strictest auditing,
accounting and regulatory requirements. Table Trac has developed a patented,
real-time system that automates and monitors the operations of casino gaming
tables.





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 and 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.
Actual results could differ from those estimates.





Revenue
Recognition





The
Company derives revenues from the sales of systems, licenses and maintenance
fees, services and rental and participation-based 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 installed, 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 their estimated value and
recognizes the associated revenue when all revenue recognition criteria have
been met for each element.





The
Company does offer its customers contracts with extended payment terms. The
Company has established a history of successfully collecting on these contracts
under the original payment terms without making concessions. Based on past and
current collection history, all sales installment contracts are being recognized
in revenue following the "system sales" policy noted above.





Maintenance
revenue





Maintenance
revenue is recognized ratably over the contract period.


6





Service
revenue





Service
revenue is recognized after the services are performed and collection of the
resulting receivable is reasonably assured.





Rental
revenue


In 2010,
the Company began offering certain new customers a rental contract. 
Revenues are billed monthly based on a per game per day basis.  There is an
option to purchase the system after the rental agreement at a pre-determined
residual value.





Participation
revenue





In 2009,
the Company began offering certain new customers a participation-based contract.
Revenues were originally determined and billed monthly based on a percentage of
the amount of money processed through the customer’s casino gaming system
utilizing the Table Trac software. After discussion with the SEC, the Company
changed its revenue recognition policy for these contracts and any future
contracts, to record revenue at the time of cash collection; there were no
contracts of this type in 2010.





Accounts Receivable /
Allowance for Doubtful Accounts





Accounts
receivable are recorded at the invoiced amount. Accounts receivable include
regular customer receivables and amounts from financed contracts coming due
within 12 months. Amounts from financed contracts coming due beyond 12 months
are recorded as "Long-term accounts receivable - financed
contracts".  An allowance for doubtful accounts is recorded when the
Company believes the amounts will not be collected. Management believes that
receivables, net of the allowance for doubtful accounts, are fully collectible.
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 table summarizes significant customer information for
the:





For the Nine Months Ended
                      September 30,2010
                    
                    
                    2009% Sales
                    
                    
                    % AR
                    
                    
                    % Sales
                    
                    
                    % ARA
                    
                    
                    31.9
                    %
                    
                    
                    46.1
                    %
                    
                    
                    -
                    
                    
                    
                    -B
                    
                    
                    14.7
                    %
                    
                    
                    4.4
                    %
                    
                    
                    28.9
                    %
                    
                    
                    7.0
                    %C
                    
                    
                    10.8
                    %
                    
                    
                    2.2
                    %
                    
                    
                    9.8
                    %
                    
                    
                    4.0
                    %D
                    
                    
                    10.7
                    %
                    
                    
                    2.5
                    %
                    
                    
                    13.9
                    %
                    
                    
                    4.0
                    %E
                    
                    
                    10.4
                    %
                    
                    
                    1.2
                    %
                    
                    
                    1.7
                    %
                    
                    
                    -F
                    
                    
                    7.5
                    %
                    
                    
                    23.9
                    %
                    
                    
                    23.1
                    %
                    
                    
                    26.0
                    %G
                    
                    
                    6.6
                    %
                    
                    
                    5.4
                    %
                    
                    
                    9.8
                    %
                    
                    
                    16.0
                    %H
                    
                    
                    2.1
                    %
                    
                    
                    7.3
                    %
                    
                    
                    1.6
                    %
                    
                    
                    16.0
                    %I
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    3.3
                    %
                    
                    
                    9.0
                    %Total
                    
                    
                    94.7
                    %
                    
                    
                    93.0
                    %
                    
                    
                    92.1
                    %
                    
                    
                    82.0
                    %





Inventory





Inventory,
comprised of finished goods is stated at the lower of cost or market. The
first-in, first-out cost method is used to value inventory. Inventory is
reviewed annually for the lower of cost or market and obsolescence. Any material
cost found to be above market value or considered obsolete is written down
accordingly. The Company had no obsolescence reserve at September 30, 2010 and
December 31, 2009.


