sobr_10qa.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10‑Q/A

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission file number: 000-53316

SOBR SAFE, INC.

(Exact name of registrant as specified in its charter)

Delaware		26-0731818
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

6400 S. Fiddlers Green Circle, Suite 1400 Greenwood Village, Colorado		80111
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (844) 762-7723

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

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

Common Stock, $0.00001 par value

SOBR

The Nasdaq Market LLC (Nasdaq Capital Market)

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

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

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

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

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of May 15, 2025, there were 1,516,145 shares of common stock, $0.00001 par value, issued and outstanding.

Explanatory Note

This Amendment No. 1 on Form 10-Q/A (this “Amendment”) to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 (the “Form 10-Q”) of SOBR Safe, Inc. (the “Company”) is being filed solely for the purpose of furnishing Exhibit 101 (Interactive Data File) to the Form 10-Q, which was not included in the original filing of the Form 10-Q with the Securities and Exchange Commission on May 15, 2025 (the “Original Filing Date”).

Except as described above, no changes have been made to the Form 10-Q and the Amendment does not modify or update the disclosures presented in, or exhibits to, the original filing of the Form 10-Q in any way. The Amendment continues to speak as of the date of the Original Filing. Furthermore, the Amendment does not reflect events occurring after the filing of the Original Filing. Accordingly, the Amendment should be read in conjunction with the Original Filing, as well as the Company’s other filings made with the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act subsequent to the filing of the Original Filing.

SOBR SAFE, INC.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

ITEM 1	Condensed Consolidated Financial Statements	3

ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

ITEM 3	Quantitative and Qualitative Disclosures About Market Risk	31

ITEM 4	Controls and Procedures	32

PART II – OTHER INFORMATION

ITEM 1	Legal Proceedings	33

ITEM 1A	Risk Factors	33

ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds	33

ITEM 3	Defaults Upon Senior Securities	34

ITEM 4	Mine Safety Disclosures	34

ITEM 5	Other Information	34

ITEM 6	Exhibits	35

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PART I – FINANCIAL INFORMATION

Forward-Looking Statement Disclaimer

This Quarterly Report includes forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements are based on management’s beliefs and assumptions, and information currently available to management. Forward-looking statements include the information concerning our possible or assumed future results of operation and events set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements include, but are not limited to, statements regarding our outlook, guidance, expectations, beliefs, hopes, intentions and strategies, in which words such as “may,” “if,” “will,” “should,” “intend,” “expect,” “anticipate,” “plan,” “believe,” “estimate,” “project,” “consider,” or similar expressions are used to identify these forward looking statements.

Forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors that may cause our actual results, performance and achievements to be materially different. Forward-looking statements are not guarantees of future performance, and we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Readers are cautioned not to put undue reliance on any forward-looking statements. Future actual results, events and stockholder values may differ materially from those expressed or implied in these forward-looking statements. The risks, uncertainties, assumptions and other factors that could cause actual results to differ from the results predicted or implied by forward-looking statements include factors discussed in our filings with the SEC, including those disclosed under captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2024 Form 10-K and our Quarterly Reports on Form 10-Q (including this Quarterly Report).

REVERSE STOCK SPLIT

At the open of market on April 4, 2025, our 1-for-10 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.

ITEM 1 Condensed Consolidated Financial Statements

The condensed consolidated balance sheets as of March 31, 2025, and December 31, 2024, the condensed consolidated statements of operations for the three months ended March 31, 2025, and 2024, the condensed consolidated statements of changes in stockholders’ equity for the three months ended March 31, 2025, and 2024, and the condensed consolidated statements of cash flows for the three months ended March 31, 2025, and 2024, follow. The unaudited condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. All such adjustments are of a normal and recurring nature.

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SOBR SAFE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31,			December 31,
	2025			2024
ASSETS	(Unaudited)

Current assets
Cash	$	10,074,029		$	8,384,042
Accounts receivable, net		28,606			24,460
Inventory		193,868			224,875
Prepaid expenses		189,482			192,637
Other current assets		22,385			46,060
Total current assets		10,508,370			8,872,074

Intellectual technology, net		1,991,599			2,087,965
Operating lease right-of-use assets, net		159,423			183,737
Other assets		27,427			27,427
Total Assets	$	12,686,819		$	11,171,203

LIABILITIES & STOCKHOLDERS' EQUITY

Current liabilities
Accounts payable	$	412,502		$	422,557
Accrued expenses		392,130			498,128
Accrued interest payable		107,625			105,501
Operating lease liabilities, current portion		115,078			111,303
Notes payable - related parties, net		11,810			11,810
Notes payable - non-related parties, net		26,683			127,590
Total current liabilities		1,065,828			1,276,889

Operating lease liabilities, less current portion		61,656			91,993
Total Liabilities		1,127,484			1,368,882

