TBTC 10-K & 10-Q changes, risk factors and insider trading

The opening of new casinos, expansion of existing casinoscasinos, and replacement of existing gaming management systems in existing casinos fluctuate withbased on demand, general economic conditions, regulatory approvalsapprovals, and the availability of financingfinancing. andThese haveactivities beenmay negativelyalso be adversely affected by thefactors recentsuch COVID-19as pandemic.inflationary Whilepressures, therising negativeinterest effectsrates, ofsupply thechain COVID-19disruptions, pandemiclabor haveshortages, abated,geopolitical there is still potential for negative effects of future pandemicsinstability, or contagiouschanges diseasein outbreaks.consumer spending patterns. In addition, the expansion of gaming into new jurisdictions can be a protractedlengthy and uncertain process, usuallyoften requiring a public referendum and/orreferendums, legislative actionaction, beforeand establishingextensive orregulatory expanding gaming.review. Any of these factors could delay, restrictrestrict, or prohibitprevent the expansion of our business and could negatively impact our results of operations, cash flowsflows, and financial condition.

The following discussionManagement's Discussion and Analysis should be read in conjunction with our audited financial statements and related notes that appear elsewhere in this filing.

The Company had fivethree projects in its backlog as of December 31, 2024.2025. The Company had threefive projects in its backlog at December 31, 2023.2024. As of the filing date of this report, the Company has signed twofour new contracts with customers in 2025.2026.

In addition, the Company has a $500,000 line of credit with a lender. AsNo amount was outstanding or drawn from this line of credit during the year ended December 31, 2024, no amount was outstanding.2025. The line of credit expires on February 1, 2026.2027.

The Company’s cash and cash equivalents position at December 31, 20242025 was $2,257,696,$8,235,788, aan decreaseincrease of $1,232,075$5,978,092 from $3,489,771$2,257,696 at December 31, 2023.2024. This decreaseincrease was primarily the result of the Company investinginvestment in certificates of deposit.deposit maturing during the 2025. The Company’s short-term investments were $0 as of December 31, 2025, as compared to $4,627,744 as of December 31, 2024.

Net cash flows provided by operating activities during the year ended December 31, 20242025 was $2,018,053$1,806,481 ana increasedecrease of $1,623,113$211,572 from $394,940$2,018,053 for the year ended December 31, 2023.2024. This increasedecrease was primarily due to a decrease in inventorycustomer anddeposits anoffset increaseby a decrease in customer deposits.inventory.

Net cash usedprovided inby investing activities was $3,111,075$4,534,991 during the year ended December 31, 2024,2025, compared to $1,556,113cash used in investing activities of $3,111,075 for the year ended December 31, 2023.2024. This increase relative to 2024 was aprimarily resultdue ofto theproceeds Company'sfrom investing inmaturing certificates of deposit andof the$4,725,286. capitalWe expendituresused relatedno cash to thepurchase openingcertificates of thedeposit Lasin Vegas2025, office.as compared to $6,561,614 in 2024.

RESULTS OF OPERATIONS, FOR THE YEAR ENDED December 31, 20242025 COMPARED TO YEAR ENDED December 31, 20232024

The most significant events that affected the 20242025 results of operations were the Company’s installation of eight casino management systems and expanding twofive existing customers systems.

Total revenues increaseddecreased $1,677,174,$115,789, a 17.7%1.0% increase,decrease, during the year ended December 31, 2025, compared to the year ended December 31, 2024, as a result of increases in system, maintenance and other sales.revenue. System sales increaseddecreased $760,105,$1,166,909, a 23%28.5% increase,decrease, due to ana increasedecrease in the number and size of site installations in 20242025 compared to 2023.2024. Maintenance revenue increased $393,205,$773,918, an 7.9%14.4% increase, due to the increase in our customer base and rates from 20232024 to 2024.2025. Service and other revenue, which includes DataTrac, KioskTrac, KioskTrac Mobile, SlotSUITE, RePrintEnroll kiosks and licensing agreements increased $523,863,$223,522, or approximately 45%,13%, as a result of an increase in DataTrac services, SlotSUITE and promotional kiosk products sold.sold in 2025 compared to 2024.

During 2024,2025, the Company delivered a total of eight systems andsystems, expanded twofive systemsexisting in the United States.customers. During 2023,2024, the Company delivered thirteeneight systems.

