Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended September 30, 2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from to

Commission file number 000-54319

LIFELOC TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Colorado	84-1053680
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

12441 West 49th Ave., Unit 4

Wheat Ridge, Colorado 80033

(Address of principal executive offices)

(303) 431-9500

(Registrant's telephone number)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	LCTC	N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒*

* The registrant is a voluntary filer of reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, and has filed all such reports during the preceding 12 months.

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" or and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☒

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:

Common Stock, no par value	2,664,116 Shares
(Class)	(outstanding at September 30, 2024)

LIFELOC TECHNOLOGIES, INC.

FORM 10-Q

For the Nine months Ended September 30, 2024

INDEX

		Page
		Number

PART I.	FINANCIAL INFORMATION	3

ITEM 1	FINANCIAL STATEMENTS (UNAUDITED)

	Condensed Balance Sheets as of September 30, 2024 and December 31, 2023 (Unaudited)	3
	Condensed Statements of Income (Unaudited) for the three and nine months ended September 30, 2024 and 2023	4
	Condensed Statements of Stockholders' Equity (Unaudited) for the nine months ended September 30, 2024 and 2023	6
	Condensed Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2024 and 2023	7
	Notes to Condensed Financial Statements (Unaudited)	8

ITEM 2	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	15

ITEM 3	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	19

ITEM 4	CONTROLS AND PROCEDURES	20

PART II.	OTHER INFORMATION	20

ITEM 1	LEGAL PROCEEDINGS	20

ITEM 1A	RISK FACTORS	20

ITEM 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	20

ITEM 3	DEFAULTS UPON SENIOR SECURITIES	20

ITEM 4	MINE SAFETY DISCLOSURES	20

ITEM 5	OTHER INFORMATION	21

ITEM 6	EXHIBITS	21

SIGNATURES		22

PART I FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

LIFELOC TECHNOLOGIES, INC.
Condensed Balance Sheets (Unaudited)


ASSETS
	September 30, 2024			December 31, 2023
CURRENT ASSETS:
Cash	$	841,621		$	1,766,621
Accounts receivable, net		611,439			812,126
Inventories, net		3,160,200			3,024,834
Federal and state income taxes receivable		60,420			—
Prepaid expenses and other		89,049			105,967
Total current assets		4,762,729			5,709,548

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		1,349,839			1,154,803
Training courses		432,375			432,375
Office equipment, software and space modifications		254,333			216,618
Sales and marketing equipment and space modifications		226,356			226,356
Research and development equipment, software and space modifications		725,556			480,684
Research and development equipment, software and space modifications not in service		147,615			—
Less accumulated depreciation		(3,511,125	)		(3,326,837	)
Total property and equipment, net		2,441,124			2,000,174

OTHER ASSETS:
Patents, net		80,517			64,439
Deposits and other		12,261			111,157
Deferred taxes		1,046,493			806,652
Total other assets		1,139,271			982,248
Total assets	$	8,343,124		$	8,691,970

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	328,528		$	402,231
Term loan payable, current portion		52,789			51,588
Income taxes payable		—			44,952
Customer deposits		28,940			195,719
Accrued expenses		270,932			329,311
Deferred revenue, current portion		56,090			79,036
Reserve for warranty expense		46,500			46,500
Total current liabilities		783,779			1,149,337

TERM LOAN PAYABLE, net of current portion and debt issuance costs		1,132,066			1,170,243

DEFERRED REVENUE, net of current portion		8,575			11,565
Total liabilities		1,924,420			2,331,145

COMMITMENTS AND CONTINGENCIES (Note 5)					—

STOCKHOLDERS' EQUITY:
Common stock, no par value; 50,000,000 shares authorized, 2,664,116 shares outstanding at September 30, 2024 (2,454,116 outstanding at December 31, 2023)		5,466,014			4,668,014
Retained earnings		952,690			1,692,811
Total stockholders' equity		6,418,704			6,360,825
Total liabilities and stockholders' equity	$	8,343,124		$	8,691,970

The accompanying notes to the condensed financial statements are an integral part of these financial statements.

LIFELOC TECHNOLOGIES, INC.

Condensed Statements of Income (Loss) (Unaudited)


	Three Months Ended September 30,
REVENUES:	2024			2023
Product sales	$	2,075,994		$	2,676,872
Royalties		3,016			5,063
Rental income		8,316			13,573
Total		2,087,326			2,695,508

COST OF SALES		1,175,374			1,576,117

GROSS PROFIT		911,952			1,119,391

OPERATING EXPENSES:
Research and development		521,107			516,174
Sales and marketing		329,716			309,898
General and administrative		269,450			269,593
Total		1,120,273			1,095,665

OPERATING INCOME (LOSS)		(208,321	)		23,726

OTHER INCOME (EXPENSE):
Interest income		9,525			17,678
Interest expense		(10,019	)		(10,494	)
Total		(494	)		7,184

NET INCOME (LOSS) BEFORE BENEFIT FROM (PROVISION FOR) TAXES		(208,815	)		30,910

BENEFIT FROM FEDERAL AND STATE INCOME TAXES		50,488			78,693

NET INCOME (LOSS)	$	(158,327	)	$	109,603

NET INCOME (LOSS) PER SHARE, BASIC	$	(0.06	)	$	0.04

NET INCOME (LOSS) PER SHARE, DILUTED	$	(0.06	)	$	0.04

WEIGHTED AVERAGE SHARES, BASIC		2,611,616			2,454,116

WEIGHTED AVERAGE SHARES, DILUTED		2,611,616			2,454,116

The accompanying notes to the condensed financial statements are an integral part of these financial statements.

LIFELOC TECHNOLOGIES, INC.

Condensed Statements of Income (Loss) (Unaudited)


	Nine Months Ended September 30,
REVENUES:	2024			2023
Product sales	$	6,580,861		$	7,056,638
Royalties		22,776			23,419
Rental income		24,462			60,351
Total		6,628,099			7,140,408

COST OF SALES		3,887,244			4,043,146

GROSS PROFIT		2,740,855			3,097,262

OPERATING EXPENSES:
Research and development		1,738,982			1,308,721
Sales and marketing		1,040,099			897,856
General and administrative		947,384			872,724
Total		3,726,465			3,079,301

OPERATING INCOME (LOSS)		(985,610	)		17,961

OTHER INCOME (EXPENSE):
Interest income		35,874			46,678
Interest expense		(30,226	)		(31,319	)
Total		5,648			15,359

NET INCOME (LOSS) BEFORE BENEFIT FROM (PROVISION FOR) TAXES		(979,962	)		33,320

BENEFIT FROM FEDERAL AND STATE INCOME TAXES		239,841			77,640

NET INCOME (LOSS)	$	(740,121	)	$	110,960

NET INCOME (LOSS) PER SHARE, BASIC	$	(0.30	)	$	0.05

NET INCOME (LOSS) PER SHARE, DILUTED	$	(0.30	)	$	0.05

WEIGHTED AVERAGE SHARES, BASIC		2,506,999			2,454,116

WEIGHTED AVERAGE SHARES, DILUTED		2,506,999			2,454,116

The accompanying notes to the condensed financial statements are an integral part of these financial statements.

Lifeloc Technologies, Inc.

Statements of Stockholders' Equity (Unaudited)


	Three Months Ended September 30,					Nine Months Ended September 30,
	2024			2023		2024			2023
Beginning balances	4,668,014			4,668,014		4,668,014			4,668,014
Beginning balances	1,111,017			1,488,554		1,692,811			1,487,197
Total stockholders' equity, beginning balances	$	5,779,031		$	6,156,568	$	6,360,825		$	6,155,211

Common stock:
Beginning balances		4,668,014			4,668,014		4,668,014			4,668,014
Issuance of 210,000 shares at $3.80 per share		798,000			—		798,000			—
Net income (loss)		—			—		—			—
Ending balances		5,466,014			4,668,014		5,466,014			4,668,014

Retained earnings:
Beginning balances		1,111,017			1,488,554		1,692,811			1,487,197
Net income (loss)		(158,327	)		109,603		(740,121	)		110,960
Ending balances		952,690			1,598,157		952,690			1,598,157

Beginning balances		5,779,031			6,156,568		6,360,825			6,155,211
Net income (loss)		(158,327)			109,603		(740,121)			110,960
Total stockholders' equity, ending balances	$	6,418,704		$	6,266,171	$	6,418,704		$	6,266,171

The accompanying notes to the condensed financial statements are an integral part of these financial statements.

LIFELOC TECHNOLOGIES, INC.

Condensed Statements of Cash Flows (Unaudited)


	Nine Months Ended September 30,
CASH FLOWS FROM OPERATING ACTIVITIES:	2024			2023
Net income (loss)	$	(740,121	)	$	110,960
Adjustments to reconcile net income (loss) to net cash (used in) operating activities-
Depreciation and amortization		193,096			198,471
Provision for doubtful accounts, net change		1,000			—
Provision for inventory obsolescence, net change		52,500			—
Deferred taxes, net change		(239,841	)		(114,116	)
Changes in operating assets and liabilities-
Accounts receivable		199,687			(81,388	)
Inventories		(187,866	)		(179,943	)
Federal and state income taxes receivable		(60,420	)		107,575
Prepaid expenses and other		16,918			(207,149	)
Deposits and other		98,896			—
Accounts payable		(73,703	)		87,870
Income taxes payable		(44,952	)		36,476
Customer deposits		(166,779	)		(16,557	)
Accrued expenses		(58,379	)		(82,738	)
Deferred revenue		(25,936	)		(13,339	)
Net cash (used in) operating activities		(1,035,900	)		(153,878	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(477,623	)		(21,611	)

Purchases of research and development equipment, software, and space modifications not in service		(147,615	)		—
Patent filing expense		(21,708	)		(1,404	)
Net cash (used in) investing activities		(646,946	)		(23,015	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments made on term loan		(40,154	)		(38,988	)
Proceeds from issuance of 210,000 shares of common stock at $3.80 per share		798,000			—
Net cash provided by (used in) financing activities		757,846			(38,988	)

NET (DECREASE) IN CASH		(925,000	)		(215,881	)

CASH, BEGINNING OF PERIOD		1,766,621			2,352,754

CASH, END OF PERIOD	$	841,621		$	2,136,873

SUPPLEMENTAL INFORMATION:
Cash paid for interest	$	27,048		$	28,091

Cash paid for income tax	$	60,420		$	—

The accompanying notes to the condensed financial statements are an integral part of these financial statements.

LIFEELOC TECHNOLOGIES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

1. ORGANIZATION AND NATURE OF BUSINESS

Lifeloc Technologies, Inc. ("Lifeloc" or the "Company") is a Colorado-based developer, manufacturer and marketer of portable hand-held and fixed station breathalyzers and related accessories, supplies and education. We design, produce and sell fuel-cell based breath alcohol testing equipment. We compete in all major segments of the breath alcohol testing instrument market, including law enforcement, workplace, corrections, original equipment manufacturing ("OEM") and consumer markets. In addition, we offer a line of supplies, accessories, services, and training to support customers' alcohol testing programs. We sell globally through distributors as well as directly to users.

We define our business as providing "near and remote sensing and monitoring" products and solutions. Today, the majority of our revenues are derived from products and services for alcohol detection and measurement. We remain committed to growing our breath alcohol testing business. In the future, we anticipate the commercialization of new sensing and measurement products that may allow Lifeloc to successfully expand our business into new growth areas where we do not presently compete or where no satisfactory product solutions exist today.

Lifeloc incorporated in Colorado in December 1983. We filed a registration statement on Form 10 with the Securities and Exchange Commission, which became effective on May 31, 2011. Our fiscal year end is December 31. Our principal executive offices are located at 12441 West 49th Avenue, Unit 4, Wheat Ridge, Colorado 80033-3338. Our telephone number is (303) 431-9500. Our websites are www.lifeloc.com and www.stsfirst.com. Information contained on our websites does not constitute part of this Form 10-Q.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation. These statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC") and accounting principles generally accepted in the United States ("GAAP") for interim financial information. They do not include all information and notes required by GAAP for complete financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the notes to financial statements included in Lifeloc's Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC. In the opinion of management, the accompanying unaudited financial statements contain all adjustments, consisting of normal recurring accruals necessary for a fair presentation of the financial position as of September 30, 2024 and December 31, 2023, and the results of operations and cash flows for the three and nine month periods ended September 30, 2024 and September 30, 2023. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for a full year. The Company's 2023 Annual Report on Form 10-K includes certain definitions and a summary of significant accounting policies and should be read in conjunction with this Form 10-Q.

