Lifeloc Technologies 2024 Annual Conference call notes:
Profitable and cash flow positive to fund growth
Using full resources to pursue growth of the drug detection SpinDx device
Lifeloc still sees the company growing to $100 million and beyond
Spin DX technology utilized beyond drug testing. Over 2 million spent on research so far.
Recurring revenue from supplies and service should follow the increases in Alcohol device equipment sales
L series focus for core Alcohol product line
Rapid drug testing is best opportunity to grow revenue by multiples 2x, 5x, 10x is foreseeable
Legalization of marijuana just increases the demand for drug testing equipment
Sandia prototype with disk - real live functional prototype with firmware and inflection device
Current analysis time down to 15 minutes with 8-10 minutes expected in the near future
SpinDx demonstrated in lab to detect panel of drugs in saliva or blood
First US Utility and PCT patents filed for SpinDx technology
Testing beyond testing for drugs of abuse
Beta testing to begin Q4 this year
First product release will be a reader with collection kit
Questions:
1. 5 n/g spiked solutions. 10 n/g human saliva. Every reason to believe to get down to 5 n/g - that is the goal. We believe we will hit that target but still has yet be demonstrated. Some jurisdictions have taken 5 n/g 4 n/g or zero tolerance. Firmware will be able to call up different jurisdictions.
2. Beta testing – expected 4th quarter 2024
3. Not satisfied. No pre-market hype. Be careful to not hype so far in advance to lose credibility. Functional prototype was shown at the meeting. The time is ripe to start letting people know this product is coming.
4. On track to begin commercialization of saliva testing. No expected timeline for breath systems. Still a number of unknowns.
5. Cash is dropping and looking into ways to replenish. Close on a line of credit this month to plug a hole in cash.
6. Working on exact pricing strategy. Competitive to Draeger. Priced slightly under the Draeger device. $25 collection device. Price aggressively. Good margin. First quarter rollout small profit contribution is expected but grows rapidly.
7. US DOT issued rules for saliva testing but no methodology. Expect to satisfy the customers. Flexible and customizable software and firmware to do that.
8. Shareholder who attended the meeting and was in the room has been buying stock which is the reason for the large share prints recently.
9. Social media awareness - time is ripe to get some help for awareness.
10. Wayne agrees and is not satisfied with the current market cap. Company inherently more valuable now than in 2014. Tons of investment into SpinDX. Market value is unreasonably low. Confident that this is coming out next year.
Open floor to shareholder questions.
1 version of the SpinDx. Handheld device 2025. They have shown the SpinDx device only to a small group.
% of R and D expense - 65% towards SpinDx.
Design of disk and collection device are currently outsourced and are still being worked on by third parties.
Full panel of drugs - right around $25. Address every segment of the market depending on what's needed. Firmware will read the cutoff. 5 n/g vs. 25 n/g. Technology is readily available to be put into the firmware.
Other uses in addition to drug detection - Drugs of abuse current license. Performance enhancing drugs, food safety, human diagnostics are all additional sectors of the market that could be addressed, enormous market potential.
Expectation loaded with the reagents - will get there quickly with optimization and tuning.
How confident about testing and commercialization. Confidence is growing . We can identify everything that needs to happen. Reader is functional. Saleable today but they still need molds and design finalization. No longer any research that needs to be discovered - Just implemented.
Incremental to existing customer base - sales and marketing process - same customers base. Loyal customer base. Beta testing through current customers.
Sandia exclusive patent - modest annual fee to keep the license in addition to % of revenue from product. Lasts until last patent expires. 15 years left. The license of the device supports US manufacturing.
Competition currently on the market. Drager, Sotaxa saliva tester pass/fail - numbers for small panel of drugs. Hound labs - collect breath and send to lab. Not immediate. Days turnaround. Compete with Drager on price - flexibility to change drug panels and cutoffs.
Exceeding $100 million - 5 year achievable goal. Reasonable objective. Alcohol testing worldwide. Lifeloc currently has 4-5% share of alcohol market. Rapid drug testing $4 billion market. 2.5% chunk of that market seems reasonable and puts them at $100 million in additional revenue.
No sales effort to date. Just previews. Will be a dedicated position in marketing.
Sales in all 50 states. Workplace every state. Law enforcement - 25 states
Line of credit established - favorable terms - not expensive money. Minimize shareholder dilution.
No red flags in SpinDx rollout. On track with SpinDx. Reasonable reason to believe that it will succeed in the marketplace. Market acceptance is unknown. Better margin on consumables than the device. Subscription element - making sure firmware is up to date is critical for jurisdictions.
Accelerate to market faster with more cash - they are going as hard as they can go. Question comes from current investor – Would $5 - $20 million in capital help to speed up the Spin DX production and sales. Current investor has ties to a group that would be willing to invest upwards of $5-20 million in Lifeloc if it could be deplorable in a useful way to speed up production, sales, marketing, etc. Call ended with Lifeloc organizing a follow up meeting with this potential investor group.
