sobr_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

For the quarterly period ended June 30, 2022

☐	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 ☒

Applicable only to issuers involved in bankruptcy proceedings during the preceding five years:

Indicate by check mark whether the registrant filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐

Applicable only to corporate issuers:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of August 12, 2022, there were 10,973,759 shares of common stock, $0.00001 par value, issued and outstanding.

SOBR SAFE, INC.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

ITEM 1	Condensed Consolidated Financial Statements	4

ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29

ITEM 3	Quantitative and Qualitative Disclosures About Market Risk	38

ITEM 4	Controls and Procedures	38

PART II – OTHER INFORMATION

ITEM 1	Legal Proceedings	39

ITEM 1A	Risk Factors	39

ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds	39

ITEM 3	Defaults Upon Senior Securities	39

ITEM 4	Mine Safety Disclosures	39

ITEM 5	Other Information	39

ITEM 6	Exhibits	41

Table of Contents

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 on information currently available to management. Forward-looking statements include the information concerning our possible or assumed future results of operations set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements also include statements in which words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “consider,” or similar expressions are used.

Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties, and assumptions. Our future results and shareholder values may differ materially from those expressed in these forward-looking statements. Readers are cautioned not to put undue reliance on any forward-looking statements.

Reverse Stock Split on April 28, 2022

At the open of market on April 28, 2022, our 1-for-3 reverse split of our common stock went effective with Financial Industry Regulatory Authority, Inc. (“FINRA”). As a result, all common stock share amounts, as well as share amounts and exercise and conversion prices in derivative security instruments have been adjusted to reflect the reverse stock split.

Table of Contents

ITEM 1 Condensed Consolidated Financial Statements

The condensed consolidated balance sheets as of June 30, 2022, and December 31, 2021, the condensed consolidated statements of operations for the three and six-months ended June 30, 2022, and 2021, the condensed consolidated statements of changes in stockholders’ equity (deficit) for the three and six-months ended June 30, 2022, and 2021, and the condensed consolidated statements of cash flows for the six-months ended June 30, 2022 and 2021, follow. The unaudited condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. All such adjustments are of a normal and recurring nature.

Table of Contents

SOBR SAFE, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2022			2021
ASSETS	(Unaudited)			(Audited)

Current assets
Cash	$	3,751,391		$	882,268
Accounts receivable		1,250			-
Inventory		172,310			39,461
Prepaid expenses		1,275,094			12,553
Total current assets		5,200,045			934,282

SOBR Safe Intellectual Technology, net of accumulated amortization of $803,050 and $610,318 at June 30, 2022 and December 31, 2021, respectively		3,051,625			3,244,357

Other assets		33,727			30,576
Total Assets	$	8,285,397		$	4,209,215

LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities
Accounts payable	$	275,040		$	270,150
Accrued expenses		366,384			463,900
Accrued interest payable		365,561			252,110
Related party payables		21,907			82,883
Derivative liability		-			1,040,000
Convertible debenture payable
* Includes unamortized debt discount related to warrants, beneficial conversion feature and embedded conversion feature of none and $1,291,882 at June 30, 2022 and December 31, 2021, respectively		-	*		1,756,899	*
Current portion notes payable - related parties
* Includes unamortized debt discount related to warrants and beneficial conversion features of $397,603 and none at June 30, 2022 and December 31, 2021, respectively		614,207	*		11,810	*
Current portion notes payable - non-related parties
* Includes unamortized debt discount related to warrants and beneficial conversion features of $400,160 and none at June 30, 2022 and December 31, 2021, respectively		881,029	*		104,183	*
Total current liabilities		2,524,128			3,981,935

Notes payable -related parties-less current portion
* Includes unamortized debt discount related to warrants and beneficial conversion features of none and $645,547 at June 30, 2022 and December 31, 2021, respectively		-	*		354,453	*
Notes payable -non-related parties-less current portion
* Includes unamortized debt discount related to warrants and beneficial conversion features of none and $648,580 at June 30, 2022 and December 31, 2021, respectively		-	*		356,420	*

