Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 10, 2022 | |
Cover [Abstract] | ||
Entity Registrant Name | SOBR SAFE, INC. | |
Entity Central Index Key | 0001425627 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Sep. 30, 2022 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2022 | |
Entity Common Stock Shares Outstanding | 14,571,120 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 000-53316 | |
Entity Incorporation State Country Code | DE | |
Entity Tax Identification Number | 26-0731818 | |
Entity Interactive Data Current | Yes | |
Entity Address Address Line 1 | 6400 S. Fiddlers Green Circle | |
Entity Address Address Line 2 | Suite 1400 | |
Entity Address City Or Town | Greenwood Village | |
Entity Address State Or Province | CO | |
Entity Address Postal Zip Code | 80111 | |
City Area Code | 844 | |
Local Phone Number | 762-7723 | |
Security 12b Title | Common Stock, $0.00001 par value | |
Trading Symbol | SOBR | |
Security Exchange Name | NASDAQ |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets | ||
Cash | $ 7,248,677 | $ 882,268 |
Accounts receivable | 8,484 | 0 |
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 |
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 | 0 |
Derivative liability | 0 | 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 | 0 | 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 | 0 | 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 | 0 | 356,420 |
Total Liabilities | 2,704,636 | 4,692,808 |
Stockholders' Equity (Deficit) | ||
Preferred stock, value | 0 | 0 |
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 |
Series A Convertible Preferred Stock [Member] | ||
Stockholders' Equity (Deficit) | ||
Preferred stock, value | 0 | 0 |
Series A-1 Convertible Preferred stock [Member] | ||
Stockholders' Equity (Deficit) | ||
Preferred stock, value | 0 | 0 |
Series B Convertible Preferred Stock [Member] | ||
Stockholders' Equity (Deficit) | ||
Preferred stock, value | $ 30 | $ 0 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
SOBR Safe Intellectual Technology, net of accumulated amortization of $899,416 and $610,318 at September 30, 2022 and December 31, 2021, respectively | $ 899,416 | $ 610,318 |
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 | 1,291,882 | 1,291,882 |
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 | 271,575 | 271,575 |
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 | 271,147 | 271,147 |
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 | 645,547 | 645,547 |
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 | $ 648,580 | $ 648,580 |
Common stock, shares par value | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 12,899,436 | 8,778,555 |
Common stock, shares outstanding | 12,899,436 | 8,778,555 |
Preferred Stock [Member] | ||
Preferred stock, shares par value | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 16,300,000 | 19,300,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Series A-1 Convertible Preferred stock [Member] | ||
Preferred stock, shares par value | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 2,700,000 | 2,700,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Series B Convertible Preferred Stock [Member] | ||
Preferred stock, shares authorized | 3,000,000 | 3,000,000 |
Preferred stock, shares issued | 3,000,000 | 3,000,000 |
Preferred stock, shares outstanding | 3,000,000 | 3,000,000 |
Series A Convertible Preferred Stock [Member] | ||
Preferred stock, shares par value | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 3,000,000 | 3,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | ||||
Revenues | $ 9,734 | $ 0 | $ 12,734 | $ 0 |
Cost of Goods Sold | 4,950 | 0 | 6,050 | 0 |
Gross Profit | 4,784 | 0 | 6,684 | 0 |
Operating expenses: | ||||
General and administrative | 1,997,822 | 949,293 | 5,145,857 | 2,557,935 |
Stock-based compensation expense | 329,323 | 147,163 | 1,080,930 | 334,228 |
Research and development | 459,847 | 566,655 | 992,491 | 1,052,650 |
Total operating expenses | 2,786,992 | 1,663,111 | 7,219,278 | 3,944,813 |
Loss from operations | (2,782,208) | (1,663,111) | (7,212,594) | (3,944,813) |
Other income (expense): | ||||
Other income (expense), net | 1,292 | 0 | 217,722 | 0 |
Gain on debt extinguishment, net | 0 | 0 | 245,105 | 0 |
Gain on fair value adjustment - derivatives, net | 0 | 0 | 1,040,000 | 0 |
Interest expense | (201,943) | (227,475) | (2,340,085) | (399,381) |
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) |
Loss before provision for income taxes | (3,098,690) | (2,021,416) | (8,856,754) | (4,566,567) |
Provision for income tax | 0 | 0 | 0 | 0 |
Net loss | (3,098,690) | (2,021,416) | (8,856,754) | (4,566,567) |
Net loss attributable to noncontrolling interest | 4 | 4 | 13 | 102 |
Net loss attributable to SOBR Safe, Inc. | (3,098,686) | (2,021,412) | (8,856,741) | (4,566,465) |
Deemed dividends related to underwritten public offering warrants down round provision | (5,005,857) | 0 | (5,005,857) | 0 |
Deemed dividends related to Original Warrants and New Warrant down round provision | (3,495,583) | 0 | (3,495,583) | 0 |
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) |
Weighted average number of common shares outstanding | 10,973,759 | 8,660,401 | 9,516,637 | 8,658,014 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (Unaudited) - USD ($) | Total | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Stockholders Deficit SOBR Safe Inc [Member] | Noncontrolling Interest |
Balance, shares at Dec. 31, 2020 | 8,640,678 | ||||||
Balance, amount at Dec. 31, 2020 | $ 3,039,484 | $ 0 | $ 86 | $ 52,694,148 | $ (49,601,220) | $ 3,093,014 | $ (53,530) |
Common stock issued to settle dividends - Series A-1 Convertible Preferred stock, shares | 14,390 | ||||||
Common stock issued to settle dividends - Series A-1 Convertible Preferred stock, amount | 107,880 | 0 | $ 0 | 107,880 | 0 | 107,880 | 0 |
Paid-in capital - fair value of stock options and restricted stock units vested | 105,013 | 0 | 0 | 105,013 | 0 | 105,013 | 0 |
Paid-in capital - relative fair value of stock warrants granted | 619,381 | 0 | 0 | 619,381 | 0 | 619,381 | 0 |
Paid-in capital - beneficial conversion feature | 480,619 | 0 | 0 | 480,619 | 0 | 480,619 | 0 |
Net loss | (1,002,434) | 0 | $ 0 | 0 | (1,002,340) | (1,002,340) | (94) |
Balance, shares at Mar. 31, 2021 | 8,655,068 | ||||||
Balance, amount at Mar. 31, 2021 | 3,349,943 | 0 | $ 86 | 54,007,041 | (50,603,560) | 3,403,567 | (53,624) |
Balance, shares at Dec. 31, 2020 | 8,640,678 | ||||||
Balance, amount at Dec. 31, 2020 | 3,039,484 | 0 | $ 86 | 52,694,148 | (49,601,220) | 3,093,014 | (53,530) |
Net loss | (4,566,567) | ||||||
Common stock issued for financial services, amount | 0 | ||||||
Deemed dividends related to Original Warrants and New Warrant down round provision | 0 | ||||||
Balance, shares at Sep. 30, 2021 | 8,660,401 | ||||||
Balance, amount at Sep. 30, 2021 | 2,109,393 | 0 | $ 86 | 56,330,624 | (54,167,685) | 2,163,025 | (53,632) |
Balance, shares at Mar. 31, 2021 | 8,655,068 | ||||||
Balance, amount at Mar. 31, 2021 | 3,349,943 | 0 | $ 86 | 54,007,041 | (50,603,560) | 3,403,567 | (53,624) |
Paid-in capital - relative fair value of stock warrants granted | 473,327 | 0 | 0 | 473,327 | 0 | 473,327 | 0 |
Paid-in capital - beneficial conversion feature | 428,595 | 0 | 0 | 428,595 | 0 | 428,595 | 0 |
Net loss | (1,542,717) | 0 | $ 0 | 0 | (1,542,713) | (1,542,713) | (4) |
Common stock issued for facility lease, shares | 5,333 | ||||||
Common stock issued for facility lease, amount | 49,600 | 0 | $ 0 | 49,600 | 0 | 49,600 | 0 |
Paid-in capital - fair value of stock options and RSU vested | 138,010 | 0 | $ 0 | 138,010 | 0 | 138,010 | 0 |
Balance, shares at Jun. 30, 2021 | 8,660,401 | ||||||
Balance, amount at Jun. 30, 2021 | 2,896,758 | 0 | $ 86 | 55,096,573 | (52,146,273) | 2,950,386 | (53,628) |
Paid-in capital - relative fair value of stock warrants granted | 847,048 | 0 | 0 | 847,048 | 0 | 847,048 | 0 |
Net loss | (2,021,416) | 0 | 0 | 0 | (2,021,412) | (2,021,412) | (4) |
Paid-in capital - fair value of stock options and RSU vested | 387,003 | 0 | $ 0 | 387,003 | 0 | 387,003 | 0 |
Deemed dividends related to Original Warrants and New Warrant down round provision | 0 | ||||||
Balance, shares at Sep. 30, 2021 | 8,660,401 | ||||||
Balance, amount at Sep. 30, 2021 | 2,109,393 | 0 | $ 86 | 56,330,624 | (54,167,685) | 2,163,025 | (53,632) |
Balance, shares at Dec. 31, 2021 | 8,779,567 | ||||||
Balance, amount at Dec. 31, 2021 | (483,593) | 0 | $ 88 | 57,041,447 | (57,471,492) | (429,957) | (53,636) |
Paid-in capital - fair value of stock options and restricted stock units vested | 934,225 | 0 | 0 | 934,225 | 0 | 934,225 | |
Paid-in capital - relative fair value of stock warrants granted | 864,000 | 0 | 0 | 864,000 | 0 | 864,000 | 0 |
Net loss | (5,569,683) | 0 | $ 0 | 0 | (5,569,679) | (5,569,679) | (4) |
Common stock issued for restricted stock units vested, shares | 16,667 | ||||||
Common stock issued for restricted stock units vested, amount | 0 | 0 | 0 | 0 | 0 | 0 | |
Common stock issued for convertible debt, shares | 7,917 | ||||||
Common stock issued for convertible debt, amount | 47,500 | $ 0 | $ 0 | 47,500 | 0 | 47,500 | 0 |
Common stock issued to settle common stock subscriptions payable, shares | 3,000,000 | (1,000,000) | |||||
Common stock issued to settle common stock subscriptions payable, amount | 0 | $ 30 | $ (10) | (20) | 0 | 0 | |
Balance, shares at Mar. 31, 2022 | 3,000,000 | 7,804,151 | |||||
Balance, amount at Mar. 31, 2022 | (4,207,551) | $ 30 | $ 78 | 58,887,152 | (63,041,171) | (4,153,911) | (53,640) |
Balance, shares at Dec. 31, 2021 | 8,779,567 | ||||||
Balance, amount at Dec. 31, 2021 | (483,593) | $ 0 | $ 88 | 57,041,447 | (57,471,492) | (429,957) | (53,636) |
Net loss | (8,856,754) | ||||||
Common stock issued for financial services, amount | 719,000 | ||||||
Deemed dividends related to Original Warrants and New Warrant down round provision | 3,495,583 | ||||||
Balance, shares at Sep. 30, 2022 | 3,000,000 | 12,899,436 | |||||
Balance, amount at Sep. 30, 2022 | 8,388,115 | $ 30 | $ 129 | 83,271,278 | (74,829,673) | 8,441,764 | (53,649) |
Balance, shares at Mar. 31, 2022 | 3,000,000 | 7,804,151 | |||||
Balance, amount at Mar. 31, 2022 | (4,207,551) | $ 30 | $ 78 | 58,887,152 | (63,041,171) | (4,153,911) | (53,640) |
Paid-in capital - fair value of stock options and restricted stock units vested | 761,437 | 0 | 0 | 761,437 | 0 | 761,437 | 0 |