Use of Estimates in the Preparation of Financial Statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities as well as disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and expense during the reporting period. Actual results could differ from those estimates.

Debt Issuance Costs. Deferred loan costs are amortized over the 10 year life of the term loan on a straight line basis, which approximates the effective interest method. Total debt amortization during the three months ended September 30, 2024 and September 30, 2023 was $1,076 and $1,076 respectively, and for the nine months ended September 30, 2024 and September 30, 2023 $3,178 and $3,228 respectively, and is included within interest expense on the statements of income.

Inventories. Inventories are stated at the lower of cost (first-in, first-out basis) or net realizable value.

We reduce inventory for estimated obsolete or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. At September 30, 2024 and December 31, 2023, inventory consisted of the following:

Schedule of inventory
	2024			2023
Raw materials & deposits	$	2,876,436		$	2,696,659
Work-in-process		6,678			26,269
Finished goods		698,742			671,062
Total gross inventories		3,581,856			3,393,990
Less reserve for obsolescence		(421,656	)		(369,156	)
Total net inventories	$	3,160,200		$	3,024,834

Income Taxes. We account for income taxes under the provisions of ASC Topic 740, Accounting for Income Taxes ("ASC 740"). We have determined an estimated annual effective tax rate of 21%. The rate will be revised, if necessary, as of the end of each successive interim period during our fiscal year to our best current estimate. The Company’s income tax expense and deferred tax assets and liabilities reflect management’s best assessment of estimated future taxes to be paid or refunded. Significant judgments and estimates are required in determining the income tax expense. Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense. In evaluating the Company’s ability to recover its deferred tax assets, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, the Company develops assumptions including the amount of future state and federal pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and the assumptions are consistent with the plans and estimates that the Company is using to manage its underlying businesses. Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense. The Company evaluates its tax positions taken or expected to be taken in the course of preparing its tax returns to determine whether the tax positions will more likely than not be sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are not recorded as a tax benefit or expense in the current year. No reserve for uncertain tax positions has been recorded.

The estimated annual effective tax rate is applied to the year-to-date ordinary income (loss) at the end of the interim period.

ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This pronouncement also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

Revenue Recognition.

Revenue from product sales and supplies is generally recorded when we ship the product and title has passed to the customer, or when agreed milestones are met in the case of product developments, provided that we have evidence of a customer arrangement and can conclude that collection is probable. The prices at which we sell our products are fixed and determinable at the time we accept a customer's order. We recognize revenue from sales to stocking distributors when there is no right of return, other than for normal warranty claims, and generally have no ongoing obligations related to product sales, except for normal warranty.

The sales of licenses to our training courses are recognized as revenue at the time of sale. Training and certification revenues are recognized at the time the training and certification occurs. Data recording revenue is recognized based on each day’s usage of enrolled devices.

Revenues arising from extended warranty contracts are booked as sales over their life on a straight-line basis. We have discontinued arranging for customer financing and leasing. Occasionally, we rent used equipment to customers, and in those cases, we recognize the revenues as they are earned over the life of the contract.

Royalty income is recognized in accordance with agreed upon terms, when performance obligations are satisfied, the amount is fixed or determinable and collectability is reasonably assured.

Rental income from space leased to our tenants is recognized in the month in which it is due, which approximates if it were recognized on a straight-line basis over the term of the related lease. We lease 2,774 square feet (12% of our total space) to one tenant pursuant to a lease that expires June 30, 2025, with the rate determined by referring to prevailing market rates. The lease does not have an option to renew or extend.

On occasion we receive customer deposits for future product orders and product developments. Customer deposits are initially recorded as a liability and recognized as revenue when the product is shipped and title has passed to the customer, or when agreed milestones are met in the case of product developments.

The following is the disaggregation of revenue into broad categories, which we have defined as shown below for the three months and for the nine months ended September 30, 2024 and September 30, 2023.

Schedule of disaggregation of revenue
	Three Months Ended September 30,
Product sales:	2024		2023
Product sales and supplies	$	1,898,001	$	2,437,753
Training, certification and data recording		157,722		215,105
Service plans and equipment rental		20,271		24,014
Product sales subtotal		2,075,994		2,676,872
Royalties		3,016		5,063
Rental income		8,316		13,573
Total revenues	$	2,087,326	$	2,695,508


	Nine Months Ended September 30,
Product sales:	2024		2023
Product sales and supplies	$	5,992,360	$	6,376,364
Training, certification and data recording		528,882		620,367
Service plans and equipment rental		59,619		59,907
Product sales subtotal		6,580,861		7,056,638
Royalties		22,776		23,419
Rental income		24,462		60,351
Total revenues	$	6,628,099	$	7,140,408

Deferred Revenue. Deferred revenues arise from service contracts and from development contracts. Revenues from service contracts are recognized on a straight-line basis over the life of the contract, generally one year, and are included in product revenue in our statements of income. However, there are occasions when they are written for longer terms up to four years. The revenues from that portion of the contract that extend beyond one year are shown in our balance sheets as long term. Deferred revenues also result from progress payments received on development contracts; those revenues are recognized when the contract is complete, and are included in product revenue in our statements of income. All development contracts are for less than one year and all deferred revenues from this source are shown in our balance sheets as short term.

New Accounting Pronouncements. We have reviewed all recently issued accounting pronouncements, including the following.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, amending reportable segment disclosure requirements to include disclosure of incremental segment information on an annual and interim basis. Among the disclosure enhancements are new disclosures regarding significant segment expenses that are regularly provided to the chief operating decision-maker and included within each each reported measure of segment profit or loss, as well as other segment items bridging segment revenue to each reported measure of segment profit or loss. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, and are applied retrospectively. Early adoption is permitted. We are currently evaluating the impact of this update on our financial statements and disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures, amending income tax disclosure requirements for the effective tax rate reconciliation and income taxes paid. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024 and are applied prospectively. Early adoption and retrospective application of the amendments are permitted. We continue to evaluate the impact of this update on our financial statements, but do not expect any changes to our current reportable segments.

3. BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE

We report both basic and diluted net income (loss) per common share. Basic net income (loss) per common share is computed by dividing net income (loss) for the period by the weighted average number of common shares outstanding for the period. Diluted net income (loss) per common share is computed by dividing the net income (loss) for the period by the weighted average number of common and potential common shares outstanding during the period if the effect of the potential common shares is dilutive. The shares used in the calculation of dilutive potential common shares exclude options to purchase shares where the exercise price was greater than the average market price of common shares for the period. The shares used in the calculation of dilutive potential common shares exclude options to purchase shares in loss periods since they are anti-dilutive.

The following table presents the calculation of basic and diluted net income (loss) per common share for the three months ended September 30, 2024 and September 30, 2023, and for the nine months ended September 30, 2024 and September 30, 2023:


	Three Months Ended September 30,
	2024			2023
Net income (loss)	$	(158,327	)	$	109,603
Weighted average shares-basic		2,611,616			2,454,116
Effect of dilutive potential common shares		—			—
Weighted average shares-diluted		2,611,616			2,454,116
Net income (loss) per share-basic	$	(0.06	)	$	0.04
Net income (loss) per share-diluted	$	(0.06	)	$	0.04
Antidilutive employee stock options		122,000			—


	Nine Months Ended September 30,
	2024			2023

Net income (loss)	$	(740,121	)	$	110,960
Weighted average shares-basic		2,506,999			2,454,116
Effect of dilutive potential common shares		—			—
Weighted average shares-diluted		2,506,999			2,454,116
Net (loss) per share-basic	$	(0.30	)	$	(.05	)
Net (loss) per share-diluted	$	(0.30	)	$	(.05	)
Antidilutive employee stock options		122,000			—

4. STOCKHOLDERS' EQUITY

In July, 2024 we issued 210,000 shares of common stock to EDCO Partners LLLP at $3.80 per share, or $798,000 in cash which results in 2,664,116 shares now outstanding. No shares were issued during the nine months ended September 30, 2023.

The following table summarizes information about employee stock options outstanding and exercisable at September 30, 2024:


		STOCK OPTIONS OUTSTANDING				STOCK OPTIONS EXERCISABLE
	Range of Exercise Prices	Number Outstanding	Weighted Average Remaining Contractual Life (in Years)		Weighted Average Exercise Price per Share	Number Exercisable		Weighted Average Exercise Price per Share
$	3.80	122,000	0.81	$	3.80	122,000	$	3.80

As of September 30, 2024, no options for our common stock remain available for grant under the 2013 Plan as it has expired.

The aggregate intrinsic value of the options outstanding and exercisable at September 30, 2024 was $50,020.

No options were exercised during the nine months ended September 30, 2024 or during the nine months ended September 30, 2023.

The total number of authorized shares of common stock continues to be 50,000,000, with no change in the par value per share.

5. COMMITMENTS AND CONTINGENCIES

Mortgage Expense. We purchased our facilities in Wheat Ridge, Colorado on October 31, 2014 for $1,949,139 and took out a term loan secured by a first mortgage on the property in the amount of $1,581,106 with Bank of America for a portion of the purchase price. This loan was paid on September 30, 2021 with proceeds from a new term loan with Citywide Banks, also secured by a first priority mortgage on the property, in the principal amount of $1,350,000 which matures in September, 2031. The new note is payable in 119 equal monthly installments of $7,453, including interest, plus a final payment of $773,727 (excluding interest) on September 30, 2031. Our minimum future principal payments on this term loan, by year, are as follows:


2024	$	13,583
2025		55,345
2026		57,000
2027		58,704
2028 – 2031		1,009,938
Total		1,194,570
Less financing cost		(9,715	)
Net term loan payable		1,184,855
Less current portion		(52,789	)
Long term portion	$	1,132,066

Employee Severance Benefits. Our obligation with respect to employee severance benefits is minimized by the "at will" nature of the employee relationships. As of September 30, 2024, we had no obligation with respect to contingent severance benefit obligations other than the Company's obligations under the employment agreement with its chief executive officer, Dr. Wayne Willkomm. In the event that Dr. Willkomm's employment is terminated by the Company without cause (including through a decision by the Company not to renew the employment agreement) or by Dr. Willkomm with Good Reason (as each are defined in the employment agreement), Dr. Willkomm will be eligible, upon satisfaction of certain conditions, for severance equal to two months of salary continuation plus 12 months of health insurance continuation.

Contractual Commitments and Purchase Orders. Contractual commitments under development agreements and outstanding purchase orders issued to vendors in the ordinary course of business totaled $2,843,637 at September 30, 2024.

Regulatory Commitments. We are subject to certain regulations of the United States Department of Transportation and by various state departments of transportation. We believe that we are in substantial compliance with all known applicable regulations.

6. INCOME TAXES

The items accounting for the difference between income taxes computed at the federal statutory rate and the provision for (benefit from) income taxes consist of the following.


	Three months Ended September 30,
	2024			2023
Federal statutory rate	$	(44,544	)	$	6,491
Effect of:
State taxes, net of federal tax benefit		(9,507	)		38,823
Other		3,563			(124,007	)
Total	$	(50,488	)	$	(78,693	)


	Nine months Ended September 30,
	2024			2023

Federal statutory rate	$	(206,538	)	$	6,997
Effect of:
State taxes, net of federal tax benefit		(43,737	)		36,525
Other		10,434			(121,162	)
Total	$	(239,841	)	$	(77,640	)

7. BUSINESS SEGMENTS

We currently have two operating segments, including our primary business which is as a developer, manufacturer and marketer of portable hand-held breathalyzers and related accessories, supplies, education, training ("Product Sales"), and royalties from development contracts with OEM manufacturers ("Royalties" and, together with Product Sales, the "Products" segment). As a result of purchasing our building on October 31, 2014, we have a second business segment consisting of renting portions of our building to one tenant, whose lease expires on June 30, 2025. The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 2.

Operating profits for these segments exclude unallocated corporate items. Administrative and staff costs were commonly used by all business segments and were indistinguishable.

The following sets forth information about capital expenditures, operations and depreciation and amortization of the business segments for the three months ended September 30, 2024 and 2023.


