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.

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).

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.

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).

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 ☐

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of ~~November 10, 2022,~~May 15, 2023, there were ~~14,571,120~~18,394,570 shares of common stock, $0.00001 par value, issued and outstanding.

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.

The condensed consolidated balance sheets as of ~~September 30, 2022,~~March 31, 2023, and December 31, ~~2021,~~2022, the condensed consolidated statements of operations for the three months ended March 31, 2023, and ~~nine-months ended September 30,~~ 2022, ~~and 2021,~~ the condensed consolidated statements of changes in stockholders’ equity (deficit) for the three months ended March 31, 2023, and ~~nine-months ended September 30,~~ 2022, ~~and 2021,~~ and the condensed consolidated statements of cash flows for the ~~nine-months~~three months ended ~~September 30,~~March 31, 2023, and ~~2021,~~2022, follow. The unaudited condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary tofor a fair statement of the results for the interim periods presented. All such adjustments are of a normal and recurring nature.

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

SOBR SAFE, Inc.	SOBR SAFE, Inc.													SOBR SAFE, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS	CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS													CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

		For The Three-Months Ended						For The Nine-Months Ended							For The Three Months Ended March 31,
		September 30,						September 30,							2023			2022
��		2022			2021			2022			2021
		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)				(Unaudited)			(Unaudited)
Revenues		$	9,734		$	-		$	12,734		$	-			$	47,868		$	1,500
Cost of Goods Sold			4,950			-			6,050			-
Gross Profit			4,784			-			6,684			-
Cost of sales																30,064			1,100
Gross profit																17,804			400

Operating expenses:
General and administrative			1,997,822			949,293			5,145,857			2,557,935				1,584,950			863,100
Stock-based compensation expense			329,323			147,163			1,080,930			334,228				698,913			934,225
Research and development			459,847			566,655			992,491			1,052,650				180,918			47,459
Total operating expenses			2,786,992			1,663,111			7,219,278			3,944,813				2,464,781			1,844,784

Loss from operations			(2,782,208	)		(1,663,111	)		(7,212,594	)		(3,944,813	)			(2,446,977	)		(1,844,384	)

Other income (expense):
Other income (expense), net			1,292			-			217,722			-
Gain on debt extinguishment, net			-			-			245,105			-
Gain on fair value adjustment – derivatives, net			-			-			1,040,000			-
Other income																70,470			27
Loss on debt extinguishment																-			(864,000	)
Loss on fair value adjustment - derivatives																-			(340,000	)
Interest expense			(201,943	)		(227,475	)		(2,340,085	)		(399,381	)			(225,185	)		(1,941,105	)
Amortization of interest – debt discount			(115,831	)		(130,830	)		(806,902	)		(222,373	)
Total other income (expense), net			(316,482	)		(358,305	)		(1,644,160	)		(621,754	)
Amortization of interest - beneficial conversion feature																-			(580,221	)
Total other expense, net																(154,715	)		(3,725,299	)

Loss before provision for income taxes			(3,098,690	)		(2,021,416	)		(8,856,754	)		(4,566,567	)			(2,601,692	)		(5,569,683	)

Provision for income tax			-			-			-			-
Provision for income taxes																-			-

Net loss			(3,098,690	)		(2,021,416	)		(8,856,754	)		(4,566,567	)			(2,601,692	)		(5,569,683	)
Net loss attributable to noncontrolling interest			4			4			13			102				5			4
Net loss attributable to SOBR Safe, Inc.			(3,098,686	)		(2,021,412	)		(8,856,741	)		(4,566,465	)		$	(2,601,687	)	$	(5,569,679	)

Deemed dividends related to underwritten public offering warrants down round provision			(5,005,857	)		-			(5,005,857	)		-

Deemed dividends related to Original Warrants and New Warrant down round provision			(3,495,583	)		-			(3,495,583	)		-

Net loss attributable to common stockholders		$	(11,600,126	)	$	(2,021,412	)	$	(17,358,181	)	$	(4,566,465	)

Basic and diluted loss per common share		$	(1.06	)	$	(0.23	)	$	(1.82	)	$	(0.53	)		$	(0.15	)	$	(0.65	)

Weighted average number of common shares outstanding			10,973,759			8,660,401			9,516,637			8,658,014				17,092,070			8,550,490

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

SOBR SAFE, Inc.	SOBR SAFE, Inc.							SOBR SAFE, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS							CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

		For The Nine Months Ended							For The Three Months Ended
		September 30,							March 31,
		2022			2021				2023			2022
		(Unaudited)			(Unaudited)				(Unaudited)			(Unaudited)
Operating Activities:
Net loss		$	(8,856,754	)	$	(4,566,567	)		$	(2,601,692	)	$	(5,569,683	)

Adjustments to reconcile net loss to net cash used in operating activities:
Amortization			289,098			289,098
Amortization of intangible assets										96,366			96,366
Amortization of interest - conversion features			848,329			222,373				-			580,221
Amortization of interest			423,782			275,052				21,644			423,782
Loss on extinguishment of debt			(245,105	)		-				-			864,000
Change in fair value of derivative liability			(1,040,000	)		-				-			340,000
Bad debt expense										882			-
Stock warrants expense			771,177			-				134,598			540,176
Stock options expense			1,262,396			399,259
Stock-based compensation expense			1,010,430			334,228				698,913			934,225
Changes in assets and liabilities:
Accounts receivable			(8,484	)		-				(648	)		(500	)
Inventory			(157,303	)		-				(34,239	)		(65,489	)
Prepaid expenses			375,001			(19,361	)			162,477			(16,733	)
Other assets			3,149			(7,146	)
Accounts payable			(149,145	)		604,834				198,159			96,886
Accrued expenses			1,027,548			(6,961	)			(87,986	)		931,796
Accrued interest payable			172,343			58,733				(177,927	)		57,696
Related party payables			(60,976	)		780				-			12,437
Stock subscriptions payable			70,500			138,069

Net cash used in operating activities			(4,264,014	)		(2,277,609	)			(1,589,453	)		(774,820	)

Financing Activities:
Proceeds from public equity offering			10,004,264			-
Cost of public equity offering			(1,309,882	)		-
Proceeds from private equity offering			5,997,854			-
Cost of private equity offering			(867,100	)		-
Repayments of convertible debenture payable			(3,048,781	)		-
Proceeds from notes payable - related parties			-			1,030,000
Proceeds from notes payable - non-related parties										3,000,001			-
Repayments of notes payable - related parties			-			(30,000	)			(550,000	)		-
Proceeds from notes payable - non-related parties			-			1,005,000
Repayments of notes payable - non-related parties			(145,932	)		-				(611,792	)		-
Proceeds from convertible debenture payable			-			2,500,000
Debt issuance costs			-			(275,000	)			(537,750	)		-
Net cash provided by financing activities			10,630,423			4,230,000				1,300,459			-

Net Change In Cash			6,366,409			1,952,391				(288,994	)		(774,820	)

Cash At The Beginning Of The Period			882,268			232,842				8,578,997			882,268

Cash At The End Of The Period		$	7,248,677		$	2,185,233			$	8,290,003		$	107,448

Schedule Of Non-Cash Investing And Financing Activities:
Deemed dividends related to underwritten public offering warrants down round provision		$	(5,005,857	)	$	-
Deemed dividends related to Original Warrants and New Warrant down round provision			(3,495,583	)	$	-
Derecognition of convertible debenture		$	3,048,781		$	-
Reacquisition value of convertible debenture		$	(3,912,781	)	$	-
Shares issued for prepaid services		$	(719,000	)	$	-
Financing of prepaid insurance		$	(274,589	)	$	-
Issuance of common stock and warrants for prepaid services									$	373,981		$	-
Non-related party debt converted to capital		$	47,500		$	-			$	-		$	47,500
Reclassification of common shares from reverse stock split		$	155		$	-
Reclassification of elective shareholder conversion of common shares to preferred shares		$	30		$	-
Relative fair value of stock warrants granted		$	-		$	1,939,756
Intrinsic value-beneficial conversion feature		$	-		$	909,214
Fair value of embedded conversion feature		$	-		$	980,000
Convertible debenture payable discount		$	-		$	823,781
Issuance of common stock for prior year accrued dividends		$	-		$	107,880
Issuance of common stock for rent		$	-		$	49,600

Supplemental Disclosure:
Cash paid for interest		$	15,986		$	67,618			$	245,822		$	4,816
Cash paid for income taxes		$	-		$	-			$	-		$	-

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

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

SOBR Safe, Inc. ~~(“SOBR Safe”)~~, ~~formerly TransBiotec, Inc.~~a Delaware corporation, (the “Company”, ~~was incorporated as Imagine Media LTD.~~“we”, “us”, and “our”) is a hardware and software company headquartered in August 2007 in the State of Delaware. A corporation also named TransBiotec, Inc. (“TransBiotec – CA”) was formed in the state of California July 4, 2004. Effective September 19, 2011, TransBiotec was acquired by TransBiotec - CA in a transaction classified as a reverse acquisition as the shareholders of TransBiotec - CA retained the majority of the outstanding common stock of TransBiotec after the share exchange. The consolidated financial statements represent the activity of TransBiotec - CA from July 4, 2004 forward,Greenwood Village, Colorado. Our company integrates proprietary software with our patented touch-based alcohol detection products, SOBRcheck™ and the consolidated activity of SOBR Safe and TransBiotec - CA from September 19, 2011 forward. SOBR Safe and TransBiotec - CA are hereinafter referred to collectively as the “Company” or “We”. The Company has developed and began selling aSOBRsure™, enabling non-invasive alcohol ~~sensing device~~detection, biometric identity verification, and real-time cloud-based alerts and reporting. Currently our principal markets are located in ~~2022.~~ North America.

On ~~January 7,~~April 28, 2022, ~~our stockholders approved an amendment to our Articles of Incorporation to effect~~we effected a 1-for-3 reverse stock split ~~of our outstanding common stock at a ratio between of 1-for-2 and 1-for-3 in connection~~ with our planned listing on Nasdaq. On March 4, 2022 the Board of Directors approved the reverse split ratio of 1-for-3 with the anticipated effective date of the reverse split on or about March 28, 2022. The 1-for-3 reverse stock split went effective with the State of Delaware, FINRA and OTC Markets on April 28, 2022. All share and per share amounts have been adjusted in these condensed consolidated financial statements to reflect the effect of the reverse stock split.

~~Also on January 7,~~On May 16, 2022, our ~~stockholders also approved an amendment to our 2019 Equity Incentive Plan to increase~~common stock began trading on the ~~shares authorized to be issued~~Nasdaq exchange under the ~~Plan from 1,282,823 shares~~ticker symbol “SOBR.” Prior to ~~1,733,333 shares.~~this, our common stock was quoted on the “OTCQB” tier of the OTC Markets, also under the ticker symbol “SOBR.”

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, ~~2021,~~2022, included in the Company’s Annual Report on Form 10-K filed with the SEC on March ~~11, 2022.~~31, 2023.

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 ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021, the~~2022, and results of operations ~~for the three~~ and ~~nine-month periods ended September 30, 2022 and 2021, and statement of~~ cash flows for the ~~nine-month period~~three-month periods ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022.

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

The preparation of unaudited condensed consolidated financial statements in conformity with ~~generally accepted accounting principles~~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, the valuation of the derivative liabilities, beneficial conversion feature expenses, stock-based compensation and the valuation allowance related to deferred tax assets. Actual results could differ from those estimates.

~~Pursuant to Accounting Standards Codification (“ASC”) Topic 820,~~ ~~Fair Value Measurements and Disclosures~~~~, and ASC 825,~~ ~~Financial Instruments~~~~, an entity~~The Company is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ~~ASC 820 and 825 establishes a~~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. ~~ASC 820 and 825~~The Company prioritizes the inputs into three levels that may be used to measure fair value:

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 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:~~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 3 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, ~~convertible debentures,~~ and other liabilities. ~~Pursuant to ASC 820 and 825, the fair value of our derivative liabilities is determined based on “Level 3” inputs.~~ We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

~~The following table presents assets and liabilities that are measured and recognized at fair value as of September 30, 2022~~At March 31, 2023 and December 31, ~~2021:~~2022, the Company did not have financial instruments requiring valuation from observable or unobservable inputs to determine fair value on a recurring basis.

The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents. The Company does not have any cash equivalents ~~as of September 30, 2022~~at March 31, 2023 and December 31, ~~2021.~~2022.

Accounts receivable is derived from sales to a limited number of ~~customers at September 30, 2022.~~customers. 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 no allowance for doubtful accounts at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022.

Inventory 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. Inventory is comprised primarily of component parts and finished ~~products intended for sale to customers.~~products. The Company evaluates the need for reserves for excess or obsolete inventory ~~determined~~ primarily based upon estimates of future demand for the Company’s products. ~~At September 30, 2022 and December 31, 2021 the~~The Company had no reserves for ~~obsolescence.~~excess inventory or obsolescence at March 31, 2023 and December 31, 2022.

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.

~~From time to time,~~As discussed under “Recently Adopted Accounting Standards” in Note 1, the Company ~~may issue~~adopted ASU 2020-06 effective January 1, 2023, which, among other things, eliminated the beneficial conversion feature model applicable to certain convertible ~~notes that may contain~~instruments. Prior to the adoption of ASU 2020-06, a beneficial conversion ~~feature. A beneficial conversion~~ feature ~~exists~~existed on the date a convertible note is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the remaining unallocated proceeds of the note after first considering the allocation of a portion of the note proceeds to the fair value of the warrants, if related warrants have been granted. The intrinsic value of the beneficial conversion feature iswas recorded as a debt discount with a corresponding amount to additional paid-in capital. The debt discount iswas amortized to interest expense over the life of the note using the effective interest method.

The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instruments are initially recorded at their fair values and are then re-valued at each reporting date, with changes in the fair value reported in the unaudited condensed consolidated statements of operations under other income (expense). The accounting treatment of derivative financial instruments requires that the Company record the embedded conversion option at its fair value as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. As a result of entering into warrant agreements, for which such instruments contained a variable conversion feature with no floor, the Company has adopted a sequencing policy ~~in accordance with ASC 815-40-35-12~~ whereby all future instruments may be classified as a derivative liability with the exception of instruments related to share-based compensation issued to employees or directors. For stock-based derivative financial instruments, the Company uses a Monte Carlo Simulation model to value the derivative instruments at inception and on subsequent valuation dates.

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

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 balance sheet.

~~We apply the guidance enumerated in ASC 480 “Distinguishing Liabilities from Equity” when determining the classification and measurement of preferred stock.~~ Preferred shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. We classify 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, we ~~classified~~classify our preferred shares in stockholders’ equity.

A subsidiary of the Company has minority members representing ownership interests of ~~1.38%~~1.4% at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022. The Company accounts for these minority, or noncontrolling interests ~~pursuant to ASC 810-10-65~~ 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.

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 ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021.~~respectively.

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 ~~SOBR’s~~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 these respective services and devices.

Revenue is recognized in conjunction with guidance provided by Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”) issued by the Financial Accounting Standards Board in May 2014.

The ~~company~~Company determines revenue recognition through five steps ~~outlined in ASC 606~~ which include (1) ~~the~~ 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, and (5) finally, recognition of revenue as the Company’s performance obligations are satisfied according to the terms of the contract.

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.

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.

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 obligations 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 twelve to thirty-six months in duration, are billed monthly ~~in advance~~ and are 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 to customers as a source of revenue to offset respective costs when control has transferred to the customer.

We report 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 products sold when revenue is recorded for the related product. Royalties are also charged to cost of products sold.

The Company ~~follows the guidance of the accounting provisions of ASC 718,~~ ~~Share-based Compensation~~~~, which requires the use of~~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.

The Company accounts for its research and development costs pursuant to ASC 730, whereby it requires the Company to disclose the amounts of costs for company and customer-sponsored research and development activities, if material. 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 SOBR product. Research and development costs were $992,491 and $1,052,650 during the nine-month periods ended September 30, 2022 and 2021, respectively. Research and development costs were $459,847 and $566,655 during the three-month periods ended September 30, 2022 and 2021, respectively.products.

Advertising and marketing costs are charged to operations as incurred. Advertising and marketing costs were ~~$75,147~~$21,301 and $70,692 during the nine-month periods ended September 30, 2022 and 2021, respectively, and are included in general and administrative expenses in the consolidated statements of operations. Advertising and marketing costs are charged to operations as incurred. Advertising and marketing costs were $29,628 and $12,438$30,185 during the three-month periods ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

~~The Company accounts for income taxes pursuant to ASC 740. Under ASC 740 deferred~~Deferred taxes are provided on aan 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 ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 as these have been offset by a 100% valuation allowance.

Basic net 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, 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.

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

Concentration of Customers – The Company has conducted ~~limited~~ sales during the ~~nine-months ended September 30,~~three-months ending March 31, 2023 and 2022, to ~~six~~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 upon the completion of sales agreements.

Concentration of Suppliers – The Company relies on a limited number of ~~components~~component and contract suppliers to assemble its product. If supplier shortages occur, or quality problems arise, production 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 flow.

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

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”) which simplifies the accounting for convertible instruments by eliminating the beneficial conversion and cash conversion accounting models. In addition, ASU 2020-06 removes certain settlement conditions required for equity contracts to qualify for the derivative scope exception and simplifies the diluted earnings per share calculation in certain areas.

The Company early adopted ASU 2020-06 effective January 1, 2023 using the modified retrospective method whereby the cumulative effect of the change is recognized as an adjustment to the opening balance of retained earnings at the date of adoption. On January 1, 2023, the Company recorded an increase to retained earnings (accumulated deficit) of $776,569 and a decrease to additional paid-in-capital of $909,214 to fully remove the unamortized debt discount related to beneficial conversion features of $132,646.

The Company has reviewed other 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.

Certain prior period amounts have been reclassified to conform with the current period presentation.

