Nov 14, 2018   SOURCE: BusinessWire

Lifeloc Reports Third Quarter 2018 Results

Lifeloc Technologies, Inc. (OTC: LCTC), a global leader in the development and manufacturing of breath alcohol testing devices, has announced financial results for the third quarter ended September 30, 2018.

Third Quarter Financial Highlights

We posted quarterly net revenue of $2.06 million resulting in quarterly net income after taxes of $58 thousand, or $0.02 per diluted share. These results compare to net revenue of $2.00 million for quarterly net income of $190, or $0.00 per diluted share, in the second quarter of 2017. Revenue for the quarter grew 3% versus the third quarter last year and year to date revenue grew for the first nine months of 2018 6% versus the first nine months last year.

This quarter was the fourth consecutive quarter with year over year growth as our distribution channels improve. Gross margin on net revenue improved in the current quarter to 46% versus 44% in the same quarter last year primarily due modestly better volume and a better product mix.

Strategic Highlights

Our vision is that Lifeloc becomes the world’s leading company in real-time alcohol and drug abuse detection and monitoring. To that effect, we continue to invest aggressively in research and development. This investment amounted to 13% of revenue for the first 9 months of the year. Lifeloc has focused product development on three specific fronts.

  • We will continue to push the bounds on our core portable breathalyzer business as we build a completely new breathalyzer platform with features that customers have demanded. Keeping our core business at the leading technical edge is critical as the core business allows us to fund our growth opportunities. This new breathalyzer platform is expected to begin limited production before the end of this year, with full scale production in the first quarter 2019.
  • We will build our alcohol monitoring business utilizing the Real-time Alcohol Detection and Recognition or R.A.D.A.R.® device product line acquired last year. R.A.D.A.R. devices are alcohol monitoring units with biometrics which can be used as a tool to supervise offenders as an alternative to incarceration. The upgraded R.A.D.A.R. device – with a more robust design and better communications – is expected to relaunch in the first quarter of 2019.
  • The marijuana breathalyzer took a step closer to realization with the detection of delta-9-THC (the psychoactive agent) captured from a vapor sample. The ability of our technology to detect delta-9-THC down to a concentration of 5 nanograms per milliliter has been demonstrated in our laboratories. Detection 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. The next step is human testing of the collection and detection mechanism.

“We are working hard to improve the business through investment both in infrastructure and new product development,” commented Dr. Wayne Willkomm, President and CEO. “We are nearing the end of the investment cycle in infrastructure with the winding down of implementation expenses of this year’s new ERP (Enterprise Resource Planning) system. Likewise, we expect to start to realize benefits from the heavy product investments of the last few years.”

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.

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.

R.A.D.A.R.® is a registered trademark of Lifeloc Technologies, Inc.

SpinDx™ is a trademark of Sandia Corporation.

 
LIFELOC TECHNOLOGIES, INC.

Condensed Balance Sheets

ASSETS

    September 30,    
2018 December 31,
CURRENT ASSETS: (Unaudited) 2017
Cash $ 2,657,328 $ 2,669,455
Accounts receivable, net 724,221 593,326
Inventories, net 1,354,768 1,175,103
Income taxes receivable 53,089 121,401
Prepaid expenses and other   85,486   21,804
Total current assets 4,874,892 4,581,089
 
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 and software 783,490 556,025
Training courses 432,375 432,375
Office equipment and software 270,241 204,282
Sales and marketing equipment 273,433 216,330
Research and development equipment and software 159,810 131,770
Less accumulated depreciation   (1,658,104 )   (1,349,499
Total property and equipment, net 3,077,420 3,007,458
 
OTHER ASSETS:
Patents, net 174,045 177,244
Deposits and other 5,144 259,037
Deferred taxes   77,782   66,531
Total other assets   256,971   502,812
Total assets $ 8,209,283 $ 8,091,359
 

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable $ 315,219 $ 297,096
Term loan payable, current portion 42,757 42,101
Customer deposits 15,941 48,763
Accrued expenses 272,085 264,290
Deferred revenue, current portion 45,027 53,137
Reserve for warranty expense   41,000   40,000
Total current liabilities 732,029 745,387
 
TERM LOAN PAYABLE, net of current portion and
debt issuance costs 1,380,201 1,410,185
 
DEFERRED REVENUE, net of current portion 10,354 9,683
 
COMMITMENTS AND CONTINGENCIES
 
STOCKHOLDERS' EQUITY:
Common stock, no par value; 50,000,000 shares
authorized, 2,454,116 shares outstanding 4,593,279 4,580,177
Retained earnings   1,493,420   1,345,927
Total stockholders' equity   6,086,699   5,926,104
Total liabilities and stockholders' equity $ 8,209,283 $ 8,091,359
 
 

LIFELOC TECHNOLOGIES, INC.