Commitments and contingencies
Stockholders' Equity
Common stock, $0.00001 par value; 100,000,000 shares authorized, 1,516,128 and 936,926 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively		152			94
Treasury stock, at cost; 17 and 16 shares as of March 31, 2025 and December 31, 2024, respectively		(38,015	)		(38,015	)
Additional paid-in capital		111,909,088			108,222,324
Accumulated deficit		(100,258,199	)		(98,328,395	)
Total SOBR Safe, Inc. stockholders' equity		11,613,026			9,856,008
Noncontrolling interest		(53,691	)		(53,687	)
Total Stockholders' Equity		11,559,335			9,802,321

Total Liabilities and Stockholders' Equity	$	12,686,819		$	11,171,203

The accompanying notes are an integral part of the condensed consolidated financial statements.

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SOBR SAFE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	For The Three Months Ended March 31,
	2025			2024
	(Unaudited)			(Unaudited)
Revenues	$	86,617		$	47,990
Cost of goods and services		35,653			24,781
Gross profit		50,964			23,209

Operating expenses:
General and administrative		1,823,469			1,415,562
Stock-based compensation expense		139,678			214,398
Research and development		40,924			102,034
Total operating expenses		2,004,071			1,731,994

Loss from operations		(1,953,107	)		(1,708,785	)

Other income (expense):
Other income		77,717			21,255
Notes payable – conversion expense		-			(585,875	)
Interest expense		(3,665	)		(232,516	)
Total other income (expense), net		74,052			(797,136	)

Loss before provision for income taxes		(1,879,055	)		(2,505,921	)

Provision for income taxes		-			-

Net loss		(1,879,055	)		(2,505,921	)
Net loss attributable to noncontrolling interest		4			5
Net loss attributable to SOBR Safe, Inc.	$	(1,879,051	)	$	(2,505,916	)

Deemed dividends related to Convertible Debt Warrants down round provision		(1,833	)		(23,270	)
Deemed dividends related to 2022 PIPE Warrants down round provision		(1,547	)		(42,539	)
Deemed dividends related to Original Warrants and New Warrants down round provision		-			(1,455,805	)
Deemed dividends related to 2024 PIPE Warrants down round provision		(47,373	)		-

Net loss attributable to common stockholders	$	(1,929,804	)	$	(4,027,530	)

Basic and diluted loss per common share	$	(1.46	)	$	(232.21	)

Weighted average number of common shares outstanding, basic and diluted		1,320,526			17,344

The accompanying notes are an integral part of the condensed consolidated financial statements.

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SOBR SAFE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)

For the Three Months Ended, March 31, 2024
	Common Stock				Preferred Stock				Treasury Stock
	Shares		Amount ($0.00001 Par)		Shares		Amount ($0.00001 Par)		Shares			Amount			Additional Paid-in Capital			Accumulated Deficit			Stockholders' Equity (Deficit) SOBR Safe, Inc.			Noncontrolling Interest			Total Stockholders’ Equity (Deficit)
Balances at January 1, 2024		16,905	$	186		-	$	-		(12	)	$	(38,015	)	$	89,840,201		$	(87,765,981	)	$	2,036,207		$	(53,670	)	$	1,982,537
Common stock issued for restricted stock units vested		105		1		-		-		-			-			(1	)		-			-			-			-
Common stock issued upon conversion of convertible debt		1,180		13		-		-		-			-			1,247,909			-			1,247,922			-			1,247,922
Paid in capital - fair value of stock options and restricted stock units vested		-		-		-		-		-			-			214,398			-			214,398			-			214,398
Deemed dividends related to Convertible Debt Warrants down round provision		-		-		-		-		-			-			23,270			(23,270	)		-			-			-
Deemed dividends related to PIPE Warrants down round provision		-		-		-		-		-			-			42,539			(42,539	)		-			-			-
Deemed dividends related to Original Warrants and New Warrants down round provision		-		-		-		-		-			-			1,455,805			(1,455,805	)		-			-			-
Common stock issued upon exercise of warrants		-		-		-		-		-			-			-			-			-			-			-
Net loss		-		-		-		-		-			-			-			(2,505,916	)		(2,505,916	)		(5	)		(2,505,921	)
Balances at March 31, 2024		18,190	$	200		-	$	-		(12	)	$	(38,015	)	$	92,824,121		$	(91,793,511	)	$	992,611		$	(53,675	)	$	938,936

