Lifeloc (LCTC) 10-Q 12 Nov 15 2015 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Nov. 12, 2015
Document And Entity Information
Entity Registrant Name	Lifeloc Technologies, Inc
Entity Central Index Key	1,493,137
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
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	Q3
Document Fiscal Year Focus	2,015

Condensed Balance Sheets

Condensed Balance Sheets - USD ($)	Sep. 30, 2015	Dec. 31, 2014
ASSETS
Cash and cash equivalents	$ 2,743,345	$ 2,749,254
Accounts receivable, net	764,329	855,452
Inventories, net	1,098,320	945,425
Income taxes receivable	27,614	83,275
Deferred taxes	119,589	120,392
Prepaid expenses and other	49,284	48,101
Total current assets	4,802,481	4,801,899
PROPERTY AND EQUIPMENT, at cost:
Land	317,932	317,932
Building	1,651,695	1,631,207
Training courses	432,375	432,375
Production equipment	436,198	401,030
Office equipment and software	237,724	237,724
Sales and marketing equipment	247,966	236,722
Research and development equipment and software	69,822	0
Less accumulated depreciation	(850,020)	(650,576)
Total property and equipment, net	2,543,692	2,606,414
OTHER ASSETS:
Patents, net	99,946	80,356
Deposits and other	239,825	69,687
Deferred taxes, long term	7,798	7,504
Total other assets	347,569	157,547
Total assets	7,693,742	7,565,860
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	292,147	469,570
Term loan payable, current portion	36,276	35,262
Customer deposits	115,348	16,018
Accrued expenses	216,788	232,130
Deferred revenue, current portion	88,100	86,493
Reserve for warranty expense	36,100	33,100
Total current liabilities	784,759	872,573
TERM LOAN PAYABLE, net of current portion	1,512,890	1,540,154
DEFERRED INCOME, net of current portion	$ 20,520	$ 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	842,561	615,919
Total stockholders' equity	5,375,573	5,133,387
Total liabilities and stockholders' equity	$ 7,693,742	$ 7,565,860

Condensed Balance Sheets (Paren

Condensed Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 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		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
REVENUES:
Product sales	$ 2,002,094	$ 2,452,129	$ 5,954,289	$ 6,545,128
Royalties	130,293	54,403	331,498	261,583
Rental income	26,964	0	80,004	0
Total sales	2,159,351	2,506,532	6,365,791	6,806,711
COST OF SALES	1,067,254	1,329,626	3,204,947	3,505,472
GROSS PROFIT	1,092,097	1,176,906	3,160,844	3,301,239
OPERATING EXPENSES:
Research and development	236,570	221,749	794,299	739,995
Sales and marketing	291,267	357,456	1,119,514	1,019,750
General and administrative	283,261	274,778	883,427	858,449
Total	811,098	853,983	2,797,240	2,618,194
OPERATING INCOME	280,999	322,923	363,604	683,045
OTHER INCOME (EXPENSE):
Interest income	3,223	5,591	10,568	16,610
Bad debt recovery	3,000	3,000	9,000	9,000
Interest expense	(17,683)	0	(52,960)	0
Amortization, financing expense	(135)	0	(497)	0
Total	(11,595)	8,591	(33,889)	25,610
NET INCOME BEFORE PROVISION FOR TAXES	269,404	331,514	329,715	708,655
PROVISION FOR FEDERAL AND STATE INCOME TAXES	(80,252)	(116,959)	(103,073)	(232,203)
NET INCOME	$ 189,152	$ 214,555	$ 226,642	$ 476,452
NET INCOME PER SHARE, BASIC	$ 0.08	$ 0.09	$ 0.09	$ 0.20
NET INCOME PER SHARE, DILUTED	$ 0.07	$ 0.09	$ 0.09	$ 0.19
WEIGHTED AVERAGE SHARES, BASIC	2,454,116	2,432,416	2,453,015	2,432,416
WEIGHTED AVERAGE SHARES, DILUTED	2,523,145	2,486,380	2,524,616	2,495,530

