SOBR Safe, Inc.: Form 10-Q/A for the period ended Mar 31, 2025

Disclaimer Regarding Forward Looking Statements

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”).

Although the forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

Reverse Stock Split

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.

Corporate Overview

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.

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.

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.”

Our corporate offices are located at 6400 South Fiddlers Green Circle, Suite 1400, Greenwood Village, Colorado 80111, telephone number (844) 762-7723.

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The following discussion:

• summarizes our plan of operation; and
• analyzes our financial condition and the results of our operations for the three-months ended March 31, 2025.

This discussion and analysis should be read in conjunction with our financial statements included as part of this Quarterly Report on Form 10-Q, as well as our financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Business Operations, Outlook and Challenges

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, SOBRsafeTM, 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:

• Behavioral health and wellness
• Judicial administrative applications
• Licensing and integration
• Commercial environments, including but not limited to oil and gas, fleet management, telematics, ride share programs, and general workplace safety
• Individual consumer use, including co-parenting trust, personal accountability, and adolescent driver safety

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.

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.

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.

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.

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.

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.

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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.

Marketing

We have developed a marketing plan that includes:

• consumer and enterprise e-commerce web-solutions,
• search engine optimization (SEO) and search engine marketing (SEM),
• integrated digital and traditional media campaigns,
• brand ambassadors, affiliate partners and social media influencers,
• public relations initiatives and trade shows,
• business to business targeted digital campaigns,
• alcohol detection/testing channel partners,
• territorial sales agents,
• advocacy group alignment,
• ongoing brand development, and
• continuous pursuit of cutting-edge technologies for future integration.

As of March 31, 2025, we have retained six channel partners to augment our sales and marketing efforts, serving business customers with SOBRsafe technology solutions, including the SOBRcheck and SOBRsure devices.

Recent Developments

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

• Achieved an increase in revenue of 80.5% from the prior year quarter coupled with an improving gross margin of 58.8%.
• Net proceeds of approximately $3.5M were received from the exercise of outstanding warrants during the quarter ended March 31, 2025, which were issued in conjunction with the 2024 PIPE Financing completed in October 2024.
• Completed a 1-for-10 reverse stock split of its common stock on April 4, 2025, reducing the total number of SOBRsafe's outstanding shares from approximately 15.2 million to 1.5 million.
• Enhanced SOBRsafe's patent-pending software technology solutions with improvements to the mobile application including streamlined administration application and notification protocols, and introduced new user interface elements.
• Completed third-party hardware product validation tests in the first quarter of 2025 and a corresponding third-party product sensor validation test.
• Collaborated with a national marketing firm providing solutions to and for the largest U.S. newspaper publisher and the largest local-to-national publishing and digital media organization in the United States, launching both business-to-consumer and business-to-business marketing initiatives building brand recognition and support 2025 sales efforts. The effort has generated improved brand awareness and stimulated market adoption through the multi-channel, multi-disciplined national marketing campaigns.
• Initiated a robust marketing campaign in March 2025 which was executed in April 2025 to correspond with the National Council on Alcohol and Drug Dependence Alcohol Awareness Month.
• Broadened the global reach of SOBRsafeTM users and subscribers across 43 U.S. states, Canada, Australia, and New Zealand, while launching an alcohol detection and testing program for airport personnel and pilots outside of the U.S., building upon the Company's global footprint.
• Expanded business-to-business sales in the first quarter of 2025 into the family law market to address the approximate 450,000 individuals undergoing domestic monitoring.

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:

• On April 4, 2025, we effected a 1-for-10 reverse stock split, a Share Combination Event, of the Company’s common stock. Fractional shares as a result of the reverse stock split were rounded up to one full share of common stock. Following the reverse stock split, the exercise price of the Series A Warrants issued in conjunction with the 2024 PIPE Financing was reduced to the Floor Price of $7.60 per common share and resulted in an additional 110,273 warrants issued to the remaining warrant holders. Further, the Share Combination Event resulted in the calculation of a True-up Payment due to the remaining holders limited to a ceiling of $1,640,000. We have evaluated the impact of the True-up Payment liability and determined that the amount will not have an impact on our ability to continue and fund operations going forward.

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Results of Operations for Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

Summary of Results of Operations

Revenue

Both the SOBRcheckTM and SOBRsureTM devices are used in conjunction with our SOBRsafeTM software solution to generate sales and revenue. Revenue is primarily generated through our business-to-consumer eCommerce platform and business-to-business sales channels including the execution of customer agreements. As of March 31, 2025, 148 unique devices have been deployed to generate hardware and software revenue which represent a 40.9% increase from the prior period ended, December 31, 2024. During the three-month periods ended March 31, 2025, and March 31, 2024, we recognized revenue of $86,617 and $47,990, respectively, or an increase of 80.4% from the prior-year quarter.

Gross Profit

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.

General and Administrative Expenses

General and administrative expenses increased by $407,907, from $1,415,562 for the three-months ended March 31, 2024, to $1,823,469 for the three-months ended March 31, 2025. The increase from the same prior year period is primarily due to an increase in payroll expense as a result of our increased employee headcount which has been offset by a decreased reliance on and in third-party professional service and consulting fees.