For the Three Months Ended, March 31, 2025

Balances at January 1, 2025		936,926	$	94		-	$	-		(16	)	$	(38,015	)	$	108,222,324		$	(98,328,395	)	$	9,856,008		$	(53,687	)	$	9,802,321
Paid in capital - fair value of stock options and restricted stock units vested		-		-		-		-		-			-			139,678			-			139,678			-			139,678
Deemed dividends related to Convertible Debt Warrants down round provision		-		-		-		-		-			-			1,833			(1,833	)		-			-			-
Deemed dividends related to 2022 PIPE Warrants down round provision		-		-		-		-		-			-			1,547			(1,547	)		-			-			-
Deemed dividends related to 2024 PIPE Warrants down round provision		-		-		-		-		-			-			47,373			(47,373	)		-			-			-
Common stock issued upon exercise of warrants		579,219		58		-		-		(1	)		-			3,496,333			-			3,496,391			-			3,496,391
Net Loss		-		-		-		-		-			-			-			(1,879,051	)		(1,879,051	)		(4	)		(1,879,055	)
Balances at March 31, 2025		1,516,145	$	152		-	$	-		(17	)	$	(38,015	)	$	111,909,088		$	(100,258,199	)	$	11,613,026		$	(53,691	)	$	11,559,335

The accompanying notes are an integral part of the condensed consolidated financial statements.

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SOBR SAFE, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

	For The Three Months Ended
	March 31,
	2025			2024
	(Unaudited)			(Unaudited)
Operating activities:
Net loss	$	(1,879,055	)	$	(2,505,921	)

Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of intangible assets		96,366			96,366
Amortization of debt discounts		-			149,295
Non-cash lease expense		24,314			21,850
Non-cash interest expense		-			80,784
Non-cash conversion expense		-			585,875
Stock-based compensation expense		139,678			214,398
Bad debt expense		-			202
Changes in assets and liabilities:
Accounts receivable		(4,146	)		(47	)
Inventory		31,007			22,179
Prepaid expenses		3,155			14,808
Other assets		23,675			(15,300	)
Accounts payable		(10,055	)		107,073
Accrued expenses		(105,998	)		(204,486	)
Accrued interest payable		2,124			2,171
Operating lease liabilities		(26,562	)		(23,144	)

Net cash used in operating activities		(1,705,497	)		(1,453,897	)

Financing activities:
Repayments of notes payable – non-related parties		(100,907	)		-
Proceeds from exercise of stock warrants		3,680,411			-
Payment for transaction costs of equity transactions		(184,020	)		-
Net cash provided by financing activities		3,395,484			-

Net Change In Cash		1,689,987			(1,453,897	)

Cash At The Beginning Of The Period		8,384,042			2,790,147

Cash At The End Of The Period	$	10,074,029		$	1,336,250

Schedule Of Non-Cash Investing And Financing Activities:
Non-related party debt converted to capital	$	-		$	853,680
Financing of prepaid insurance premiums	$	-		$	37,649
Deemed dividends related to Convertible Debt Warrants down round provision	$	1,833		$	23,270
Deemed dividends related to 2022 PIPE Warrants down round provision	$	1,547		$	42,539
Deemed dividends related to Original Warrants and New Warrants down round provision	$	-		$	1,455,805
Deemed dividends related to 2024 PIPE Warrants down round provision	$	47,373		$	-
Supplemental Disclosure:
Cash paid for interest	$	1,541		$	266
Cash paid for income taxes	$	-		$	-

The accompanying notes are an integral part of the condensed consolidated financial statements.

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SOBR SAFE, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SOBR Safe, Inc., a Delaware corporation, (the “Company”, “we”, “us”, and “our”) is a hardware and software company headquartered in Greenwood Village, Colorado. Our Company integrates proprietary software, SOBRsafe^TM, with our patented touch-based alcohol monitoring and detection products, SOBRcheck™ and SOBRsure™, enabling non-invasive alcohol monitoring and detection, biometric identity verification, and qualified, real-time cloud-based alerts and reporting. We operate as a single segment designed to enable customers to purchase products directly through channel partners, sales agents or through our enterprise and consumer digital channels. Currently our principal markets are located in North America.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements included herein have been prepared in accordance with generally accepted accounting principles (“GAAP”) as promulgated in the United States of America and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These unaudited condensed consolidated financial statements and the notes thereto should be read in conjunction with the Company’s audited consolidated financial statements and related notes for the year ended December 31, 2024, included in the Company’s Annual Report on Form 10-K filed with the SEC on April 15, 2025.

In management’s opinion, the unaudited condensed consolidated financial statements reflect all adjustments (including reclassifications and normal recurring adjustments) necessary to present fairly the financial position as of March 31, 2025, and December 31, 2024, and results of operations and cash flows for the three-month periods ended March 31, 2025 and 2024.

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its majority owned subsidiary, TransBiotec-CA (“TBT”), of 98.6%. We have eliminated all intercompany transactions and balances between entities consolidated in these unaudited condensed consolidated financial statements.

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Specifically, such estimates were made by the Company for the recoverability and useful lives of long-lived assets, the intellectual technology, stock-based compensation and the valuation allowance related to deferred tax assets. Actual results could differ from those estimates.

