Lifeloc Technologies, Inc

Previous wording

We have completed the design of the SpinDetect™ microfluidic disk, with all analytical chemistry now occurring on the disk after sample introduction. We are initiating beta testing of the oral-fluid analyzer focused on delta-9-THC detection using a prototype reader, with final component optimization underway under a signed beta-testing agreement. The initial commercial product is expected to measure delta-9-THC, followed by a multi-drug panel release. We anticipate a commercial launch in 2026, with subsequent expansion into additional drug panels and sample types, including blood and breath — the latter integrated with our LX9 breathalyzer. The SpinDetect™ reader is designed to accept multiple disk formats, which may also enable future applications beyond drug testing, such as detection of food-safety markers and environmental contaminants; these applications would require additional research, regulatory clearances, and potential expansion of our existing license rights. Continued progress toward commercialization is dependent on timely access to capital to support fabrication, validation, regulatory preparation, and market introduction.

Current wording

We have completed the design of the SpinDetect™ microfluidic disk, with all analytical chemistry now occurring on the disk after sample introduction. We will be initiating beta testing of the oral-fluid analyzer focused on delta-9-THC detection using a prototype reader, with final component optimization underway under a signed beta-testing agreement. The initial commercial product is expected to measure delta-9-THC, followed by a multi-drug panel release. We anticipate a limited commercial launch in Q1 of 2027, with subsequent expansion into additional drug panels and sample types, including blood and breath — the latter integrated with our LX9 breathalyzer. The SpinDetect™ reader is designed to accept multiple disk formats, which may also enable future applications beyond drug testing, such as detection of food-safety markers and environmental contaminants; these applications would require additional research, regulatory clearances, and potential expansion of our existing license rights. Continued progress toward commercialization is dependent on timely access to capital to support fabrication, validation, regulatory preparation, and market introduction.

Previous wording

Our product sales for the three months ended March 31, 2026 were $2,289,759, an increase of 1% from $2,263,047 for the same period a year ago. This increase results from acceleration of several larger orders that may reflect customers’ current availability of funds. In addition, the continuing inflationary pressure outlook on customers’ budgets may also have played a role. When royalties of $4,053 and rental income of $0 are included, total revenues of $2,293,812 increased by $16,778, or 1%, for the three months ended March 31, 2026 when compared to the same three months a year ago. Rental income was discontinued after June 30, 2025, and royalties decreased by $1,618 due to a decrease in sales by royalty-paying customers.

Current wording

Our product sales for the three months ended June 30, 2026 were $2,434,697, an increase of 11% from $2,191,260 for the same period a year ago. This increase results from acceleration of several larger orders that may reflect customers’ current availability of funds. In addition, the continuing inflationary pressure outlook on customers’ budgets may also have played a role. When royalties of $10,260 and rental income of $0 are included, total revenues of $2,444,957 increased by $225,581, or 10%, for the three months ended June 30, 2026 when compared to the same three months a year ago. Rental income was discontinued after June 30, 2025, and royalties decreased by $9,540 due to a decrease in sales by royalty-paying customers.

Previous wording

Gross profit for the three months ended March 31, 2026 of $987,074 represented an increase of 9% from total gross profit of $908,566 for the three months ended March 31, 2025, primarily as a result of higher product sales. Cost of product sales decreased from $1,363,805 in the three months ended March 31, 2025 to $1,306,738 in the same period in 2026, a decrease of $57,067 (4%). Gross profit margin on products increased to 43% in the three months ended March 31, 2026 from 40% in the three months ended March 31, 2025 primarily as a result of the higher sales and product mix.

Current wording

Gross profit for the three months ended June 30, 2026 of $1,092,526 represented an increase of 18% from total gross profit of $924,599 for the three months ended June 30, 2025, primarily as a result of higher product sales. Cost of product sales increased from $1,294,777 in the three months ended June 30, 2025 to $1,352,431 in the same period in 2026, an increase of $57,654 (4%). Gross profit margin on products increased to 45% in the three months ended June 30, 2026 from 42% in the three months ended June 30, 2025 primarily as a result of the higher sales and product mix.