Total Liabilities		2,524,128			4,692,808
Stockholders' Equity (Deficit)
Preferred stock, $0.00001 par value; 16,300,000 and19,300,000 shares authorized at June 30, 2022 and December 31, 2021, respectively, no shares issued or outstanding at June 30, 2022 and December 31, 2021		-			-
Series A Convertible Preferred stock, $0.00001 par value; 3,000,000 shares authorized, no shares issued or outstanding at June 30, 2022 and December 31, 2021		-			-
Series A-1 Convertible Preferred stock, $0.00001 par value; 2,700,000 shares authorized, no shares issued or outstanding as of June 30, 2022 and December 31, 2021		-			-
Series B Convertible Preferred stock, 3,000,000 shares authorized, 3,000,000 shares issued and outstanding at June 30, 2022 and none at December 31, 2021, respectively		30			-
Common stock, $0.00001 par value; 100,000,000 shares authorized; 10,973,759 and 8,778,555 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively		110			88
Additional paid-in capital		69,044,321			57,041,447
Accumulated deficit		(63,229,547	)		(57,471,492	)
Total SOBR Safe, Inc. stockholders' equity (deficit)		5,814,914			(429,957	)
Noncontrolling interest		(53,645	)		(53,636	)

Total Stockholders' Equity (Deficit)		5,761,269			(483,593	)

Total Liabilities and Stockholders' Equity (Deficit)	$	8,285,397		$	4,209,215

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

Table of Contents

SOBR SAFE, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2022			2021			2022			2021
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenues	$	1,500		$	-		$	3,000		$	-
Cost of Goods Sold		-			-			1,100			-
Gross Profit		1,500			-			1,900			-

Operating expenses:
General and administrative		878,861			831,781			3,148,035			1,608,642
Stock-based compensation expense		308,823			168,375			751,607			187,065
Research and development		485,184			314,532			532,644			485,995
Total operating expenses		1,672,868			1,314,688			4,432,286			2,281,702

Loss from operations		(1,671,368	)		(1,314,688	)		(4,430,386	)		(2,281,702	)

Other income (expense):
Other income (expense), net		216,402			-			216,429			-
Gain on debt extinguishment, net		1,109,105			-			245,105			-
Gain on fair value adjustment – derivatives, net		1,380,000			-			1,040,000			-
Interest expense		(1,111,671	)		(146,028	)		(2,138,142	)		(171,906	)
Amortization of interest - beneficial conversion feature		(110,849	)		(82,001	)		(691,071	)		(91,543	)
Total other income (expense), net		1,482,987			(228,029	)		(1,327,679	)		(263,449	)

Loss before provision for income taxes		(188,381	)		(1,542,717	)		(5,758,065	)		(2,545,151	)

Provision for income tax		-			-			-			-

Net loss		(188,381	)		(1,542,717	)		(5,758,065	)		(2,545,151	)
Net loss attributable to noncontrolling interest		5			4			9			98
Net loss attributable to SOBR Safe, Inc.	$	(188,376	)	$	(1,542,713	)	$	(5,758,056	)	$	(2,545,053	)

Basic and diluted loss per common share	$	(0.02	)	$	(0.18	)	$	(0.66	)	$	(0.29	)

Weighted average number of common shares outstanding		8,998,031			8,659,463			8,776,000			8,656,801

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

Table of Contents

SOBR SAFE, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

(Unaudited)

	Common Stock				Preferred Stock
	Shares		Amount ($0.00001 Par)		Shares		Amount ($0.00001 Par)		Additional Paid-in Capital		Accumulated Deficit			Stockholders' Equity (Deficit) SOBR Safe, Inc.		Noncontrolling Interest			Total Stockholders’ Equity (Deficit)
Balances at January 1, 2021		8,640,678	$	86		-	$	-	$	52,694,148	$	(49,601,220	)	$	3,093,014	$	(53,530	)	$	3,039,484
Common stock issued to settle dividends - Series A-1 Convertible Preferred stock		14,390		-		-		-		107,880		-			107,880		-			107,880
Paid-in capital - fair value of stock options and restricted stock units vested

SEC Form 10-Q filed by SOBR Safe Inc.