Capital expenditures:	2024		2023
Product sales	$	133,947	$	6,800
Royalties		—		—
Products subtotal		133,947		6,800
Rentals		—		—
Total	$	133,947	$	6,800

Revenues:	2024		2023
Product sales	$	2,075,994	$	2,676,872
Royalties		3,016		5,063
Products subtotal		2,079,010		2,681,935
Rentals		8,316		13,573
Total	$	2,087,326	$	2,695,508

Gross profit:	2024			2023
Product sales	$	911,047		$	1,123,942
Royalties		3,016			5,063
Products subtotal		914,063			1,129,005
Rentals		(2,111	)		(9,614	)
Total	$	911,952		$	1,119,391

Depreciation and amortization:	2024		2023
Product sales	$	76,965	$	61,973
Royalties		—		—
Products subtotal		76,965		61,973
Rentals		1,512		4,410
Total	$	78,477	$	66,383

Interest expense:	2024		2023
Product sales	$	8,954	$	8,488
Royalties		—		—
Products subtotal		8,954		8,488
Rentals		1,065		2,006
Total	$	10,019	$	10,494

Net income (loss) before taxes:	2024			2023
Product sales	$	(208,655	)	$	37,467
Royalties		3,016			5,063
Products subtotal		(205,639	)		42,530
Rentals		(3,176	)		(11,620	)
Total	$	(208,815	)	$	30,910

The following sets forth information about capital expenditures, operations and depreciation and amortization of the business segments for the nine months ended September 30, 2024 and 2023.

Capital expenditures:	2024		2023
Product sales	$	625,238	$	21,611
Royalties		—		—
Products subtotal		625,238		21,611
Rentals		—		—
Total	$	625,238	$	21,611

Revenues:	2024		2023
Product sales	$	6,580,861	$	7,056,638
Royalties		22,776		23,419
Products subtotal		6,603,637		7,080,057
Rentals		24,462		60,351
Total	$	6,628,099	$	7,140,408

Gross profit:	2024		2023
Product sales	$	2,710,884	$	3,047,143
Royalties		22,776		23,419
Products subtotal		2,733,660		3,070,562
Rentals		7,195		26,700
Total	$	2,740,855	$	3,097,262

Depreciation and amortization:	2024		2023
Product sales	$	187,594	$	185,241
Royalties		—		—
Products subtotal		187,594		185,241
Rentals		5,502		13,230
Total	$	193,096	$	198,471

Interest expense:	2024		2023
Product sales	$	26,813	$	22,777
Royalties		—		—
Products subtotal		26,813		22,777
Rentals		3,413		8,542
Total	$	30,226	$	31,319

Net income (loss) before taxes:	2024			2023
Product sales	$	(1,006,520	)	$	(8,257	)
Royalties		22,776			23,419
Products subtotal		(983,744	)		15,162
Rentals		3,782			18,158
Total	$	(979,962	)	$	33,320

There were no intersegment revenues.

At September 30, 2024, $185,549 of our assets were used in the Rentals segment, with the remainder, $8,157,575 used in the Products and unallocated segments.

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion of our financial condition and results of operations, and should be read in conjunction with our financial statements and the related notes included elsewhere in this Form 10-Q. Certain statements contained in this section are not historical facts, including statements about our strategies and expectations about new and existing products, market demand, acceptance of new and existing products, technologies and opportunities, market and industry segment growth, and return on investments in products and markets. These statements are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"), and we intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in these statutes. You can identify forward-looking statements by the use of forward-looking terminology such as "believes," "expects," "may," "will," "should," "seeks," "intends," "plans" or "anticipates" or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters. Such statements 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 section are based on information available to us on the date of this document, and we assume no obligation to update such forward looking statements. Readers of this Form 10-Q are strongly encouraged to review the section titled "Risk Factors" in our December 31, 2023 Form 10-K.

Overview

Lifeloc Technologies, Inc., a Colorado corporation ("Lifeloc", "Company", “We”, “Us”, “Our”, “Them”), is a Colorado-based developer, manufacturer and marketer of portable hand-held and fixed station breathalyzers and related accessories, supplies and education. We design, produce and sell fuel-cell based breath alcohol testing equipment. We compete in all major segments of the portable breath alcohol testing instrument market, including law enforcement, workplace, corrections, original equipment manufacturing ("OEM") and consumer markets. In addition, we offer a line of supplies, accessories, services, and training to support customers' alcohol testing programs. We sell globally through distributors as well as directly to users.

In addition, with the October 2014 purchase of our corporate headquarters and certain adjacent property, we added a new reporting segment focused on the ownership and rental of real property through existing commercial leases.

Outlook

Installed Base of Breathalyzers. We believe the installed base of our breathalyzers will increase as the inherent risks associated with drinking while driving or while working in safety sensitive jobs become more widely acknowledged and as our network of distributors and our direct sales force grows. We believe that increased marketing efforts, the introduction of new products and the expansion of our sales network may provide the basis for increased sales and continuing profitable operations. However, these measures, or any others that we may adopt or determine not to adopt, may not result in either increased sales or continuing profitable operations.

Possibility of Operating Losses. Over many of the past several years we have operated profitably; however, prior to that, and in 2021 through 2023, we incurred losses. Those losses are continuing in 2024 and we expect them to continue in 2025 as we continue to work toward the commercialization of SpinDx. There is no assurance that we will not incur losses in any given quarter or year in the future.

Sales Growth. We expect to increase sales in the U.S. and worldwide as our network of direct customers and distributors grows and becomes more proficient and expands the number of new accounts. Our growth efforts have focused on expanding our global reach and broadening our product offering in alcohol and drug detection. Orders for all of our products, particularly ignition interlock components, are on an intermittent purchase order basis and there is no assurance they will continue at any given rate, or that orders will repeat.

Sales and Marketing Expenses. We continue our efforts to expand our domestic and international distribution capability, and we believe that sales and marketing expenses will need to be maintained at a healthy level in order to do so. Sales and marketing expenses are expected to increase as we increase our direct sales representatives and marketing efforts.

Research and Development Expenses. We expect to increase our research and development expenses to support refinements to our products, and the development of additional new products.

SpinDx

In August 2016 we entered into an exclusive patent license agreement with Sandia Corporation pursuant to which we acquired the exclusive rights to develop, manufacture and market Sandia's patented SpinDx™ technology for the detection of drugs of abuse. We believe this license agreement represents the beginning of a relationship that will become material to the Company in the near future. A prototype was built by Sandia under our Cooperative Research and Development Agreement and received in 2018, after which we commenced work on commercializing the device. This effort was hampered by the pandemic, but with the recovery, our full attention has been given to SpinDx. Although the patents to the base technology belong to Sandia, any improvements we make that are patentable belong solely to Lifeloc. The first Lifeloc-owned utility patent application was filed in February 2024.

In the first nine months of 2024 we purchased SpinDx related test and other equipment totaling $244,872 and in 2023 $0. In addition, during the first nine months of 2024 we invested $147,615 in space required for SpinDx related work that is not yet in service. We are estimating that completing and equipping this lab space will require an additional $150,000 during Q4 of 2024. Purchasing specialized equipment for the production of certain SpinDx components will require additional significant outlays, the total of which has not been determined. We are optimistic about the results of the work to date and expect market introduction via beta testing later in Q4 of 2024, which will continue in 2025, with a sales-ready device later in 2025. SpinDx™ uses a centrifugal disk with micro fluidic flow paths allowing multiple tests to be carried out on a single small sample. The SpinDx™ platform has the potential to revolutionize real-time screening for a panel of high abuse drugs, with the ability to quickly and quantitatively measure very low concentrations of drugs such as cocaine, heroin, methamphetamine, fentanyl and others. We intend to use this technology, sometimes referred to as "Lab on a Disk", to develop devices and tests that could be used at roadside, emergency rooms and in workplace testing to get a rapid measure for a panel of such drugs of abuse with a quantitative measure for delta-9-THC. In our laboratory, we have detected delta-9-THC (the primary psychoactive component of marijuana) down to concentrations of 5 nanograms per milliliter in spiked saliva samples and down to 10 nanograms per milliliter in samples obtained from human users. This includes resolving the psychoactive delta-9-THC from its inactive metabolites. Resolving the psychoactive levels from metabolites is an important step in establishing impairment which is an important differentiation from competitive devices. We expect the initial release of the new product will consist of the SpinDx base reader unit, an oral fluid collection device and an analysis disk. We expect subsequent product releases will utilize the same SpinDx base reader and collection devices for samples from blood and from breath. We completed the upgrade of our base breathalyzer platform in 2019 (the LX9), and we remain committed to combining it with the SpinDx technology. If successful, this combination will result in a marijuana breathalyzer.

R.A.D.A.R.

On March 8, 2017, we entered into an Asset Purchase Agreement (the "Asset Purchase Agreement") with Track Group Inc., a Delaware corporation. Pursuant to the terms and conditions of the Asset Purchase Agreement, we acquired certain assets comprised of: (1) handheld hardware device technology (the "R.A.D.A.R.® Mobile Devices"), designed to measure breath alcohol content of the user; and (2) software technology called R.A.D.A.R.® (Real-time Alcohol Detection and Reporting) Reporting Center designed to allow the Device to be configured and to capture and manage the data being returned from the Device (together with the Device, the "R.A.D.A.R.® Assets"). We purchased the assets of R.A.D.A.R. 100 knowing the product needed significant upgrading, which was essentially completed and released for sale several years later as R.A.D.A.R. 200. This product met with little market acceptance as a result of the underperformance of one feature. We withdrew R.A.D.A.R. 200 from the market and outsourced the development of R.A.D.A.R. 300 to a third party but which is currently on hold as a result of focusing all of our effort on SpinDx.

Results of Operations

For the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

Supply chain problems caused by Covid-19, as well as the other market impacts of Covid-19, were mostly resolved by the end of 2023. After meeting pent up demand in 2023 and the first half of 2024, sales in the third quarter of 2024 reverted back to pre-Covid levels. We maintained our reduced costs at their 2023 levels where possible, although inflation took its toll, increasing the cost of raw materials, labor, and freight. We continued and intensified our new product development efforts while maintaining the high level of customer service that has led to an excellent reputation for outstanding customer service. With the introduction of new products and reduction in research and development costs once current R&D efforts are completed, we believe Lifeloc will again be profitable.

Net sales.

Our product sales for the quarter ended September 30, 2024 were $2,075,994, a decrease of $600,878 (22%) from $2,676,872 for the quarter ended September 30, 2023. When royalties of $3,016 and rental income of $8,316 are included, total revenues of $2,087,326 were down by $608,182 over the same quarter a year ago. Rental income decreased by $5,257 due to our election not to renew or replace a lease for a portion of the space formerly occupied by a tenant, and royalties decreased by $2,047 due to a decrease in sales by royalty-paying customers.

Gross profit.

Total gross profit for the three months ended September 30, 2024 of $911,952 represented a decrease of 19% from total gross profit of $1,119,391 for the same three months ended September 30, 2023, primarily as a result of decreased sales without a decrease in fixed costs, as well as increased cost of materials and labor resulting from inflation. Cost of product sales decreased from $1,552,930 in the three months ended September 30, 2023 to $1,164,947 in the same period in 2024, a decrease of $387,983 (25%). Gross profit margin on products increased to 44% in the quarter ended September 30, 2024 from 42% in the same period a year ago primarily as a result of an increase in sales resulting from resolution with a customer regarding a deposit which did not involve any cost of goods.

Research and development expenses.

Research and development expenses were relatively unchanged at $521,107 for the quarter ended September 30, 2024 representing an increase of $4,933 (1%) over the $516,174 in the same period a year ago.

Sales and marketing expenses.

Sales and marketing expenses of $329,716 for the 3 months ended September 30, 2024 were up by $19,818 (or 6%) from the $309,898 spent in the same period a year ago, as a result of expanded marketing efforts, including the addition of personnel.

General and administrative expenses.

General and administrative expenses of $269,450 for the quarter ended September 30, 2024 were relatively unchanged from $269,593 for the quarter ended September 30, 2023.

Other income (expense).

Interest income decreased from $17,678 for the three months ended September 30, 2023 to $9,525 for the three months ended September 30, 2024 as a result of lower funds availability. Interest expense of $10,019 in the 3 months ended September 30, 2024 was down from $10,494 in the previous year as a result of the paydown on our loan on our building.

Net income (loss).

We realized a net loss of $158,327 for the 3 months ended September 30, 2024 compared to net income of $109,603 for the quarter ended September 30, 2023. This decrease of $267,930 was the result of the changes in gross profit, operating expenses and other income discussed above, which resulted in a loss before taxes of $208,815, or a decrease of $239,725 from the profit before taxes of $30,910 in 2023, and after the benefit from taxes of $50,488 versus a benefit from taxes of $78,693 in the same three months a year ago.

For the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

Net sales.