Net loss | (188,381) | 0 | $ 0 | 0 | (188,376) | (188,376) | (5) |
Common stock issued for restricted stock units vested, shares | 16,666 | ||||||
Common stock issued for restricted stock units vested, amount | 0 | 0 | $ 0 | 0 | 0 | ||
Common stock issued in financing transaction, net of issuance costs, shares | 2,352,942 | ||||||
Common stock issued in financing transaction, net of issuance costs, amount | 8,694,363 | 0 | $ 24 | 8,694,339 | 0 | 8,694,363 | 0 |
Common stock issued for financial services, shares | 800,000 | ||||||
Common stock issued for financial services, amount | 719,000 | $ 0 | $ 8 | 718,992 | 0 | 719,000 | 0 |
Balance, shares at Jun. 30, 2022 | 3,000,000 | 10,973,759 | |||||
Balance, amount at Jun. 30, 2022 | 5,761,269 | $ 30 | $ 110 | 69,044,321 | (63,229,547) | 5,814,914 | (53,645) |
Paid-in capital - fair value of stock options and restricted stock units vested | 594,763 | 0 | 0 | 594,763 | 0 | 594,763 | 0 |
Net loss | (3,098,690) | 0 | $ 0 | 0 | (3,098,686) | (3,098,686) | (4) |
Common stock issued in financing transaction, net of issuance costs, shares | 1,925,677 | ||||||
Common stock issued in financing transaction, net of issuance costs, amount | 5,130,773 | 0 | $ 19 | 5,130,754 | 0 | 5,130,773 | 0 |
Deemed dividends related to underwritten public offering warrants down round provision | 0 | 0 | 5,005,857 | (5,005,857) | 0 | 0 | |
Deemed dividends related to Original Warrants and New Warrant down round provision | 3,495,583 | $ 0 | $ 0 | 3,495,583 | (3,495,583) | 0 | 0 |
Balance, shares at Sep. 30, 2022 | 3,000,000 | 12,899,436 | |||||
Balance, amount at Sep. 30, 2022 | $ 8,388,115 | $ 30 | $ 129 | $ 83,271,278 | $ (74,829,673) | $ 8,441,764 | $ (53,649) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Operating Activities: | ||
Net loss | $ (8,856,754) | $ (4,566,567) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Amortization | 289,098 | 289,098 |
Amortization of interest - conversion features | 848,329 | 222,373 |
Amortization of interest | 423,782 | 275,052 |
Loss on extinguishment of debt | (245,105) | 0 |
Change in fair value of derivative liability | (1,040,000) | 0 |
Stock warrants expense | 771,177 | 0 |
Stock options expense | 1,262,396 | 399,259 |
Stock-based compensation expense | 1,010,430 | 334,228 |
Changes in assets and liabilities: | ||
Accounts receivable | (8,484) | 0 |
Inventory | (157,303) | 0 |
Prepaid expenses | 375,001 | (19,361) |
Other assets | 3,149 | (7,146) |
Accounts payable | (149,145) | 604,834 |
Accrued expenses | 1,027,548 | (6,961) |
Accrued interest payable | 172,343 | 58,733 |
Related party payables | (60,976) | 780 |
Stock subscriptions payable | 70,500 | 138,069 |
Net cash used in operating activities | (4,264,014) | (2,277,609) |
Financing Activities: | ||
Proceeds from public equity offering | 10,004,264 | 0 |
Cost of public equity offering | (1,309,882) | 0 |
Proceeds from private equity offering | 5,997,854 | 0 |
Cost of private equity offering | (867,100) | 0 |
Repayments of convertible debenture payable | (3,048,781) | 0 |
Proceeds from notes payable - related parties | 0 | 1,030,000 |
Repayments of notes payable - related parties | 0 | (30,000) |
Proceeds from notes payable - non-related parties | 0 | 1,005,000 |
Repayments of notes payable - non-related parties | (145,932) | 0 |
Proceeds from convertible debenture payable | 0 | 2,500,000 |
Debt issuance costs | 0 | (275,000) |
Net cash provided by financing activities | 10,630,423 | 4,230,000 |
Net Change In Cash | 6,366,409 | 1,952,391 |
Cash At The Beginning Of The Period | 882,268 | 232,842 |
Cash At The End Of The Period | 7,248,677 | 2,185,233 |
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) | 0 |
Derecognition of convertible debenture | 3,048,781 | 0 |
Reacquisition value of convertible debenture | (3,912,781) | 0 |
Shares issued for prepaid services | (719,000) | 0 |
Financing of prepaid insurance | (274,589) | 0 |
Non-related party debt converted to capital | 47,500 | 0 |
Reclassification of common shares from reverse stock split | 155 | 0 |
Reclassification of elective shareholder conversion of common shares to preferred shares | 30 | 0 |
Relative fair value of stock warrants granted | 0 | 1,939,756 |
Intrinsic value-beneficial conversion feature | 0 | 909,214 |
Fair value of embedded conversion feature | 0 | 980,000 |
Convertible debenture payable discount | 0 | 823,781 |
Issuance of common stock for prior year accrued dividends | 0 | 107,880 |
Issuance of common stock for rent | 49,600 | |
Supplemental Disclosure: | ||
Cash paid for interest | 15,986 | 67,618 |
Cash paid for income taxes | $ 0 | $ 0 |
ORGANIZATION, OPERATIONS AND SU
ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2022 | |
ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SOBR Safe, Inc. (“SOBR Safe”), formerly TransBiotec, Inc., was incorporated as Imagine Media LTD. 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, 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 a non-invasive alcohol sensing device in 2022. On January 7, 2022, our stockholders 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 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, 2022, our stockholders also approved an amendment to our 2019 Equity Incentive Plan to increase the shares authorized to be issued under the Plan from 1,282,823 shares to 1,733,333 shares. Basis of Presentation 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, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 11, 2022. 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 and December 31, 2021, the 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 ended September 30, 2022 and 2021. Principles of Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its majority owned subsidiary, TransBiotec-CA. We have eliminated all intercompany transactions and balances between entities consolidated in these unaudited condensed financial statements. Use of Estimates The preparation of unaudited condensed consolidated financial statements in conformity with generally accepted accounting principles 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. Financial Instruments Pursuant to Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures Financial Instruments Level Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 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: 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 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 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 and December 31, 2021: 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 Cash 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 and December 31, 2021. Accounts Receivable Accounts receivable is derived from sales to a limited number of customers at September 30, 2022. 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 and December 31, 2021. Inventory 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 finished products intended for sale to customers. 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 Company had no reserves for obsolescence. Prepaid Expenses 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. Beneficial Conversion Features From time to time, the Company may issue convertible notes that may contain a beneficial conversion feature. A beneficial conversion feature exists 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 is recorded as a debt discount with a corresponding amount to additional paid-in capital. The debt discount is amortized to interest expense over the life of the note using the effective interest method. Derivative Instruments 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 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. Preferred Stock 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 our preferred shares in stockholders’ equity. Minority Interest (Noncontrolling Interest) A subsidiary of the Company has minority members representing ownership interests of 1.38% at September 30, 2022 and December 31, 2021. 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. Impairment of Long-Lived Assets 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 periods ended September 30, 2022 and 2021. Revenue Recognition 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 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 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. Contracts with a Single License/Service Performance Obligation 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. Contracts for Purchase of Hardware Devices Only 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. Contracts with Multiple Performance Obligations 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. Stock-based Compensation The Company follows the guidance of the accounting provisions of ASC 718, Share-based Compensation Research and Development 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. Advertising and Marketing Costs Advertising and marketing costs are charged to operations as incurred. Advertising and marketing costs were $75,147 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 during the three-month periods ended September 30, 2022 and 2021, respectively. Income Tax The Company accounts for income taxes pursuant to ASC 740. Under ASC 740 deferred taxes are provided on a 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 and December 31, 2021 as these have been offset by a 100% valuation allowance. Net Loss Per Share 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. Concentration of Credit Risk Credit Risk – Concentration of Customers Concentration of Suppliers Related Parties 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. Recently Issued Accounting Guidance The Company has reviewed 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. |
GOING CONCERN
GOING CONCERN | 9 Months Ended |
Sep. 30, 2022 | |
GOING CONCERN | |