7





Recent Accounting
Pronouncements





In
October 2009, the FASB issued an update to existing guidance on revenue
recognition for arrangements with multiple deliverables and deliverables that
include software elements effective for fiscal years beginning on or after June
15, 2010.  This update will allow companies to allocate consideration
received for qualified separate deliverables using estimated selling price for
both delivered and undelivered items when vendor-specific objective evidence or
third-party evidence is unavailable.  Additional disclosures
discussing the nature of multiple element arrangements, the types of
deliverables under the arrangements, the general timing of their delivery, and
significant factors and estimates used to determine estimated selling prices are
required. The Company has adopted this update for new revenue arrangements
entered into or materially modified beginning January 1, 2011. Our adoption of
this update is not expected to have a material impact on our financial
statements.





Reclassifications





Certain
accounts in the prior year’s audited consolidated financial statements have been
reclassified for comparative purposes to conform to the current year’s
presentation.  The reclass was a change in presentation of IGT license
reimbursement of costs of approximately $61,000 being included in cost of sales
to offset the IGT license expense on the statement of operations to reflect the
current classification.  These reclassifications had no effect on
reported net income (loss).





2.
            Accounts Receivable
      –





Accounts
receivable consisted of the following at:





September 30,
                      
                      
                      December 31,2010
                      
                      
                      2009Accounts
      receivable under normal 30 day terms
                      
                      $
                      336,795
                      
                      
                      $
                      339,430Financed
      contracts:Short-term
                      
                      
                      102,525
                      
                      
                      
                      430,307Current
      portion of long-term
                      
                      
                      434,731
                      
                      
                      
                      553,431Long-term,
      net of current portion
                      
                      
                      465,797
                      
                      
                      
                      236,466Total
      accounts receivable
                      
                      
                      1,339,848
                      
                      
                      
                      1,559,634Less
      allowance for doubtful accounts
                      
                      
                      (182,054
                      )
                      
                      
                      (182,054
                      )Accounts
      receivable, net
                      
                      $
                      1,157,794
                      
                      
                      $
                      1,377,580





The
entire allowance account at September 30, 2010 and December 31, 2009 consists of
one international customer’s contract balance. A roll-forward of the Company’s
allowance for doubtful is as follows:





For the Nine Months Ended
                    September 30, 2010
                  
                  
                  For the Year Ended
                    December31, 2009Accounts
      receivable allowance, beginning of period
                  
                  $
                  182,054
                  
                  
                  $
                  -Provision
      adjustment during period
                  
                  
                  -
                  
                  
                  
                  265,528Write-off
      of bad debt
                  
                  
                  -
                  
                  
                  
                  (83,474
                  )Accounts
      receivable allowance, end of period
                  
                  $
                  182,054
                  
                  
                  $
                  182,054





3.
            Inventory –





Company
inventories consisted of the following at:




For the Nine Months Ended
                      September 30, 2010
                    
                    
                    For
      the Year Ended
                      December 31, 2009Raw
      materials
                    
                    $
                    -
                    
                    
                    $
                    -Work-in-process
                    
                    
                    -
                    
                    
                    
                    -Finished
      goods
                    
                    
                    254,942
                    
                    
                    
                    189,482Total
                    
                    $
                    254,942
                    
                    
                    $
                    189,482





4.
            Stockholders’
      Equity –





In April
2010, the Company issued 67,571 shares, at $1.75 per share for a total cost of
$118,249 to the Board of Directors for annual compensation for the period from
April 1, 2010 to March 31, 2011. A total of $23,625 and $70,999 was recognized
as stock compensation expense for the three and nine months ended September 30,
2010.





In July
2010, the Company recorded 25,000 restricted shares, at $2.45 per share for a
total cost of $61,250 to the investor relations firm per contract for the period
from May 2010 to April 2011. A total of $40,522 and $50,522 was recognized as
professional fees: shareholder relations for three and nine months ended
September 30, 2010. For the restricted stock - $15,312 was recorded for three
months ended September 30, 2010 and $25,522 for the nine months ended September
30, 2010. These restricted shares will actually be issued in November 2010, per
contract.





As of
September 30, 2010, the Company holds 1,000 common stock shares in treasury at a
total cost of $1,422 for future employee incentives under the bonus
program.





Stock
options





In
October 2001, the Company implemented an Employee Stock Incentive Plan. This
plan provides for the issuance of options to employees to purchase shares of the
Company's common stock at an exercise price at least equal to the fair value of
the stock at the grant date. These options are exercisable for a period of seven
years from the date of grant. Table Trac has reserved 1,000,000 shares of its
common stock for potential issuance under this plan. As of September 30, 2010,
370,000 stock options were available for grants.





