Lifeloc (LCTC) 10-Q 13 Nov 20 2020 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2020	Nov. 05, 2020
Cover [Abstract]
Entity Registrant Name	Lifeloc Technologies, Inc
Entity Central Index Key	0001493137
Document Type	10-Q
Document Period End Date	Sep. 30, 2020
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Shell Company	false
Entity Interactive Data Current	Yes
Entity Incorporation State Country Code	CO
Entity File Number	000-54319
Entity Common Stock, Shares Outstanding		2,454,116
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2020

Condensed Balance Sheets

Condensed Balance Sheets - USD ($)	Sep. 30, 2020	Dec. 31, 2019
ASSETS
Cash	$ 2,264,887	$ 3,185,996
Accounts receivable, net	517,618	641,239
Inventories, net	2,518,996	1,986,299
Income taxes receivable	223,404	6,750
Prepaid expenses and other	67,916	18,857
Total current assets	5,592,821	5,839,141
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 and software	976,621	976,621
Training courses	432,375	432,375
Office equipment, software and space modifications	218,074	208,986
Sales and marketing equipment and space modifications	232,600	232,600
Research and development equipment, software and space modifications	172,429	172,429
Less accumulated depreciation	(2,220,032)	(1,959,541)
Total property and equipment, net	2,628,242	2,879,645
OTHER ASSETS:
Patents, net	154,415	145,323
Deposits and other	163,480	74,027
Deferred taxes	97,846	86,658
Total other assets	415,741	306,008
Total assets	8,636,804	9,024,794
CURRENT LIABILITIES:
Accounts payable	257,743	261,798
Term loan payable, current portion	46,128	44,879
Paycheck Protection loan payable	465,097	0
Customer deposits	182,810	214,031
Accrued expenses	212,359	290,458
Deferred revenue, current portion	37,494	45,874
Reserve for warranty expense	46,500	45,000
Total current liabilities	1,248,131	902,040
Term loan payable, net of current portion and debt issuance costs	1,289,659	1,324,467
Deferred revenue, net of current portion	1,723	6,066
Total liabilities	2,539,513	2,232,573
Commitments and contingencies
STOCKHOLDERS' EQUITY:
Common stock, no par value; 50,000,000 shares authorized, 2,454,116 shares outstanding	4,636,038	4,603,304
Retained earnings	1,461,253	2,188,917
Total stockholders' equity	6,097,291	6,792,221
Total liabilities and stockholders' equity	$ 8,636,804	$ 9,024,794

Condensed Balance Sheets (Paren

Condensed Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2020	Dec. 31, 2019
STOCKHOLDERS' EQUITY:
Common stock, par value	$ 0	$ 0
Common stock, authorized shares	50,000,000	50,000,000
Common stock, outstanding shares	2,454,116	2,454,116

Condensed Statements of Income

Condensed Statements of Income (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
REVENUES:
Total	$ 1,555,068	$ 2,258,155	$ 4,893,442	$ 6,664,638
Cost of sales	957,964	1,193,088	3,190,193	3,512,235
Gross profit	597,104	1,065,067	1,703,249	3,152,403
OPERATING EXPENSES:
Research and development	335,075	253,716	814,457	742,884
Sales and marketing	235,733	329,824	837,077	961,746
General and administrative	297,128	287,814	978,056	908,607
Total	867,936	871,354	2,629,590	2,613,237
Operating income (loss)	(270,832)	193,713	(926,341)	539,166
OTHER INCOME (EXPENSE):
Interest income	2,598	10,454	13,016	27,726
Interest expense	(14,051)	(14,513)	(42,198)	(43,404)
Total	(11,453)	(4,059)	(29,182)	(15,678)
Net income (loss) before (provision for) benefit from taxes	(282,285)	189,654	(955,523)	523,488
Benefit from (provision for) federal and state income taxes	69,519	(38,129)	227,859	(122,279)
Net income (loss)	$ (212,766)	$ 151,525	$ (727,664)	$ 401,209
Net income (loss) per share, basic	$ (0.09)	$ 0.06	$ (0.30)	$ 0.16
Net income (loss) per share, diluted	$ (0.09)	$ 0.06	$ (0.30)	$ 0.16
Weighted average shares, basic	2,454,116	2,454,116	2,454,116	2,454,116
Weighted average shares, diluted	2,454,116	2,454,116	2,454,116	2,454,786
Products
REVENUES:
Total	$ 1,502,034	$ 2,083,044	$ 4,705,598	$ 6,219,779
Royalties
REVENUES:
Total	31,395	153,922	123,527	376,906
Rental Income
REVENUES:
Total	$ 21,639	$ 21,189	$ 64,317	$ 67,953

