Lifeloc Technologies, Inc. Annual Report: A Business Breakdown

I’m writing this guide to help you understand how Lifeloc Technologies performed this year. We’ll skip the dense financial filings and look at what’s actually happening with the business so you can decide if it fits your portfolio.

1. What does this company do?

Lifeloc, based in Wheat Ridge, Colorado, designs and builds professional breath-alcohol testing equipment. Their products include portable breathalyzers and fixed units used by police, corrections officers, and employers. Beyond hardware, they earn steady income from calibration services, software, and supplies like mouthpieces. These supplies typically offer higher profit margins than the initial hardware sales.

2. The Big Pivot: From Landlord to Tech-Focused

Lifeloc made a major change this year: they stopped being a landlord. They previously leased 15,000 square feet of their facility to other tenants. As of June 30, 2025, they ended those leases to use the entire building themselves. This move removes the complexity of property management and allows the company to focus entirely on research and manufacturing.

3. The "Moonshot": SpinDetect™

The most important story for investors is SpinDetect™. Lifeloc is moving from alcohol testing into the much larger drug-testing market.

Current drug testing is often slow and expensive, relying on labs that can cost $100 to $300 per test with multi-day turnaround times. Lifeloc’s SpinDetect™ platform uses microfluidics to test on-site in under 10 minutes for about $25. They are targeting THC detection to help employers navigate marijuana legalization. The product is in late-stage development, with a launch planned for early 2026. They eventually plan to expand from saliva testing into blood and breath diagnostics.

4. How Did They Perform This Year?

The 2025 results show a company in transition:

• Sales are growing: Revenue reached $9.03 million, up 6% from $8.52 million in 2024. This was driven by a 9% rise in law enforcement contracts and a 4% increase in international sales.
• Profitability is a struggle: The company lost $2.47 million in 2025, compared to a $1.05 million loss in 2024.
• The cost of innovation: While the core business maintains a healthy 40% profit margin, operating costs jumped 22%. This was primarily due to $1.2 million in new research spending for SpinDetect™ and higher interest payments on debt. Additionally, a $400,000 accounting adjustment related to tax assets impacted the bottom line.

5. Risks: What You Need to Know

• The "Control" Factor: CEO Vern D. Kornelsen owns about 77% of the company’s stock. This gives him total control over the Board of Directors and major company decisions, leaving little room for other investors to influence the business.
• Cash Flow: Lifeloc ended 2025 with $1.1 million in cash. With a burn rate of approximately $200,000 per month, the company has a tight runway. If SpinDetect™ is delayed, they may need to raise additional capital, which could result in share dilution for current investors.
• Stock Liquidity: Lifeloc trades on the OTC Pink Sheets. With low daily trading volume, the stock can be volatile and difficult to buy or sell quickly without impacting the share price.

6. Future Outlook

The company’s value is tied to the success of SpinDetect™. Management views 2026 as a pivotal year. If the product succeeds, Lifeloc plans to leverage the same technology for food safety and water quality testing, which could open new revenue streams.

Investor Takeaway: Lifeloc is a classic "high-risk, high-reward" play. You are essentially betting on the successful commercialization of SpinDetect™. If you are comfortable with the risks of a small-cap, OTC-traded company and believe in the potential of their new drug-testing technology, it may be worth a closer look. If you prefer stability and liquidity, this may not be the right fit for your portfolio.