Lifeloc (LCTC) 10-Q 12 May 15 2015 Q1 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	3 Months Ended
	Mar. 31, 2015	7-May-15
Document And Entity Information
Entity Registrant Name	Lifeloc Technologies, Inc
Entity Central Index Key	1493137
Document Type	10-Q
Document Period End Date	31-Mar-15
Amendment Flag	FALSE
Current Fiscal Year End Date	-19
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		2,454,116
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2015

Condensed_Balance_Sheets

Condensed Balance Sheets (USD $)	Mar. 31, 2015	Dec. 31, 2014
ASSETS
Cash and cash equivalents	$2,526,793	$2,749,254
Accounts receivable, net	682,530	855,452
Inventories, net	963,359	945,425
Income taxes receivable	83,275	83,275
Deferred taxes	144,068	120,392
Prepaid expenses and other	91,767	48,101
Total current assets	4,491,792	4,801,899
PROPERTY AND EQUIPMENT, at cost:
Land	317,932	317,932
Building	1,631,207	1,631,207
Training courses	432,375	432,375
Production equipment	401,030	401,030
Office equipment and software	237,724	237,724
Sales and marketing equipment	242,966	236,722
Less accumulated depreciation	-716,098	-650,576
Total property and equipment, net	2,547,136	2,606,414
OTHER ASSETS:
Patents, net	81,014	80,356
Deposits and other	92,733	69,687
Deferred taxes, long term	6,246	7,504
Total other assets	179,993	157,547
Total assets	7,218,921	7,565,860
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	216,951	469,570
First mortgage payable, current portion	35,465	35,262
Customer deposits	23,707	16,018
Accrued expenses	160,444	232,130
Deferred revenue, current portion	90,704	86,493
Reserve for warranty expense	34,100	33,100
Total current liabilities	561,371	872,573
FIRST MORTGAGE PAYABLE, net of current portion	1,531,043	1,540,154
DEFERRED INCOME, net of current portion	16,435	19,746
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, no par value; 50,000,000 shares authorized, 2,454,116 shares outstanding (2,447,416 at December 31, 2014)	4,533,012	4,517,468
Retained earnings	577,060	615,919
Total stockholders' equity	5,110,072	5,133,387
Total liabilities and stockholders' equity	$7,218,921	$7,565,860

Condensed_Balance_Sheets_Paren

Condensed Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2015	Dec. 31, 2014
STOCKHOLDERS' EQUITY:
Common stock, par value	$0	$0
Common stock, authorized shares	50,000,000	50,000,000
Common stock, issued shares	2,454,116	2,447,416
Common stock, outstanding shares	2,454,116	2,447,416

Condensed_Statements_of_Income

Condensed Statements of Income (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
REVENUES:
Product sales	$1,950,317	$1,973,251
Royalties	63,290	109,020
Rental income	26,471	0
Total sales	2,040,078	2,082,271
COST OF SALES	1,068,979	1,052,971
GROSS PROFIT	971,099	1,029,300
OPERATING EXPENSES:
Research and development	275,250	285,233
Sales and marketing	410,561	315,630
General and administrative	334,559	296,704
Total	1,020,370	897,567
OPERATING INCOME (LOSS)	-49,271	131,733
OTHER INCOME (EXPENSE):
Interest income	3,490	4,648
Bad debt recovery	2,000	3,000
Interest expense	-17,496	0
Total	-12,006	7,648
NET INCOME (LOSS) BEFORE PROVISION FOR TAXES	-61,277	139,381
PROVISION FOR FEDERAL AND STATE INCOME TAXES	22,418	-32,608
NET INCOME (LOSS)	($38,859)	$106,773
NET INCOME (LOSS) PER SHARE, BASIC	($0.02)	$0.04
NET INCOME (LOSS) PER SHARE, DILUTED	($0.02)	$0.04
WEIGHTED AVERAGE SHARES, BASIC	2,450,777	2,432,416
WEIGHTED AVERAGE SHARES, DILUTED	2,528,076	2,498,246