Condensed Statement of Stockhol

Condensed Statement of Stockholders' Equity (Unaudited) - USD ($)	Common Stock	Retained Earnings	Total
Beginning balance at Dec. 31, 2018	$ 4,597,646	$ 1,563,091	$ 6,160,737
Stock based compensation expense related to stock options	5,658		5,658
Net income (loss)		401,209	401,209
Ending balance at Sep. 30, 2019	4,603,304	1,964,300	6,567,604
Beginning balance at Jun. 30, 2019	4,600,867	1,812,775	6,413,642
Stock based compensation expense related to stock options	2,437		2,437
Net income (loss)		151,525	151,525
Ending balance at Sep. 30, 2019	4,603,304	1,964,300	6,567,604
Beginning balance at Dec. 31, 2019	4,603,304	2,188,917	6,792,221
Stock based compensation expense related to stock options	32,734		32,734
Net income (loss)		(727,664)	(727,664)
Ending balance at Sep. 30, 2020	4,636,038	1,461,253	6,097,291
Beginning balance at Jun. 30, 2020	4,635,727	1,674,019	6,309,746
Stock based compensation expense related to stock options	311		311
Net income (loss)		(212,766)	(212,766)
Ending balance at Sep. 30, 2020	$ 4,636,038	$ 1,461,253	$ 6,097,291

Condensed Statements of Cash Fl

Condensed Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ (727,664)	$ 401,209
Adjustments to reconcile net income (loss) to net cash provided from (used in) operating activities
Depreciation and amortization	270,984	316,150
Provision for doubtful accounts, net change	3,899	0
Provision for inventory obsolescence, net change	48,943	7,500
Deferred taxes, net change	(11,188)	(10,192)
Reserve for warranty expense, net change	1,500	1,000
Stock based compensation expense related to stock options	32,734	5,658
Changes in operating assets and liabilities-
Accounts receivable	119,722	(79,544)
Inventories	(581,640)	(768,790)
Income taxes receivable	(216,654)	90,629
Prepaid expenses and other	(49,059)	(62,178)
Deposits and other	(89,453)	62,884
Accounts payable	(4,055)	45,355
Customer deposits	(31,221)	145,341
Accrued federal and state income tax	0	105,346
Accrued expenses	(78,099)	49,430
Deferred revenue	(12,723)	23,706
Net cash provided by (used in) operating activities	(1,323,974)	333,504
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(9,088)	(166,488)
Patent filing expense	(18,772)	0
Net cash (used in) investing activities	(27,860)	(166,488)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments made on term loan	(34,372)	(33,167)
Proceeds from Paycheck Protection loan	465,097	0
Net cash provided by (used in) financing activities	430,725	(33,167)
Net increase (decrease) in cash	(921,109)	133,849
Cash and cash equivalents, beginning of period	3,185,996	2,788,327
Cash and cash equivalents, end of period	2,264,887	2,922,176
SUPPLEMENTAL INFORMATION:
Cash paid for interest	41,384	42,590
Cash paid for income tax	$ 20,063	$ 0

1. ORGANIZATION AND NATURE OF B

1. ORGANIZATION AND NATURE OF BUSINESS	9 Months Ended
	Sep. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
NOTE 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" 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, www.lifeguardbreathtester.com, and www.stsfirst.com. Information contained on our websites does not constitute part of this Form 10-Q.