Condensed Statements of Cash Fl

Condensed Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 226,642	$ 476,452
Adjustments to reconcile net income to net cash provided by operating activities-
Depreciation and amortization	204,855	137,640
Deferred taxes	509	(29,074)
Reserve for warranty expense	3,000	5,925
Changes in operating assets and liabilities-
Accounts receivable	91,123	(360,767)
Inventories	(152,895)	(332,622)
Income taxes receivable	55,661	131,577
Prepaid expenses and other	(1,233)	8,840
Deposits and other	(170,585)	(93,790)
Accounts payable	(177,423)	308,774
Income taxes payable	0	25,782
Customer deposits	99,330	(167,373)
Accrued expenses	(15,342)	(105,551)
Deferred income	2,381	16,560
Net cash provided from operating activities	166,023	22,373
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(136,722)	(207,799)
Patent filing expense	(24,504)	(16,454)
Net cash (used in) investing activities	(161,226)	(224,253)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments made on term loan	(26,250)	0
Sale of common stock	15,544	0
Net cash used in financing activities	(10,706)	0
NET (DECREASE) IN CASH	(5,909)	(201,880)
CASH, BEGINNING OF PERIOD	2,749,254	3,357,260
CASH, END OF PERIOD	2,743,345	3,155,380
Supplemental cash flow disclosure:
Cash paid for interest	52,960	0
Cash paid for income tax	$ 46,904	$ 108,976

1. ORGANIZATION AND NATURE OF B

1. ORGANIZATION AND NATURE OF BUSINESS	9 Months Ended
	Sep. 30, 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

2. SUMMARY OF SIGNIFICANT ACCOU

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Sep. 30, 2015
Notes to Financial Statements
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	Use of Estimates in the Preparation of Financial Statements. Fair Value of Financial Instruments. ASC Topic 820, Fair Value Measurements and Disclosures 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. September 30, December 31, 2015 2014 Raw materials & deposits $ 643,255 $ 476,941 Work-in-process 177,769 132,029 Finished goods 369,796 428,955 Total gross inventories 1,190,820 1,037,925 Less reserve for obsolescence (92,500 ) (92,500 ) Total net inventories $ 1,098,320 $ 945,425 Income Taxes. 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. Supplies are recognized as sales when they are shipped. The sales of licenses to our training courses, as well as training revenues, are recognized as revenue at the time of sale. We generally do not arrange for customer financing or leasing through unrelated third parties, instead 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. 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. Deferred Revenues 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. Recent Accounting Pronouncements 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, and 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	9 Months Ended
	Sep. 30, 2015
Business Combinations [Abstract]
NOTE 3. BUSINESS COMBINATIONS	Building and land 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 nine months ended September 30, 2015 was $80,004. 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 are 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	9 Months Ended
	Sep. 30, 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 per share: Three Months Ended September 30, 2015 September 30, 2014 Net income $ 189,152 $ 214,555 Weighted average shares-basic 2,454,116 2,432,416 Effect of dilutive potential common shares 69,029 53,964 Weighted average shares-diluted 2,523,145 2,486,380 Net income per share-basic $ .08 $ .09 Net income per share-diluted $ .07 $ .09 Antidilutive employee stock options - - Nine Months Ended September 30, 2015 September 30, 2014 Net income $ 226,642 $ 476,452 Weighted average shares-basic 2,453,015 2,432,416 Effect of dilutive potential common shares 71,601 63,114 Weighted average shares-diluted 2,524,616 2,495,530 Net income per share-basic $ .09 $ .20 Net income per share-diluted $ .09 $ .19 Antidilutive employee stock options - -

5. STOCKHOLDERS' EQUITY

5. STOCKHOLDERS' EQUITY	9 Months Ended
	Sep. 30, 2015
Notes to Financial Statements
NOTE 5 - STOCKHOLDERS' EQUITY	The following table summarizes information about employee stock options outstanding and exercisable at September 30, 2015: 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 $2.32 - $3.69 79,000 2.54 $2.67 79,000 $2.67 Holders of 6,700 options entitling them to purchase shares of stock at $2.32 apiece exercised their options during the nine months ended September 30, 2015. None were exercised during the nine months ended September 30, 2014. Of the 79,000 options exercisable as of September 30, 2015, all are incentive stock options. The exercise price of all options granted through September 30, 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 TERM LOAN

6. LINE OF CREDIT AND TERM LOAN PAYABLE	9 Months Ended
	Sep. 30, 2015
Debt Disclosure [Abstract]
NOTE 6 - LINE OF CREDIT AND TERM LOAN PAYABLE	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 mortgage in the property we acquired with the loan. In connection with the 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 September 30, 2015 this credit facility had not been used.