Condensed_Statements_of_Cash_F

Condensed Statements of Cash Flows (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	($38,859)	$106,773
Adjustments to reconcile net income to net cash provided by operating activities-
Depreciation and amortization	67,061	44,313
Provision for bad debt	-934	0
Deferred taxes	-22,418	-13,723
Reserve for warranty expense	1,000	2,525
Changes in operating assets and liabilities-
Accounts receivable	173,856	-149,713
Inventories	-17,934	-167,964
Income taxes receivable	0	46,330
Prepaid expenses and other	-43,666	390
Deposits and other	-23,046	-1,326
Accounts payable	-252,619	93,231
Customer deposits	7,689	-76,335
Accrued expenses	-71,686	-182,996
Deferred revenue	900	-7,367
Net cash used in operating activities	-220,656	-305,862
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	-6,244	-125,347
Purchase of patent	-2,197	-6,106
Net cash (used in) investing activities	-8,441	-131,453
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments made on first mortgage	-8,908	0
Sale of common stock	15,544	0
Net cash provided from financing activities	6,636	0
NET INCREASE (DECREASE) IN CASH	-222,461	-437,315
CASH, BEGINNING OF PERIOD	2,749,254	3,357,260
CASH, END OF PERIOD	2,526,793	2,919,945
Supplemental cash flow disclosure:
Cash paid for interest	17,496	0
Cash paid for income tax	$0	$0

1_ORGANIZATION_AND_NATURE_OF_B

1. ORGANIZATION AND NATURE OF BUSINESS	3 Months Ended
	Mar. 31, 2015
Notes to Financial Statements
NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS	Lifeloc Technologies, Inc., a Colorado corporation ("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 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.
	We define our business as providing "near and remote sensing" 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.
	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.
	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, www.lifeguardbreathtester.com, stsfirst.com and www.lifeloc.fr.  Information contained on our websites does not constitute part of this Form 10-K.

2_SUMMARY_OF_SIGNIFICANT_ACCOU

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	3 Months Ended
	Mar. 31, 2015
Notes to Financial Statements
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	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.
	Fair Value of Financial Instruments.   Our financial instruments consist of cash, short-term trade receivables, payables and a first mortgage.  The carrying values of cash and cash equivalents, short-term receivables, and payables approximate their fair value due to their short term maturities.  The carrying value of the first mortgage approximates its fair value based on interest rates currently obtainable.
	ASC Topic 820, Fair Value Measurements and Disclosures ("ASC 820"), provides a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements. Specifically, ASC 820 sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. ASC 820 defines the hierarchy as follows:
	Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equity securities listed on the New York Stock Exchange.
	Level 2 - Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts or priced with models using highly observable inputs.
	Level 3 - Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights.
	Inventories.   Inventories are stated at the lower of cost (first-in, first-out basis) or market. 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 March 31, 2015 and December 31, 2014, inventory consisted of the following:
		2015			2014
	Raw materials & deposits	$	477,561		$	476,941
	Work-in-process		128,610			132,029
	Finished goods		449,688			428,955
	Total gross inventories		1,055,859			1,037,925
	Less reserve for obsolescence		(92,500	)		(92,500	)
	Total net inventories	$	963,359		$	945,425
	Income Taxes.  We account for income taxes under the provisions of Accounting Standards Codification Topic 740, "Accounting for Income Taxes" ("ASC 740"). We have determined an estimated annual effective tax rate.  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 estimated annual effective tax rate is applied to the year-to-date ordinary income (or 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 is generally recorded when we ship the product and title has passed to the customer, 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.
	Deferred revenues arising from service and extended warranty contracts are booked as sales over their life on a straight-line basis. Supplies are recognized as sales when they are shipped.  Training revenues are recognized at the time the training occurs.  We have discontinued arranging for customer financing and leasing through unrelated third parties and instead are providing for 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.
	The sales of licenses to our training courses are recognized as revenue at the time of sale.
	Rental income from space leased to our tenants is recognized in the month in which it is due, which approximates recognition on a straight-line basis.
	On occasion we receive customer deposits for future product orders.  Customer deposits are initially recorded as a liability and recognized as revenue when the product is shipped and title has passed to the customer.
	Deferred Revenue.  Deferred revenues arise from service contracts, from extended warranty contracts, and from customer leases.  Those revenues are recognized on a straight-line basis over the life of the contract, which generally are written for one year.  However, there are occasions when they are written for longer terms up to four years.  In those cases, the revenues from that portion of the contract that extend beyond one year are shown in our balance sheet as long term.  Deferred revenues also result from progress payments received on development contracts; those revenues are recognized when the contract is complete.  All development contracts are for less than one year and all deferred revenues from this source are shown in our balance sheet as short term.
	Recent Accounting Pronouncements.  We have reviewed all recently issued, but not yet effective, accounting pronouncements.  The Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09 (Revenue from Contracts with Customers), which is effective for annual reporting periods beginning after December 15, 2016.  We have not yet assessed the impact, if any, of adopting this standard.
	Segment Reporting.   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.  As a result of purchasing our building on October 31, 2014, we have a second segment consisting of renting portions of our building to existing tenants, whose leases expire at various times until December 31, 2017.