Financial Instruments

The Company is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy is broken down into three levels based on reliability of the inputs as follows:

Level I: Inputs that reflect unadjusted quoted prices in active markets that are accessible to SOBRsafe for identical assets or liabilities

Level II: Applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level III: Applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s financial instruments consist primarily of cash, accounts receivable, accounts payable, accrued expenses, accrued interest payable, related party payables, notes payable, and other liabilities. The Company believes that the recorded values of our financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

At March 31, 2025 and December 31, 2024, the Company did not have financial instruments requiring valuation from observable or unobservable inputs to determine fair value on a recurring basis.

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Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of 90 days or less at the date of purchase as cash equivalents. The Company does not have any cash equivalents at March 31, 2025 and December 31, 2024.

Accounts Receivable

Customer accounts are monitored for potential credit losses based upon management’s assessment of expected collectability and the allowance for doubtful accounts is reviewed periodically to assess the adequacy of the allowance. In making this assessment, management takes into consideration any circumstances of which the Company is aware regarding a customer’s inability to meet its financial obligations to the Company, and any potential prevailing economic conditions and their impact on the Company’s customers. The Company had $25,000 in allowance for credit losses at March 31, 2025 and December 31, 2024, respectively.

Inventory

Inventory is comprised of component parts and finished product and is valued at the lower of cost or net realizable value. The cost of substantially all the Company’s inventory is determined by the FIFO cost method. The Company evaluates the valuation of inventory and periodically adjusts the value for estimated excess based upon estimates of future demand and market conditions, and obsolete inventory based upon otherwise damaged or impaired goods. The Company had no reserves for obsolescence at March 31, 2025 and December 31, 2024.

Prepaid Expenses

Amounts incurred in advance of contractual performance or coverage periods are recorded as prepaid assets and recognized as expense in the period service or coverage is provided.

Debt Issuance Costs

Debt issuance costs incurred in connection with the issuance of debt are capitalized and amortized to interest expense over the term of the debt using the effective interest method. The unamortized amount is presented as a reduction of debt on the unaudited condensed consolidated balance sheet.

Preferred Stock

Preferred shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. The Company classifies conditionally redeemable preferred shares (if any), which includes preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control, as temporary equity. At all other times, the Company classifies preferred shares in stockholders’ equity.

Noncontrolling Interest

A subsidiary of the Company, TBT, has minority members representing ownership interests of 1.4% at March 31, 2025 and December 31, 2024. The Company accounts for this noncontrolling interest whereby gains and losses in a subsidiary with a noncontrolling interest are allocated to the noncontrolling interest based on the ownership percentage of the noncontrolling interest, even if that allocation results in a deficit noncontrolling interest balance.

Intangible Assets

Intangible asset values are determined where the assets are acquired at fair value on the acquisition date. Relative fair value of the intangible assets acquired are determined where goodwill is not recognized in an intangible asset acquisition and any consideration that exceeds fair value of the net assets acquired are allocated to the identifiable assets based upon relative fair values. Where there is excess of fair value assigned to the intangible assets acquired, recoverability is determined at the acquisition date on an undiscounted cash flow basis. In the event the assessment for recoverability of the intangible asset fair value upon acquisition does not result in an adjustment, an impairment analysis is conducted on the next practicable measurement date, when events or circumstances related to the fair value of the intangible asset change, or at least annually.

Impairment of Long-Lived Assets

Long-lived assets and identifiable intangibles held for use are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the sum of undiscounted expected future cash flows is less than the carrying amount of the asset or if changes in facts and circumstances indicate, an impairment loss is recognized and measured using the asset’s fair value. No impairment loss was recognized during the three-month periods ended March 31, 2025 and 2024, respectively.

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Revenue Recognition

The Company enters contracts with customers and generates revenue through various combinations of software products and services which include the sale of cloud-based software solutions, detection and data collection hardware devices, and cloud-based data reporting and analysis services. Depending on the combination of products and services detailed in the respective customer contract, the identifiable components may be highly interdependent and interrelated with each other such that each is required to provide the substance of the value of the Company’s offering and accounted for as a combined performance obligation, or the specific components may be generally distinct and accounted for as separate performance obligations. Revenue is recognized when control of these software products and/or services are transferred to the customer in an amount that reflects the consideration the Company expects to be entitled in exchange for respective services and devices.

The Company determines revenue recognition through five steps which include: (1) identification of the contract or contracts with a customer; (2) identification of individual or combined performance obligations contained in the contract; (3) determination of the transaction price detailed within the contract; (4) allocation of the transaction price to the specific performance obligations; (5) recognition of revenue as the Company’s performance obligations are satisfied according to the terms of the contract.