GOING CONCERN | NOTE 2. GOING CONCERN 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, cash flow from operations, and competing market developments. The Company may need additional capital in the future. As of September 30, 2022, the Company has an accumulated deficit of ($74,829,673). During the nine-months ended September 30, 2022, the Company also experienced negative cash flows from operating activities of ($4,264,014) and generated nominal revenue from product and subscription sales. It appears these principal conditions or events, considered in the aggregate, indicate it is probable that the Company will be unable to meet its obligations as they become due within one year after the date the financial statements are issued. As such, there is substantial doubt about the entity’s ability to continue as a going concern. 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. Underwritten Public Offering 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). Private Investment in Public Equity Offering (“PIPE Offering”) 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
INVENTORY | 9 Months Ended |
Sep. 30, 2022 | |
INVENTORY | |
INVENTORY | NOTE 3. INVENTORY Inventory at September 30, 2022 and December 31, 2021 consisted of the following: September 30, December 31, 2022 2021 Raw materials $ 82,914 $ - Work in process - - Finished goods 113,850 39,461 Inventory, net $ 196,764 $ 39,461 |
PREPAID EXPENSES
PREPAID EXPENSES | 9 Months Ended |
Sep. 30, 2022 | |
PREPAID EXPENSES | |
PREPAID EXPENSES | NOTE 4. PREPAID EXPENSES Prepaid expenses at September 30, 2022 and December 31, 2021 consist of the following: September 30, December 31, 2022 2021 Insurance $ 240,291 $ 4,286 Deposits 32,236 - Consulting services 383,613 8,267 Prepaid expenses $ 656,140 $ 12,553 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 1, 2022, the Company made a payment 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 500,000 common shares on June 29, 2022 to the consultant as additional compensation for the services to be provided at $0.91 per share with a fair value on the date of issuance of $455,000. The Company recorded professional consulting service expense of $377,500 and $566,250 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 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. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2022 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | NOTE 5. INTANGIBLE ASSETS Intangible assets consist of the following at December 31, 2021: 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 Intangible assets consist of the following at September 30, 2022: Gross Carrying Accumulated Net Intangible Amortization Period Amount Amortization Asset (in years) SOBR Safe Intellectual Technology $ 3,854,675 $ 899,416 $ 2,955,259 10 Amortization expense for the nine-month periods ended September 30, 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. Estimated future amortization expense for device technology intangible assets is as follows: 2023 2024 2025 2026 2027 Thereafter $ 385,467 $ 385,467 $ 385,467 $ 385,467 $ 385,467 $ 1,027,924 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2022 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 6. RELATED PARTY TRANSACTIONS 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). 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
ACCRUED EXPENSES | 9 Months Ended |
Sep. 30, 2022 | |
ACCRUED EXPENSES | |
ACCRUED EXPENSES | NOTE 7. ACCRUED EXPENSES Accrued expenses at September 30, 2022 and December 31, 2021 consist of the following: September 30, 2022 December 31, 2021 Registration rights and default damages and penalties (see Note 8) $ - $ 189,663 Consulting services 203,647 163,647 Other 178,698 110,590 Accrued expenses $ 382,345 $ 463,900 |
CONVERTIBLE DEBENTURE PAYABLE
CONVERTIBLE DEBENTURE PAYABLE | 9 Months Ended |
Sep. 30, 2022 | |
CONVERTIBLE DEBENTURE PAYABLE | |
CONVERTIBLE DEBENTURE PAYABLE | NOTE 8. CONVERTIBLE DEBENTURE PAYABLE Convertible debenture payable at September 30, 2022 and December 31, 2021 consist of the following: 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 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 is 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. 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 approximately $195,105. Damages and accrued interest expense are included in general and administrative expenses in the Condensed Consolidated Statement of Operations. The Company recorded interest expense of $5,443 and none for the nine-months ended September 30, 2022 and 2021. 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 expense in the Condensed Consolidated Statement of Operations for the nine-months ended September 30, 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 the occurrence of a Qualified Offering no longer apply and interest accrues at 18% per annum on the principal amount. 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 life of the convertible debenture. The debt discount amortization expense recorded as amortization of interest in the Condensed Consolidated Statements of Operations was $465,635 and $16,245 for the nine-month periods 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 31, 2021 was none and $402,465, respectively. Stock warrants amortization expense recorded as interest expense was $465,635 and $14,039 for the nine-month periods ended September 30, 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 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-month period ended September 30, 2022. |
NOTES PAYABLE
NOTES PAYABLE | 9 Months Ended |
Sep. 30, 2022 | |
NOTES PAYABLE | |
NOTES PAYABLE | NOTE 9. NOTES PAYABLE RELATED PARTIES Related party notes payable at September 30, 2022 and December 31, 2021 consist of the following: September 30, 2022 December 31, 2021 Convertible Notes Payable with Detached Free-standing Warrants $ 1,000,000 $ 1,000,000 Conventional Non-Convertible Notes Payable 11,810 11,810 Unamortized Debt Discount (271,575 ) (645,547 ) Net Related Party Notes Payable $ 740,235 $ 366,263 Current Portion (740,235 ) (11,810 ) Net Long-Term Portion $ - $ 354,453 Total interest expense for related party notes was $89,753 and $55,151 for the nine-month periods ended September 30, 2022 and 2021, respectively. Related Party Convertible Notes Payable with Warrants The Company has thirteen convertible notes payable to 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 $1,000,000 as of September 30, 2022. 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 $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. Related Party Non-Convertible Notes Payable 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 PARTIES Non-related party notes payable at September 30, 2022 and December 31, 2021 consist of the following: September 30, 2022 December 31, 2021 Convertible Notes Payable with Detached Free-Standing Warrants $ 1,005,000 $ 1,005,000 Convertible Notes Payable 9,183 56,683 Non-Convertible Notes Payable 176,156 42,500 Notes Payable with Detached Free-Standing Warrants - 5,000 Unamortized Debt Discount (271,147 ) (648,580 ) Net Non-Related Party Notes Payable $ 919,192 $ 460,603 Current Portion (919,192 ) (104,183 ) Net Long-Term Portion $ - $ 356,420 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. Convertible Notes Payable with Detached Free-Standing Warrants 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 recorded as amortization of interest – beneficial conversion feature in the consolidated statements of operations was $173,353 and $105,060 for the nine-month periods ended September 30, 2022 and 2021. The unamortized beneficial conversion feature was $123,803 and $297,156 at September 30, 2022 and December 31, 2021, respectively. As of September 30, 2022, these notes carry outstanding warrants of 167,500. The relative fair market value of the related stock warrants granted during the nine-month periods ended September 30, 2022 and 2021 was none and $541,707, respectively. Stock warrants amortization expense recorded as interest expense was $204,080 and $122,012 for the nine-month periods ended September 30, 2022 and 2021. The unamortized discount at September 30, 2022 and December 31, 2021 was $147,345 and $351,425, respectively. Convertible Notes Payable The Company has two convertible notes payable to non-related parties that have a principal balance of $9,183 as of September 30, 2022 and three convertible notes payable to non-related parties that have a principal balance of $56,683 as of December 31, 2021. These notes carry interest rates ranging from 5% - 12% and have due dates ranging from February 2013 to March 2022. Two of the three notes 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. Non-convertible Notes Payable The Company has two non-convertible notes payable to non-related parties that have a principal balance of $17,500 as of September 30, 2022, and December 31, 2021. These notes carry interest rates ranging from 9% - 10% and have due dates ranging from December 2013 to November 2015 of which the two 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 through 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. Notes Payable with Detached Free-Standing Warrants 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. |
DERIVATIVE LIABILITY
DERIVATIVE LIABILITY | 9 Months Ended |
Sep. 30, 2022 | |
DERIVATIVE LIABILITY | |
DERIVATIVE LIABILITY | NOTE 10. DERIVATIVE LIABILITY Warrants Issued with Convertible Debenture In September 2021, the Company completed a financing transition and received $2,500,000 from the Purchaser and in exchange issued an 18% Original Issue Discount Convertible Debenture in the principal amount of $3,048,781. The debenture includes voluntary and automatic conversion features at a variable conversion prices convertible into the Company’s common shares at an undetermined future date. The Company analyzed the conversion features of the debenture agreement for derivative accounting consideration under ASU 2017-11 (ASC 815-15, Derivatives and Hedging Fair Value Measurements and Disclosures, Financial Instruments 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 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. 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, the 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 Company recorded a fair market value net gain of $1,040,000 for the nine-month period ended September 30, 2022. The fair value of the embedded derivative recorded on the balance sheet as a liability was none at September 30, 2022. A summary of the activity of the derivative liability is shown below: 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 $ - |
COMMON STOCK SUBSCRIPTION PAYAB
COMMON STOCK SUBSCRIPTION PAYABLE | 9 Months Ended |
Sep. 30, 2022 | |
COMMON STOCK SUBSCRIPTION PAYABLE | |