3_BUSINESS_COMBINATIONS

3. BUSINESS COMBINATIONS	3 Months Ended
	Mar. 31, 2015
Business Combinations [Abstract]
NOTE 3. BUSINESS COMBINATIONS	Building and land.  On October 31, 2014 we purchased the building formerly leased by us for a total price of $1,949,139, of which $317,932 was allocated to land.  The allocation between building and land was based on Level 3 inputs and was determined by management based on estimates of rent and return on investment analyses.  Based on a third party analysis, we allocated a portion of the building cost to its components.  The components are depreciated over 5 and 15 years, using double declining depreciation methods, and the building is depreciated over 39 years using the straight line method.
	Approximately 48% of the building is leased to third party tenants pursuant to lease agreements expiring on various dates ranging to December 31, 2017.  Rental revenue included in our statement of income for the three months ended March 31, 2015 was $26,471.
	Future rental income and related expenses will depend in part on whether existing leases are renewed.
	Training Courses.  On December 1, 2014 we acquired all of the assets of Superior Training Solutions, Inc. ("STS") for $300,000 cash plus 15,000 shares of our common stock valued at $132,375, reflecting a total purchase price of $432,375.  In accordance with the purchase agreement between Lifeloc and STS, the value of the stock was based on the closing quote on our stock price for a specified period prior to closing.  Based on Level 3 inputs, which consisted of estimates of future cash flows, the entire purchase price was allocated to training courses, which will be depreciated over 15 years using the straight line method.   Revenues are generated by selling licenses to direct customers as well as resellers, and are recognized as earned revenue at the time of sale.

4_BASIC_AND_DILUTED_INCOME_PER

4. BASIC AND DILUTED INCOME PER COMMON SHARE	3 Months Ended
	Mar. 31, 2015
Notes to Financial Statements
NOTE 4 - BASIC AND DILUTED INCOME PER COMMON SHARE	We report both basic and diluted net income (loss) per share.  Basic net income or loss per common share is computed by dividing net income or loss for the period by the weighted average number of common shares outstanding for the period.  Diluted net income or loss per common share is computed by dividing the net income or 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 following table presents the calculation of basic and diluted net income (loss) per share:
		Three Months Ended
		31-Mar-15			31-Mar-14
	Net income (loss)	$	(38,859	)	$	106,773
	Weighted average shares-basic		2,450,777			2,432,416
	Effect of dilutive potential common shares		77,299			65,830
	Weighted average shares-diluted		2,528,076			2,498,246
	Net income per share-basic	$	(0.02	)	$	0.04
	Net income per share-diluted	$	(0.02	)	$	0.04
	Antidilutive employee stock options		82,000			0

