SOBR Safe Inc

Previous wording

Our Management’s Discussion and Analysis or Plan of Operations contains not only statements that are historical facts, but also forward-looking statements within the meaning of the Exchange Act. Forward-looking statements include statements in which words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “consider,” or similar expressions are used. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national and local general economic and market conditions; demographic changes; our access to capital to fund our continuing operations, our ability to sell our products and services and to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission (“SEC”).

Current wording

Our Management’s Discussion and Analysis of financial condition and results of operations contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national and local general economic and market conditions; demographic changes; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission (“SEC”).

Previous wording

On March 9, 2020, our Board of Directors approved the amendment to our Certificate of Incorporation and stockholders holding 52% of our then outstanding voting stock approved an amendment to our Certificate of Incorporation. The Certificate of Amendment to our Certificate of Incorporation was for the purpose of, among other things, changing our name from “TransBiotec, Inc.” to “SOBR Safe, Inc.” The Certificate of Amendment to our Certificate of Incorporation became effective with the State of Delaware on April 24, 2020.

Current wording

On March 9, 2020, our Board of Directors approved the amendment to our Certificate of Incorporation and stockholders holding 52% of our then outstanding voting stock approved an amendment to our Articles of Incorporation. The Certificate of Amendment to our Certificate of Incorporation was for the purpose of, among other things, changing our name from “TransBiotec, Inc.” to “SOBR Safe, Inc.” The Certificate of Amendment to our Certificate of Incorporation became effective with the State of Delaware on April 24, 2020.

Previous wording

Our SOBRcheck™ device is a patent-pending, touch-based identity verification and alcohol detection solution. Users place two fingers on the device sensors for which one compares biometric data points from the finger to confirm identity, while the other senses alcohol released through the pores of the fingertip. The touch-based device connects to the SOBRsafe™ software solution to collect, present and communicate data collected to subscribed parties. The SOBRcheck™ device has been in commercial production since the first quarter of 2022 and we have executed customer agreements since that time.

Current wording

Our SOBRcheck™ device is a patent-pending, touch-based identity verification and alcohol detection solution. Users place two fingers on the device sensors, one compares biometric data points from the finger to confirm identity, while the other senses alcohol released through the pores of the fingertip. The touch-based device connects to the SOBRsafe™ software solution to collect, present and communicate data collected to subscribed parties. The SOBRcheck™ device has been in commercial production since the first quarter of 2022 and we have executed customer agreements since that time.

Previous wording

Since inception we have generated significant losses from operations and anticipate that we will continue to generate significant losses for the foreseeable future. Our success is dependent on our ability to access additional capital. Additional capital will be required under the following circumstances: 1) to offset negative cash flows from operations, 2) to accelerated customer acquisition, thereby increasing capital outlay, 3) for advanced purchasing of materials, 4) for the acquisition of new technology, 5) for potential acquisition of a key asset, and 6) for sales expansion.

Current wording

Since inception we have generated significant losses from operations and anticipate that we will continue to generate significant losses for the foreseeable future. Our success is dependent on our ability to access additional capital. Additional capital will be required under the following circumstances: 1) to offset negative cash flows from operations, 2) to accelerate customer acquisition, thereby increasing capital outlay, 3) for advanced purchasing of materials, 4) for the acquisition of new technology, 5) for potential acquisition of a key asset, and 6) for sales expansion.

Previous wording

During the quarter ended March 31, 2024, the following developments occurred:

Current wording

During the six-months ended June 30, 2024, the following developments occurred:

Previous wording

The cost of sales for the three-months ended March 31, 2024, was $24,781 resulting in a gross profit of $23,209 and a gross margin of 48.4%. The cost of sales for the three-months ended March 31, 2023, was $30,064 resulting in a gross profit of $17,804 and a gross margin of 37.2%. Due to the limited history of generating revenue, the gross profit and gross margins at March 31, 2024 and 2023 are not indicative of future planned or actual performance of the Company, its product lines or services.