Previous wording

Research, development and sustaining engineering expenses continued at the high level of $414,445, or 18% of product sales, for the three months ended March 31, 2026, representing a decrease of $55,235 (12%) over the $469,680 in the same period a year ago. This decrease resulted primarily from a lull in payments to outside contractors needed for continuing design work related to SpinDetect™.

Current wording

Research, development and sustaining engineering expenses continued at the high level of $560,281, or 23% of product sales, for the three months ended June 30, 2026, representing a decrease of $62,981 (10%) over the $623,262 in the same period a year ago. This decrease resulted primarily from a lull in payments to outside contractors needed for continuing design work related to SpinDetect™.

Previous wording

Sales and marketing expenses of $313,229 for the three months ended March 31, 2026 were down by $21,327 (or 6%) from the $334,556 spent in the same period a year ago as a result of across the board efforts to lower expenses.

Current wording

Sales and marketing expenses of $320,968 for the three months ended June 30, 2026 were down by $18,560 (or 6%) from the $339,528 spent in the same period a year ago as a result of across the board efforts to lower expenses.

Previous wording

Interest income decreased from $12,357 a year ago to $6,531 in 2026 as a result of less funds available at the beginning of the period. Interest expense of $31,242 in the three months ended March 31, 2026 was up from $24,495 in the previous year as a result of the increase in subordinated debentures outstanding in the 2026 quarter vs. less in the same quarter a year ago. The total increase of $12,573 from $12,138 of other expense (net) in the period ended March 31, 2025 to total other expense (net) of $24,711 in the current quarter is expected to continue in future quarters due to the increase in borrowings.

Current wording

Interest income decreased from $10,931 a year ago to $8,856 in 2026 as a result of less funds available at the beginning of the period. Interest expense of $39,610 in the three months ended June 30, 2026 was up from $26,305 in the previous year as a result of the increase in subordinated debentures outstanding in the 2026 quarter vs. less in the same quarter a year ago as well as adding a new term loan in May 2026. The total increase of $15,380 from $15,374 of other expense (net) in the period ended June 30, 2025 to total other expense (net) of $30,754 in the current quarter is expected to continue in future quarters due to the increase in borrowings.

Previous wording

We realized a net (loss) of ($152,713) for the three months ended March 31, 2026 compared to a net (loss) of ($292,686) for the three months ended March 31, 2025. This decrease of $139,973 (48%) was the result of the changes in gross profit, operating expenses and other income discussed above. The benefit from taxes in the three months ended March 31, 2026 was $0 which was the same amount in the same period a year ago.

Current wording

We realized a net (loss) of ($134,330) for the three months ended June 30, 2026 compared to a net (loss) of ($393,639) for the three months ended June 30, 2025. This decrease of $259,309 (or 66%) was the result of the changes in gross profit, operating expenses and other income discussed above. The benefit from taxes in the three months ended June 30, 2026 was $0 which was the same amount in the same period a year ago.

Previous wording

Revenues in the first three months of 2026 were slightly higher compared to revenues during the same period in 2025. We believe that continued increased sales efforts may result in modestly improved revenues in 2026 and beyond with the anticipated availability of SpinDetect™. Revenues in 2026 may be similar to revenues in 2025. 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 six months of 2026 were slightly higher compared to revenues during the same period in 2025. We believe that continued increased sales efforts may result in modestly improved revenues in 2026 and beyond with the anticipated availability of SpinDetect™. Revenues in 2026 may be similar to revenues in 2025. 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. 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.

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 UMB (formerly 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

On December 31, 2024 we issued an unsecured $750,000 subordinated debenture bearing interest at 8.25%, including 62,500 warrants exercisable on or before December 31, 2030 into 62,500 shares of our common stock at a price of $4.50 per share. On March 1, 2025 we issued an unsecured $75,000 subordinated debenture bearing interest at 8.25%, including 6,250 warrants exercisable on or before December 31, 2030 into 6,250 shares of our common stock at a price of $4.50 per share. Using the Black Scholes model, the fair market value of these warrants resulted in deferred financing cost of $132,000, which is included in our balance sheet at March 31, 2026 at $126,829 after amortization in the three months ending March 31, 2026 of $5,171, and which resulted in an increase to capital of $120,000 on December 31, 2024 and $12,000 on March 1, 2025. The interest of 8.25% was paid in quarterly increments in 2025, and will be included in monthly payments of $10,119 including principal in 2026.

