Lifeloc Reports Third Quarter 2017 Results

November 16, 2017 |

7 min read

The Company posted quarterly net revenue of $2.00 million for a quarterly net income of $190, or $0.00 per diluted share.

Nov. 16, 2017 22:02 UTC

WHITE RIDGE, Colo.--(BUSINESS WIRE)-- Lifeloc Technologies Inc. (LCTC), a global leader in the development and manufacturing of breath alcohol testing devices, has announced financial results for its third quarter of 2017 that ended September 30, 2017.

The Company posted quarterly net revenue of $2.00 million for a quarterly net income of $190, or $0.00 per diluted share. These results compare to net revenue of $2.03 million for a quarterly gain of $91 thousand, or $0.04 per diluted share, in the year-ago quarter. Gross margin on products was 45% in the 2017 third quarter and 48% in the 2016 third quarter. Gross margin on net revenue was lower in the current quarter as a result of product mix, decreased sales volume, lower royalties and costs associated with the Remote Alcohol Detection and Recognition or R.A.D.A.R.® device business acquired earlier this 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.

For the nine months ending September 30, 2017 the Company posted net revenue of $6.03 million for a nine months net income of $146 thousand, or $0.06 per diluted share. These results compare to net revenue of $6.54 million for a nine months net income of $410 thousand, or $0.16 per diluted share, in the year-ago nine months. Gross margin on products was 46% in the first nine months of 2017 and 48% in the first nine months of 2016. Gross margin on products was lower in the current nine months as a result of product mix, decreased sales volume, lower royalties and costs associated with R.A.D.A.R. device business acquired earlier this year.

Net cash declined by $1.06 million in the first nine months of 2017 due to investments in the business, of which the largest was the acquisition of the R.A.D.A.R. device product line, which contributed to a significant growth in both assets and inventory. Even so, total debt was reduced by $31 thousand through regular mortgage payments.

“While we are disappointed to see any sales drop and only break even profitability, these current short-term results are reflective of our strategic plan to invest significantly in the growth of the business and directing those resources to focus on transformative technologies rather than line extensions,” said CEO Dr. Wayne Willkomm. “There have been few incremental product line extensions released in the last 12 months to contribute to short-term sales. Instead we look to the future for some significant product launches. We expect to introduce a completely new breathalyzer with the features that customers have been seeking. Likewise, we expect to reintroduce the R.A.D.A.R. device with better communications and a more robust mechanical design, improving service life. Development work continues on the real time, quantitative analysis for a panel of drugs including THC utilizing the SpinDx™ technology licensed from Sandia Corporation and the closely related THC breathalyzer. This work has demonstrated the detection of very low quantities of THC, but more work is needed to reduce this to a practical device. The Lifeloc commitment to innovation remains as strong as ever.”

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, http://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 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, available free of charge at the SEC’s website (http://www.sec.gov).

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

SpinDx™ is a trademark of Sandia Corporation.


Condensed Balance Sheets

ASSETS

			September 30,
			2017		December 31,
CURRENT ASSETS:			(Unaudited)		2016
	Cash	$	2,708,924	$	3,772,064
	Accounts receivable, net		724,063		495,397
	Inventories, net		1,212,757		835,609
	Income taxes receivable		98,539		114,673
	Prepaid expenses and other		52,276		52,072
	Total current assets		4,796,559		5,269,815

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		-
	Production equipment and software		531,325		456,005
	Training courses		432,375		432,375
	Office equipment and software		219,235		193,332
	Sales and marketing equipment		228,908		228,908
	Research and development equipment and software		116,670		78,157
	Less accumulated depreciation		(1,329,234)		(1,112,498)
	Total property and equipment, net		3,015,454		2,523,006

OTHER ASSETS:
	Patents, net		180,959		71,909
	Deposits and other		244,001		98,991
	Deferred taxes		96,891		109,727
	Total other assets		521,851		280,627

	Total assets	$	8,333,864	$	8,073,448

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
	Accounts payable	$	380,938	$	284,590
	Term loan payable, current portion		41,655		40,218
	Customer deposits		66,034		51,611
	Accrued expenses		260,722		239,833
	Deferred revenue, current portion		55,811		64,283
	Reserve for warranty expense		41,000		40,000
	Total current liabilities		846,160		720,535

