Overview

Lifeloc Technologies, Inc. is a leading developer, manufacturer, and marketer of portable hand-held and fixed station breathalyzers, with a focus on expanding its offerings into technologies for the detection of drugs of abuse. The company began its alcohol breath testing product line in 1989 and has since introduced a range of innovations, including Bluetooth connectivity, passive screening devices, and automatic calibration systems.

Lifeloc competes in all major segments of the portable breath alcohol testing instrument market, including law enforcement, workplace, corrections, and original equipment manufacturing (OEM) markets. In addition to its core breathalyzer products, the company offers a line of supplies, accessories, services, and training to support customers’ alcohol testing programs.

In 2016, Lifeloc acquired exclusive rights to develop and commercialize Sandia Corporation’s patented SpinDx™ technology, which enables rapid, on-site, and cost-effective drug testing using a centrifugal disk platform. Despite initial delays due to the pandemic, the company has advanced the technology and plans to launch the product in stages, beginning with a saliva-based system, followed by blood and breath sample capabilities.

Lifeloc places strong emphasis on high-quality training as a key component of its testing business, offering in-person instruction, online modules, and a learning management system (LMS) called Lifeloc University. The company also continues to pursue acquisitions aligned with its mission to deliver near and remote sensing and monitoring solutions.

Outlook

Lifeloc expects the installed base of its breathalyzers to increase as the risks associated with drinking while driving or in safety-sensitive jobs become more widely acknowledged, and as the company’s network of distributors and direct sales force grows. However, the company has incurred operating losses in recent years, including 2021 through 2024, and expects these losses to continue as it works toward the commercialization of SpinDx.

The company expects to increase sales in the U.S. and worldwide as its network of direct customers and distributors grows and becomes more proficient. Lifeloc’s growth efforts have focused on expanding its global reach and broadening its product offering in alcohol and drug detection. The company also expects to maintain a healthy level of sales and marketing expenses to support its distribution capability expansion.

Research and development expenses are expected to remain high through 2025 as the company completes the development of its new product line, including SpinDx. Lifeloc believes its cash resources will be sufficient to fund its operations for the next twelve months under its current operating plan, but if it is unable to manage the business operations in line with its budget expectations, it could have a material adverse effect on the company’s viability, financial position, results of operations, and cash flows.

Results of Operations

For the three months ended March 31, 2025 compared to the three months ended March 31, 2024:

Metric	Q1 2025	Q1 2024	Change
Net Sales	$2,263,047	$2,134,434	+6%
Total Revenues	$2,277,034	$2,153,443	+6%
Gross Profit	$908,566	$835,307	+9%
Gross Profit Margin	40%	38%	+2 percentage points
Research, Development, and Sustaining Engineering Expenses	$469,680	$555,599	-16%
Sales and Marketing Expenses	$334,556	$345,009	-3%
General and Administrative Expenses	$384,878	$314,926	+22%
Net Income (Loss)	$(292,686)	$(283,806)	-3%

The key highlights from the results include:

• Net sales and total revenues increased by 6% due to acceleration of larger orders and inflationary pressure on customers’ budgets.
• Gross profit increased by 9%, with gross profit margin improving from 38% to 40%.
• Research, development, and sustaining engineering expenses decreased by 16% due to a lull in payments to outside contractors.
• Sales and marketing expenses decreased by 3% due to cost-cutting efforts.
• General and administrative expenses increased by 22% primarily due to higher professional fees.
• The company realized a net loss of $292,686, a 3% increase from the net loss of $283,806 in the same period a year ago.

Trends and Uncertainties

Lifeloc expects revenues in 2025 to be similar to 2024 levels, with the potential for improved revenues in 2026 and beyond due to continued sales efforts and the expected availability of SpinDx™ for sale. Inflationary pressures have affected the company’s business, including increasing the cost of raw materials, labor, and freight, but Lifeloc’s actions to mitigate the impact have been somewhat successful.

The company expects to continue experiencing quarter-to-quarter revenue fluctuations due to the unpredictable timing and size of large customer orders. Lifeloc’s focus for the remainder of 2025 is on growing sales, increasing gross profits, and continuing research and development efforts on new products, including SpinDx™, for long-term growth.

Liquidity and Capital Resources

Lifeloc has traditionally funded its working capital needs through product sales and close management of working capital components. The company has also received cash from private offerings of its common stock and the issuance of subordinated debentures.

As of March 31, 2025, Lifeloc had $1,522,457 in cash and cash equivalents, $761,697 in trade accounts receivable, and $1,117,069 in current liabilities, resulting in net liquid assets of $1,167,085. The company believes that the diminishing of the COVID-19 pandemic, the resolution of supply chain issues, and the introduction of new products will allow it to operate profitably. However, if revenue levels do not increase as expected, or if inflationary pressures or the development and market acceptance of SpinDx™ take longer than expected, Lifeloc may need to seek additional sources of capital or implement further cost reduction measures.

Critical Accounting Policies and Estimates

Lifeloc’s financial statements are prepared in accordance with U.S. generally accepted accounting principles, which requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, sales, and expenses. The company’s critical accounting policies and estimates include:

• Allowances for doubtful accounts
• Inventory obsolescence and write-downs
• Depreciation and amortization of property and equipment
• Revenue recognition
• Stock-based compensation

Lifeloc regularly evaluates its accounting policies and estimates, and actual results may differ from the company’s estimates due to different assumptions or conditions.