Current wording

The cost of goods and services for the three months ended June 30, 2024, was $41,156 resulting in a gross profit of $13,035 and a gross margin of 24%. The increased cost of goods and services for the period was due to one-time write-offs of defective SOBRcheck TM devices of $17,434. Without these one-time write-offs, the normalized gross margin would be 56%. Due to the limited history of generating revenue, the gross profit and gross margin for the three months ended June 30, 2024, and 2023 may not be indicative of future planned or actual performance of the Company, its product lines or services.

Previous wording

Conversion expense was $585,875 for the three-months ended March 31, 2024. This expense relates to the convertible debt inducement that occurred on March 4, 2024. There was no conversion expense for the three-months ended March 31, 2023.

Current wording

Notes payable conversion expense was $585,875 for the six months ended June 30, 2024. This expense relates to the convertible debt inducement that occurred on March 4, 2024.

Previous wording

Our net loss decreased by $95,771 from $2,601,692 to $2,505,921, from the three-month period ended March 31, 2023, compared to the three-month period ended March 31, 2024. The change in our net loss and operating loss for the three months ended March 31, 2024, compared to the same prior year period, is primarily a result of a decrease in stock-based compensation expense and a decrease in investor relations spend, offset by notes payable conversion expense. The changes are detailed below.

Current wording

Our operating loss decreased by $1,560,252 from $5,146,272 for the six-month period ended June 30, 2023, compared to $3,586,020 for the six-month period ended June 30, 2024. The change in our operating loss for the six months ended June 30, 2024, compared to the same prior year period, is primarily a result in a reduction in general and administrative expense due to less spend on travel, professional services, and payroll. Stock-based compensation expense also decreased due to rewards fully vesting.

Previous wording

Liquidity and Capital Resources for Three Months Ended March 31, 2024 Compared to December 31, 2023

Current wording

Liquidity and Capital Resources for Six Months Ended June 30, 2024 Compared to December 31, 2023

Previous wording

During the three-months ended March 31, 2024 and 2023, the Company has incurred recurring losses from operations. Future capital requirements will depend on many factors including the Company’s ability to sell and develop products, generate cash flow from operations, and assess competing market developments. The Company will need additional capital in the near term. Our cash on hand as of March 31, 2024, was $1,336,250 and our current normalized operating cash flow burn rate is approximately $475,000 per month.

Current wording

During the six-months ended June 30, 2024, and 2023, the Company has incurred recurring losses from operations. Future capital requirements will depend on many factors including the Company’s ability to sell and develop products, generate cash flow from operations, and assess competing market developments. The Company will need additional capital in the near term. Our cash on hand as of June 30, 2024, was $2,166,404 and our current normalized operating cash flow burn rate is approximately $475,000 per month.

Previous wording

Management believes that cash balances and negative working capital at March 31, 2024 do not provide adequate operating capital for operating activities for the twelve months from the date these financial statements are issued. However, management believes actions presently being taken to generate product and services revenues, and positive cash flows, in addition to the Company’s plans and ability to access capital sources and implement additional expense reduction tactics to preserve working capital, provide the opportunity for the Company to continue as a going concern. These plans are contingent upon the actions to be performed by the Company and these conditions have not been met on or before March 31, 2024. As such, substantial doubt about the entity’s ability to continue as a going concern has not been alleviated as of March 31, 2024.

Current wording

Management believes that cash balances at June 30, 2024 do not provide adequate operating capital for operating activities for the twelve months from the date these financial statements are issued. However, management believes actions presently being taken to generate product and services revenues, and positive cash flows, in addition to the Company’s plans and ability to access capital sources and implement additional expense reduction tactics to preserve working capital, provide the opportunity for the Company to continue as a going concern. These plans are contingent upon the actions to be performed by the Company and these conditions have not been met on or before June 30, 2024. As such, substantial doubt about the entity’s ability to continue as a going concern has not been alleviated as of June 30, 2024.

