SOBR Safe Inc

Previous wording

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations contain 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”).

Current 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 “may,” “if,” “will,” “should,” “intend,” “expect,” “anticipate,” “plan,” “believe,” “estimate,” “project,” “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”).

Previous wording

At the open of market on October 2, 2024, our 1-for-110 reverse split of our common stock went effective with Nasdaq Capital Markets. As a result, all common stock share amounts, as well as share amounts and exercise and conversion prices have been adjusted to reflect the reverse stock split.

Current wording

At the open of the market on April 4, 2025, our 1-for-10 reverse split of our common stock went effective with Nasdaq Capital Markets (“Nasdaq”). As a result, all common stock share amounts, as well as share amounts and exercise and conversion prices have been adjusted to reflect the reverse stock split.

Previous wording

On September 19, 2011, we, as Imagine Media, Ltd., a Delaware corporation, acquired approximately 52% of the outstanding shares of TransBiotec, Inc. (“TBT”), a California corporation, from TBT’s directors in exchange for 124,439 shares of our common stock. In January 2012, our Board of Directors amended our Certificate of Incorporation changing our name from Imagine Media, Ltd. to TransBiotec, Inc., and we acquired approximately 45% of the remaining outstanding shares of TBT in exchange for 109,979 shares of our common stock. With the acquisitions in September 2011 and January 2012 of TBT common stock, we own approximately 99% of the outstanding shares of TBT. As a result of the acquisitions, TBT’s business is our business, and, unless otherwise indicated, any references to “we” or “us” include the business and operations of TBT.

Current wording

On September 19, 2011, we, as Imagine Media, Ltd., a Delaware corporation, acquired approximately 52% of the outstanding shares of TransBiotec, Inc. (“TBT”), a California corporation, from TBT’s directors in exchange for 124,439 shares of our common stock. In January 2012, our Board of Directors (the “Board”) amended our Certificate of Incorporation, changing our name from Imagine Media, Ltd. to TransBiotec, Inc., and we acquired approximately 45% of the remaining outstanding shares of TBT in exchange for 109,979 shares of our common stock. With the acquisitions in September 2011 and January 2012 of TBT common stock, we own approximately 99% of the outstanding shares of TBT. As a result of the acquisitions, TBT’s business is our business, and, unless otherwise indicated, any references to “we” or “us” include the business and operations of TBT.

Previous wording

Pursuant to approval of an application with Nasdaq to uplist our common stock to their exchange under the ticker symbol “SOBR,” our common stock began trading and quoted on the Nasdaq exchange on May 16, 2023. Prior to this uplist to the Nasdaq exchange, our common stock was quoted on the “OTCQB” tier of the OTC Markets under the ticker symbol “SOBR.”

Current wording

Pursuant to approval of an application with the Nasdaq Capital Market (“Nasdaq”) to uplist our common stock to their exchange under the ticker symbol “SOBR,” our common stock began trading and quoted on the Nasdaq on May 16, 2022. Prior to this uplist to the Nasdaq exchange, our common stock was quoted on the “OTCQB” tier of the OTC Markets under the ticker symbol “SOBR.”

Previous wording

We provide non-invasive technologies to quickly and humanely identify the presence of alcohol in individuals. Our mission is to save lives, positively impact behavioral outcomes and individual wellness, increase workplace safety and productivity, and create significant economic benefits. Our non-invasive technologies are integrated within our scalable and patent-pending software platform, SOBRsafe™, producing statistical, measurable business and user data. To that end, our SOBRsafe™ software platform, along with our integrated hardware devices used to provide non-invasive alcohol detection and identity verification, combine to create a robust solution that has current and potential applications in:

Current wording

We provide non-invasive technology to quickly and discretely monitor, detect and identify the presence of alcohol in individuals. Our mission is to save lives, positively impact behavioral outcomes and individual wellness, increase workplace safety and productivity, and create significant economic benefits. Our non-invasive technologies are integrated within our scalable and patent-pending software platform, SOBRsafe TM, producing statistical, measurable business and user data. We operate as a single segment designed to enable customers to purchase products directly through channel partners, sales agents or through our digital enterprise and consumer channels. To that end, our SOBRsafe software platform, along with our integrated hardware devices, SOBRcheck™ and SOBRsure™, used to provide non-invasive alcohol monitoring, detection and identity verification, combine to create a robust solution that has current and potential applications in:

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, 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 contained in perspiration emitted 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.

