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, 2023

☐	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 (NASDAQ)

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 9, 2023, there were 18,544,570 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	26

ITEM 3	Quantitative and Qualitative Disclosures About Market Risk	35

ITEM 4	Controls and Procedures	35

PART II – OTHER INFORMATION

ITEM 1	Legal Proceedings	37

ITEM 1A	Risk Factors	37

ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds	37

ITEM 3	Defaults Upon Senior Securities	37

ITEM 4	Mine Safety Disclosures	37

ITEM 5	Other Information	37

ITEM 6	Exhibits	38

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

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.

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1 Condensed Consolidated Financial Statements

The condensed consolidated balance sheets as of June 30, 2023, and December 31, 2022, the condensed consolidated statements of operations for the three and six months ended June 30, 2023, and 2022, the condensed consolidated statements of changes in stockholders’ equity for the three and six months ended June 30, 2023, and 2022, and the condensed consolidated statements of cash flows for the six months ended June 30, 2023, and 2022, 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

	June 30,			December 31,
	2023			2022
ASSETS	(Unaudited)			(Audited)

Current assets
Cash	$	5,675,979		$	8,578,997
Accounts receivable		31,128			30,322
Inventory		263,360			215,493
Prepaid expenses		396,777			200,905
Total current assets		6,367,244			9,025,717
Operating lease right-of-use assets, net		316,960			-
Intellectual technology, net of accumulated amortization of $1,188,514 and $995,782 at June 30, 2023 and December 31, 2022, respectively		2,666,161			2,858,893
Other assets		43,358			27,427
Total Assets	$	9,393,723		$	11,912,037

LIABILITIES & STOCKHOLDERS' EQUITY

Current liabilities
Accounts payable	$	410,920		$	142,965
Accrued expenses		393,467			392,282
Accrued interest payable		92,728			469,691
Related party payables		1,887			1,887
Operating lease liabilities, current portion		62,477			-
Notes payable - related parties
* Includes unamortized debt discount related to warrants and beneficial conversion features of none and $145,548 at June 30, 2023 and December 31, 2022, respectively		11,810	*		866,262	*
Notes payable - non-related parties
* Includes unamortized debt discount related to warrants and beneficial conversion feature of none and $144,878 at June 30, 2023 and December 31, 2022, respectively		284,729	*		948,597	*
Total current liabilities		1,258,018			2,821,684

Operating lease liabilities - less current portion		253,531			-
Notes payable - non-related parties - less current portion
* Includes unamortized debt discount related to original issue discount, warrants and costs of issuance of $1,190,171 and none at June 30, 2023 and December 31, 2022, respectively		2,029,554	*		-
Accrued interest payable		50,208			-
Total Liabilities		3,591,311			2,821,684
Stockholders' Equity
Preferred stock, $0.00001 par value; 16,300,000 shares authorized, no shares issued or outstanding at June 30, 2023 and December 31, 2022		-			-
Series A Convertible Preferred stock, $0.00001 par value; 3,000,000 shares authorized, no shares issued or outstanding at June 30, 2023 and December 31, 2022		-			-
Series A-1 Convertible Preferred stock, $0.00001 par value; 2,700,000 shares authorized, no shares issued or outstanding at June 30, 2023 and December 31, 2022		-			-
Series B Convertible Preferred stock, $0.00001 par value; 3,000,000 shares authorized, none and 3,000,000 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively		-			30
Common stock, $0.00001 par value; 100,000,000 shares authorized, 18,544,570 and 16,984,570 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively		185			170
Treasury stock, at cost; 12,329 shares at June 30, 2023 and December 31, 2022		(38,015	)		(38,015	)
Additional paid-in capital		88,920,822			87,509,666
Accumulated deficit		(83,026,918	)		(78,327,845	)
Total SOBR Safe, Inc. stockholders' equity		5,856,074			9,144,006
Noncontrolling interest		(53,662	)		(53,653	)
Total Stockholders' Equity		5,802,412			9,090,353