Current wording

On December 31, 2024 we issued an unsecured $750,000 subordinated debenture bearing interest at 8.25%, including 62,500 warrants exercisable on or before December 31, 2030 into 62,500 shares of our common stock at a price of $4.50 per share. On March 1, 2025 we issued an unsecured $75,000 subordinated debenture bearing interest at 8.25%, including 6,250 warrants exercisable on or before December 31, 2030 into 6,250 shares of our common stock at a price of $4.50 per share. Using the Black Scholes model, the fair market value of these warrants resulted in deferred financing cost of $132,000, which is included in our balance sheet at June 30, 2026 at $99,257 after amortization in the six months ending June 30, 2026 of $10,514 , and which resulted in an increase to capital of $120,000 on December 31, 2024 and $12,000 on March 1, 2025. The interest of 8.25% was paid in quarterly increments in 2025, and will be included in monthly payments of $10,119 including principal in 2026.

Previous wording

During the three months ended March 31, 2026, net cash used in operating activities was $129,365, reflecting the net loss partially offset by non-cash charges and working capital changes. Net cash used in investing activities was $19,781, primarily for equipment purchases. Net cash used in financing activities was $27,525, consisting of scheduled principal payments on our term loan. Subsequent to March 31, 2026, we obtained additional debt financing from a related party to fund the continued development of SpinDetect™.

Current wording

During the six months ended June 30, 2026, net cash used in operating activities was $262,577, reflecting the net loss partially offset by non-cash charges and working capital changes. Net cash used in investing activities was $19,781, primarily for equipment purchases. Net cash provided from financing activities was $444,565, consisting primarily of $500,000 in proceeds from a new related-party term loan, partially offset by scheduled principal payments on our term loan and subordinated debentures.

Previous wording

As of March 31, 2026, cash and cash equivalents were $569,330, trade accounts receivable were $850,341 and current liabilities were $1,064,101 resulting in net liquid assets of $355,570. We believe our core breathalyzer business has remained fundamentally sound and, together with the anticipated commercialization of SpinDetect™, provides a reasonable basis for a return to profitability. However, if revenues from our core business do not grow as expected, if the commercialization of SpinDetect™ is delayed or requires more capital than anticipated, or if general economic conditions deteriorate, we may be required to seek additional sources of capital and/or to implement further cost reduction measures, as necessary.

Current wording

As of June 30, 2026, cash and cash equivalents were $908,208, trade accounts receivable were $826,715 and current liabilities were $1,099,030 resulting in net liquid assets of $635,893. We believe our core breathalyzer business has remained fundamentally sound and, together with the anticipated commercialization of SpinDetect™, provides a reasonable basis for a return to profitability. However, if revenues from our core business do not grow as expected, if the commercialization of SpinDetect™ is delayed or requires more capital than anticipated, or if general economic conditions deteriorate, we may be required to seek additional sources of capital and/or to implement further cost reduction measures, as necessary.

Previous wording

Equipment expenditures during the three months ended March 31, 2026 consisted of SpinDetect™ related equipment of $14,411 compared to $18,548 in the first three months of 2025, and $5,370 in office equipment versus $0 in 2025. No patent application costs were incurred during either period. As development of SpinDetect™ progresses, and as normal wear and tear of equipment occurs, we expect to incur outlays for equipment and patent filings in 2026 and beyond.

Current wording

Equipment expenditures during the six months ended June 30, 2026 consisted of SpinDetect™ related equipment of $14,411 compared to $236,789 in the first six months of 2025, and $5,370 in sales and marketing equipment versus $5,462 in 2025. No patent application costs were incurred during either period. As development of SpinDetect™ progresses, and as normal wear and tear of equipment occurs, we expect to incur outlays for equipment and patent filings in 2026 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 three months ended March 31, 2026 and 2025, 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 six months ended June 30, 2026 and 2025, warranty costs were not deemed significant.