Contracts with a Single License/Service Performance Obligation

For contracts with a single performance obligation consisting of a license and/or data services, the entire transaction price is allocated to the single performance obligation. Where the Company provides a performance obligation as licensed software or data services, revenue is recognized upon delivery of the software or services ratably over the respective term of the contract.

Contracts for Purchase of Hardware Devices Only

Where hardware devices are sold separately by the Company, the entire transaction price is allocated to the device as an individual performance obligation and revenue recognized at a point in time when either legal title, physical possession, or the risks and rewards of ownership have transferred to the customer. Generally, these requirements are satisfied at the point in time the Company ships the product, as this is when the customer obtains control of the asset under SOBR’s standard terms and conditions of the purchase.

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Contracts with Multiple Performance Obligations

Where a Company’s contract with a respective customer contains multiple performance obligations and due to the interdependent and interrelated nature of the licensed software, hardware devices and data reporting services, the Company accounts for the individual performance obligations if they are distinct in nature and the transaction price is allocated to each distinct performance obligation(s) on a directly observable standalone sales price basis. Determining whether products and services are distinct performance obligations that should be accounted for separately or combined as one unit of accounting may require significant judgment. Standalone selling prices are primarily based upon the price at which the performance obligation is sold separately. The Company may be able to establish a standalone sales price based upon observable products or services sold or priced separately in comparable circumstances, competitor pricing or similar customers. Where the performance obligations are either not distinct or directly observable, the Company estimates the standalone sales price of the performance obligations based upon the overall pricing objectives taking into consideration the value of the contract arrangement, number of licenses, number and types of hardware devices and the length of term of the contract. Professional judgement may be required to determine the standalone sales price for each performance obligation where not directly observable. Revenue for contracts with multiple performance obligations is recognized on a ratable basis for each respective performance obligation as allocated under the prescribed Transaction Price identification model applied.

The Company requires customers to make payments related to subscribed software licenses and data services on a monthly basis via authorized bank account ACH withdrawal or an automatic credit card charge during the approved term of the respective agreement. The collectability of future cash flows are reasonably assured with any potential non-payment easily identified with future services being discontinued or suspended due to non-payment.

The Company’s contracts are generally three to twelve months in duration, billed monthly, and non-cancelable. The timing of revenue recognition may differ from the timing of invoicing to customers. The Company generally has an unconditional right to consideration when customers are invoiced and a receivable is recorded. A contract asset (unbilled revenue) is recognized when revenue is recognized prior to invoicing, or a contract liability (deferred revenue) when revenue will be recognized subsequent to invoicing.

The Company has elected to charge shipping, freight, and delivery costs to customers who choose expedited shipping options as a source of revenue to offset respective costs when control has transferred to the customer.

The Company reports revenue net of sales and other taxes collected from customers to be remitted to government authorities.

Estimated costs for the Company’s standard one-year warranty are charged to cost of goods and services when revenue is recorded for the related product. Royalties are also charged to cost of goods and services.

Leases

The Company determines if an arrangement is or contains a lease at inception. Leases with an initial term of twelve months or less are considered short-term leases and are not recognized on the Company’s unaudited condensed consolidated balance sheet. Right-of-use (“ROU”) assets and liabilities are recognized on the unaudited condensed consolidated balance sheet for leases with an expected term greater than twelve months. Operating lease ROU assets represent our right to use an underlying asset over the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at inception based on the present value of lease payments over the lease term. When the rate implicit in the lease is not determinable, the Company uses its estimated secured incremental borrowing rate in determining the present value of lease payments. The lease expense for fixed lease payments is recorded on a straight-line basis over the lease term and variable lease payments are included in the lease expense when the obligation for those payments is incurred. The Company has elected not to separate lease and non-lease components.

Stock-based Compensation

The Company uses the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (warrants, options, and restricted stock units). The fair value of each warrant and option is estimated on the date of grant using the Black-Scholes options pricing model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. The Company has not paid dividends historically and does not expect to pay them in the future. Expected volatilities are based on weighted averages of the historical volatility of the Company’s common stock estimated over the expected term of the awards. The expected term of options granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus the contract term as historically the Company had limited activity surrounding its awards. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term. The grant date fair value of a restricted stock unit equals the closing price of our common stock on the trading day of the grant date.

Research and Development

Research and development costs are expensed as incurred. The Company incurred research and development costs as it acquired new knowledge to bring about significant improvements in the functionality and design of its products.

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Advertising and Marketing Costs

Advertising and marketing costs are expensed as incurred. Advertising and marketing costs were $382,310 and $52,847 during the three-month periods ended March 31, 2025, and 2024, respectively.

Income Tax

Deferred taxes are provided on an asset and liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company has not recorded any deferred tax assets or liabilities at March 31, 2025 and December 31, 2024, as these have been offset by a 100% valuation allowance.

