TABLE TRAC INC

At inception, the Company recorded $210,782 in "Net investment in sales type leases" and derecognized $139,521 from “Inventory" on its condensed balance sheet. The Company recognized $71,261 in profit from sales type leases in its condensed statements of operations for the three months ended March 31, 2021 as a result of the transaction. For the three months ended March 31, 2021 the Company recognized $6,057 of interest income in the Company's condensed statements of operations

The total net investments in sales type leases, as of March 31, 2021 was $204,724. The current portion of $37,640 is included in Current Assets on the condensed balance sheet as of March 31, 2021, and the long term portion of $167,084 is included in Long-Term Assets on the condensed balance sheet as of March 31, 2021.  The lease contains a purchase option at the conclusion of the lease, which the Company has determined does not meet the probability criterion.  The Company has not recorded an unguaranteed residual asset.

Cash provided by operations for the three months ended March 31, 2021 was approximately $798,000 compared to cash used in operations of  approximately $59,000 for the period ending March 31, 2020. This increase was a result of a number of factors including a significant increase in net income,  a decrease in inventory, prepaid expenses and customer deposits. These increases were offset by an increase in accounts receivable and net investment in sales type leases. 

As of March 31, 2021, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of our disclosure controls and procedures as such term is defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded our disclosure controls and procedures were not effective because of the identification of a material weakness in our internal control over financial reporting for the year ended  March 31, 2021.  Remediation efforts have already been implemented which primarily consists of new policies and procedures to assist management in recording transactions appropriately, particularly related to revenue and cost recognition.  We will consider this material weakness to be fully remediated once the applicable controls operate for a sufficient period of time and our management has concluded, through testing, that these controls are operating effectively, which management expects to be completed by June 30, 2021.

In March 2021, the Company awarded 15,200 shares of restricted stock to employees. The shares are subject to a two year vesting period. The shares were issued pursuant to the exemption set forth in Section 4(a)(2) of the Securities Act on the basis that the shares were issued in a transaction not involving any public offering.