2. SUMMARY OF SIGNIFICANT ACCOU

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Sep. 30, 2020
Accounting Policies [Abstract]
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	Basis of Presentation Use of Estimates in the Preparation of Financial Statements. Fair Value Measurement 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. 2020 2019 Raw materials & deposits $ 2,194,561 $ 1,601,354 Work-in-process 16,692 32,006 Finished goods 496,686 492,939 Total gross inventories 2,707,939 2,126,299 Less reserve for obsolescence (188,943 ) (140,000 ) Total net inventories $ 2,518,996 $ 1,986,299 Income Taxes. Accounting for 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. Revenue from Contracts with Customers (Topic 606). Revenue from product sales and supplies 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. 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 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. 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. 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. Topic 606 requires the disaggregation of revenue into broad categories, which we have defined as shown below for the three and nine months ended September 30, 2020 and 2019. Three Months Ended September 30, Product sales: 2020 2019 Product sales and supplies $ 1,341,071 $ 1,886,464 Training, certification and data recording 146,712 170,631 Service plans and equipment rental 14,251 25,949 Products subtotal 1,502,034 2,083,044 Royalties 31,395 153,922 Building rentals 21,639 21,189 Total revenues $ 1,555,068 $ 2,258,155 Nine Months Ended September 30, Product sales: 2020 2019 Product sales and supplies $ 4,240,139 $ 5,643,275 Training, certification and data recording 411,603 498,440 Service plans and equipment rental 53,856 78,064 Products subtotal 4,705,598 6,219,779 Royalties 123,527 376,906 Building rentals 64,317 67,953 Total revenues $ 4,893,442 $ 6,664,638 Deferred Revenue. Recent Accounting Pronouncements Stock-Based Compensation Compensation – Stock Compensation ASC 718 requires companies to estimate the fair value of share-based payment awards 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 the accompanying statement of income. Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. We used the Black-Scholes option-pricing model to determine fair value. Our determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to our expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. Although the fair value of employee stock options is determined in accordance with ASC 718 using an option-pricing model, that value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction. Stock-based compensation expense recognized under ASC 718 for the three months ended September 30, 2020 and 2019 was $311 and $2,437 respectively, and for the nine months ended September 30, 2020 and 2019 it was $32,734 and $5,658 respectively. These amounts consist of stock-based compensation expenses from grants of employee stock options which are allocated to General and Administrative Expense when incurred. Segment Reporting.

3. BASIC AND DILUTED INCOME (LO

3. BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE	9 Months Ended
	Sep. 30, 2020
Earnings Per Share [Abstract]
NOTE 3 - BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE	We report both basic and diluted net income (or loss) per common 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 per common share is computed by dividing the net income 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 three and nine months ended September 30, 2020 and 2019: Three Months Ended September 30, 2020 2019 Net income (loss) $ (212,766 ) $ 151,525 Weighted average shares-basic 2,454,116 2,454,116 Effect of dilutive potential common shares — — Weighted average shares-diluted 2,454,116 2,456,105 Net income (loss) per share-basic $ (0.09 ) $ 0.06 Net income (loss) per share-diluted $ (0.09 ) $ 0.06 Contingently vesting employee stock options 12,500 50,000 Nine Months Ended September 30, 2020 2019 Net income (loss) $ (727,664 ) $ 401,209 Weighted average shares-basic 2,454,116 2,454,116 Effect of dilutive potential common shares — 670 Weighted average shares-diluted 2,454,116 2,454,786 Net income (loss) per share-basic $ (0.30 ) $ 0.16 Net income (loss) per share-diluted $ (0.30 ) $ 0.16 Contingently vesting employee stock options 12,500 50,000

4. STOCKHOLDERS' EQUITY

4. STOCKHOLDERS' EQUITY	9 Months Ended
	Sep. 30, 2020
STOCKHOLDERS' EQUITY:
NOTE 4 - STOCKHOLDERS' EQUITY	The following table summarizes information about employee stock options outstanding and exercisable at September 30, 2020: 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 $6.00 12,500 1.75 $6.00 - — $5.51 3,000 3.83 $5.51 3,000 $5.51 $3.80 88,698 4.42 $3.80 92,698 $3.80 The exercise price of all options granted through September 30, 2020 has been equal to or greater than the fair market value of the Company's common stock at the time the options were issued. We granted 50,000 options to an officer in January of 2016, which vested based on the achievement of certain performance conditions. These options were cancelled and reissued in an amendment on October 1, 2017. Of the 50,000 granted options, 25,000 expired without vesting on December 31, 2019 and 12,500 expired without vesting on March 31, 2020. Vesting of the remaining 12,500 options is subject to performance achieved during the years ending December 31, 2020 and 2021. An additional total of 110,500 options were granted during the nine months ended September 30, 2020, 48,000 of which were granted to two officers and three directors. Out of that 48,000, the officers were granted 37,500 and 7,500 and the directors were granted 1,000 each. These options vested immediately upon granting. No options were exercised during the nine months ended September 30, 2020 or during the nine months ended September 30, 2019. 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 CONTINGENCIE

5. COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Sep. 30, 2020
Commitments and Contingencies Disclosure [Abstract]
NOTE 5 - COMMITMENTS AND CONTINGENCIES	Mortgage Expense 2020 $ 11,592 2021 48,021 2022 50,005 2023 52,071 2024 1,178,528 Total 1,340,217 Less financing cost (4,430 ) Net term loan payable 1,335,787 Less current portion (46,128 ) Long term portion $ 1,289,659 Employee Severance Benefits Contractual Commitments and Purchase Orders Regulatory Commitments

6. LINE OF CREDIT AND PAYCHECK

6. LINE OF CREDIT AND PAYCHECK PROTECTION LOAN	9 Months Ended
	Sep. 30, 2020
Line of Credit Facility [Abstract]
NOTE 6 - LINE OF CREDIT AND PAYCHECK PROTECTION LOAN	As part of the long-term financing of our property purchased on October 31, 2014, we obtained a one-year $250,000 revolving line of credit facility with Bank of America, which matured on October 31, 2015 and was extended to June 30, 2018, and bears interest at a rate equal to the LIBOR daily floating rate of .081% and 1.826% on September 30, 2020 and 2019, respectively, plus 2.5%. The agreement was amended to increase the amount of the line to $750,000 and extend the maturity date to June 30, 2021. The revolving line of credit facility is secured by all personal property and assets, whether now owned or hereafter acquired, wherever located. The revolving line of credit facility requires that certain financial ratios be maintained. As a result of the loss in 2020, these ratios were not met and the revolving line of credit is unavailable until such time as these ratio requirements are met. There was no balance due on the line of credit as of September 30, 2020 and December 31, 2019. The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act allocated $350 billion to help small businesses keep workers employed amid the pandemic and economic downturn. Known as the Paycheck Protection Program (“PPP”), the initiative provides federally guaranteed loans to small businesses. A portion or all of these loans may be forgiven if borrowers comply with certain PPP guidelines including spending the funds on authorized expenses and maintaining their payrolls during the crisis or restore their payrolls afterward. On May 4, 2020, the Company received proceeds of $465,097 from Bank of America under the PPP (the “PPP Loan”). The PPP Loan has a two-year term, a maturity date of May 3, 2022, and interest at a rate of 1.0% per annum. Monthly principal and interest payments are deferred for six months after the date of disbursement. The PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties. The PPP Loan note contains events of default and other provisions customary for a loan of this type. The PPP provides that the PPP Loan may be partially or wholly forgiven if the funds are used for certain qualifying expenses as described in the CARES Act. The Company intends to use the entire PPP Loan amount for qualifying expenses and to apply for forgiveness of the loan in accordance with the terms of the CARES Act and subsequent legislation. The terms of potential forgiveness may also be subject to further requirements in any regulations and guidelines the U.S. Small Business Administration may adopt. While the Company currently believes that its use of the Note proceeds will meet the conditions for forgiveness under the Paycheck Protection Program, no assurance is provided that the Company will obtain forgiveness of the Note in whole or in part. Management has elected to treat the loan as current in the balance sheet at September 30, 2020.

7. INCOME TAXES

7. INCOME TAXES	9 Months Ended
	Sep. 30, 2020
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 (benefit from) income taxes consists of the following: Three Months Ended September 30, 2020 2019 Federal statutory rate $ (59,280 ) $ 39,827 Effect of: State taxes, net of federal tax benefit 13,056 (9,559 ) Estimated research and development credits — (12,686 ) Other (23,295 ) 20,547 Total $ (69,519 ) $ 38,129 Nine Months Ended September 30, 2020 2019 Federal statutory rate $ (200,660 ) $ 109,932 Effect of: State taxes, net of federal tax benefit 42,706 (26,563 ) Estimated research and development credits — (18,801 ) Other (69,905 ) 57,711 Total $ (227,859 ) $ 122,279