The Company has incurred recurring losses from operations. Future capital requirements will depend on many factors, including the Company’s ability to sell and develop products, generate cash flow from operations, and assess competing market developments. The Company may need additional capital in the future.

As of ~~September 30, 2022,~~March 31, 2023, the Company has an accumulated deficit of approximately ($~~74,829,673)~~80,200,000). During the ~~nine-months~~three months ended ~~September 30, 2022,~~March 31, 2023, the Company ~~also~~ experienced negative cash flows from operating activities of approximately ($~~4,264,014)~~1,600,000) and ~~generated nominal revenue from product~~has $905,000 of convertible notes payable due in various amounts between April and ~~subscription sales. It appears these principal conditions or events, considered in the aggregate, indicate it is probable that~~May 2023.

On March 9, 2023, the Company ~~will be unable to meet its obligations as they become~~received approximately $2,500,000 of net proceeds from a Debt Offering (see Note 9).

On April 12, 2023, the Company prepaid the principal and all accrued interest for the convertible notes due ~~within one year~~in April and May 2023.

Management believes that cash balances of approximately $8,300,000 and positive working capital of $7,100,000 at March 31, 2023 provide adequate working capital for operating activities for the next twelve months after the date ~~the~~these financial statements are issued. ~~As such, there is substantial doubt about~~Further, actions presently being taken to generate product and services revenues in addition to working capital provide the ~~entity’s ability~~opportunity for the Company to continue as a going ~~concern.~~ concern as of March 31, 2023.

~~The Company has identified factors that mitigate the probable conditions that have raised substantial doubt about the entity’s ability to continue as a going concern.~~

On May 13, 2022, the Company entered into an Underwriting Agreement in which the Company agreed to complete an underwritten public offering with an Underwriter to sell 2,352,942 units (Units) at a public offering price of $4.25 per Unit, with each Unit consisting of one share of the Company’s Common Stock, with a par value $0.00001, and two warrants (the “Common Warrants) each to purchase one share of Common Stock. The Common Warrants included in the Units are exercisable immediately and have an exercise price of $4.25 per share (100% of the price per Unit sold in the offering). The Company’s Common Stock began trading on the Nasdaq Capital Market under the symbol SOBR on May 16, 2022. The Warrants have not been listed for trading and will expire five years from the date of their issuance. Further, pursuant to the terms of the Underwriting Agreement and related “lock-up” agreements, the Company, each director and executive officer of the Company, and certain stockholders have agreed with the Underwriter not to offer for sale, issue, sell, contract to sell, pledge or otherwise dispose of any of our Common Stock or securities convertible into Common Stock for a period of 180 days (24 months for the Company) commencing on the May 13, 2022, the date of the final prospectus.

On May 18, 2022, the Underwriter to the public offering was granted a 45-day option, exercisable in one or more times in whole or in part, to purchase up to an additional 352,941 shares of Common Stock and/or up to an additional 705,882 Warrants (the “Underwriter Warrants”) solely to cover over-allotments. The over-allotment shares of Common Stock can be purchased at the public offering price of the Units ($4.25), less the underwriting discounts payable by the Company, and the Underwriter Warrants can be purchased for $0.01 per Warrant. Each purchased Underwriter Warrant can be exercised at the public offering price of the Units ($4.25). The Underwriter purchased 424,116 Underwriter Warrants during the 45-day option which expired on July 2, 2022 and did exercise its option to purchase Common Stock or additional Underwriter Warrants.

Further on May 18, 2022, pursuant to the Underwriting Agreement, the Company issued Representative’s Warrants to purchase up to an aggregate of 141,177 shares of Common Stock (the “Representative’s Warrants”). The Representative’s Warrants are exercisable beginning on November 17, 2022, until May 17, 2027. The initial exercise price of Representative's Warrants is $5.3125 per share, which is equivalent to 125% of the public offering price per Unit in the public offering.

~~On May 18, 2022, the Company received approximately $8,780,000 of net proceeds from the underwritten public offering.~~

On May 19, 2022, the principal balance of the Armistice Capital Master Fund, Ltd 18% Original Issue Discount Convertible Debenture in default at March 31, 2022 of $3,048,781, was paid in full on May 19, 2022 satisfying all amounts due and accrued under the default, including penalty, damages and interest provisions of the loan agreement (see Note 8).

On September 28, 2022, the Company entered into a PIPE Offering pursuant to a Securities Purchase Agreement (the “Agreement”) and Registration Rights Agreement (the “Registration Rights Agreement”) with institutional investors for aggregate gross proceeds of approximately $6,000,000, before deducting fees to the placement agent and other expenses payable by the Company. The PIPE Offering closed on September 30, 2022.

In connection with the PIPE Offering, the Company issued 1,925,677 Non-Prefunded Units and 2,128,378 Prefunded Units at a purchase price of $1.48 per unit priced at-the-market under Nasdaq rules. The Prefunded Units were sold at the same price less the Prefunded Warrant exercise price of $0.001.

Each Non-Prefunded Unit consists of one share of common stock and one non-tradable Non-Prefunded Warrant exercisable for one share of common stock, at a price of $1.35, subject to adjustments pursuant to the non-prefunded warrant agreement (“Non-Prefunded Warrant Agreement”). Each Prefunded Unit consists of one share of a Non-Prefunded Warrant and one non-tradable Prefunded Warrant exercisable for one share of common stock, at a price of $1.35 less the Prefunded Warrant exercise price of $0.001, subject to adjustments pursuant to the prefunded warrant agreement (“Prefunded Warrant Agreement”). The Non-Prefunded Warrants are exercisable immediately upon issuance and will expire seven years from the issuance date, and the Prefunded Warrants are exercisable immediately upon issuance and expire when fully exercised.

~~On September 30, 2022, the Company received approximately $5,140,000 of net proceeds from the PIPE Offering.~~

Management believes that the net offering proceeds of approximately $13,920,000 from the underwritten public offering and the PIPE Offering, after the payment of the defaulted loan balance of $3,048,781, providing for a cash balance at September 30, 2022 of approximately $7,250,000 provides adequate working capital for operating activities for the next twelve months after the date the financial statements are issued. However, the Company is responsible for convertible notes payable plus interest at 12% per annum due 24 months from issuance in the first half of 2021. Total principal balances of the convertible notes at September 30, 2022 are $2,005,000 and are due $1,100,000, $155,000 and $750,000 in March 2023, April 2023 and May 2023, respectively. The notes are convertible at $9.00 per share of the Company’s common stock. The notes contain both voluntary and automatic conversion features. The notes may be convertible at any time, by the holders, beginning on the date of issuance. The notes automatically convert into shares of the Company’s common stock if the Company’s common stock closes at or above $6.00 per share for five (5) consecutive trading days while listed on Nasdaq. Should the notes not automatically convert or a significant portion of the note holders voluntarily not convert the notes to our common stock, we may need additional funds beyond the funds raised in the underwritten public offering and the PIPE offering.

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. The full impact of the COVID-19 outbreak and related variants continues to evolve as of the date of this report. Management is actively monitoring the global situation on its financial condition, liquidity, operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak, its variants and the global responses to curb its spread, the Company is not able to estimate the effects of the COVID-19 outbreak on its results of operations, financial condition, or liquidity for fiscal year 2022. However, if the pandemic continues, it may have an adverse effect on the Company’s results of future operations, financial position, and liquidity in fiscal year 2022.

Management believes the net proceeds received from the underwritten public offering, PIPE Offering and actions presently being taken to generate product and services revenues provide the opportunity for the Company to continue as a going concern; however, these plans are contingent upon actions to be performed by the Company and these conditions have not been met on or before September 30, 2022. Additionally, the COVID-19 outbreak could have a continued material adverse impact on economic and market conditions and trigger a period of global economic slowdown, which could impair the Company’s ability to raise needed funds to continue as a going concern. As such, substantial doubt about the entity’s ability to continue as a going concern was not alleviated as of September 30, 2022.

Inventory ~~at September 30, 2022 and December 31, 2021~~ consisted of the following:

Prepaid expenses ~~at September 30, 2022 and December 31, 2021 consist~~consisted of the following:

On February 26, 2021, the Company entered into a lease agreement for use of an office facility for a 12-month term beginning March 1, 2021 through February 28, 2022. In addition to monthly base rent of $6,000, the agreement required the issuance of 5,333 shares of its common stock valued at $49,600. Stock-based compensation expense related to this agreement for the nine-month periods ended September 30, 2022 and 2021 are $8,267 and $28,933, respectively.

On May 25, 2022, the Company purchased Directors & Officers insurance prepaying annual premiums of $349,455 through a nine-month financing arrangement (see Note 9). The Company recorded $87,364 and $116,485 of insurance expense related to the prepaid Directors & Officers insurance for the three and nine-month periods ended September 30, 2022, respectively.

In June and July 2022, the Company purchased General Liability, Workers’ Compensation, Property and Automobile insurance prepaying annual premiums of $10,335. The Company recorded $2,478 and $3013 of insurance expense related to these prepaid policies for the three and nine-month periods ending September 30, 2022, respectively.

On May 31, 2022, the Company entered into a new office facility lease agreement for a 12-month term beginning July 1, 2022 through June 30, 2023 with a monthly base rent of $15,736. The lease agreement required a deposit equivalent to one month’s base rent to be held by the lessor for the term of the lease.

On ~~April~~January 1, ~~2022,~~2023, the Company ~~made~~entered into a ~~payment~~6-month agreement for investor relations services in exchange for the issuance of $300,000 to a consultant as a prepayment for strategic advisory and digital marketing services to be provided during a nine -month period beginning on May 16, 2022 through November 15, 2022. In addition, the Company issued 500,000225,000 common shares ~~on June 29, 2022~~and 225,000 warrants to ~~the consultant as additional compensation for the services to be provided~~purchase shares of common stock at ~~$0.91~~$1.35 per ~~share with a~~share. The shares and warrants had an aggregate fair value of $373,981 on the date of issuance which is recognized over the period of ~~$455,000.~~service. The Company recorded $186,991 of professional ~~consulting service~~services expense ~~of $377,500 and $566,250~~related to the agreement for the ~~three and nine-month periods ended September 30, 3022, respectively.~~

~~On May 16, 2022, the Company made a payment of $100,000 to a consultant as prepayment for business development consulting services to be provided during a six-month~~three-month period beginning on May 16, 2022 through November 15, 2022. In addition, the Company issued 300,000 common shares on June 8, 2022 to the consultant as additional compensation for services to be provided at $0.88 per share with a fair value on the date of issuance of $264,000. The Company recorded professional consulting service expense of $182,000 and $273,000 for the three and nine-month periods ended September 30, 2022, respectively.ending March 31, 2023.

Amortization expense was $96,366 for each of the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021 was $298,098 and $298,098, respectively,~~ and is included in general and administrative expenses in the condensed consolidated statements of operations. ~~Amortization expense for the three-month periods ended September 30, 2022 and 2021 was $99,366 and $99,366, respectively.~~

As of March 31, 2023, estimated future amortization expense for device technology intangible assets is as follows:

2023	2023			2024				2025				2026				2027				Thereafter			2023			2024				2025				2026				2027				Thereafter
$	385,467			$	385,467			$	385,467			$	385,467			$	385,467			$	1,027,924		289,098			$	385,464			$	385,464			$	385,464			$	385,464			$	931,573

On February 12, 2021, the Company entered into a note payable agreement with David Gandini, an officer and shareholder, under which Mr. Gandini advanced the Company $30,000 for working capital purposes. The unsecured note carried interest at 0% and was paid in April 2021.

On March 30, 2021, the Company received notification from IDTEC that it was exercising a portion of the 106,667 warrants issued resulting from the 2020 Waiver Under Asset Purchase Agreement and Post-Closing Covenant Agreement with IDTEC. The warrant exercise price is $1.50 per share. With the proceeds of the exercise, the Company paid $88,469 during the three-month period ended December 31, 2021 to settle an outstanding judgement against the Company which was considered as a non-permitted liability under the Post-Closing Covenant Agreement. We issued 58,980 shares of our common stock for the $88,470 we received from IDTEC to pay the settlement. As the shares had not been issued by March 31, 2021, the amount received from IDTEC was included in the common stock subscriptions payable balance at March 31, 2021.

On March 3 and 31, 2021, the Company issued convertible notes payable (see Note 9) totaling $350,000 to existing shareholders holding a direct or indirect interest in the Company and $200,000 to a Company’s director and another director’s family member. The principal amount of the secured convertible debentures are convertible at $9.00 per share, and include warrants to purchase in total 91,667 shares of the Company’s common stock at $9.00 per share.

On May 31, 2021, the Company issued convertible notes payable (see Note 9) totaling $400,000 to existing shareholders holding a direct or indirect interest in the Company and $50,000 to a Company’s officer. The principal amount of the secured convertible debentures are convertible at $9.00 per share, and include warrants to purchase in total 75,000 shares of the Company’s common stock at $9.00 per share.

On March 1, 2022 the Board of Directors approved the designation of 3,000,000 shares of the Company’s Preferred Stock as “Series B Convertible Preferred Stock”. The Series B Convertible Preferred Stock shares were issued in exchange for 333,333 shares of the Company’s common stock held by the Company’s CEO David Gandini and 666,667 shares of the Company’s common stock held by IDTEC SPV, LLC, an entity controlled by a beneficial owner of the Company (see Note ~~13)~~15).

On July 25, 2022, the Company entered into a Consulting Agreement with a beneficial owner of the Company. The Consulting Agreement commenced on the effective date and will continue through March 1, 2023. The Company is committed to issue 75,000 restricted shares of the Company’s Common Stock to the Consultant for the professional services (See Note 11).

Accrued expenses ~~at September 30, 2022 and December 31, 2021~~ consist of the following:

	September 30, 2022		December 31, 2021		March 31, 2023		December 31, 2022
Registration rights and default damages and penalties (see Note 8)	$	-	$	189,663
Consulting services		203,647		163,647		163,647		197,897
Other		178,698		110,590		140,649		194,385
Accrued expenses	$	382,345	$	463,900	$	304,296	$	392,282

~~Convertible debenture payable at September 30, 2022 and December 31, 2021 consist of the following:~~

On September 28, 2021, (the “Closing Date”) the Company completed a financing transaction under a Securities Purchase Agreement (the “SPA”) and corresponding 18% Original Issue Discount Convertible Debenture (the “Debenture”), Common Stock Purchase Warrant (the “Original Warrant”) and Registration Rights Agreement (“RRA”). Under the terms of the SPA, the Company received $2,500,000 from the Purchaser and in exchange issued the Debenture in the principal amount of $3,048,781 and Original Warrants to purchase up to 406,504 shares of the Company’s common stock. The Debenture is convertible voluntarily by the Purchaser at any time into shares of our common stock, at the lesser of $7.50, representing 100% of the closing price of our common stock on the trading day immediately prior to the Closing Date, or 75% of the average VWAP of our common stock during the 5 trading day period immediately prior to the conversion date (the “Conversion Price”), or automatically upon the occurrence of a single public offering of our common stock which results in the listing of our common stock on a national securities exchange as defined in the Exchange Act (the “Qualified Offering”) into shares of our common stock at the lesser of the Conversion Price, or 75% of the offering price of the securities offered in the Qualified Offering. The Debenture due date iswas March 27, 2022, does not accrue interest unless there is an event of default under the terms of the Debenture. The Original Warrant is exercisable at any time through September 28, 2026 into shares of our common stock at an exercise price of $6.00 per share, unless an event of default occurs, at which time the exercise price will adjust to $3.00 per share. The Original Warrant contains a cashless exercise provision but only in the event the Company fails to have an effective registration statement registering the common shares underlying the Original Warrant at any time beginning six months from the Closing ~~Date.~~Date The RRA requires the Company to register for resale and maintain effectiveness of such Registration Statement for such all of the registrable securities under the terms of the Debenture and Original Warrant, within defined time frames. Should the Company fail to meet the RRA requirements, until the date causing such event of noncompliance is cured, Company shall pay to the Purchaser as partial liquidated damages equal to the product of 2% of the principal amount not to exceed 24% of the aggregate principal. If the Company fails to pay of the liquidated damages within seven days after the date payable, the Company will pay interest at 18% until such amounts are paid in full. The filing date requirements were cured in February 2022. Total RRA damages and ~~estimated~~ related costs ~~are~~of approximately ~~$195,105. Damages and accrued interest expense are included in general and administrative expenses in~~$192,399 were recognized during the ~~Condensed Consolidated Statement of Operations. The Company recorded interest expense of $5,443 and none for the nine-months~~three-month period ended ~~September 30, 2022 and 2021.~~March 31, 2022.

The Debenture matured on March 27, 2022 and the Company did not make the required principal payment putting the Company in default under the terms of the Debenture. On March 30, 2022, we entered into a Waiver Agreement with the Purchaser, under which the Purchaser granted the Company a waiver of the default penalties under the Debenture such that any default penalties will not be charged and/or due until April 17, 2022 (the “Waiver”). Default penalties at the Purchaser’s election are due and payable at the Mandatory Default Amount defined as the sum of (a) the greater of (i) the outstanding principal amount of this Debenture, plus all accrued and unpaid interest hereon, divided by the Conversion Price on the date the Mandatory Default Amount is either (A) demanded or otherwise due or (B) paid in full, whichever has a lower Conversion Price, multiplied by the VWAP on the date the Mandatory Default Amount is either (x) demanded or otherwise due or (y) paid in full, whichever has a higher VWAP, or (ii) 130% of the outstanding principal amount of this Debenture, plus 100% of accrued and unpaid interest hereon, and (b) all other amounts, costs, expenses and liquidated damages due in respect of this Debenture, As the default had not been cured through the Waiver date, mandatory default penalties of $914,634 are included in ~~general and administrative~~interest expense in the ~~Condensed Consolidated Statement~~condensed consolidated statement of ~~Operations~~operations for the ~~nine-months~~three months ended ~~September 30,~~March 31, 2022.

