Lifeloc Reports Second Quarter 2023 Results

Friday, 04 August 2023 09:25 AM

Topic: 

Earnings

WHEAT RIDGE, CO / ACCESSWIRE / August 4, 2023 / Lifeloc Technologies, Inc. (OTC PINK:LCTC), a global leader in the development and manufacturing of breath alcohol and drug testing devices, has announced financial results for the quarter ended June 30, 2023.

Second Quarter Financial Highlights

Lifeloc posted quarterly net revenue of $2.280 million in the second quarter of 2023, resulting in a quarterly net profit of $55 thousand, or $0.02 per diluted share. These results compare to net revenue of $2.180 million and quarterly net loss of $(202) thousand, or $(0.08) per diluted share in the second quarter of 2022. Revenue for the quarter increased 5% versus the second quarter last year, as demand continued to recover from the impact of the COVID-19 global pandemic and the government ordered shutdowns. Six-month net revenues of $4.445 million and a net profit of $1 thousand, or $0.00 per diluted share, compared to net revenue of $4.341 million and a net loss of $(346) thousand, or $(0.14) per diluted share, for the same six months of 2022. Total gross margin in the second quarter improved to 45.7% versus 30.4% for the same quarter last year. For the first six months of 2023 gross margin was 44.5% versus 34.7% for the same period last year.

Margin improvement was the biggest difference over last year, resulting from a combination of price increases, lower depreciation, and reduced inefficiencies because of fewer supply constraints this year. The margin improvement along with a small sales increase was sufficient to offset the rising research and development investment for SpinDx and still result in a profitable second quarter and a breakeven first half of the year 2023.

We believe our product line-up is strong. The new platforms LX9 and LT7 have features and performance that have driven market penetration by meeting previously unaddressable market needs, such as wider temperature ranges and fast customization that incorporates local languages. We expect that most L-series sales will be incremental to FC-series devices rather than displacing FC sales. The L-series devices have been certified to meet the requirements of most modern registration standards, such as SAI's (Standards Australia International) latest AS 3547:2019 standards for Breath Alcohol Detectors. Our FC-series devices remain favored in many law enforcement and international organizations. The workplace Phoenix® 6.0 BT and EV30 models have been gaining market share. And our Easycal® automated calibration station builds important protection around our brand with the only automated calibration available for portable breath alcohol testers.

We believe our most important goal and best opportunity remains the convergence of the global need for rapid detection of drugs of abuse with Lifeloc's proven capability to build easy-to-use portable testing equipment. We are focusing our research and development efforts on leveraging the SpinDx™ technology platform, sometimes referred to as "Lab on a Disk," to develop a series of devices and tests that can be used at roadside and in emergency rooms, forensic labs and workplace testing to get a rapid and quantitative measure for a panel of drugs of abuse, beginning with a device that allows for detection of delta-9-THC (the major intoxicating component of the cannabis plant) from a test subject's saliva. Testing has commenced to validate the SpinDx technology against the definitive standard liquid chromatography-mass spectroscopy (LCMS) measurement utilizing human samples. The LCMS data are validating the SpinDx test results on real-world human saliva tests at a limit of detection of approximately 10 ng/ml. With our research and development work, we continue to improve our technology's robustness and convenience of operation. The release of our SpinDx saliva testing system for beta testing is expected this year and is projected to result in commercialization in 2024. We expect to accelerate development on combining our LX9 breathalyzer with the THC SpinDx detection unit, to produce our roadside marijuana breathalyzer system.

"In the second quarter we experienced a loosening of supply chain constraints as well as healthy demand. As a result, a portion of our production backlog was satisfied this quarter with some carryover into the third quarter. We are optimistic that supply will no longer be a significant constraint to our normal order flow," commented Dr. Wayne Willkomm, President and CEO. "Keeping product flowing is critical to funding our biggest opportunity, which is pushing the SpinDx product platform across the finish line to commercialization. We anticipate that our research and development expenses will continue to rise in this final push.