Our product sales for the first nine months of 2024 were $6,580,861, a decrease of 7%, or $475,777 for the same period in 2023. When royalties of $22,776 and rental income of $24,462 are included, total revenues of $6,628,099 were down by $512,309 over the same nine months a year ago. Rental income decreased by $35,889 due to our election not to renew or replace a lease for a portion of the space formerly occupied by a tenant, and royalties decreased by $643 due to a decrease in sales by royalty-paying customers.

Gross profit.

Total gross profit for the 9 months ended September 30, 2024 of $2,740,855 represented a decrease of 12% from total gross profit of $3,097,262 for the same nine months ended September 30, 2023, primarily as a result of lower sales without a decrease in fixed costs, as well as increased cost of materials and labor resulting from inflation. Cost of product sales decreased from $4,009,495 in the 9 months ended September 30, 2023 to $3,869,977 in the same period in 2024, a decrease of $139,518 (3%). Gross profit margin on products decreased to 41% in the 9 months ended September 30, 2024 from 43% in the same period a year ago.

Research and development expenses were $1,738,982 for the nine months ended September 30, 2024 representing an increase of $430,261 (33%) over the $1,308,721 in the same period a year ago. This increase resulted primarily from additional personnel, materials and outside contractors needed for our dedication of resources to SpinDx.

Sales and marketing expenses.

Sales and marketing expenses of $1,040,099 for the 9 months ended September 30, 2024 were up by $142,243 (or 16%) from the $897,856 spent in the same period a year ago, as a result of expanded marketing efforts, personnel, web site and other similar items.

General and administrative expenses.

General and administrative expenses of $947,384 for the 9 months ended September 30, 2024 versus $872,724 for the same period ended September 30, 2023 were up by $74,660 (9%). This increase was the result of across the board inflationary increases.

Other income (expense).

Interest income decreased from $46,678 a year ago to $35,874 in 2024, as a result of lower funds availability. Interest expense of $30,226 in the 9 months ended September 30, 2024 was down from $31,319 in the previous year as a result of the paydown on our loan on our building.

Net income (loss).

We realized a net loss of $740,121 for the 9 months ended September 30, 2024 compared to net income of $110,960 for the same 9 months ended September 30, 2023. This negative swing of $851,081 was the result of the changes in gross profit, operating expenses and other income discussed above, which resulted in a loss before taxes of $979,962, or an increased loss of $1,013,282 from the profit before taxes of $33,320 in 2023. After the benefit from taxes of $239,841 versus the benefit from taxes of $77,640 in the same period a year ago, we realized a net loss of $740,121 compared to net income of $110,960 in 2023.

Trends and Uncertainties That May Affect Future Results.

Revenues in the year 2024 were down compared to revenues in 2023. We believe that continued increased sales efforts may result in modestly improved revenues in the fourth quarter of 2024 and beyond. Inflationary pressures have affected our business in a number of ways, including increasing the cost of raw materials, labor, and freight. Our actions to mitigate the impact of inflation, including pre-ordering components in higher than usual quantities, sourcing new vendors and increasing prices, have been somewhat successful.

We expect our quarter-to-quarter revenue fluctuations to continue, due to the unpredictable timing of large orders from customers and the size of those orders in relation to total revenues. Going forward, we intend to focus our development efforts on products we believe offer the best prospects to increase our intermediate and near-term revenues, with particular emphasis on completing SpinDx™.

Our operating plan for the remainder of 2024 is focused on growing sales, increasing gross profits, and continuing research and development efforts on new products, including SpinDx™, for long-term growth. We cannot predict with certainty the expected sales, gross profit, net income or loss, or usage of cash and cash equivalents for 2024. However, we believe that cash resources will be sufficient to fund our operations for the next twelve months under our current operating plan. If we are unable to manage the business operations in line with our budget expectations, it could have a material adverse effect on business viability, financial position, results of operations and cash flows. Further, if we are not successful in sustaining profitability and remaining at least cash flow break-even, additional borrowings or capital may be required to maintain ongoing operations.

Interest expense.

In connection with the financing of our building purchase on October 31, 2014 we obtained a 10-year term loan from Bank of America in an initial principal amount of $1,581,106 bearing interest at 4.45% per annum (which was decreased to 4% in 2016) and secured by a first-priority mortgage in the acquired property, as well as a one-year $250,000 line of credit, which was later increased to $750,000 with a maturity date of September 28, 2021. The Bank of America loan was paid on September 30, 2021 with proceeds from a new term loan from Citywide Banks, also secured by a first-priority mortgage on the property, in the principal amount of $1,350,000. The new loan is payable in monthly installments of $7,453, with interest at 2.95% and a maturity date of September 30, 2031. The revolving line of credit facility expired in accordance with its terms. In July 2024, we obtained a new $750,000 line of credit from Citywide Banks with a maturity date of one year and a variable interest rate determined by SOFR (Secured Overnight Rate Financing) plus 2.75% payable monthly. As of September 30, 2024 this line of credit had not been accessed and no balance was due on the loan.

Liquidity and Capital Resources

We compete in a highly technical, very competitive and, in most cases, price driven alcohol testing marketplace, where products can take years to develop and introduce to distributors and end users. Furthermore, manufacturing, marketing and distribution activities are regulated by the DOT and other regulatory bodies that, while intended to enhance the ultimate quality and functionality of products produced, can contribute to the cost and time needed to maintain existing products and develop and introduce new products.

Except for normal operating contractual commitments and purchase orders, we do not have any material contractual commitments requiring settlement in the future.

We have traditionally funded working capital needs through product sales and close management of working capital components of our business. Historically, we have also received cash from private offerings of our common stock, warrants to purchase shares of our common stock, and notes. In our earlier years, we incurred quarter to quarter operating losses to develop current product applications, utilizing a number of proprietary and patent-pending technologies. Although we have been profitable in recent years except 2020 and 2022, we can provide no assurances that operating losses will not occur in the future. Should that situation arise, we may not be able to obtain working capital funds necessary in the time frame needed and at satisfactory terms, if at all.

As of September 30, 2024, cash and cash equivalents was $841,621, trade accounts receivable were $611,439 and current liabilities were $783,779 resulting in net liquid assets of $669,281. We believe that the resolution of supply chain issues and the Covid-19 pandemic, and the introduction of several new products during the last several years, along with new and on-going customer relationships will allow Lifeloc to operate profitably. If the revenue levels during the last several years do not continue to grow, if inflationary pressures are not contained, or if the development of SpinDx takes longer than expected, we may be required to seek additional sources of borrowings or capital and/or to implement further cost reduction measures, as necessary.

Equipment expenditures, consisting of space modifications, updated office and production equipment, and SpinDx related equipment and lab space during the first nine months of 2024 were $625,238, including $195,036 of equipment not yet in service, compared to $21,611 in the first nine months of 2023, an increase of $603,627. We incurred patent application costs in preparation for filing of $21,708 in 2024 versus $1,404 in 2023. We are estimating that completing and equipping the lab space will require an additional $150,000 during the fourth quarter of 2024. As development of SpinDx progresses, and as normal wear and tear of equipment occurs, we expect to continue to incur outlays for equipment and patent filings in 2024 and beyond.

We generally provide a standard one-year limited warranty on materials and workmanship to our customers. We provide for estimated warranty costs at the time product revenue is recognized. Warranty costs are included as a component of cost of goods sold in the accompanying statements of operations. For the quarter ended September 30, 2024 and for the quarter ended September 30, 2023, warranty costs were not deemed significant.

Critical Accounting Policies and Estimates

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, sales and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to bad debts, inventories, sales returns, deferred tax assets, warranty, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect the more significant judgments and estimates used in the preparation of our financial statements.

We have concluded that we have two operating segments, including our primary business which is as a developer, manufacturer and marketer of portable hand-held breathalyzers and related accessories, supplies and education, and a second segment consisting of renting portions of our building to existing tenants.

We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances would be required, which would increase our expenses during the periods in which any such allowances were made. The amount recorded as a provision for bad debts in each period is based upon our assessment of the likelihood that we will be paid on our outstanding receivables, based on customer-specific as well as general considerations. To the extent that our estimates prove to be too high, and we ultimately collect a receivable previously determined to be impaired, we may record a reversal of the provision in the period of such determination.

We reduce inventory for estimated obsolete or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. Any write-downs of inventory would reduce our reported net income during the period in which such write-downs were applied.

Property and equipment are stated at cost, with depreciation computed over the estimated useful lives of the assets, generally five years (three years for software and technology licenses). We use the declining method of depreciation for property, including space modifications, and the straight line method for software and technology licenses. We purchased all of the assets of STS, an online education company, in 2014, which consisted of training courses that are amortized over 15 years using the straight line method. In October 2014, we purchased our building. A majority of the cost of the building is depreciated over 39 years using the straight line method. In addition, based on the results of a third party analysis, a portion of the cost was allocated to components integral to the building. Such components are depreciated over 5 and 15 years, using the declining method. The R.A.D.A.R.® software and patents that were purchased in March 2017 were originally set to amortize over 15 years using the straight line method, but in 2022 we accelerated the amortization of the remaining cost to fully amortize the assets by December 31, 2022. Maintenance and repairs are expensed as incurred and major additions, replacements and improvements are capitalized.

The sales of licenses to our training courses are recognized as revenue at the time of sale. Direct training performed by us is recognized when training is completed by the trainer, with the unearned portion classified as deferred revenue. Training and certification revenues are recognized at the time the training and certification occurs. Data recording revenue is recognized based on each day’s usage of enrolled devices.

Revenues arising from extended warranty contracts are booked as sales over their life on a straight-line basis. We provide customer financing and leasing ourselves, which we recognize as revenue over the applicable lease term. Occasionally, we rent used equipment to customers, and in those cases, we recognize the revenues as they are earned over the life of the contract.

Royalty income is recognized in accordance with agreed upon terms, when performance obligations are satisfied, the amount is fixed or determinable and collectability is reasonably assured.

Rental income from space leased to our tenants is recognized in the month in which it is due.

On occasion we receive customer deposits for future product orders and for product development. Customer deposits are initially recorded as a liability and recognized as revenue when the product is shipped and title has passed to the customer, or in the case of product development, when agreed milestones are met.

Stock-based compensation is presented in accordance with the guidance of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 718, Compensation — Stock Compensation ("ASC 718"). Under the provisions of ASC 718, companies are required to estimate the fair value of share-based payment awards made to employees and directors including employee stock options based on estimated fair values on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in our statement of operations.

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4 – CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, our management has evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2024.

(b) Changes in Internal Control over Financial Reporting

There were no significant changes in our internal controls over financial reporting during the period ended September 30, 2024 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. Our management, including our Chief Executive Officer and our Chief Financial Officer, do not expect that the Company's disclosure controls will prevent or detect all errors and all fraud. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with associated policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II. OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

We may be involved from time to time in litigation, negotiation and settlement matters that may have a material effect on our operations or finances. We are not aware of any pending or threatened litigation against us or our officers or directors in their capacity as such that could have a material impact on our operations or finances.

ITEM 1A – RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in ''Risk Factors'' in our Annual Report on Form 10-K for the year ended December 31, 2023, which could materially affect our business, financial condition and/or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On July 23, 2024, we sold 210,000 shares of common stock to EDCO Partners LLLP, an accredited investor, in a private placement pursuant to Section 4(a)(2) and Regulation D of the Securities Act. The purchase price under the Private Placement was $3.80 per share, for a total of $798,000 in proceeds to Lifeloc. There were no discounts or commissions paid to underwriters or placement agents. There were no sales of equity securities during the nine months ended September 30, 2023.

No options were exercised during the nine months ended September 30, 2024 or during the nine months ended September 30, 2023.

ITEM 3 – DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4 – MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5 – OTHER INFORMATION

During the quarter ended September 30, 2024, no director or officer of the Company adopted, modified or terminated any contract, instruction or written plan for the purchase or sale of the Company’s securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement” as defined in Item 408(a) of Regulation S-K).

ITEM 6 – EXHIBITS

The following exhibits are filed with this report on Form 10-Q or are incorporated by reference:

Exhibit No.		Description of Exhibit
10.1		Subscription Agreement by and between Lifeloc Technologies, Inc. and EDCO Partners LLLP
31.1		Certification of Principal Executive Officer Pursuant To Section 302 Of The Sarbanes—Oxley Act Of 2002
31.2		Certification of Principal Financial Officer Pursuant To Section 302 Of The Sarbanes—Oxley Act Of 2002
32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

SIGNATURES

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		LIFELOC TECHNOLOGIES, INC.

