Lifeloc Reports First Quarter 2020 Results

May 13, 2020

WHEAT RIDGE, Colo.–(BUSINESS WIRE)–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 first quarter ended March 31, 2020.

First Quarter Financial Highlights

We posted quarterly net revenue of $2.018 million resulting in a quarterly net loss of $165 thousand, or $(0.07) per diluted share. These results compare to net revenue of $2.069 million for the first quart of 2019. and quarterly net income of $31 thousand, or $0.01 per diluted share in the first quarter of 2019. Revenue for the quarter declined 2% versus the first quarter last year.

This sales decline appears to be a direct result of the global Covid-19 pandemic. Sales in January were higher than the prior year but declined in February and March when many important markets began imposing travel bans and social lockdowns. The quarter resulted in a loss as a result of the reduced sales and ongoing expenses including the cost of product launches and investment in our workforce in the form of option grants to key employees.

Product Pipeline

Our vision is that Lifeloc becomes the world’s leading company in real-time alcohol and drug abuse detection and monitoring. We have been investing strongly in product development to achieve this vision, focusing on a few major product developments that we expect to have a significant impact on our performance. We believe we are now at the point where we will start to reap the benefit of these investments.

Some of our new products are entering the market now. Our new breath alcohol testers, the LX9 and LT7 have been released and are starting to find adoption both in the U.S. and internationally. These units are on the U.S. Department of Transportation Conforming Products List. With a highly flexible configuration, multiple language capability and a wide temperature use range these units are expected to facilitate future sales growth. Our automated calibration has been broadened with the Easycal® G2, which is compatible with our existing installed base of professional breathalyzers as well as the new platform units. The G2 model includes RFID (Radio Frequency Identification) reading of calibration standard data, which further automates the calibration process.

Likewise, the R.A.D.A.R.^® (Real-time Alcohol Detection and Reporting) model 200 has been released to manufacturing. This new model has updated communication, improved GPS accuracy and mechanical reliability and is currently in final testing. R.A.D.A.R. devices are alcohol monitoring units which can be used as a tool to supervise offenders as an alternative to incarceration. Onboard biometrics automatically verify the identity of the test subject. R.A.D.A.R. devices are a critical step in moving our business towards a recurring revenue model.

Our marijuana breathalyzer remains a key target for product development. The continued broader legalization of marijuana only increases the need for a rapid, quantitative roadside test to identify drivers under the influence of marijuana. The ability of our technology to detect delta-9-THC down to a concentration of 5 nanograms per milliliter and to collect a testable sample from a vapor stream has already been demonstrated in our laboratories. Detection of THC is accomplished through the SpinDx technology, licensed exclusively by Lifeloc Technologies for drugs of abuse from Sandia National Laboratory. More work is needed to convert this technology into a simple-to-operate device suitable for roadside testing.

“Our new products have been gaining traction and the availability of the R.A.D.A.R. model 200 will be very timely because of the greater need for more automated offender supervision,” reports CEO Dr. Wayne Willkomm. “At Lifeloc, like at most small Colorado companies, we have been strongly impacted by the COVID-19 pandemic. We are an essential business and, as such, have remained open throughout the COVID-19 outbreak to support public safety and the transportation industry. While our sales have suffered, our overhead has remained constant. In response to this downturn we have applied for and received funding from the Paycheck Protection Program. It is important to note that while Lifeloc is a publicly traded company, we are also significantly smaller with a smaller market capitalization than most publicly traded companies. In the face of our narrowing margins, we believe the PPP loan is necessary to help us continue to support our 36 full-time workers and keep good manufacturing jobs here in the U.S. Lifeloc is currently in the middle of two major product launches and is also investing substantially in developing a marijuana breathalyzer, which, if successful, will contribute powerfully to societal needs for safety. With the help of the PPP loan, we are grateful to be able to keep our full workforce employed and fully engaged in our mission during this difficult time.”

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

ASSETS

			March 31,
			2020		December 31,
CURRENT ASSETS:			(Unaudited)		2019
	Cash	$	2,913,332	$	3,185,996
	Accounts receivable, net		638,038		641,239
	Inventories, net		2,236,331		1,986,299
	Income taxes receivable		41,305		6,750
	Prepaid expenses and other		139,772		18,857
	Total current assets		5,968,778		5,839,141

PROPERTY AND EQUIPMENT, at cost:
	Land		317,932		317,932
	Building		1,928,795		1,928,795
	Real-time Alcohol Detection And Recognition equipment and software		569,448		569,448
	Production equipment, software and space modifications		976,621		976,621
	Training courses		432,375		432,375
	Office equipment, software and space modifications		218,074		208,986
	Sales and marketing equipment and space modifications		232,600		232,600
	Research and development equipment, software and space modifications		172,429		172,429
	Less accumulated depreciation		(2,053,197)		(1,959,541)
	Total property and equipment, net		2,795,077		2,879,645

OTHER ASSETS:
	Patents, net		160,823		145,323
	Deposits and other		74,027		74,027
	Deferred taxes		96,007		86,658
	Total other assets		330,857		306,008