Total Liabilities and Stockholders' Equity	$	9,393,723		$	11,912,037

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 June 30,						For The Six Months Ended June 30,
	2023			2022			2023			2022
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenues	$	37,601		$	1,500		$	85,469		$	3,000
Cost of goods and services		16,576			-			46,640			1,100
Gross profit		21,025			1,500			38,829			1,900

Operating expenses:
General and administrative		1,899,383			1,358,480			3,484,333			2,221,579
Stock-based compensation expense		627,762			743,838			1,326,675			1,678,063
Research and development		193,175			485,184			374,093			532,644
Total operating expenses		2,720,320			2,587,502			5,185,101			4,432,286

Loss from operations		(2,699,295	)		(2,586,002	)		(5,146,272	)		(4,430,386	)

Other income (expense):
Other income, net		60,587			216,402			131,057			216,429
Gain (loss) on debt extinguishment, net		(26,125	)		1,109,105			(26,125	)		245,105
Gain on fair value adjustment – derivatives, net		-			1,380,000			-			1,040,000
Interest expense		(209,125	)		(197,037	)		(434,310	)		(2,138,142	)
Amortization of interest - beneficial conversion features		-			(110,849	)		-			(691,071	)
Total other income (expense), net		(174,663	)		2,397,621			(329,378	)		(1,327,679	)

Loss before provision for income taxes		(2,873,958	)		(188,381	)		(5,475,650	)		(5,758,065	)

Provision for income taxes		-			-			-			-

Net loss		(2,873,958	)		(188,381	)		(5,475,650	)		(5,758,065	)
Net loss attributable to noncontrolling interest		4			5			9			9
Net loss attributable to SOBR Safe, Inc.	$	(2,873,954	)	$	(188,376	)	$	(5,475,641	)	$	(5,758,056	)

Basic and diluted loss per common share	$	(0.16	)	$	(0.02	)	$	(0.31	)	$	(0.66	)

Weighted average number of common shares outstanding		18,361,768			8,998,031			17,730,426			8,776,000

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 (DEFICIT)

(Unaudited)

																					Stockholders’
	Common Stock						Preferred Stock				Treasury Stock										Equity						Total
				Amount					Amount						Additional						(Deficit)						Stockholders’
				($0.00001					($0.00001				Amount		Paid-in			Accumulated			SOBR Safe,			Noncontrolling			Equity
	Shares			Par)			Shares		Par)		Shares		(at cost)		Capital			Deficit			Inc.			Interest			(Deficit)

Balances at January 1, 2022		8,778,555		$	88			-	$	-		-	$	-	$	57,041,447		$	(57,471,492	)	$	(429,957	)	$	(53,636	)	$	(483,593	)
Common stock issued for restricted stock units		16,667			-			-		-		-		-		-			-			-			-			-
Common stock issued for convertible debt		7,917			-			-		-		-		-		47,500			-			47,500			-			47,500
Common stock exchanged for convertible preferred stock		(1,000,000	)		(10	)		3,000,000		30		-		-		(20	)		-			-			-			-

Paid-in capital - fair value of stock options and restricted stock units		-			-			-		-		-		-		934,225			-			934,225			-			934,225
Paid-in capital - relative fair value of stock warrants granted		-			-			-		-		-		-		864,000			-			864,000			-			864,000
Net loss		-			-			-		-		-		-		-			(5,569,679	)		(5,569,679	)		(4	)		(5,569,683	)
Balances at March 31, 2022		7,803,139		$	78			3,000,000	$	30		-	$	-	$	58,887,152		$	(63,041,171	)	$	(4,153,911	)	$	(53,640	)	$	(4,207,551	)
Common stock and warrants issued in public equity offering, net of issuance costs		2,532,942			24			-

SEC Form 10-Q filed by SOBR Safe Inc.