Lifeloc Technologies, Inc

Previous wording

Lifeloc Technologies, Inc., a Colorado corporation ("Lifeloc", "Company", “We”, “Us”, “Our”, “Them”), is a Colorado-based developer, manufacturer and marketer of portable hand-held and fixed station breathalyzers and related accessories, supplies and education. We design, produce and sell fuel-cell based breath alcohol testing equipment. We compete in all major segments of the portable breath alcohol testing instrument market, including law enforcement, workplace, corrections, original equipment manufacturing ("OEM") and consumer markets. In addition, we offer a line of supplies, accessories, services, and training to support customers' alcohol testing programs. We sell globally through distributors as well as directly to users.

Current wording

We compete in all major segments of the portable breath alcohol testing instrument market, including law enforcement, workplace, corrections, and original equipment manufacturing ("OEM") markets. In addition, we offer a line of supplies, accessories, services, and training to support customers' alcohol testing programs. We sell globally through distributors as well as directly to users.

Previous wording

Possibility of Operating Losses. Over many of the past several years we have operated profitably; however, prior to that, and in 2021 through 2023, we incurred losses. Those losses are continuing in 2024 and we expect them to continue in 2025 as we continue to work toward the commercialization of SpinDx. There is no assurance that we will not incur losses in any given quarter or year in the future.

Current wording

Possibility of Operating Losses. Over many of the past several years we have operated profitably; however, prior to that, and in 2021 through 2024, we incurred operating losses. Those operating losses are continuing in 2025 and we expect them to continue as we continue to work toward the commercialization of SpinDx. There is no assurance that we will not incur operating losses in any given quarter or year in the future.

Previous wording

Research and Development Expenses. We expect to increase our research and development expenses to support refinements to our products, and the development of additional new products.

Current wording

Research and Development Expenses. We expect to maintain our research and development expenses through 2025, and to begin to reduce them as we complete development of our new product line.

Previous wording

Supply chain problems caused by Covid-19, as well as the other market impacts of Covid-19, were mostly resolved by the end of 2023. After meeting pent up demand in 2023 and the first half of 2024, sales in the third quarter of 2024 reverted back to pre-Covid levels. We maintained our reduced costs at their 2023 levels where possible, although inflation took its toll, increasing the cost of raw materials, labor, and freight. We continued and intensified our new product development efforts while maintaining the high level of customer service that has led to an excellent reputation for outstanding customer service. With the introduction of new products and reduction in research and development costs once current R&D efforts are completed, we believe Lifeloc will again be profitable.

Current wording

Supply chain problems caused by Covid-19, as well as the other market impacts of Covid-19, were mostly resolved by the end of 2024, and the perceived need to monitor for the presence of alcohol reverted back to the level experienced previously. We maintained our reduced costs at their 2024 levels where possible, although inflation took its toll, increasing the cost of raw materials, labor, and freight. We continued and intensified our new product development efforts while maintaining the high level of customer service that has led to an excellent reputation for outstanding customer service. With the introduction of new products, we believe Lifeloc will again be profitable.

Previous wording

Total gross profit for the three months ended September 30, 2024 of $911,952 represented a decrease of 19% from total gross profit of $1,119,391 for the same three months ended September 30, 2023, primarily as a result of decreased sales without a decrease in fixed costs, as well as increased cost of materials and labor resulting from inflation. Cost of product sales decreased from $1,552,930 in the three months ended September 30, 2023 to $1,164,947 in the same period in 2024, a decrease of $387,983 (25%). Gross profit margin on products increased to 44% in the quarter ended September 30, 2024 from 42% in the same period a year ago primarily as a result of an increase in sales resulting from resolution with a customer regarding a deposit which did not involve any cost of goods.

Current wording

Gross profit for the three months ended March 31, 2025 of $908,566 represented an increase of 9% from total gross profit of $835,307 for the three months ended March 31, 2024, primarily as a result of higher product sales. Cost of product sales increased from $1,315,079 in the three months ended March 31, 2024 to $1,363,805 in the same period in 2025, an increase of $48,726 (4%). Gross profit margin on products increased to 40% in the three months ended March 31, 2025 from 38% in the three months ended March 31, 2024 primarily as a result of the higher sales.

Previous wording

Sales and marketing expenses of $329,716 for the 3 months ended September 30, 2024 were up by $19,818 (or 6%) from the $309,898 spent in the same period a year ago, as a result of expanded marketing efforts, including the addition of personnel.

Current wording

Sales and marketing expenses of $334,556 for the three months ended March 31, 2025 were down by $10,453 (or 3%) from the $345,009 spent in the same period a year ago as a result of across the board efforts to lower expenses.

Previous wording

We realized a net loss of $158,327 for the 3 months ended September 30, 2024 compared to net income of $109,603 for the quarter ended September 30, 2023. This decrease of $267,930 was the result of the changes in gross profit, operating expenses and other income discussed above, which resulted in a loss before taxes of $208,815, or a decrease of $239,725 from the profit before taxes of $30,910 in 2023, and after the benefit from taxes of $50,488 versus a benefit from taxes of $78,693 in the same three months a year ago.