Previous wording

Our SOBRsure™ device is a patent-pending, fitness-style wearable band with an alcohol detection solution intended for discrete, low-profile and voluntary use providing real-time alcohol monitoring and GPS tracking. The wearable band is a device which includes a contained sensor which senses alcohol released through the pores of the skin. The wearable band connects to a mobile device via Bluetooth communication where the SOBRsafe™ mobile application collects and transmits data to the SOBRsafe™ software solution. The SOBRsure™ device provides passive, real-time alcohol insights to administrators, clinicians, parents and more, and also includes device removal and service interruption notifications. The SOBRsure™ is in commercial production and became available for sale in late September 2023.

Current wording

Our SOBRsure device is a patent-pending, fitness-style wearable band with an alcohol monitoring and detection solution intended for discrete, low-profile and voluntary use providing qualified, real-time alcohol monitoring and GPS tracking. The wearable band is a device which includes a contained sensor which senses alcohol contained in perspiration released through the pores of the skin. The wearable band connects to a mobile device via Bluetooth communication where the SOBRsafe mobile application collects and transmits data to the SOBRsafe software solution. The SOBRsure device provides passive, qualified, real-time alcohol insights to administrators, clinicians, parents and more, and also includes device removal and service interruption notifications.

Previous wording

Our SOBRsafe™ technology can also be deployed across numerous additional devices for various uses. We are currently exploring possible integrations with existing telematics systems and licensing by non-competitive third parties.

Current wording

Our SOBRsafe technology can also be deployed across numerous additional devices for various uses. We are currently exploring possible integrations with existing systems and licensing by non-competitive third parties.

Previous wording

We believe our device portfolio approach could yield a substantial repository of user data – a potentially monetizable asset for statistical analytics. The opportunity to collect data points over time could enable the development of business and insurance liability benchmarking, through artificial intelligence (AI), powerful guidance for perpetual safety improvement and associated cost savings capture. By demonstrating substance-free environments, organizations could deliver a data-driven argument for lowering insurance premiums. We could potentially partner with insurance providers to encourage use of the SOBRsafe™ devices and/or technology.

Current wording

We believe our device portfolio approach could yield a substantial repository of user data – a potentially monetizable asset for statistical analytics. The opportunity to collect data points over time could enable the development of business and insurance liability benchmarking, through artificial intelligence (“AI”), powerful guidance for perpetual safety improvement and associated economic cost savings capture. By demonstrating substance-free environments, organizations could deliver a data-driven argument for a reduction in annual insurance premiums. We could potentially partner with insurance providers to encourage use of the SOBRsafe devices and/or technology.

Previous wording

Design, manufacturing, quality testing and distribution for all SOBRsafe™ integrated devices takes place in the United States.

Current wording

Continuing in fiscal 2025, and as in prior years, the design, manufacturing, quality testing and distribution for all SOBRsafe integrated devices take place in the United States.

Previous wording

Our products continue to gain awareness and recognition through trade shows, media exposure, social media and product demonstrations. To generate sales, we have a three-part strategy: 1) direct sales to businesses and consumers, 2) enter into agreements with channel partners and 3) enter into licensing and integration agreements. We currently employ four highly experienced sales professionals facilitating direct sales and channel partner relationships. Licensing and integration opportunities with non-competitive third parties continue in preliminary stages.

Current wording

Our brand, products and software services continue to gain awareness and recognition through a robust marketing platform, trade shows, media exposure, social media and product demonstrations. To generate sales, we have a three-part strategy: 1) direct sales to enterprise businesses and consumers, 2) enter into agreements with channel partners and 3) enter into licensing and integration agreements. We currently employ four highly experienced sales professionals facilitating direct sales and channel partner relationships. Licensing and integration opportunities with third parties continue in preliminary stages.