Charles Gonzales, Research and Development Manager, added, "We have moved into the next critical phase of the SpinDx product development cycle, now developing our custom microfluidic disk with the first targeted drug being cannabis. We have also added tests for cocaine and amphetamines and have initiated work to detect fentanyl for our subsequent drug panel. The project is maintaining good momentum. We continue with validation testing utilizing actual human samples obtained through the Colorado School of Public Health at the University of Colorado Anschutz, with results to date confirming SpinDx performance."

About Lifeloc Technologies

Lifeloc Technologies, Inc. (OTC PINK: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, performance, expectations about new and existing products, market demand, economic conditions, 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.

Phoenix® and Easycal® are registered trademarks of Lifeloc Technologies, Inc.

SpinDx™ is a trademark of Sandia Corporation.

Amy Evans
Lifeloc Technologies, Inc.
http://www.lifeloc.com
(303) 431-9500

LIFELOC TECHNOLOGIES, INC.
Condensed Balance Sheets

ASSETS

CURRENT ASSETS:
 June 30, 2023 (Unaudited) December 31, 2022
Cash
 $1,913,499 $2,352,754
Accounts receivable, net
 762,670 627,919
Inventories, net
 2,904,064 2,732,463
Employee retention credit receivable
 - 107,575
Prepaid expenses and other
 207,778 58,203
Total current assets
 5,788,011 5,878,914
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
 1,162,803 1,147,992
Training courses
 432,375 432,375
Office equipment, software and space modifications
 216,618 216,618
Sales and marketing equipment and space modifications
 226,356 226,356
Research and development equipment, software and space modifications
 480,684 480,684
Less accumulated depreciation
 (3,199,561) (3,072,961)
Total property and equipment, net
 2,135,450 2,247,239
OTHER ASSETS:
Patents, net
 67,747 69,679
Deposits and other
 500 500
Deferred taxes
 320,376 321,429
Total other assets
 388,623 391,608
Total assets
 $8,312,084 $8,517,761

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable
 $329,839 $413,957
Term loan payable, current portion
 50,652 50,028
Customer deposits
 174,967 201,031
Accrued expenses
 290,942 344,944
Deferred revenue, current portion
 63,676 80,222
Reserve for warranty expense
 46,500 46,500
Total current liabilities
 956,576 1,136,682
TERM LOAN PAYABLE, net of current portion and
debt issuance costs
 1,195,158 1,219,677
DEFERRED REVENUE, net of current portion
 3,782 6,191
Total liabilities
 2,155,516 2,362,550
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, no par value; 50,000,000 shares
authorized, 2,454,116 shares outstanding
 4,668,014 4,668,014
Retained earnings
 1,488,554 1,487,197
Total stockholders' equity
 6,156,568 6,155,211
Total liabilities and stockholders' equity
 $8,312,084 $8,517,761

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

 Three Months Ended June 30,
REVENUES:
 2023 2022
Product sales
 $2,246,407 $2,144,813
Royalties
 10,150 12,572
Rental income
 23,789 22,639
Total
 2,280,346 2,180,024
COST OF SALES
 1,237,902 1,516,389
GROSS PROFIT
 1,042,444 663,635
OPERATING EXPENSES:
Research and development
 395,781 352,910
Sales and marketing
 300,075 276,669
General and administrative
 284,116 293,421
Total
 979,972 923,000
OPERATING INCOME (LOSS)
 62,472 (259,365)
OTHER INCOME (EXPENSE):
Interest income
 19,200 1,190
Interest expense
 (10,290) (10,817)
Total
 8,910 (9,627)
NET INCOME (LOSS) BEFORE PROVISION FOR TAXES
 71,382 (268,992
BENEFIT FROM (PROVISION FOR) FEDERAL AND STATE INCOME TAXES
 (16,237) 67,462
NET INCOME (LOSS)
 $55,145 $(201,530)
NET INCOME (LOSS) PER SHARE, BASIC
 $0.02 $(0.08)
NET INCOME (LOSS) PER SHARE, DILUTED
 $0.02 $(0.08)
WEIGHTED AVERAGE SHARES, BASIC
 2,454,116 2,454,116
WEIGHTED AVERAGE SHARES, DILUTED
 2,454,116 2,454,116