COMMON STOCK SUBSCRIPTION PAYABLE | NOTE 11. COMMON STOCK SUBSCRIPTION PAYABLE 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. |
COMMON STOCK
COMMON STOCK | 9 Months Ended |
Sep. 30, 2022 | |
COMMON STOCK | |
COMMON STOCK | NOTE 12. COMMON STOCK The Company’s common stock transactions for the nine-months ended September 30, 2021, consist of the following: The Company issued 14,390 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 to its landlord under the terms of 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. The Company’s common stock transactions for the nine-months ended September 30, 2022, consist 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 Company exchanged 1,000,000 shares of common stock for 3,000,000 shares of Series B convertible preferred stock (see Note 13). On May 18, 2022, the Company issued 2,352,942 shares of common stock in connection with a completed underwritten public offering. The Company received approximately $8,779,000 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 Company issued 16,667 shares of its 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 per share with a fair value on the date of issuance of $455,000. The Company issued 300,000 shares 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 issuance of $264,000. On September 30, 2022, 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 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”). |
PREFERRED STOCK
PREFERRED STOCK | 9 Months Ended |
Sep. 30, 2022 | |
PREFERRED STOCK | |
PREFERRED STOCK | NOTE 13. PREFERRED STOCK 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 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 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, (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. |
STOCK WARRANTS, STOCK OPTIONS A
STOCK WARRANTS, STOCK OPTIONS AND RESTRICTED STOCK UNITS | 9 Months Ended |
Sep. 30, 2022 | |
STOCK WARRANTS, STOCK OPTIONS AND RESTRICTED STOCK UNITS | |
STOCK WARRANTS, STOCK OPTIONS AND RESTRICTED STOCK UNITS | NOTE 14. STOCK WARRANTS, STOCK OPTIONS AND RESTRICTED STOCK UNITS 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. Stock Warrants 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), to purchase up to 406,504 and 101,626, respectively, shares of our common stock at an exercise price of $6.00 per share. The Original Warrants and New 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. On May 18, 2022, the Company issued through an underwritten public offering 4,705,884 (the "Offering Warrants”), 424,116 Underwriter Warrants, and 141,177 Representative Warrants 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, in exchange for professional services rendered, to purchase common stock of the Company at an exercise price of $4.25 per warrant. The warrants expire three years from the date of issuance and were valued at approximately $6,000 using the Black Scholes option pricing model. On September 28, 2022, the Company entered into a private investment in public equity offering (the “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. The additional issuance of the Original Warrants and New Warrants expire seven years from the date of original issuance 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 relative fair market value of 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 of 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. The Prefunded Warrants are classified as a component 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-month periods ended September 30, 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 based on the following assumptions: September 30, 2022 September 30, 2021 Exercise Price $1.35 – 6.00 $6.00 – 9.00 Dividend Yield 0% 0% Volatility 110 – 160% 120 – 158% Risk-free Interest Rate 2.45 – 3.88% 0.14 – 0.98% Life of Warrants 3 – 7 Years 2 – 5 Years The following table summarizes the changes in the Company’s outstanding warrants during the nine-month periods ended September 30, 2022 and 2021: 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 Warrants Granted 740,671 $ 6.00 – 9.00 3.40 Years $ 7.35 $ 108,506 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 Warrants Outstanding Number of Shares Exercise Price Per Share Weighted Average Remaining Contractual Life (1) Weighted Average Exercise Price Per Share Aggregate Intrinsic Value Balance at December 31, 2021 836,464 $ 1.50 – 9.00 3.04 Years $ 6.78 $ 1,784,838 Warrants Granted 13,315,461 $ 1.35 – 5.31 5.80 Years $ 1.94 $ 9,896,694 Warrants Exercised - Warrants Expired/Forfeited - Balance at September 30, 2022 14,151,925 $ 1.35 – 9.00 5.66 Years $ 1.62 $ 14,934,593 (1) Share-Based Compensation On October 24, 2019, the Company’s 2019 Equity Incentive Plan (the “Plan”) RSUs”) 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. Stock Options As of September 30, 2022 and December 31, 2021, the Company has granted stock options to acquire 1,084,921 and 1,036,588 shares of common stock under the plan, respectively. As of September 30, 2022, the plan has 844,977 vested options and 256,712 non-vested options. As of December 31, 2021, 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. In total for the nine-months ended September 30, 2022 and 2021, the Company recorded in general and administrative expense $1,262,396 and $630,027, respectively, of share-based compensation expense related to stock options. The unrecognized compensation expense as of September 30, 2022, was approximately $1,371,614 for non-vested share-based awards to be recognized over periods of approximately one month to two years and four 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 periods ended September 30, 2022 and 2021 were as follows: September 30, 2022 September 30, 2021 Exercise Price $ 8.25 – 9.08 $ 7.50 – 10.74 Dividend Yield 0 % 0 % Volatility 191% - 192% % 44% - 185 % Risk-free Interest Rate 0.78% - 1.52 % 0.16% – 1.69 % Life of Options 2 – 3 Years 1.3 – 7 Years The following table summarizes the changes in the Company’s outstanding stock options during the nine-month periods ended September 30, 2022 and 2021: 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, 2020 857,409 $ 0.79 – 9.90 7.45 Years $ 1.50 $ 6,302,277 Options Granted 203,509 7.50 – 10.73 2.58 Years 9.53 (414,147 ) Options Exercised - Options Cancelled (70,196 ) 0.79 – 9.87 8.91 Options Expired/Forfeited - Balance at September 30, 2021 990,722 $ 0.79 – 10.73 6.15 Years $ 2.63 $ 4,829,417 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 Options Granted 70,000 $ 8.25 – 9.08 1.58 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 Options Outstanding Number of Shares Exercise Price Per Share Weighted Average Remaining Contractual Life Weighted Average Exercise Price Per Share Aggregate Intrinsic Value Exercisable at December 31, 2021 635,609 $ 0.79 - 10.74 6.70 Years $ 1.59 $ 4,655,089 Exercisable at September 30, 2022 844,977 $ 0.79 – 10.30 6.06 Years $ 2.02 $ 599,156 Restricted Stock Units 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 RSUs granted in 2022 vest the earlier 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. 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 periods ended September 30, 2022 and 2021: 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 RSUs Weighted Average Grant Date Fair Value Per Share Weighted Average Vesting Period Unvested at December 31, 2021 133,585 $ 8.56 1.66 Years Granted 41,667 6.92 0.96 Years Vested (16,667 ) 7.50 Unvested at September 30, 2022 158,585 $ 8.24 0.25 Years 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. Executive Officers Stock Options and RSUs The Company has 357,542 and 823,482 outstanding executive officers stock options exercisable at $0.79 to $10.14 and $0.79 to $10.14 per share as of September 30, 2022 and December 31, 2021, respectively. The Company has 57,626 and 61,919 unvested RSUs granted to executive officers as of September 30, 2022 and December 31, 2021, respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2022 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 15. COMMITMENTS AND CONTINGENCIES Operating Leases On February 26, 2021 the Company executed an office lease, effective for a 12-month term beginning March 1, 2021. The lease requires 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 is 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 period beginning July 1, 2022 with a monthly base rent of $15,736. Rent expense under office leases, including CAM charges, was $110,570 and $106,997 for the nine-month periods ended September 30, 2022 and 2021, respectively. Legal Proceedings 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. As of September 30, 2022, and December 31, 2021, the Company has accrued $11,164 plus accrued interest of approximately $18,000. In the event we pay any money related to this lawsuit, IDTEC agreed to pay the amount for the Company in exchange for shares of our common stock. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 16. SUBSEQUENT EVENTS The Company has evaluated subsequent events for recognition and disclosure through November 14, 2022, which is the date the condensed consolidated financial statements were available to be issued, and has determined the following are material subsequent events that require recognition or disclosure in the accompanying condensed consolidated financial statements. The Company entered into a PIPE Offering on September 28, 2022 pursuant to a Securities Purchase Agreement 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 Agreement 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. |
ORGANIZATION OPERATIONS AND SUM
ORGANIZATION OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
ORGANIZATION OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | |
Basis of Presentation | 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, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 11, 2022. 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 and December 31, 2021, the 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 ended September 30, 2022 and 2021. |
Principles of Consolidation | The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its majority owned subsidiary, TransBiotec-CA. We have eliminated all intercompany transactions and balances between entities consolidated in these unaudited condensed financial statements. |
Use of Estimates | The preparation of unaudited condensed consolidated financial statements in conformity with generally accepted accounting principles 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. |