The
Company uses the Black-Scholes-Merton option-pricing model as a method for
determining the estimated fair market value for employee stock awards.
Compensation expense for employee stock awards is recognized on a straight-line
basis over the vesting period of the award. The Company recorded $0 of related
compensation expense for the three and nine months ended September 30, 2010 and
2009, respectively.





There
were 337,500 options outstanding and exercisable at September 30, 2010 and
December 31, 2009 with an exercise price of $0.125, which expire October 30,
2010. The options had an aggregate intrinsic value of $531,563 at September 30,
2010 which is equal to the difference in the closing stock price on that date
and the exercise price, multiplied by the number of in-the-money options that
would have been received had all options been exercised on September 30,
2010.





The
337,500 options were all exercised on October 27, 2010 at the exercise price of
$0.125, for cash proceeds of $42,188.


8




5.
            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.





The
Company files income tax returns in the U.S. federal jurisdiction and various
state jurisdictions. Based on its evaluation, it has concluded that there are no
significant unrecognized tax positions. The Company’s evaluation was performed
for the tax years ended December 31, 2006 through 2009, the tax years that
remain subject to examination by major tax jurisdictions as of September 30,
2010. The Company does not believe there will be any material changes in its
unrecognized tax positions over the next twelve 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 a component of operating
expense.





6.
            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 earnings per share for the:





Three Months Ended
                    September 30,
                  
                  
                  Nine Months Ended
                    September 30,2010
                  
                  
                  2009
                  
                  
                  2010
                  
                  
                  2009Basic
      earnings per share calculation:Net
      income (loss) to common stockholders
                  
                  $
                  43,852
                  
                  
                  $
                  (354,458
                  )
                  
                  $
                  (155,551
                  )
                  
                  $
                  66,760Weighted
      average number of common shares outstanding
                  
                  
                  4,254,533
                  
                  
                  
                  4,162,234
                  
                  
                  
                  4,210,169
                  
                  
                  
                  4,162,234Basic
      net income (loss) per share
                  
                  $
                  0.01
                  
                  
                  $
                  (0.09
                  )
                  
                  $
                  (0.04
                  )
                  
                  $
                  0.02Diluted
      earnings per share calculation:Net
      income (loss)
                  
                  $
                  43,852
                  
                  
                  $
                  (354,458
                  )
                  
                  $
                  (155,551
                  )
                  
                  $
                  66,760Weighted
      average number of common shares outstanding
                  
                  
                  4,254,533
                  
                  
                  
                  4,162,234
                  
                  
                  
                  4,210,169
                  
                  
                  
                  4,162,234Common
      stock equivalents:Stock
      options
                  
                  
                  312,684
                  
                  
                  
                  (1
                  )
                  
                  
                  (1
                  )
                  
                  
                  316,353Weighted
      average diluted shares outstanding
                  
                  
                  4,567,217
                  
                  
                  
                  4,162,234
                  
                  
                  
                  4,210,169
                  
                  
                  
                  4,478,587Diluted
      net income (loss) per share
                  
                  $
                  0.01
                  
                  
                  $
                  (0.09
                  )
                  
                  $
                  (0.04
                  )
                  
                  $
                  0.01





(1)  Stock
options outstanding of 337,500 were not included in the calculation as they
would have been anti-dilutive.


9





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 31, 2010 relating to our year ended
December 31, 2009.





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 the 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, Inc. 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 is a Nevada corporation, formed on June 27, 1995, with principal offices in
Minnetonka, Minnesota. It developed and patented (U. S. patent number 5,957,776)
a proprietary information and management system (Table Trac) that automates and
monitors the operations of casino table games. Since 2000, Table Trac has added
functionality, developed related casino system modules for guest rewards and
loyalty club, marketing analysis, guest service, promotion
administration/management, vault/cage management and audit/accounting to its
existing table games management program. These modules all use Table Trac's
simple to learn browser-based interface.





Recently,
we expanded our product offerings in the areas of gaming machine on-line
accounting and management, customer mailing for tiered pre-encoded promotional
marketing, touch screen customer service kiosks, guest service paging and
wireless handheld communication devices. The addition of these modalities has
transformed Table Trac from a "niche" supplier of peripheral products to one of
a full-line single source supplier.