Condensed Statements of Income (Unaudited)
   

Three Months Ended
September 30,

REVENUES: 2018     2017
Product sales $ 1,985,520 $ 1,944,734
Royalties 46,417 43,785
Rental income   23,822   12,160
Total 2,055,759 2,000,679
 
COST OF SALES   1,111,067   1,118,203
 
GROSS PROFIT 944,692 882,476
 
OPERATING EXPENSES:
Research and development 249,092 242,005
Sales and marketing 331,505 367,101
General and administrative   271,172   268,667
Total   851,769   877,773
 
OPERATING INCOME 92,923 4,703
 
OTHER INCOME (EXPENSE):
Interest income 7,676 1,036
Interest expense   (14,957 )   (15,261 )
Total   (7,281 )   (14,225 )
 
NET INCOME (LOSS) BEFORE PROVISION FOR TAXES 85,642 (9,522 )
 
(PROVISION FOR) BENEFIT FROM FEDERAL AND STATE INCOME TAXES   (27,478 )   9,712
 
NET INCOME $ 58,164 $ 190
 
NET INCOME PER SHARE, BASIC $ 0.02 $ -
 
NET INCOME PER SHARE, DILUTED $ 0.02 $ -
 
WEIGHTED AVERAGE SHARES, BASIC   2,454,116   2,454,116
 
WEIGHTED AVERAGE SHARES, DILUTED   2,504,116   2,511,925
 
 

LIFELOC TECHNOLOGIES, INC.

Condensed Statements of Income (Unaudited)
   

Nine Months Ended
September 30,

REVENUES: 2018     2017
Product sales $ 6,121,553 $ 5,706,328
Royalties 207,840 268,127
Rental income   57,524   57,075
Total 6,386,917 6,031,530
 
COST OF SALES   3,446,592   3,171,449
 
GROSS PROFIT 2,940,325 2,860,081
 
OPERATING EXPENSES:
Research and development 840,647 690,198
Sales and marketing 997,563 1,074,219
General and administrative   864,629   858,987
Total   2,702,839   2,623,404
 
OPERATING INCOME 237,486 236,677
 
OTHER INCOME (EXPENSE):
Interest income 14,113 4,682
Interest expense   (47,045 )   (45,572 )
Total   (32,932 )   (40,890 )
 
NET INCOME BEFORE PROVISION FOR TAXES 204,554 195,787
 
PROVISION FOR FEDERAL AND STATE INCOME TAXES   (57,061 )   (49,736 )
 
NET INCOME $ 147,493 $ 146,051
 
NET INCOME PER SHARE, BASIC $ 0.06 $ 0.06
 
NET INCOME PER SHARE, DILUTED $ 0.06 $ 0.06
 
WEIGHTED AVERAGE SHARES, BASIC   2,454,116   2,454,116
 
WEIGHTED AVERAGE SHARES, DILUTED   2,504,116   2,520,414
 
   

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

 

 

Nine Months Ended
September 30,

CASH FLOWS FROM OPERATING ACTIVITIES: 2018     2017
Net income $ 147,493 $ 146,051
Adjustments to reconcile net income to net cash
provided from (used in) operating activities-
Depreciation and amortization 320,983 225,310
Provision for inventory obsolescence, net change 42,500 37,500
Deferred taxes, net change (11,251 ) 12,836
Reserve for warranty expense, net change 1,000 1,000
Stock based compensation expense related to
stock options 13,102 18,494
Changes in operating assets and liabilities-
Accounts receivable (130,895 ) (228,666 )
Inventories (222,165 ) (414,648 )
Income taxes receivable 68,312 16,134
Prepaid expenses and other (63,682 ) (204 )
Deposits and other 253,893 (145,010 )
Accounts payable 18,123 96,348
Customer deposits (32,822 ) 14,423
Accrued expenses 7,795 20,889
Deferred revenue   (7,439 )   (6,861 )
Net cash provided from (used in) operating activities 404,947 (206,404 )
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (378,567 ) (139,736 )
Cash paid for software acquired in asset acquisition - (396,948 )
Cash paid for equipment acquired in asset acquisition - (351,250 )
Reclassification of equipment and software acquired in
asset acquisition as inventory - 178,750
Cash paid for patents and patent applications acquired
in asset acquisition - (100,000 )
Patent filing expense   (6,648 )   (17,217 )
Net cash (used in) investing activities (385,215 ) (826,401 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments made on term loan   (31,859 )   (30,335 )
Net cash (used in) financing activities   (31,859 )   (30,335 )
 
NET (DECREASE) IN CASH (12,127 ) (1,063,140 )
 
CASH, BEGINNING OF PERIOD   2,669,455   3,772,064
 
CASH, END OF PERIOD   2,657,328 $ 2,708,924
 
SUPPLEMENTAL INFORMATION:
Cash paid for interest $ 44,270 $ 30,040
 
Cash paid for income tax $ - $ 13,844