Loss Per Share

Basic loss per share is computed by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted loss per share gives the effect to all dilutive potential common shares outstanding during the period, including stock options, restricted stock units, warrants and convertible instruments. Diluted net loss per share excludes all potentially issuable shares if their effect is anti-dilutive. Because the effect of the Company’s dilutive securities is anti-dilutive, diluted net loss per share is the same as basic loss per share for the periods presented.

The following outstanding and potentially issuable shares at March 31, 2025 and March 31, 2024, have been excluded from the computation of diluted weighted shares outstanding, as they could have been anti-dilutive:

	March 31,		March 31,
	2025		2024
Stock options		1,323		1,454
Restricted stock units		90		90
Warrants		1,229,924		12,059
Convertible instruments		2		3,783
Total dilutive securities		1,231,339		17,386

Concentration of Credit Risk

Credit Risk – Financial instruments that potentially subject the Company to concentration of credit risk consisted primarily of cash. The Company maintains its cash at two domestic financial institutions. The Company is exposed to credit risk in the event of a default by the financial institutions to the extent that cash balances are in excess of the amount insured by the Federal Deposit Insurance Corporation of up to $250,000 per institution. The Company places its cash with high-credit quality financial institutions and managed within established guidelines to mitigate risk. To date, the Company has not experienced any loss on its cash.

Concentration of Customers – To date, the Company’s sales have been made to a limited number of customers. Should the Company continue to conduct sales to a limited number of customers and remain highly concentrated, revenue may experience significant period to period shifts and may decline if the Company were to lose one or more of its customers, or if the Company were unable to obtain new customers.

Concentration of Suppliers – The Company relies on a limited number of component and contract suppliers to assemble and distribute its product. If supplier shortages occur, or quality problems arise, production and distribution schedules could be significantly delayed or costs significantly increased, which could in turn have a material adverse effect on the Company’s financial condition, results of operations and cash flows.

Related Parties

Related parties are any entities or individuals that, through employment, ownership, or other means, possess the ability to direct or cause the direction of management and policies of the Company.

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Recently Adopted Accounting Standards

The Company has reviewed recently issued, but not yet effective, accounting pronouncements and does not believe the future adoptions of any such pronouncements will be expected to cause a material impact on its financial condition or the results of operations.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amended guidance enhances income tax disclosures primarily related to the effective tax rate reconciliation and income taxes paid information. This guidance requires disclosure of specific categories in the effective tax rate reconciliation and further information on reconciling items meeting a quantitative threshold. In addition, the amended guidance requires disaggregating income taxes paid (net of refunds received) by federal, state, and foreign taxes. It also requires disaggregating individual jurisdictions in which income taxes paid, net of refunds received, is equal to or greater than five percent of total income taxes paid, net of refunds received. The amended guidance will be effective for annual periods beginning January 1, 2025. The guidance can be applied either prospectively or retrospectively.

NOTE 2. GOING CONCERN

The Company has incurred recurring losses from operations and has limited cash liquidity and capital resources to meet future capital requirements. The Company’s ability to meet future capital requirements will depend on many factors, including the Company’s ability to develop and sell products, generate cash flow from operations, and assess competing market developments. The Company may need additional capital resources in the near future. Sources of debt financing may result in additional interest expense. Any financing, if available, may be on unfavorable terms. If adequate funds are not available or obtained, the Company may be required to reduce or curtail operations.

As of March 31, 2025, the Company has an accumulated deficit of approximately $100,208,000. During the three months ended March 31, 2025, the Company experienced negative cash flows from operating activities of approximately $1,706,000. These principal conditions and events, when considered in the aggregate, could indicate it is probable that the Company will be unable to meet its obligations as they become due within one year after the date the financial statements are issued. However, the Company has identified factors that may mitigate the probable conditions that have raised substantial doubt about the entity’s ability to continue as a going concern.

Management believes that cash balances of approximately $10,075,000 and positive working capital of approximately $9,443,000 at March 31, 2025, provide adequate capital for operating activities for the next twelve months after the date these financial statements are issued. Management believes the release of its second generation SOBRsure device in the fourth quarter of 2024 and a comprehensive 2025 marketing plan have positioned the Company to generate improvement in the generation of both revenue and positive cash flows from sales. These plans are contingent upon the actions to be performed by the Company and these conditions have not been met on or before March 31, 2025. Management believes despite limited revenue generation and historical operating cash flows, adequate cash balances and working capital are sufficient to support ongoing operations for the next twelve months and the Company will continue as a going concern as of March 31, 2025.