In exchange for the Waiver of the default penalties the Company agreed to: (i) amend that certain Common Stock Warrant (the “Original Warrant”) issued by the Company to the Purchaser dated September 27, 2021 to extend the Termination Date (as defined in the Original Warrant) from September 28, 2026 to September 28, 2028; and (ii) issue the Purchaser a second Common Stock Purchase Warrant (the “New Warrant”) entitling the Purchaser to subscribe for and purchase up to an additional 101,626 shares of our common stock, expiring March 29, 2029, with all other terms of the warrant the same as the Original Warrant. We also agreed, within thirty (30) days of the date of the Waiver, to file a Registration Statement on Form S-1 (or, if such form is unavailable for such a registration, on such other form as is available for such registration), covering the resale of all of the shares underlying the New Warrant.

As a result of the ~~default event, Debenture’s automatic conversion features upon~~change in the ~~occurrence of a Qualified Offering no longer apply~~Original Warrant extended termination date and ~~interest accrues at 18% per annum on~~ the ~~principal amount.~~

~~The~~New Warrant issued in exchange for the Waiver, the Company evaluated the Debenture for derivative embedded and beneficial conversion features and determined that its embedded conversion feature carried a debt discount. The total conversion feature debt discount of $980,000 is amortized over the lifereacquisition price of the ~~convertible debenture.~~ Debenture to be $3,912,781. As the net carrying amount of the Debenture is $3,048,781, a loss on extinguishment of debt of $864,000 was recognized during the three-month period ended March 31, 2022.

The debt discount amortization expense recorded as amortization of interest in the ~~Condensed Consolidated Statements~~condensed consolidated statement of ~~Operations~~operations was $465,635 ~~and $16,245~~ for the ~~nine-month periods~~three-month period ended ~~September 30, 2022 and 2021, respectively.~~

On September 28, 2022, the Company entered into a PIPE Offering pursuant to a Securities Purchase Agreement (the “Agreement”) and Registration Rights Agreement (the “Registration Rights Agreement”) where the Company agreed to issue Non-Prefunded and Prefunded PIPE Units consisting of one share of common stock and one non-tradeable warrant exercisable for one common share at a price of $1.35 per warrant (See Note 2). Pursuant to agreements related to the issuance of Debenture Original Warrants and New Warrants both warrants contain an adjustment provision (the “Adjustment”) whereby upon a Dilutive Issuance (as defined in the Original Warrant and the New Warrant), the holder of such warrants shall be entitled to receive shares of common stock at an effective price per share that is less than the Exercise Price (as defined in the warrants), and such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance at such effective price. Entering into the PIPE Offering initiated the Adjustment and an aggregate 1,750,225 warrants the (the “Armistice Warrants”) consisting of (i) 1,400,180 warrants pursuant to the Adjustment terms under the Original Warrant, and (ii) 350,045 warrants pursuant to the Adjustment terms of New Warrants.

As of September 30, 2022 and 2021, the debenture carries outstanding warrants of 2,258,355 and 406,504, respectively. The relative fair market value of the related stock warrants granted during the nine-month periods ended September 30, 2022 and 2021 was $4,359,583 and $847,048, respectively.

~~The unamortized discount at September 30, 2022 and December~~March 31, ~~2021 was none and $402,465, respectively.~~2022. Stock warrants amortization expense recorded as interest expense was ~~$465,635 and $14,039~~$ 402,465 for the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

The Company incurred $548,781 of Original Issue Discount and $275,000 of debt issuance costs related to the Debenture which ~~is being~~was amortized to interest expense over the term of the debt using the effective interest method. ~~The unamortized discount and issuance costs at September 30, 2022 and December 31, 2021 was none and $423,782, respectively.~~ Interest expense related to the Original Issue Discount and debt issuance costs was $423,782 ~~and none~~ for the ~~nine-month periods ended September 30, 2022 and 2021, respectively.~~

On May 19, 2022, the principal balance of the Debenture in default of $3,048,781, was paid in full satisfying all amounts due and accrued under the default, including penalty, damages and interest provisions of the agreement. Where the Company was not required to pay the penalty, damages and interest provision of the agreement, a gain on extinguishment of debt of $1,109,105 was recorded during the nine-monththree-month period ended ~~September 30,~~March 31, 2022.

Related party notes payable ~~at September 30, 2022 and December 31, 2021~~ consist of the following:

	September 30, 2022			December 31, 2021			March 31, 2023			December 31, 2022
Convertible Notes Payable with Detached Free-standing Warrants	$	1,000,000		$	1,000,000
Conventional Non-Convertible Notes Payable		11,810			11,810
Convertible Notes Payable with Warrants - 2021 Debt Offering							$	450,000		$	1,000,000
Non-Convertible Note Payable								11,810			11,810
Unamortized Debt Discount		(271,575	)		(645,547	)		(19,754	)		(145,548	)
Net Related Party Notes Payable	$	740,235		$	366,263		$	442,056		$	866,262
Current Portion		(740,235	)		(11,810	)		(442,056	)		(866,262	)
Net Long-Term Portion	$	-		$	354,453		$	-		$	-

Total interest expense for related party notes was ~~$89,753~~$25,742 and ~~$55,151~~$385,889 for the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

The Company ~~has~~had four and thirteen convertible notes payable to related parties ~~each~~with total principal balances of $450,000 and $1,000,000 at March 31, 2023 and December 31, 2022, respectively. The notes were issued in March, April, and May 2021 as part of a 2021 debt offering. Each of the notes were issued with detached free-standing warrants to purchase the Company’s common stock at ~~$9.00~~$9 per ~~share, that have a total principal balance of $1,000,000 as of September 30, 2022.~~share. The notes, secured by the Company’s patents and ~~patents~~patent applications, include interest at 12%, are convertible at ~~$9.00~~$9 per share of the Company’s common stock and are due 24 months after issuance. The ~~note holders~~noteholders may elect to have the interest paid in cash monthly or have the interest accrue and be payable on the maturity date. Interest elected to be accrued will be paid in cash or may be converted into shares of our common stock under the same terms as the principal amount on the maturity date.

The notes contain both voluntary and automatic conversion features. The notes may be converted at any time, by the holders, beginning on the date of issuance. However, the holders may not convert any outstanding amounts due under the note, if at the time of such conversion the amount of common stock issued for the conversion, when added to other shares of Company common stock owned by the holders or which can be acquired by holders upon exercise or conversion of any other instrument, would cause the holder to own more than 4.9% of the Company’s outstanding common stock. Beginning on the issuance date, the outstanding principal amount of the note, and any accrued interest, will automatically convert into shares of the Company’s common stock if the Company’s common stock closes at or above $6 per share for five (5) consecutive trading days while listed on NASDAQ.

The Company evaluated the convertible notes payable for embedded derivatives and beneficial conversion features and determined that there were beneficial conversion features to record. The total beneficial conversion feature debt discount of $448,999 is amortized over the life of the convertible notes payable. The debt discount amortization expense is recorded as amortization of interest – beneficial conversion feature in the condensed consolidated statements of operations and was none and $55,356 for the three-month periods ended March 31, 2023 and 2022, respectively. The unamortized debt discount related to the beneficial conversion feature was $66,843 at December 31, 2022. This balance was eliminated upon adoption of ASU 2020-06 effective January 1, 2023 (see Note 1).

At the time of issuance, a portion of the proceeds from the 2021 debt offering was allocated to the stock warrants issued with the notes based on their relative fair value, resulting in a debt discount of $551,001 which is amortized over the life of the notes. Amortization of the debt discount related to the stock warrants is recorded as interest expense and was $58,951 and $67,932 for the three-month periods ended March 31, 2023 and 2022, respectively. The unamortized debt discount related to the warrants was $19,754 and $78,705 at March 31, 2023 and December 31, 2022, respectively.

The Company has one non-convertible note payable to a related party that has a principal balance of $11,810 as of March 31, 2023 and December 31, 2022. The note carries an interest rate at 0%. The note payable had a due date of December 31, 2012 and is currently in default.

Total interest expense for non-related party notes was $41,126 and $129,009 for the three-month periods ended March 31, 2023 and 2022, respectively.

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 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 386,998 shares of the Company’s common stock. The Notes are convertible voluntarily by the Purchaser at any time the principal amounts are outstanding into shares of our common stock at a conversion price $2.28. 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 $2.52 per share. The Company received approximately $2,500,000 of net proceeds from the 2023 Debt Offering after offering-related costs.

The Company had nine and sixteen convertible notes payable to related parties with total principal balances of $455,000 and $1,005,000 at March 31, 2023 and December 31, 2022, respectively. The notes were issued in March, April, and May 2021 as part of a 2021 debt offering. Each of the notes were issued with detached free-standing warrants to purchase the Company’s common stock at $9 per share. The notes, secured by the Company’s patents and patent applications, include interest at 12%, are convertible at $9 per share of the Company’s common stock and are due 24 months after issuance. The noteholders may elect to have the interest paid in cash monthly or have the interest accrue and be payable on the maturity date. Interest elected to be accrued will be paid in cash or may be converted into shares of our common stock under the same terms as the principal amount on the maturity date.

The notes contain both voluntary and automatic conversion features. The notes will be convertible at any time, by the holders, beginning on the date of issuance. However, the holders may not convert any outstanding amounts due under the note if at the time of such conversion the amount of common stock issued for the conversion, when added to other shares of Company common stock owned by the holders or which can be acquired by holders upon exercise or conversion of any other instrument, would cause the holder to own more than 4.9% of the Company’s outstanding common stock. Beginning on the issuance date, the outstanding principal amount of the note, and any accrued interest, will automatically convert into shares of the Company’s common stock if the Company’s common stock closes at or above ~~$6.00~~$6 per share for five (5) consecutive trading days while listed on NASDAQ.

The Company evaluated the convertible notes payable for ~~derivative~~ embedded derivatives and beneficial conversion ~~features. The Company determined that there were beneficial conversion~~ features ~~to record. The total beneficial conversion feature debt discount of $448,999 is amortized over the life of the convertible notes payable.~~

~~The debt discount amortization expense recorded as amortization of interest – beneficial conversion feature in the Condensed Consolidated Statements of Operations was $167,913~~ and $101,070 for the nine-month periods ended September 30, 2022 and 2021, respectively. The unamortized beneficial conversion feature was $123,429 and $291,343 at September 30, 2022 and December 31, 2021, respectively. As of September 30, 2022, these notes carry outstanding warrants of 166,667. The relative fair market value of the related stock warrants granted during the nine-month periods ended September 30, 2022 and December 31, 2021 was none and $551,001, respectively. Stock warrants amortization expense recorded as interest expense was $206,059 and $127,354 for the nine-month periods ended September 30, 2022 and 2021, respectively. The unamortized discount at September 30, 2022 and December 31, 2021 is $148,146 and $354,205, respectively.

The Company has one non-convertible note payable to a related party that has a principal balance of $11,810 as of September 30, 2022 and December 31, 2021. The note carries an interest rate at 0%. The note payable had a due date of December 31, 2012 and is currently in default.

~~Non-related party notes payable at September 30, 2022 and December 31, 2021 consist of the following:~~

~~Total interest expense for non-related party notes was $100,687 and $31,614 for the nine-month periods ended September 30, 2022 and 2021, respectively.~~

The Company has sixteen convertible notes payable to non-related parties, each with detached free-standing warrants to purchase the Company’s common stock at $9.00 per share, that have a total principal balance of $1,005,000 as of September 30, 2022 and December 31, 2021. The notes, secured by the Company’s patents and patents applications, include interest at 12%, are convertible at $9.00 per share of the Company’s common stock and are due 24 months after issuance. The note holders may elect to have the interest paid in cash monthly or have the interest accrue and be payable on the maturity date. Interest elected to be accrued will be paid in cash or may be converted into shares of our common stock under the same terms as the principal amount on the maturity date. The notes contain both voluntary and automatic conversion features. The notes will be convertible at any time, by the holders, beginning on the date of issuance. However, the holders may not convert any outstanding amounts due under the note if at the time of such conversion the amount of common stock issued for the conversion, when added to other shares of Company common stock owned by the holders or which can be acquired by holders upon exercise or conversion of any other instrument, would cause the holder to own more than 4.9% of the Company’s outstanding common stock. Beginning on the issuance date, the outstanding principal amount of the note, and any accrued interest, will automatically convert into shares of the Company’s common stock if the Company’s common stock closes at or above $6.00 per share for five (5) consecutive trading days while listed on NASDAQ. The Company evaluated the convertible notes payable for derivative embedded and beneficial conversion features. The Company determined that there were beneficial conversion features to record. The total beneficial conversion feature debt discount of $460,215 is amortized over the life of the convertible notes payable.

The debt discount amortization expense is recorded as amortization of interest – beneficial conversion feature in the condensed consolidated statements of operations and was ~~$173,353~~none and ~~$105,060~~$59,230 for the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021.~~respectively. The unamortized debt discount related to the beneficial conversion feature was ~~$123,803 and $297,156~~$65,803 at ~~September 30, 2022 and~~ December 31, 2022. This balance was eliminated upon adoption of ASU 2020-06 effective January 1, 2023 (see Note 1).

At the time of issuance, a portion of the proceeds from the 2021 ~~respectively. As of September 30, 2022, these~~debt offering was allocated to the stock warrants issued with the notes ~~carry outstanding warrants of 167,500. The~~based on their relative fair ~~market~~ value, resulting in a debt discount of $541,707 which is amortized over the life of the notes. Amortization of the debt discount related to the stock warrants ~~granted during the nine-month periods ended September 30, 2022 and 2021 was none and $541,707, respectively. Stock warrants amortization expense~~is recorded as interest expense and was ~~$204,080~~$64,924 and ~~$122,012~~$69,780 for the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021.~~respectively. The unamortized debt discount related to the warrants was $14,151 and $79,074 at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021 was $147,345 and $351,425,~~2022, respectively.

The Company has two convertible notes payable to a non-related ~~parties that have a~~entity with principal ~~balance of~~balances totaling $9,183 as of ~~September 30, 2022~~March 31, 2023 and ~~three convertible notes payable to non-related parties that have a principal balance of $56,683 as of~~ December 31, ~~2021. These~~2022. The notes ~~carry~~bear interest ~~rates ranging from 5% -~~at 12% and ~~have due dates ranging from February 2013 to March 2022. Two~~are convertible into shares of the ~~three~~Company’s common stock at $32.29 per share. The notes were due in February and March 2013 and are currently in default. These notes carry a conversion price of $6.00 to $32.29 per share. On March 3, 2022 the Company authorized the issuance of 7,917 shares of common stock under the terms of a $47,500 convertible note payable issued March 6, 2020 with interest at 5%, due March 6, 2022 and convertible at $6.00 per share. The Company evaluated these convertible notes payable for derivative embedded and beneficial conversion features. The Company determined that there were beneficial conversion features to record. The conversion features were either fully amortized upon grant or over the life of the convertible notes payable.

The Company has two non-convertible notes payable to non-related parties ~~that have a~~with principal ~~balance of~~balances totaling $17,500 as of ~~September 30, 2022,~~March 31, 2023, and December 31, ~~2021.~~2022. These notes carry interest rates ranging from 9% - 10% and have due dates ranging from December 2013 to November ~~2015 of which the two~~2015. The notes are currently in default.

On May 25, 2022, the Company entered into a financing agreement for payment of annual Directors & Officers insurance premiums for coverage from May 2022 through May 2023 totaling $349,455. The financing agreement required an initial down payment of $74,866 with the remaining amount of $274,559 financed for a nine-month period at an annual interest rate of 4.37% with monthly payments of $31,068 beginning in June 2022. The financing liability balance at December 31, 2022 ~~through~~was $61,792. The note was paid in full in February 2023. ~~The Company recorded $2,355 and $3,340 of insurance expense related to the prepaid insurance for the three and nine-month periods ending September 30, 2022.~~

The Company has one note payable with detached free-standing warrants to a non-related party that has a principal balance of $5,000 as of September 30, 2022 and December 31, 2021. This note carries an interest rate of 10% and had a due date of September 2014. This note is currently in default. The detached free-standing warrants for this note payable were not exercised by the note holder and expired in 2019.

InAs discussed in Note 8, in September 2021, the Company completed a financing ~~transition~~transaction and received proceeds of $2,500,000 from the ~~Purchaser and in exchange issued~~issuance of an 18% Original Issue Discount Convertible Debenture in the principal amount of $3,048,781. The ~~debenture includes voluntary and automatic~~Company determined that the debenture’s conversion features ~~at a variable conversion prices convertible into the Company’s common shares at~~were an ~~undetermined future date. The Company analyzed the conversion features of~~embedded derivative that was required to be bifurcated from the debenture ~~agreement for derivative accounting consideration under ASU 2017-11 (ASC 815-15,~~ ~~Derivatives~~ and ~~Hedging~~~~), and determined the embedded conversion features should be classified~~separately reported as a derivative ~~because the exercise price of the convertible note is subject to a variable conversion rate and should therefore be accounted for~~liability at fair value, ~~under ASC 820,~~ ~~Fair Value Measurements and Disclosures,~~ ~~and ASC 825,~~ ~~Financial Instruments~~~~. In accordance~~ with ~~ASC 815-15, the Company bifurcated the conversion feature of the debenture and recorded a derivative liability.~~

~~The embedded derivative for the debenture is carried on the Company’s balance sheet at fair value. The derivative liability is marked to market each measurement period and any unrealized change~~changes in fair value ~~is recorded as a component of the consolidated statement of operations and the associated fair value carrying amount on the balance sheet was adjusted by the change.~~reported in earnings each period. The Company fair valued the embedded derivative using a Monte Carlo simulation model based on the following assumptions: (1) expected volatility of 120%, (2) risk-free interest rate of 0.05%, and (3) expected life from 4 to 6 months. On September 28, 2021, the Closing Date of the transaction, theinitial fair value of the ~~embedded derivative was $980,000 and is amortized to interest expense over the term of the Debenture.~~

~~Upon completing a cash payment of the principal balance of the Convertible Debenture on May 19, 2022, the voluntary and automatic conversion feature associated with the~~ derivative liability ~~no longer existed. Utilizing level 3 inputs, the~~was $980,000. The Company ~~recorded~~recognized a fair market value ~~net gain~~loss of ~~$1,040,000~~$340,000 related to the derivative liability for the ~~nine-month~~three-month period ended ~~September 30,~~March 31, 2022. The Company did not have a fair value of the embedded derivative recorded on the balance sheet as a liability ~~was none at September 30,~~March 31, 2023 and December 31, 2022.

