SOBR Safe, Inc.: Form 10-Q for the period ended Sep 30, 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 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 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.

The following discussion:

• summarizes our plan of operation; and
• analyzes our financial condition and the results of our operations for the nine months ended September 30, 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.

26

Table of Contents

Business Operations, Outlook and Challenges

We provide non-invasive technology to quickly and discreetly 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.

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 development and acquisition of new technology, 5) for potential acquisition of a key asset, and 6) for sales expansion.

Alcohol Use Disorder and Its Effects

SOBR Safe is committed to addressing the increasing diagnosis of Alcohol Use Disorder (“AUD”) which is a medical condition characterized by an inability to control or stop the use of alcohol despite the adverse effects and consequences. According to the National Institute on Alcohol Abuse and Alcoholism (“NIAAA”) approximately 29 million individuals in the United States and 283 million globally suffer from this diagnosis where the problematic use of alcohol can result in both short- and long-term health issues including effects on behavioral wellness and overall physical health. The NIAA also notes AUD increased by 38% during the COVID pandemic creating a surge in diagnoses and untreated cases.

In the United States, alcohol consumption and AUD can be linked to more than 200 diseases including 50% of all liver disease and 25% of pancreatitis cases and contributes to 5% of cancer related deaths. Approximately 178,000 alcohol related deaths occurred in the United States during 2022 and continue to increase annually.

Further attributing to the ongoing and ever-increasing AUD epidemic, less than 10% of those affected have available or receive treatment leaving approximately 26 million in the United States without traditional medical treatment options. The demographics of the 26 million untreated individuals cover a wide range including 17 million men and 12 million women with 1.5 million under the age of 21. Those who are not able to receive medications or clinical behavioral treatments must work to find alternative solutions to address and recover from AUD such as the SOBR Safe monitoring and detection solutions. We continue ongoing efforts to identify the wide-ranging demographics of the AUD epidemic in an effort to provide solutions defined for each group according to their treatment needs and journeys.

27

Table of Contents

We have begun executing a strategic initiative to expand beyond our core cloud-based alcohol monitoring and detection solutions to establish a broader presence within the health and wellness ecosystem. This evolution reflects SOBR’s commitment to supporting users not only in maintaining sobriety but also in achieving overall physical and mental well-being. Approximately 40% of Americans who experience AUD each year also experience depression, and around 35% live with anxiety. This overlap highlights a sizable total addressable market that spans behavioral health providers including sober living facilities, intensive outpatient programs, and residential treatment centers as well as retail consumers managing recovery for themselves or supporting a loved one. We believe this expansion will strengthen user engagement, diversify revenue streams, and position the Company as a comprehensive wellness technology provider in the future. Our ongoing focus will be placed on product innovation, providing data-driven user insights, and ensuring that new offerings remain consistent with our mission to promote a healthier, safer world free from the impacts of alcohol with balanced lifestyles.

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 September 30, 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 nine months ended September 30, 2025, the following developments occurred:

• Achieved an increase in revenue of 102.1% from the prior year nine-month period.
• Net proceeds of approximately $3.3M 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.
• We effected and completed a 1-for-10 reverse stock split of the Company’s common stock on April 4, 2025, a Share Combination Event, reducing the total number of outstanding shares from approximately 15.2 million to 1.5 million. 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. 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, which was paid in full in July 2025.
• 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.
• Additional marketing focused campaigns have been conducted to coincide with key national initiatives including Recovery Month in September 2025.
• Broadened the global reach of SOBRsafe users and subscribers across all 50 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.
• Converted the Company’s website presence to an ecommerce platform supporting both business to business and business to consumer channels facilitating hardware and software subscription sales creating a scalable mechanism for future sale growth.
• Launched a comprehensive customer service support center to provide broader range of services including inbound and outbound communication capabilities.
• Partnering with a leading university in the United States to support their research and development of a transdermal alcohol analytics platform utilizing SOBRsure devices for essential data acquisition.
• On July 17, 2025, the Company’s stockholders approved and ratified an amendment to increase the number of shares authorized under the 2019 Equity Incentive Plan to 350,000 shares.

28

Table of Contents

Subsequent to the nine months ended September 30, 2025, the following developments occurred as detailed below:

• As of October 31, 2025, the Company has successfully exited the one-year monitoring period by the Nasdaq Listing Qualification staff which expired on October 30, 2025. Thus, the Company is no longer subject to limitations surrounding the granting of addition time periods to cure and regain compliance with applicable Nasdaq listing requirements should the Company fall out of compliance in the future.

