Lifeloc Reports Third Quarter 2019 Results

Lifeloc Technologies, Inc. (OTC: LCTC), a global leader in the development and manufacturing of breath alcohol and drug testing devices, has announced financial results for the third quarter ended September 30, 2019.

Third Quarter Highlights

Lifeloc posted quarterly net revenue of $2.258 million resulting in quarterly net income after taxes of $152 thousand, or $0.06 per diluted share. These results compare to net revenue of $2.056 million and quarterly net income of $58 thousand, or $0.02 per diluted share in the third quarter of 2018. Gross margin on total revenue grew to 47% versus 46% in the same quarter last year. Revenue for the quarter increased nearly 10% versus the third quarter last year. For the first nine months of 2019, net revenue was $6.665 million and net income was $401 thousand, versus revenue of $6.387 million and net income of $147 thousand the same period last year ($0.16 vs. $0.06 per diluted share).

The third quarter performance benefited from the release and shipments of the second generation of our patent protected EasyCal automated calibration station, as well as increased royalties. This updated calibration station has expanded capabilities to calibrate our entire line of professional breathalyzers as well as RFID (Radio Frequency Identification) registration of calibration standards to further automate the process, representing a further advance of an already unique product.

“It was another strong quarter, both in top line revenue growth and bottom line earnings versus last year,” said CEO Dr. Wayne Willkomm. He added, “We are hopeful for further growth versus last year, with the DOT (Department of Transportation) approval of our newest breathalyzers, which happened in the fourth quarter. These new breathalyzers are packed with features and power that make these top performers while still offering excellent value to our customers. But with the completion of these products, research and development expenses are not expected to drop. We continue to expect research spending to ramp up as we redirect existing resources and even add more resources to deploy against our top priority, which is the development and commercialization of our real-time drug testing, including the marijuana breathalyzer based on the SpinDx lab on a disc detection platform.”

Real-time drug testing remains Lifeloc’s brightest growth opportunity. Lifeloc and Sandia National Laboratory in cooperation have developed trace analysis technologies for drugs of abuse. Getting rapid, quantitative results for a panel of drugs of abuse, including marijuana, heroin, cocaine and methamphetamine, is a critical tool needed by law enforcement to ensure safety on our roads and in the workplace. We have demonstrated SpinDx to perform trace analysis from liquid and vapor samples in the laboratory. Our work ahead is to complete the conversion of SpinDx from a laboratory test to simple-to-operate devices ready for deployment in the field.

Likewise, alcohol monitoring is another critical path to growth. Alcohol monitoring is accomplished through our R.A.D.A.R. (Real-time Alcohol Detection and Reporting) device, which is a tool to supervise offenders as an alternative to incarceration. The R.A.D.A.R. device calls for random alcohol tests, and stores the results for later retrieval by the probation officer, while onboard biometrics automatically verify the identity of the test subject. The second generation R.A.D.A.R. devices are in development with production expected in the first quarter of 2020. R.A.D.A.R. devices and their associated monitoring services are a critical step in moving our business towards a recurring revenue model.

About Lifeloc Technologies

Lifeloc Technologies, Inc. (OTC: LCTC) is a trusted U.S. manufacturer of evidential breath alcohol testers and related training and supplies for Workplace, Law Enforcement, Corrections and International customers. Lifeloc stock trades over-the-counter under the symbol LCTC. We are a fully reporting Company with our SEC filings available on our web site, www.lifeloc.com/investor.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which involve substantial risks and uncertainties that may cause actual results to differ materially from those indicated by the forward-looking statements. All forward-looking statements expressed or implied in this press release, including statements about our strategies, expectations about new and existing products, market demand, acceptance of new and existing products, technologies and opportunities, market size and growth, and return on investments in products and market, are based on information available to us on the date of this document, and we assume no obligation to update such forward-looking statements. Investors are strongly encouraged to review the section titled “Risk Factors” in our SEC filings.

Easycal and R.A.D.A.R. are registered trademarks of Lifeloc Technologies, Inc.

SpinDx is a trademark of Sandia Corporation.

LIFELOC TECHNOLOGIES, INC. Condensed Balance Sheets
		September 30,
		2019				December 31,
		(Unaudited)				2018
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	2,922,176			$	2,788,327
Accounts receivable, net			754,680				675,136
Inventories, net			2,051,897				1,290,607
Income taxes receivable			—				90,629
Prepaid expenses and other			97,333				35,155
Total current assets			5,826,086				4,879,854
PROPERTY AND EQUIPMENT, at cost:
Land			317,932				317,932
Building			1,952,347				1,928,795
Real-time Alcohol Detection And Reporting equipment and software			569,448				569,448
Production equipment and software			911,454				800,569
Training courses			432,375				432,375
Office equipment and software			246,946				241,836
Sales and marketing equipment			246,738				219,797
Research and development equipment and software			159,810				159,810
Less accumulated depreciation			(1,954,927	)			(1,649,203	)
Total property and equipment, net			2,882,123				3,021,359
OTHER ASSETS:
Patents, net			148,535				158,147
Deposits and other			77,568				140,452
Deferred taxes			90,061				79,869
Total other assets			316,164				378,468
Total assets		$	9,024,373			$	8,279,681
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable		$	389,138			$	343,783
Term loan payable, current portion			44,413				43,207
Customer deposits			164,606				19,265
Accrued federal and state income tax			105,346				—
Accrued expenses			300,342				250,912
Deferred revenue, current portion			67,199				44,218
Reserve for warranty expense			41,000				40,000
Total current liabilities			1,112,044				741,385
TERM LOAN PAYABLE, net of current portion and
debt issuance costs			1,335,788				1,369,347
DEFERRED REVENUE, net of current portion			8,937				8,212
Total liabilities			2,456,769				2,118,944
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, no par value; 50,000,000 shares
authorized, 2,454,116 shares outstanding			4,603,304				4,597,646
Retained earnings			1,964,300				1,563,091
Total stockholders' equity			6,567,604				6,160,737
Total liabilities and stockholders' equity		$	9,024,373			$	8,279,681