On July 25, 2022, the Company entered into a Consulting Agreement for professional services primarily focused on business development opportunities to enhance exposure to the Company’s devices and detection systems. The Consultant is operated by a beneficial owner of the Company. The Consulting Agreement commenced on the effective date and will continue through March 1, 2023. The Company is committed to issue 75,000 restricted shares of the Company’s Common Stock to the Consultant for the professional services. The restricted shares are to be issued no later than 30-days from the signing of the Consulting Agreement, or August 24, 2022. As of September 30, 2022, the restricted common shares had not been issue d resulting in a common stock subscription payable due of $70,500.

The Company’s common stock transactions for the ~~nine-months~~three-months ended ~~September 30, 2021,~~March 31, 2023, consist of the following:

The Company issued ~~14,390~~225,000 shares of ~~its~~ common stock to ~~SOBR Safe, LLC, an entity controlled by~~ a ~~beneficial owner of the Company, in full satisfaction of $107,880 of accrued dividends resulting from the December 2020 conversion of the Series A-1 Convertible Preferred Stock into common shares.~~

~~The Company issued 16,000 shares of its common stock valued at $49,600~~consultant for investor relations services to ~~its landlord under the terms of~~be provided over a lease agreement expiring in February 2022. The amount has been recorded as prepaid expense and amortized monthly over the lease term as general and administrative expense in the consolidated statement of operations.six-month period.

The Company’s common stock transactions for the ~~nine-months~~three-months ended ~~September 30,~~March 31, 2022, ~~consist~~consisted of the following:

The Company issued 16,667 shares of its common stock for RSUs vested during 2021.

The Company issued 7,917 shares of common stock under the terms of a $47,500 convertible note payable.

~~On March 1, 2022, the~~The Company exchanged 1,000,000 shares of common stock for 3,000,000 shares of Series B ~~convertible preferred stock~~Convertible Preferred Stock (see ~~Note 13)~~Notes 12 and 15).

On ~~May 18, 2022,~~November 20, 2015, the Company’s Board of Directors authorized a class of stock designated as preferred stock with a par value of $0.00001 per share comprising 25,000,000 shares, 3,000,000 shares of which were classified as Series A Convertible Preferred Stock. In each calendar year, the holders of the Series A Convertible Preferred Stock are entitled to receive, when, as and if, declared by the Board of Directors, out of any funds and assets of the Company ~~issued 2,352,942~~legally available, non-cumulative dividends, in an amount equal to any dividends or other Distribution on the common stock in such calendar year (other than a Common Stock Dividend). No dividends (other than a Common Stock Dividend) shall be paid and no distribution shall be made with respect to the common stock unless dividends shall have been paid or declared and set apart for payment to the holders of the Series A Convertible Preferred Stock simultaneously. Dividends on the Series A Convertible Preferred Stock shall not be mandatory or cumulative, and no rights or interest shall accrue to the holders of the Series A Convertible Preferred Stock by reason of the fact that the Company shall fail to declare or pay dividends on the Series A Convertible Preferred Stock, except for such rights or interest that may arise as a result of the Company paying a dividend or making a distribution on the common stock in violation of the terms. The holders of each share of Series A Convertible Preferred Stock then outstanding shall be entitled to be paid, out of the Available Funds and Assets, and prior and in preference to any payment or Distribution (or any setting part of any payment or Distribution) of any Available Funds and Assets on any shares of common stock, and equal in ~~connection~~preference to any payment or Distribution (or any setting part of any payment or Distribution) of any Available Funds and Assets on any shares of any other series of preferred stock that have liquidation preference, an amount per share equal to the Original Issue Price of the series A Convertible Preferred Stock plus all declared but unpaid dividends on the Series A Convertible Preferred Stock. A reorganization, or any other consolidation or merger of the Company with ~~a completed underwritten public offering. The Company received approximately $8,779,000 of net proceeds from the~~or into any other corporation, or any other sale of ~~an underwritten public offering~~all or substantially all of ~~2,352,942 units (Units)~~the assets of the Company, shall not be deemed a liquidation, dissolution, or winding up of the Company. Shares of the Series A Convertible Preferred Stock are convertible at a ~~public offering~~35% discount rate to the average closing price ~~of $4.25~~ per ~~Unit, with each Unit consisting of one~~ share of ~~our Common~~the Company’s common stock (either as listed on a national exchange or as quoted over-the-market) for the last 15 trading days immediately prior to conversion. However, no conversions of the Series A Convertible Preferred Stock ~~par value $0.00001, and two warrants each~~ to ~~purchase one~~shares of common stock can occur unless the average closing price per share of ~~Common Stock.~~the Company’s common stock (either as listed on a national exchange or as quoted over-the-market) for the last 15 trading days immediately prior to conversion is at least $5.01. The shares of Series A Convertible Preferred Stock vote on a one for one basis. The right of conversion is limited by the fact the holder of the Series A Convertible Preferred Stock may not convert if such conversion would cause the holder to beneficially own more than 4.9% of the Company’s common stock after giving effect to such conversion.

On December 9, 2019, the Company’s Board of Directors created a class of preferred stock designated as 8% Series A-1 Convertible Preferred Stock comprising of 2,000,000 shares. During 2020, the authorized shares were increased to 2,700,000 shares. The ~~Company issued 16,667~~rights and preferences of the 8% Series A-1 Convertible Preferred Stock are as follows: (a) dividend rights of 8% per annum based on the original issuance price of $1 per share, (b) liquidation preference over the Company’s common stock, (c) conversion rights into shares of ~~its~~the Company’s common stock ~~for RSUs vested during 2022.~~

~~The Company issued 500,000 shares of its common stock to a consultant as a prepayment for strategic advisory and digital marketing services. The common shares were issued~~ at ~~$0.91~~$3 per share (not to be affected by any reverse stock split in connection with ~~a fair value on~~the Asset Purchase Agreement with IDTEC), (d) redemption rights such that we have the right, upon 30 days written notice, at any time after one year from the date of issuance, to redeem all or part of ~~$455,000.~~

~~The Company issued 300,000 shares~~the Series A-1 Convertible Preferred Stock for 150% of ~~its common stock to a consultant as prepayment for business development consulting services. The common shares were issued at $0.88 per share with a fair value on~~ the ~~date of~~original issuance ~~of $264,000.~~

~~On September 30, 2022,~~price, € no call rights by the Company, issued 1,925,677 shares of common stock in connection with a completed PIPE Offering. The Company received approximately $5,140,000 of net proceeds from the sale of 4,054,055 PIPE units at an offering price of $1.48 per PIPE unit. In connection with the PIPE Offering, the Company issued 1,925,677 Non-Prefunded Units and 2,128,378 Prefunded Units at a purchase price of $1.48 per unit priced at-the-market under Nasdaq rules. The Prefunded Units were sold at the same price less the Prefunded Warrant exercise price of $0.001. Each Non-Prefunded Unit consists of one(f) each share of common stock and one non-tradable Non-Prefunded Warrant exercisable for one share of common stock, at a price of $1.35, subject to adjustments pursuant to the non-prefunded warrant agreement (“Non-Prefunded Warrant Agreement”). Each Prefunded Unit consists of one share of a Non-Prefunded Warrant and one non-tradable Prefunded Warrant exercisable for one share of common stock, at a price of $1.35 less the Prefunded Warrant exercise price of $0.001, subject to adjustments pursuant to the prefunded warrant agreement (“Prefunded Warrant Agreement”).

~~NOTE 13. PREFERRED STOCK~~Series A-1 Convertible Preferred Stock will vote on an “as converted” basis.

On March 1, 2022 the Board of Directors approved the designation of 3,000,000 shares of the Company’s Preferred Stock as ~~“Series~~Series B Convertible Preferred ~~Stock”.~~Stock. The 3,000,000 Series B Convertible Preferred Stock shares were issued in exchange for 333,333 shares of the Company’s common stock held by the Company’s CEO David Gandini and 666,667 shares of the Company’s common stock held by IDTEC SPV, LLC, an entity controlled by a beneficial owner of the Company. The Company entered into the Share Exchange Agreements to provide certain changes to its capital structure in connection with the planned underwriting offering and listing on Nasdaq. The convertible preferred stock is classified as a permanent equity instrument. The exchange of common stock for the convertible preferred stock results in no value transfer from the common shareholders to the preferred shareholders and vice versa should the preferred stock be converted back to common. The rights and preferences of the Series B Convertible Preferred Stock are as follows: (a) dividends shall not be mandatory or cumulative, (b) liquidation preference over the Company’s common stock at an amount per share equal to the original issue price of the Series B Convertible Preferred Stock plus all accrued but unpaid dividends on the Series B Convertible Preferred Stock, (c) each three shares of Series B Convertible Preferred Stock shall be convertible, at the option of the holder, beginning on the date that is six months from the date the Holder acquired the shares of Series B Convertible Preferred Stock, and without the payment of additional consideration by the holder, , into one share of common stock, (d) no redemption rights by the Company, (e) no call rights by the Company, and (f) each share of Series B Convertible Preferred Stock will vote on an “as converted” basis.

The Company accounts for share-based compensation stock options and restricted stock units, and non-employee stock warrants under ASC 718, whereby costs are recorded based on the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable, utilizing ~~either~~ the Black-Scholes ~~pricing model or the Monte Carlo simulation option~~ pricing model for stock options and warrants, and the closing price of our common stock on the grant date for restricted stock units. Unless otherwise provided for, the Company covers equity instrument exercises by issuing new shares.

During March, April and May 2021, the Company issued through the Offering convertible notes payable with warrants, (see Note 9), to purchase up to 334,167 shares of our common stock at an exercise price of $9.00 per share. The warrants expire two years after the date of issuance.

On ~~September 28, 2021 and~~ March 30, 2022, the Company issued ~~through the sale of the Debenture Original Warrants and New Warrants, (see Note 8),~~warrants to purchase up to ~~406,504 and~~ 101,626 ~~respectively,~~ shares of ~~our~~ common stock at an$6 per share in exchange for a waiver of default penalties under the terms of a convertible debenture. The relative fair value of the warrants at the time of issuance was $864,000. The exercise price ~~of $6.00~~on the warrants was reduced to $1.35 per ~~share.~~share in September 2022 in accordance with a down-round provision contained in the warrants. The ~~Original Warrants and New Warrants~~warrants expire seven years after the date of ~~issuance and were valued using the Monte Carlo simulation option pricing model at approximately $847,000 and $864,000, respectively.~~issuance.

~~On May 18, 2022,~~In January 2023, the Company ~~issued through an underwritten public offering 4,705,884 (the "Offering Warrants”), 424,116 Underwriter Warrants, and 141,177 Representative Warrants~~entered into a consulting agreement for professional services to purchase common stock of the Company at exercise prices of $4.25, $4.25 and $5.3125, respectively. The Warrants expire five years from the date of issuance and were valued at approximately $5,700,000 using the Monte Carlo simulation option pricing model.

~~On August 3, 2022, the Company issued 10,000 warrants,~~be provided over a 6-month period in exchange for ~~professional services rendered,~~the issuance of 225,000 common shares and 225,000 warrants to purchase shares of common stock ~~of the Company~~ at ~~an exercise price of $4.25~~$1.35 per ~~warrant.~~share. The warrants expire three years from the date of ~~issuance and~~issuance. The warrants were valued at ~~approximately $6,000~~$162,481 using the ~~Black Scholes option pricing model.~~Black-Scholes model on the date of issuance, which will be recognized over the 6-month term of the agreement.

On ~~September 28, 2022,~~March 9, 2023, in conjunction with the 2023 Debt Offering (see Note 9), the Company ~~entered into~~issued a ~~private investment in public equity offering (the “PIPE Offering”) pursuant~~total of 386,998 warrants to a Securities Purchase Agreement (the “Agreement”) and Registration Rights Agreement (the “Registration Rights Agreement”) where the Company agreed to issue Non-Prefunded and Prefunded PIPE Units consisting of one share of common stock and one non-tradeable warrant exercisable for one common share at a price of $1.35 per warrant (See Note 2). Pursuant to agreements related to the issuance of Debenture Original Warrants and New Warrants both warrants contain an adjustment provision (the “Adjustment”) whereby upon a Dilutive Issuance (as defined in the Original Warrant and the New Warrant), the holder of such warrants shall be entitled to receivepurchase shares of common stock at ~~an effective price~~$2.52 per share that is less than the Exercise Price (as defined in the warrants), and such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance at such effective price. Entering into the PIPE Offering initiated the Adjustment and an aggregate 1,750,225share. The warrants the (the “Armistice Warrants”) consisting of (i) 1,400,180 warrants pursuant to the Adjustment terms under the Original Warrant, and (ii) 350,045 warrants pursuant to the Adjustment terms of New Warrants. The additional issuance of the Original Warrants and New Warrants expire ~~seven~~five years from the date of ~~original issuance~~issuance. Total proceeds from the 2023 Debt Offering were allocated to the warrants based on ~~September 28, 2021, and March 30, 2022, respectively. The additional Original Warrants and New Warrants were valued at approximately $3,495,000 using the Monte Carlo simulation option pricing model.~~

~~As of September 30, 2022, the Convertible Debenture carries outstanding warrants in the form of Original Warrants and New Warrants of 2,258,355, in aggregate with a~~their relative fair ~~market~~ value, ofresulting in $398,517 allocated to the ~~related stock~~ warrants ~~granted of approximately $5,200,000.~~

On September 30, 2022, the Company issued through the PIPE Offering 4,054,055 warrants (the “PIPE Warrants”) to purchase common stock of the Company at an exercise price of $1.35 per warrant. The PIPE Warrants expire seven years from the date ofafter issuance ~~and were valued at approximately $9,300,000 using the Monte Carlo simulation option pricing model.~~

Also on September 30, 2022, the Company issued through the PIPE Offering 2,128,378 Prefunded Warrants to purchase common stock of the Company at an exercise price of $0.001 per warrant. The Prefunded Warrants are exercisable immediately upon issuance and expire when exercised in full.costs.

The ~~Prefunded Warrants are classified as a component~~fair values of permanent stockholders’ equity within additional paid-in capital and were recorded at the issuance date using a relative fair value allocation method. The Prefunded Warrants are equity classified because they (i) are freestanding financial instruments that are legally detachable and separately exercisable from the equity instruments, (ii) are immediately exercisable, (iii) do not embody an obligation for the Company to repurchase its shares, (iv) permit the holders to receive a fixed number of shares of common stock upon exercise, (v) are indexed to the Company’s common stock and (vi) meet the equity classification criteria. In addition, such Prefunded Warrants do not provide any guarantee of value or return. The Company valued the Prefunded Warrants at issuance concluding the purchase price approximated the fair value and allocated net proceeds from the purchase proportionately to the common stock and Prefunded Warrants, of which $3,150,000 was allocated to the Prefunded Warrants and recorded as a component of Additional Paid-in-Capital.

~~The total outstanding balance of all stock warrants in the Company is 14,151,925 and 836,464 at September 30, 2022 and December 31 2021, respectively. There were 13,315,461 detached free-standing~~ stock warrants granted during the nine-month period ended September 30, 2022, and 740,671 detached free-standing stock warrants granted during the nine-month period ended September 30, 2021. The fair value of these non-employee stock warrants granted during the nine-monththree-month periods ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021 totaled $27,540,584 and $1,939,756, respectively, and~~ were determined using the ~~Monte Carlo simulation and~~ Black-Scholes option pricing ~~models~~model based on the following assumptions:

	September 30, 2022	September 30, 2021	March 31, 2023		March 31, 2022
Exercise Price	$1.35 – 6.00	$6.00 – 9.00	$1.35 - $2.52		$	6.00
Dividend Yield	0%	0%		0%		0	%
Volatility	110 – 160%	120 – 158%	162% - 209%			110	%
Risk-free Interest Rate	2.45 – 3.88%	0.14 – 0.98%	4.56% - 4.73%			2.45	%
Life of Warrants	3 – 7 Years	2 – 5 Years
Expected Life			1.5 - 2.5 Years		7 Years

The following table summarizes the changes in the Company’s outstanding warrants during the ~~nine-month~~three-month periods ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:

	Warrants Outstanding Number of Shares			Exercise Price Per Share		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price Per Share		Aggregate Intrinsic Value		Warrants Outstanding Number of Shares		Exercise Price Per Share		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price Per Share		Aggregate Intrinsic Value
Balance at December 31, 2020		194,773		$	1.50 – 6.00	3.80 Years	$	2.82	$	1,173,737
Balance at December 31, 2021												836,464	$	1.50 – 9.00	3.04 Years	$	6.78	$	1,784,838
Warrants Granted		740,671		$	6.00 – 9.00	3.40 Years	$	7.35	$	108,506		101,626	$	6.00	7.00 Years	$	6.00	$	152,439
Warrants Exercised		(58,980	)	$	1.50		$	1.50				-	$	-		$	-	$	-
Warrants Expired		-										-	$	-		$	-	$	-
Balance at September 30, 2021		876,464		$	1.50 – 9.00	3.30 Years	$	6.75	$	665,424
Balance at March 31, 2022												938,090	$	1.50 – 9.00	4.14 Years	$	6.69	$	757,863

On October 24, 2019, the Company’s 2019 Equity Incentive Plan (the “Plan”) went effective authorizing 1,282,823 shares of ~~Company~~the Company’s common stock for issuance as stock options and restricted stock units (“RSUs”) to employees, directors or consultants. The Plan was approved by the Company’s Board of Directors and the holders of a majority of the Company’s voting stock on September 9, 2019. In January 2022, the stockholders ratified ~~a further authorization~~an amendment to increase the shares authorized under the Plan to 1,733,333. The plan provisions provide automatically increasing the shares authorized for issuance under the Plan on February 1st of each year by 5% of the total number of shares of common stock outstanding on December 31st of the preceding year. There are currently 2,581,947 shares authorized for ~~a total~~issuance under the Plan, consisting of the 1,733,333 shares ~~subject to~~as authorized on January 7, 2022, plus 848,614 shares added per the ~~Plan.~~automatic increase on February 1, 2023.