Financial Instruments | Pursuant to Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures Financial Instruments Level Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 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: 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 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 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 and December 31, 2021: 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 |
Cash | 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 and December 31, 2021. |
Accounts Receivable | Accounts receivable is derived from sales to a limited number of customers at September 30, 2022. 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 and December 31, 2021. |
Inventory | 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 finished products intended for sale to customers. 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 Company had no reserves for obsolescence. |
Prepaid Expenses | 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. |
Beneficial Conversion Features | From time to time, the Company may issue convertible notes that may contain a beneficial conversion feature. A beneficial conversion feature exists 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 is recorded as a debt discount with a corresponding amount to additional paid-in capital. The debt discount is amortized to interest expense over the life of the note using the effective interest method. |
Derivative Instruments | 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 | 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. |
Preferred Stock | 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 our preferred shares in stockholders’ equity. |
Noncontrolling Interest | A subsidiary of the Company has minority members representing ownership interests of 1.38% at September 30, 2022 and December 31, 2021. 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. |
Impairment of Long-Lived Assets | 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 periods ended September 30, 2022 and 2021. |
Revenue Recognition | 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 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 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. Contracts with a Single License/Service Performance Obligation 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. Contracts for Purchase of Hardware Devices Only 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. Contracts with Multiple Performance Obligations 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. |
Stock-based Compensation | The Company follows the guidance of the accounting provisions of ASC 718, Share-based Compensation |
Research and Development | 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. |
Advertising and Marketing Costs | Advertising and marketing costs are charged to operations as incurred. Advertising and marketing costs were $75,147 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 during the three-month periods ended September 30, 2022 and 2021, respectively. |
Income Tax | The Company accounts for income taxes pursuant to ASC 740. Under ASC 740 deferred taxes are provided on a 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 and December 31, 2021 as these have been offset by a 100% valuation allowance. |
Net Loss Per Share | 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. |
Concentration of Credit Risk | Credit Risk – Concentration of Customers Concentration of Suppliers |
Related Parties | 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. |
Recent Issued Accounting Guidance | The Company has reviewed 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. |
ORGANIZATION OPERATIONS AND S_2
ORGANIZATION OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 1 Months Ended |
Jul. 25, 2022 | |
RSUs [Member] | |
Schedule of assets and liabilities | 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 |
INVENTORY (Tables)
INVENTORY (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
INVENTORY (Tables) | |
Schedule of inventory | September 30, December 31, 2022 2021 Raw materials $ 82,914 $ - Work in process - - Finished goods 113,850 39,461 Inventory, net $ 196,764 $ 39,461 |
PREPAID EXPENSES (Tables)
PREPAID EXPENSES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
PREPAID EXPENSES (Tables) | |
Schedule of prepaid expenses | September 30, December 31, 2022 2021 Insurance $ 240,291 $ 4,286 Deposits 32,236 - Consulting services 383,613 8,267 Prepaid expenses $ 656,140 $ 12,553 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
INTANGIBLE ASSETS | |
Summary of Intangible Assets | 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 Gross Carrying Accumulated Net Intangible Amortization Period Amount Amortization Asset (in years) SOBR Safe Intellectual Technology $ 3,854,675 $ 899,416 $ 2,955,259 10 |
Schedule of estimated future amortization expense | 2023 2024 2025 2026 2027 Thereafter $ 385,467 $ 385,467 $ 385,467 $ 385,467 $ 385,467 $ 1,027,924 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
ACCRUED EXPENSES (Tables) | |
Schedule of Accrued expenses | September 30, 2022 December 31, 2021 Registration rights and default damages and penalties (see Note 8) $ - $ 189,663 Consulting services 203,647 163,647 Other 178,698 110,590 Accrued expenses $ 382,345 $ 463,900 |
CONVERTIBLE DEBENTURE PAYABLE (
CONVERTIBLE DEBENTURE PAYABLE (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
NOTES PAYABLE | |
Schedule of debenture payable | 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 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
NOTES PAYABLE (Tables) | |
Schedule of notes payables - related parties | September 30, 2022 December 31, 2021 Convertible Notes Payable with Detached Free-standing Warrants $ 1,000,000 $ 1,000,000 Conventional Non-Convertible Notes Payable 11,810 11,810 Unamortized Debt Discount (271,575 ) (645,547 ) Net Related Party Notes Payable $ 740,235 $ 366,263 Current Portion (740,235 ) (11,810 ) Net Long-Term Portion $ - $ 354,453 |
Schedule of notes payables - non related parties | September 30, 2022 December 31, 2021 Convertible Notes Payable with Detached Free-Standing Warrants $ 1,005,000 $ 1,005,000 Convertible Notes Payable 9,183 56,683 Non-Convertible Notes Payable 176,156 42,500 Notes Payable with Detached Free-Standing Warrants - 5,000 Unamortized Debt Discount (271,147 ) (648,580 ) Net Non-Related Party Notes Payable $ 919,192 $ 460,603 Current Portion (919,192 ) (104,183 ) Net Long-Term Portion $ - $ 356,420 |
DERIVATIVE LIABILITY (Tables)
DERIVATIVE LIABILITY (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
DERIVATIVE LIABILITY | |
Schedule of activity of derivative liability | 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 $ - |
STOCK WARRANTS, STOCK OPTIONS_2
STOCK WARRANTS, STOCK OPTIONS AND RESTRICTED STOCK UNITS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
STOCK WARRANTS, STOCK OPTIONS AND RESTRICTED STOCK UNITS (Tables) | |
Schedule of fair value of warrant and stock options granted | September 30, 2022 September 30, 2021 Exercise Price $1.35 – 6.00 $6.00 – 9.00 Dividend Yield 0% 0% Volatility 110 – 160% 120 – 158% Risk-free Interest Rate 2.45 – 3.88% 0.14 – 0.98% Life of Warrants 3 – 7 Years 2 – 5 Years September 30, 2022 September 30, 2021 Exercise Price $ 8.25 – 9.08 $ 7.50 – 10.74 Dividend Yield 0 % 0 % Volatility 191% - 192% % 44% - 185 % Risk-free Interest Rate 0.78% - 1.52 % 0.16% – 1.69 % Life of Options 2 – 3 Years 1.3 – 7 Years |
Schedule of warrant And Option outstanding Stock | 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 Warrants Granted 740,671 $ 6.00 – 9.00 3.40 Years $ 7.35 $ 108,506 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 Warrants Outstanding Number of Shares Exercise Price Per Share Weighted Average Remaining Contractual Life (1) Weighted Average Exercise Price Per Share Aggregate Intrinsic Value Balance at December 31, 2021 836,464 $ 1.50 – 9.00 3.04 Years $ 6.78 $ 1,784,838 Warrants Granted 13,315,461 $ 1.35 – 5.31 5.80 Years $ 1.94 $ 9,896,694 Warrants Exercised - Warrants Expired/Forfeited - Balance at September 30, 2022 14,151,925 $ 1.35 – 9.00 5.66 Years $ 1.62 $ 14,934,593 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, 2020 857,409 $ 0.79 – 9.90 7.45 Years $ 1.50 $ 6,302,277 Options Granted 203,509 7.50 – 10.73 2.58 Years 9.53 (414,147 ) Options Exercised - Options Cancelled (70,196 ) 0.79 – 9.87 8.91 Options Expired/Forfeited - Balance at September 30, 2021 990,722 $ 0.79 – 10.73 6.15 Years $ 2.63 $ 4,829,417 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 Options Granted 70,000 $ 8.25 – 9.08 1.58 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 Options Outstanding Number of Shares Exercise Price Per Share Weighted Average Remaining Contractual Life Weighted Average Exercise Price Per Share Aggregate Intrinsic Value Exercisable at December 31, 2021 635,609 $ 0.79 - 10.74 6.70 Years $ 1.59 $ 4,655,089 Exercisable at September 30, 2022 844,977 $ 0.79 – 10.30 6.06 Years $ 2.02 $ 599,156 |
Restricted Stock Units | 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 RSUs Weighted Average Grant Date Fair Value Per Share Weighted Average Vesting Period Unvested at December 31, 2021 133,585 $ 8.56 1.66 Years Granted 41,667 6.92 0.96 Years Vested (16,667 ) 7.50 Unvested at September 30, 2022 158,585 $ 8.24 0.25 Years |
ORGANIZATION OPERATIONS AND S_3
ORGANIZATION OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | Sep. 30, 2022 | Jun. 30, 2022 | Dec. 31, 2021 | Sep. 28, 2021 |
Derivative liabilites | $ 0 | $ 0 | $ 1,040,000 | $ 980,000 |
Level 1 [Member] | ||||
Derivative liabilites | 0 | 0 | ||
Level 2 [Member] | ||||
Derivative liabilites | 0 | 0 | ||
Level 3 [Member] | ||||
Derivative liabilites | $ 0 | $ 1,040,000 |
ORGANIZATION OPERATIONS AND S_4
ORGANIZATION OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Jan. 08, 2022 | Jan. 07, 2022 | Dec. 31, 2021 | |
Research and development costs | $ 459,847 | $ 566,655 | $ 992,491 | $ 1,052,650 | |||
Advertising and marketing costs | $ 29,628 | $ 12,438 | $ 75,147 | $ 70,692 | |||
Increase in authorized shares | $ 1,733,333 | $ 1,282,823 | |||||
Valuation allowance, percentage | 100% | ||||||
Reverse stock split description | 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 | ||||||
