UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

WASHINGTON,
D.C.  20549



Form 10-Q/A

Amendment
No. 1



|☒ | QUARTERLY REPORT PURSUANT
    TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | -------------------------------------------------------------------------------------------
|  |                                                                                            
|  | For the quarterly period ended March 31,
    2020                                          



OR

|☐ | TRANSITION REPORT PURSUANT
    TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | --------------------------------------------------------------------------------------------
|  |                                                                                             
|  | For the transition period from                     
    to                                  



Commission
file number     000-54319



LIFELOC
TECHNOLOGIES, INC.

(Exact
name of registrant as specified in its charter)



|Colorado                            | 84-1053680                              
|----------------------------------- | ----------------------------------------
|(State or other jurisdiction
    of | (I.R.S. Employer
    Identification No.)
|incorporation or
    organization)  |                                         



12441
West 49th Ave., Unit 4

Wheat
Ridge, Colorado  80033

(Address
of principal executive offices)



(303)
431-9500

(Registrant's
telephone number)



Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☐   No  ☒*



*
The registrant is a voluntary filer of reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934,
and has filed all such reports during the preceding 12 months.



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   
Yes ☒       No  ☐



Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company.  See the definitions of "large accelerated filer," "accelerated filer," "smaller
reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.



|Large
    accelerated filer      ☐                | Accelerated
    filer      ☐     
|------------------------------------------------- | ---------------------------------
|Non-accelerated filer      
    ☐                 | Smaller reporting
    company   ☒
|(Do not check if
    a smaller reporting company) |                                  
|Emerging
    growth company  ☐                    |                                  



If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐



Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ☐  
No   ☒



Indicate
the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:



|Common
    Stock, no par value | 2,454,116
    Shares             
|------------------------------ | ---------------------------------
|(Class)                        | (outstanding at May
    12, 2020)



Securities
registered pursuant to Section 12(b) of the Act:



|Title
    of each class | Trading
    Symbol(s) | Name
    of each exchange on which registered
|----------------------- | --------------------- | ---------------------------------------------
|Common Stock            | LCTC                  | N/A                                          















EXPLANATORY NOTE



Lifeloc Technologies, Inc. (the “Company”)
is filing this Amendment No. 1 to its Quarterly Report on Form 10-Q/A (this “Amendment”) to amend the Company’s
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, as filed with the Securities and Exchange Commission
(the “SEC”) on May 13, 2020 (the “10-Q”). This Amendment is being filed solely to amend and replace the
certification of the Company’s chief executive officer included as Exhibit 31.1 to the 10-Q and in connection therewith,
to amend the Index to Exhibits therein.



No attempt has been made in this Amendment to modify
or update the disclosures presented in the 10-Q. This Amendment does not reflect events occurring after the filing of the 10-Q
(i.e., those events occurring after May 13, 2020) or modify or update those disclosures that may be affected by subsequent events.













LIFELOC
TECHNOLOGIES, INC.



FORM 10-Q



For
the Three Months Ended March 31, 2020



INDEX



|                                                                                                        |                                                                                                                 |  | Page   |  
|------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------- |  | ------ | -
|                                                                                                        |                                                                                                                 |  | Number |  
|                                                                                                        |                                                                                                                 |  |        |  
|PART I.     
    FINANCIAL INFORMATION                                                                  |                                                                                                                 |  | 3      |  
|                                                                                                        |                                                                                                                 |  |        |  
|ITEM 1   
    FINANCIAL STATEMENTS (UNAUDITED)                                                          |                                                                                                                 |  |        |  
|                                                                                                        |                                                                                                                 |  |        |  
|                                                                                                        | Condensed Balance Sheets as of March 31, 2020
    (Unaudited) and December 31, 2019                             |  |        | 3
|                                                                                                        | Condensed Statements of Income (Unaudited) for
    the three months ended March 31, 2020 and 2019               |  |        | 4
|                                                                                                        | Condensed Statements
    of Stockholders' Equity (Unaudited) for the three months ended March 31, 2020 and 2019 |  |        | 5
|                                                                                                        | Condensed Statements
    of Cash Flows (Unaudited) for the three months ended March 31, 2020 and 2019           |  |        | 6
|                                                                                                        | Notes to Condensed
    Financial Statements (Unaudited)                                                         |  |        | 7
|                                                                                                        |                                                                                                                 |  |        |  
|ITEM 2        MANAGEMENT'S DISCUSSION
    AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |                                                                                                                 |  | 13     |  
|                                                                                                        |                                                                                                                 |  |        |  
|ITEM
3       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                 |                                                                                                                 |  | 20     |  
|                                                                                                        |                                                                                                                 |  |        |  
|ITEM
4      CONTROLS AND PROCEDURES                                                                     |                                                                                                                 |  | 20     |  
|                                                                                                        |                                                                                                                 |  |        |  
|PART II.    
    OTHER INFORMATION                                                                      |                                                                                                                 |  | 22     |  
|                                                                                                        |                                                                                                                 |  |        |  
|ITEM 1     
    LEGAL PROCEEDINGS                                                                       |                                                                                                                 |  | 21     |  
|                                                                                                        |                                                                                                                 |  |        |  
|ITEM 1A   RISK FACTORS                                                                                  |                                                                                                                 |  |        |  
|                                                                                                        |                                                                                                                 |  |        |  
|ITEM
2      UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                                 |                                                                                                                 |  | 21     |  
|                                                                                                        |                                                                                                                 |  |        |  
|ITEM
3      DEFAULTS UPON SENIOR SECURITIES                                                             |                                                                                                                 |  | 21     |  
|                                                                                                        |                                                                                                                 |  |        |  
|ITEM
4      MINE SAFETY DISCLOSURES                                                                     |                                                                                                                 |  | 21     |  
|                                                                                                        |                                                                                                                 |  |        |  
|ITEM
5      OTHER INFORMATION                                                                           |                                                                                                                 |  | 21     |  
|                                                                                                        |                                                                                                                 |  |        |  
|ITEM
6      EXHIBITS                                                                                    |                                                                                                                 |  | 22     |  
|                                                                                                        |                                                                                                                 |  |        |  
|SIGNATURES                                                                                              |                                                                                                                 |  | 23     |  
|                                                                                                        |                                                                                                                







2







PART
I      FINANCIAL INFORMATION



ITEM
1 – FINANCIAL STATEMENTS

LIFELOC
TECHNOLOGIES, INC.