Cost of sales increaseddecreased 34.2%11.6% to $2,890,020 in 2025 from $3,270,733 in 2024 from $2,436,449 in 2023.2024. The increasedecrease of $834,284$380,713 was primarily due to ana increasedecrease in volumevolume, type and size of installations. The following table summarizes our cost of sales:

Selling, general and administrative expenses increased 15%6% to $6,554,624 in 2025 from $6,175,668 in 2024 from $5,374,687 in 2023.2024. This increase of $800,981$378,956 was primarily due to an increase in the Company's salesresearch and marketingdevelopment efforts, an increase in sales commissions and an increase in gross wages.efforts.

Interest income increased to $477,951 in 2025, compared to $388,716 in 2024, compared to $330,005 in 2023, primarily due to the increase of interest income from cash being invested into multiple certificates of deposit.deposit as well as a high yield savings account.

The income tax expense was $532,500$462,000 in 2024,2025, for an effective rate of 25.3%,22.2%, compared to income tax expense of $397,000$532,500 for an effective rate of 20.1%25.3% in 2023.2024. The change in the effective rate is primarily due to changes in non-taxable income, non-deductible expenses and generation/utilization of tax credits.

The net income for 20242025 was $1,576,428$1,626,620 compared to net income of $1,613,005$1,576,428 for 2023,2024, which is a decreaseincrease of $36,577.$50,192.

The Company’s discussion and analysis of financial condition and results of operations is based upon its financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates these estimates, including those related to revenue recognition, bad debts, inventory valuation, intangible assets, and income taxes.recognition. The Company bases these estimates on historical experience and on various other assumptions that it believes 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 estimates and judgments that the Company believes have the most effect on its reported financial position and results of operations are as follows:

Management’s assessment of collectability at both contract inception and on an ongoing basis resulted in the determination that some of our contracts did not meet the criterion for collectability. The balance of these contracts are not included as part of accounts receivable on the balance sheet. Accordingly, for these contracts whereby the collectability criterion has not been met, revenue will be recognized as payments are received. During the years ended December 31, 20242025 and 2023,2024, the Company has determined that approximately $1,229,290$887,500 and $2,392,560$1,229,290 for these systems did not meet the revenue recognition collectability criterion. Management considered the following facts and circumstances in its determination: these installations are subject to different regulators than our current customer base; Payments have not been received for items invoiced; one customer has a large debtor in a senior position to Table Trac. Both contracts will continue to be recognized on a cash basis subject to ongoing collectability assessment. A change in the collectability assessment in a future period may allow the Company to recognize revenue prior to collecting cash. During the quarter ending September 30, 2024, a casino, previously included in this assessment, discontinued its business operations resulting in the noted decrease. The company has received substantially all of the site's inventory installed.

Inventory, consisting of finished goods, is stated at the lower of cost or net realizable value. The average cost method is used to value inventory. Inventory is reviewed annuallyquarterly for the lower of cost or net realizable value and obsolescence. Any material cost found to be above market value or considered obsolete is written down accordingly. The Company had $7,697$8,597 and $8,768$7,697 of obsolescence reserves at December 31, 20242025 and 2023,2024, respectively.

The Company has also filed patent applications related to its gaming ticket management system, which is designed to reduce reliance on coin-based payouts by enabling accurate accounting and automated rounding of ticket exchanges to defined denominations. TheIn addition, the Company has filed patent applications related to its progressive jackpot tracking system, which is designed to interface with a wide range of progressive jackpot configurations and improve the efficiency of tracking jackpot activity across the casino floor. These systems incorporate data-driven and artificial intelligence–based technologies intended to improve operational visibility and processing efficiency.

During the firstsecond quarter of 2026, the Company delivered threesix new systems and upgraded three existing system.systems. At the end of the quarter, the Company had casino management systems, table games management systems, DataTrac, KioskTrac, KioskTrac Mobile, SlotSUITE, RePrintEnroll kiosks installed with on-going support and maintenance contracts with over 115 casino operators in over 300 casinos worldwide. Sales to customers in the United States represented 95.1%93.6% of the Company’s total revenues for the three month period ending MarchJune 31,30, 2026.

