Company Overview

SOBR Safe, Inc. (NASDAQ:SOBR) is a trailblazer in the field of non-invasive alcohol detection technology, providing innovative solutions that address the significant challenges posed by alcohol misuse. The company's mission is to save lives, positively impact behavioral outcomes, increase workplace safety and productivity, and create substantial economic benefits through its cutting-edge technologies.

Established in 2011 as Imagine Media, Ltd., the company underwent a name change to TransBiotec, Inc. in 2012 and then to SOBR Safe, Inc. in 2020, reflecting its pivotal shift towards developing and commercializing its proprietary alcohol detection products. The company's journey began with the acquisition of approximately 52% of TransBiotec, Inc. (TBT) in September 2011, followed by the acquisition of an additional 45% in January 2012, resulting in SOBR Safe owning approximately 99% of TBT. This strategic move effectively made TBT's business the primary focus of the company.

Product Portfolio

SOBR Safe's flagship products, SOBRcheck and SOBRsure, utilize advanced touch-based and transdermal technologies to detect the presence of alcohol in individuals. The SOBRcheck device compares biometric data points from a user's fingertips to confirm identity, while simultaneously sensing alcohol released through the pores. The SOBRsure wearable band, on the other hand, passively monitors alcohol levels through the skin, providing real-time insights to administrators, clinicians, and families.

The company's commitment to innovation is evident in its robust product portfolio, which also includes the scalable and patent-pending SOBRsafe software platform. This comprehensive solution integrates the company's hardware devices, enabling the collection, presentation, and communication of valuable data to subscribed parties.

Market Strategy

SOBR Safe's strategic approach to market expansion has involved direct sales to businesses and consumers, forging partnerships with channel partners, and exploring licensing and integration agreements with non-competitive third parties. The company's sales and marketing efforts have gained significant traction, with the successful execution of customer agreements and the commencement of commercial production for both the SOBRcheck and SOBRsure devices.

Despite the challenges posed by the COVID-19 pandemic, SOBR Safe has demonstrated resilience and agility. The company has continued to evolve its products and software to meet diverse customer requirements across various markets, including behavioral health, judicial/administrative applications, commercial environments, and individual consumer use.

Financials

SOBR Safe's financial performance has been marked by recurring losses from operations, a common occurrence in the early stages of technology companies. As of September 30, 2024, the company reported cash on hand of $304,540 and a current normalized operating cash flow burn rate of approximately $550,000 per month. Management has acknowledged the need for additional capital to support the company's growth, and has outlined strategies to generate product and services revenues, access capital sources, and implement expense reduction tactics to preserve working capital.

The company's efforts to strengthen its financial position and restructure its outstanding debt obligations have been noteworthy. In 2024, SOBR Safe entered into an inducement offer letter agreement with holders of its 2023 convertible notes, resulting in the conversion of $3.56 million in principal and accrued interest into 52,150 shares of common stock. Additionally, the company received approximately $2.8 million in gross proceeds from the exercise of warrants, further bolstering its balance sheet.

For the nine months ended September 30, 2024, SOBR Safe reported revenues of $148,310, up 22% from the prior year period. Gross profit for the nine-month period was $66,380, with a gross margin of 45%. The company's net loss for the nine months ended September 30, 2024, was $6.42 million, an improvement of 16% compared to the prior year period.

In the most recent quarter (Q3 2024), SOBR Safe reported revenue of $46,129, representing a year-over-year growth of 27.2%. This increase was primarily driven by increased sales of the SOBRsure device and SaaS subscriptions. However, the company still recorded a net loss of $1,841,206 for the quarter.

As of September 30, 2024, SOBR Safe had total current assets of $930,300, while total assets stood at $3.35 million. Total current liabilities were $1.19 million, and total liabilities were $1.32 million. The company's debt-to-equity ratio was 0.22, indicating a relatively low level of debt compared to equity. The current ratio of 0.78 and quick ratio of 0.55 suggest that the company may face some challenges in meeting its short-term obligations.

Liquidity

In March 2023, SOBR Safe entered into a Debt Offering with institutional investors, which included the issuance of 15% Original Issue Discount Convertible Notes and Common Stock Purchase Warrants. The company received $3 million from investors and issued Notes in principal amounts of $3.53 million and Warrants to purchase up to 3,520 shares of the company's common stock. This strategic move provided the company with additional capital to support its ongoing operations and product development efforts.

Furthermore, in June 2024, SOBR Safe entered into a Warrant Inducement with a certain holder of its existing warrants, receiving $2.79 million in gross proceeds from the exercise of 93,810 warrants. This transaction not only provided the company with additional capital but also demonstrated investor confidence in SOBR Safe's long-term potential.

The decrease in cash from $2.79 million at the end of 2023 to $304,540 as of September 30, 2024, was primarily due to the company's negative cash flow from operations of $4.91 million during the nine-month period. This highlights the ongoing challenge of achieving profitability and generating sufficient cash flow from operations to fund ongoing operations.

Product Segments

SOBR Safe's product portfolio consists of two main segments: SOBRcheck and SOBRsure.

The SOBRcheck device is the company's touch-based identity verification and alcohol detection solution. Users place two fingers on the device sensors, with one sensor comparing biometric data points from the finger to confirm identity, while the other senses alcohol released through the pores of the fingertip. The SOBRcheck device has been in commercial production since the first quarter of 2022, and the company has executed customer agreements for the product since that time.

The SOBRsure device is SOBR Safe's patent-pending, fitness-style wearable band with an alcohol detection solution intended for discrete, low-profile, and voluntary use. The wearable band includes a sensor that senses alcohol released through the pores of the skin. It 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, real-time alcohol insights to administrators, clinicians, parents, and others, and also includes device removal and service interruption notifications. The SOBRsure device became available for sale in late September 2023.

Geographic Market

Currently, SOBR Safe only sells its products in North America. As the company continues to grow and expand its market presence, it may explore opportunities to enter international markets in the future.

Conclusion

SOBR Safe's commitment to innovation and its focus on addressing the significant challenges posed by alcohol misuse have positioned the company as a pioneer in its industry. As the company navigates the complex landscape, it continues to explore strategic partnerships, expand its customer base, and strengthen its financial footing, all while remaining dedicated to its mission of saving lives and improving societal well-being.

Throughout its history, SOBR Safe has faced and overcome various challenges, including the need for continuous capital infusion to fund its operations and product development. The company has addressed these challenges through a combination of cost-cutting measures, revenue generation initiatives, and strategic capital raising activities. These efforts have allowed SOBR Safe to maintain its focus on developing and commercializing its innovative alcohol detection technologies while working towards achieving long-term financial stability.

As SOBR Safe continues to grow its product lines and increase market penetration, the company's ability to access additional capital and achieve profitability will be crucial in supporting its ongoing growth and development efforts. The recent increases in revenue and improvements in net loss demonstrate progress, but the company still faces significant challenges in achieving sustainable financial performance. The success of SOBR Safe's innovative products in the market and its ability to manage costs effectively will be key factors in determining the company's long-term success and viability.