The Company generally recognizes share-based compensation expense on the grant date and over the period of vesting or period that services will be provided.

~~As of September 30, 2022~~At March 31, 2023 and December 31, ~~2021,~~2022, the Company ~~has granted~~had outstanding stock options ~~to acquire 1,084,921~~of 1,936,813 and ~~1,036,588 shares of common stock~~1,086,813, respectively, that were granted under the ~~plan, respectively. As of September 30, 2022, the plan has 844,977 vested~~Plan. In addition, there were 16,769 stock options outstanding at March 31, 2023 and ~~256,712 non-vested options. As of~~ December 31, ~~2021,~~2022 that were not granted under the ~~plan had 618,841 vested shares and 417,747 non-vested shares. The stock options are held by our officers, directors, employees, and certain key consultants.~~ Plan.

In total for the ~~nine-months~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ the Company recorded ~~in general~~$385,968 and ~~administrative expense $1,262,396 and $630,027,~~$492,441, respectively, of share-based compensation expense related to stock options. ~~The unrecognized~~Unrecognized compensation expense as of ~~September 30, 2022,~~March 31, 2023 was ~~approximately $1,371,614 for non-vested share-based awards to~~$2,304,873 which will be recognized over ~~periods~~a weighted average period of ~~approximately one month to two years and four~~22.5 months.

In applying the Black-Scholes options pricing model, assumptions used to compute the fair value of ~~the~~ stock options granted during the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were as follows:

	September 30, 2022			September 30, 2021			March 31, 2023			March 31, 2022
Exercise Price	$	8.25 – 9.08		$	7.50 – 10.74		$	1.88 – 2.32		$	8.25 – 9.08
Dividend Yield		0	%		0	%		0	%		0	%
Volatility		191% - 192%	%		44% - 185	%	148%-207		%	191%-192		%
Risk-free Interest Rate		0.78% - 1.52	%		0.16% – 1.69	%	4.09-4.40		%	0.78%-1.52		%
Life of Options		2 – 3 Years			1.3 – 7 Years
Expected Term							2.7 - 5.8 Years			2.0 – 3.0 Years

The following table summarizes the changes in the Company’s outstanding stock options during the ~~nine-month~~three-month periods ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:

	Options Outstanding Number of Shares			Exercise Price Per Share		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price Per Share		Aggregate Intrinsic Value		Options Outstanding Number of Shares		Exercise Price Per Share		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price Per Share		Aggregate Intrinsic Value
Balance at December 31, 2021		1,053,356		$	0.79 – 10.74	6.21 Years	$	3.39	$	5,804,517		1,053,356	$	0.79 – 10.74	6.21 Years		$	3.39	$	5,804,517
Options Granted		70,000		$	8.25 – 9.08	1.58 Years	$	8.29	$	-		70,000	8.25 – 9.08		2.04 Years			8.29		-
Options Exercised		-										-		-		-		-		-
Options Cancelled		-
Options Expired/Forfeited		(21,667	)	$	4.94 – 10.73		$	9.33				-		-		-		-		-
Balance at September 30, 2022		1,101,689		$	0.79 – 10.30	5.28 Years	$	3.59	$	559,146
Balance at March 31, 2022												1,123,356	$	0.79 – 10.74	5.71 Years		$	3.70	$	2,014,970

The Plan provides for the grant of RSUs. RSUs are settled in shares of the Company’s common stock as the RSUs become vested. In January and February 2022, the Company granted 16,667 service based RSUs to an executive officer and 25,000 service based RSUs to a director, respectively. ~~All~~Those RSUs ~~granted~~vested in November 2022 ~~vest the earlier~~and 41,667 shares of the ~~expiration of any lock-up period that includes the securities of the Company owned by the Plan participant after the up list of the Company to a national exchange or January 1, 2023.~~Company’s common stock were issued. On January 12, 2022, 16,667 shares of the Company’s common stock were issued for ~~the~~ RSUs vested during 2021. ~~On June 8, 2022, 16,667 shares of the Company’s common stock were issued to a consultant for RSUs vested in May 2022.~~

The following table summarizes RSU activity under the Plan for the ~~nine-month~~three-month periods ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:

In total for the nine-months ended September 30, 2022 and 2021, the Company recorded in general and administrative expense $960,430 and $308,361, respectively, of share-based compensation expense related to RSU’s. As of September 30, 2022, total estimated compensation costs of RSUs granted and outstanding but not yet vested was $257,118 which is expected to be recognized over the weighted average period of 3 months.

In total for the three months ended March 31, 2023 and 2022, the Company recorded $312,945 and $442,784, respectively, in stock-based compensation expense related to RSUs. As of March 31, 2023, total unrecognized compensation cost related to RSUs was $303,025 which will be recognized over a weighted average period of 5.7 months.

The Company ~~has 357,542~~had 980,705 and ~~823,482~~537,371 outstanding stock options for executive officers ~~stock options exercisable at $0.79 to $10.14 and $0.79 to $10.14 per share~~ as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021, respectively.~~2022, respectively, with exercise prices ranging from $0.79 to $2.39 per share. The Company ~~has 57,626~~had 150,000 and ~~61,919~~200,000 unvested RSUs granted to executive officers as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively.

On February 26, 2021 the Company executed an office lease, effective for a 12-month term beginning March 1, 2021. The lease ~~requires~~required monthly base rent payments of $6,000 and the issuance of 5,333 shares of the Company’s common stock. The value of the common stock of $49,600 iswas amortized to rent expense on a monthly basis over the lease term. This lease was not renewed. The Company leased shared office space on a monthly basis with monthly rents approximating $4,500 through June 30, 2022. The Company ~~also leased an office space for approximately $5,000 per month on a short-term (month to month) basis through a related party which terminated on June 30, 2022. The Company~~ entered into a lease agreement to rent office space for a ~~twelve-month~~12-month period beginning July 1, 2022 with a monthly base rent of $15,736. Rent expense under office leases, including CAM charges, was ~~$110,570~~$48,893 and ~~$106,997~~$48,819 for the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

On December 6, 2006, Orange County Valet and Security Patrol, Inc. filed a lawsuit against the Company in Orange County California State Superior Court for Breach of Contract in the amount of $11,164. A default judgment was taken against the Company in this matter. In mid-2013 we learned the Plaintiff’s perfected the judgment against the Company, but we have not heard from the ~~Plaintiffs as of the date of this report.~~Plaintiffs. As of ~~September 30, 2022,~~March 31, 2023 and December 31, ~~2021,~~2022, the Company has accrued $11,164 plus accrued interest of approximately $18,000. In the event ~~we pay~~the Company pays any money related to this lawsuit, IDTEC agreed, in connection with the closing of our 2020 asset purchase transaction with IDTEC, to pay the amount for the Company in exchange for shares of our common stock.

The Company has evaluated subsequent events for recognition and disclosure through ~~November 14, 2022,~~May 15, 2023, which is the date the condensed consolidated financial statements were available to be ~~issued,~~issued.

On April 5, 2023, the Company received notice from holders of the Company’s Series B Preferred Shares, SOBR Safe, Inc. CEO, David Gandini, and IDTEC SPV, LLC, an entity controlled by a beneficial owner of the Company, for exercise of their option to convert the Series B Convertible Preferred Stock to Common Shares on a three to one basis. On April 20, 2023, the Company completed the conversion of 3,000,000 Series B Preferred Shares to 1,000,000 of the Company’s Common Shares. No additional consideration was required or paid upon conversion by the holders.

On April 12, 2023, the Company paid $980,752 of the outstanding principal and accrued interest balances for convertible debt notes due on April 16, 2023 and May 31, 2023. In accordance with the terms and commitments for the 2023 Convertible Debt Offering arrangement completed on March 9, 2023, the Company utilized proceeds from the offering to fund the convertible debt note payments.

On April 17, 2023, the Company entered into the First Amendment to the current office lease extending the term of the lease from July 1, 2023 through September 30, 2024. The First Amendment requires monthly base rent payments of $15,736 through September 30, 2024, $16,054 from October 1, 2024 through September 30, 2025, and $16,372 from October 1, 2025 through September 30, 2026. All recitals, conditions and terms of the original office lease remain in effect. The Company has determined the ~~following are material subsequent events that~~First Amendment to result in a lease modification which will require ~~recognition or disclosure in~~ the ~~accompanying condensed consolidated financial statements.~~

~~The Company entered into~~company to record a ~~PIPE Offering on September 28, 2022 pursuant to~~right-of-use asset and a ~~Securities Purchase Agreement~~lease liability during the second quarter of 2023 based upon the modified terms and Registration Rights Agreement with institutional investors issuing 1,925,677 Non-Prefunded Units and 2,128,378 Prefunded Units at a purchase price of $1.48 per unit, with each Non-Prefunded Unit and Prefunded Unit consisting of one common share and one non-tradeable warrant at a price of $1.35. Pursuant to the Underwriting Agreementconditions of the Underwritten Public Offering completed on May 18, 2022, the Common Warrants and Underwriter Warrants each to purchase one share of common stock for an exercise price of $4.25 contain an adjustment provision whereby upon a Dilutive Issuance (as defined in the Underwriting Agreement) when the dilutive the exercise price is lower than the exercise price of the public offering, the exercise price shall be reduced to either the lower amount not to be adjusted lower than an exercise price of $2.125. Subsequent to September 30, 2022 and as of November 14, 2022, the Company has received net proceeds of approximately $3,550,000 from the exercise of approximately 1,670,000 public offering Common Warrants.

On November 4, 2022, the Board of Directors approved a Unanimous Written Consent Resolution to reprice 305,000 stock options granted under the Company’s 2019 Equity Incentive Plan at 110% for employees and 100% for Board members of the November 4, 2022 closing stock price. At this time of the filing of this Form 10Q the Company had not assessed the accounting treatment or impact for the repriced values.amendment.

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

Our Management’s Discussion and Analysis or Plan of Operations contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national and local general economic and market conditions; demographic changes; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission (“SEC”).

Although the forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

On November 4, 2021, our Board of Directors approved an amendment to our Articles of Incorporation to effect a reverse stock split of our outstanding common stock at a ratio between of 1-for-2 and 1-for-3 in connection with our planned listing on Nasdaq.

On January 7, 2022, our stockholders approved the same amendment to our Articles of Incorporation to effect a reverse stock split of our outstanding common stock at a ratio between of 1-for-2 and 1-for-3 in connection with our planned listing on Nasdaq, with the final ratio to be determined by our Board of Directors.

~~On March 4, 2022, our Board of Directors approved the reverse split ratio of 1-for-3.~~

On April 28, 2022, the 1-for-3 reverse stock split went effective with the State of Delaware, Financial Industry Regulatory Authority (“FINRA”) and OTC Markets. As a result of the 1-for-3 reverse stock split, every three shares of our outstanding common stock prior to the effect of that amendment were combined and reclassified into one share of our common stock, and the number of outstanding shares of our common stock at the time was reduced from 23,409,415 (pre-split) to approximately 7,803,139 (post-split). No fractional shares were issued in connection with the reverse stock split, and any of our stockholders that would have been entitled to receive a fractional share as a result of the reverse stock split instead received one additional share of our common stock in lieu of the fractional share. The reverse stock split did not in itself affect any stockholder’s ownership percentage of our common stock, except to the extent that any fractional share was rounded up to the nearest whole share.

We were incorporated under the name Imagine Media, Ltd. in August 2007 to publish and distribute Image Magazine, a monthly guide and entertainment source for the Denver, Colorado area. We generated only limited revenue and essentially abandoned the business plan in January 2009.

On September 19, 2011, we, as Imagine Media, Ltd., a Delaware corporation, acquired approximately 52% of the outstanding shares of TransBiotec, Inc. (“TBT”), a California corporation, from TBT’s directors in exchange for 124,439 shares of our common stock. In January 2012, our Board of Directors amended our Certificate of Incorporation changing our name from Imagine Media, Ltd. to TransBiotec, Inc., and we acquired approximately 45% of the remaining outstanding shares of TBT in exchange for 109,979 shares of our common stock. With the acquisitions in September 2011 and January 2012 of TBT common stock, we own approximately 99% of the outstanding shares of TBT. As a result of the acquisitions, TBT’s business is our business, and, unless otherwise indicated, any references to “we” or “us” include the business and operations of TBT.

On March 9, 2020, ~~in connection with our transaction with IDTEC, LLC~~ our Board of Directors approved the amendment to our Certificate of Incorporation ~~on March 9, 2020~~ and stockholders holding ~~52.24%~~52% of our then outstanding voting stock approved an amendment to our Articles of Incorporation. The Certificate of Amendment to our Certificate of Incorporation was for the purpose of, among other things, ~~(i)~~ changing our name from “TransBiotec, Inc.” to “SOBR Safe, Inc.”~~, (ii) effecting a 1-for-33.26 reverse stock split of our common stock, and (iii) decreasing our authorized common stock from 800,000,000 shares to 100,000,000 shares.~~ The Certificate of Amendment to our Certificate of Incorporation became effective with the State of Delaware on April 24, 2020.

AsOn April 28, 2022, the Company completed a ~~result of the~~3-for-1 reverse stock split effected by our Certificate of Amendment to our Certificate of Incorporation, every 33.26 shares of our outstanding common stock prior to the effect of that amendment were combined and reclassified into one share of our common stock, and the number of outstanding shares of our common stock at the time was reduced from 266,097,657 (pre-split) to approximately 8,000,000 (post-split). No fractional shares were issued in connection with the reverse stock split, and any of our stockholders that would have been entitled to receive a fractional share as a result of the reverse stock split received one additional share of our common stock in lieu of the fractional share. The reverse stock split did not in itself affect any stockholder’s ownership percentage of our common stock, except to the extent that any fractional share was rounded up to the nearest whole share.

~~At the open of market on April 28, 2022, our 1-for-3 reverse split of our common stock~~which went effective with the OTC Markets. 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.~~split of the 3-for-1 reverse stock split, every three shares of our outstanding common stock prior to the effect of that amendment were combined and reclassified into one share of our common stock.

Pursuant to approval of an application with Nasdaq to uplist our common stock to their exchange under the ticker symbol “SOBR,” our common stock began trading and quoted on the Nasdaq exchange on May 16, 2022. Prior to this uplist to the Nasdaq exchange, our common stock was quoted on the “OTCQB” tier of the OTC Markets under the ticker symbol “SOBR.”

Our corporate offices are located at 6400 South Fiddlers Green Circle, Suite 1400, Greenwood Village, Colorado 80111, telephone number (844) 762-7723.

This discussion and analysis should be read in conjunction with our financial statements included as part of this Quarterly Report on Form 10-Q, as well as our financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

We ~~develop~~provide organizations with a non-invasive technology that quickly and ~~provide companies with non-invasive alcohol detection technology to quickly identify~~safely identifies the presence of ~~alcohol.~~alcohol in its employees, contractors, participants or patients. These technologies are integrated within our robust and scalable data platform, producing statistical and measurable user and business data. Our mission is to save lives, increase productivity, create significant economic ~~benefit for our customers~~benefits and positively impact behavior. To that end, we developed the scalable, patent-pending ~~SOBRSafe™ hardware/~~SOBRsafe™ software platform for non-invasive alcohol detection and identity verification, a solution ~~with primary focus on warehousing~~that has applications in probation management, fleet & facility safety, and ~~last mile fleet,~~for outpatient alcohol rehabilitation and ~~the judicial system.~~youth drivers in a wearable form. We believe that uniform daily use of our device could result in material insurance savings across workers’ compensation, general liability, umbrella and fleet policies.

SOBRcheck™ is our stationary identification and alcohol monitoring product. When installed, SOBRcheck™ enables a rapid, hygienic biometric finger scan to authenticate ID and determine the presence or absence of alcohol. The SOBRcheck™ product provides the administrator with real-time results, delivered securely, to more efficiently manage their existing substance abuse policy. Our device is meant to be a specific point in time, quick test for the presence of alcohol, with the results to be used as a complementary data source in support of the organization’s alcohol policies. If alcohol is detected by the device, then our customers follow up in accordance with its own policies, which could include additional tests via a blood test or breathalyzer (we will not provide these devices). We will gather de-identified information regarding Pass/Fail tests for use in determining trends in a company and/or industry, etc., but such information does not include any specific data about the individual user, only whether a pass or fail result occurred.

We are in commercial production and sale of our SOBRcheck™ solution. We have executed customer agreements and have had revenue since the first quarter 2022.

Our second device, the SOBRsure™, is our transdermal, alcohol-detecting wearable wristband that uses the same SOBRsafe™ hardware/software technology platform for ongoing, real-time alcohol monitoring and GPS tracking. The primary intended applications include probation management, fleet & facility, outpatient alcohol rehabilitation, commercial fleets and youth drivers. The wearable band will be commercially available in the second quarter of 2023.

Our SOBRsafe™ technology can also be deployed across numerous additional devices and form factors for various uses; among those we are currently exploring include possible integrations with existing telematics systems, and it could be licensed by non-competitive third parties.