Condensed
Balance Sheets



|
|
|



|ASSETS                                                                   |  |               |            |                 
|------------------------------------------------------------------------ |  | ------------- | ---------- | ----------------
|                                                                         |  | March
    31, |            |                 
|                                                                         |  | 2020          |            | December
    31,
|CURRENT ASSETS:                                                          |  | (Unaudited)   |            | 2019            
|Cash                                                                     |  | $             | 2,913,332  |                 
|Accounts
    receivable, net                                             |  |               | 638,038    |                 
|Inventories,
    net                                                     |  |               | 2,236,331  |                 
|Income
    taxes receivable                                              |  |               | 41,305     |                 
|Prepaid
    expenses and other                                           |  |               | 139,772    |                 
|Total
    current assets                                                 |  |               | 5,968,778  |                 
|                                                                         |  |               |            |                 
|PROPERTY AND EQUIPMENT,
    at cost:                                     |  |               |            |                 
|Land                                                                     |  |               | 317,932    |                 
|Building                                                                 |  |               | 1,928,795  |                 
|Real-time
    Alcohol Detection And Recognition equipment and software   |  |               | 569,448    |                 
|Production
    equipment, software and space modifications               |  |               | 976,621    |                 
|Training
    courses                                                     |  |               | 432,375    |                 
|Office
    equipment, software and space modifications                   |  |               | 218,074    |                 
|Sales
    and marketing equipment and space modifications                |  |               | 232,600    |                 
|Research
    and development equipment, software and space modifications |  |               | 172,429    |                 
|Less
    accumulated depreciation                                        |  |               | (2,053,197 | )               
|Total
    property and equipment, net                                    |  |               | 2,795,077  |                 
|                                                                         |  |               |            |                 
|OTHER ASSETS:                                                            |  |               |            |                 
|Patents,
    net                                                         |  |               | 160,823    |                 
|Deposits
    and other                                                   |  |               | 74,027     |                 
|Deferred
    taxes                                                       |  |               | 96,007     |                 
|Total
    other assets                                                   |  |               | 330,857    |                 
|                                                                         |  |               |            |                 
|Total
    assets                                                         |  | $             | 9,094,712  |                 
|                                                                         |  |               |            |                 
|LIABILITIES
    AND STOCKHOLDERS' EQUITY                                 |  |               |            |                 
|CURRENT LIABILITIES:                                                     |  |               |            |                 
|Accounts
    payable                                                     |  | $             | 480,361    |                 
|Term
    loan payable, current portion                                   |  |               | 45,494     |                 
|Customer
    deposits                                                    |  |               | 184,332    |                 
|Accrued
    expenses                                                     |  |               | 319,366    |                 
|Deferred
    revenue, current portion                                    |  |               | 42,849     |                 
|Reserve
    for warranty expense                                         |  |               | 46,000     |                 
|Total
    current liabilities                                            |  |               | 1,118,402  |                 
|                                                                         |  |               |            |                 
|TERM LOAN PAYABLE,
    net of current portion and                        |  |               |            |                 
|debt
    issuance costs                                                  |  |               | 1,312,732  |                 
|                                                                         |  |               |            |                 
|DEFERRED
    REVENUE, net of current portion                             |  |               | 4,552      |                 
|Total
    liabilities                                                    |  |               | 2,435,686  |                 
|                                                                         |  |               |            |                 
|COMMITMENTS AND CONTINGENCIES                                            |  |               |            |                 
|                                                                         |  |               |            |                 
|STOCKHOLDERS' EQUITY:                                                    |  |               |            |                 
|Common stock, no
    par value; 50,000,000 shares                        |  |               |            |                 
|authorized,
    2,454,116 shares outstanding                             |  |               | 4,635,415  |                 
|Retained
    earnings                                                    |  |               | 2,023,611  |                 
|Total
    stockholders' equity                                           |  |               | 6,659,026  |                 
|                                                                         |  |               |            |                 
|Total
    liabilities and stockholders' equity                           |  | $             | 9,094,712  |                 



See
accompanying notes





3









LIFELOC
TECHNOLOGIES, INC.

Condensed
Statements of Income (Unaudited)



|                                                                |  | Three
    Months Ended March 31,
|--------------------------------------------------------------- |  | --------------------------------
|REVENUES:                                                       |  | 2020                            
|Product
    sales                                               |  | $                               
|Royalties                                                       |  |                                 
|Rental
    income                                               |  |                                 
|Total                                                           |  |                                 
|                                                                |  |                                 
|COST OF SALES                                                   |  |                                 
|                                                                |  |                                 
|GROSS PROFIT                                                    |  |                                 
|                                                                |  |                                 
|OPERATING EXPENSES:                                             |  |                                 
|Research
    and development                                    |  |                                 
|Sales
    and marketing                                         |  |                                 
|General
    and administrative                                  |  |                                 
|Total                                                           |  |                                 
|                                                                |  |                                 
|OPERATING INCOME (LOSS)                                         |  |                                 
|                                                                |  |                                 
|OTHER INCOME (EXPENSE):                                         |  |                                 
|Interest
    income                                             |  |                                 
|Interest
    expense                                            |  |                                 
|Total
    other income (expense)                                |  |                                 
|                                                                |  |                                 
|NET INCOME (LOSS) BEFORE
    PROVISION FOR TAXES                |  |                                 
|                                                                |  |                                 
|BENEFIT
    FROM (PROVISION FOR) FEDERAL AND STATE INCOME TAXES |  |                                 
|                                                                |  |                                 
|NET
    INCOME (LOSS)                                           |  | $                               
|                                                                |  |                                 
|NET
    INCOME (LOSS) PER SHARE, BASIC                          |  | $                               
|                                                                |  |                                 
|NET
    INCOME (LOSS) PER SHARE, DILUTED                        |  | $                               
|                                                                |  |                                 
|WEIGHTED AVERAGE
    SHARES, BASIC                              |  |                                 
|                                                                |  |                                 
|WEIGHTED AVERAGE
    SHARES, DILUTED                            |  |                                 





See
accompanying notes



4









Lifeloc
Technologies, Inc.

Statements
of Stockholders' Equity (Unaudited)

|                                                   
|---------------------------------------------------
|                                                   
|Total
    stockholders' equity, beginning balances 
|                                                   
|Common stock (no shares
    issued during periods):
|Beginning
    balances                             
|Stock
    based compensation expense related       
|to
    stock options                               
|Ending balances                                    
|                                                   
|Retained earnings:                                 
|Beginning
    balances                             
|Net
    income (loss)                              
|Ending
    balances                                
|                                                   
|Total
    stockholders' equity, ending balances    





See
accompanying notes





5







LIFELOC
TECHNOLOGIES, INC.