5_STOCKHOLDERS_EQUITY

5. STOCKHOLDERS' EQUITY	3 Months Ended
	Mar. 31, 2015
Notes to Financial Statements
NOTE 5 - STOCKHOLDERS' EQUITY	The following table summarizes information about employee stock options outstanding and exercisable at March 31, 2015:
		STOCK OPTIONS OUTSTANDING				STOCK OPTIONS EXERCISABLE
	Range of Exercise Prices	Number	Weighted-Average	Weighted-Average		Number	Weighted-Average
		Outstanding	Remaining Contractual	Exercise Price		Exercisable	Exercise Price
			Life (in Years)	per Share			per Share
	$2.32 - $3.69	82,000	2.99		$2.70	82,000		$2.70
	Holders of 6,700 options entitling them to purchase shares of stock at $2.32 apiece exercised their options during the three months ended March 31, 2015.  None were exercised during the three months ended March 31, 2014.
	Of the 82,000 options exercisable as of March 31, 2015, all are incentive stock options. The exercise price of all options granted through March 31, 2015 has been equal to or greater than the fair market value.
	The total number of authorized shares of common stock continues to be 50,000,000, with no change in the par value per share.

6_LINE_OF_CREDIT_AND_FIRST_MOR

6. LINE OF CREDIT AND FIRST MORTGAGE	3 Months Ended
	Mar. 31, 2015
Debt Disclosure [Abstract]
NOTE 6 - LINE OF CREDIT AND FIRST MORTGAGE	On October 31, 2014, we purchased the commercial property we use as our corporate headquarters and certain adjacent property in Wheat Ridge, Colorado for a total purchase price of $1,949,139, of which we paid $368,033 in cash and financed the remaining $1,581,106 through a 10-year term loan from Bank of America bearing interest at 4.45% per annum, secured by a first-priority security interest in the property we acquired with the loan. In connection with the term loan, we arranged for a one-year $250,000 line of credit from Bank of America secured by all assets of the Company.  The line of credit bears interest at a rate calculated at the LIBOR daily floating rate plus 2.5%.  At March 31, 2015 this credit facility had not been used.

7_INCOME_TAXES

7. INCOME TAXES	3 Months Ended
	Mar. 31, 2015
Income Tax Disclosure [Abstract]
NOTE 7. INCOME TAXES	The items accounting for the difference between income taxes computed at the federal statutory rate and the provision for income taxes consists of the following:
		Three Months Ended
		March 31,			March 31,
		2015			2014
	Federal statutory rate	$	(20,834	)	$	47,390
	Effect of:
	State taxes, net of federal benefit		2,744			7,481
	Research and development credits		-			-
	Domestic Production Activities Deduction		-			(16,792	)
	Other		(4,328	)		(5,471	)
	Total	$	(22,418	)	$	32,608

8_COMMITMENTS

8. COMMITMENTS	3 Months Ended
	Mar. 31, 2015
Commitments and Contingencies Disclosure [Abstract]
NOTE 8. COMMITMENTS	Mortgage Expense. We purchased our facilities in Wheat Ridge, Colorado on October 31, 2014 for $1,949,139 and executed a first mortgage on all assets in the amount of $1,581,106 with Bank of America for a portion of the purchase price.  The note bears interest at 4.45% per annum, and is payable in 120 equal monthly installments of $8,801 including interest.  Our minimum future principal payments on this first mortgage, by year, are as follows:
	Year	Amount
	2015	$	26,354
	2016		36,689
	2017		35,576
	2018		40,353
	2019		42,211
	2020 – 2024		1,385,325
	Total		1,566,508
	Less current portion		(35,465	)
	Long term portion	$	1,531,043
	Rent Expense. Rent expense for our facilities for the 3 months ended March 31, 2014 was $26,599.  As a result of purchasing our building, we did not incur rent expense after October 31, 2014.
	Employee Severance Benefits.  Our obligation with respect to employee severance benefits is minimized by the "at will" nature of the employee relationships.  As of March 31, 2015 we had no obligation with respect to contingent severance benefit obligations.
	Purchase Orders.  Outstanding purchase orders issued to vendors in the ordinary course of business totaled $1,492,957 at March 31, 2015.
	Other Material Contractual Commitments.  Aside from the credit facility commitments, we do not have any material contractual commitments requiring settlement in the future except that we revised a development agreement which will, in the ordinary course of business, require additional payments by us of $66,410 during 2015.
	Regulatory Commitments. With respect to our LifeGuard product, we are subject to regulation by the United States Food and Drug Administration ("FDA").  The FDA provides regulations governing the manufacture and sale of our LifeGuard product, and we are subject to inspections by the FDA to determine our compliance with these regulations.  FDA inspections are conducted periodically at the discretion of the FDA.  As of March 31, 2015, we had not been inspected by the FDA; however, we believe we are in substantial compliance with all known regulations. We are also subject to regulation by the DOT and by various state departments of transportation so far as our other products are concerned.  We believe that we are in substantial compliance with all known applicable regulations.