Previous wording

During the nine-months ended September 30, 2024, the following developments occurred:

Current wording

During the quarter ended March 31, 2025, the following developments occurred:

Previous wording

Subsequent to the nine-months ended September 30, 2024, the following developments occurred and are reflective of the reverse stock split completed on October 2, 2024 as detailed below:

Current wording

Subsequent to the three-months ended March 31, 2025, the following developments occurred and are reflective of the reverse stock split completed on April 2, 2025 as detailed below:

Previous wording

The cost of goods and services for the three-months ended September 30, 2024, was $15,992 resulting in a gross profit of $30,137 and a gross margin of 65%. The cost of goods and services for the three months ended September 30, 2023, was $20,195 resulting in a gross profit of $16,079 and a gross margin of 44%. The increase in gross profit margin of $ 14,058 was due to a higher proportion of revenue being attributed to recurring SaaS subscriptions, and SOBRsure TM device sales and user subscriptions. Due to the limited history of generating revenue, the gross profit and gross margin for the three months ended September 30, 2024, and 2023 may not be indicative of future planned or actual performance of the Company, its product lines or SaaS services.

Current wording

The cost of sales for the three-months ended March 31, 2025, was $35,653 resulting in a gross profit of $50,964 and a gross margin of 58.8%. 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 increase in gross margin can be attributed to higher SOBRsure sales and an increase in software subscriptions which generate higher margins than the SOBRcheck device which was our primary source of revenue in the prior year quarter. Due to the limited history of generating revenue, the gross profit and gross margins during the periods ended March 31, 2025 and 2024 are not indicative of future planned or actual performance of the Company, its product lines or services.

Previous wording

Notes payable conversion expense was $585,875 for the nine months ended September 30, 2024. This expense relates to the Convertible Debt Inducement completed on March 4, 2024.

Current wording

There was no conversion of debt or associated interest expense for the three-months ended March 31, 2025 as in prior periods. The conversion expense of $585,875 for the three months ended March 31, 2024 relates to the convertible debt inducement completed on March 4, 2024.

Previous wording

Interest expense decreased by $173,106 from $179,014 for the three months ended September 30, 2023, to $5,908 for the three months ended September 30, 2024. The decrease in interest expense is due to the conversion of the outstanding convertible debt balances by the noteholders to equity during the second quarter of 2024.

Current wording

Interest expense decreased by $228,851, from $232,516 for the three-months ended March 31, 2024, to $3,665 for the three-months ended March 31, 2025. This decrease was due to make-whole interest related to outstanding convertible debt as the conversion of debt to common stock was completed on March 4, 2024. This component of interest expense was offset by a decrease in overall interest expense on the remaining convertible debt post conversion.

Previous wording

Our operating loss of $1,847,868 for the three months ended September 30, 2024 decreased by $219,175, or 11%, from $2,067,043 for the three months ended September 30, 2023. The change in our operating loss for the three months ended September 30, 2024, compared to the same prior year period, is primarily a result in a reduction in employee payroll and benefits expense, and stock-based compensation expense offset by an increase in increased professional services and marketing expenses as detailed above.

Current wording

Our net loss decreased by $626,866 from $2,505,921 to $1,879,055, from the three-months ended March 31, 2024, compared to the three-months ended March 31, 2025. The change in our net loss and operating loss for the three months ended March 31, 2025, compared to the same prior year period, is driven by a decrease in stock-based compensation expense, a decrease in research and development expenses, a decrease in notes payable conversion and associated interest expense, offset by increased general and administrative expense, as detailed above.

Previous wording

Liquidity and Capital Resources for Nine Months Ended September 30, 2024 Compared to December 31, 2023

Current wording

Liquidity and Capital Resources for Three Months Ended March 31, 2025 Compared to December 31, 2024

Previous wording

During the nine-months ended September 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 September 30, 2024, was $304,537 and our current normalized operating cash flow burn rate is approximately $550,000 per month.

Current wording

During the three-months ended March 31, 2025 and 2024, 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 may need additional capital in the near term. Our cash on hand as of March 31, 2025, was $10,074,029 and our current normalized operating cash flow burn rate is approximately $675,000 per month.