8. BUSINESS SEGMENTS

8. BUSINESS SEGMENTS	9 Months Ended
	Sep. 30, 2020
Segment Reporting [Abstract]
NOTE 8 - BUSINESS SEGMENTS	We currently have two business segments: (i) the sale of physical products, including 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), and (ii) rental of a portion of our building (the "Rentals" segment). 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 the operations of the business segments for the three months ended September 30, 2020 and 2019. 2020 2019 Product sales $ 1,502,034 $ 2,083,044 Royalties 31,395 153,922 Products subtotal 1,533,429 2,236,966 Rentals 21,639 21,189 Total $ 1,555,068 $ 2,258,155 Gross profit: Product sales $ 556,045 $ 908,084 Royalties 31,395 153,922 Products subtotal 587,440 1,062,006 Rentals 9,664 3,061 Total $ 597,104 $ 1,065,067 Interest expense: Product sales $ 9,228 $ 9,529 Royalties — — Products subtotal 9,228 9,529 Rentals 4,823 4,984 Total $ 14,051 $ 14,513 Net income (loss) before taxes: Product sales $ (318,521 ) $ 37,655 Royalties 31,395 153,922 Products subtotal (287,126 ) 191,577 Rentals 4,841 (1,923 ) Total $ (282,285 ) $ 189,654 The following sets forth information about the operations of the business segments for the nine months ended September 30, 2020 and 2019. 2020 2019 Product sales $ 4,705,598 $ 6,219,779 Royalties 123,527 376,906 Products subtotal 4,829,125 6,596,685 Rentals 64,317 67,953 Total $ 4,893,442 $ 6,664,638 Gross profit: Product sales $ 1,556,229 $ 2,758,793 Royalties 123,527 376,906 Products subtotal 1,679,756 3,135,699 Rentals 23,493 16,704 Total $ 1,703,249 $ 3,152,403 Interest expense: Product sales $ 27,713 $ 27,290 Royalties — — Products subtotal 27,713 27,290 Rentals 14,485 16,114 Total $ 42,198 $ 43,404 Net income (loss) before taxes: Product sales $ (1,088,058 ) $ 145,992 Royalties 123,527 376,906 Products subtotal (964,531 ) 522,898 Rentals 9,008 590 Total $ (955,523 ) $ 523,488 There were no intersegment revenues. At September 30, 2020, $771,449 of our assets were used in the Rentals segment, with the remainder, $7,865,355, used in the Products and unallocated segments.

9. SUBSEQUENT EVENTS

9. SUBSEQUENT EVENTS	9 Months Ended
	Sep. 30, 2020
Subsequent Events [Abstract]
NOTE 9 - 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 ACC_2

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 2020
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation
Use of Estimates in the Preparation of Financial Statements	Use of Estimates in the Preparation of Financial Statements.
Fair Value Measurement	Fair Value Measurement 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. 2020 2019 Raw materials & deposits $ 2,194,561 $ 1,601,354 Work-in-process 16,692 32,006 Finished goods 496,686 492,939 Total gross inventories 2,707,939 2,126,299 Less reserve for obsolescence (188,943 ) (140,000 ) Total net inventories $ 2,518,996 $ 1,986,299
Income Taxes	Income Taxes. Accounting for 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	Revenue Recognition. Revenue from Contracts with Customers (Topic 606). Revenue from product sales and supplies 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. 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 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. 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. 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. Topic 606 requires the disaggregation of revenue into broad categories, which we have defined as shown below for the three and nine months ended September 30, 2020 and 2019. Three Months Ended September 30, Product sales: 2020 2019 Product sales and supplies $ 1,341,071 $ 1,886,464 Training, certification and data recording 146,712 170,631 Service plans and equipment rental 14,251 25,949 Products subtotal 1,502,034 2,083,044 Royalties 31,395 153,922 Building rentals 21,639 21,189 Total revenues $ 1,555,068 $ 2,258,155 Nine Months Ended September 30, Product sales: 2020 2019 Product sales and supplies $ 4,240,139 $ 5,643,275 Training, certification and data recording 411,603 498,440 Service plans and equipment rental 53,856 78,064 Products subtotal 4,705,598 6,219,779 Royalties 123,527 376,906 Building rentals 64,317 67,953 Total revenues $ 4,893,442 $ 6,664,638
Deferred Revenue	Deferred Revenue.
Recent Accounting Pronouncements	Recent Accounting Pronouncements
Stock-Based Compensation	Stock-Based Compensation Compensation – Stock Compensation ASC 718 requires companies to estimate the fair value of share-based payment awards 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 the accompanying statement of income. Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. We used the Black-Scholes option-pricing model to determine fair value. Our determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to our expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. Although the fair value of employee stock options is determined in accordance with ASC 718 using an option-pricing model, that value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction. Stock-based compensation expense recognized under ASC 718 for the three months ended September 30, 2020 and 2019 was $311 and $2,437 respectively, and for the nine months ended September 30, 2020 and 2019 it was $32,734 and $5,658 respectively. These amounts consist of stock-based compensation expenses from grants of employee stock options which are allocated to General and Administrative Expense when incurred.
Segment Reporting	Segment Reporting.