NOTE 3. INVENTORY

Inventories consist of the following:

	March 31,		December 31,
	2025		2024
Component parts	$	59,081	$	59,081
Finished goods		134,787		165,794
Inventory	$	193,868	$	224,875

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NOTE 4. PREPAID EXPENSES

Prepaid expenses consist of the following:

	March 31,		December 31,
	2025		2024
Insurance	$	85,183	$	165,041
Deposit		40,736		15,736
Other		63,563		11,860
Prepaid expenses	$	189,482	$	192,637

On July 1, 2024, the Company purchased annual general risk and director and officers insurance policies prepaying annual premiums of $330,083 through an eight-month financing arrangement on the same date (see Note 8). The Company recorded $83,852 and $92,836 of insurance expense related to the prepaid annual general risk and directors & officers insurance premiums during the three-month periods ended March 31, 2025 and 2024.

NOTE 5. LEASES

The Company leases its corporate headquarters office space and certain office equipment under arrangements classified as operating leases.

The Company entered into its lease agreement to rent office space for a twelve-month period beginning July 1, 2022, with a monthly base rent of $9,744. The lease did not contain renewal options and was considered a short-term lease at inception. In April 2023, the Company executed an amendment to extend the term of the lease from July 1, 2023, through September 30, 2026. The amended lease provides for a monthly base rent of $9,744 through September 2024, with fixed escalating monthly base rent for each year thereafter, and no rent due for the months of July through September 2023.

The Company determined that the amendment results in a lease modification that is not accounted for as a separate contract. Further, due to the extension of the lease term beyond the initial twelve months, the office lease can no longer be considered a short-term lease. The Company recorded a right-of-use asset and lease liability as of April 17, 2023 (the effective date of the amendment) based on the modified terms and conditions of the amended lease.

Total operating lease expense for the three-month period ended March 31, 2025, total operating lease expense was $50,115 which included $21,190 of variable lease expense. Total operating lease expense for the three-month period ended March 31, 2024, total operating lease expense was $50,265, of which $21,340 was attributable to variable lease expense.

Operating lease obligations recorded on the unaudited condensed consolidated balance sheet at March 31, 2025 are as follows:

Operating lease liabilities – current portion	$	115,078
Operating lease liabilities – less current portion		61,656
Total operating lease liabilities	$	176,734

Future lease payments included in the measurement of operating lease liabilities on the unaudited condensed consolidated balance sheet at March 31, 2025 are as follows:

2025	$	94,471
2026		95,063
Total undiscounted future minimum lease payments		189,534
Less imputed interest		(12,800	)
Total operating lease liabilities	$	176,734

The weighted average remaining lease term is 17.9 months, and the weighted average discount rate is 10%.

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NOTE 6. INTANGIBLE ASSETS

Intangible assets are comprised of SOBRsafe^TM Intellectual Technology and consist of the following:

	March 31, 2025			December 31, 2024
Gross carrying amount	$	3,854,675		$	3,854,675
Accumulated amortization		(1,863,076	)		(1,766,710	)
Net intangible asset	$	1,991,599		$	2,087,965
Amortization period (in years)		10			10

Amortization expense was $96,366 for each of the three-month periods ended March 31, 2025, and 2024.

Estimated future amortization expense for device technology intangible assets is as follows:

2025	$	289,098
2026		385,464
2027		385,464
2028		385,464
2029		385,464
Thereafter		160,645
Total future amortization expense	$	1,991,599

NOTE 7. ACCRUED EXPENSES

Accrued expenses consist of the following:

	March 31,		December 31,
	2025		2024
Consulting services	$	272,622	$	293,395
Other		119,508		204,733
Total accrued expenses	$	392,130	$	498,128

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NOTE 8. NOTES PAYABLE

RELATED PARTIES

Notes payable to related parties consist of the following:

	March 31, 2025			December 31, 2024
Non-convertible note payable	$	11,810		$	11,810
Less current portion		(11,810	)		(11,810	)
Net long-term portion	$	-		$	-

The Company has one related party note payable that has an interest rate of 0%. The note payable had a due date of December 31, 2012, and is currently in default. Total interest expense for the related party notes was none for both three-month periods ended March 31, 2025 and 2024.

NON-RELATED PARTIES

Notes payable to non-related parties consist of the following:

	March 31,			December 31,
	2025			2024
Convertible notes payable	$	9,183		$	9,183
Non-convertible notes payable		17,500			17,500
Premium financing note payable		-			100,907
Net non-related party notes payable		26,683			127,590
Current portion		(26,683	)		(127,590	)
Net long-term portion	$	-		$	-

Total interest expense for non-related party notes was $3,665 and $40,921 for the three-month periods ended March 31, 2025 and 2024, respectively.