November 12, 2024	By:	/s/ Wayne R. Willkomm
Date		Wayne R. Willkomm, Ph.D.
		President and Chief Executive Officer (Principal Executive Officer)

November 12, 2024	By:	/s/ Michelle Heim
Date		Michelle Heim
		Controller (Principal Accounting Officer)

Exhibit Index

Exhibit No.		Description of Exhibit
10.1		Subscription Agreement by and between Lifeloc Technologies, Inc. and EDCO Partners LLLP
31.1		Certification of Principal Executive Officer Pursuant To Section 302 Of The Sarbanes—Oxley Act Of 2002
31.2		Certification of Principal Financial Officer Pursuant To Section 302 Of The Sarbanes—Oxley Act Of 2002
32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

Exhibit 10.1

Subscription Agreement

THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE OR ANY OTHER JURISDICTION. THERE ARE FURTHER RESTRICTIONS ON THE TRANSFERABILITY OF THE SECURITIES DESCRIBED HEREIN.

THE PURCHASE OF THE SECURITIES INVOLVES A HIGH DEGREE OF RISK AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN BEAR THE RISK OF THE LOSS OF THEIR ENTIRE INVESTMENT.

Lifeloc Technologies, Inc.

12441 W 49^th Ave., Ste 4

Wheat Ridge, CO 80033

Ladies and Gentlemen:

The undersigned understands that Lifeloc Technologies, Inc., a corporation organized under the laws of Colorado (the "Company"), is offering an aggregate of 210,000 shares of its common stock, no par value (the "Securities") in a private placement. This offering is made pursuant to the Consent Minutes dated July 23, 2024 and all filings with the Securities and Exchange Commission (collectively, the "Offering Documents"), all as more particularly described and set forth in the Offering Documents. The undersigned further understands that the offering is being made without registration of the Securities under the Securities Act of 1933, as amended (the "Securities Act"), or any securities law of any state of the United States or of any other jurisdiction, and is being made only to "accredited investors" (as defined in Rule 501 of Regulation D under the Securities Act).

1. Subscription. Subject to the terms and conditions hereof and the provisions of the Offering Documents, the undersigned hereby irrevocably subscribes for the Securities set forth in Appendix A hereto for the aggregate purchase price set forth in Appendix A, which is payable as described in Section 4 hereof. The undersigned acknowledges that the Securities will be subject to restrictions on transfer as set forth in this subscription agreement (the "Subscription Agreement").

2. Acceptance of Subscription and Issuance of Securities. It is understood and agreed that the Company shall have the sole right, at its complete discretion, to accept or reject this subscription, in whole or in part, for any reason and that the same shall be deemed to be accepted by the Company only when it is signed by a duly authorized officer of the Company and delivered to the undersigned at the Closing referred to in Section 3 hereof. Subscriptions need not be accepted in the order received, and the Securities may be allocated among subscribers. Notwithstanding anything in this Subscription Agreement to the contrary, the Company shall have no obligation to issue any of the Securities to any person who is a resident of a jurisdiction in which the issuance of Securities to such person would constitute a violation of the securities, "blue sky" or other similar laws of such jurisdiction (collectively referred to as the "State Securities Laws").

3. The Closing. The closing of the purchase and sale of the Securities (the "Closing") shall take place at the offices of the Company, at 9:00 a.m. on July 20, 2024, or at such other time and place as the Company may designate by notice to the undersigned.

4. Payment for Securities. Payment for the Securities shall be received by the Company from the undersigned by wire transfer of immediately available funds or other means approved by the Company at or prior to the Closing, in the amount as set forth in Appendix A hereto. The Company shall deliver a certificate representing the Securities to the undersigned at the Closing bearing an appropriate legend referring to the fact that the Securities were sold in reliance upon an exemption from registration under the Securities Act.

5. Representations and Warranties of the Company. As of the Closing, the Company represents and warrants that:

(a) The Company has been duly incorporated and is validly existing under the laws of Colorado, with full power and authority to conduct its business as it is currently being conducted and to own its assets; and has secured any authorizations, approvals, permits and orders required by law for the conduct by the Company of its business as it is currently being conducted.

(b) The Securities have been duly authorized and, when issued, delivered and paid for in the manner set forth in this Subscription Agreement, will be validly issued, fully paid and nonassessable.

6. Representations and Warranties of the Undersigned. The undersigned hereby represents and warrants to and covenants with the Company that:

(a) General.

(i) The undersigned has all requisite authority (and in the case of an individual, the capacity) to purchase the Securities, enter into this Subscription Agreement and to perform all the obligations required to be performed by the undersigned hereunder, and such purchase will not contravene any law, rule, or regulation binding on the undersigned or any investment guideline or restriction applicable to the undersigned.

(ii) The undersigned is a resident of the state set forth on the signature page hereto and is not acquiring the Securities as a nominee or agent or otherwise for any other person.

(iii) The undersigned will comply with all applicable laws and regulations in effect in any jurisdiction in which the undersigned purchases or sells Securities and obtain any consent, approval or permission required for such purchases or sales under the laws and regulations of any jurisdiction to which the undersigned is subject or in which the undersigned makes such purchases or sales, and the Company shall have no responsibility therefor.

(b) Information Concerning the Company.

(i) The undersigned has received a copy of the Offering Documents. The undersigned has not been furnished any offering literature other than the Offering Documents, and the undersigned has relied only on the information contained therein.

(ii) The undersigned understands and accepts that the purchase of the Securities involves various risks, including the risks outlined in the Offering Documents and in this Subscription Agreement. The undersigned represents that it is able to bear any loss associated with an investment in the Securities.

(iii) The undersigned confirms that it is not relying on any communication (written or oral) of the Company or any of its affiliates, as investment or tax advice or as a recommendation to purchase the Securities. It is understood that information and explanations related to the terms and conditions of the Securities provided in the Offering Documents or otherwise by the Company or any of its affiliates shall not be considered investment or tax advice or a recommendation to purchase the Securities, and that neither the Company nor any of its affiliates is acting or has acted as an advisor to the undersigned in deciding to invest in the Securities. The undersigned acknowledges that neither the Company nor any of its affiliates has made any representation regarding the proper characterization of the Securities for purposes of determining the undersigned's authority to invest in the Securities.

(iv) The undersigned is familiar with the business and financial condition and operations of the Company, all as generally described in the Offering Documents. The undersigned has had access to such information concerning the Company and the Securities as it deems necessary to enable it to make an informed investment decision concerning the purchase of the Securities.

(v) The undersigned understands that, unless the undersigned notifies the Company in writing to the contrary at or before the Closing, each of the undersigned's representations and warranties contained in this Subscription Agreement will be deemed to have been reaffirmed and confirmed as of the Closing, taking into account all information received by the undersigned.

(vi) The undersigned acknowledges that the Company has the right in its sole and absolute discretion to abandon this private placement at any time prior to the completion of the offering. This Subscription Agreement shall thereafter have no force or effect, and the Company shall return the previously paid subscription price of the Securities, without interest thereon, to the undersigned.

(vii) The undersigned understands that no federal or state agency has passed upon the merits or risks of an investment in the Securities or made any finding or determination concerning the fairness or advisability of this investment.

(i) The undersigned represents that it is not relying on (and will not at any time rely on) any communication (written or oral) of the Company, as investment advice or as a recommendation to purchase the Securities, it being understood that information and explanations related to the terms and conditions of the Securities and the other transaction documents that are described in the Offering Documents shall not be considered investment advice or a recommendation to purchase the Securities.

(ii) The undersigned confirms that the Company has not (A) given any guarantee or representation as to the potential success, return, effect or benefit (either legal, regulatory, tax, financial, accounting or otherwise) of an investment in the Securities or (B) made any representation to the undersigned regarding the legality of an investment in the Securities under applicable legal investment or similar laws or regulations. In deciding to purchase the Securities, the undersigned is not relying on the advice or recommendations of the Company and the undersigned has made its own independent decision that the investment in the Securities is suitable and appropriate for the undersigned.

(d) Status of Undersigned.

(i) The undersigned has such knowledge, skill and experience in business, financial and investment matters that the undersigned is capable of evaluating the merits and risks of an investment in the Securities. With the assistance of the undersigned's own professional advisors, to the extent that the undersigned has deemed appropriate, the undersigned has made its own legal, tax, accounting, and financial evaluation of the merits and risks of an investment in the Securities and the consequences of this Subscription Agreement. The undersigned has considered the suitability of the Securities as an investment in light of its own circumstances and financial condition and the undersigned is able to bear the risks associated with an investment in the Securities, and it is authorized to invest in the Securities.

(ii) The undersigned is an "accredited investor" as defined in Rule 501(a) under the Securities Act. The undersigned agrees to furnish any additional information requested by the Company or any of its affiliates to assure compliance with applicable U.S. federal and state securities laws in connection with the purchase and sale of the Securities.

(e) Restrictions on Transfer or Sale of Securities.

(i) The undersigned is acquiring the Securities solely for the undersigned’s own beneficial account, for investment purposes, and not with a view to, or for resale in connection with, any distribution of the Securities. The undersigned understands that the Securities have not been registered under the Securities Act or any State Securities Laws by reason of specific exemptions under the provisions thereof which depend in part upon the investment intent of the undersigned and of the other representations made by the undersigned in this Subscription Agreement. The undersigned understands that the Company is relying upon the representations and agreements contained in this Subscription Agreement (and any supplemental information) for the purpose of determining whether this transaction meets the requirements for such exemptions.

(ii) The undersigned understands that the Securities are "restricted securities" under applicable federal securities laws and that the Securities Act and the rules of the U.S. Securities and Exchange Commission (the "Commission") provide in substance that the undersigned may dispose of the Securities only pursuant to an effective registration statement under the Securities Act or an exemption from the registration requirements of the Securities Act, and the undersigned understands that the Company has no obligation or intention to register any of the Securities or the offering or sale thereof, or to take action so as to permit offers or sales pursuant to the Securities Act or an exemption from registration thereunder (including pursuant to Rule 144 thereunder). Accordingly, the undersigned understands that under the Commission's rules, the undersigned may dispose of the Securities only in "private placements" which are exempt from registration under the Securities Act, in which event the transferee will acquire "restricted securities," subject to the same limitations that apply to the Securities in the hands of the undersigned. Consequently, the undersigned understands that the undersigned must bear the economic risks of the investment in the Securities for an indefinite period of time.

(iii) The undersigned agrees: (A) that the undersigned will not sell, assign, pledge, give, transfer, or otherwise dispose of the Securities or any interest therein, or make any offer or attempt to do any of the foregoing, unless the transaction is registered under the Securities Act and complies with the requirements of all applicable State Securities Laws, or the transaction is exempt from the registration provisions of the Securities Act and all applicable requirements of State Securities Laws; (B) that the certificates representing the Securities will bear a legend making reference to the foregoing restrictions; and (C) that the Company and its affiliates shall not be required to give effect to any purported transfer of such Securities, except upon compliance with the foregoing restrictions.

(iv) The undersigned acknowledges that neither the Company nor any other person offered to sell the Securities to it by means of any form of general solicitation or advertising, including but not limited to: (A) any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio or (B) any seminar or meeting whose attendees were invited by any general solicitation or general advertising.

7. Conditions to Obligations of the Undersigned and the Company. The obligations of the undersigned to purchase and pay for the Securities specified in Appendix A and of the Company to sell those Securities, are subject to the satisfaction at or prior to the Closing of the following conditions precedent: the representations and warranties of the Company contained in Section 5 hereof and of the undersigned contained in Section 6 hereof shall be true and correct as of the Closing in all respects with the same effect as though such representations and warranties had been made on and as of the Closing.

8. Obligations Irrevocable. The obligations of the undersigned shall be irrevocable.

9. Legend. The certificates representing the Securities sold pursuant to this Subscription Agreement will be imprinted with a legend in substantially the following form:

"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED, OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE STATE SECURITIES LAWS AND THE SECURITIES LAWS OF OTHER JURISDICTIONS, AND IN THE CASE OF A TRANSACTION EXEMPT FROM REGISTRATION, UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR SUCH OTHER APPLICABLE LAWS."

10. Waiver, Amendment. Neither this Subscription Agreement nor any provisions hereof shall be modified, changed, discharged or terminated except by an instrument in writing, signed by the party against whom any waiver, change, discharge or termination is sought.