We are
able to offer customers casino management systems with functionality comparable
to our larger competitors at a significant lower price point by utilizing
innovative technology and programming resources. We have over 15 years of
experience in designing and developing casino table game management systems and
more than 11 years of experience in designing and deploying casino management
systems focused on customer reward and loyalty programs.  Equally
important, we have proven track record and countless hours of continuous gaming
machine operation monitoring and accounting.





Discussion of Critical
Accounting Policies





Our
discussion and analysis of financial condition and results of operations is
based upon our financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States. The preparation
of these financial statements requires us to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses, and
related disclosure of contingent assets and liabilities. We evaluate these
estimates on an on-going basis, including those related to revenue recognition,
bad debts, inventory valuation, intangible assets, and income taxes. We base
these estimates on historical experience and on various other assumptions that
we believe are reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions. The accounting
policies, estimates and judgments that we believe have the most effect on the
reported financial position and results of operations are as listed below. This
section should also be read in conjunction with Note 1 in our financial
statements in our Annual Report on Form 10-K for the year ended December 31,
2009.





Revenue
Recognition





We derive
revenues from the sales of systems, licenses and maintenance fees, services and
rental and participation-based agreements.


10





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 installed, 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,
we allocate the revenue to each element based on their estimated value and
recognize the associated revenue when all revenue recognition criteria have been
met for each element.





The
Company does offer its customers contracts with extended payment terms. The
Company has established a history of successfully collecting on these contracts
under the original payment terms without making concessions. Based on past and
current collection history, all sales installment contracts are being recognized
in revenue following the "system sales" policy noted above.





Maintenance
Revenue





Maintenance
revenue is recognized ratably over the contract period.





Service
Revenue





Service
revenue is recognized after the services are performed and collection of the
resulting receivable is reasonably assured.





Rental
revenue


In 2010,
the Company began offering certain new customers a rental contract. 
Revenues are billed monthly based on a per game per day basis.  There is an
option to purchase the system after the rental agreement at a pre-determined
residual value.





Participation
Revenue





In 2009,
the Company began offering certain new customers a participation-based contract.
Revenues were originally determined and billed monthly based on a percentage of
the amount of money processed through the customer’s casino gaming system
utilizing the Table Trac software. After discussion with the SEC, the Company
changed its revenue recognition policy for these contracts, and any future
contracts, to record revenue at the time of cash collection.





Inventory





Inventory
comprised of finished goods and work in process is stated at the lower of cost
or market. The first-in, first-out cost method is used to value inventory.
Inventory is reviewed annually for the lower of cost or market and obsolescence.
Any material cost found to be above market value or considered obsolete is
written down accordingly.





Accounts
Receivable





Accounts
receivable includes regular customer receivables and amounts from financed
contracts coming due within 12 months. Amounts from these contracts coming due
beyond 12 months are recorded as "Long-term accounts receivable - financed
contracts ".  Our accounts receivable also includes an allowance for
doubtful accounts.




Results
of Operations - Three Months Ended September 30, 2010 Compared to Three Months
Ended September 30, 2009





During
the three months ended September 30, 2010, income (loss) from operations was
$57,209 compared to ($613,506) for the three months ended September 30, 2009.
The major components of revenues, cost of sales and selling, general and
administrative expenses are discussed below.





Revenues





Revenues
totaled $959,102 for the three months ended September 30, 2010 compared to
$471,847 for the three months ended September 30, 2009.  The following
table summarizes our revenues for the three months ended September 30, 2010 and
2009, respectively:




Three Months Ended September 30,2010
                    
                    
                    2009
                    
                    
                    2010
                    
                    
                    2009(percent
      of revenues)System
      sales
                    
                    $
                    682,106
                    
                    
                    $
                    137,648
                    
                    
                    
                    71.1
                    %
                    
                    
                    29.2
                    %License
      and maintenance fees
                    
                    
                    219,465
                    
                    
                    
                    257,253
                    
                    
                    
                    22.9
                    %
                    
                    
                    54.5
                    %Other
      sales
                    
                    
                    57,531
                    
                    
                    
                    76,946
                    
                    
                    
                    6.0
                    %
                    
                    
                    16.3
                    %Total
      revenues
                    
                    $
                    959,102
                    
                    
                    $
                    471,847
                    
                    
                    
                    100.0
                    %
                    
                    
                    100.0
                    %


11





During
the three months ended September 30, 2010, we generated more systems sales
revenue than 2009 because a large system installation was completed in 2010 and
no system installation was completed in the same three month period in
2009.  Revenues from license and maintenance fees decreased slightly
for 2010 mainly due to the drop of one international system in operation in 2010
over 2009.  Lastly, other sales, which include sales of printers,
kiosk software, mailing services, and consulting services decreased slightly due
to less of these type of sale for the quarter in 2010.