Condensed
Statements of Cash Flows (Unaudited)



|                                                           |  |                                  |           |     
|---------------------------------------------------------- |  | -------------------------------- | --------- | ----
|                                                           |  | Three
    Months Ended March 31,
|CASH FLOWS FROM
    OPERATING ACTIVITIES:                  |  | 2020                             |           | 2019
|Net
    income (loss)                                      |  | $                                | (165,306  | )   
|Adjustments
    to reconcile net income (loss) to net cash |  |                                  |           |     
|provided
    from (used in) operating activities-          |  |                                  |           |     
|Depreciation
    and amortization                          |  |                                  | 97,199    |     
|Provision
    for doubtful accounts, net change            |  |                                  | 2,000     |     
|Provision
    for inventory obsolescence, net change       |  |                                  | 36,765    |     
|Deferred
    taxes, net change                             |  |                                  | (9,349    | )   
|Reserve
    for warranty expense, net change               |  |                                  | 1,000     |     
|Stock
    based compensation expense related to            |  |                                  |           |     
|stock
    options                                          |  |                                  | 32,111    |     
|Changes
    in operating assets and liabilities-           |  |                                  |           |     
|Accounts
    receivable                                    |  |                                  | 1,201     |     
|Inventories                                                |  |                                  | (286,797  | )   
|Income
    taxes receivable                                |  |                                  | (34,555   | )   
|Prepaid
    expenses and other                             |  |                                  | (120,915  | )   
|Deposits
    and other                                     |  |                                  | —         |     
|Accounts
    payable                                       |  |                                  | 218,563   |     
|Customer
    deposits                                      |  |                                  | (29,699   | )   
|Accrued
    expenses                                       |  |                                  | 28,908    |     
|Deferred
    revenue                                       |  |                                  | (4,539    | )   
|Net
    cash provided from (used in)                       |  |                                  |           |     
|operating
    activities                                   |  |                                  | (233,413  | )   
|                                                           |  |                                  |           |     
|CASH FLOWS FROM INVESTING
    ACTIVITIES:                  |  |                                  |           |     
|Purchases
    of property and equipment                    |  |                                  | (9,088    | )   
|Patent
    filing expense                                  |  |                                  | (18,772   | )   
|Net
    cash (used in) investing activities                |  |                                  | (27,860   | )   
|                                                           |  |                                  |           |     
|CASH FLOWS FROM FINANCING
    ACTIVITIES:                  |  |                                  |           |     
|Principal
    payments made on term loan                   |  |                                  | (11,391   | )   
|Net
    cash (used in) financing                           |  |                                  |           |     
|activities                                                 |  |                                  | (11,391   | )   
|                                                           |  |                                  |           |     
|NET INCREASE (DECREASE)
    IN CASH                        |  |                                  | (272,664  | )   
|                                                           |  |                                  |           |     
|CASH, BEGINNING
    OF PERIOD                              |  |                                  | 3,185,996 |     
|                                                           |  |                                  |           |     
|CASH, END OF PERIOD                                        |  | $                                | 2,913,332 |     
|                                                           |  |                                  |           |     
|SUPPLEMENTAL INFORMATION:                                  |  |                                  |           |     
|Cash
    paid for interest                                 |  | $                                | 13,860    |     
|                                                           |  |                                  |           |     
|Cash
    paid for income tax                               |  | $                                | 20,063    |     





See
accompanying notes



6







LIFEELOC
TECHNOLOGIES, INC.

NOTES
TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)



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 ACCOUNTING POLICIES

Basis
of Presentation.  These statements have been prepared in accordance with the rules and regulations of the Securities
and Exchange Commission ("SEC") and accounting principles generally accepted in the United States ("GAAP")
for interim financial information.  They do not include all information and notes required by GAAP for complete financial
statements.  However, except as disclosed herein, there has been no material change in the information disclosed in the notes
to financial statements included in Lifeloc's Annual Report on Form 10-K for the year ended December 31, 2019 as filed with the
SEC.  In the opinion of management, the accompanying unaudited financial statements contain all adjustments, consisting of
normal recurring accruals necessary for a fair presentation of the financial position as of March 31, 2020 and December 31, 2019,
and the results of operations and cash flows for the quarter ended March 31, 2020.  Operating results for the interim periods
presented are not necessarily indicative of the results that may be expected for a full year.  The Company's 2019 Annual
Report on Form 10-K includes certain definitions and a summary of significant accounting policies and should be read in conjunction
with this Form 10-Q.



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 Measurement.  Accounting Standards Codification ("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.





7











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, 2020 and December 31, 2019, inventory
consisted of the following:



|                                  |  | 2020 |           | 2019
|--------------------------------- |  | ---- | --------- | ----
|Raw
    materials & deposits      |  | $    | 1,808,760 |     
|Work-in-process                   |  |      | 21,053    |     
|Finished
    goods                |  |      | 583,283   |     
|Total
    gross inventories       |  |      | 2,413,096 |     
|Less
    reserve for obsolescence |  |      | (176,765  | )   
|Total
    net inventories         |  | $    | 2,236,331 |     



Income
Taxes.  We account for income taxes under the provisions of ASC 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.  In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update
(“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606).This ASU is a comprehensive new revenue
recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an
amount that reflects the consideration it expects to receive in exchange for those goods or services.  We adopted this ASU
on January 1, 2018 retrospectively, with the cumulative effect of initial application (which was zero) recognized in retained
earnings on that date.



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.





8











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 months ended
March 31, 2020 and March 31, 2019.



|Product
    sales:                             |  | 2020 |           | 2019
|---------------------------------------------- |  | ---- | --------- | ----
|Product
    sales and supplies                 |  | $    | 1,767,140 |     
|Training,
    certification and data recording |  |      | 148,182   |     
|Service
    plans and equipment rental         |  |      | 22,544    |     
|Products
    subtotal                          |  |      | 1,937,866 |     
|Royalties                                      |  |      | 59,281    |     
|Building
    rentals                           |  |      | 21,189    |     
|Total
    revenues                             |  | $    | 2,018,336 |     



Deferred
Revenue.  Deferred revenues arise from service contracts and from development contracts.  Revenues from
service contracts are recognized on a straight-line basis over the life of the contract, generally one year, and are included
in product revenue in our statements of income.  However, there are occasions when they are written for longer terms
up to four years.  The revenues from that portion of the contract that extend beyond one year are shown in our balance sheets
as long term.  Deferred revenues also result from progress payments received on development contracts; those revenues
are recognized when the contract is complete, and are included in product revenue in our statements of income.  All
development contracts are for less than one year and all deferred revenues from this source are shown in our balance sheets as
short term.