Minority Interest [Member] | |||||||
Ownership interest, percentage | 1.38% | 1.38% | 1.38% |
GOING CONCERN (Details Narrativ
GOING CONCERN (Details Narrative) | 1 Months Ended | 9 Months Ended | ||||||
May 13, 2022 $ / shares shares | Sep. 28, 2022 USD ($) $ / shares shares | May 18, 2022 USD ($) $ / shares shares | May 17, 2022 $ / shares | Sep. 30, 2022 USD ($) $ / shares | Sep. 30, 2021 USD ($) | Mar. 31, 2022 USD ($) $ / shares $ / bbl | Dec. 31, 2021 USD ($) $ / shares | |
Accumulated deficit | $ (74,829,673) | $ (57,471,492) | ||||||
Net cash used in operating activities | $ (4,264,014) | $ (2,277,609) | ||||||
Underwritten public offering units issued | shares | 2,352,942 | 424,116 | ||||||
Underwritten public offering, price per unit | 4.25 | 4.25 | 4.25 | |||||
Warrants exercise price | $ / shares | $ 4.25 | |||||||
Price per unit sold, percentage | 100% | 0.01% | ||||||
Warrants expiry term | 5 years | |||||||
Additional common stock shares issued | shares | 352,941 | |||||||
Additional warrants issued | shares | 705,882 | |||||||
Public Offerings Price | $ / shares | $ 4.25 | $ 125 | ||||||
Common Stock, par value | $ / shares | $ 0.00001 | $ 0.00001 | $ 0.00001 | |||||
Representative's Warrants issued | $ 141,177 | |||||||
Representative's Warrants per share | $ / shares | $ 5.3125 | |||||||
Net proceeds from the sale of an underwritten public offering | $ 8,780,000 | $ 13,920,000 | ||||||
Original Issue Discount Convertible Debenture | 18% | 18% | ||||||
Convertible notes payable loan balance | $ 3,048,781 | $ 3,048,781 | ||||||
Net offering proceeds from loan | 3,048,781 | |||||||
Working capital | $ 7,250,000 | |||||||
Convertible notes payable annual interest rate | 12% | 12% | ||||||
Principal balances of convertible notes due, Sep 30, 2022 | $ 2,005,000 | $ 2,005,000 | ||||||
Principal balances of convertible notes due, March 2023 | 1,100,000 | 1,100,000 | ||||||
Principal balances of convertible notes due, April 2023 | 155,000 | 155,000 | ||||||
Principal balances of convertible notes due, May 2023 | $ 750,000 | $ 750,000 | ||||||
Common stock closing price per share | $ / shares | $ 9 | $ 6 | ||||||
PIPE Offering [Member] | ||||||||
Gross proceeds | $ 6,000,000 | |||||||
Non-Prefunded Units issued | shares | 1,925,677 | |||||||
Prefunded Units issued | shares | 2,128,378 | |||||||
Purchase Price per unit | $ / shares | $ 1.48 | |||||||
Prefunded Warrant exercise price | $ / shares | 0.001 | 0.001 | ||||||
Non Prefunded Warrant exercise price | $ / shares | $ 1.35 | $ 1.35 | ||||||
Proceeds from PIPE Offering | $ 5,140,000 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
INVENTORY (Details) | ||
Raw materials | $ 82,914 | $ 0 |
Work in process | 0 | 0 |
Finished goods | 113,850 | 39,461 |
Inventory, net | $ 196,764 | $ 39,461 |
PREPAID EXPENSES (Details)
PREPAID EXPENSES (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
INVENTORY (Details) | ||
Insurance | $ 240,291 | $ 4,286 |
Deposits | 32,236 | 0 |
Consulting services | 383,613 | 8,267 |
Prepaid expenses | $ 656,140 | $ 12,553 |
PREPAID EXPENSES (Details Narra
PREPAID EXPENSES (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||||
Jun. 08, 2022 | Jul. 31, 2022 | Jun. 29, 2022 | May 31, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | May 16, 2022 | Apr. 01, 2022 | Dec. 31, 2021 | Feb. 26, 2021 | |
Insurance annual preminum | $ 349,455 | |||||||||||
Insurance expense | $ 87,364 | $ 116,485 | ||||||||||
Professional consulting service expense | $ 182,000 | $ 273,000 | ||||||||||
Common stock, shares issued | 12,899,436 | 12,899,436 | 8,778,555 | |||||||||
Stock based compensation expense | $ 329,323 | $ 147,163 | $ 1,080,930 | $ 334,228 | ||||||||
Common stock value | 129 | 129 | $ 88 | |||||||||
General Liability, Workers' Compensation [Member] | ||||||||||||
Insurance expense | 2,478 | 3,013 | ||||||||||
Annual insurance premium prepaying | $ 10,335 | |||||||||||
New Lease Agreement [Member] | ||||||||||||
Common stock, shares issued | 5,333 | |||||||||||
Stock based compensation expense | 8,267 | $ 28,933 | ||||||||||
Monthly rent | 6,000 | |||||||||||
Common stock value | $ 49,600 | |||||||||||
office facility lease agreement [Member] | ||||||||||||
Monthly rent | $ 15,736 | 15,736 | ||||||||||
Consultant [Member] | ||||||||||||
Professional consulting service expense | $ 377,500 | $ 566,250 | ||||||||||
Common stock, shares issued | 300,000 | 500,000 | ||||||||||
Prepayment | $ 100,000 | $ 300,000 | ||||||||||
Fair value of share issuance | $ 264,000 | $ 455,000 | ||||||||||
Per share value | $ 0.88 | $ 0.91 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Intangible assets, net | $ 2,955,259 | $ 3,244,357 |
Intellectual Technology [Member] | ||
Amortization Period | 10 years | 10 years |
Intangible assets, gross | $ 3,854,675 | $ 3,854,675 |
Accumulated amortization | 899,416 | 610,318 |
Intangible assets, net | $ 2,955,259 | $ 3,244,357 |
INTANGIBLE ASSETS (Details 1)
INTANGIBLE ASSETS (Details 1) | Sep. 30, 2022 USD ($) |
INTANGIBLE ASSETS | |
2023 | $ 385,467 |
2024 | 385,467 |
2025 | 385,467 |
2026 | 385,467 |
2027 | 385,467 |
Thereafter | $ 1,027,924 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
INTANGIBLE ASSETS | ||||
Amortization expense | $ 99,366 | $ 99,366 | $ 298,098 | $ 298,098 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | ||||
Jul. 25, 2022 | May 31, 2021 | Mar. 31, 2021 | Mar. 30, 2021 | Sep. 30, 2022 | Feb. 12, 2021 | |
Debt conversion rate | $ 9 | $ 9 | $ 9 | |||
Warrants to purchase shares of common stock | 75,000 | 91,667 | ||||
Issuance of new rstricted shares | 75,000 | |||||
Issuance of convertible notes payable | 350,000 | |||||
Indirect interest amount recieved | $ 50,000 | $ 200,000 | ||||
Warrants exercise price | $ 9 | |||||
Working capital | $ 7,250,000 | |||||
Board of Directors [Member] | ||||||
Convertible notes payable | $ 400,000 | |||||
Designation shares of Preferred Stock | 3,000,000 | |||||
IDTEC [Member] | ||||||
Issuance of new rstricted shares | 58,980 | |||||
Warrants exercise price | $ 1.50 | |||||
Warrants purchased | 106,667 | |||||
Settelment of outstanding amount | $ 88,469 | |||||
Settlement of outstanding judgement | $ 88,470 | |||||
Common stock, shares held | 666,667 | |||||
David Gandini [Member] | ||||||
Working capital | $ 30,000 | |||||
Unseured note interest rate | 0% | |||||
Preferred Stock shares issued in exchange for common stock | 333,333 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
ACCRUED EXPENSES | ||
Registration rights and default damages and penalties (see Note 8) | $ 0 | $ 189,663 |
Consulting services | 203,647 | 163,647 |
Other | 178,698 | 110,590 |
Accrued expenses | $ 382,345 | $ 463,900 |
CONVERTIBLE DEBENTURE PAYABLE_2
CONVERTIBLE DEBENTURE PAYABLE (Details) - USD ($) | Sep. 30, 2022 | Jun. 30, 2022 | Dec. 31, 2021 |
RELATED PARTY TRANSACTIONS | |||
Convertible Debenture Payable with Detached Free-standing Warrant | $ 0 | $ 0 | $ 3,048,781 |
Unamortized Debt Discount | $ 0 | 0 | (1,291,882) |
Net Convertible Debenture Payable | $ 0 | $ 1,756,899 |
CONVERTIBLE DEBENTURE PAYABLE_3
CONVERTIBLE DEBENTURE PAYABLE (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 28, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Aug. 03, 2022 | |
Debt face amount | $ 3,048,781 | ||||
Warrant to purchase shares | 406,504 | ||||
Debenture conversion description | 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 | ||||
Proceeds from financing transition | $ 2,500,000 | ||||
OID percentage | 18% | ||||
Exercise price | $ 6 | ||||
Adjusted exercise price | $ 3 | ||||
Partial liquidated damages description | 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 | ||||
Unamortized discount and issuance costs | $ 0 | $ 402,465 | |||
Outstanding warrants | 2,258,355 | 406,504 | |||
Fair market value of stock warrants | $ 4,359,583 | $ 847,048 | |||
Unamortized discount | 423,782 | $ 423,782 | |||
Interest expense related to debt issuance costs | 5,443 | 5,443 | |||
Interest expense | 465,635 | 14,039 | |||
Debt issuance cost | $ 423,782 | 423,782 | |||
Outstanding principal amount of debenture, percentage | 130% | ||||
Accrued and unpaid interest, percentage | 100% | ||||
Default penalties included in general and administrative expense | $ 914,634 | ||||
Warrant to purchase additional shares of common stock | 101,626 | ||||
Warrant to purchase additional shares of common stock, expiry date | Mar. 29, 2029 | ||||
Debt discount amortization expense | $ 465,635 | $ 16,245 | |||
Original Issue Discount | 548,781 | ||||
Debt issuance costs | 275,000 | ||||
Unpaid damages and estimated related costs | $ 195,000 | ||||
Warrant issued | 4,054,055 | 10,000 | |||
Armistice Warrants [Member] | |||||
Warrant issued | 1,750,225 | ||||
Original Warrant | 1,400,180 | ||||
New Warrants | 350,045 | ||||
Securities Purchase Agreement [Member] | Registration Rights Agreement [Member] | |||||
Warrant exercisable per share | $ 1.35 |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - Related Party Notes Payable [Member] - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Convertible Notes Payable with Detached Free-standing Warrants | $ 1,000,000 | $ 1,000,000 |
Conventional Non-Convertible Notes Payable | 11,810 | 11,810 |
Unamortized Debt Discount | (271,575) | (645,547) |
Net Non-Related Party Notes Payable | 740,235 | 366,263 |
Current portion | (740,235) | (11,810) |
Net Long-Term Portion | $ 0 | $ 354,453 |
NOTES PAYABLE (Details 1)
NOTES PAYABLE (Details 1) - Non-Related Party Notes Payable [Member] - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Convertible Notes Payable with Detached Free-Standing Warrants | $ 1,005,000 | $ 1,005,000 |
Convertible notes payable | 9,183 | 56,683 |
Non-Convertible Notes Payable | 176,156 | 42,500 |
Notes Payable with Detached Free-Standing Warrants | 0 | 5,000 |
Unamortized Discount | (271,147) | (648,580) |
Net Non-Related Party Notes Payable | 919,192 | 460,603 |
Current Portion | (919,192) | (104,183) |
Net Long-term Portion | $ 0 | $ 356,420 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
Mar. 06, 2020 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Jun. 30, 2022 | May 25, 2022 | Jun. 30, 2021 | May 31, 2021 | Mar. 31, 2021 | |
Interest expenses for related party notes | $ 89,753 | $ 55,151 | |||||||||
Note payable conversion price per share | $ 9 | $ 9 | $ 9 | $ 9 | |||||||