Cost of
Sales





Cost of
sales for the three months ended September 30, 2010 increased to $351,326 from
$106,849 for the three months ended September 30, 2009.  The following
table summarizes our revenues for the three months ended September 30, 2010 and
2009, respectively:




Three Months Ended September 30,2010
                    
                    
                    2009
                    
                    
                    2010
                    
                    
                    2009(percent
      of revenues)System
      sales
                    
                    $
                    144,984
                    
                    
                    $
                    27,968
                    
                    
                    
                    15.1
                    %
                    
                    
                    5.9
                    %License
      and maintenance fees
                    
                    $
                    49,160
                    
                    
                    $
                    39,336
                    
                    
                    
                    5.1
                    %
                    
                    
                    8.3
                    %Other
      sales
                    
                    $
                    157,182
                    
                    
                    $
                    39,545
                    
                    
                    
                    16.4
                    %
                    
                    
                    8.4
                    %Total
      cost of sales
                    
                    $
                    351,326
                    
                    
                    $
                    106,849
                    
                    
                    
                    36.6
                    %
                    
                    
                    22.6
                    %Gross
      profit
                    
                    $
                    607,776
                    
                    
                    $
                    364,998
                    
                    
                    
                    63.4
                    %
                    
                    
                    77.4
                    %





The
Company's gross profit was 63% and 77% for the three months ended September 30,
2010 and 2009, respectively. This decrease is primarily due to an increase in
system installations completed during the current period compared to the no
system completed in the same period last year. Generally, system sales have a
lower gross profit compared to our license and maintenance fee revenue, which
has very little associated costs.





Selling, General and
Administrative Expenses





For the
three months ended September 30, 2010, selling, general and administrative
expenses were $550,567 compared to $626,974 for the same period in
2009.  Our most significant changes in operating expenses from the two
three-month interim periods related to sales and marketing, professional fees,
stock compensation, bad debt, payroll and license & permit expense. A
discussion of the various components of our operating expenses for the three
months ended September 30, 2010 and 2009 appears below:




Sales and
Marketing. Our expenses related to sales and marketing efforts decreased
significantly for the three months ended September 30, 2010, to $80,526 compared
to $96,640 for the same period in 2009 primarily due to decreased marketing
efforts (trade shows, etc.) related to the sale of our systems.





Professional
Fees. Professional fees for the three months ended September 30, 2010 aggregated
to $73,894 versus $35,410 for the same period in 2009 primarily due to an
increase in accounting services and shareholder relation services.  We
expect professional fees to increase throughout the remainder of 2010 as we
concentrate on our Sarbanes-Oxley compliance efforts and broadening our investor
awareness. Although with the exemption from 404(b) compliance, they should not
increase as drastically as anticipated since we will not be subjected to an
audit of our internal controls by our outside auditors.





Stock
Compensation.  Expense related to stock compensation for the three
months ended September 30, 2010 compared to the same period in 2009 was $23,625
and $0, respectively.  For 2010, the Company issued shares for board
of director service.





Bad
Debt.  Bad debt expense for the three months ended September 30, 2010
was $0 compared to $43,817 for the same period in 2009.  This change
relates to an increase in our 2009 allowance for doubtful accounts due to the
discontinued operations of one customer in 2009.





Payroll.
Our payroll costs decreased for the three months ended September 30, 2010 to
$202,973 compared to $265,281 for the same period in 2009. The decrease is
mainly due to no bonuses being paid for the current quarter ended in
2010.





Licenses
and Permits. Our license and permits expense increased for the three months
ended September 30, 2010 to $11,240 from $1,225 for the same time period in 2009
mainly due to fees associated with the licensing and background investigation of
the Company with regard to obtaining a vendor gaming license with the State of
South Dakota.


12





Interest
Income





For the
three months ended September 30, 2010, interest income was $10,058 compared to
$51,051 for 2009.  This decrease is primarily related to the $42,611
of interest income accrued on our $250,000 note receivable in 2009. The note was
written off at September 30, 2009.