Previous wording

Management believes that cash balances at September 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 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 September 30, 2024. As such, substantial doubt about the entity’s ability to continue as a going concern has not been alleviated as of September 30, 2024.

Current wording

Management believes that cash balances and positive working capital at March 31, 2025 provide adequate operating capital for operating activities for the next twelve months after the date these financial statements are issued. Management anticipates additional revenue generation with the release of its second generation SOBRsure TM device and a comprehensive marketing plan. These plans are contingent upon the actions to be performed by the Company which have been implemented through the quarter and will continue into future periods, however, these conditions have not been met on or before March 31, 2025. The Company has acquired additional proceeds net of transactional costs from the exercise of outstanding warrants of approximately $3,496,391 during the first quarter of 2025, increasing the Company’s cash balances. As such, Management believes despite limited revenue generation and positive operating cash flows being generated in the past, adequate cash balances and working capital are available to support ongoing operations for the next twelve months and the Company will continue as a going concern at March 31, 2026.

Previous wording

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

Current wording

Our cash, total current assets, total assets, total current liabilities, and total liabilities as of March 31, 2025, and as of December 31, 2024, respectively, are as follows:

Previous wording

Our total current liabilities and total liabilities decreased as of September 30, 2024, as compared to December 31, 2023. The decrease in total liabilities is primarily due to the conversion of the outstanding convertible debt balances and related interest expense due in March 2025 by the noteholders to equity during the second quarter of 2024 of approximately $2,450,000. Other decreases include a reduction in accounts payable and accrued expenses of approximately $510,000, offset by current notes payable for insurance premiums of approximately $162,000.

Current wording

Our total current liabilities decreased as of March 31, 2025, as compared to December 31, 2024. The decrease is primarily attributed to the payment of accounts payable and accrued expenses, and the premium financing payable for insurance premiums.

Previous wording

We had net cash used in operating activities of $4,911,028 for the nine-month period ended September 30, 2024, as compared to net cash used in operating activities of $4,705,018 for the nine-month period ended September 30, 2023. For the period in 2024, the net cash used in operating activities consisted primarily of our net loss of $6,424,505, offset by non-cash expense items including amortization of $289,098, amortization of debt discounts of $237,250, stock-based compensation expense of $584,551, non-cash interest expense of $336,510, non-cash lease expense of $67,315, non-cash conversion expense of $585,875 and changes in our assets and liabilities for accounts receivable of ($20,573), inventory of $72,798, prepaid expenses of $86,566, other assets of ($21,534), accounts payable of ($200,355), accrued expenses of ($306,941), accrued interest payable of ($126,086), bad debt expense of $202, and operating lease liabilities of ($71,199).

Current wording

For the three month period in 2025, the net cash used in operating activities consisted primarily of our net loss of $1,879,055, offset by non-cash expense items including amortization of $96,366, stock-based compensation expense of $139,678, lease expense of $24,314, and changes in our assets and liabilities primarily from inventory of $31,007, other assets of $23,675, prepaid expenses of $3,155, accrued expenses of ($105,998), and operating lease liabilities of ($26,562).

Previous wording

For the period in 2023, the net cash used in operating activities consisted primarily of our net loss of $7,673,030, offset by non-cash expense items including amortization of $289,098, amortization of debt discounts of $417,647, loss on extinguishment of debt of $26,125, stock-based compensation expense of $1,836,674, non-cash interest expense of $29,638, non-cash lease expense of $34,714, bad debt expense of $1,132 and changes in our assets and liabilities for accounts receivable of $3,456, inventory of ($51,721), prepaid expenses of $571,129, other assets of ($18,411), accounts payable of $106,054, accrued expenses of $13,171, accrued interest payable of ($281,079), related party payables of ($1,887), and operating lease liabilities of ($7,728).

Current wording

For the three-months ended March 31, 2024, 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.

Previous wording

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

Current wording

We had no cash provided by or used in investing activities during the three-month periods ended March 31, 2025 or March 31, 2024.