Design, manufacturing, quality testing and distribution for all SOBRsafe™ devices takes place in the United States.

Our SOBRcheck™ and SOBRsure^TM revenue model consists of two components: a hardware device purchase price and a recurring monthly SaaS subscription fee per user.

We are now in full commercial production and are selling the SOBRcheck device, and we have executed agreements with distributors and customers. We were in revenue as of the first quarter of 2022. We are also in the process of vetting and hiring sales professionals to manage and sell accounts in the warehousing and last mile fleet, alcohol rehabilitation and the judicial markets. Recent Developments

Our second device, the wearable wristband SOBRsure™, utilizes the same SOBRSafe™ sensor technology and software platform, which we validated during the SOBRcheck™ pilot tests. The primary intended application for this band is for the warehousing and last mile fleet, alcohol rehabilitation and the judicial markets. . We plan for the wearable band to be commercially available in the fourth quarter of 2022.

Design, manufacturing and assembly of our SOBRcheck™ and SOBRsure™ devices are taking place in the United States. We currently utilize two companies for manufacturing of the SOBRcheck™ device. We do not have agreements in place with these companies and we operate with them on a purchase order/payment basis. We supply a purchase order, which they fulfill, and then they send us an invoice.

Our SOBRsafe™ technology can also be deployed across numerous additional devices for various uses; among those we are currently exploring include possible integration and licensing by non-competitive third parties.March 2023 Senior Convertible Debt Offering (“Debt Offering”)

On January 15, 2021, we initiated a Private Offering (the “Offering”) of up to 40 Units ($2,000,000) with each Unit consisting of one $50,000 principal amount secured convertible debenture, convertible at $9.00 per share, and a Warrant to purchase 8,333 shares of the Company’s common stock at $9.00 per share. The Secured Debentures carry interest at 12% and mature 24 months after issuance. The Warrants are exercisable six months after issuance and expire 24 months after issuance. The Offering closed on May 31, 2021 and raised $2,005,000.

On September 28, 2021, we completed a financing transaction of a convertible debenture and issued warrants (the “Debenture”) that raised $2,225,000 of net proceeds after debt issuance costs. The Debenture is for a face amount $3,048,781 with an Original Issue Discount of 18% and was due March 27, 2022, if not converted. The Debenture matured on March 27, 2022 and we did not make the required principal payment putting the Company in default under the terms of the Debenture. On March 30, 2022,7, 2023, we entered into a ~~Waiver~~Purchase Agreement and Registration Rights Agreement with institutional investors and issued an aggregate of $3.5 million principal amount of convertible senior notes due in 2025 and accompanying warrants to purchase 386,998 shares of Company common stock for aggregate gross proceeds of approximately $3.0 million, before deducting fees to the ~~purchaser, under which~~placement agent and other expenses payable by the ~~Purchaser granted~~Company. The Company has utilized the ~~Company a waiver~~proceeds to replace and pay off approximately $2.5 million in existing debt. The transaction financing closed on March 9, 2023

Pursuant to the convertible note agreement, the Notes have an original issue discount of 15%. The Notes mature on March 10, 2025, unless earlier converted upon the ~~default penalties under the Debenture such that any default penalties will not be charged and/or due until April 17, 2022 (the “Waiver”). In exchange for the Waiver~~satisfaction of ~~the default penalties the Company agreed to: (i) amend the original~~certain conditions. The initial conversion price is $2.28 per share of Common Stock, ~~Warrant (the “Original Warrant”) issued by~~subject to adjustment upon the ~~Company to~~occurrence of specific events. Interest on the ~~purchaser dated September 27, 2021 to extend~~Notes shall commence accruing on the ~~Termination~~Issuance Date at the Interest Rate of 5% per annum (as defined in the ~~Original Warrant) from September 28, 2026~~Note Agreement) and shall be computed on the basis of a 360-day year and twelve 30-day months.

Pursuant to ~~September 28, 2028; and (ii) issue~~ the ~~Purchaser a second Common Stock Purchase Warrant (the “New Warrant”) entitling the Purchaser to subscribe for and purchase up to an additional 101,626 shares of our~~ common stock ~~expiring March 29, 2029, with all other terms of the~~purchase warrant, the ~~same as~~Warrants are immediately exercisable upon the ~~Original Warrant. The extended terms~~date of ~~the Original Warrants and the~~ issuance of the New Warrants resulted in additional interest expense of $164,000 and $700,000, respectively during the nine-month period ended September 30, 2022. We did not cure the default as of the Waiver date resulting in mandatory penalties of $914,634 accrued as of March 31, 2022.

We deployed the net funding we received from the 2021 financing of approximately $4.2M to bolster and expedite product development (SOBRcheck™ and SOBRsure™), deploy sales and marketing initiatives to develop the SOBR brand and grow the business and expand the employee base in correlation with customer and technology development.

On May 18, 2022, we received approximately $8,799,000 of net proceeds from the sale of an underwritten public offering of 2,352,942 units (Units) at a public offering price of $4.25 per Unit, with each Unit consisting of one share of our Common Stock, par value $0.00001, and two warrants each to purchase one share of Common Stock. The Warrants included in the Units are exercisable immediately and have an initial exercise price of ~~$4.25 per share (100% of the price per Unit sold in the offering).~~$2.52. The Company issued 386,998 Warrants. The Warrants ~~are not listed for trading and will~~ expire on March 9, 2028, five years from the date of ~~their~~ issuance. ~~On May 19, 2022,~~Pursuant to the ~~$3,048,781 principal balance~~terms of the ~~Armistice Capital Master Fund, Ltd 18% Original Issue Discount Convertible Debenture in default at March 31, 2022, was paid in full satisfying all amounts due and accrued under~~Registration Rights Agreement, the ~~default, including debt forgiveness of penalty, damages and interest provisions~~Company will register the Common Stock underlying the Warrants no later than the 45^th calendar day following the closing of the ~~loan agreement totaling $1,109,105.~~Offering. The Company completed registration of Common Stock underlying both the conversion of the Notes and the Warrants which became effective April 21, 2023.

On ~~September 30, 2022, we~~March 9, 2023, the Company received approximately ~~$5,140,000~~$2,500,000 of net proceeds from a private investment in public equity offering (“PIPE Offering”) of 1,925,677 Non-Prefunded Units and 2,128,378 Prefunded Units at a purchase price of $1.48 per unit priced at-the-market under Nasdaq rules. The Prefunded Units were sold at the same price less the Prefunded Warrant exercise price of $0.001. Each Non-Prefunded Unit consists of one share of common stock and one non-tradable Non-Prefunded Warrant exercisable for one share of common stock, at a price of $1.35, subject to adjustmentsDebt Offering pursuant to a Purchase Agreement (the “Agreement”) and Registration Rights Agreement with institutional investors. The March 2023 Debt Offering requires that the ~~non-prefunded warrant agreement (“Non-Prefunded Warrant Agreement”). Each Prefunded Unit consists~~$2,005,000 of ~~one share~~the convertible notes payable due in March, April and May 2023 be paid by April 24, 2023. Total principal balances of ~~a Non-Prefunded Warrant~~the convertible notes at March 31, 2023 are $905,000 and ~~one non-tradable Prefunded Warrant exercisable~~are payable at $155,000 and $750,000 in April 2023 and May 2023, respectively. On April 12, 2023, the Company prepaid the principal and all accrued interest for ~~one share of common stock, at a price of $1.35 less~~ the Prefunded Warrant exercise price of $0.001, subject to adjustments pursuant to the prefunded warrant agreement (“Prefunded Warrant Agreement”). The Non-Prefunded Warrants are exercisable immediately upon issuanceconvertible notes due in April and ~~will expire seven years from the issuance date, and the Prefunded Warrants are exercisable immediately upon issuance and expire when fully exercised.~~May 2023.

Management believes that ~~the net offering proceeds~~cash balances of approximately ~~$13,920,000 from the underwritten public offering~~$8,300,000 and ~~the PIPE Offering, after the payment~~positive working capital of ~~the defaulted loan balance of $3,048,781, providing for a cash balance~~$7,100,000 at ~~September 30, 2022 of approximately $7,250,000 provides~~March 31, 2023 provide adequate working capital for operating activities for the next twelve months after the date ~~the~~these financial statements are issued. ~~However,~~Further, actions presently being taken to generate product and services revenues in addition to working capital provide the opportunity for the Company ~~is responsible for convertible notes payable plus interest at 12% per annum due 24 months from issuance in the first half~~to continue as a going concern as of ~~2021. Total principal balances of the convertible notes at September 30, 2022 are $2,005,000 and are due $1,100,000, $155,000 and $750,000 in~~ March 2023, April 2023 and May 2023, respectively. The notes are convertible at $9.00 per share of the Company’s common stock. The notes contain both voluntary and automatic conversion features. The notes may be convertible at any time, by the holders, beginning on the date of issuance. The notes automatically convert into shares of the Company’s common stock if the Company’s common stock closes at or above $6.00 per share for five (5) consecutive trading days while listed on Nasdaq. Should the notes not automatically convert or a significant portion of the note holders voluntarily not convert the notes to our common stock, we may need additional funds beyond the funds raised in the underwritten public offering and the PIPE offering. Subsequent to September 30, 2022, we received net proceeds of approximately $3,550,000 from the exercise of approximately 1,670,000 public offering Common Warrants at an exercise price of $2.125 per share as adjusted for a dilutive issuance as defined in the Underwriting Agreement.31, 2023.

Additional capital may be required under the following circumstances, 1) accelerated customer acquisition increasing capital outlay, 2) advanced purchasing of materials due to COVID backlog, 3) acquisition of new technology, 4) potential acquisition of a key asset, and 5) global expansion.

We are closely monitoring the coronavirus and the directives from federal and local authorities regarding not only our workforce, but how it impacts companies we work with for the development of our SOBRSafe™ technology and the devices that deploy that technology. The extent to which the COVID-19 continues to impact our financial conditions and results of operations, or those of our third-party suppliers, will depend on future developments, which are highly uncertain and cannot be predicted with confidence at this time, including the duration of new outbreaks, information which may emerge concerning the severity of COVID-19 and the actions being taken to contain COVID-19 or treat its impact, among others. Governmental agencies can fluctuate in their implementation of social distancing and “work from home” regulations. If those regulations increase then the chances increase that more and more companies may be forced to either shut down, slow down or alter their work routines. Since the development and testing of our SOBR technologies and the potential platform devices is a “hands on” process, these alternative work arrangements could significantly slow down our anticipated schedules for the marketing and sale of our SOBR devices, which could have a negative impact our business. Management is actively monitoring the global situation on our financial condition, liquidity, operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 variants and the global responses to curb its spread, we are not able to estimate the effects of the COVID-19 on our results of operations, financial condition, or liquidity for fiscal year 2023. However, as the COVID-19 variants continue, it could have an adverse effect on our results of future operations, financial position and liquidity in fiscal year 2023.

Results of Operations for ~~Three-Months~~Three Months Ended ~~September 30, 2022~~March 31, 2023 Compared to ~~Three-Months~~Three Months Ended ~~September 30, 2021~~March 31, 2022

	Three-Months Ended September 30,						Three Months Ended March 31,
	2022			2021			2023			2022
Revenue	$	9,734		$	-		$	47,868		$	1,500
Cost of goods sold		4,950			-
Cost of sales								30,064			1,100
Gross Profit		4,784			-			17,804			400

Operating expenses:
General and administrative		1,997,822			949,293			1,584,950			863,100
Stock-based compensation expense		329,323			147,163			698,913			934,225
Research and development		459,847			566,655			180,918			47,459

Total operating expenses		2,786,992			1,663,111			2,464,781			1,884,784

Operating loss		(2,782,208	)		(1,663,111	)		(2,446,977	)		(1,844,384	)

Other income (expense):
Other income (expense), net		1,292			-			70,470			27
Loss on extinguishment of debt								-			(864,000	)
Loss on fair value adjustment – derivatives								-			(340,000	)
Interest expense		(201,943	)		(227,475	)		(225,185	)		(1,941,105	)
Amortization of interest – conversion features		(115,831	)		(130,830	)		-			(580,221	)
Total other income, net		(316,482	)		(358,305	)
Total other expense, net								(154,715	)		(3,725,299	)

Net loss	$	(3,098,690	)	$	(2,021,416	)	$	(2,601,692	)	$	(5,569,683	)

Our net loss ~~increased~~decreased by ~~$1,077,274~~$2,967,991 from ~~$2,021,416~~$5,569,683 to ~~$3,098,690,~~$2,601,692, from the three-month period ended ~~September 30, 2021~~March 31, 2022 compared to the three-month period ended ~~September 30, 2022.~~March 31, 2023. The change in our net loss and operating loss for the three ~~-months~~months ended ~~September 30, 2022,~~March 31, 2023, compared to the same prior year period, is primarily a result ofin acceleration of our planned strategic operational ~~and financing~~ activities resulting in increases for general and administrative expenses, and research and development expense, which have been offset by a reduction in costs associated with financing activities including interest expenses and other financing related costs, ~~general and administrative expenses,~~ and stock-based compensation expense. The changes are detailed below.

Prior to the three-month period ended ~~September 30,~~March 31, 2022, we progressed to commercial production, launch and sale of our first SOBRcheck™ devices and software solution to initial customers with our devices being delivered for use in January 2022. Since, we have executed customer agreements, invoiced these customers and recognized revenue of ~~$9,734~~$47,868 during the ~~three-months ended, September 30, 2022.~~first quarter 2023 compared to $1,500 in the prior year quarter.

The cost of ~~goods sold~~sales for the three-months ended ~~September 30, 2022~~March 31, 2023 was ~~$4,950~~$30,064 resulting in a gross profit of ~~$4,784~~$17,804 and a gross margin of ~~49%~~37.2%. The cost of sales for the three-months ended March 31, 2022 was $1,100 resulting in a gross profit of $400 and a gross margin of 27%. Due to the limited history of generating revenue, the gross profit and gross ~~margin for the three-months ended September 30,~~margins at March 31, 2023 and 2022 isare not indicative of future planned or actual performance of the Company, its product lines or services.

General and administrative expenses increased by ~~$1,048,529,~~$721,850, from ~~$949,293~~$863,100 for the three-month period ended ~~September 30, 2021~~March 31, 2022 to ~~$1,997,822~~$1,584,950 for the three-month period ended ~~September 30, 2022.~~March 31, 2023. The increase from the same prior year period is primarily due to increases in our employee compensation and benefits of ~~$148,339,~~$250,780 as a result of our increased employee ~~stock-option expense of $77,407,~~base, professional, legal and consulting services of ~~$670,131, general~~$294,361, insurance expense of ~~$76,125, business development~~$75,507, and ~~marketing expense of $17,190 and an increase in~~ other general & administrative expenses in aggregate of ~~$59,337.~~$101,202

The Company had stock-based compensation expense of ~~$329,323~~$698,913 for the three-months ended ~~September 30, 2022,~~March 31, 2023, compared to ~~$147,163~~$934,225 for the three-months ended ~~September 30, 2021.~~March 31, 2022. The stock-based compensation expense was related to the issuance of our common stock or restricted stock units as compensation to certain consultants and ~~employees.~~

~~Research and development decreased by $106,808 to $459,847 for~~employees that is recognized over the ~~three-months ended September 30, 2022, compared to $566,655 for the three-months ended September 30, 2021. The decrease in research and development can be attributed to the finalization~~period of our initial develop of our SOBRsure wearable device and SOBRsafe software platform during the three-months ended September 30, 2022 as compare to full development activities in the prior year for the SOBRcheck device and initiation of the SOBRsafe software platform in preparation to commercialize the device in January 2022.

Interest expense decreased by $25,532, from $227,475 for the three-month period ended September 30, 2021 to $201,943 for the three-month period ended September 30, 2022. This decrease is primarily attributable to the Company paying off outstanding convertible debt in May 2022 as compared to incurring the convertible debt in September 2021.

During the three-months ended September 30, 2022, the Company had amortization of interest – beneficial conversion feature expense of $115,831 compared to $130,830 during the three-months ended September 30, 2021, resulting in a decrease of $14,999. The decrease can be attributed to the amortized discount on convertible notes payable of which we had substantially less outstanding convertible debt during the three-months ended September 30, 2022 compared to the same period in 2021.

~~Results of Operations for Nine-Months Ended September 30, 2022 Compared to Nine-Months Ended September 30, 2021~~

Our net loss increased by $4,290,187 from $4,566,567 to $8,856,754, from the nine-month period ended September 30, 2021 compared to the nine-month period ended September 30, 2022. The change in our net loss and operating loss for the nine-months ended September 30, 2022, compared to the same prior year period, is primarily a result of acceleration of our planned strategic operational and financing activities resulting in increases in interest and other financing related costs, general and administrative expenses, and stock-based compensation expense, offset by a reduction in research and development expense and gains related to debt extinguishment and fair-value adjustments to derivative liabilities. The changes are detailed below.

Prior to the nine-month period ended September 30, 2022, we progressed to commercial production, launch and sale of our first SOBRcheck™ devices and software solution to initial customers with our devices being delivered for use in January 2022. Since, we have executed customer agreements, invoiced these customers and recognized revenue of $12,734 during the nine-months ended, September 30, 2022.

The cost of goods sold for the nine-months ended September 30, 2022 was $6,050 resulting in a gross profit of $6,684 and a gross margin of 52%. Due to the limited history of generating revenue, the gross profit and gross margin at September 30, 2022 is not indicative of future planned or actual performance of the Company, its product lines or services.

General and administrative expenses increased by $2,587,922, from $2,557,935 for the nine-month period ended September 30, 2021 to $5,145,857 for the nine-month period ended September 30, 2022. The increase from the same prior year period is primarily due to increases in our employee compensation and benefits of $443,182, employee stock-option expense of $863,137 professional, legal and consulting services of $1,021,089, general insurance expense of $107,289, licenses & fees of $61,456 and an aggregate increase of $91,769 in other general & administrative expenses.