Recent
Accounting Pronouncements.  We have reviewed all recently issued, but not yet effective, accounting pronouncements
and do not expect them to have a material effect on our financial statements.





Stock-Based
Compensation.  Stock-based compensation is presented in accordance with the guidance of ASC Topic 718, Compensation
– Stock Compensation ("ASC 718").  Under the provisions of ASC 718, companies are required 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 our statement
of income.



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 March 31, 2020 and 2019 was $32,111 and $2,162 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.  We have concluded that we have two operating segments, including our primary business which is as a developer,
manufacturer, lessor and marketer of portable hand-held breathalyzers and related accessories, supplies, education, training and
royalties from development contracts.  As a result of purchasing our building on October 31, 2014, we have a second business
segment consisting of renting portions of our building to existing tenants, whose leases expire at various times until April 30,
2021.





9







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 (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 months ended March
31, 2020 and March 31, 2019:

|                                               |  | 2020 |           | 2019
|---------------------------------------------- |  | ---- | --------- | ----
|Net
    income (loss)                          |  | $    | (165,306  | )   
|Weighted average
    shares-basic              |  |      | 2,454,116 |     
|Effect
    of dilutive potential common shares |  |      | —         |     
|Weighted
    average shares-diluted            |  |      | 2,454,116 |     
|Net
    income (loss) per share-basic          |  | $    | (0.07     | )   
|Net
    income (loss) per share-diluted        |  | $    | (0.07     | )   
|Antidilutive
    employee stock options        |  |      | —         |     



4.  STOCKHOLDERS'
EQUITY

The
following table summarizes information about employee stock options outstanding and exercisable at March 31, 2020:



|                             |       | STOCK
    OPTIONS OUTSTANDING |  | STOCK
    OPTIONS EXERCISABLE                                                                                                           
|---------------------------- | ----- | ----------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------
|Range
    of Exercise Prices |       | Number Outstanding            |  | Weighted-Average Remaining
                                         Contractual Life
                                         (in Years)
|                             | $6.00 |                               |  |                                                                                                                                         
|                             | $5.51 |                               |  |                                                                                                                                         
|                             | $3.80 |                               |  |                                                                                                                                         



The
exercise price of all options granted through March 31, 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 three months ended March 31, 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 three months ended March 31,
2020 or during the three months ended March 31, 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.





10







5.  COMMITMENTS
AND CONTINGENCIES



Mortgage
Expense. We purchased our facilities in Wheat Ridge, Colorado on October 31, 2014 for $1,949,139 and took out a term loan
secured by a first mortgage on the property in the amount of $1,581,106 with Bank of America for a portion of the purchase price. 
Effective June 30, 2016 the note was amended to revise the interest rate from 4.45% to 4.00% per annum.  The revised note
is payable in 99 equal monthly installments of $8,417, including interest, plus a final payment of $1,138,104 (excluding interest)
on October 31, 2024.  Our minimum future principal payments on this term loan, by year, are as follows:

| | 2020                                                           |  |  | $ | 34,572    |  
| | -------------------------------------------------------------- |  |  | - | --------- | -
| | 2021                                                           |  |  |   | 48,021    |  
| | 2022                                                           |  |  |   | 50,005    |  
| | 2023                                                           |  |  |   | 52,072    |  
| | 2024                                                           |  |  |   | 1,178,528 |  
| | Total                                                          |  |  |   | 1,363,198 |  
| | Less
                                         financing cost   |  |  |   | (4,972    | )
| | Net
                                         term loan payable |  |  |   | 1,358,226 |  
| | Less
                                         current portion  |  |  |   | (45,494   | )
| | Long
                                         term portion     |  |  | $ | 1,312,732 |  
| |                                                                |  |  |   |           |  



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, 2020 we had no obligation with respect to contingent severance benefit
obligations other than the Company's obligations under the employment agreement with its chief executive officer, Dr. Wayne Willkomm.
In the event that Dr. Willkomm's employment is terminated by the Company without Cause (including through a decision by the Company
not to renew the employment agreement) or by Dr. Willkomm with Good Reason (as each are defined in the employment agreement),
Dr. Willkomm will be eligible, upon satisfaction of certain conditions, for severance equal to two months of salary continuation
plus 12 months of health insurance continuation.

Contractual
Commitments and Purchase Orders. Contractual commitments under development agreements and outstanding purchase orders issued
to vendors in the ordinary course of business totaled $2,050,179 at March 31, 2020.

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.  On June 26, 2017, we were inspected by the FDA and no violations were issued.
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.

6.  LINE
OF CREDIT

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 .12088% and 2.382% on March 31, 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, 2020. 
The revolving line of credit facility is secured by all personal property and assets, whether now owned or hereafter acquired,
wherever located.  There was no balance due on the line of credit as of March 31, 2020 and December 31, 2019.

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
|---------------------------------------------- |  | ----------------------
|                                               |  | March
    31, 2020    
|Federal
    statutory rate                     |  | $                     
|Effect
    of:                                 |  |                       
|State
    taxes, net of federal tax benefit    |  |                       
|Estimated
    research and development credits |  |                       
|Other                                          |  |                       
|Total                                          |  | $                     





11







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 March 31, 2020 and 2019.

|                                    |  | 2020 |           | 2019
|----------------------------------- |  | ---- | --------- | ----
|Product
    sales                   |  | $    | 1,937,866 |     
|Royalties                           |  |      | 59,281    |     
|Products
    subtotal               |  |      | 1,997,147 |     
|Rentals                             |  |      | 21,189    |     
|Total                               |  | $    | 2,018,336 |     
|                                    |  |      |           |     
|Gross
    profit:                   |  |      |           |     
|Product
    sales                   |  | $    | 714,294   |     
|Royalties                           |  |      | 59,281    |     
|Products
    subtotal               |  |      | 773,575   |     
|Rentals                             |  |      | 4,501     |     
|Total                               |  | $    | 778,076   |     
|                                    |  |      |           |     
|Interest
    expense:               |  |      |           |     
|Product
    sales                   |  | $    | 9,280     |     
|Royalties                           |  |      | —         |     
|Products
    subtotal               |  |      | 9,280     |     
|Rentals                             |  |      | 4,851     |     
|Total                               |  | $    | 14,131    |     
|                                    |  |      |           |     
|Net
    income (loss) before taxes: |  |      |           |     
|Product
    sales                   |  | $    | (268,158  | )   
|Royalties                           |  |      | 59,281    |     
|Products
    subtotal               |  |      | (208,877  | )   
|Rentals                             |  |      | (350      | )   
|Total                               |  | $    | (209,227  | )   



There
were no intersegment revenues.