2. SUMMARY OF SIGNIFICANT ACC_3

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	9 Months Ended
	Sep. 30, 2020
Accounting Policies [Abstract]
Inventories	2020 2019 Raw materials & deposits $ 2,194,561 $ 1,601,354 Work-in-process 16,692 32,006 Finished goods 496,686 492,939 Total gross inventories 2,707,939 2,126,299 Less reserve for obsolescence (188,943 ) (140,000 ) Total net inventories $ 2,518,996 $ 1,986,299
Disaggregation of revenue	Three Months Ended September 30, Product sales: 2020 2019 Product sales and supplies $ 1,341,071 $ 1,886,464 Training, certification and data recording 146,712 170,631 Service plans and equipment rental 14,251 25,949 Products subtotal 1,502,034 2,083,044 Royalties 31,395 153,922 Building rentals 21,639 21,189 Total revenues $ 1,555,068 $ 2,258,155 Nine Months Ended September 30, Product sales: 2020 2019 Product sales and supplies $ 4,240,139 $ 5,643,275 Training, certification and data recording 411,603 498,440 Service plans and equipment rental 53,856 78,064 Products subtotal 4,705,598 6,219,779 Royalties 123,527 376,906 Building rentals 64,317 67,953 Total revenues $ 4,893,442 $ 6,664,638

3. BASIC AND DILUTED INCOME PER

3. BASIC AND DILUTED INCOME PER COMMON SHARE (Tables)	9 Months Ended
	Sep. 30, 2020
Earnings Per Share [Abstract]
Basic and diluted net income (loss) per share	Three Months Ended September 30, 2020 2019 Net income (loss) $ (212,766 ) $ 151,525 Weighted average shares-basic 2,454,116 2,454,116 Effect of dilutive potential common shares — — Weighted average shares-diluted 2,454,116 2,456,105 Net income (loss) per share-basic $ (0.09 ) $ 0.06 Net income (loss) per share-diluted $ (0.09 ) $ 0.06 Contingently vesting employee stock options 12,500 50,000 Nine Months Ended September 30, 2020 2019 Net income (loss) $ (727,664 ) $ 401,209 Weighted average shares-basic 2,454,116 2,454,116 Effect of dilutive potential common shares — 670 Weighted average shares-diluted 2,454,116 2,454,786 Net income (loss) per share-basic $ (0.30 ) $ 0.16 Net income (loss) per share-diluted $ (0.30 ) $ 0.16 Contingently vesting employee stock options 12,500 50,000

4. STOCKHOLDERS' EQUITY (Tables

4. STOCKHOLDERS' EQUITY (Tables)	9 Months Ended
	Sep. 30, 2020
STOCKHOLDERS' EQUITY:
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 $6.00 12,500 1.75 $6.00 - — $5.51 3,000 3.83 $5.51 3,000 $5.51 $3.80 88,698 4.42 $3.80 92,698 $3.80

5. COMMITMENTS AND CONTINGENC_2

5. COMMITMENTS AND CONTINGENCIES (Tables)	9 Months Ended
	Sep. 30, 2020
Commitments and Contingencies Disclosure [Abstract]
Minimum future lease payments	2020 $ 11,592 2021 48,021 2022 50,005 2023 52,071 2024 1,178,528 Total 1,340,217 Less financing cost (4,430 ) Net term loan payable 1,335,787 Less current portion (46,128 ) Long term portion $ 1,289,659

