SOBR Safe(SOBR) - 2023 Q2 - Quarterly Report

Financial Performance - Revenues for the three months ended June 30, 2023, were $37,601, a significant increase from$1,500 in the same period of 2022[21]. - Gross profit for the six months ended June 30, 2023, was $38,829, compared to$1,900 for the same period in 2022, indicating a substantial improvement[21]. - Net loss for the six months ended June 30, 2023, was $5,475,650, a decrease of$282,415 from the net loss of $5,758,065 in the same period of 2022[180]. - Operating loss increased to$5,146,272 for the six months ended June 30, 2023, from $4,430,386 in the prior year, primarily due to increased general and administrative expenses[179]. - Net loss for the three months ended June 30, 2023, was$2,873,958, up from $188,381 in the prior year[166]. Expenses and Liabilities - Total operating expenses for the three months ended June 30, 2023, rose to$2.72 million, up from $2.59 million in the same period of 2022, reflecting an increase of approximately 5$1,899,383, an increase of $540,903 from$1,358,480 in the same period of 2022[169]. - Interest expense decreased significantly by $1,703,832 to$434,310 for the six months ended June 30, 2023, due to the absence of default penalties included in the prior year[190]. - Total current liabilities decreased to $1.26 million as of June 30, 2023, from$2.82 million as of December 31, 2022, a reduction of approximately 55%[19]. Cash Flow and Assets - Cash and cash equivalents decreased to $5.68 million as of June 30, 2023, from$8.58 million as of December 31, 2022, a decline of about 34%[17]. - Cash balances were approximately $5,700,000 with positive working capital of$5,100,000 as of June 30, 2023, providing adequate working capital for the next twelve months[161]. - Net cash used in operating activities for the six months ended June 30, 2023, was $3,262,642, compared to$2,721,376 for the same period in 2022, indicating an increase in cash outflow[27]. Stock and Equity - The company issued 2,532,942 shares of common stock in a public equity offering, raising approximately $8,694,363 after issuance costs[23]. - The total common stock outstanding decreased from 8,778,555 shares at the beginning of 2022 to 7,803,139 shares by March 31, 2022[23]. - The company granted stock options and restricted stock units, resulting in an increase of$934,225 in paid-in capital[23]. - The Company raised $3,000,001 from the 2023 Debt Offering, issuing convertible notes with a principal amount of$3,529,412 and warrants to purchase up to 386,998 shares at an exercise price of $2.52 per share[99]. Revenue Recognition and Product Development - The company recognizes revenue when control of software products and services is transferred to customers, following a five-step process[51]. - The SOBRsure™ wearable wristband is in commercial production and available for sale in Q3 2023[154]. - The company executed customer agreements and began generating revenue from the SOBRcheck™ device since Q1 2022[153]. Internal Controls and Governance - The company identified and remediated two material weaknesses in internal controls over financial reporting as of June 30, 2023[211]. - The first material weakness was addressed by hiring a Chief Financial Officer, a Vice President of Finance and Accounting, and a Controller, enabling better segregation of duties[211]. - An independent consultant was retained to assess and document internal controls, which has now been completed[211]. Market Presence and Strategy - The company’s common stock began trading on the Nasdaq exchange under the ticker symbol "SOBR" on May 16, 2022, indicating a significant milestone in its market presence[30]. - The company integrates proprietary software with patented alcohol detection products, targeting primarily the North American market[8]. - The company anticipates needing additional capital for accelerated customer acquisition, advanced purchasing of materials, and potential global expansion[162].