TERM LOAN PAYABLE, net of current portion and
	debt issuance costs		1,424,239		1,455,604

DEFERRED REVENUE, net of current portion			10,276		8,665

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
	Common stock, no par value; 50,000,000 shares
	authorized, 2,454,116 shares outstanding		4,575,814		4,557,320
	Retained earnings		1,477,375		1,331,324
	Total stockholders' equity		6,053,189		5,888,644

	Total liabilities and stockholders' equity	$	8,333,864	$	8,073,448


Condensed Statements of Income (Unaudited)

		Three Months Ended September 30,
REVENUES:			2017		2016
	Product sales	$	1,944,734	$	1,960,610
	Royalties		43,785		48,070
	Rental income		12,160		21,725
	Total		2,000,679		2,030,405

COST OF SALES			1,118,203		1,039,810

GROSS PROFIT			882,476		990,595

OPERATING EXPENSES:
	Research and development		242,005		208,085
	Sales and marketing		367,101		380,448
	General and administrative		268,667		251,234
	Total		877,773		839,767

OPERATING INCOME			4,703		150,828

OTHER INCOME (EXPENSE):
	Interest income		1,036		1,896
	Bad debt recovery		-		-
	Interest expense		(15,261)		(15,438)
	Total		(14,225)		(13,542)

NET (LOSS) INCOME BEFORE PROVISION FOR TAXES			(9,522)		137,286

BENEFIT FROM (PROVISION FOR) FEDERAL AND STATE INCOME TAXES			9,712		(46,501)

NET INCOME		$	190	$	90,785

NET INCOME PER SHARE, BASIC		$	-	$	0.04

NET INCOME PER SHARE, DILUTED		$	-	$	0.04

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

WEIGHTED AVERAGE SHARES, DILUTED			2,511,925		2,527,150


Condensed Statements of Income (Unaudited)

		Nine Months Ended September 30,
			2017		2016
REVENUES:
	Product sales	$	5,706,328	$	6,086,605
	Royalties		268,127		373,958
	Rental income		57,075		77,289
	Total		6,031,530		6,537,852

COST OF SALES			3,171,449		3,214,271

GROSS PROFIT			2,860,081		3,323,581

OPERATING EXPENSES:
	Research and development		690,198		740,486
	Sales and marketing		1,074,219		1,075,191
	General and administrative		858,987		858,980
	Total		2,623,404		2,674,657

OPERATING INCOME			236,677		648,924

OTHER INCOME (EXPENSE):
	Interest income		4,682		9,789
	Bad debt recovery		-		4,500
	Interest expense		(45,572)		(50,404)
	Total		(40,890)		(36,115)

NET INCOME BEFORE PROVISION FOR TAXES			195,787		612,809

PROVISION FOR FEDERAL AND STATE INCOME TAXES			(49,736)		(202,702)

NET INCOME		$	146,051	$	410,107

NET INCOME PER SHARE, BASIC		$	0.06	$	0.17

NET INCOME PER SHARE, DILUTED		$	0.06	$	0.16

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

WEIGHTED AVERAGE SHARES, DILUTED			2,520,414		2,532,301


Condensed Statements of Cash Flows (Unaudited)

			Nine Months Ended September 30,
CASH FLOWS FROM OPERATING ACTIVITIES:			2017		2016
	Net income		$	146,051	$	410,107
	Adjustments to reconcile net income to net cash			295,140		241,457
	provided by (used in) operating activities
	Changes in operating assets and liabilities			(647,595)		(356,390)
		Net cash provided from (used in) operating activities		(206,404)		295,174

CASH FLOWS FROM INVESTING ACTIVITIES				(826,401)		(44,333)

CASH FLOWS FROM FINANCING ACTIVITIES:				(30,335)		(28,062)
NET INCREASE (DECREASE) IN CASH				(1,063,140)		222,779

CASH, BEGINNING OF PERIOD				3,772,064		3,227,190

CASH, END OF PERIOD			$	2,708,924	$	3,449,969