11. Assignability. Neither this Subscription Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by either the Company or the undersigned without the prior written consent of the other party, and any attempted assignment without such prior written consent shall be void.

12. Waiver of Jury Trial. THE UNDERSIGNED IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED BY THIS SUBSCRIPTION AGREEMENT.

13. Submission to Jurisdiction. With respect to any suit, action, or proceeding relating to any offers, purchases, or sales of the Securities by the undersigned ("Proceedings"), the undersigned irrevocably submits to the jurisdiction of the federal and state courts located in the State of Colorado, which submission shall be exclusive, unless none of such courts has lawful jurisdiction over such Proceedings.

14. Governing Law. This Subscription Agreement shall be governed by and construed in accordance with the laws of the State of Colorado.

15. Section and Other Headings. The section and other headings contained in this Subscription Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Subscription Agreement.

16. Counterparts. This Subscription Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which together shall be deemed to be one and the same agreement.

17. Notices. All notices and other communications provided for herein shall be in writing and shall be deemed to have been duly given if delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid to the following addresses (or such other address as either party shall have specified by notice in writing to the other):

If to the Company:	12441 West 49^th Ave., Ste 4, Wheat Ridge, CO 80033 E-mail: Wayne@lifeloc.com Attention: President
with a copy to:	Orbital Law Group, 1020 15^th St., Ste 18-L, Denver, CO 80202 Attention: Liz Polizzi Oertle
If to the Purchaser:	EDCO Partners LLLP 4605 S Denice Dr., Englewood, CO 80111 E-mail: VDKVDK@aol.com Attention: Vern Kornelsen
with a copy to:	Michael J. Kornelsen 1641 E Virginia Ave., Denver, CO 80209 E-Mail: Mike@kornelsen.com

18. Binding Effect. The provisions of this Subscription Agreement shall be binding upon and accrue to the benefit of the parties hereto and their respective heirs, legal representatives, successors, and assigns.

19. Survival. All representations, warranties and covenants contained in this Subscription Agreement shall survive (i) the acceptance of the subscription by the Company and the Closing, (ii) changes in the transactions, documents and instruments described in the Offering Documents which are not material or which are to the benefit of the undersigned, and (iii) the death or disability of the undersigned.

20. Notification of Changes. The undersigned hereby covenants and agrees to notify the Company upon the occurrence of any event prior to the closing of the purchase of the Securities pursuant to this Subscription Agreement which would cause any representation, warranty, or covenant of the undersigned contained in this Subscription Agreement to be false or incorrect.

21. Severability. If any term or provision of this Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.

IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement this 23^rd of July, 2024.

PURCHASER:

EDCO Partners LLLP

By: /s/Vern D. Kornelsen

Name: Vern D. Kornelsen

Title: General Partner

APPENDIX A

Consideration to be Delivered

Securities to Be Acquired	Aggregate Purchase Price to Be Paid
210,000 shares of common stock	US$798,000

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Wayne R. Willkomm, certify that:

1. I have reviewed this report on Form 10-Q of Lifeloc Technologies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: November 12, 2024

/s/ Wayne R. Willkomm

Wayne R. Willkomm, Ph.D.

Chief Executive Officer

(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Vern D. Kornelsen, certify that:

1. I have reviewed this report on Form 10-Q of Lifeloc Technologies, Inc.;

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: November 12, 2024

/s/ Vern D. Kornelsen

Vern D. Kornelsen

Chief Financial Officer

(Principal Financial Officer)

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Wayne R. Willkomm, Chief Executive Officer of Lifeloc Technologies, Inc. (the "Company"), hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

●

the Quarterly Report on Form 10-Q of the Company for the period ended September 30, 2024 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

●

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the period covered by the Report.

Dated: November 12, 2024

/s/ Wayne R. Willkomm

Wayne R. Willkomm, Ph.D.

Chief Executive Officer

(Principal Executive Officer)

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Vern D. Kornelsen, Chief Financial Officer of Lifeloc Technologies, Inc. (the "Company"), hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

●

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the period covered by the Report.

Dated: November 12, 2024

/s/ Vern D. Kornelsen

Vern D. Kornelsen

Chief Financial Officer

(Principal Financial Officer)

Cover	9 Months Ended
Cover	Sep. 30, 2024 shares
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2024
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--12-31
Entity File Number	000-54319
Entity Registrant Name	LIFELOC TECHNOLOGIES, INC.
Entity Central Index Key	0001493137
Entity Tax Identification Number	84-1053680
Entity Incorporation, State or Country Code	CO
Entity Address, Address Line One	12441 West 49th Ave.
Entity Address, Address Line Two	Unit 4
Entity Address, City or Town	Wheat Ridge
Entity Address, State or Province	CO
Entity Address, Postal Zip Code	80033
City Area Code	303
Local Phone Number	431-9500
Title of 12(b) Security	Common Stock
Trading Symbol	LCTC
Entity Current Reporting Status	No
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding	2,664,116

Condensed Balance Sheets (Unaudited) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
CURRENT ASSETS:
Cash	$ 841,621	$ 1,766,621
Accounts receivable, net	611,439	812,126
Inventories, net	3,160,200	3,024,834
Federal and state income taxes receivable	60,420	0
Prepaid expenses and other	89,049	105,967
Total current assets	4,762,729	5,709,548
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	1,349,839	1,154,803
Training courses	432,375	432,375
Office equipment, software and space modifications	254,333	216,618
Sales and marketing equipment and space modifications	226,356	226,356
Research and development equipment, software and space modifications	725,556	480,684
Research and development equipment, software and space modifications not in service	147,615	0
Less accumulated depreciation	(3,511,125)	(3,326,837)
Total property and equipment, net	2,441,124	2,000,174
OTHER ASSETS:
Patents, net	80,517	64,439
Deposits and other	12,261	111,157
Deferred taxes	1,046,493	806,652
Total other assets	1,139,271	982,248
Total assets	8,343,124	8,691,970
CURRENT LIABILITIES:
Accounts payable	328,528	402,231
Term loan payable, current portion	52,789	51,588
Income taxes payable	0	44,952
Customer deposits	28,940	195,719
Accrued expenses	270,932	329,311
Deferred revenue, current portion	56,090	79,036
Reserve for warranty expense	46,500	46,500
Total current liabilities	783,779	1,149,337
TERM LOAN PAYABLE, net of current portion and debt issuance costs	1,132,066	1,170,243
DEFERRED REVENUE, net of current portion	8,575	11,565
Total liabilities	1,924,420	2,331,145
COMMITMENTS AND CONTINGENCIES (Note 5)
STOCKHOLDERS' EQUITY:
Common stock, no par value; 50,000,000 shares authorized, 2,664,116 shares outstanding at September 30, 2024 (2,454,116 outstanding at December 31, 2023)	5,466,014	4,668,014
Retained earnings	952,690	1,692,811
Total stockholders' equity	6,418,704	6,360,825
Total liabilities and stockholders' equity	$ 8,343,124	$ 8,691,970

Condensed Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Common stock, par value	$ 0	$ 0
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares outstanding	2,664,116	2,454,116

Condensed Statements of Income (Loss) (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
REVENUES:
Product sales	$ 2,075,994	$ 2,676,872	$ 6,580,861	$ 7,056,638
Royalties	3,016	5,063	22,776	23,419
Rental income	8,316	13,573	24,462	60,351
Total	2,087,326	2,695,508	6,628,099	7,140,408
COST OF SALES	1,175,374	1,576,117	3,887,244	4,043,146
GROSS PROFIT	911,952	1,119,391	2,740,855	3,097,262
OPERATING EXPENSES:
Research and development	521,107	516,174	1,738,982	1,308,721
Sales and marketing	329,716	309,898	1,040,099	897,856
General and administrative	269,450	269,593	947,384	872,724
Total	1,120,273	1,095,665	3,726,465	3,079,301
OPERATING INCOME (LOSS)	(208,321)	23,726	(985,610)	17,961
OTHER INCOME (EXPENSE):
Interest income	9,525	17,678	35,874	46,678
Interest expense	(10,019)	(10,494)	(30,226)	(31,319)
Total	(494)	7,184	5,648	15,359
NET INCOME (LOSS) BEFORE BENEFIT FROM (PROVISION FOR) TAXES	(208,815)	30,910	(979,962)	33,320
BENEFIT FROM FEDERAL AND STATE INCOME TAXES	50,488	78,693	239,841	77,640
NET INCOME (LOSS)	$ (158,327)	$ 109,603	$ (740,121)	$ 110,960
NET INCOME (LOSS) PER SHARE, BASIC	$ (0.06)	$ 0.04	$ (0.30)	$ 0.05
NET INCOME (LOSS) PER SHARE, DILUTED	$ (0.06)	$ 0.04	$ (0.30)	$ 0.05
WEIGHTED AVERAGE SHARES, BASIC	2,611,616	2,454,116	2,506,999	2,454,116
WEIGHTED AVERAGE SHARES, DILUTED	2,611,616	2,454,116	2,506,999	2,454,116

Statements of Stockholders' Equity (Unaudited) - USD ($)	Common Stock [Member]	Retained Earnings [Member]	Total
Beginning balance, value at Dec. 31, 2022	$ 4,668,014	$ 1,487,197	$ 6,155,211
Issuance of 210,000 shares at $3.80 per share
Net income (loss)		110,960	110,960
Ending balance, value at Sep. 30, 2023	4,668,014	1,598,157	6,266,171
Beginning balance, value at Jun. 30, 2023	4,668,014	1,488,554	6,156,568
Issuance of 210,000 shares at $3.80 per share
Net income (loss)		109,603	109,603
Ending balance, value at Sep. 30, 2023	4,668,014	1,598,157	6,266,171
Beginning balance, value at Dec. 31, 2023	4,668,014	1,692,811	6,360,825
Issuance of 210,000 shares at $3.80 per share	798,000
Net income (loss)		(740,121)	(740,121)
Ending balance, value at Sep. 30, 2024	5,466,014	952,690	6,418,704
Beginning balance, value at Jun. 30, 2024	4,668,014	1,111,017	5,779,031
Issuance of 210,000 shares at $3.80 per share	798,000
Net income (loss)		(158,327)	(158,327)
Ending balance, value at Sep. 30, 2024	$ 5,466,014	$ 952,690	$ 6,418,704

Statements of Stockholders' Equity (Unaudited) (Parenthetical)	9 Months Ended
	Sep. 30, 2024 $ / shares shares
Statement of Stockholders' Equity [Abstract]
Isuance of shares \| shares	210,000
Share price \| $ / shares	$ 3.80

Condensed Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ (740,121)	$ 110,960
Adjustments to reconcile net income (loss) to net cash (used in) operating activities-
Depreciation and amortization	193,096	198,471
Provision for doubtful accounts, net change	1,000	0
Provision for inventory obsolescence, net change	52,500	0
Deferred taxes, net change	(239,841)	(114,116)
Changes in operating assets and liabilities-
Accounts receivable	199,687	(81,388)
Inventories	(187,866)	(179,943)
Federal and state income taxes receivable	(60,420)	107,575
Prepaid expenses and other	16,918	(207,149)
Deposits and other	98,896	0
Accounts payable	(73,703)	87,870
Income taxes payable	(44,952)	36,476
Customer deposits	(166,779)	(16,557)
Accrued expenses	(58,379)	(82,738)
Deferred revenue	(25,936)	(13,339)
Net cash (used in) operating activities	(1,035,900)	(153,878)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(477,623)	(21,611)
Purchases of research and development equipment, software, and space modifications not in service	(147,615)	0
Patent filing expense	(21,708)	(1,404)
Net cash (used in) investing activities	(646,946)	(23,015)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments made on term loan	(40,154)	(38,988)
Proceeds from issuance of 210,000 shares of common stock at $3.80 per share	798,000	0
Net cash provided by (used in) financing activities	757,846	(38,988)
NET (DECREASE) IN CASH	(925,000)	(215,881)
CASH, BEGINNING OF PERIOD	1,766,621	2,352,754
CASH, END OF PERIOD	841,621	2,136,873
SUPPLEMENTAL INFORMATION:
Cash paid for interest	27,048	28,091
Cash paid for income tax	$ 60,420	$ 0

Condensed Statements of Cash Flows (Unaudited) (Parenthetical)	9 Months Ended
	Sep. 30, 2024 $ / shares shares
Statement of Cash Flows [Abstract]
Isuance of shares \| shares	210,000
Share price \| $ / shares	$ 3.80

Pay vs Performance Disclosure - USD ($)	3 Months Ended		9 Months Ended
Pay vs Performance Disclosure - USD ($)	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Pay vs Performance Disclosure [Table]
Net Income (Loss)	$ (158,327)	$ 109,603	$ (740,121)	$ 110,960

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Sep. 30, 2024
Insider Trading Arrangements [Line Items]
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

ORGANIZATION AND NATURE OF BUSINESS

9 Months Ended

Sep. 30, 2024

Accounting Policies [Abstract]

ORGANIZATION AND NATURE OF BUSINESS

1. ORGANIZATION AND NATURE OF BUSINESS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2024

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Inventories. Inventories are stated at the lower of cost (first-in, first-out basis) or net realizable value.