Tax
Provision





The
provision for income taxes for the three months ended September 30, 2010 was
$23,415 which was calculated at a 35% effective rate, compared to the income tax
benefit of ($207,997) for the same period in 2009, which was calculated at a
(37%) effective rate.





Net Income
(Loss)





Net
income (loss) before taxes for the three months ended September 30, 2010, was
$67,267 compared to ($562,455) for same period in 2009. Net income was $43,852
for the nine months ended September 30, 2010 compared to net loss of ($354,458)
for 2009. The increase is primarily due to the completed installation during the
three months ended September 30, 2010. The basic earnings (loss) per share
were $0.01 compared to ($0.09) for the three months ended September 30, 2010 and
2009, respectively.





Results
of Operations - Nine Months Ended September 30, 2010 Compared to Nine months
Ended September 30, 2009





During
the nine months ended September 30, 2010, loss from operations was ($296,079)
compared to ($16,490) for the nine months ended September 30, 2009. The major
components of revenues, cost of sales and selling, general and administrative
expenses are discussed below.





Revenues





For the
nine months ended September 30, 2010, revenues totaled $1,784,089 compared to
$2,582,404 for 2009.  The following table summarizes our revenues for
the nine months ended September 30, 2010 and 2009, respectively:




Nine Months Ended September 30,2010
                    
                    
                    2009
                    
                    
                    2010
                    
                    
                    2009(percent
      of revenues)System
      sales
                    
                    $
                    905,407
                    
                    
                    $
                    1,745,344
                    
                    
                    
                    50.7
                    %
                    
                    
                    67.6
                    %License
      and maintenance fees
                    
                    
                    703,021
                    
                    
                    
                    723,524
                    
                    
                    
                    39.4
                    %
                    
                    
                    28.0
                    %Other
      sales
                    
                    
                    175,661
                    
                    
                    
                    113,536
                    
                    
                    
                    9.8
                    %
                    
                    
                    4.4
                    %Total
      revenues
                    
                    $
                    1,784,089
                    
                    
                    $
                    2,582,404
                    
                    
                    
                    100.0
                    %
                    
                    
                    100.0
                    %





During
the nine months ended September 30, 2010, we generated less systems sales
revenue than in 2009 because only one large system installation was completed in
2010 compared to three systems in the same period in 2009.  Revenues
from license and maintenance fees decreased slightly for 2010 mainly due to the
drop of one international system in operation in 2010 over
2009.  Lastly, other sales, which include sales of printers, kiosk
software, mailing services, and consulting services increased over 2009 as we
began those sales in the 2nd quarter
of 2009.





Cost of
Sales





Cost of
sales for the nine months ended September 30, 2010 decreased to $440,690 from
$541,590 for 2009.





Nine Months Ended September 30,2010
                    
                    
                    2009
                    
                    
                    2010
                    
                    
                    2009(percent
      of revenues)System
      sales
                    
                    $
                    169,038
                    
                    
                    $
                    392,380
                    
                    
                    
                    9.5
                    %
                    
                    
                    15.2
                    %License
      and maintenance fees
                    
                    
                    139,981
                    
                    
                    
                    106,128
                    
                    
                    
                    7.8
                    %
                    
                    
                    4.1
                    %Other
      sales
                    
                    
                    131,671
                    
                    
                    
                    43,082
                    
                    
                    
                    7.4
                    %
                    
                    
                    1.7
                    %Total
      cost of sales
                    
                    $
                    440,690
                    
                    
                    $
                    541,590
                    
                    
                    
                    24.7
                    %
                    
                    
                    21.0
                    %Gross
      profit
                    
                    $
                    1,343,399
                    
                    
                    $
                    2,040,814
                    
                    
                    
                    75.3
                    %
                    
                    
                    79.0
                    %





The
Company's gross profit was 75% and 79% for the nine months ended September 30,
2010 and 2009, respectively. This decrease is primarily due to an increase in
product support wages with the hire of a specialist in 2010, which accounts for
the increase in license and maintenance costs. The increased volume of other
sales accounts for the increased costs. The decrease in system sales from three
in 2009 to one in 2010 account for the decrease in system sales
costs.





Selling, General and
Administrative Expenses





Selling,
general and administrative expenses for the nine months ended September 30, 2010
were $1,639,478 compared to $1,705,774 for 2009.  Our most significant
changes in operating expenses from the two interim periods related to insurance,
sales and marketing, professional fees, stock compensation and bad debt. A
discussion of the various components of our operating expenses for the nine
months ended September 30, 2010 appears below.