The Company had stock-based compensation expense of $1,080,930 for the nine -months ended September 30, 2022, compared to $334,228 for the nine-months ended September 30, 2021. The stock-based compensation expense was related to the issuance of our common stock or restricted stock units as compensation to certain consultants and employees.service.

Research and development ~~decreased~~expenses increased by ~~$60,159~~$133,459, to ~~$992,491~~$180,918 for the ~~nine-months~~three-months ended ~~September 30, 2022,~~March 31, 2023, compared to ~~$1,052,650~~$47,459 for the ~~nine-months~~three-months ended ~~September 30, 2021.~~March 31, 2022. The ~~decrease~~increase in research and development ~~can be attributed~~was due to the ~~finalization~~continued development of our ~~initial develop~~SOBR® Safe™ software platform, and the final development stages of our ~~SOBRsure wearable~~SOBRsure™ device, ~~and SOBRsafe software platform during~~as the ~~nine-months ended September 30, 2022 as compare to full development activities in the prior year for the SOBRcheck device and initiation of the SOBRsafe software platform in preparation~~Company prepares to commercialize the device in ~~January 2022.~~the second quarter of 2023. During the three months ended March 31, 2022, the Company was in the final development stages of the SOBRcheck^TM device and the initial development of the SOBRsafe^TM software platform largely complete.

Fair value adjustment – derivatives was a ~~gain~~loss of ~~$1,040,000~~$340,000 for the ~~nine-month~~three-month period ended ~~September 30,~~March 31, 2022, which is related to outstanding financial instruments issued in September 2021 that contain an embedded derivative liability component. Upon completing a cash payment of $3,048,751 for the principal balance of the Convertible Debenture on May 19, 2022, the voluntary and automatic conversion feature associated with the derivative liability no longer existed where the fair value of the derivative liability recorded on the balance sheet was none at September 30, 2022. We did not have any outstanding financial instruments that contain derivative liability components during the ~~nine-month~~three-month period ended, ~~September 30, 2021. Fair value and gains~~March 31, 2023. The gain or ~~losses~~loss related to the instruments are affected by the price of our common stock.

Interest expense ~~increased~~decreased by ~~$1,940,704,~~$1,715,920, from ~~$399,381~~$1,941,105 for the ~~nine-month~~three-month period ended ~~September 30, 2021~~March 31, 2022 to ~~$2,340,085~~$225,185 for the ~~nine-month~~three-month period ended ~~September 30, 2022.~~March 31, 2023. This ~~increase~~decrease is primarily attributable to the ~~Company having significantly more~~lower interest expense of $801,286 from outstanding convertible debt and ~~a one-time debt~~related default ~~penalty~~penalties of $914,634 ~~related to the Armistice Convertible Debt~~ during the ~~nine-months~~three months ended ~~September 30,~~March 31, 2022 compared to the same period in ~~2021.~~2023.

During the ~~nine-months~~three-months ended ~~September 30, 2022,~~March 31, 2023, the Company had amortization of interest – beneficial conversion feature expense of ~~$806,902~~none compared to ~~$222,373~~$580,221 during the ~~nine-months~~three-months ended ~~September 30, 2021, resulting in an increase of $584,529.~~March 31, 2022. The ~~expenses~~expense for the ~~periods were~~three-month period ending March 31, 2022 was related to the amortized discount on convertible notes ~~payable of which we had substantially more outstanding convertible debt during the nine-months ended September 30, 2022 compared to the same period in 2021.~~payable.

Liquidity and Capital Resources for ~~Nine-Months~~Three Months Ended ~~September 30, 2022~~March 31, 2023 Compared to December 31, ~~2021~~2022

During the ~~nine-months~~three-months ended ~~September 30, 2022,~~March 31, 2023, because of our operating losses, we did not generate positive operating cash flows. Future capital requirements will depend on many factors, including the Company’s ability to sell and develop products, generate cash flow from operations, and assess competing market developments. The Company may need additional capital in the future. Our cash on hand as of ~~September 30, 2022~~March 31, 2023 is ~~$7,248,677~~$8,290,003 and our current normalized monthly operating cash flow burn rate is approximately ~~$400,000. As a result, we need to raise additional funds to finance our current and long-term business plans. We currently do not believe we~~$500,000. Management believes the cash balance at March 31, 2023 will ~~be able to satisfy our cash needs from our revenues~~provide adequate working capital for ~~some time, and there is no guarantee we will be successful in~~operating activities for the ~~future to adequately satisfy~~next twelve months after the date these ~~needs through the proceeds generated from the sales of our securities or additional financing~~financial statements are issued.

Our cash, current assets, total assets, current liabilities, and total liabilities as of ~~September 30, 2022~~March 31, 2023 and as of December 31, ~~2021,~~2022, respectively, are as follows:

	September 30, 2022		December 31, 2021		Change			March 31, 2023		December 31, 2022		Change
Cash	$	7,248,677	$	882,268	$	6,366,409		$	8,290,003	$	8,578,997	$	(288,994	)
Total Current Assets		8,110,066		934,282		7,175,784			9,308,366		9,025,717		282,649
Total Assets		11,092,752		4,209,215		6,883,537			12,098,320		11,912,037		186,283
Total Current Liabilities		2,704,636		3,981,935		(1,277,299	)		1,837,384		2,821,684		(984,300	)
Total Liabilities		2,704,636		4,652,808		(1,948,172	)		3,944,760		2,821,684		1,123,076

Our current assets and total assets increased as of ~~September 30, 2022,~~March 31, 2023, as compared to December 31, ~~2021,~~2022, primarily due to the ~~completed underwritten public~~completion of a convertible debt financing ~~and PIPE Offering~~resulting in net proceeds of approximately ~~$13,920,000,~~$2,500,000 offset by ~~payment of~~ the ~~principal amount of $3,048,751 for the past due Convertible Debenture and~~ use of cash to support our negative cash flow from operations.

Our current liabilities decreased as of ~~September 30, 2022,~~March 31, 2023, as compared to December 31, ~~2021.~~2022. This decrease was primarily due to payments made to principal and interest amounts owed to holders of convertible debt notes payable which matured during the ~~payment of the principal amount of $3,048,751 net of discounts~~three-month period ending March 31, 2023 and ~~beneficial conversion features for~~ a ~~net amount of $1,756,899 for the past due Convertible Debenture~~decrease in accrued expenses which isare offset by ~~private placement notes payable becoming current of $1,659,427, net of discounts and beneficial conversion features. Other decreases include~~increases in operating accounts payable of $104,126, accrued expenses payable of $81,555, derivative liability of $1,040,000, and related parties payable of $80,996 offset by increased accrued interest of $172,343 and a common stock subscription payable of $70,500.payable.

In order to repay all our obligations in full or in part when due, ~~in conjunction with continued operating expenses,~~ we will be required to generate adequate cash flow from operations or raise significant capital from other sources. There is no assurance, however, that we will be successful in these efforts.

We had net cash used in operating activities of ~~$4,264,014~~$1,589,453 for the ~~nine-month~~three-month period ended ~~September 30, 2022,~~March 31, 2023, as compared to net cash used for operating activities of ~~$2,277,609~~$774,820 for the ~~nine-month~~three-month period ended ~~September 30, 2021.~~ March 31, 2022. For the period in 2023, the net cash used in operating activities consisted primarily of our net loss of $2,601,692, offset by non-cash expense items including depreciation and amortization of $96,366, amortization of interest of $21,644, stock warrants expense of $134,598, and stock-based compensation expense of $698,913, bad debt expense of $882 and changes in our assets and liabilities for accounts receivable of ($648), inventory of ($34,239), prepaid expenses of $162,477, accounts payable of $198,159, accrued expenses of $(87,986), and accrued interest payable of $(177,927).

For the period in 2022, the net cash used in operating activities consisted primarily of our net loss of ~~$8,856,754,~~$5,569,684, offset by non-cash expense items including depreciation and amortization of ~~$289,098, amortization~~$96,366, loss on extinguishment of ~~interest – conversion features~~debt of ~~$848,329, amortization of interest of $423,782, stock warrants expense of $771,177,~~$864,000, change in fair value of a derivative liability by ~~($1,040,000),~~$340,000, amortization of interest – conversion features of $1,291,882, amortization of interest of $252,297, stock options expense of ~~$1,262,396,~~$491,441, and stock-based compensation expense of ~~$1,010,430,~~$442,784, and changes in our assets and liabilities for accounts receivable of ($~~8,484)~~500), inventory of ($~~157,303)~~65,489), prepaid expenses of ~~$375,001,~~$8,267, accounts payable of ~~($149,145),~~$84,323, accrued expenses of ~~$1,027,549,~~$929,059, and accrued interest payable of ~~$172,343, related party payables of ($60,976), and common stock subscriptions payable of $70,500.~~$60,437.

For the period in 2021, the net cash used in operating activities consisted primarily of our net loss of $4,566,567, offset by depreciation and amortization of $289,098, amortization of interest – conversion features of $222,373, amortization of interest of $275,052, stock options expense of $399,259, and stock-based compensation expense of $334,228, and changes in our assets and liabilities of prepaid expenses of $(19,361), other assets of ($7,146), accounts payable of $604,834, accrued expenses of ($6,961), accrued interest payable of $58,733, related party payables of $780, and common stock subscriptions payable of $138,069. For the period in 2020, the net cash used in operating activities consisted primarily of our net loss of $28,898,637 and change in fair value of derivative liability of $60,650, offset by a loss on debt extinguishment, net of $269,144, depreciation and amortization of $133,571, amortization of interest beneficial conversion feature of $1,407,675, stock warrants expense of $8,856, stock options expense of $343,549, stock-based compensation expense of $41,302, and asset impairment adjustment of $25,320,555, and changes in our assets and liabilities of prepaid expenses of $994, other assets of ($8,680), accounts payable of $140,906, accrued expenses of ($83,495), accrued interest payable of ($6,697), and related party payables of ($51,976).

We had no cash provided by or used ~~for~~in investing activities during the ~~nine-month~~three-month periods ended ~~September 30, 2022~~March 31, 2023 or ~~2021.~~March 31, 2022.

~~During~~We received gross proceeds from the ~~nine-month~~issuance of convertible notes payable of $3,000,001 during the three-month period ended ~~September 30, 2022, we completed an underwritten public financing on May 18, 2022 of $10,004,245~~March 31, 2023 which was offset by associated costs of the financing of ($1,309,882). On May 19, 2022, the $3,048,781 principal balance of the Convertible Debenture in default at March 31, 2022, was paid in full satisfying all amounts due and accrued under the default, including debt forgiveness of penalty, damages and interest provisions of the loan agreement. On September 30, 2022, we completed a private investment in public equity offering of $5,997,873 offset by associated costs of the financing of ($857,700). During the nine-month period ended September 30, 2022, the Company also completed schedule repayments of notes payable to non-related parties of ($145,932).

For the nine-month period ended September 30, 2021, our net cash from financing activities consisted of proceeds from notes payable – non-related parties of $1,005,000, proceeds from notes payable – related parties of $1,030,000, repayments of notes payable-related parties of ($30,000), proceeds from convertible debenture payable of $2,500,000 and debt issuance costs of ~~($275,000).~~$537,750. Payments of approximately $1,161,792 were made toward the principal and accrued interest amounts for matured convertible notes payable issued in 2021 to both related and non-related parties.

We had no cash provided by or used in financing activities during the three-month period ended March 31, 2022.

At ~~September 30, 2022,~~March 31, 2023, the Company had no financial commitments and was not committed to material contractual obligations for the design, production, delivery or ~~assemble~~assembly of its software platform or associated devices, or commercial leases.

We have no off-balance sheet arrangements as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. The full impact of the COVID-19 outbreak and its variants continues to evolve as of the date of this filing. Management is actively monitoring the global situation on our financial condition, liquidity, operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak, its variants, and the global responses to curb its spread, we are not able to estimate the effects of the COVID-19 outbreak on our results of operations, financial condition, or liquidity for fiscal year 2022. However, if the pandemic continues, it could have an adverse effect on our results of future operations, financial position, and liquidity in 2022.

We do not believe that inflation has had a material impact on our business, revenue or operating results during the periods presented. However, continued increases in inflation could have an adverse effect on our results of future operations, financial position, and liquidity in ~~2022.~~2023.

There have been no recent accounting pronouncements or changes in accounting pronouncements during the period ended ~~September 30, 2022,~~March 31, 2023, or subsequently thereto, that we believe are of potential significance to our financial statements.

As a smaller reporting company, we are not required to provide the information required by this Item.

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Disclosure and control procedures are also designed to ensure that such information is accumulated and communicated to management, including the chief executive officer and chief financial officer, to allow timely decisions regarding required disclosures.

As of ~~September 30, 2022,~~March 31, 2023, we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer (our Principal Executive Officer) and Chief Financial Officer (our Principal Financial Officer), of the effectiveness of the design and operation of our disclosure controls and procedures. In designing and evaluating the disclosure controls and procedures, management recognizes that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their desired control objectives. Additionally, in evaluating and implementing possible controls and procedures, management is required to apply its reasonable judgment. ~~During~~In order to remediate the ~~nine-month period ended September 30, 2022, we~~material weakness in our documentation, evaluation and testing of internal controls, the Company hired a new Chief Financial Officer ~~whereas previously our Chief Executive Officer also served as our Principal Financial Officer,~~ and ~~hired~~ a Vice President of Finance and Accounting in 2022, and a Controller in February 2023 to improve disclosure controls and procedures, and support additional segregation of financial and internal controls. Also, our Board approved our Audit Committee Charter in compliance with Nasdaq requirements. These additions will significantly decrease the risk associated with the identified material weaknesses including segregation of duties, design, and documentation of internal controls. However, we may need to hire additional qualified and experienced personnel to assist us in further remedying these material weaknesses, especially with our transactional accounting and the preparation of our financial statements. To that end, we plan to hire additional qualified individuals whose primary job responsibilities will be performing day-to-day accounting-related functions. Although the Company began mitigating certain limitations in the effectiveness of its system of controls and procedures during 2022 and the ~~nine-month~~three month period ended ~~September 30, 2022,~~March 31, 2023, based on the evaluation described above, and as a result, in part, of the timing of beginning to implement the mitigating improvements, management has concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective and have not significantly improved as reported in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~

~~As funds become available to us, we expect to implement additional measures to improve disclosure controls and procedures.~~2022.

There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

Appearing as an exhibit to this quarterly report on Form 10-Q are “Certifications” of our Chief Executive and Financial Officer. The Certifications are required pursuant to Sections 302 of the Sarbanes-Oxley Act of 2002 (the “Section 302 Certifications”). This section of the quarterly report on Form 10-Q contains information concerning the Controls Evaluation referred to in the Section 302 Certifications. This information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.

On December 6, 2006, Orange County Valet and Security Patrol, Inc. filed a lawsuit against us in Orange County California State Superior Court for Breach of Contract in the amount of $11,164. A default judgment was taken against us in this matter. In mid-2013 we learned the Plaintiff’s perfected the judgment against us, but we have not heard from the Plaintiffs as of May ~~2022.~~2023. In the event we pay any money related to this lawsuit, IDTEC, LLC agreed, in connection with us closing the asset purchase transaction with IDTEC, to pay the amount for us in exchange for shares of our common stock.

We had one outstanding judgment against us involving a past employee of the Company. The matter was under the purview of the State of California, Franchise Tax Board, Industrial Health and Safety Collections. We owed approximately $28,786 plus accrued interest of approximately $53,000 to our ex-employee for unpaid wages under these Orders. On March 8, 2021, we received an Acknowledgement of Satisfaction of Judgement-Full by the California Court notifying us that the judgement has been settled with a payment of approximately $85,000 including the accrued interest owed through settlement date and legal fees of approximately $3,000. IDTEC, LLC agreed, in connection with us closing the asset purchase transaction with IDTEC, to pay the amount for us in exchange for shares of our common stock acquired through the exercise of a warrant held by IDTEC, LLC.

In the ordinary course of business, we are from time to time involved in various pending or threatened legal actions. The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations. However, in the opinion of our management, other than as set forth herein, matters currently pending or threatened against us are not expected to have a material adverse effect on our financial position or results of operations.

As a smaller reporting company, we are not required to provide the information required by this Item.

During the three months ended ~~September 30, 2022,~~March 31, 2023 we issued ~~approximately 8,108,110~~the following unregistered ~~securities in connection with a private investment in public equity offering (“PIPE Offering”) facilitated by Aegis Capital Corp. In connection with the PIPE Offering, the~~securities.

The Company issued ~~1,925,677 Non-Prefunded Units~~225,000 common shares and ~~2,128,378 Prefunded Units at~~225,000 warrants to purchase common shares for professional services.

The Company entered into a Purchase Agreement and Registration Rights Agreement issuing an aggregate of $3.5 million principal amount of convertible senior notes (the “Notes”) due in 2025 and accompanying warrants (the “Warrants”) to purchase common shares of the Company. The initial conversion price for the Notes is $2.28 per share of ~~$1.48 per unit priced at-the-market under Nasdaq rules.~~common stock. The ~~Prefunded Units were sold at the same price less the Prefunded Warrant~~Company issued 386,998 Warrants with an initial exercise price of ~~$0.001.~~

~~Each Non-Prefunded Unit consists of one share~~$2.52 per Warrant. The Company completed a registration statement for 1,709,734 shares of common stock underlying the outstanding Notes and ~~one non-tradable Non-Prefunded Warrant exercisable for one share~~386,998 shares of common stock ~~at a price of $1.35, subject to adjustments pursuant to~~underlying the non-prefunded warrant agreement (“Non-Prefunded Warrant Agreement”). Each Prefunded Unit consists of one share of a Non-Prefunded Warrant and one non-tradable Prefunded Warrant exercisable for one share of common stock, at a price of $1.35 less the Prefunded Warrant exercise price of $0.001, subject to adjustments pursuant to the prefunded warrant agreement (“Prefunded Warrant Agreement”). The Non-Prefunded Warrants ~~are exercisable immediately upon issuance and will expire seven years from the issuance date, and the Prefunded Warrants are exercisable immediately upon issuance and expire when fully exercised.~~

~~On September 30, 2022, we received proceeds, net of associated costs, from the PIPE Offering of approximately $5,140,000~~ which ~~will be utilized to fund ongoing operations and continued research and development activities related to the SOBRSafe suite of devices and software platform.~~

Also, on September 30, 2022, the company issued 1,750,225 warrants for our common stock underlying outstanding warrants issued by us in a previous transaction and held by Armistice Capital Master Fund, Ltd. We did not receive any additional proceeds from this issuance.