7. INCOME TAXES (Tables)

7. INCOME TAXES (Tables)	9 Months Ended
	Sep. 30, 2020
Income Tax Disclosure [Abstract]
Income tax reconciliation	Three Months Ended September 30, 2020 2019 Federal statutory rate $ (59,280 ) $ 39,827 Effect of: State taxes, net of federal tax benefit 13,056 (9,559 ) Estimated research and development credits — (12,686 ) Other (23,295 ) 20,547 Total $ (69,519 ) $ 38,129 Nine Months Ended September 30, 2020 2019 Federal statutory rate $ (200,660 ) $ 109,932 Effect of: State taxes, net of federal tax benefit 42,706 (26,563 ) Estimated research and development credits — (18,801 ) Other (69,905 ) 57,711 Total $ (227,859 ) $ 122,279

8. BUSINESS SEGMENTS (Tables)

8. BUSINESS SEGMENTS (Tables)	9 Months Ended
	Sep. 30, 2020
Segment Reporting [Abstract]
Segment reporting	The following sets forth information about the operations of the business segments for the three months ended September 30, 2020 and 2019. 2020 2019 Product sales $ 1,502,034 $ 2,083,044 Royalties 31,395 153,922 Products subtotal 1,533,429 2,236,966 Rentals 21,639 21,189 Total $ 1,555,068 $ 2,258,155 Gross profit: Product sales $ 556,045 $ 908,084 Royalties 31,395 153,922 Products subtotal 587,440 1,062,006 Rentals 9,664 3,061 Total $ 597,104 $ 1,065,067 Interest expense: Product sales $ 9,228 $ 9,529 Royalties — — Products subtotal 9,228 9,529 Rentals 4,823 4,984 Total $ 14,051 $ 14,513 Net income (loss) before taxes: Product sales $ (318,521 ) $ 37,655 Royalties 31,395 153,922 Products subtotal (287,126 ) 191,577 Rentals 4,841 (1,923 ) Total $ (282,285 ) $ 189,654 The following sets forth information about the operations of the business segments for the nine months ended September 30, 2020 and 2019. 2020 2019 Product sales $ 4,705,598 $ 6,219,779 Royalties 123,527 376,906 Products subtotal 4,829,125 6,596,685 Rentals 64,317 67,953 Total $ 4,893,442 $ 6,664,638 Gross profit: Product sales $ 1,556,229 $ 2,758,793 Royalties 123,527 376,906 Products subtotal 1,679,756 3,135,699 Rentals 23,493 16,704 Total $ 1,703,249 $ 3,152,403 Interest expense: Product sales $ 27,713 $ 27,290 Royalties — — Products subtotal 27,713 27,290 Rentals 14,485 16,114 Total $ 42,198 $ 43,404 Net income (loss) before taxes: Product sales $ (1,088,058 ) $ 145,992 Royalties 123,527 376,906 Products subtotal (964,531 ) 522,898 Rentals 9,008 590 Total $ (955,523 ) $ 523,488

2. SUMMARY OF SIGNIFICANT ACC_4

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Inventories
Raw materials & deposits	$ 2,194,561	$ 1,601,354
Work-in-process	16,692	32,006
Finished goods	496,686	492,939
Total gross inventories	2,707,939	2,126,299
Less reserve for obsolescence	(188,943)	(140,000)
Total net inventories	$ 2,518,996	$ 1,986,299

2. SUMMARY OF SIGNIFICANT ACC_5

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Total revenues	$ 1,555,068	$ 2,258,155	$ 4,893,442	$ 6,664,638
Products
Total revenues	1,502,034	2,083,044	4,705,598	6,219,779
Products | Product Sales and Supplies
Total revenues	1,341,071	1,886,464	5,643,275	4,240,139
Products | Training, Certification and Data Recording
Total revenues	146,712	170,631	411,603	498,440
Products | Service Plans and Equipment Rental
Total revenues	14,251	25,949	53,856	78,064
Royalties
Total revenues	31,395	153,922	123,527	376,906
Rental Income
Total revenues	$ 21,639	$ 21,189	$ 64,317	$ 67,953