Schedule of inventory
	2024			2023
Raw materials & deposits	$	2,876,436		$	2,696,659
Work-in-process		6,678			26,269
Finished goods		698,742			671,062
Total gross inventories		3,581,856			3,393,990
Less reserve for obsolescence		(421,656	)		(369,156	)
Total net inventories	$	3,160,200		$	3,024,834

The estimated annual effective tax rate is applied to the year-to-date ordinary income (loss) at the end of the interim period.

Revenue Recognition.

Royalty income is recognized in accordance with agreed upon terms, when performance obligations are satisfied, the amount is fixed or determinable and collectability is reasonably assured.

Schedule of disaggregation of revenue
	Three Months Ended September 30,
Product sales:	2024		2023
Product sales and supplies	$	1,898,001	$	2,437,753
Training, certification and data recording		157,722		215,105
Service plans and equipment rental		20,271		24,014
Product sales subtotal		2,075,994		2,676,872
Royalties		3,016		5,063
Rental income		8,316		13,573
Total revenues	$	2,087,326	$	2,695,508


	Nine Months Ended September 30,
Product sales:	2024		2023
Product sales and supplies	$	5,992,360	$	6,376,364
Training, certification and data recording		528,882		620,367
Service plans and equipment rental		59,619		59,907
Product sales subtotal		6,580,861		7,056,638
Royalties		22,776		23,419
Rental income		24,462		60,351
Total revenues	$	6,628,099	$	7,140,408

New Accounting Pronouncements. We have reviewed all recently issued accounting pronouncements, including the following.

BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE

9 Months Ended

Sep. 30, 2024

Earnings Per Share [Abstract]

BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE

3. BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE


	Three Months Ended September 30,
	2024			2023
Net income (loss)	$	(158,327	)	$	109,603
Weighted average shares-basic		2,611,616			2,454,116
Effect of dilutive potential common shares		—			—
Weighted average shares-diluted		2,611,616			2,454,116
Net income (loss) per share-basic	$	(0.06	)	$	0.04
Net income (loss) per share-diluted	$	(0.06	)	$	0.04
Antidilutive employee stock options		122,000			—


	Nine Months Ended September 30,
	2024			2023

Net income (loss)	$	(740,121	)	$	110,960
Weighted average shares-basic		2,506,999			2,454,116
Effect of dilutive potential common shares		—			—
Weighted average shares-diluted		2,506,999			2,454,116
Net (loss) per share-basic	$	(0.30	)	$	(.05	)
Net (loss) per share-diluted	$	(0.30	)	$	(.05	)
Antidilutive employee stock options		122,000			—

STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2024

Equity [Abstract]

STOCKHOLDERS' EQUITY

4. STOCKHOLDERS' EQUITY

The following table summarizes information about employee stock options outstanding and exercisable at September 30, 2024:


		STOCK OPTIONS OUTSTANDING				STOCK OPTIONS EXERCISABLE
	Range of Exercise Prices	Number Outstanding	Weighted Average Remaining Contractual Life (in Years)		Weighted Average Exercise Price per Share	Number Exercisable		Weighted Average Exercise Price per Share
$	3.80	122,000	0.81	$	3.80	122,000	$	3.80

As of September 30, 2024, no options for our common stock remain available for grant under the 2013 Plan as it has expired.

The aggregate intrinsic value of the options outstanding and exercisable at September 30, 2024 was $50,020.

No options were exercised during the nine months ended September 30, 2024 or during the nine months ended September 30, 2023.

The total number of authorized shares of common stock continues to be 50,000,000, with no change in the par value per share.

COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

5. COMMITMENTS AND CONTINGENCIES


2024	$	13,583
2025		55,345
2026		57,000
2027		58,704
2028 – 2031		1,009,938
Total		1,194,570
Less financing cost		(9,715	)
Net term loan payable		1,184,855
Less current portion		(52,789	)
Long term portion	$	1,132,066

INCOME TAXES

9 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

6. INCOME TAXES

The items accounting for the difference between income taxes computed at the federal statutory rate and the provision for (benefit from) income taxes consist of the following.


	Three months Ended September 30,
	2024			2023
Federal statutory rate	$	(44,544	)	$	6,491
Effect of:
State taxes, net of federal tax benefit		(9,507	)		38,823
Other		3,563			(124,007	)
Total	$	(50,488	)	$	(78,693	)


	Nine months Ended September 30,
	2024			2023

Federal statutory rate	$	(206,538	)	$	6,997
Effect of:
State taxes, net of federal tax benefit		(43,737	)		36,525
Other		10,434			(121,162	)
Total	$	(239,841	)	$	(77,640	)

BUSINESS SEGMENTS

9 Months Ended

Sep. 30, 2024

Segment Reporting [Abstract]

BUSINESS SEGMENTS

7. BUSINESS SEGMENTS

Operating profits for these segments exclude unallocated corporate items. Administrative and staff costs were commonly used by all business segments and were indistinguishable.

The following sets forth information about capital expenditures, operations and depreciation and amortization of the business segments for the three months ended September 30, 2024 and 2023.


Capital expenditures:	2024		2023
Product sales	$	133,947	$	6,800
Royalties		—		—
Products subtotal		133,947		6,800
Rentals		—		—
Total	$	133,947	$	6,800

Revenues:	2024		2023
Product sales	$	2,075,994	$	2,676,872
Royalties		3,016		5,063
Products subtotal		2,079,010		2,681,935
Rentals		8,316		13,573
Total	$	2,087,326	$	2,695,508

Gross profit:	2024			2023
Product sales	$	911,047		$	1,123,942
Royalties		3,016			5,063
Products subtotal		914,063			1,129,005
Rentals		(2,111	)		(9,614	)
Total	$	911,952		$	1,119,391

Depreciation and amortization:	2024		2023
Product sales	$	76,965	$	61,973
Royalties		—		—
Products subtotal		76,965		61,973
Rentals		1,512		4,410
Total	$	78,477	$	66,383

Interest expense:	2024		2023
Product sales	$	8,954	$	8,488
Royalties		—		—
Products subtotal		8,954		8,488
Rentals		1,065		2,006
Total	$	10,019	$	10,494

Net income (loss) before taxes:	2024			2023
Product sales	$	(208,655	)	$	37,467
Royalties		3,016			5,063
Products subtotal		(205,639	)		42,530
Rentals		(3,176	)		(11,620	)
Total	$	(208,815	)	$	30,910

The following sets forth information about capital expenditures, operations and depreciation and amortization of the business segments for the nine months ended September 30, 2024 and 2023.

Capital expenditures:	2024		2023
Product sales	$	625,238	$	21,611
Royalties		—		—
Products subtotal		625,238		21,611
Rentals		—		—
Total	$	625,238	$	21,611

Revenues:	2024		2023
Product sales	$	6,580,861	$	7,056,638
Royalties		22,776		23,419
Products subtotal		6,603,637		7,080,057
Rentals		24,462		60,351
Total	$	6,628,099	$	7,140,408

Gross profit:	2024		2023
Product sales	$	2,710,884	$	3,047,143
Royalties		22,776		23,419
Products subtotal		2,733,660		3,070,562
Rentals		7,195		26,700
Total	$	2,740,855	$	3,097,262

Depreciation and amortization:	2024		2023
Product sales	$	187,594	$	185,241
Royalties		—		—
Products subtotal		187,594		185,241
Rentals		5,502		13,230
Total	$	193,096	$	198,471

Interest expense:	2024		2023
Product sales	$	26,813	$	22,777
Royalties		—		—
Products subtotal		26,813		22,777
Rentals		3,413		8,542
Total	$	30,226	$	31,319

Net income (loss) before taxes:	2024			2023
Product sales	$	(1,006,520	)	$	(8,257	)
Royalties		22,776			23,419
Products subtotal		(983,744	)		15,162
Rentals		3,782			18,158
Total	$	(979,962	)	$	33,320

There were no intersegment revenues.

At September 30, 2024, $185,549 of our assets were used in the Rentals segment, with the remainder, $8,157,575 used in the Products and unallocated segments.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2024

Accounting Policies [Abstract]

Basis of Presentation

Use of Estimates in the Preparation of Financial Statements

Debt Issuance Costs

Inventories

Inventories. Inventories are stated at the lower of cost (first-in, first-out basis) or net realizable value.

Schedule of inventory
	2024			2023
Raw materials & deposits	$	2,876,436		$	2,696,659
Work-in-process		6,678			26,269
Finished goods		698,742			671,062
Total gross inventories		3,581,856			3,393,990
Less reserve for obsolescence		(421,656	)		(369,156	)
Total net inventories	$	3,160,200		$	3,024,834

Income Taxes

The estimated annual effective tax rate is applied to the year-to-date ordinary income (loss) at the end of the interim period.

Revenue Recognition

Revenue Recognition.

Royalty income is recognized in accordance with agreed upon terms, when performance obligations are satisfied, the amount is fixed or determinable and collectability is reasonably assured.

Schedule of disaggregation of revenue
	Three Months Ended September 30,
Product sales:	2024		2023
Product sales and supplies	$	1,898,001	$	2,437,753
Training, certification and data recording		157,722		215,105
Service plans and equipment rental		20,271		24,014
Product sales subtotal		2,075,994		2,676,872
Royalties		3,016		5,063
Rental income		8,316		13,573
Total revenues	$	2,087,326	$	2,695,508


	Nine Months Ended September 30,
Product sales:	2024		2023
Product sales and supplies	$	5,992,360	$	6,376,364
Training, certification and data recording		528,882		620,367
Service plans and equipment rental		59,619		59,907
Product sales subtotal		6,580,861		7,056,638
Royalties		22,776		23,419
Rental income		24,462		60,351
Total revenues	$	6,628,099	$	7,140,408

Deferred Revenue

New Accounting Pronouncements

New Accounting Pronouncements. We have reviewed all recently issued accounting pronouncements, including the following.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2024

Accounting Policies [Abstract]

Schedule of inventory

Schedule of inventory
	2024			2023
Raw materials & deposits	$	2,876,436		$	2,696,659
Work-in-process		6,678			26,269
Finished goods		698,742			671,062
Total gross inventories		3,581,856			3,393,990
Less reserve for obsolescence		(421,656	)		(369,156	)
Total net inventories	$	3,160,200		$	3,024,834

Schedule of disaggregation of revenue

Schedule of disaggregation of revenue
	Three Months Ended September 30,
Product sales:	2024		2023
Product sales and supplies	$	1,898,001	$	2,437,753
Training, certification and data recording		157,722		215,105
Service plans and equipment rental		20,271		24,014
Product sales subtotal		2,075,994		2,676,872
Royalties		3,016		5,063
Rental income		8,316		13,573
Total revenues	$	2,087,326	$	2,695,508


	Nine Months Ended September 30,
Product sales:	2024		2023
Product sales and supplies	$	5,992,360	$	6,376,364
Training, certification and data recording		528,882		620,367
Service plans and equipment rental		59,619		59,907
Product sales subtotal		6,580,861		7,056,638
Royalties		22,776		23,419
Rental income		24,462		60,351
Total revenues	$	6,628,099	$	7,140,408

BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE (Tables)

9 Months Ended

Sep. 30, 2024

Earnings Per Share [Abstract]

Schedule of calculation of basic and diluted net income (loss) per common share


	Three Months Ended September 30,
	2024			2023
Net income (loss)	$	(158,327	)	$	109,603
Weighted average shares-basic		2,611,616			2,454,116
Effect of dilutive potential common shares		—			—
Weighted average shares-diluted		2,611,616			2,454,116
Net income (loss) per share-basic	$	(0.06	)	$	0.04
Net income (loss) per share-diluted	$	(0.06	)	$	0.04
Antidilutive employee stock options		122,000			—