Summary of Results of Operations

Results of Operations for Three Months Ended September 30, 2025, Compared to Three Months Ended September 30, 2024

Revenue

Revenues of $108,893 for the three months ended September 30, 2025 have increased by $62,764, or an increase of 136.1%, as compared to the prior year period of $46,129. This increase is primarily driven by increased sales of our SOBRsure device of $25,059, or 336.0%, and an increase in sales of our SOBRsure software subscriptions of $41,915, or 312.5%. These increases have been offset by increases in sales returns and discounts of $7,130. During the three months ended September 30, 2025, the Company sold 277 unique SOBRsure 2nd generation devices, representing an increase of 55.6% from 178 unique sales of SOBRsure 2nd generation devices during the three months ended June 30, 2025.

Gross Profit

The cost of goods and services for the three months ended September 30, 2025, was $71,026 resulting in a gross profit of $37,867 and a gross margin of 34.8%. 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 65.3%. The decrease in gross margin is primarily driven by two factors: (i) strategic price reductions to the SOBRsure devices and software subscriptions and (ii) an increase in cost of goods associated with product replacements. The pricing adjustments reflect a proactive approach to enhancing market competitiveness and expanding our customer base. The replacements were linked to specific product quality issues that have since been identified and addressed. The Company has implemented corrective actions, including enhanced quality assurance processes and supplier performance reviews, to mitigate similar issues going forward. We expect these efforts to support margin recovery in future periods while maintaining our focus on customer satisfaction and product integrity. While these actions contributed to a short-term decline in gross margin, they are expected to support revenue growth and improve margin performance over the longer term.

General and Administrative Expenses

General and administrative expenses increased by $618,345, from $1,499,296 for the three months ended September 30, 2024, to $2,117,641 for the three months ended September 30, 2025. This increase is primarily attributable to an increase in payroll costs of $286,965, an increase in business development costs of $156,002, an increase in professional services spend of $155,926 principally in marketing efforts, and an increase in travel costs of $19,571.

29

Table of Contents

Stock-Based Compensation Expense

The Company had stock-based compensation expense of $115,250 for the three months ended September 30, 2025, compared to $184,243 for the three months ended September 30, 2024. The reduction in stock-based compensation expense is due to previously issued equity compensation awards becoming fully vested and no issuance of new awards in 2025.

Research and Development

Research and development expenses decreased by $164,364, or 84.5%, to $30,102 for the three months ended September 30, 2025, compared to $194,466 for the three months ended September 30, 2024. The decrease in research and development is driven by focusing on improvements to its existing SOBRsafe software platform and enhancements to its mobile application, whereas the prior year spend was primarily driven by more expensive hardware development initiatives including the development of the second generation of the SOBRsure device.

Other Income, net

Other income, net increased by $34,893 from $12,566 for the three months ended September 30, 2024, to $47,459 for the three months ended September 30, 2025. Other income consists primarily of interest income earned on cash deposits. The increase in interest income is due to more cash on hand during 2025 when compared to the same period in 2024 as a result of cash proceeds from the 2024 PIPE Financing in October 2024, and the Series A Warrant exercises completed in the fourth quarter of 2024 and the first quarter of 2025.

Interest Expense

Interest expense increased by $3,053 from $5,908 for the three months ended September 30, 2024, to $8,961 for the three months ended September 30, 2025. This increase is due to an increase in the premium financing note payable balance at September 30, 2025.

Operating Loss; Net Loss

Our operating loss increased by $377,258 from $1,847,868 for the three months ended September 30, 2024, compared to $2,225,126 for the three months ended September 30, 2025. 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 an increase in general and administrative expense (as detailed above), offset by decreases in stock-based compensation and research and development expenses.

Our net loss increased by $345,418 from $1,841,210 for the three months ended September 30, 2024, to $2,186,628 for the three months ended September 30, 2025. The change in our net loss for the three months ended September 30, 2024, compared to the same prior year period, is primarily a result in an increase our operating loss as detailed above, offset by an increase in interest income.