Results of Operations – Three Months Ended MarchJune 31,30, 2026 Compared to Three months ended MarchJune 31,30, 2025

During the three months ended MarchJune 31,30, 2026, income from operations was $1,160,508$1,193,857 compared to income from operations of $942,627,$56,416, for the three months ended MarchJune 31,30, 2025. 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 totaled $3,914,339$4,244,884 for the three months ended MarchJune 31,30, 2026 compared to $ 3,535,933,2,338,845, for the three months ended MarchJune 31,30, 2025.

During the three months ended MarchJune 31,30, 2026, the Company delivered threesix new systems and upgraded three existing system.systems. During the same period in 2025, the Company delivered fiveone systems and expanded three existing customers.system.

Cost of sales increased to $1,253,284$1,283,647 for the three months ended MarchJune 31,30, 2026 from $932,323,$579,301, for the three months ended MarchJune 31,30, 2025 due primarily to the sizeincrease in number of each installinstallations completed during the three months ended MarchJune 31,30, 2026. The following table summarizes our cost of sales for the three months ended MarchJune 31,30, 2026 and 2025, respectively:

The Company’s gross profit was 68.0%69.8% and 73.6%75.3% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. This decrease is a result of the increased relative labormaterial costs associated with the twosix additional system installations with added complexities which weresystems installed in the three months ended MarchJune 31,30, 2026.

For the three months ended MarchJune 31,30, 2026, selling, general and administrative expenses were $1,500,547$1,767,380 compared to $1,660,983$1,703,128 for the same period in 2025. This decreaseincrease was a result of lower gross wagesprimarily due to ourthe lower head count and a decrease in sometiming of one our salesspring and marketing spending.tradeshows.

For the three months ended MarchJune 31,30, 2026, interest income was $96,981$99,361 compared to $117,680$125,572 for the same period in 2025. This decrease was a result of the company having no short-term investments and lower interest rates in the 2026 period.

The income tax expense for the three months ended MarchJune 31,30, 2026 was $286,000$289,000 as compared to $283,570,$38,430, for the three months ended MarchJune 31,30, 2025. See Note 8 for an explanation of the decreaseincrease in the effective tax rate.

Income before taxes for the three months ended MarchJune 31,30, 2026 was $1,257,489$1,293,936 compared to income before taxes for the three months ended MarchJune 31,30, 2025 of $1,065,809.$183,212. Net income for the three months ended MarchJune 31,30, 2026 was $971,489$1,004,936 compared to net income of $782,239$144,782 for the three months ended MarchJune 31,30, 2025. The basic and diluted income per share was $0.21$0.22 and $0.21, compared to basic and diluted income per share of $0.17$0.03 for the three months ended MarchJune 31,30, 2026 and 2025, respectively.

The Company had threeone system installationsinstallation in its backlog at MarchJune 31,30, 2026. The Company had fivetwo system installations in its backlog as of MarchJune 31,30, 2025. As of the filing date of this report, the Company has signed no new contracts.

Management believes that the Company has adequate cash to meet its obligations and continue operations for both existing customer contracts and ongoing product development for at least the next 12 months from the date of this filing. The Company has a $500,000 line of credit and as of MarchJune 31,30, 2026, there were no borrowings outstanding under the line of credit. The Company’s primary sources of liquidity are cash and cash equivalents, short-term investments, receivables and future cash generated from operations. As of MarchJune 31,30, 2026, the Company had total cash and cash equivalents of $8,122,868.$8,152,589. Management is not aware of any trends or any known demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in the Company's liquidity increasing or decreasing in any material way.

Net cash provided by operations for the threesix months ended MarchJune 31,30, 2026 was $444,090$590,149 compared to $734,810$1,212,220 for the threesix month period ending MarchJune 31,30, 2025. This decrease was a result of a number of factors including an increase in accounts receivable and a decrease in accruedprepaid expenses, offset by a decrease in inventory and customer deposits and an increase in net income.

For the threesix months ended MarchJune 31,30, 2026 net cash providedused byfor investing activities was $0$23,480 compared to cash provided by investing activities of $2,570,085 for the same period in 2025. This decrease was primarily a result of the Company not having certificates of deposit maturing in the threesix months ended MarchJune 31,30, 2026.

For the threesix months ended MarchJune 31,30, 2026 net cash used in financing activities was $557,010$649,868 compared to $92,789$185,579 for the same period in 2025, This increase was due to the payment of a special cash dividend in the threesix months ended MarchJune 31,30, 2026.

The Company had no off-balance sheet arrangements as of MarchJune 31,30, 2026.