Current wording

We realized a net (loss) of ($292,686) for the three months ended March 31, 2025 compared to a net (loss) of ($283,806) for the three months ended March 31, 2024. This increase of $8,880 (3%) was the result of the changes in gross profit, operating expenses and other income discussed above, which resulted in a (loss) before taxes of ($292,686) or a decrease of $80,019 from the (loss) before taxes of ($372,705) in 2024. The benefit from taxes in the three months ended March 31, 2025 was $0 versus a benefit from taxes of $88,899 in the same period a year ago as a result of increasing the valuation allowance in the three months ended March 31, 2024 and no increase in the three months ended March 31, 2025.

Previous wording

Revenues in the year 2024 were down compared to revenues in 2023. We believe that continued increased sales efforts may result in modestly improved revenues in the fourth quarter of 2024 and beyond. Inflationary pressures have affected our business in a number of ways, including increasing the cost of raw materials, labor, and freight. Our actions to mitigate the impact of inflation, including pre-ordering components in higher than usual quantities, sourcing new vendors and increasing prices, have been somewhat successful.

Current wording

Revenues in the first three months of 2025 were higher compared to revenues during the same period in 2024. We believe that continued increased sales efforts, together with the expected availability of SpinDx™ for sale in 2026, may result in improved revenues in 2026 and beyond. Revenues in 2025 may be similar to revenues in 2024. Inflationary pressures have affected our business in a number of ways, including increasing the cost of raw materials, labor, and freight. Our actions to mitigate the impact of inflation, including pre-ordering components in higher than usual quantities, sourcing new vendors and increasing prices have been somewhat successful.

Previous wording

In connection with the financing of our building purchase on October 31, 2014 we obtained a 10-year term loan from Bank of America in an initial principal amount of $1,581,106 bearing interest at 4.45% per annum (which was decreased to 4% in 2016) and secured by a first-priority mortgage in the acquired property, as well as a one-year $250,000 line of credit, which was later increased to $750,000 with a maturity date of September 28, 2021. The Bank of America loan was paid on September 30, 2021 with proceeds from a new term loan from Citywide Banks, also secured by a first-priority mortgage on the property, in the principal amount of $1,350,000. The new loan is payable in monthly installments of $7,453, with interest at 2.95% and a maturity date of September 30, 2031. The revolving line of credit facility expired in accordance with its terms. In July 2024, we obtained a new $750,000 line of credit from Citywide Banks with a maturity date of one year and a variable interest rate determined by SOFR (Secured Overnight Rate Financing) plus 2.75% payable monthly. As of September 30, 2024 this line of credit had not been accessed and no balance was due on the loan.

Current wording

In connection with the financing of our building purchase on October 31, 2014 we obtained a 10-year term loan from Bank of America in an initial principal amount of $1,581,106 bearing interest at 4.45% per annum (which was decreased to 4% in 2016) and secured by a first-priority mortgage in the acquired property. The Bank of America loan was paid on September 30, 2021 with proceeds from a new term loan from Citywide Banks, also secured by a first-priority mortgage on the property, in the principal amount of $1,350,000. The new loan is payable in monthly installments of $7,453, with interest at 2.95% and a maturity date of September 30, 2031.

Previous wording

We have traditionally funded working capital needs through product sales and close management of working capital components of our business. Historically, we have also received cash from private offerings of our common stock, warrants to purchase shares of our common stock, and notes. In our earlier years, we incurred quarter to quarter operating losses to develop current product applications, utilizing a number of proprietary and patent-pending technologies. Although we have been profitable in recent years except 2020 and 2022, we can provide no assurances that operating losses will not occur in the future. Should that situation arise, we may not be able to obtain working capital funds necessary in the time frame needed and at satisfactory terms, if at all.

Current wording

We have traditionally funded working capital needs through product sales and close management of working capital components of our business. Historically, we have also received cash from private offerings of our common stock, warrants to purchase shares of our common stock, and notes. In July, 2024 we completed a private placement of 210,000 shares of our common stock at $3.80 per share for a total raise of $798,000 with a related party. On December 31, 2024, we completed the issuance of a six year subordinated debenture for $750,000 with a third party. On March 1, 2025, we completed the issuance of a 70-month subordinated debenture for $75,000 with a third party. In our earlier years, we incurred quarter to quarter operating losses to develop current product applications, utilizing a number of proprietary and patent-pending technologies. Although we have been profitable in recent years except 2020, 2022 and 2024, we can provide no assurances that operating losses will not occur in the future. Should that situation arise, we may not be able to obtain working capital funds necessary in the time frame needed and at satisfactory terms, if at all.