9_BUSINESS_SEGMENTS

9. BUSINESS SEGMENTS	3 Months Ended
	Mar. 31, 2015
Segment Reporting [Abstract]
NOTE 9. BUSINESS SEGMENTS	We currently have two business segments:  (i) the sale of physical products (“Products”, including portable hand-held breathalyzers and related accessories, supplies, education, training, and royalties from development contracts with OEM manufacturers), and (ii) rental of a portion of our building (“Rentals”).  There was only one business segment, Products, in the quarter ended March 31, 2014.  The accounting policies of the segments are the same as those described in the summary of significant accounting policies.
	Operating profits for these segments excludes unallocated corporate items.  Administrative and staff costs were commonly used by all business segments and were indistinguishable.
	The following sets forth information about the operations of the business segments:
		Three Months
		Ended
		March 31,
		2015
	Revenue:
	Products	$	2,013,607
	Rentals		26,471
	Total	$	2,040,078
	Gross profit:
	Products	$	968,383
	Rentals		2,716
	Total	$	971,099
	Interest expense:
	Products	$	9,098
	Rentals		8,398
	Total	$	17,496
	Net (loss):
	Products	$	(33,177	)
	Rentals		(5,682	)
	Total	$	(38,859	)
	There were no intersegment revenues.
	As of March 31, 2015, $759,893 of our assets were used in the Rentals segment, with the remainder, $6,459,028, used in the Products and unallocated segments.

10_SUBSEQUENT_EVENTS

10. SUBSEQUENT EVENTS	3 Months Ended
	Mar. 31, 2015
Notes to Financial Statements
NOTE 10 - SUBSEQUENT EVENTS	We evaluated all of our activity and concluded that no subsequent events have occurred that would require recognition in our financial statements or disclosure in the notes to our financial statements.

2_SUMMARY_OF_SIGNIFICANT_ACCOU1

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
	Mar. 31, 2015
Summary Of Significant Accounting Policies Policies
Use of Estimates	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.
Fair Value of Financial Instruments	Our financial instruments consist of cash, short-term trade receivables, payables and a first mortgage.  The carrying values of cash and cash equivalents, short-term receivables, and payables approximate their fair value due to their short term maturities.  The carrying value of the first mortgage approximates its fair value based on interest rates currently obtainable.
	ASC Topic 820, Fair Value Measurements and Disclosures ("ASC 820"), provides a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements. Specifically, ASC 820 sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. ASC 820 defines the hierarchy as follows:
	Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equity securities listed on the New York Stock Exchange.
	Level 2 - Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts or priced with models using highly observable inputs.
	Level 3 - Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights.
Inventories	Inventories are stated at the lower of cost (first-in, first-out basis) or market. 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 March 31, 2015 and December 31, 2014, inventory consisted of the following:
		2015			2014
	Raw materials & deposits	$	477,561		$	476,941
	Work-in-process		128,610			132,029
	Finished goods		449,688			428,955
	Total gross inventories		1,055,859			1,037,925
	Less reserve for obsolescence		(92,500	)		(92,500	)
	Total net inventories	$	963,359		$	945,425
Income Taxes	We account for income taxes under the provisions of Accounting Standards Codification Topic 740, "Accounting for Income Taxes" ("ASC 740"). We have determined an estimated annual effective tax rate.  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 estimated annual effective tax rate is applied to the year-to-date ordinary income (or 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 is generally recorded when we ship the product and title has passed to the customer, 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.
	Deferred revenues arising from service and extended warranty contracts are booked as sales over their life on a straight-line basis. Supplies are recognized as sales when they are shipped.  Training revenues are recognized at the time the training occurs.  We have discontinued arranging for customer financing and leasing through unrelated third parties and instead are providing for 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.
	The sales of licenses to our training courses are recognized as revenue at the time of sale.
	Rental income from space leased to our tenants is recognized in the month in which it is due, which approximates recognition on a straight-line basis.
	On occasion we receive customer deposits for future product orders.  Customer deposits are initially recorded as a liability and recognized as revenue when the product is shipped and title has passed to the customer.
Deferred Revenue	Deferred revenues arise from service contracts, from extended warranty contracts, and from customer leases.  Those revenues are recognized on a straight-line basis over the life of the contract, which generally are written for one year.  However, there are occasions when they are written for longer terms up to four years.  In those cases, the revenues from that portion of the contract that extend beyond one year are shown in our balance sheet as long term.  Deferred revenues also result from progress payments received on development contracts; those revenues are recognized when the contract is complete.  All development contracts are for less than one year and all deferred revenues from this source are shown in our balance sheet as short term.
Recent Accounting Pronouncements	We have reviewed all recently issued, but not yet effective, accounting pronouncements.  The Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09 (Revenue from Contracts with Customers), which is effective for annual reporting periods beginning after December 15, 2016.  We have not yet assessed the impact, if any, of adopting this standard.
Segment Reporting	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.  As a result of purchasing our building on October 31, 2014, we have a second segment consisting of renting portions of our building to existing tenants, whose leases expire at various times until December 31, 2017.