	Nine Months Ended September 30,
	2024			2023

Net income (loss)	$	(740,121	)	$	110,960
Weighted average shares-basic		2,506,999			2,454,116
Effect of dilutive potential common shares		—			—
Weighted average shares-diluted		2,506,999			2,454,116
Net (loss) per share-basic	$	(0.30	)	$	(.05	)
Net (loss) per share-diluted	$	(0.30	)	$	(.05	)
Antidilutive employee stock options		122,000			—

STOCKHOLDERS' EQUITY (Tables)

9 Months Ended

Sep. 30, 2024

Equity [Abstract]

Schedule of employee stock options outstanding and exercisable


		STOCK OPTIONS OUTSTANDING				STOCK OPTIONS EXERCISABLE
	Range of Exercise Prices	Number Outstanding	Weighted Average Remaining Contractual Life (in Years)		Weighted Average Exercise Price per Share	Number Exercisable		Weighted Average Exercise Price per Share
$	3.80	122,000	0.81	$	3.80	122,000	$	3.80

COMMITMENTS AND CONTINGENCIES (Tables)

9 Months Ended

Sep. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

Schedule of minimum future principal payments


2024	$	13,583
2025		55,345
2026		57,000
2027		58,704
2028 – 2031		1,009,938
Total		1,194,570
Less financing cost		(9,715	)
Net term loan payable		1,184,855
Less current portion		(52,789	)
Long term portion	$	1,132,066

INCOME TAXES (Tables)

9 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

Schedule of provision for (benefit from) income taxes


	Three months Ended September 30,
	2024			2023
Federal statutory rate	$	(44,544	)	$	6,491
Effect of:
State taxes, net of federal tax benefit		(9,507	)		38,823
Other		3,563			(124,007	)
Total	$	(50,488	)	$	(78,693	)


	Nine months Ended September 30,
	2024			2023

Federal statutory rate	$	(206,538	)	$	6,997
Effect of:
State taxes, net of federal tax benefit		(43,737	)		36,525
Other		10,434			(121,162	)
Total	$	(239,841	)	$	(77,640	)

BUSINESS SEGMENTS (Tables)

9 Months Ended

Sep. 30, 2024

Segment Reporting [Abstract]

Schedule of capital expenditures, operations and depreciation and amortization of the business segments


Capital expenditures:	2024		2023
Product sales	$	133,947	$	6,800
Royalties		—		—
Products subtotal		133,947		6,800
Rentals		—		—
Total	$	133,947	$	6,800

Revenues:	2024		2023
Product sales	$	2,075,994	$	2,676,872
Royalties		3,016		5,063
Products subtotal		2,079,010		2,681,935
Rentals		8,316		13,573
Total	$	2,087,326	$	2,695,508

Gross profit:	2024			2023
Product sales	$	911,047		$	1,123,942
Royalties		3,016			5,063
Products subtotal		914,063			1,129,005
Rentals		(2,111	)		(9,614	)
Total	$	911,952		$	1,119,391

Depreciation and amortization:	2024		2023
Product sales	$	76,965	$	61,973
Royalties		—		—
Products subtotal		76,965		61,973
Rentals		1,512		4,410
Total	$	78,477	$	66,383

Interest expense:	2024		2023
Product sales	$	8,954	$	8,488
Royalties		—		—
Products subtotal		8,954		8,488
Rentals		1,065		2,006
Total	$	10,019	$	10,494

Net income (loss) before taxes:	2024			2023
Product sales	$	(208,655	)	$	37,467
Royalties		3,016			5,063
Products subtotal		(205,639	)		42,530
Rentals		(3,176	)		(11,620	)
Total	$	(208,815	)	$	30,910

The following sets forth information about capital expenditures, operations and depreciation and amortization of the business segments for the nine months ended September 30, 2024 and 2023.

Capital expenditures:	2024		2023
Product sales	$	625,238	$	21,611
Royalties		—		—
Products subtotal		625,238		21,611
Rentals		—		—
Total	$	625,238	$	21,611

Revenues:	2024		2023
Product sales	$	6,580,861	$	7,056,638
Royalties		22,776		23,419
Products subtotal		6,603,637		7,080,057
Rentals		24,462		60,351
Total	$	6,628,099	$	7,140,408

Gross profit:	2024		2023
Product sales	$	2,710,884	$	3,047,143
Royalties		22,776		23,419
Products subtotal		2,733,660		3,070,562
Rentals		7,195		26,700
Total	$	2,740,855	$	3,097,262

Depreciation and amortization:	2024		2023
Product sales	$	187,594	$	185,241
Royalties		—		—
Products subtotal		187,594		185,241
Rentals		5,502		13,230
Total	$	193,096	$	198,471

Interest expense:	2024		2023
Product sales	$	26,813	$	22,777
Royalties		—		—
Products subtotal		26,813		22,777
Rentals		3,413		8,542
Total	$	30,226	$	31,319

Net income (loss) before taxes:	2024			2023
Product sales	$	(1,006,520	)	$	(8,257	)
Royalties		22,776			23,419
Products subtotal		(983,744	)		15,162
Rentals		3,782			18,158
Total	$	(979,962	)	$	33,320

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Accounting Policies [Abstract]
Raw materials & deposits	$ 2,876,436	$ 2,696,659
Work-in-process	6,678	26,269
Finished goods	698,742	671,062
Total gross inventories	3,581,856	3,393,990
Less reserve for obsolescence	(421,656)	(369,156)
Total net inventories	$ 3,160,200	$ 3,024,834

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Product Information [Line Items]
Total revenues	$ 2,087,326	$ 2,695,508	$ 6,628,099	$ 7,140,408
Product Sales And Supplies [Member]
Product Information [Line Items]
Total revenues	1,898,001	2,437,753	5,992,360	6,376,364
Training Certification And Data Recording [Member]
Product Information [Line Items]
Total revenues	157,722	215,105	528,882	620,367
Service Plans And Equipment Rental [Member]
Product Information [Line Items]
Total revenues	20,271	24,014	59,619	59,907
Product Sales Subtotal [Member]
Product Information [Line Items]
Total revenues	2,075,994	2,676,872	6,580,861	7,056,638
Royalties [Member]
Product Information [Line Items]
Total revenues	3,016	5,063	22,776	23,419
Rental Income [Member]
Product Information [Line Items]
Total revenues	$ 8,316	$ 13,573	$ 24,462	$ 60,351

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Accounting Policies [Abstract]
Total debt amortization	$ 1,076	$ 1,076	$ 3,178	$ 3,228
Estimated annual effective tax rate			21.00%
Lease percentage	12.00%		12.00%
Lease expire date			Jun. 30, 2025

BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Earnings Per Share [Abstract]
Net income (loss)	$ (158,327)	$ 109,603	$ (740,121)	$ 110,960
Weighted average shares-basic	2,611,616	2,454,116	2,506,999	2,454,116
Effect of dilutive potential common shares	0	0	0	0
Weighted average shares-diluted	2,611,616	2,454,116	2,506,999	2,454,116
Net (loss) per share-basic	$ (0.06)	$ 0.04	$ (0.30)	$ (0.05)
Net (loss) per share-diluted	$ (0.06)	$ 0.04	$ (0.30)	$ (0.05)
Antidilutive employee stock options	122,000	0	122,000	0

STOCKHOLDERS' EQUITY (Details) - Price Range 1 [Member]	9 Months Ended
STOCKHOLDERS' EQUITY (Details) - Price Range 1 [Member]	Sep. 30, 2024 $ / shares shares
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items]
Range of exercise prices	$ 3.80
Stock option outstanding \| shares	122,000
Weighted average remaining contractual life (in years)	9 months 21 days
Weighted average exercise price per share	$ 3.80
Number of options exercisable \| shares	122,000
Weighted average exercise price per share, exercisable	$ 3.80

STOCKHOLDERS' EQUITY (Details Narrative) - USD ($)	1 Months Ended	9 Months Ended
STOCKHOLDERS' EQUITY (Details Narrative) - USD ($)	Jul. 31, 2024	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Class of Stock [Line Items]
Number of shares issued, shares		210,000
Share price		$ 3.80
Common stock, shares outstanding		2,664,116		2,454,116
Intrinsic value of options outstanding and exercisable		$ 50,020
Options, exercised		0	0
Common stock, authorized shares		50,000,000		50,000,000
Plan 2013 [Member]
Class of Stock [Line Items]
Options available for grant		0
Common Stock [Member] \| EDCO Partners LLLP [Member]
Class of Stock [Line Items]
Number of shares issued, shares	210,000
Share price	$ 3.80
Number of shares issued, value	$ 798,000
Common stock, shares outstanding	2,664,116
Common stock, shares issued			0

COMMITMENTS AND CONTINGENCIES (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Commitments and Contingencies Disclosure [Abstract]
2024	$ 13,583
2025	55,345
2026	57,000
2027	58,704
2028 - 2031	1,009,938
Total	1,194,570
Less financing cost	(9,715)
Net term loan payable	1,184,855
Less current portion	(52,789)
Long term portion	$ 1,132,066	$ 1,170,243

COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)			9 Months Ended
	Sep. 30, 2021	Oct. 31, 2014	Sep. 30, 2024
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Facilities purchased		$ 1,949,139
Periodic payment			$ 7,453
Final payment			773,727
Outstanding purchase orders issued to vendors			$ 2,843,637
Bank Of America [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Term loan		$ 1,581,106
Citywide Banks [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Principal amount	$ 1,350,000

INCOME TAXES (Details) - USD ($)	3 Months Ended		9 Months Ended
INCOME TAXES (Details) - USD ($)	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Income Tax Disclosure [Abstract]
Federal statutory rate	$ (44,544)	$ 6,491	$ (206,538)	$ 6,997
State taxes, net of federal tax benefit	(9,507)	38,823	(43,737)	36,525
Other	3,563	(124,007)	10,434	(121,162)
Total	$ (50,488)	$ (78,693)	$ (239,841)	$ (77,640)

BUSINESS SEGMENTS (Details) - USD ($)	3 Months Ended		9 Months Ended
BUSINESS SEGMENTS (Details) - USD ($)	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Segment Reporting Information [Line Items]
Net income (loss) before taxes	$ (208,815)	$ 30,910	$ (979,962)	$ 33,320
Product Sales [Member]
Segment Reporting Information [Line Items]
Capital expenditures	133,947	6,800	625,238	21,611
Revenues	2,075,994	2,676,872	6,580,861	7,056,638
Gross profit	911,047	1,123,942	2,710,884	3,047,143
Depreciation and amortization	76,965	61,973	187,594	185,241
Interest expense	8,954	8,488	26,813	22,777
Net income (loss) before taxes	(208,655)	37,467	(1,006,520)	(8,257)
Royalties [Member]
Segment Reporting Information [Line Items]
Capital expenditures	0	0	0	0
Revenues	3,016	5,063	22,776	23,419
Gross profit	3,016	5,063	22,776	23,419
Depreciation and amortization	0	0	0	0
Interest expense	0	0	0	0
Net income (loss) before taxes	3,016	5,063	22,776	23,419
Products Subtotal [Member]
Segment Reporting Information [Line Items]
Capital expenditures	133,947	6,800	625,238	21,611
Revenues	2,079,010	2,681,935	6,603,637	7,080,057
Gross profit	914,063	1,129,005	2,733,660	3,070,562
Depreciation and amortization	76,965	61,973	187,594	185,241
Interest expense	8,954	8,488	26,813	22,777
Net income (loss) before taxes	(205,639)	42,530	(983,744)	15,162
Rentals [Member]
Segment Reporting Information [Line Items]
Capital expenditures	0	0	0	0
Revenues	8,316	13,573	24,462	60,351
Gross profit	(2,111)	(9,614)	7,195	26,700
Depreciation and amortization	1,512	4,410	5,502	13,230
Interest expense	1,065	2,006	3,413	8,542
Net income (loss) before taxes	(3,176)	(11,620)	3,782	18,158
Total [Member]
Segment Reporting Information [Line Items]
Capital expenditures	133,947	6,800	625,238	21,611
Revenues	2,087,326	2,695,508	6,628,099	7,140,408
Gross profit	911,952	1,119,391	2,740,855	3,097,262
Depreciation and amortization	78,477	66,383	193,096	198,471
Interest expense	10,019	10,494	30,226	31,319
Net income (loss) before taxes	$ (208,815)	$ 30,910	$ (979,962)	$ 33,320

BUSINESS SEGMENTS (Details Narrative)	Sep. 30, 2024 USD ($)
Segment Reporting [Abstract]
Rentals segment	$ 185,549
Rentals segment remainder	$ 8,157,575

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