Previous wording

As of September 30, 2024, cash and cash equivalents was $841,621, trade accounts receivable were $611,439 and current liabilities were $783,779 resulting in net liquid assets of $669,281. We believe that the resolution of supply chain issues and the Covid-19 pandemic, and the introduction of several new products during the last several years, along with new and on-going customer relationships will allow Lifeloc to operate profitably. If the revenue levels during the last several years do not continue to grow, if inflationary pressures are not contained, or if the development of SpinDx takes longer than expected, we may be required to seek additional sources of borrowings or capital and/or to implement further cost reduction measures, as necessary.

Current wording

As of March 31, 2025, cash and cash equivalents were $1,522,457, trade accounts receivable were $761,697 and current liabilities were $1,117,069 resulting in net liquid assets of $1,167,085. We believe that the diminishing of the Covid-19 pandemic, the resolution of supply chain issues, and the introduction of several new products during the last several years, along with new and on-going customer relationships will allow Lifeloc to operate profitably. If the revenue levels prior to 2020 do not continue to increase in a timely manner, if inflationary pressures are not contained, or if the development and market acceptance of SpinDx™ takes longer than expected, we may be required to seek additional sources of capital and/or to implement further cost reduction measures, as necessary.

Previous wording

Equipment expenditures, consisting of space modifications, updated office and production equipment, and SpinDx related equipment and lab space during the first nine months of 2024 were $625,238, including $195,036 of equipment not yet in service, compared to $21,611 in the first nine months of 2023, an increase of $603,627. We incurred patent application costs in preparation for filing of $21,708 in 2024 versus $1,404 in 2023. We are estimating that completing and equipping the lab space will require an additional $150,000 during the fourth quarter of 2024. As development of SpinDx progresses, and as normal wear and tear of equipment occurs, we expect to continue to incur outlays for equipment and patent filings in 2024 and beyond.

Current wording

Equipment expenditures, consisting of SpinDx™ related equipment, during the three months ended March 31, 2025 were $18,548 compared to $41,858 and $16,572 for office equipment, a total of $58,430 for the same period in 2024, a decrease of $39,882. We incurred patent application costs of $21,708 in the three months ended March 31, 2024 versus $0 in 2025. No expired or fully amortized patents were removed from our financial statements in 2025 or 2024. As development of SpinDx progresses, and as normal wear and tear of equipment occurs, we expect to incur outlays for equipment and patent filings in 2025 and beyond.

Previous wording

We generally provide a standard one-year limited warranty on materials and workmanship to our customers. We provide for estimated warranty costs at the time product revenue is recognized. Warranty costs are included as a component of cost of goods sold in the accompanying statements of operations. For the quarter ended September 30, 2024 and for the quarter ended September 30, 2023, warranty costs were not deemed significant.

Current wording

We generally provide a standard one-year limited warranty on materials and workmanship to our customers. We provide for estimated warranty costs at the time product revenue is recognized. Warranty costs are included as a component of cost of goods sold in the accompanying statements of operations. For the three months ended March 31, 2025 and 2024, warranty costs were not deemed significant.

Previous wording

Property and equipment are stated at cost, with depreciation computed over the estimated useful lives of the assets, generally five years (three years for software and technology licenses). We use the declining method of depreciation for property, including space modifications, and the straight line method for software and technology licenses. We purchased all of the assets of STS, an online education company, in 2014, which consisted of training courses that are amortized over 15 years using the straight line method. In October 2014, we purchased our building. A majority of the cost of the building is depreciated over 39 years using the straight line method. In addition, based on the results of a third party analysis, a portion of the cost was allocated to components integral to the building. Such components are depreciated over 5 and 15 years, using the declining method. The R.A.D.A.R.® software and patents that were purchased in March 2017 were originally set to amortize over 15 years using the straight line method, but in 2022 we accelerated the amortization of the remaining cost to fully amortize the assets by December 31, 2022. Maintenance and repairs are expensed as incurred and major additions, replacements and improvements are capitalized.

Current wording

Property and equipment are stated at cost, with depreciation computed over the estimated useful lives of the assets, generally five years (three years for software and technology licenses). We use the declining method of depreciation for property, including space modifications, and the straight-line method for software and technology licenses. We purchased all of the assets of STS, an online education company, in 2014, which consisted of training courses that were originally set to amortize over 15 years using the straight-line method, but in 2025 we are accelerating the amortization of the remaining cost to fully amortize the asset by December 31, 2025. In October 2014, we purchased our building. A majority of the cost of the building is depreciated over 39 years using the straight-line method. In addition, based on the results of a third-party analysis, a portion of the cost was allocated to components integral to the building. Such components are depreciated over 5 and 15 years, using the declining method.

Previous wording

Revenues arising from extended warranty contracts are booked as sales over their life on a straight-line basis. We provide customer financing and leasing ourselves, which we recognize as revenue over the applicable lease term. Occasionally, we rent used equipment to customers, and in those cases, we recognize the revenues as they are earned over the life of the contract.

Current wording

Revenues arising from extended warranty contracts are booked as sales over their life on a straight-line basis. Occasionally, we rent used equipment to customers, and in those cases, we recognize the revenues as they are earned over the life of the contract.