7. INCOME TAXES

7. INCOME TAXES	9 Months Ended
	Sep. 30, 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: Nine Months Ended September 30, September 30, 2015 2014 Federal statutory rate $ 112,104 $ 240,943 Effect of: State taxes, net of federal benefit 14,564 32,837 Research and development credits (16,486 ) - Domestic Production Activities Deduction (32,972 ) (50,376 ) Other 25,863 8,799 Total $ 103,073 $ 232,203

8. COMMITMENTS

8. COMMITMENTS	9 Months Ended
	Sep. 30, 2015
Commitments and Contingencies Disclosure [Abstract]
NOTE 8. COMMITMENTS	First Mortgage Expense Year Amount 2015 $ 9,012 2016 36,689 2017 35,576 2018 40,353 2019 42,211 2020 – 2024 1,385,325 Total 1,549,166 Less current portion (36,276 ) Long term portion $ 1,512,890 Rent Expense Employee Severance Benefits Purchase Orders Other Material Contractual Commitments Regulatory Commitments.

9. BUSINESS SEGMENTS

9. BUSINESS SEGMENTS	9 Months Ended
	Sep. 30, 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 nine months ended September 30, 2014. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Operating profits for the Products segment includes all unallocated corporate items. Administrative and staff costs were commonly used by all business segments and were indistinguishable. These costs are included in the Product segment in the table below. The following sets forth information about the operations of the business segments (royalty activity has been separated from product activity for informational purposes only): Three Months Ended September 30, 2015 Nine Months Ended September 30, 2015 Revenue: Products $ 2,002,094 $ 5,954,289 Royalties 130,293 331,498 Subtotal 2,132,387 6,285,787 Rentals 26,964 80,004 Total $ 2,159,351 $ 6,365,791 Gross profit: Products $ 959,070 $ 2,823,604 Royalties 130,293 331,498 Subtotal 1,089,363 3,155,102 Rentals 2,734 5,742 Total $ 1,092,097 $ 3,160,844 Interest expense: Products $ 9,195 $ 27,539 Rentals 8,488 25,421 Total 17,683 $ 52,960 Net income before provision for taxes: Products 275,158 349,394 Rentals (5,754 ) (19,679 ) Total 269,404 329,715 There were no intersegment revenues. As of September 30, 2015, $792,814 of our assets were used in the Rentals segment, with the remainder, $6,900,928, used in the Products and unallocated segments.

10. SUBSEQUENT EVENTS

10. SUBSEQUENT EVENTS	9 Months Ended
	Sep. 30, 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 ACC16

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 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. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included in the accompanying condensed unaudited financial statements.
Fair Value of Financial Instruments	Our financial instruments consist of cash, short-term trade receivables, payables and a term loan secured by 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 term loan approximates its fair value based on interest rates currently obtainable. ASC Topic 820, Fair Value Measurements and Disclosures 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 September 30, 2015 and December 31, 2014, inventory consisted of the following: September 30, December 31, 2015 2014 Raw materials & deposits $ 643,255 $ 476,941 Work-in-process 177,769 132,029 Finished goods 369,796 428,955 Total gross inventories 1,190,820 1,037,925 Less reserve for obsolescence (92,500 ) (92,500 ) Total net inventories $ 1,098,320 $ 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. Supplies are recognized as sales when they are shipped. The sales of licenses to our training courses, as well as training revenues, are recognized as revenue at the time of sale. We generally do not arrange for customer financing or leasing through unrelated third parties, instead 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. 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.
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. 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.
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, 2017. In addition, Accounting Standards Update No. 2015-03 (Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs), which will be effective for annual reporting periods beginning after December 15, 2015 and interim periods beginning after December 15, 2016, and Accounting Standards Update No. 2015-11 (Inventory), which will be effective for annual reporting periods and interim periods beginning after December 15, 2016, may also have an impact on us. We have not yet assessed the impact, if any, of adopting these standards.
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, and 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 ACC17

