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. 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 | |||||||
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