3. BASIC AND DILUTED INCOME P_2

3. BASIC AND DILUTED INCOME PER COMMON SHARE (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Earnings Per Share [Abstract]
Net income (loss)	$ (212,766)	$ 151,525	$ (727,664)	$ 401,209
Weighted average shares - basic	2,454,116	2,454,116	2,454,116	2,454,116
Effect of dilutive potential common shares	0	0	0	670
Weighted average shares - diluted	2,454,116	2,454,116	2,454,116	2,454,786
Net income (loss) per share - basic	$ (0.09)	$ 0.06	$ (0.30)	$ 0.16
Net income (loss) per share - diluted	$ (0.09)	$ 0.06	$ (0.30)	$ 0.16
Contingently vesting employee stock options	12,500	50,000	12,500	50,000

4. STOCKHOLDERS' EQUITY (Detail

4. STOCKHOLDERS' EQUITY (Details)	9 Months Ended
	Sep. 30, 2020$ / sharesshares
Stock Option 1
Range of exercise prices	$ 6
Option outstanding | shares	12,500
Weighted average remaining contractual life (in years)	1 year 9 months
Weighted average exercise price per share	$ 6
Number exercisable | shares	0
Weighted average exercise price per share	$ .00
Stock Option 2
Range of exercise prices	$ 5.51
Option outstanding | shares	3,000
Weighted average remaining contractual life (in years)	3 years 9 months 29 days
Weighted average exercise price per share	$ 5.51
Number exercisable | shares	3,000
Weighted average exercise price per share	$ 5.51
Stock Option 3
Range of exercise prices	$ 3.80
Option outstanding | shares	88,698
Weighted average remaining contractual life (in years)	4 years 5 months 1 day
Weighted average exercise price per share	$ 3.80
Number exercisable | shares	92,698
Weighted average exercise price per share	$ 3.80

4. STOCKHOLDERS' EQUITY (Deta_2

4. STOCKHOLDERS' EQUITY (Details Narrative) - shares	Sep. 30, 2020	Dec. 31, 2019
STOCKHOLDERS' EQUITY:
Common stock, authorized	50,000,000	50,000,000

5. COMMITMENTS AND CONTINGENC_3

5. COMMITMENTS AND CONTINGENCIES (Details)	Sep. 30, 2020USD ($)
Commitments and Contingencies Disclosure [Abstract]
2020	$ 11,592
2021	48,021
2022	50,005
2023	52,071
2024	1,178,528
Total	1,340,217
Less financing cost	(4,430)
Net term loan payable	1,335,787
Less current portion	(46,128)
Long term portion	$ 1,289,659

7. INCOME TAXES (Details)

7. INCOME TAXES (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Income Tax Disclosure [Abstract]
Federal statutory rate	$ (59,280)	$ 39,827	$ (200,660)	$ 109,932
State taxes, net of federal tax benefit	13,056	(9,559)	42,706	(26,563)
Estimated research and development credits	0	(12,686)	0	(18,801)
Other	(23,295)	20,547	(69,905)	57,711
Total	$ (69,519)	$ 38,129	$ (227,859)	$ 122,279

8. BUSINESS SEGMENTS (Details)

8. BUSINESS SEGMENTS (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Revenue	$ 1,555,068	$ 2,258,155	$ 4,893,442	$ 6,664,638
Gross profit	597,104	1,065,067	1,703,249	3,152,403
Interest expense	14,051	14,513	42,198	43,404
Net income (loss) before taxes	(282,285)	189,654	(955,523)	523,488
Products
Revenue	1,502,034	2,083,044	4,705,598	6,219,779
Gross profit	556,045	908,084	1,556,229	2,758,793
Interest expense	9,228	9,529	27,713	27,290
Net income (loss) before taxes	(318,521)	37,655	(1,088,058)	145,992
Royalties
Revenue	31,395	153,922	123,527	376,906
Gross profit	31,395	153,922	123,527	376,906
Interest expense	0	0	0	0
Net income (loss) before taxes	31,395	153,922	123,527	376,906
Subtotal
Revenue	1,533,429	2,236,966	4,829,125	6,596,685
Gross profit	587,440	1,062,006	1,679,756	3,135,699
Interest expense	9,228	9,529	27,713	27,290
Net income (loss) before taxes	(287,126)	191,577	(964,531)	522,898
Rentals
Revenue	21,639	21,189	64,317	67,953
Gross profit	9,664	3,061	23,493	16,704
Interest expense	4,823	4,984	14,485	16,114
Net income (loss) before taxes	$ 4,841	$ (1,923)	$ 9,008	$ 590