At
March 31, 2020, $616,183 of our assets were used in the Rentals segment, with the remainder, $8,478,529, used in the Products
and unallocated segments.

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, except as follows.

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 a $465,097 loan under the PPP (the “PPP Loan”).
The PPP Loan has a two-year term, a maturity date of May 3, 2022, and an 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. The terms of any 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.



12









ITEM
2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



The
following is a discussion of our financial condition and results of operations, and should be read in conjunction with our financial
statements and the related notes included elsewhere in this Form 10-Q.  Certain statements contained in this section
are not historical facts, including statements about our strategies and expectations about new and existing products, market demand,
acceptance of new and existing products, technologies and opportunities, market and industry segment growth, and return on investments
in products and markets.  These statements are forward-looking statements as defined in the Private Securities Litigation
Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934 (the "Exchange
Act"), and we intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements
contained in these statutes.  You can identify forward-looking statements by the use of forward-looking terminology
such as "believes," "expects," "may," "will," "should," "seeks," "intends,"
"plans" or "anticipates" or the negative of these words and phrases or similar words or phrases that are predictions
of or indicate future events or trends and that do not relate solely to historical matters.  Such statements involve
substantial risks and uncertainties that may cause actual results to differ materially from those indicated by the forward-looking
statements.  All forward-looking statements in this section are based on information available to us on the date of
this document, and we assume no obligation to update such forward looking statements.  Readers of this Form 10-Q are
strongly encouraged to review the section titled "Risk Factors"in our December 31, 2019 Form 10-K.



Overview

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.stsfirst.com and lifeguardbreathtester.com.  Information contained
on our websites does not constitute part of this Form 10-K.





13







Principal
Products and Services and Methods of Distribution

Alcohol
Breath Testers



In
1989, we introduced our first breath alcohol tester, the PBA3000. Our Phoenix® Classic was completed and released for sale
in 1998, superseding the PBA3000. In turn, the Phoenix® Classic has been superseded by our FC Series and Workplace Series
of portable breath alcohol testers, which are discussed below. Neither the PBA3000 nor the Phoenix® Classic is actively sold
today.



In
2001, we completed and released for sale our new FC Series, designed specifically for domestic and international law enforcement
and corrections markets. The portable breath alcohol testers comprising our FC Series are currently being sold worldwide, having
contributed to our growth since their introduction. The FC Series is designed to meet the needs of domestic and international
law enforcement for roadside drink/drive testing and alcohol offender monitoring. The FC Series is approved by the U.S. Department
of Transportation ("DOT") as an evidential breath tester, making it suitable for sale to state law enforcement agencies
for preliminary roadside breath alcohol testing.  The FC Series is routinely updated with firmware, software and component
improvements as they become available.  It is readily adaptable to the specific requirements and regulations of domestic
and international markets.



In
2005 and 2006, we introduced two new models, the EV30 and Phoenix® 6.0 Evidential Breath Tester ("Phoenix® 6.0"),
which constitute our Workplace Series of testing devices.  Like their predecessor, the Phoenix® Classic, and our
FC Series, these instruments are DOT approved. The DOT's specifications support the DOT's workplace alcohol testing programs,
including those applicable to workplace alcohol testing for the federally regulated transportation industry. We also sell component
parts used in alcohol testing devices, such as mouthpieces used by our breathalyzers, as well as forms and labels used for record
keeping, and calibration products for user re-calibration of our devices.  We offer optional service agreements on our
equipment, re-calibration services, and spare parts, and we sell supporting instrument training and user certification training
to our workplace customers.



In
2006, we commenced selling breath alcohol equipment components that we manufacture to other OEMs for inclusion as subassemblies
or components in their breath alcohol testing devices.



In
late 2009, Lifeloc released the LifeGuard® Personal Breathalyzer ("LifeGuard®"), a personal alcohol breath
tester that incorporates the same fuel-cell technology used in our professional devices.  Intended for the global consumer
breathalyzer market, LifeGuard® is marketed internationally through global distributors.



In
2011 and 2012, Lifeloc introduced Bluetooth wireless keyboard and printer communication options for our Phoenix® 6.0 along
with a series of web based workplace training courses. We believe these two product innovations have been key to our success
and leadership in workplace breath testing.



In
2013, Lifeloc expanded our FC Series of professional breath alcohol testers targeted at domestic and international law enforcement
and corrections markets with the addition of the FC5 Hornet (the "FC5"). The FC5 is a passive (no mouthpieces required)
portable handheld alcohol screening device that competes directly with passive alcohol screeners from our competitors in the education,
law enforcement, workplace and corrections markets.



14







In
2013, we also introduced the SentinelTM zero tolerance alcohol screening station, a fully automated wall mounted screening
station for use in safety sensitive industries such as oil and gas and mining. Both devices expand Lifeloc's products for passive
alcohol screening.



In
the third quarter of 2014, we received approval from DOT for our EASYCAL® automatic calibration station for use with our Phoenix
® 6.0 Evidential Breath Testers, and we began shipments of the EASYCAL® to our law enforcement, corrections, workplace
and international customers.   The EASYCAL® calibration station is a first of its kind device that automatically
performs breath tester instrument calibration, calibration verification and gas management.  As compared to manual instrument
calibration, the EASYCAL® reduces the opportunity for human error, saves time and reduces operating costs.  In May of
2019, we received DOT approval on a second generation EASYCAL® with broader capabilities called the EASYCAL® G2.

In
October 2015, we expanded our SentinelTM line with the SentinelTM VA alcohol screening station, a fully automated station
to control vehicular access to safety critical facilities, such as mines, refineries, power stations and nuclear facilities. 
The SentinelTM VA alcohol screening station is intended to allow all drivers entering a secure area to be tested quickly
and efficiently without leaving their vehicle.

In
November 2019, we received approval from DOT for our LX9 and LT7 base unit alcohol breathalyzers.