Previous wording

Our cash, total current assets, total assets, total current liabilities, and total liabilities as of March 31, 2024, and as of December 31, 2023, respectively, are as follows:

Current wording

Our cash, current assets, total assets, current liabilities, and total liabilities as of June 30, 2024, and as of December 31, 2023, respectively, are as follows:

Previous wording

Our total current liabilities increased as of March 31, 2024, as compared to December 31, 2023. The increase was due to the classification of convertible debt which is due in March 2025.

Current wording

Our total current liabilities and total liabilities decreased as of June 30, 2024, as compared to December 31, 2023. The decrease was due to the conversion of the entire convertible debt balance due in March 2025 to equity during the quarter.

Previous wording

We had net cash used in operating activities of $1,453,897 for the three-month period ended March 31, 2024, as compared to net cash used for operating activities of $1,589,453 for the three-month period ended March 31, 2023. For the period in 2024, the net cash used in operating activities consisted primarily of our net loss of $2,505,921, offset by non-cash expense items including amortization of $96,366, amortization of debt discounts of $149,295, stock-based compensation expense of $214,398, interest expense of $80,784 conversion expense of $585,875, and changes in our assets and liabilities primarily from inventory of $22,179, prepaid expenses of $14,808, other assets of ($15,300), accounts payable of $107,073, accrued expenses of $(204,486), and accrued interest payable of $2,171.

Current wording

We had net cash used in operating activities of $3,049,161 for the six-month period ended June 30, 2024, as compared to net cash used in operating activities of $3,262,642 for the six-month period ended June 30, 2023. For the period in 2024, the net cash used in operating activities consisted primarily of our net loss of $4,583,295, offset by non-cash expense items including amortization of $192,732, amortization of debt discounts of $237,250, stock-based compensation expense of $400,307, non-cash interest expense of $336,510, non-cash lease expense of $44,284, non-cash conversion expense of $585,875 and changes in our assets and liabilities for accounts receivable of ($9,708), inventory of $60,844, prepaid expenses of $81,051, accrued expenses of ($208,212), accrued interest payable of ($128,214), and operating lease liabilities of ($46,872).

Previous wording

For the period in 2023, the net cash used in operating activities consisted primarily of our net loss of $2,601,692, offset primarily by non-cash expense items including amortization of $96,366, amortization of interest of $21,644, stock warrants expense of $134,598, and stock-based compensation expense of $698,913, bad debt expense of $882 and changes in our assets and liabilities primarily from inventory of ($34,239), prepaid expenses of $162,477, accounts payable of $198,159, accrued expenses of $(87,986), and accrued interest payable of $(177,927).

Current wording

For the period in 2023, the net cash used in operating activities consisted primarily of our net loss of $5,475,650, offset by non-cash expense items including amortization of $192,732, amortization of interest of $286,346, loss on extinguishment of debt of $26,125, stock warrants expense of $182,901, stock-based compensation expense of $1,326,675, non-cash interest expense of $29,638, non-cash lease expense of $13,747, bad debt expense of $1,132 and changes in our assets and liabilities for accounts receivable of ($1,938), inventory of ($47,867), prepaid expenses of $398,521, other assets of ($15,931), accounts payable of $341,425, accrued expenses of $1,185, accrued interest payable of $(324,083), and operating lease liabilities of ($14,699).

Previous wording

We had no cash provided by or used in investing activities during the three-month periods ended March 31, 2024 or March 31, 2023.

Current wording

We had no cash provided by or used in investing activities during the six-month periods ended June 30, 2024, or June 30, 2023.

Previous wording

During the three-month period ended March 31, 2023, we received gross proceeds from the issuance of convertible notes payable of $3,000,001 which was offset by issuance costs of $537,750. Payments of approximately $1,161,792 were made toward the principal and accrued interest amounts for matured convertible notes payable issued in 2021 to both related and non-related parties.

Current wording

During the six-month period ended June 30, 2023, we received gross proceeds from the issuance of convertible notes payable of $3,000,001 which was offset by issuance costs of $537,750. Payments of approximately $2,100,000 were made toward the principal and accrued interest amounts for matured convertible notes payable issued in 2021 to both related and non-related parties.