Stock-Based Compensation Expense

The Company had stock-based compensation expense of $139,678 for the three-months ended March 31, 2025, compared to $214,398 for the three-months ended March 31, 2024. The decrease from the prior year in expense of $74,720 is from the completed vesting, forfeitures and cancelations of previous grants. The stock-based compensation expense for both respective periods was related to the issuance of our stock options or restricted stock units as compensation to certain consultants and employees that is recognized over the period of service. During 2024 and through the three-months ended March 31, 2025, we have not granted additional stock-based compensation units.

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Research and Development

Research and development expenses decreased by $61,110, to $40,924 for the three-months ended March 31, 2025, compared to $102,034 for the three-months ended March 31, 2024. The decrease in research and development costs during the quarter ended March 31, 2025, can be attributed to the completion of development of the second generation SOBRsure wearable device at the end of 2024 with no commensurate hardware development projects beginning in the period. Research and development expense during the three-months ended March 31, 2025 can be attributed to the continuing enhancement of our SOBRsafe software products and mobile application.

Other Income (Expense), net

Other income, net of $74,052 for the three-months ended March 31, 2025 is comprised primarily of interest income derived from invested cash balances, as compared to $21,255 for the three-months ended March 31, 2024 which was generated from lower cash balances during the prior-year period.

Other expense, net of $797,136 for the three-months ended March 31, 2024 is attributed to the conversion of debt and associated interest expense during the three months ended March 31, 2024.

Notes Payable – Conversion Expense

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.

Interest Expense

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.

Operating Loss; Net Loss

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.

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

Introduction

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.

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 SOBRsureTM 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.

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:

Our total current assets and total assets increased as of March 31, 2025, as compared to December 31, 2024, primarily due to proceeds received from the exercise of common stock warrants issued in the 2024 PIPE Financing transaction yielding approximately $3.5 million in net cash proceeds offset by cash flow used in general operations.

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.

Sources and Uses of Cash

Operations

We had net cash used in operating activities of approximately $1,706,000 for the three-months ended March 31, 2025, as compared to net cash used for operating activities of approximately $1,454,000 for the three-months ended March 31, 2024.

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).

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.

Investments

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

Financing

Our net cash provided by financing activities for the three-months ended March 31, 2025, was $3,395,484. For the three-months ended March 31, 2025, our net cash from financing activities consisted of proceeds from the exercise of warrants of $3,680,411, offset by issuance costs of $184,020 and financing payments of $100,907 for annual insurance premiums.

We had no cash provided by or used in financing activities during the three-months ended March 31, 2024

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Contractual Obligations and Commitments

At March 31, 2025, the Company had contractual commitments to make payments under operating leases. Payments due under these commitments are as follows:

For additional information about our contractual commitments for these leases, see “Note 5 – Leases” included in our Notes to the Condensed Consolidated Financial Statements.

Off Balance Sheet Arrangements

We have no off-balance sheet arrangements as of March 31, 2025, and December 31, 2024.

Effects of Inflation

We do not believe that inflation has had a material impact on our business, revenue or operating results during the periods presented. However, continued increases in inflation could have an adverse effect on our results of future operations, financial position, and liquidity in 2025.

Recent Accounting Pronouncements

New pronouncements issued for future implementation are discussed in Note 1 to the financial statements.

On December 28, 2010, we borrowed $11,810 from a related party. The note payable carries an interest rate of 0% and matured on December 31, 2012. As of March 31, 2025, this note was in default.

On February 20, 2012, we borrowed $3,750 from a non-related party. The note payable carries an interest rate of 12% and matured on February 19, 2013. As of March 31, 2025, this note was in default.

On March 20, 2012, we borrowed $5,433 from a non-related party. The note payable carries an interest rate of 12% and matured on March 19, 2013. As of March 31, 2025, this note was in default.

On September 27, 2013, we borrowed $15,000 from a non-related party. The note payable carries an interest rate of 9% and matured on December 25, 2013. As of March 31, 2025, this note was in default.

On July 31, 2015, we borrowed $2,500 from a non-related party. The note payable carries an interest rate of 10% and matured on November 28, 2015. As of March 31, 2025, this note was in default.

(a) Evaluation of Disclosure and Controls Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (our Principal Executive Officer) and Chief Financial Officer (our Principal Accounting Officer), of the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rules 13a – 15(c) and 15d – 15(e)). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer, who are our Principal Executive Officer and Principal Financial Officer, respectively, concluded that, as of the quarter ended March 31, 2025, our disclosure controls and procedures were effective.

In designing and evaluating the disclosure controls and procedures, management recognizes that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their desired control objectives. Additionally, in evaluating and implementing possible controls and procedures, management is required to apply its reasonable judgment.

(b) Changes in Internal Controls over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Our process for evaluating controls and procedures is continuous and encompasses constant improvement of the design and effectiveness of established controls and procedures and the remediation of any deficiencies, which may be identified during this process.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

(c) Officer’s Certifications

Appearing as an exhibit to this quarterly report on Form 10-Q are “Certifications” of our Chief Executive and Financial Officer. The Certifications are required pursuant to Sections 302 of the Sarbanes-Oxley Act of 2002 (the “Section 302 Certifications”). This section of the quarterly report on Form 10-Q contains information concerning the Controls Evaluation referred to in the Section 302 Certifications. This information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.

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As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item. However, our current risk factors are set forth in our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC on April 15, 2025.