Testers
for Drugs of Abuse



In
August 2016, we entered into an exclusive patent license agreement with Sandia Corporation, Albuquerque, NM, pursuant to which
we acquired the exclusive rights to develop, manufacture and market Sandia's patented SpinDxTM technology for the detection
of drugs of abuse. SpinDxTM uses a centrifugal disk with micro fluidic flow paths allowing multiple tests to be carried out
on a single small sample.  Sandia Corporation developed a prototype using the SpinDxTM technology under our Cooperative
Research and Development Agreement. We received the prototype in 2018 and are now commercializing the device. The SpinDxTM
platform has the potential to improve real-time screening for a panel of high-abuse drugs, with the ability to efficiently and
quantitatively measure relatively low concentrations of drugs such as cocaine, heroin, methamphetamine, fentanyl and other high-abuse
drugs.  We intend to use this technology, sometimes referred to as "Lab on a Disk", to develop devices and
tests that could be used at roadside, emergency rooms and in workplace testing to get a rapid and quantitative measure for a panel
of such drugs of abuse.  We have detected delta-9-THC (the primary psychoactive component of marijuana) down to concentrations
of 5 nanograms per milliliter in our laboratory.  This includes resolving the psychoactive delta-9-THC from its inactive
metabolites, an important step in establishing impairment.  We completed the upgrade of our base breathalyzer platform in
2019 (the LX9), and we remain committed to combining it with the SpinDxTM technology. Our goal is to use this combination
to develop a THC breathalyzer.  There is no assurance that our efforts to develop a marijuana breathalyzer will be successful
or that significant sales will result from such development if successful.



In
March 2017 we acquired substantially all of the assets related to the Real-time Alcohol Detection and Reporting product ("R.A.D.A.R.®")
from Track Group, Inc. ("TRCK") for $860,000 in cash.  The purchased assets included the R.A.D.A.R.® device
with cellular reporting for real-time alcohol monitoring, database infrastructure to tabulate and manage subscriber behavior,
and biometric methodology and intellectual property to fully automate identity verification.  The R.A.D.A.R.® device
was designed to be part of an offender supervision program as an alternative to incarceration, and it is assigned to offenders
as a condition of parole or probation with random testing throughout the day to demonstrate that they are meeting the conditions
of their sentence.  We essentially completed improving the manufacturability of R.A.D.A.R.® devices in Q1 of 2020, with
final testing and sales to commence in Q2.



15







Training



Drug
and alcohol testing is highly regulated; thus quality training is an important component of our business.  Initially, our
network of Master Trainers provided classroom training which generated certification fees.  This was expanded to include
instructor materials, online training modules and direct (live) training via webcam.  In 2011, we launched Lifeloc University,
a Learning Management System (LMS), defined as "a software application for the administration, documentation, tracking, reporting
and delivery of educational courses or training programs." Lifeloc University is a critical component for online training
courses since it provides student accountability.  In 2018, we updated and revised the Lifeloc University LMS utilizing responsive
design so it could be viewed on mobile devices.



In
December 2014, we acquired substantially all of the assets of Superior Training Solutions, Inc. ("STS"), a company that
develops and sells online drug and alcohol training and refresher courses. We have augmented and updated the assets we acquired
from STS to enable mobile device usage. These assets complement our existing drug and alcohol training courses.



Real
Property



On
October 31, 2014, we purchased the commercial property we use as our corporate headquarters and certain adjacent property in Wheat
Ridge, Colorado.  The building consists of 22,325 square feet, of which 14,412 square feet are occupied by us and 7,913 square
feet are currently leased to two tenants under leases that expire at various times in 2020. We intend to continue to lease the
space we are not occupying, but in the future may elect to expand our own operations into space currently leased to other tenants. 
Our purchase of the property was partially financed through a term loan in an original principal amount of $1,581,106, secured
by a first-priority mortgage on the property. The loan matures in October 2024.



Additional
Areas of Interest



Consistent
with our business goal of providing "near and remote sensing and monitoring" products and solutions, our acquisition
strategy involves purchasing companies, development resources and assets that are aligned with our areas of interest and that
can further aid in our entering additional markets.  We expect to actively research and engage in the acquisition of resources
that can expedite our entrance into new markets or strengthen our position in existing ones.



Results
of Operations



For
the three months ended March 31, 2020 compared to the three months ended March 31, 2019.



Net
sales.Our product sales for the quarter ended March 31, 2020 were $1,937,866, a decrease of 2% from $1,970,101 for the quarter
ended March 31, 2019.  This decrease is primarily attributable to a decrease in demand, which is impacted by Covid-19.  When
royalties of $59,281 and rental income of $21,189 are included, total revenues of $2,018,336 decreased by $50,425, or 2%, for
the quarter ended March 31, 2020 when compared to the same quarter a year ago. Product sales and royalties are expected to continue
to decline in Q2 as a continuing result of the Covid-19 impact.

Gross
profit.   Our total gross profit for the three months ended March 31, 2020 of $778,076 represented a decrease of 17%
from total gross profit of $932,202 for the same period a year earlier. This decrease is primarily as a result of decreased sales
volume, as well as decreased royalties and rental income.  Cost of product sales increased from $1,119,864 in Q1 of
2019 to $1,223,572 in Q1 of 2020, or 1%, primarily as a result of decreased sales volume and fixed production overhead. 
Gross profit margin on products went from 43% in Q1 of 2019 to 37% in Q1 of 2020, also as a result of reduced sales volume.





16







Research
and development expenses.  Our research and development expenses were $296,897 for the quarter ended March 31, 2020,
representing an increase of 21% over the $245,799 in the same quarter a year ago.  This increase resulted mostly from
adding personnel and increased compensation, along with higher payments to outside vendors in connection with the work needed
to upgrade and re-launch R.A.D.A.R.®



Sales
and marketing expenses.   Our sales and marketing expenses of $326,564 for the quarter ended March 31, 2020 were relative
unchanged from the $316,383 for the quarter ended March 31, 2019.



General
and administrative expenses.   Our general and administrative expenses of $356,887 for the quarter ended March 31, 2020
increased over the same period a year ago by $31,712 or 10%, mostly attributable to stock-based compensation expense related to
stock options granted during the current quarter.



Other
income (expense).  Our other income consisted of interest income of $7,176 in the quarter ended March 31, 2020,
which decreased over the $9,422 in the same quarter a year ago, mostly as the result of decreased yield on cash available for
investment in Q1 of 2020.  Our interest expense of $14,131 in the current quarter over $14,423 in the same period a year
ago is the result of the balance of the term loan on our building declining.



Net
income (loss).  We realized a net loss of $165,306 for the quarter ended March 31, 2020 compared to net income of $30,964
for the quarter ended March 31, 2019.  This decrease of $196,270 was the result of the changes in gross profit and
operating expenses discussed above, offset in part by a reduction of income taxes of $52,801.