2_SUMMARY_OF_SIGNIFICANT_ACCOU2

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	3 Months Ended
	Mar. 31, 2015
Summary Of Significant Accounting Policies Tables
Inventories		2015			2014
	Raw materials & deposits	$	477,561		$	476,941
	Work-in-process		128,610			132,029
	Finished goods		449,688			428,955
	Total gross inventories		1,055,859			1,037,925
	Less reserve for obsolescence		(92,500	)		(92,500	)
	Total net inventories	$	963,359		$	945,425

4_BASIC_AND_DILUTED_INCOME_PER1

4. BASIC AND DILUTED INCOME PER COMMON SHARE (Tables)	3 Months Ended
	Mar. 31, 2015
Basic And Diluted Income Per Common Share Tables
Basic and diluted net income (loss) per share		Three Months Ended
		31-Mar-15			31-Mar-14
	Net income (loss)	$	(38,859	)	$	106,773
	Weighted average shares-basic		2,450,777			2,432,416
	Effect of dilutive potential common shares		77,299			65,830
	Weighted average shares-diluted		2,528,076			2,498,246
	Net income per share-basic	$	(0.02	)	$	0.04
	Net income per share-diluted	$	(0.02	)	$	0.04
	Antidilutive employee stock options		82,000			0

5_STOCKHOLDERS_EQUITY_Tables

5. STOCKHOLDERS' EQUITY (Tables)	3 Months Ended
	Mar. 31, 2015
Stockholders Equity Tables
Stock options outstanding and exercisable		STOCK OPTIONS OUTSTANDING				STOCK OPTIONS EXERCISABLE
	Range of Exercise Prices	Number	Weighted-Average	Weighted-Average		Number	Weighted-Average
		Outstanding	Remaining Contractual	Exercise Price		Exercisable	Exercise Price
			Life (in Years)	per Share			per Share
	$2.32 - $3.69	82,000	2.99		$2.70	82,000		$2.70

7_INCOME_TAXES_Tables

7. INCOME TAXES (Tables)	3 Months Ended
	Mar. 31, 2015
Income Taxes Tables
Schedule of income tax reconciliation		Three Months Ended
		March 31,			March 31,
		2015			2014
	Federal statutory rate	$	(20,834	)	$	47,390
	Effect of:
	State taxes, net of federal benefit		2,744			7,481
	Research and development credits		-			-
	Domestic Production Activities Deduction		-			(16,792	)
	Other		(4,328	)		(5,471	)
	Total	$	(22,418	)	$	32,608