Convertible Notes Payable with Warrants - 2023 Debt Offering

On March 7, 2023, the Company entered into a Debt Offering (the “2023 Debt Offering”) pursuant to a Purchase Agreement (the “Agreement”) and Registration Rights Agreement with institutional investors (the “Purchasers”). The 2023 Debt Offering closed on March 9, 2023. The 2023 Debt Offering includes 15% Original Issue Discount Convertible Notes (the “Notes”) and Common Stock Purchase Warrants (the “Warrants”). Under the terms of the Agreement, the Company received $3,000,001 from the Purchasers and in exchange issued the Notes in principal amounts of $3,529,412 and Warrants to purchase up to 352 shares of the Company’s common stock. The Notes are convertible voluntarily by the Purchaser at any time. The principal amounts are convertible into shares of our common stock at a conversion price $2,508. The Notes are due March 10, 2025, and accrue interest quarterly at 5% per annum. The accrued interest is payable by way of inclusion in the convertible amount and is compounded quarterly. The Warrants are exercisable at any time through March 9, 2028, into shares of the Company’s common stock at an exercise price of $2,772 per share. The Company received approximately $2,500,000 of net proceeds from the 2023 Debt Offering after offering-related costs.

On May 10, 2023, noteholders elected to convert a total of $341,998 (the “Conversion Amount”) pertaining to the 2023 Debt Offering into 137 shares of the Company’s common stock at $2,508 per share. As provided for in the Agreement, the Conversion Amount included original Note principal of $309,688, as well as accrued interest of $32,311.

On March 4, 2024, the Company entered into inducement offer letter agreements (the “Inducement Letters”) with each holder (collectively, the “Holders”, and individually, a “Holder”) of the Notes issued on March 9, 2023. Pursuant to the Inducement Letters, the Holders agreed to convert some or all of the Applicable Notes at a reduced conversion price equal to $682.00 per share (such reduced conversion price, the “Notes Conversion Price”). Simultaneously with the execution of the Inducement Letters, the Company received conversion notices from such Holders for the conversion of approximately $804,000 aggregate principal amount of the Applicable Notes, representing approximately 25% of the aggregate principal amount of the Applicable Notes. In connection with such conversion, the Notes Conversion Price was permanently reduced to $682.00. The Company recognized conversion expense of $585,875 for the induced conversion.

On January 15, 2025, the Reset Date for the Sereis A Warrants issued in the 2024 PIPE Offering, the final determination of the Reset Exercise Price was determined to be $8.29 per share (Note 11). Pursuant to the Reset Date and Reset Exercise Price, and the terms and condition of the Warrants, the exercise price for the Warrants was reduced to $8.29 per share. The differences with respect to the adjusted warrant exercise prices is treated as a deemed dividend and a reduction in net income available to common shareholders.

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In addition, pursuant to the Inducement Letters, the exercise price in the Common Stock Purchase Warrants issued on March 9, 2023 (the “Applicable Warrants”) currently held by Holders was permanently reduced to $682.00 per share (such reduced exercise price, the “Warrants Exercise Price”).

In March, May, and June 2024 noteholders elected to convert an aggregate total of $3,556,234 (the “Conversion Amount”) pertaining to the 2023 Debt Offering into 5,214 shares of the Company’s common stock at $682 per share. As provided for in the Agreement, the Conversion Amount included original Note principal of $3,219,724, as well as $336,510 of accrued interest incurred in both fiscal 2023 and 2024.

Convertible Notes Payable

The Company has two convertible notes payable to a non-related entity with principal balances totaling $9,183 as of March 31, 2025, and December 31, 2024. The notes bear interest at 12% and are convertible into shares of the Company’s common stock at $35,519 per share. The notes were due in 2013 and are currently in default.

Non-Convertible Notes Payable

The Company has two non-convertible notes payable to non-related parties with principal balances totaling $17,500 as of March 31, 2025, and December 31, 2024. These notes carry interest rates ranging from 9% - 10% and have due dates ranging from December 2013 to November 2015. The notes are currently in default.

Premium Financing Note Payable

On July 1, 2024, the Company entered into a financing agreement for payment of its annual insurance premiums for coverage from July 2024 through June 2025 totaling $330,083. The financing agreement required an initial down payment of $66,017 with the remaining amount of $264,066 financed for an eight-month period at an annual interest rate of 9.1% with monthly payments of $34,150 beginning in July 2024. The principal balance and any accrued interest related to the premium financing note payable was paid in full in March 2025.

NOTE 9. COMMON STOCK

The Company’s common stock transactions for the three-months ended March 31, 2025, consist of the following:

The Company issued 579,218 shares of common stock upon exercise of warrants.

The Company’s common stock transactions for the three-months ended March 31, 2024, consist of the following:

The Company issued 105 shares of common stock for RSUs vested during 2024.

The Company issued 1,180 shares of common stock upon conversion of a portion of the Convertible Notes issued in the 2023 Debt Offering.

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NOTE 10. PREFERRED STOCK

On November 20, 2015, the Company’s Board of Directors authorized a class of stock designa

Amendment: SEC Form 10-Q/A filed by SOBR Safe Inc.