	Total assets	$	9,094,712	$	9,024,794

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
	Accounts payable	$	480,361	$	261,798
	Term loan payable, current portion		45,494		44,879
	Customer deposits		184,332		214,031
	Accrued expenses		319,366		290,458
	Deferred revenue, current portion		42,849		45,874
	Reserve for warranty expense		46,000		45,000
	Total current liabilities		1,118,402		902,040

TERM LOAN PAYABLE, net of current portion and
	debt issuance costs		1,312,732		1,324,467

DEFERRED REVENUE, net of current portion			4,552		6,066
	Total liabilities		2,435,686		2,232,573

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY:
	Common stock, no par value; 50,000,000 shares
	authorized, 2,454,116 shares outstanding		4,635,415		4,603,304
	Retained earnings		2,023,611		2,188,917
	Total stockholders’ equity		6,659,026		6,792,221

	Total liabilities and stockholders’ equity	$	9,094,712	$	9,024,794


LIFELOC TECHNOLOGIES, INC.
Condensed Statements of Income (Unaudited)

		Three Months Ended March 31,
REVENUES:			2020		2019
	Product sales	$	1,937,866	$	1,970,101
	Royalties		59,281		72,838
	Rental income		21,189		25,822
	Total		2,018,336		2,068,761

COST OF SALES			1,240,260		1,136,559

GROSS PROFIT			778,076		932,202

OPERATING EXPENSES:
	Research and development		296,897		245,799
	Sales and marketing		326,564		316,383
	General and administrative		356,887		325,175
	Total		980,348		887,357

OPERATING INCOME (LOSS)			(202,272)		44,845

OTHER INCOME (EXPENSE):
	Interest income		7,176		9,422
	Interest expense		(14,131)		(14,423)
	Total other income (expense)		(6,955)		(5,001)

NET INCOME (LOSS) BEFORE PROVISION FOR TAXES			(209,227)		39,844

BENEFIT FROM (PROVISION FOR) FEDERAL AND STATE INCOME TAXES			43,921		(8,880)

NET INCOME (LOSS)		$	(165,306)	$	30,964

NET INCOME (LOSS) PER SHARE, BASIC		$	(0.07)	$	0.01

NET INCOME (LOSS) PER SHARE, DILUTED		$	(0.07)	$	0.01

WEIGHTED AVERAGE SHARES, BASIC			2,454,116		2,454,116

WEIGHTED AVERAGE SHARES, DILUTED			2,454,116		2,504,116

Lifeloc Technologies, Inc.
Statements of Stockholders’ Equity (Unaudited)


		Three Months Ended March 31,
		2020		2019
Total stockholders’ equity, beginning balances		$	6,792,221	$	6,160,737

Common stock (no shares issued during periods):
	Beginning balances		4,603,304		4,597,646
	Stock based compensation expense related
	to stock options		32,111		2,162
	Ending balances		4,635,415		4,599,808

Retained earnings:
	Beginning balances		2,188,917		1,563,091
	Net income (loss)		(165,306)		30,964
	Ending balances		2,023,611		1,594,055

Total stockholders’ equity, ending balances		$	6,659,026		6,193,863

LIFELOC TECHNOLOGIES, INC.
Condensed Statements of Cash Flows (Unaudited)

			Three Months Ended March 31,
CASH FLOWS FROM OPERATING ACTIVITIES:			2020		2019
	Net income (loss)		$	(165,306)	$	30,964
	Adjustments to reconcile net income to net cash
	provided from (used in) operating activities-
	Depreciation and amortization			97,199		103,047
	Provision for doubtful accounts, net change			2,000		–
	Provision for inventory obsolescence, net change			36,765		–
	Deferred taxes, net change			(9,349)		(54,608)
	Reserve for warranty expense, net change			1,000		–
	Stock based compensation expense related to
	stock options			32,111		2,162
	Changes in operating assets and liabilities-
	Accounts receivable			1,201		127,128
	Inventories			(286,797)		(383,133)
	Income taxes receivable			(34,555)		55,107
	Prepaid expenses and other			(120,915)		(99,989)
	Deposits and other			–		86,485
	Accounts payable			218,563		310,840
	Customer deposits			(29,699)		2,248
	Accrued expenses			28,908		(34,254)
	Deferred revenue			(4,539)		4,544
		Net cash provided from (used in)
		operating activities		(233,413)		150,541

CASH FLOWS FROM INVESTING ACTIVITIES:
	Purchases of property and equipment			(9,088)		(128,614)
	Patent filing expense			(18,772)		–
		Net cash (used in) investing activities		(27,860)		(128,614)

CASH FLOWS FROM FINANCING ACTIVITIES:
	Principal payments made on term loan			(11,391)		(11,101)
		Net cash (used in) financing
		activities		(11,391)		(11,101)

NET INCREASE (DECREASE) IN CASH				(272,664)		10,826

CASH, BEGINNING OF PERIOD				3,185,996		2,788,327

CASH, END OF PERIOD			$	2,913,332	$	2,799,153

SUPPLEMENTAL INFORMATION:
	Cash paid for interest		$	13,860	$	14,152

	Cash paid for income tax		$	20,063	$	–