Insurance premiums | $ 349,455 | ||||||||||
Note payable due date | March 6, 2022 | May 2022 through May 2023 | |||||||||
Initial down payment | 74,866 | ||||||||||
Remaining amount | $ 274,559 | ||||||||||
Annual interest rate | 4.37% | ||||||||||
Monthly payments | $ 31,068 | ||||||||||
Insurance expense related to prepaid insurance | $ 2,355 | $ 3,340 | |||||||||
Unamortized discount | 0 | 0 | $ 1,291,882 | $ 0 | |||||||
Interest expense | 201,943 | $ 227,475 | 2,340,085 | 399,381 | |||||||
Convertible Notes Payable | 0 | 0 | 3,048,781 | $ 0 | |||||||
Amortization expenses, beneficial conversion feature | 465,635 | 16,245 | |||||||||
Accrued interest | 424,453 | $ 424,453 | 252,110 | ||||||||
Common Stock Purchase Plans [Member] | Six Related Parties [Member] | |||||||||||
Accrued interest | $ 45,388 | ||||||||||
Unamortized beneficial conversion | 297,155 | ||||||||||
Notes Payable with Warrants | |||||||||||
Note payable due date | September 2014 | ||||||||||
Notes Payable with Detached Free-standing Warrants | 5,000 | $ 5,000 | |||||||||
Interest rate | 10% | ||||||||||
Non-Convertible Notes Payable Two [Member] | |||||||||||
Unamortized discount | $ 147,345 | $ 147,345 | 351,425 | ||||||||
Interest expense | 100,687 | 31,614 | |||||||||
Amortization expenses, beneficial conversion feature | 204,080 | 122,012 | |||||||||
Fair market value of warrants | $ 0 | 541,707 | |||||||||
Interest rate | 0% | ||||||||||
Outstanding warrants | 167,500 | 167,500 | |||||||||
Convertible Notes Payable Two [Member] | |||||||||||
Convertible debt, conversion, principal amount | $ 9,183 | $ 9,183 | 56,683 | ||||||||
Related Party Notes Payable [Member] | |||||||||||
Note payable conversion price per share | $ 6 | $ 6 | |||||||||
Unamortized discount | $ 217,112 | $ 217,112 | 351,425 | ||||||||
Interest expense | 134,313 | 55,413 | |||||||||
Convertible Notes Payable | 56,683 | ||||||||||
Amortization expenses, beneficial conversion feature | $ 167,913 | 101,070 | |||||||||
Ownership of outstanding common stock | 4.90% | 4.90% | |||||||||
Default interest rate | 12% | 12% | |||||||||
Unamortized beneficial conversion feature | $ 123,429 | 291,343 | |||||||||
Beneficial conversion feature debt discount | 448,999 | ||||||||||
Convertible notes payable principal | $ 11,810 | 11,810 | 11,810 | ||||||||
Purchase price of shares issued | 9 | 9 | |||||||||
Notes Payable with Detached Free-standing Warrants | $ 1,000,000 | 1,000,000 | |||||||||
Fair market value of warrants | $ 541,707 | 541,707 | |||||||||
Non-Related Party Notes Payable [Member] | |||||||||||
Note payable conversion price per share | $ 9 | $ 9 | |||||||||
Note payable due date | March 6, 2022 | ||||||||||
Interest expense | $ 100,687 | 31,614 | |||||||||
Amortization expenses, beneficial conversion feature | $ 173,353 | 105,060 | |||||||||
Ownership of outstanding common stock | 4.90% | 4.90% | |||||||||
Default interest rate | 12% | 12% | |||||||||
Purchase prices of shares issued | $ 9 | $ 9 | |||||||||
shares of common stock | $ 47,500 | $ 47,500 | |||||||||
Convertible Notes Payable with Detached Free-standing Warrants | $ 1,005,000 | 1,005,000 | 1,005,000 | ||||||||
Unamortized beneficial conversion feature | 123,803 | $ 297,156 | |||||||||
Beneficial conversion feature debt discount | $ 460,215 | ||||||||||
Non-Related Party Notes Payable [Member] | Minimum [Member] | |||||||||||
Note payable conversion price per share | $ 6 | ||||||||||
Note payable due date | Mar. 06, 2022 | ||||||||||
Interest rate | 5% | 5% | |||||||||
Non-Related Party Notes Payable [Member] | Maximum [Member] | |||||||||||
Note payable conversion price per share | $ 32.29 | ||||||||||
Note payable due date | March 6, 2020 | ||||||||||
Interest rate | 12% | 12% | |||||||||
Non-Related Party Notes Payable [Member] | Non-Convertible Notes Payable [Member] | |||||||||||
Note payable conversion price per share | $ 6 | $ 6 | |||||||||
Note payable due date | Mar. 13, 2022 | ||||||||||
Convertible notes payable principal | $ 17,500 | $ 17,500 | $ 17,500 | ||||||||
Interest rate | 5% | ||||||||||
Non-Related Party Notes Payable [Member] | Non-Convertible Notes Payable [Member] | Minimum [Member] | |||||||||||
Note payable due date | December 2013 | ||||||||||
Interest rate | 5% | ||||||||||
Non-Related Party Notes Payables [Member] | Non-Convertible Notes Payable [Member] | Maximum [Member] | |||||||||||
Note payable due date | June 2022 | ||||||||||
Interest rate | 10% | ||||||||||
Related Party Convertible Notes Payable [Member] | |||||||||||
Unamortized discount | $ 148,146 | $ 148,146 | 354,205 | ||||||||
Amortization expenses, beneficial conversion feature | 206,059 | 127,354 | |||||||||
Beneficial conversion feature debt discount | 460,215 | ||||||||||
Fair market value of warrants | $ 0 | $ 551,001 | $ 551,001 | ||||||||
Interest rate | 0% | ||||||||||
Outstanding warrants | 166,667 | 166,667 | |||||||||
Stock issued during the period | 167,500 |
DERIVATIVE LIABILITY (Details)
DERIVATIVE LIABILITY (Details) | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
DERIVATIVE LIABILITY | |
Balance at December 31, 2021 | $ 1,040,000 |
Fair value of derivatives issued | 0 |
Fair value adjustments | (1,040,000) |
Balance at September 30, 2022 | $ 0 |
DERIVATIVE LIABILITY (Details N
DERIVATIVE LIABILITY (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2022 | Jun. 30, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Sep. 28, 2021 | |
Risk-free interest rate | 0.05% | |||||||||
Expected volatility rate | 120% | |||||||||
OID percentage | 18% | |||||||||
Proceeds from financing transition | $ 2,500,000 | |||||||||
Change in fair value of derivative liability | $ 0 | $ 1,380,000 | $ 0 | $ 0 | $ 0 | $ 0 | 1,040,000 | $ 0 | ||
Derivative liabilites | $ 0 | $ 0 | $ 0 | $ 1,040,000 | $ 980,000 | |||||
Maximum [Member] | ||||||||||
Expected life | 6 years | |||||||||
Maximum [Member] | ||||||||||
Expected life | 4 years |
COMMON STOCK SUBSCRIPTION PAY_2
COMMON STOCK SUBSCRIPTION PAYABLE (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | ||
Jul. 25, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Common stock payable | $ 70,500 | $ 0 | ||
RSUs [Member] | ||||
Issued shares of common stock for servece, Share | 75,000 | 16,667 | 16,667 |
COMMON STOCK (Details Narrative
COMMON STOCK (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Jul. 25, 2022 | May 18, 2022 | Jun. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | |
Issuance of new stock, PIPE Offring | 1,925,677 | ||||
Issued shares of common stock in connection with a completed public offering | 2,352,942 | 5,140,000 | |||
Received of net proceeds from the sale of underwritten public offering | $ 8,779,000 | $ 4,054,055 | |||
Public offering price | $ 4.25 | $ 1.48 | |||
Warrant exercise price | 0.001 | ||||
Stock price | 1.35 | ||||
Share of common stock | $ 1.35 | ||||
Sale of an underwritten public offering, share | 2,352,942 | 2,128,378 | |||
Issued shares of common stock for service, Value | $ 719,000 | $ 719,000 | $ 0 | ||
Convertible Note Payable [Member] | |||||
Issued shares of common stock for service, Share | 7,917 | ||||
Issued shares of common stock for service, Value | $ 47,500 | ||||
RSUs [Member] | |||||
Issued shares of common stock for service, Share | 75,000 | 16,667 | 16,667 | ||
Strategic Advisory And Digital Marketing Services [Member] | Consultant [Member] | |||||
Issued shares of common stock for service, Share | 500,000 | ||||
Issued shares of common stock for service, Value | $ 455,000 | ||||
Shares price | $ 0.91 | ||||
Business Development Consulting Services [Member] | Consultant [Member] | |||||
Issued shares of common stock for service, Share | 300,000 | ||||
Issued shares of common stock for service, Value | $ 264,000 | ||||
Shares price | $ 0.88 | ||||
Lease Agreement [Member] | |||||
Debt Conversion, Converted Instrument, Amount | $ 49,600 | ||||
Debt conversion, converted instrument, shares issued, shares | 16,000 | ||||
Agreement expiring date | February 2022 | ||||
Series A-1 Convertible Preferred stock [Member] | |||||
Issued shares of common stock for service, Share | 14,390 | ||||
Debt Conversion, Converted Instrument, Amount | $ 107,880 | ||||
Series B Convertible Preferred Stock [Member] | |||||
Issued shares of common stock for service, Share | 1,000,000 | ||||
Debt conversion, converted instrument, shares issued, shares | 3,000,000 | ||||
Non-Prefunded Units [Member] | |||||
Issued shares of common stock for service, Value | $ 1,925,677 |
PREFERRED STOCK (Details Narrat
PREFERRED STOCK (Details Narratve) - Series B Convertible Preferred Stock [Member] - shares | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Exchange shares issued of common stcok | 333,333 | |
Common stock held by company | 666,667 | |
Preferred stock, shares authorized | 3,000,000 | 3,000,000 |
STOCK WARRANTS STOCK OPTIONS AN
STOCK WARRANTS STOCK OPTIONS AND RESTRICTED STOCK UNITS (Details) - $ / shares | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Risk free interest rate | 0.05% | |
Volatility | 120% | |
Warrants [Member] | ||
Dividend yield | 0% | 0% |
Maximum [Member] | Warrants [Member] | ||
Exercise Price | $ 6 | $ 9 |
Risk free interest rate | 3.88% | 0.98% |
Life of Warrants | 7 years | 5 years |
Volatility | 160% | 158% |
Maximum [Member] | Warrants [Member] | ||
Exercise Price | $ 1.35 | $ 6 |
Risk free interest rate | 2.45% | 0.14% |
Life of Warrants | 3 years | 2 years |
Volatility | 110% | 120% |
STOCK WARRANTS STOCK OPTIONS _2
STOCK WARRANTS STOCK OPTIONS AND RESTRICTED STOCK UNITS (Details 1) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Outstanding at ending of period | 1,101,689 | 990,722 |
Weighted Average Remaining Contractual Life , Beginning balance | 6 years 2 months 15 days | 7 years 5 months 12 days |
Weighted Average Remaining Contractual Life, Warrants granted | 1 year 6 months 29 days | 2 years 6 months 29 days |
Weighted Average Remaining Contractual Life, Ending balance | 5 years 3 months 10 days | 6 years 1 month 24 days |
Aggregate Intrinsic Value, Beginning balance | $ 5,804,517 | $ 6,302,277 |
Aggregate Intrinsic Value, Warrants granted | 0 | 414,147 |
Aggregate Intrinsic Value, Ending balance | $ 559,146 | $ 4,829,417 |
Warrants [Member] | ||
Outstanding at beginning of period | 836,464 | 194,773 |
Warrants Granted | 13,315,461 | 740,671 |
Warrants Exercised | 0 | (58,980) |
Warrants Expired | 0 | 0 |