Trends
and Uncertainties That May Affect Future Results



Revenues
in the first quarter of 2020 were lower compared to revenues in 2019 as a result of the Covid-19 pandemic and related governmental
orders.  We believe this situation will continue into Q2, although the re-launch of R.A.D.A.R.® late in Q1 may offset
this to some extent.  We expect our quarter-to-quarter revenue fluctuations to continue, due to the unpredictable timing
of large orders from customers and the size of those orders in relation to total revenues.  Going forward, we intend
to focus our development efforts on products we believe offer the best prospects to increase our intermediate and near-term revenues.



Our
2020 operating plan is focused on growing sales, increasing gross profits, and increasing research and development efforts on
new products for long term growth.  We cannot predict with certainty the expected sales, gross profit, net income or
loss, or usage of cash and cash equivalents for 2020.  However, we believe that cash resources and borrowing capacity
will be sufficient to fund our operations for the next twelve months under our current operating plan.  If we are unable
to manage the business operations in line with our budget expectations, it could have a material adverse effect on business viability,
financial position, results of operations and cash flows. Further, if we are not successful in sustaining profitability and remaining
at least cash flow break-even, additional capital may be required to maintain ongoing operations.



Liquidity
and Capital Resources



We
compete in a highly technical, very competitive and, in most cases, price driven alcohol testing marketplace, where products can
take years to develop and introduce to distributors and end users.  Furthermore, manufacturing, marketing and distribution
activities are regulated by the FDA, the DOT, and other regulatory bodies that, while intended to enhance the ultimate quality
and functionality of products produced, can contribute to the cost and time needed to maintain existing products and develop and
introduce new products.



We
have traditionally funded working capital needs through product sales and close management of working capital components of our
business.  Historically, we have also received cash from private offerings of our common stock, warrants to purchase
shares of our common stock, and notes. In our earlier years, we incurred quarter to quarter operating losses to develop current
product applications, utilizing a number of proprietary and patent-pending technologies.  Although we have been profitable
during the last several years, we expect that operating losses could well occur in the future.  Should that situation
arise, we may not be able to obtain working capital funds necessary in the time frame needed and at satisfactory terms or at all.





17







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 (amended to 4% per annum in 2017), 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 (increased to $500,000 in 2016, and again to $750,000 in 2017) 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%. As of March 31, 2020, this credit facility had not been used.



Equipment
and software purchased during the quarter ended March 31, 2020 were $9,088, compared to $115,995 in the same period a year ago. 
Building improvements during the quarter ended March 31, 2019 were $12,619, compared to none in the quarter ended March 31, 2020.
We filed patent applications at a cost to us of $18,772 in the first quarter of 2020 and $0 in the first quarter of 2019.



As
of March 31, 2020, cash was $2,913,331, accounts receivable were $638,038 and current liabilities were $1,118,402 resulting in
a net liquid asset amount of $2,432,968.  We believe that the introduction of several new products during the last several
years, along with new and on-going customer relationships, will continue to generate sufficient revenues to maintain profitability.  If
these revenues are not achieved on a timely basis, we may be required to implement cost reduction measures, as necessary.



We
generally provide a standard one-year warranty on materials and workmanship to our customers.  We provide for estimated
warranty costs at the time product revenue is recognized.  Warranty costs are included as a component of cost of goods
sold in the accompanying statements of income.  For the quarter ended March 31, 2020 and for the quarter ended March
31, 2019, warranty costs were not deemed significant.



Critical
Accounting Policies and Estimates



Our
financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis. The preparation of financial statements in conformity with United States generally accepted
accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities,
the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting periods.



We
regularly evaluate the accounting policies and estimates that we use to prepare our financial statements.  In general,
management's estimates are based on historical experience, on information from third party professionals, and on various other
assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates
made by management.



Our
discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have
been prepared in accordance with accounting principles generally accepted in the United States.  The preparation of
these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities,
sales and expenses, and related disclosure of contingent assets and liabilities.  On an on-going basis, we evaluate
our estimates, including those related to bad debts, inventories, sales returns, warranty, contingencies and litigation.  We
base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily
apparent from other sources.  Actual results may differ from these estimates under different assumptions or conditions.  We
believe the following critical accounting policies affect the more significant judgments and estimates used in the preparation
of our financial statements.





18







We
have concluded that we have two operating segments, including our primary business which is as a developer, manufacturer, lessor
and marketer of portable hand-held breathalyzers and related accessories, supplies, education, training and royalties from development
contracts and a second segment consisting of renting portions of our building to existing tenants.



We
maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required
payments.  If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability
to make payments, additional allowances would be required, which would increase our expenses during the periods in which any such
allowances were made.  The amount recorded as a provision for bad debts in each period is based upon our assessment
of the likelihood that we will be paid on our outstanding receivables, based on customer-specific as well as general considerations.  To
the extent that our estimates prove to be too high, and we ultimately collect a receivable previously determined to be impaired,
we may record a reversal of the provision in the period of such determination.



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.  Any write-downs
of inventory would reduce our reported net income during the period in which such write-downs were applied.



Property
and equipment are stated at cost, with depreciation computed over the estimated useful lives of the assets, generally five years
(three years for software and technology licenses).  We use the double declining method of depreciation for property and
equipment, and the straight line method for software and technology licenses. We purchased all of the assets of STS, an online
education company, in 2014, which consisted of training courses that are amortized over 15 years using the straight line method. 
In October 2014, we purchased our building. A majority of the cost of the building is depreciated over 39 years using the straight
line method. In addition, based on the results of a third party analysis, a portion of the cost was allocated to components integral
to the building.  Such components are depreciated over 5 and 15 years, using the double declining method and the straight
line method respectively.  Maintenance and repairs are expensed as incurred and major additions, replacements and improvements
are capitalized.



In
March 2017, we acquired the R.A.D.A.R.® assets from TRCK, which consisted of production equipment and of hardware device technology
(the "Devices") that are depreciated over 5 years using the double declining balance method when placed in service.
With the R.A.D.A.R.® assets, we also purchased software designed to measure breath alcohol content of the user and software
technology designed to allow the Devices to be configured and to capture and manage the data being returned from the Device, as
well as 6 issued U.S. patents and 16 domestic and international patent applications.  This software and the patents and patent
applications will be amortized over 15 years using the straight line method.



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 are providing
for customer financing and leasing, 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. 
Revenues from rental of equipment and extended service plans are recognized over the life of the contracts.





19







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.



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.