~~A Form S-1 registration statement has been filed to register the securities associated with the PIPE Offering and the warrants issued to Armistice Capital Master Fund, Ltd and~~ was ~~declared~~ effective ~~on November 10, 2022.~~April 21, 2023.

On December 28, 2010, we borrowed $11,810 from a related party. The note payable carries an interest rate of 0% and matured on December 31, 2012. As of March 31, ~~2022~~2023 this note was in default.

On February 20, 2012, we borrowed $3,750 from a non-related party. The note payable carries an interest rate of 12% and matured on February 19, 2013. As of March 31, ~~2022~~2023 this note was in default.

On March 20, 2012, we borrowed $5,433 from a non-related party. The note payable carries an interest rate of 12% and matured on March 19, 2013. As of March 31, ~~2022~~2023 this note was in default.

On September 27, 2013, we borrowed $15,000 from a non-related party. The note payable carries an interest rate of 9% and matured on December 25, 2013. As of March 31, ~~2022 this note was in default.~~

~~On March 14, 2014, we borrowed $5,000 from a non-related party. The note payable carries an interest rate of 10% and matured on September 14, 2014. As of March 31, 2022~~2023 this note was in default.

On July 31, 2015, we borrowed $2,500 from a non-related party. The note payable carries an interest rate of 10% and matured on November 28, 2015. As of March 31, ~~2022~~2023 this note was in default.

~~Not applicable.~~There have been no events which are required to be reported under this Item.

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a ~~registration~~registrati0n statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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)

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

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	3126

ITEM 3	Quantitative and Qualitative Disclosures About Market Risk	4133

ITEM 4	Controls and Procedures	4234

PART II – OTHER INFORMATION

ITEM 1	Legal Proceedings	4335

ITEM 1A	Risk Factors	4335

ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds	4335

ITEM 3	Defaults Upon Senior Securities	4435

ITEM 4	Mine Safety Disclosures	4435

ITEM 5	Other Information	4435

ITEM 6	Exhibits	4536

SOBR SAFE, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS

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

Current assets
Cash	$	7,248,677		$	882,268
Accounts receivable		8,484			-
Inventory		196,764			39,461
Prepaid expenses		656,140			12,553
Total current assets		8,110,065			934,282

SOBR Safe Intellectual Technology, net of accumulated amortization of $899,416 and $610,318 at September 30, 2022 and December 31, 2021, respectively		2,955,259			3,244,357

Other assets		27,427			30,576
Total Assets	$	11,092,751		$	4,209,215

LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities
Accounts payable	$	166,024		$	270,150
Accrued expenses		382,345			463,900
Accrued interest payable		424,453			252,110
Related party payables		1,887			82,883
Common stock payable		70,500			-
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 September 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 $271,575 and none at September 30, 2022 and December 31, 2021, respectively		740,235	*		11,810	*
Current portion notes payable - non-related parties
* Includes unamortized debt discount related to warrants and beneficial conversion features of $271,147 and none at September 30, 2022 and December 31, 2021, respectively		919,192	*		104,183	*
Total current liabilities		2,704,636			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 September 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 September 30, 2022 and December 31, 2021, respectively		-	*		356,420	*

Total Liabilities		2,704,636			4,692,808
Stockholders' Equity (Deficit)
Preferred stock, $0.00001 par value; 16,300,000 and 19,300,000 shares authorized at September 30, 2022 and December 31, 2021, respectively, no shares issued or outstanding at September 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 September 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 September 30, 2022 and December 31, 2021		-			-
Series B Convertible Preferred stock, 3,000,000 shares authorized, 3,000,000 shares issued and outstanding at September 30, 2022 and none at December 31, 2021, respectively		30			-
Common stock, $0.00001 par value; 100,000,000 shares authorized; 12,899,436 and 8,778,555 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		129			88
Additional paid-in capital		83,271,278			57,041,447
Accumulated deficit		(74,829,673	)		(57,471,492	)
Total SOBR Safe, Inc. stockholders' equity (deficit)		8,441,764			(429,957	)
Noncontrolling interest		(53,649	)		(53,636	)

Total Stockholders' Equity (Deficit)		8,388,115			(483,593	)

Total Liabilities and Stockholders' Equity (Deficit)	$	11,092,751		$	4,209,215

SOBR SAFE, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31,			December 31,
	2023			2022
ASSETS	(Unaudited)			(Audited)

Current assets
Cash	$	8,290,003		$	8,578,997
Accounts receivable		30,088			30,322
Inventory		249,732			215,493
Prepaid expenses		412,409			200,905
Total current assets		8,982,232			9,025,717

SOBR Safe Intellectual Technology, net of accumulated amortization of $1,092,148 and $995,782 at March 31, 2023 and December 31, 2022, respectively		2,762,527			2,858,893

Other assets		27,427			27,427
Total Assets	$	11,772,186		$	11,912,037

LIABILITIES & STOCKHOLDERS' EQUITY

Current liabilities
Accounts payable	$	341,124		$	142,965
Accrued expenses		304,296			392,282
Accrued interest payable		280,489			469,691
Related party payables		1,887			1,887
Notes payable - related parties
* Includes unamortized debt discount related to warrants and beneficial conversion features of $19,754 and $145,548 at March 31, 2023 and December 31, 2022, respectively		442,056	*		866,262	*
Notes payable - non-related parties
* Includes unamortized debt discount related to warrants and beneficial conversion feature of $14,151 and $144,878 at March 31, 2023 and December 31, 2022		467,532	*		948,597	*
Total current liabilities		1,837,384			2,821,684

Notes payable - non-related parties - less current portion
* Includes unamortized debt discount related to original issue discount, warrants and costs of issuance of $1,433,312 and none at March 31, 2023 and December 31, 2022, respectively		2,096,101	*		-
Accrued interest payable		11,275			-

Total Liabilities		3,944,760			2,821,684
Stockholders' Equity
Preferred stock, $0.00001 par value; 16,300,000 shares authorized, no shares issued or outstanding at March 31, 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 March 31, 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 March 31, 2023 and December 31, 2022		-			-
Series B Convertible Preferred stock, $0.00001 par value; 3,000,000 shares authorized, 3,000,000 shares issued and outstanding at March 31, 2023 and December 31, 2022		30			30
Common stock, $0.00001 par value; 100,000,000 shares authorized, 17,209,570 and 16,984,570 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively		172			170
Treasury stock, at cost; 12,329 shares at March 31, 2023 and December 31, 2022		(38,015	)		(38,015	)
Additional paid-in capital		88,071,861			87,509,666
Accumulated deficit		(80,152,964	)		(78,327,845	)
Total SOBR Safe, Inc. stockholders' equity		7,881,084			9,144,006
Noncontrolling interest		(53,658	)		(53,653	)

Total Stockholders' Equity		7,827,426			9,090,353

Total Liabilities and Stockholders' Equity	$	11,772,186		$	11,912,037

	Common Stock				Preferred Stock															Total
	Shares		Amount ($0.00001 Par)		Shares		Amount ($0.00001 Par)		Additional Paid-in Capital		Accumulated Deficit			(Deficit) SOBR Safe, Inc.			Noncontrolling Interest			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		-		-		-		-		105,013		-			105,013			-			105,013
Paid-in capital – relative fair value of stock warrants granted		-		-		-		-		619,381		-			619,381			-			619,381
Paid-in capital – beneficial conversion feature		-		-		-		-		480,619		-			480,619			-			480,619
Net loss		-		-		-		-		-		(1,002,340	)		(1,002,340	)		(94	)		(1,002,434	)
Balances at March 31, 2021		8,655,068	$	86		-	$	-	$	54,007,041	$	(50,603,560	)	$	3,403,567		$	(53,624	)	$	3,349,943
Common stock issued for facility lease		5,333		-		-		-		49,600		-			49,600			-			49,600
Paid-in capital – fair value of stock options and RSU vested		-		-		-		-		138,010		-			138,010			-			138,010
Paid-in capital – relative fair value of stock warrants granted		-		-		-		-		473,327		-			473,327			-			473,327
Paid-in capital – beneficial conversion feature		-		-		-		-		428,595		-			428,595			-			428,595
Net loss		-		-		-		-		-		(1,542,713	)		(1,542,713	)		(4	)		(1,542,717	)
Balances at June 30, 2021		8,660,401	$	86		-	$	-	$	55,096,573	$	(52,146,273	)	$	2,950,386		$	(53,628	)	$	2,896,758
Paid-in capital – fair value of stock options and RSU vested		-		-		-		-		387,003		-			387,003			-			387,003
Paid-in capital – relative fair value of stock warrants granted		-		-		-		-		847,048		-			847,048			-			847,048
Net loss		-		-		-		-		-		(2,021,412	)		(2,021,412	)		(4	)		(2,021,416	)
Balances at September 30, 2021		8,660,401	$	86		-	$	-	$	56,330,624	$	(54,167,685	)	$	2,163,025		$	(53,632	)	$	2,109,393

	Common Stock						Preferred Stock										Stockholders’						Total
	Shares			Amount ($0.00001 Par)			Shares		Amount ($0.00001 Par)		Additional Paid-in Capital			Accumulated Deficit			(Deficit) SOBR Safe, Inc.			Noncontrolling Interest			Stockholders’ Equity (Deficit)
Balances at January 1, 2022		8,779,567		$	88			-	$	-	$	57,041,447		$	(57,471,492	)	$	(429,957	)	$	(53,636	)	$	(483,593	)
Common stock issued for restricted stock units vested		16,667			-			-		-		-			-			-			-			-
Common stock issued for convertible debt		7,917			-			-		-		47,500			-			47,500			-			47,500
Common stock issued to settle common stock subscriptions payable		(1,000,000	)		(10	)		3,000,000		30		(20	)		-			-			-			-
Paid-in capital – fair value of stock options and restricted stock units vested		-			-			-		-		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		7,804,151		$	78			3,000,000	$	30	$	58,887,152		$	(63,041,171	)	$	(4,153,911	)	$	(53,640	)	$	(4,207,551	)
Common stock issued in financing transaction, net of issuance costs		2,352,942			24			-		-		8,694,339			-			8,694,363			-			8,694,363
Common stock issued for financial services		800,000			8			-		-		718,992			-			719,000			-			719,000
Common Stock issued for restricted stock units vested		16,666			-			-		-		-			-			-			-			-
Paid-in capital – fair value of stock options and restricted stock units vested		-			-			-		-		761,437			-			761,437			-			761,437
Net loss		-			-			-		-		-			(188,376	)		(188,376	)		(5	)		(188,381	)
Balances at June 30, 2022		10,973,759		$	110			3,000,000	$	30	$	69,044,321		$	(63,229,547	)	$	5,814,914		$	(53,645	)	$	5,761,269
Common stock issued in financing transaction, net of issuance costs		1,925,677			19			-		-		5,130,754			-			5,130,773			-			5,130,773
Paid-in capital – fair value of stock options and restricted stock units vested		-			-			-		-		594,763			-			594,763			-			594,763
Deemed dividends related to underwritten public offering warrants down round provision		-			-			-		-		5,005,857			(5,005,857	)		-			-
Deemed dividends related to Original Warrants and New Warrant down round provision		-			-			-		-		3,495,583			(3,495,583	)		-			-
Net loss		-			-			-		-		-			(3,098,686	)		(3,098,686	)		(4	)		(3,098,690	)
Balances at September 30, 2022		12,899,436		$	129			3,000,000	$	30	$	83,271,278		$	(74,829,673	)	$	8,441,764		$	(53,649	)	$	8,388,115

September 30, 2022	Level 1		Level 2		Level 3
Derivative liabilities	$	-	$	-	$	-

December 31, 2021	Level 1		Level 2		Level 3
Derivative liabilities	$	-	$	-	$	1,040,000

	Gross Carrying		Accumulated		Net Intangible		Amortization Period
	Amount		Amortization		Asset		(in years)
SOBR Safe
Intellectual Technology	$	3,854,675	$	610,318	$	3,244,357		10

	September 30, 2022		December 31, 2021

Convertible Debenture Payable with Detached Free-standing Warrant	$	-	$	3,048,781
Unamortized Debt Discount		-		(1,291,882	)
Net Convertible Debenture Payable	$	-	$	1,756,899

Balance at December 31, 2021	$	1,040,000
Fair value of derivatives issued		-
Fair value adjustments, net		(1,040,000	)
Balance at September 30, 2022	$	-

	RSUs		Weighted Average Grant Date Fair Value Per Share		Weighted Average Vesting Period
Unvested at December 31, 2020		71,667	$	8.75	1.70 Years
Granted		61,918		8.51	1.36 Years
Vested		-
Unvested at September 30, 2021		133,585	$	8.63	1.08 Years

	o	summarizes our plan of operation; and
	o	analyzes our financial condition and the results of our operations for the ~~nine-months~~three-months ended ~~September 30, 2022.~~March 31, 2023.

	Nine-Months Ended September 30,
	2022			2021
Revenue	$	12,734		$	-
Cost of goods sold		6,050			-
Gross Profit		6,684			-

Operating expenses:
General and administrative		5,145,857			2,557,935
Stock-based compensation expense		1,080,930			334,228
Research and development		992,491			1,052,650
Total operating expenses		7,219,278			3,944,813

Operating loss		(7,212,594	)		(3,944,813	)

Other income (expense):
Other income (expense), net		217,722			-
Gain on debt extinguishment		245,105			-
Gain of fair value adjustment – derivatives		1,040,000			-
Interest expense		(2,340,085	)		(399,381	)
Amortization of interest – conversion features		(806,902	)		(222,373	)
Total other income, net		(1,644,160	)		(621,754	)

Net loss	$	(8,856,754	)	$	(4,566,567	)

Item No.		Description
	~~Description~~
3.1 (1)		Articles of Incorporation of Imagine Media, Ltd.

3.2 (2)		Articles of Amendment to Articles of Incorporation to TransBiotec, Inc.

3.3 (3)		Certificate of Amendment to Certificate of Incorporation filed with the State of Delaware on May 25, 2017

3.4 (4)		Amended and Restated Bylaws of SOBR Safe, Inc.

3.5 (5)		Certificate of Amendment to Certificate of Incorporation of TransBiotec, Inc. changing name to SOBR Safe, Inc., effecting 1-for-33.26 reverse stock split and decreasing authorized common stock to 100M shares

3.6*3.6 (8)		~~Certificate of~~ Amendment to ~~Certificate of Incorporation~~Amended and Restated Bylaws of SOBR Safe, Inc. ~~effecting 1-for-3 reverse stock split.~~dated April 6, 2023.

~~10.6~~10.1 (6)		~~Securities Purchase~~Executive Employment Agreement ~~by and between SOBR Safe, Inc. and Aegis Capital Corp.~~with David Gandini dated ~~September 28, 2022~~January 30th, 2023

~~10.7 (6)~~10.2 (7)		~~Registration Rights~~Purchase Agreement ~~by and~~ between SOBR Safe, Inc. and Purchasers dated ~~September 28, 2022~~March 7, 2023

~~10.8 (6)~~10.3 (7)		~~Form of Pre-Funded Warrant~~Registration Rights Agreement ~~by and~~ between SOBR Safe, Inc. and Purchasers dated ~~September 30, 2022~~March 7, 2023

~~10.9 (6)~~10.4 (7)		Form of ~~Warrant Agreement by and~~Senior Convertible Note between SOBR Safe, Inc. and ~~Purchasers~~Holders dated ~~September 30, 2022~~March 9, 2023

10.5 (7)		Common Stock Purchase Warrant between SOBR Safe, Inc. and Holders dated March 9, 2023

31.1*		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer (filed herewith)

31.2*		Rule 13a-14(a)/15d-14(a) Certification of Chief Accounting Officer (filed herewith)

32.1*		Section 1350 Certification of Chief Executive Officer (filed herewith).

32.2*		Section 1350 Certification of Chief Accounting Officer (filed herewith).

101.INS **		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.SCH **		Inline XBRL Taxonomy Extension Schema Document

101.CAL **		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF **		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB **		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE **		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

(1)	Incorporated by reference from our Registration Statement on Form SB-2, filed with the Commission on January 31, 2008

(2)	Incorporated by reference from our Registration Statement on Form S-1, filed with the Commission on November 6, 2012

(3)	Incorporated by reference from our Annual Report on Form 10-K for the year ended December 31, 2017, filed with the Commission on February 6, 2019

(4)	Incorporated by reference from our Current Report on Form 8-K, filed with the Commission on November ~~19, 2019~~18, 2019.

(5)	Incorporated by reference from our Current Report on Form 8-K, filed with the Commission on June 11, ~~2020~~2020.

(6)	Incorporated by reference from our Current Report on Form 8-K, filed with the Commission on ~~October~~February 3, ~~2022~~2023.

(7)	Incorporated by reference from our Current Report on Form 8-K, filed with the Commission on March 13, 2023.

(8)	Incorporated by reference from our Annual Report on Form 8-K, filed with the Commission on April 11, 2023.

	SOBR Safe, Inc.

Dated: ~~November 14, 2022~~May 15, 2023		/s/ David Gandini
	By:	David Gandini
	Its:	Chief Executive Officer and Principal Executive Officer