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	9 Months Ended
	Sep. 30, 2015
Summary Of Significant Accounting Policies Tables
Inventories	September 30, December 31, 2015 2014 Raw materials & deposits $ 643,255 $ 476,941 Work-in-process 177,769 132,029 Finished goods 369,796 428,955 Total gross inventories 1,190,820 1,037,925 Less reserve for obsolescence (92,500 ) (92,500 ) Total net inventories $ 1,098,320 $ 945,425

4. BASIC AND DILUTED INCOME P18

4. BASIC AND DILUTED INCOME PER COMMON SHARE (Tables)	9 Months Ended
	Sep. 30, 2015
Basic And Diluted Income Per Common Share Tables
Basic and diluted net income per share	Three Months Ended September 30, 2015 September 30, 2014 Net income $ 189,152 $ 214,555 Weighted average shares-basic 2,454,116 2,432,416 Effect of dilutive potential common shares 69,029 53,964 Weighted average shares-diluted 2,523,145 2,486,380 Net income per share-basic $ .08 $ .09 Net income per share-diluted $ .07 $ .09 Antidilutive employee stock options - - Nine Months Ended September 30, 2015 September 30, 2014 Net income $ 226,642 $ 476,452 Weighted average shares-basic 2,453,015 2,432,416 Effect of dilutive potential common shares 71,601 63,114 Weighted average shares-diluted 2,524,616 2,495,530 Net income per share-basic $ .09 $ .20 Net income per share-diluted $ .09 $ .19 Antidilutive employee stock options - -

5. STOCKHOLDERS' EQUITY (Tables

5. STOCKHOLDERS' EQUITY (Tables)	9 Months Ended
	Sep. 30, 2015
Stockholders Equity Tables
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 $2.32 - $3.69 79,000 2.54 $2.67 79,000 $2.67

7. INCOME TAXES (Tables)

7. INCOME TAXES (Tables)	9 Months Ended
	Sep. 30, 2015
Income Taxes Tables
Schedule of income tax reconciliation	Nine Months Ended September 30, September 30, 2015 2014 Federal statutory rate $ 112,104 $ 240,943 Effect of: State taxes, net of federal benefit 14,564 32,837 Research and development credits (16,486 ) - Domestic Production Activities Deduction (32,972 ) (50,376 ) Other 25,863 8,799 Total $ 103,073 $ 232,203

8. COMMITMENTS (Tables)

8. COMMITMENTS (Tables)	9 Months Ended
	Sep. 30, 2015
Commitments Tables
Minimum future lease payments	Year Amount 2015 $ 9,012 2016 36,689 2017 35,576 2018 40,353 2019 42,211 2020 – 2024 1,385,325 Total 1,549,166 Less current portion (36,276 ) Long term portion $ 1,512,890

9. BUSINESS SEGMENTS (Tables)

9. BUSINESS SEGMENTS (Tables)	9 Months Ended
	Sep. 30, 2015
Segment Reporting [Abstract]
Schedule of Segment Reporting	Three Months Ended September 30, 2015 Nine Months Ended September 30, 2015 Revenue: Products $ 2,002,094 $ 5,954,289 Royalties 130,293 331,498 Subtotal 2,132,387 6,285,787 Rentals 26,964 80,004 Total $ 2,159,351 $ 6,365,791 Gross profit: Products $ 959,070 $ 2,823,604 Royalties 130,293 331,498 Subtotal 1,089,363 3,155,102 Rentals 2,734 5,742 Total $ 1,092,097 $ 3,160,844 Interest expense: Products $ 9,195 $ 27,539 Rentals 8,488 25,421 Total 17,683 $ 52,960 Net income before provision for taxes: Products 275,158 349,394 Rentals (5,754 ) (19,679 ) Total 269,404 329,715