13





Sales and
Marketing. For the nine months ended September 30, 2010, our expenses related to
sales and marketing efforts increased significantly to $192,372 from $156,343
for 2009 due to increased marketing efforts (trade shows, etc.) related to the
sale of our systems.





Professional
Fees. For the nine months ended September 30, 2010, our professional fees
aggregated to $224,220 versus $101,948 for 2009 primarily due to an increase in
accounting services and shareholder relation services. We expect
professional fees to increase throughout the remainder of 2010 as we concentrate
on our Sarbanes-Oxley compliance efforts and broadening our investor awareness.
And although with the exemption from 404(b) compliance, they should not increase
as drastically as anticipated since we will not be subjected to an audit of our
internal controls by our outside auditors; the Company has, as noted in Item 4T
below, hired an outside internal control consulting firm to help with our
internal control processes.





Insurance.
For the nine months ended September 30, 2010 our insurance costs increased to
$81,060 from $53,361 for 2009.  Included are several new insurances for
2010 – dental, directors & officers, employment practices and fiduciary
liability. Our health insurance and worker compensation insurance premiums also
increased for 2010.





Stock
Compensation.  Expense related to stock compensation for the nine
months ended September 30, 2010 compared to the nine months ended September 30,
2009 was $70,999 and $51,632, respectively. For 2010, the Company issued shares
for board of director service while in 2009 the Company issued shares through
the employee bonus program.




Bad
Debt.  Bad debt expense for the nine months ended September 30, 2010
was $126 compared to $182,317 for the nine months ended September 30,
2009.  This change relates to an increase in our 2009 allowance for
doubtful accounts due to the discontinued operations of one customer in
2009.




Interest
Income





For the
nine months ended September 30, 2010, interest income was $45,528 compared to
$136,803 for 2009.  This decrease is primarily related to the $101,530
of interest income accrued on our $250,000 note receivable in 2009. The note was
written off at September 30, 2009.





Income Tax
Expense





For the
nine-month period ended September 30, 2010, our income tax benefit was ($95,000)
compared to income tax expense of $53,553 for 2009, which resulted because our
loss before taxes for the 2010 period was ($250,551) compared to income before
taxes for the 2009 period of $120,313.  The overall effective rate for
2010 was (38%) compared to 44% for 2009.





Net Income
(Loss)





For the
nine-month period ended September 30, 2010, net loss before taxes was ($250,551)
compared to net income before taxes of $120,313 for 2009. Net loss was
($155,551) for the nine months ended September 30, 2010 compared to net income
of $66,760 for 2009. The decrease in net income is due to fewer system
installations generating revenue in 2010.  The basic earnings (loss)
per share was ($0.04) compared to $0.02 for the nine months ended September 30,
2010 and 2009, respectively.





Backlog





The
Company’s backlog generally consists of future system installations and
expansion of offerings for currently installed and supported
systems.  These expanded offerings can include kiosks, in-casino
broadcast advertising, and electronic marketing to casino patrons.





The
Company has contracts to install three casino management systems that were not
installed as of September 30, 2010.





The
Company is currently working with gaming establishments in eight US states, as
well as countries in Central and South America to purchase new systems and
expand service offerings for existing customers.




Liquidity
and Capital Resources





Summary
cash flow data is as follows:




Nine Months EndedSeptember 30,2010
                    
                    
                    2009Cash
      flows provided (used) by :Operating
      activities
                    
                    $
                    (49,375
                    )
                    
                    $
                    29,284Investing
      activities
                    
                    
                    (56,742
                    )
                    
                    
                    (250,000
                    )Financing
      activities
                    
                    
                    -
                    
                    
                    
                    (942
                    )Net
      decrease in cash
                    
                    
                    (106,117
                    )
                    
                    
                    (221,658
                    )Cash,
      beginning of period
                    
                    
                    1,320,946
                    
                    
                    
                    1,212,953Cash,
      end of period
                    
                    $
                    1,214,829
                    
                    
                    $
                    991,295


14





At
September 30, 2010, we had cash of $1,214,829 compared to cash of $991,295 on
September 30, 2009. The increase results mainly from an increase in accounts
receivable collections.  Changes in cash flows provided by operating
activities related primarily to deferred income taxes, stock compensation
expense, and changes in operating assets and liabilities, including accounts
receivable, interest receivable, inventory, income taxes receivable, deferred
system sales costs, accrued payroll and related withholding liabilities and
deferred revenue.  Changes in cash flows from investing activities
relate to vehicle and equipment purchases and our new rental system program in
2010 and a $250,000 loan to one of our customers in 2009. Changes in cash flows
from financing activities relate to the issuance of restricted stock in
2010.