30

Table of Contents

Results of Operations for Nine Months Ended September 30, 2025, Compared to Nine Months Ended September 30, 2024

Revenue

Revenues of $299,738 for the nine months ended September 30, 2025, have increased by $151,428, or 102.1%, as compared to the prior year period of $148,310. This increase from the prior year period is primarily driven by increased sales of our SOBRsure device of $94,960, or 195.1%; an increase in sales of our SOBRsure subscriptions of $72,593, or 412.5%; an increase in our SOBRcheck subscriptions of $6,362, or 10.1%. These increases are offset by decreased sales of our SOBRcheck device of $14,888 and an increase in discounts and returns of $9,991. During the first nine months of 2025, the Company sold 603 unique SOBRsure 2nd generation devices after being launched in the fourth quarter of 2024.

Gross Profit

The cost of goods and services for the nine months ended September 30, 2025 was $151,023 resulting in a gross profit of $148,715 and a gross margin of 49.6%. The cost of goods and services for the nine months ended September 30, 2024 was $81,929 resulting in a gross profit of $66,381. The prior period cost of goods and services included an inventory cost adjustment of $23,410 resulting in an adjusted gross margin of 58.4%. The decrease in gross margin is primarily driven by an increase in cost of goods associated with product replacements during the third quarter of 2025. The replacements were linked to specific product quality issues that have since been identified and addressed. While this impacted gross margin in the short term, the Company has implemented corrective actions, including enhanced quality assurance processes and supplier performance reviews, to mitigate similar issues going forward. We expect these efforts to support margin recovery in future periods while maintaining our focus on customer satisfaction and product integrity. The gross margin adjusted for these replacements was 59.7%.

General and Administrative Expenses

General and administrative expenses increased by $1,445,347, or 33.5%, from $4,310,791 for the nine months ended September 30, 2024, to $5,756,138 for the nine months ended September 30, 2025. This increase is primarily attributable to an increase in professional services spend of $852,678 principally for the 2025 consumer and commercial marketing programs launched for the first time, an increase in payroll costs of $548,060, an increase in business development expense of $80,494 offset by a decrease in insurance spend of $28,748.

31

Table of Contents

Stock-Based Compensation Expense

The Company had stock-based compensation expense of $370,180 for the nine months ended September 30, 2025, compared to $584,551 for the nine months ended September 30, 2024. The reduction in stock-based compensation expense is due to previously issued equity compensation awards becoming fully vested and no issuance of new awards in 2025.

Research and Development

Research and development expenses for the nine months ended September 30, 2025, and 2024, decreased by $335,226, or 55.4%, from $604,927 for the nine months ended September 30, 2024, to $269,701 for the nine months ended September 30, 2025. The decrease in research and development is due to the Company making improvements to its existing SOBRsafe software platform and enhancements to its mobile application, whereas the prior year spend was primarily driven by more expensive hardware development initiatives including the second generation of the SOBRsure device.

Other Income, net

Other income, net increased by $153,911 from $46,978 for the nine months ended September 30, 2024 to $200,889 for the nine months ended September 30, 2025. Other income consists primarily of interest income earned on cash deposits. The increase is due to more cash on hand during 2025 when compared to the same period in 2024 as a result of cash proceeds from the 2024 PIPE Financing in October 2024, and the Series A Warrant exercises completed in the fourth quarter of 2024 and the first quarter of 2025.

Interest Expense

Interest expense decreased by $436,967 from $451,720 for the nine months ended September 30, 2024, to $14,753 for the nine months ended September 30, 2025. This decrease was due to make-whole interest related to outstanding convertible debt as the conversion of debt to common stock was completed in the prior year.

Operating Loss; Net Loss

Our operating loss increased by $813,416, from $5,433,888 for the nine months ended September 30, 2024, compared to $6,247,304 for the nine months ended September 30, 2025. The change in our operating loss for the three months ended September 30, 2025, compared to the same prior year period, is primarily a result in an increase in general and administrative expense as detailed above, offset by decreases in stock-based compensation and research and development expenses.

Our net loss decreased by $363,337 from $6,424,505 for the nine months ended September 30, 2024, compared to $6,061,168 for the nine months ended September 30, 2025. The change in our net loss for the nine months ended September 30, 2025, compared to the same prior year period, is primarily a result of notes payable conversion expense not experienced in 2025 and a decrease in interest expense for make-whole interest, and an increase in interest income. These decreases were offset by the increase in our operating loss as compared to the prior period detailed above.

Liquidity and Capital Resources for Nine Months Ended September 30, 2025, Compared to December 31, 2024

Introduction

During the nine months ended September 30, 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 will need additional capital in the near term. Our cash on hand as of September 30, 2025, was $4,711,664 and our current normalized operating cash flow burn rate is approximately $560,000 per month.