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

 Six Months Ended June 30,
REVENUES:
 2023 2022
Product sales
 $4,379,766 $4,256,570
Royalties
 18,356 39,212
Rental income
 46,778 44,878
Total
 4,444,900 4,340,660
COST OF SALES
 2,467,029 2,835,136
GROSS PROFIT
 1,977,871 1,505,524
OPERATING EXPENSES:
Research and development
 792,547 742,934
Sales and marketing
 587,958 553,306
General and administrative
 603,131 646,254
Total
 1,983,636 1,942,494
OPERATING INCOME (LOSS)
 (5,765) (436,970)
OTHER INCOME (EXPENSE):
Interest income
 29,000 1,622
Interest expense
 (20,825) (21,727)
Total
 8,175 (20,105)
NET INCOME (LOSS) BEFORE PROVISION FOR TAXES
 2,410 (457,075)
BENEFIT FROM (PROVISION FOR) FEDERAL AND STATE INCOME TAXES
 (1,053) 111,037
NET INCOME (LOSS)
 $1,357 $(346,038)
NET INCOME (LOSS) PER SHARE, BASIC
 $- $(0.14)
NET INCOME (LOSS) PER SHARE, DILUTED
 $- $(0.14)
WEIGHTED AVERAGE SHARES, BASIC
 2,454,116 2,454,116
WEIGHTED AVERAGE SHARES, DILUTED
 2,454,116 2,454,116

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

Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
Total stockholders' equity, beginning balances
$6,101,423 $6,466,460 $6,155,211 $6,593,766
Common stock (no shares issued during periods):
Beginning balances
 4,668,014 4,668,014 4,668,014 4,650,812
Stock based compensation expense related
to stock options
 - - - 17,202
Ending balances
 4,668,014 4,668,014 4,668,014 4,668,014
Retained earnings:
Beginning balances
 1,433,409 1,798,446 1,487,197 1,942,954
Net income (loss)
 55,145 (201,530) 1,357 (346,038)
Ending balances
 1,488,554 1,596,916 1,488,554 1,596,916
Total stockholders' equity, ending balances
$6,156,568 $6,264,930 $6,156,568 $6,264,930

LIFELOC TECHNOLOGIES, INC.
Condensed Statements of Cash Flows

 Six Months Ended June 30,
CASH FLOWS FROM OPERATING ACTIVITIES:
 2023 2022
Net income (loss)
 $1,357 $(346,038)
Adjustments to reconcile net income to net cash
provided from (used in) operating activities-
Depreciation and amortization
 132,088 267,455
Provision for inventory obsolescence, net change
 - 94,578
Deferred taxes, net change
 1,053 (111,037)
Stock based compensation expense related to
stock options
 - 17,202
Changes in operating assets and liabilities-
Accounts receivable
 (134,751) (173,583)
Inventories
 (171,601) 273,224
Employee retention credit and income taxes receivable
 107,575 -
Prepaid expenses and other
 (149,575) (67,884)
Accounts payable
 (84,118) (146,322)
Customer deposits
 (26,064) 276
Accrued expenses
 (54,002) (58,337)
Deferred revenue
 (18,955) (3,990)
Net cash (used in) operating activities
 (396,993) (254,456)
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Purchases of property and equipment
 (14,811) (40,753)
Patent filing expense
 (1,404) -
Net cash (used in) investing activities
 (16,215) (40,753)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Principal payments made on term loan
 (26,047) (25,144)
Net cash (used in) financing activities
 (26,047) (25,144)
NET INCREASE (DECREASE) IN CASH
 (439,255) (320,353)
CASH, BEGINNING OF PERIOD
 2,352,754 2,571,668
CASH, END OF PERIOD
 $1,913,499 $2,251,315
SUPPLEMENTAL INFORMATION:
Cash paid for interest
 $18,673 $19,575

SOURCE: Lifeloc Technologies, Inc.