8_COMMITMENTS_Tables

8. COMMITMENTS (Tables)	3 Months Ended
	Mar. 31, 2015
Commitments Tables
Minimum future lease payments	Year	Amount
	2015	$	26,354
	2016		36,689
	2017		35,576
	2018		40,353
	2019		42,211
	2020 – 2024		1,385,325
	Total		1,566,508
	Less current portion		(35,465	)
	Long term portion	$	1,531,043

9_BUSINESS_SEGMENTS_Tables

9. BUSINESS SEGMENTS (Tables)	3 Months Ended
	Mar. 31, 2015
Segment Reporting [Abstract]
Schedule of Segment Reporting		Three Months
		Ended
		March 31,
		2015
	Revenue:
	Products	$	2,013,607
	Rentals		26,471
	Total	$	2,040,078
	Gross profit:
	Products	$	968,383
	Rentals		2,716
	Total	$	971,099
	Interest expense:
	Products	$	9,098
	Rentals		8,398
	Total	$	17,496
	Net (loss):
	Products	$	(33,177	)
	Rentals		(5,682	)
	Total	$	(38,859	)

2_SUMMARY_OF_SIGNIFICANT_ACCOU3

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Inventories
Raw materials & deposits	$477,561	$476,941
Work-in-process	128,610	132,029
Finished goods	449,688	428,955
Total gross inventories	1,055,859	1,037,925
Less reserve for obsolescence	-92,500	-92,500
Total net inventories	$963,359	$945,425

4_BASIC_AND_DILUTED_INCOME_PER2

4. BASIC AND DILUTED INCOME PER COMMON SHARE (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
INCOME PER COMMON SHARE
Net income	($38,859)	$106,773
Weighted-average shares - basic	2,450,777	2,432,416
Effect of dilutive potential common shares	77,299	65,830
Weighted-average shares - diluted	2,528,076	2,498,246
Net income per share - basic	($0.02)	$0.04
Net income per share - diluted	($0.02)	$0.04
Antidilutive employee stock options	82,000	0

5_STOCKHOLDERS_EQUITY_Details

5. STOCKHOLDERS' EQUITY (Details) (USD $)	3 Months Ended
	Mar. 31, 2015
Stockholders Equity Details
Range of Exercise Prices, min	$2.32
Range of Exercise Prices, max	$3.69
Option Outstanding	82,000
Weighted Average Remaining Contractual Life (in Years)	2 years 11 months 26 days
Weighted Average Exercise Price per Share	$2.70
Number Exercisable	82,000
Weighted Average Exercise Price per Share	$2.70

5_STOCKHOLDERS_EQUITY_Details_

5. STOCKHOLDERS' EQUITY (Details Narrative)	Mar. 31, 2015	Dec. 31, 2014
Stockholders Equity Details Narrative
Common Stock Authorized	50,000,000	50,000,000

7_INCOME_TAXES_Details

7. INCOME TAXES (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Income Tax Disclosure [Abstract]
Federal statutory rate	($20,834)	$47,390
State taxes, net of federal tax benefit	2,744	7,481
Research & development credit	0	0
Domestic Production Activities Deduction	0	-16,792
Other	-4,328	-5,471
Total	($22,418)	$32,608

8_COMMITMENTS_Details

8. COMMITMENTS (Details) (USD $)	Mar. 31, 2015
Commitments Tables
2015	$26,354
2016	36,689
2017	35,576
2018	40,353
2019	42,211
2020 b 2024	1,385,325
Total	1,566,508
Less current portion	-35,465
Long term portion	$1,531,043

8_COMMITMENTS_AND_CONTINGENCIE

8. COMMITMENTS AND CONTINGENCIES (Details Narrative) (USD $) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Commitments And Contingencies Details Narrative Usd
Rent expense	$0	$26,599

9_BUSINESS_SEGMENTS_Details

9. BUSINESS SEGMENTS (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Revenue	$2,040,078	$2,082,271
Gross profit	971,099	1,029,300
Interest expense	17,496	0
Net income (loss)	-38,859	106,773
Products
Revenue	2,013,607
Gross profit	968,383
Interest expense	9,098
Net income (loss)	-33,177
Rentals
Revenue	26,471
Gross profit	2,716
Interest expense	8,398
Net income (loss)	($5,682)