32

Table of Contents

Management believes that cash balances and positive working capital at September 30, 2025 do not 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 device and a comprehensive marketing plan. In addition, the Company’s plans and ability to access capital sources and implement 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 which have been implemented through the quarter and will continue into future periods, however, these conditions have not been met on or before November 12, 2025. As such, substantial doubt about the Company’s ability to continue as a going concern has not been alleviated at September 30, 2025.

Our cash, current assets, total assets, current liabilities, and total liabilities as of September 30, 2025, and as of December 31, 2024, respectively, are as follows:

Our total current assets and total assets decreased as of September 30, 2025, as compared to December 31, 2024, primarily due to a decrease in cash of $3,672,378, amortization of SOBRsafe Intellectual Technology and Right-of-Use assets of approximately $364,000, and lower inventory on hand of approximately $82,600, offset by an increase in prepaid expenses of approximately $121,000 and accounts receivable of approximately $8,000.

Our total current liabilities and total liabilities decreased as of September 30, 2025, as compared to December 31, 2024. The decrease was primarily due to a decrease in accounts payable of approximately $27,500, and accrued expenses of approximately $138,000. The decrease in accrued expenses during the period was primarily driven by the payment of approximately $82,600 for transactional costs related to the exercise of Series A Warrants in 2024. The decrease in current liabilities is offset by an increase in notes payable of approximately $83,000, deferred revenue of approximately $10,000, and operating lease liabilities of approximately $10,300.

Sources and Uses of Cash

Operations

We had net cash used in operating activities of $5,330,526 for the nine months ended September 30, 2025, as compared to net cash used in operating activities of $4,911,028 for the nine months ended September 30, 2024. During the period in 2025, the net cash used in operating activities consisted primarily of our net loss of $6,061,168, offset by non-cash expense items including amortization of $291,006, stock-based compensation expense of $370,182, non-cash lease expense of $74,968, and changes in our assets and liabilities; accounts receivable of $17,414, inventory of $82,645, prepaid expenses of $152,161, other assets of $26,889, accounts payable and accrued expenses of $195,596, and deferred revenue of $10,092 and operating lease liabilities of $81,712.

For the nine months ended September 30, 2024, the net cash used in operating activities of $4,911,028 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 debt conversion expense of 585,875, non-cash interest expense of $336,510, non-cash lease expense of $67,315, and changes in our assets and liabilities; accounts receivable of $20,573, inventory of $72,798, and prepaid expenses of $86,566, accounts payable and accrued expenses of $507,296, accrued interest payable of 126,086 and operating lease liabilities of $71,199.

Investments

For the nine months ended September 30, 2025 the net cash used in investing activities of $38,172 consisted of our purchase of office leasehold and furniture improvements. There was no cash provided by or used in investing activities during the nine months September 30, 2024.

33

Table of Contents

Financing

Our net cash provided by financing activities for the nine months ended September 30, 2025, was $1,696,320. Net cash from financing activities consisted of proceeds from the exercise of warrants of $3,680,411, offset by issuance costs of $184,021, financing payments of $160,070 for annual insurance premiums and the payment of $1,640,000 for the PIPE Warrant True-up Payment.

Our net cash provided by financing activities for the nine months ended September 30, 2024, was $2,425,418. During the nine months ended September 30, 2024, we received gross proceeds from the exercise of warrants for $2,786,174, which was offset by transactional costs of $360,756.

Contractual Obligations and Commitments

At September 30, 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 September 30, 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.

34

Table of Contents

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 September 30, 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 September 30, 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 September 30, 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 September 30, 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 September 30, 2025, this note was in default.

(a) Evaluation of Disclosure Controls and 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 September 30, 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 September 30, 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.

35

Table of Contents

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.

While we contract with US-based suppliers for our products, we may be indirectly exposed to third-party vendor risk.

We use multiple US-based suppliers to manufacture our products, and such suppliers may have complex supply chains, making it challenging for us to identify all the risks in the supply chain. In addition, such suppliers may contract separately with sub-suppliers that may be located in different countries with different laws and regulations, making it difficult to ensure compliance. While we conduct due diligence before engaging a supplier and regularly review and assess their performance, our due diligence review does not include any sub-suppliers they may use, nor have we worked with our suppliers to improve their risk management practices. In addition, we have not developed contingency plans to address potential disruptions in our supply chain, such as identifying alternative suppliers or building up inventory.