There are
no known trends, events or uncertainties that are likely to have a material
impact on our short or long-term liquidity. The primary source of liquidity in
both the short and long-term will be system sales and the resulting license and
maintenance fees from existing systems. We anticipate the ability to manage
expenses and cash flow so monthly obligations will be satisfied by cash flow
from operations. We believe the Company has adequate cash 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 September 30,
2010.





Item 3. Quantitative and
Qualitative Disclosures About Market Risk





Not
applicable.





Item 4T. Controls and
Procedures





Material Weaknesses
Previously Disclosed





As
discussed in Item 9A of our 2009 Annual Report on Form 10-K, as of December 31,
2009, we identified certain material weaknesses relating to our accounting
policies and procedures, board of director financial oversight, lack of
segregation of duties, financial close and reporting and internal financial
expertise.





Evaluation of Disclosure
Controls and Procedures





Our Chief
Executive Officer/Principal Financial Officer (CEO/PFO) evaluated the
effectiveness of the Company's disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered
in this report. Taking into account the material weaknesses previously
disclosed, which have not been remediated as of the end of the period covered by
this Quarterly Report, our CEO/PFO concluded that our disclosure controls and
procedures were not effective in providing reasonable assurance that information
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act was recorded, processed, summarized and reported within
the time periods specified by the Securities and Exchange Commission's rules and
forms and did not ensure that information required to be disclosed in the
reports that we file or submit under the Exchange Act was accumulated and
communicated to our management, including our CEO/PFO, as appropriate, to allow
timely decisions regarding required disclosure.





As a
result of this conclusion, the financial statements for the period covered by
this report were prepared with particular attention to the material weaknesses
previously disclosed. Notwithstanding the material weaknesses in internal
controls which continue to exist as of September 30, 2010, CEO/PFO concluded
that the financial statements included in this Form 10-Q present fairly, the
financial position, results of operations and cash flows of the Company as
required for interim financial statements.





Changes in Internal Control
over Financial Reporting





Management
has made the following steps to help improve the Company’s control
structure:





The
Company continues to work on and enhance its internal control processes and
procedures put in place during last quarter and believes it has sufficient
personnel resources and technical accounting and reporting expertise within the
Company's financial closing and reporting functions at the time of the
preparation of this form 10-Q, having had the full benefit of the KMAS CPA
expertise for the nine months ended September 30, 2010. In September 2010, the
Company hired a part-time clerical clerk for the data entry into the accounting
system; this provides another level of segregation of duties.





In May
2010, the Company engaged Milo Belle Consultants LLC (MBC), who is providing
internal audit control personnel for testing assistance in streamlining
processes and procedures. Testing of our processes and procedures began July 26,
2010. We are still in process of remediation of the general computer controls
section of that testing.





We were
unable to conclude that the material weaknesses described in our Annual Report
on Form 10-K for the year ended December 31, 2009 were effectively remediated as
of September 30, 2010 due to the fact that (i) less than the entire remediation
plan has been developed and implemented and (ii) an insufficient period of time
has passed for management to test and document the effectiveness of those
controls which have been newly created as part of the remediation plan (as
summarized above). However, we believe that we have mitigated those weaknesses
with the steps outlined above – our actual testing of our processes and
procedures by an independent party began on July 26, 2010 and completed in
August with remediation plans still in process for some computer
controls.


15





PART
II. OTHER INFORMATION





Item 1. Legal
Proceedings




None.





Item 1A. Risk
Factors





None.





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





None.





Item 3. Defaults upon
Senior Securities





None.





Item 4. Submission of
Matters to a Vote of Security Holders




None.




Item 5. Other
Information




None.


16





Item 6.
Exhibits




Exhibit
                
                Description31.1
                
                Certification
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 ( filed herewith
      ).31.2
                
                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).





SIGNATURES





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





Dated:
      November 15, 2010
            Table
      Trac, Inc.(Registrant)By:
            /s/ Chad HoehneChad
      HoehnePresident,
      Chief Executive Officer and Principal Financial
  Officer


17