Stock-based
compensation is presented in accordance with the guidance of Financial Accounting Standards Board ("FASB") Accounting
Standards Codification ("ASC") Topic 718, Compensation — Stock Compensation ("ASC 718").  Under
the provisions of ASC 718, companies are required to estimate the fair value of share-based payment awards made to employees and
directors including employee stock options based on estimated fair values 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 our statement of operations.



Off-Balance
Sheet Arrangements



We
currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect
on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures
or capital resources.



ITEM
3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



Not
applicable.



ITEM 4 –
CONTROLS AND PROCEDURES



(a)       Evaluation
of Disclosure Controls and Procedures



As
of the end of the period covered by this Quarterly Report on Form 10-Q, our management has evaluated, under the supervision and
with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934).  Disclosure
controls and procedures are designed to ensure that information required to be disclosed in our reports filed under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange
Commission's rules and forms and that such information is accumulated and communicated to our management, including our Chief
Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.  Based on this evaluation,
our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as
of March 31, 2020.



(b)       Changes
in Internal Control over Financial Reporting



There
were no significant changes in our internal controls over financial reporting during the period ended March 31, 2020 that have
materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.



20







Limitations
on the Effectiveness of Controls



A
control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control
system's objectives will be met.  Our management, including our Chief Executive Officer and our Chief Financial Officer,
do not expect that the Company's disclosure controls will prevent or detect all errors and all fraud.  Further, the
design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered
relative to their costs.  Because of the inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.  These
inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because
of simple error or mistake.  Controls can also be circumvented by the individual acts of some persons, by collusion
of two or more people, or by management override of the controls.  The design of any system of controls is based in
part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed
in achieving its stated goals under all potential future conditions.  Over time, controls may become inadequate because
of changes in conditions or deterioration in the degree of compliance with associated policies or procedures.  Because
of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.



PART II. OTHER
INFORMATION



ITEM
1 – LEGAL PROCEEDINGS



We
may be involved from time to time in litigation, negotiation and settlement matters that may have a material effect on our operations
or finances. We are not aware of any pending or threatened litigation against us or our officers or directors in their capacity
as such that could have a material impact on our operations or finances.



ITEM
1A – RISK FACTORS



In
addition to the other information set forth in this report, you should carefully consider the factors discussed in ''Risk Factors''
in our Annual Report on Form 10-K for the year ended December 31, 2019, which could materially affect our business, financial
condition and/or future results.  The risks described in our Annual Report on Form 10-K are not the only risks facing
us.  Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially
adversely affect our business, financial condition and/or operating results.



ITEM
2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS



No
options were exercised during the three months ended March 31, 2020 or during the three months ended March 31, 2019.  There
were no sales of equity securities during the three months ended March 31, 2020 or during the three months ended March 31, 2019.



ITEM
3 – DEFAULTS UPON SENIOR SECURITIES



None.



ITEM
4 – MINE SAFETY DISCLOSURES



Not
applicable.



ITEM
5 – OTHER INFORMATION



None.





21







ITEM 6
– EXHIBITS



The
following exhibits are filed with this report on Form 10-Q or are incorporated by reference:



|Exhibit No. |  | Description
    of Exhibit                                                                                                                                                                                                                
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1        |  | First
    Amended and Restated Employment Agreement dated January 25, 2019 by and between Lifeloc Technologies, Inc. and Wayne Willkomm,
    Ph.D. (incorporated by reference to our Current Report on Form 8-K filed on January 25, 2019)
|31.1        |  | Certification of Principal Executive Officer Pursuant To Section 302 Of The Sarbanes—Oxley Act Of 2002                                                                                                                                    
|31.2        |  | Certification of Principal Financial Officer Pursuant To Section 302 Of The Sarbanes—Oxley Act Of 2002                                                                                                                                    
|32.1        |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                         
|32.2        |  | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                         
|101.INS     |  | XBRL
    Instance Document                                                                                                                                                                                                                
|101.SCH     |  | XBRL
    Schema Document                                                                                                                                                                                                                  
|101.CAL     |  | XBRL
    Calculation Linkbase Document                                                                                                                                                                                                    
|101.LAB     |  | XBRL
    Label Linkbase Document                                                                                                                                                                                                          
|101.PRE     |  | XBRL
    Presentation Linkbase Document                                                                                                                                                                                                   
|101.DEF     |  | XBRL
    Definition Linkbase Document                                                                                                                                                                                                     
|            |  |                                                                                                                                                                                                                                           





22







SIGNATURES



Pursuant
to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.



|                 |     | LIFELOC
    TECHNOLOGIES, INC.                                                                      | 
|---------------- | --- | --------------------------------------------------------------------------------------------------- | 
|                 |     |                                                                                                     | 
|July
    8, 2020 | By: | /s/ Wayne
    R. Willkomm                                                                           | 
|Date             |     | Wayne
    R. Willkomm, Ph.D.                                                                        | 
|                 |     | President
        and Chief Executive Officer
        (Principal
        Executive Officer)         | 
|                 |     |                                                                                                     | 
|July
    8, 2020 | By: | /s/ Kristie
    L. LaRose                                                                           | 
|Date             |     | Kristie
    L. LaRose                                                                               | 
|                 |     | Vice
        President of Finance and Administration
        (Principal
        Accounting Officer) | 









23









Exhibit
Index



|Exhibit No. |  | Description
    of Exhibit                                                                                                                                                                                                               
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1        |  | First
    Amended and Restated Employment Agreement dated January 25, 2019 by and between Lifeloc Technologies, Inc. and Wayne Willkomm,
    Ph.D. (incorporated by reference to our Current Report on Form 8-K filed on January 25, 2019
|31.1        |  | Certification
    of Principal Executive Officer Pursuant To Section 302 Of The Sarbanes—Oxley Act Of 2002                                                                                                                               
|31.2        |  | Certification
    of Principal Financial Officer Pursuant To Section 302 Of The Sarbanes—Oxley Act Of 2002                                                                                                                               
|32.1        |  | Certification
    of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002                                                                                
|32.2        |  | Certification
    of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002                                                                                
|101.INS     |  | XBRL
    Instance Document                                                                                                                                                                                                               
|101.SCH     |  | XBRL
    Schema Document                                                                                                                                                                                                                 
|101.CAL     |  | XBRL
    Calculation Linkbase Document                                                                                                                                                                                                   
|101.LAB     |  | XBRL
    Label Linkbase Document                                                                                                                                                                                                         
|101.PRE     |  | XBRL
    Presentation Linkbase Document                                                                                                                                                                                                  
|101.DEF     |  | XBRL
    Definition Linkbase Document