2. SUMMARY OF SIGNIFICANT ACC23

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	Sep. 30, 2015	Dec. 31, 2014
Inventories
Raw materials & deposits	$ 643,255	$ 476,941
Work-in-process	177,769	132,029
Finished goods	369,796	428,955
Total gross inventories	1,190,820	1,037,925
Less reserve for obsolescence	(92,500)	(92,500)
Total net inventories	$ 1,098,320	$ 945,425

4. BASIC AND DILUTED INCOME P24

4. BASIC AND DILUTED INCOME PER COMMON SHARE (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
INCOME PER COMMON SHARE
Net income	$ 189,152	$ 214,555	$ 226,642	$ 476,452
Weighted-average shares - basic	2,454,116	2,432,416	2,453,015	2,432,416
Effect of dilutive potential common shares	69,029	53,964	71,601	63,114
Weighted-average shares - diluted	2,523,145	2,486,380	2,524,616	2,495,530
Net income per share - basic	$ 0.08	$ 0.09	$ 0.09	$ 0.20
Net income per share - diluted	$ 0.07	$ 0.09	$ 0.09	$ 0.19
Antidilutive employee stock options	0	0	0	0

5. STOCKHOLDERS' EQUITY (Detail

5. STOCKHOLDERS' EQUITY (Details)	9 Months Ended
	Sep. 30, 2015$ / sharesshares
Stockholders Equity Details
Range of Exercise Prices, min	$ 2.32
Range of Exercise Prices, max	$ 3.69
Option Outstanding | shares	79,000
Weighted Average Remaining Contractual Life (in Years)	2 years 6 months 14 days
Weighted Average Exercise Price per Share	$ 2.67
Number Exercisable | shares	79,000
Weighted Average Exercise Price per Share	$ 2.67

5. STOCKHOLDERS' EQUITY (Deta26

5. STOCKHOLDERS' EQUITY (Details Narrative) - shares	Sep. 30, 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		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Income Tax Disclosure [Abstract]
Federal statutory rate			$ 112,104	$ 240,943
State taxes, net of federal tax benefit			14,564	32,837
Research & development credit			(16,486)	0
Domestic Production Activities Deduction			(32,972)	(50,376)
Other			25,863	8,799
Total	$ 80,252	$ 116,959	$ 103,073	$ 232,203

8. COMMITMENTS (Details)

8. COMMITMENTS (Details)	Sep. 30, 2015USD ($)
Commitments Tables
2,015	$ 9,012
2,016	36,689
2,017	35,576
2,018	40,353
2,019	42,211
2020 - 2024	1,385,325
Total	1,549,166
Less current portion	(36,276)
Long term portion	$ 1,512,890

8. COMMITMENTS AND CONTINGENCIE

8. COMMITMENTS AND CONTINGENCIES (Details Narrative) (USD $) - USD ($)	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Commitments And Contingencies Details Narrative Usd
Rent expense	$ 0	$ 79,796

9. BUSINESS SEGMENTS (Details)

9. BUSINESS SEGMENTS (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Revenue	$ 2,159,351	$ 2,506,532	$ 6,365,791	$ 6,806,711
Gross profit	1,092,097	1,176,906	3,160,844	3,301,239
Interest expense	17,683	0	52,960	0
Net income before provision for taxes	269,404	$ 331,514	329,715	$ 708,655
Products
Revenue	2,002,094		5,954,289
Gross profit	959,070		2,823,604
Interest expense	9,195		27,539
Net income before provision for taxes	275,158		349,394
Royalties
Revenue	130,293		331,498
Gross profit	130,293		331,498
Interest expense	0		0
Net income before provision for taxes	0		0
Subtotal
Revenue	2,132,387		6,285,787
Gross profit	1,089,363		3,155,102
Interest expense	0		0
Net income before provision for taxes	0		0
Rentals
Revenue	26,964		80,004
Gross profit	2,734		5,742
Interest expense	8,488		25,421
Net income before provision for taxes	$ (5,754)		$ (19,679)