LIFELOC TECHNOLOGIES, INC. Condensed Statements of Income (Unaudited)
		Three Months Ended September 30,
REVENUES:		2019				2018
Product sales		$	2,083,044			$	1,985,520
Royalties			153,922				46,417
Rental income			21,189				23,822
Total			2,258,155				2,055,759
COST OF SALES			1,193,088				1,111,067
GROSS PROFIT			1,065,067				944,692
OPERATING EXPENSES:
Research and development			253,716				249,092
Sales and marketing			329,824				331,505
General and administrative			287,814				271,172
Total			871,354				851,769
OPERATING INCOME			193,713				92,923
OTHER INCOME (EXPENSE):
Interest income			10,454				7,676
Interest expense			(14,513	)			(14,957	)
Total			(4,059	)			(7,281	)
NET INCOME BEFORE PROVISION FOR TAXES			189,654				85,642
PROVISION FOR FEDERAL AND STATE INCOME TAXES			(38,129	)			(27,478	)
NET INCOME		$	151,525			$	58,164
NET INCOME PER SHARE, BASIC		$	0.06			$	0.02
NET INCOME PER SHARE, DILUTED		$	0.06			$	0.02
WEIGHTED AVERAGE SHARES, BASIC			2,454,116				2,454,116
WEIGHTED AVERAGE SHARES, DILUTED			2,456,105				2,454,116

LIFELOC TECHNOLOGIES, INC. Condensed Statements of Income (Unaudited)
		Nine Months Ended September 30,
		2019				2018
REVENUES:
Product sales		$	6,219,779			$	6,121,553
Royalties			376,906				207,840
Rental income			67,953				57,524
Total			6,664,638				6,386,917
COST OF SALES			3,512,235				3,446,592
GROSS PROFIT			3,152,403				2,940,325
OPERATING EXPENSES:
Research and development			742,884				840,647
Sales and marketing			961,746				997,563
General and administrative			908,607				864,629
Total			2,613,237				2,702,839
OPERATING INCOME			539,166				237,486
OTHER INCOME (EXPENSE):
Interest income			27,726				14,113
Interest expense			(43,404	)			(47,045	)
Total			(15,678	)			(32,932	)
NET INCOME BEFORE PROVISION FOR TAXES			523,488				204,554
PROVISION FOR FEDERAL AND STATE INCOME TAXES			(122,279	)			(57,061	)
NET INCOME		$	401,209			$	147,493
NET INCOME PER SHARE, BASIC		$	0.16			$	0.06
NET INCOME PER SHARE, DILUTED		$	0.16			$	0.06
WEIGHTED AVERAGE SHARES, BASIC			2,454,116				2,454,116
WEIGHTED AVERAGE SHARES, DILUTED			2,454,786				2,454,116

Lifeloc Technologies, Inc. Condensed Statements of Stockholders' Equity
		Three Months Ended September 30,								Nine Months Ended September 30,
		2019				2018				2019				2018
Total shareholders' equity, beginning balances		$	6,413,642			$	6,024,167			$	6,160,737			$	5,926,104
Common stock (no shares issued during periods):
Beginning balances			4,600,867				4,588,911				4,597,646				4,580,177
Stock based compensation expense related
to stock options			2,437				4,368				5,658				13,102
Ending balances			4,603,304				4,593,279				4,603,304				4,593,279
Retained earnings:
Beginning balances			1,812,775				1,435,256				1,563,091				1,345,927
Net income			151,525				58,164				401,209				147,493
Ending balances			1,964,300				1,493,420				1,964,300				1,493,420
Total shareholders' equity, ending balances		$	6,567,604			$	6,086,699			$	6,567,604			$	6,086,699

LIFELOC TECHNOLOGIES, INC. Condensed Statements of Cash Flows (Unaudited)
		Nine Months Ended September 30,
CASH FLOWS FROM OPERATING ACTIVITIES:		2019				2018
Net income		$	401,209			$	147,493
Adjustments to reconcile net income to net cash
provided by operating activities-
Depreciation and amortization			316,150				320,983
Provision for inventory obsolescence, net change			7,500				42,500
Deferred taxes, net change			(10,192	)			(11,251	)
Reserve for warranty expense, net change			1,000				1,000
Stock based compensation expense related to
stock options			5,658				13,102
Changes in operating assets and liabilities-
Accounts receivable			(79,544	)			(130,895	)
Inventories			(768,790	)			(222,165	)
Income taxes receivable			90,629				68,312
Prepaid expenses and other			(62,178	)			(63,682	)
Deposits and other			62,884				253,893
Accounts payable			45,355				18,123
Customer deposits			145,341				(32,822	)
Accrued federal and state income tax			105,346				—
Accrued expenses			49,430				7,795
Deferred revenue			23,706				(7,439	)
Net cash provided from
operating activities			333,504				404,947
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment			(166,488	)			(378,567	)
Patent filing expense			—				(6,648	)
Net cash (used in) investing activities			(166,488	)			(385,215	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments made on term loan			(33,167	)			(31,859	)
Net cash (used in) financing
activities			(33,167	)			(31,859	)
NET INCREASE (DECREASE) IN CASH			133,849				(12,127	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			2,788,327				2,669,455
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	2,922,176			$	2,657,328
SUPPLEMENTAL INFORMATION:
Cash paid for interest		$	42,590			$	44,270
Cash paid for income tax		$	—			$	—

 

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