Outstanding at ending of period | 14,151,925 | 876,464 |
Weighted Average Exercise Price Per Share, Beginning balance | $ 6.78 | $ 2.82 |
Weighted Average Exercise Price Per Share, Warrants granted | 1.94 | 7.35 |
Weighted Average Exercise Price Per Share, Warrants exercised | 1.50 | |
Weighted Average Exercise Price Per Share, Ending balance | $ 1.62 | $ 6.75 |
Weighted Average Remaining Contractual Life , Beginning balance | 3 years 14 days | 3 years 9 months 18 days |
Weighted Average Remaining Contractual Life, Warrants granted | 5 years 9 months 18 days | 3 years 4 months 24 days |
Weighted Average Remaining Contractual Life, Ending balance | 5 years 7 months 28 days | 3 years 3 months 18 days |
Aggregate Intrinsic Value, Beginning balance | $ 1,784,838 | $ 1,173,737 |
Aggregate Intrinsic Value, Warrants granted | 9,896,694 | 108,506 |
Aggregate Intrinsic Value, Ending balance | $ 14,934,593 | $ 665,424 |
Maximum [Member] | Warrants [Member] | ||
Exercise Price Per Share, Beginning balance | $ 9 | $ 6 |
Exercise Price Per Share, Warrants granted | 5.31 | 9 |
Exercise Price Per Share, Warrants Exercised | 1.50 | |
Exercise Price Per Share, Ending balance | 9 | 9 |
Maximum [Member] | Warrants [Member] | ||
Exercise Price Per Share, Beginning balance | 1.50 | 1.50 |
Exercise Price Per Share, Warrants granted | 1.35 | 6 |
Exercise Price Per Share, Warrants Exercised | 0 | |
Exercise Price Per Share, Ending balance | $ 1.35 | $ 1.50 |
STOCK WARRANTS STOCK OPTIONS _3
STOCK WARRANTS STOCK OPTIONS AND RESTRICTED STOCK UNITS (Details 2) - $ / shares | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Expected volatility | 120% | |
Risk free interest rate | 0.05% | |
Stock Options [Member] | ||
Dividend yield | 0% | 0% |
Maximum [Member] | Stock Options [Member] | ||
Exercise Price | $ 9.08 | $ 10.74 |
Expected volatility | 192% | 185% |
Risk free interest rate | 1.52% | 1.69% |
Life of Warrants | 3 years | 7 years |
Maximum [Member] | Stock Options [Member] | ||
Exercise Price | $ 8.25 | $ 7.50 |
Expected volatility | 191% | 44% |
Risk free interest rate | 0.78% | 0.16% |
Life of Warrants | 2 years | 1 year 3 months 18 days |
STOCK WARRANTS STOCK OPTIONS _4
STOCK WARRANTS STOCK OPTIONS AND RESTRICTED STOCK UNITS (Details 3) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Outstanding at beginning of period | 1,053,356 | 857,409 |
Options Granted | 70,000 | 203,509 |
Options Cancelled | 0 | (70,196) |
Options Expired/Forfeited | (21,667) | |
Outstanding at ending of period | 1,101,689 | 990,722 |
Weighted Average Remaining Contractual Life , Beginning balance | 6 years 2 months 15 days | 7 years 5 months 12 days |
Weighted Average Remaining Contractual Life, Options granted | 1 year 6 months 29 days | 2 years 6 months 29 days |
Weighted Average Remaining Contractual Life, Ending balance | 5 years 3 months 10 days | 6 years 1 month 24 days |
Weighted Average Exercise Price Per Share, Beginning balance | $ 3.39 | $ 1.50 |
Weighted Average Exercise Price Per Share, Options granted | 8.29 | 9.53 |
Weighted Average Exercise Price Per Share, Options Expired/Forfeited | 9.33 | |
Weighted Average Exercise Price Per Share, Options Cancelled | 8.91 | |
Weighted Average Exercise Price Per Share, ending balance | $ 3.59 | $ 2.63 |
Aggregate Intrinsic Value, Beginning balance | $ 5,804,517 | $ 6,302,277 |
Aggregate Intrinsic Value, Options granted | 0 | 414,147 |
Aggregate Intrinsic Value, Ending balance | $ 559,146 | $ 4,829,417 |
Maximum [Member] | Stock Options [Member] | ||
Exercise Price Per Share, Beginning balance | $ 10.74 | $ 9.90 |
Options Granted | 9.08 | 10.73 |
Options Cancelled | 9.87 | |
Options Expired/Forfeited | 10.73 | |
Exercise Price Per Share, Ending balance | 10.30 | 10.73 |
Maximum [Member] | Stock Options [Member] | ||
Exercise Price Per Share, Beginning balance | 0.79 | 0.79 |
Options Granted | 8.25 | 7.50 |
Options Cancelled | 0.79 | |
Options Expired/Forfeited | 4.94 | |
Exercise Price Per Share, Ending balance | $ 0.79 | $ 0.79 |
STOCK WARRANTS STOCK OPTIONS _5
STOCK WARRANTS STOCK OPTIONS AND RESTRICTED STOCK UNITS (Details 4) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
STOCK WARRANTS STOCK OPTIONS AND RESTRICTED STOCK UNITS (Details) | ||
Weighted Average Remaining Contractual Life , Beginning balance | 6 years 8 months 12 days | 6 years 21 days |
Options Outstanding Number Of Shares | 844,977 | 635,609 |
Exercise Price Per minimum | $ 0.79 | $ 0.79 |
Exercise Price Per Maximum | 10.74 | 10.30 |
Weighted Average Exercise Price Per Share, Options Exercisable | $ 2.02 | $ 1.59 |
Aggregate Intrinsic Value. Exercisable | $ 599,156 | $ 4,655,089 |
STOCK WARRANTS STOCK OPTIONS _6
STOCK WARRANTS STOCK OPTIONS AND RESTRICTED STOCK UNITS (Details 5) - Restricted Stock Units [Member] - $ / shares | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Unvested begenning | 133,585 | 71,667 |
Granted | 41,667 | 61,918 |
Vested | (16,667) | 0 |
Unvested ending | 158,585 | 133,585 |
Weighted Average Vesting Period, beginning balance | 1 year 8 months 12 days | 1 year 7 months 28 days |
Weighted Average Vesting Period RSU granted | 11 months 15 days | 1 year 4 months 9 days |
Weighted Average Vesting Period, ending balance | 3 months | 1 year 29 days |
Weighted Average Grant Date Fair Value Per Share beginning balance | $ 8.56 | $ 8.75 |
Weighted Average Grant Date Fair Value Per Share RSU granted | 6.92 | 8.51 |
Weighted Average Vest Date Fair Value Per Share RSU granted | 7.50 | |
Weighted Average Grant Date Fair Value Per Share ending balance | $ 8.24 | $ 8.63 |
STOCK WARRANTS STOCK OPTIONS _7
STOCK WARRANTS STOCK OPTIONS AND RESTRICTED STOCK UNITS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||||||||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 28, 2022 | Aug. 03, 2022 | Jun. 08, 2022 | Jan. 12, 2022 | Dec. 31, 2021 | Sep. 28, 2021 | Jun. 30, 2021 | May 31, 2021 | Oct. 24, 2019 | |
Exercise prices | $ 1.35 | $ 1.35 | $ 4.25 | ||||||||||
Warrant issued | 4,054,055 | 4,054,055 | 10,000 | ||||||||||
Warrant issued value | $ 9,300,000 | $ 9,300,000 | $ 6,000 | ||||||||||
General and administrative expense | 1,997,822 | $ 949,293 | 5,145,857 | $ 2,557,935 | |||||||||
Stock based compensation expense | $ 329,323 | $ 147,163 | $ 1,080,930 | 334,228 | |||||||||
Prefunded Warrants [Member] | |||||||||||||
Exercise prices | $ 0.001 | $ 0.001 | |||||||||||
Warrant issued | 2,128,378 | 2,128,378 | |||||||||||
Warrant issued value | $ 3,150,000 | $ 3,150,000 | |||||||||||
Private investment in public equity [Member] | |||||||||||||
Exercise prices | $ 1.35 | ||||||||||||
Warrant issued | 1,750,225 | ||||||||||||
Warrant issued value | $ 5,200,000 | $ 5,200,000 | |||||||||||
New Warrants | 2,258,355 | 2,258,355 | 350,045 | ||||||||||
Original Warrant | 1,400,180 | ||||||||||||
Original Warrant value | $ 3,495,000 | ||||||||||||
New Warrants value | $ 3,495,000 | ||||||||||||
Restricted Stock Units [Member] | |||||||||||||
General and administrative expense | $ 960,430 | 308,361 | |||||||||||
Common stock issued for RSUs vested | 16,667 | 16,667 | 16,667 | 16,667 | |||||||||
Stock based compensation expense | $ 257,118 | ||||||||||||
Remaining weighted average vesting period | 3 years | ||||||||||||
Unvested RSUs granted to executive officers | 357,542 | 357,542 | 823,482 | ||||||||||
Options acquire shares of common stock exercise price description | executive officers stock options exercisable at $0.79 to $10.14 and $0.79 to $10.14 per share | ||||||||||||
Restricted Stock Units [Member] | Executive Vice Presidentof Salesand Marketingand Revenue Officer [Member] | |||||||||||||
Stock options vested | 57,626 | 57,626 | 61,919 | ||||||||||
Options to acquire shares of common stock | 25,000 | ||||||||||||
Stock Options [Member] | |||||||||||||
Stock options to acquire shares of common stock | 1,084,921 | 1,084,921 | 1,036,588 | ||||||||||
Vested shares | 844,977 | 844,977 | 618,841 | ||||||||||
Non-vested shares | 256,712 | 256,712 | 417,747 | ||||||||||
General and administrative expense | $ 1,262,396 | 630,027 | |||||||||||
Unrecognized compensation expense | $ 1,371,614 | ||||||||||||
Stock Warrant [Member] | |||||||||||||
Exercise prices | $ 4.25 | $ 4.25 | $ 6 | ||||||||||
Number of warrants outstanding | 14,151,925 | 14,151,925 | 836,464 | ||||||||||
Public offering | 4,705,884 | 4,705,884 | |||||||||||
Warrants to purchase | 141,177 | 141,177 | |||||||||||
Underwriter exercise prices | $ 4.25 | $ 4.25 | |||||||||||
Warrants to purchase exercise prices | $ 5.3125 | $ 5.3125 | |||||||||||
Representative Warrants | 5,700,000 | 5,700,000 | |||||||||||
Common stock purchase | 101,626 | 101,626 | 406,504 | 334,167 | |||||||||
Common stock purchase per share | $ 6 | $ 9 | |||||||||||
Non-employee detached free-standing stock warrants granted | 13,315,461 | 13,315,461 | 740,671 | ||||||||||
Fair value of non-employee stock warrants granted | $ 27,540,584 | $ 1,939,756 | |||||||||||
Number of authorized shares | 1,733,333 | ||||||||||||
Authorization of shares of common stock | 1,282,823 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | ||||
Jul. 31, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 06, 2006 | |
Contract settlement amount | $ 11,164 | |||||
Accrued interest, legal proceedings | $ 11,164 | $ 18,000 | ||||
Short Term Operating Lease [Member] | ||||||
Rent expense | $ 110,570 | $ 106,997 | ||||
Operating lease, monthly payment | $ 4,500 | |||||
Issuance of common stock | 5,333 | |||||
Rent payments, monthly | $ 6,000 | |||||
Office lease term | 12 years | |||||
Prepaid expenses with common shares | $ 49,600 | |||||
Leases on office space per month | $ 15,736 | $ 5,000 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | Nov. 11, 2022 | Nov. 04, 2022 | Sep. 30, 2022 | Sep. 28, 2022 | Aug. 03, 2022 |
Price per share, warrants | $ 1.35 | ||||
Public offering, exercise price | $ 1.35 | $ 4.25 | |||
Subsequent Event [Member] | |||||
Proceeds from exercise of warrants | $ 3,550,000 | ||||
Proceeds from exercise of public offering, warrants | $ 1,670,000 | ||||
Stock option granted, repricing share | 305,000 | ||||
Subsequent Event [Member] | Board of Directors Chairman [Member] | |||||
Stock option granted, percentage | 100% | ||||
Subsequent Event [Member] | Employee [Member] | |||||
Stock option granted, percentage | 110% | ||||
Non-Prefunded Units [Member] | |||||
Share issued | 1,925,677 | ||||
Price per share | $ 1.48 | ||||
Prefunded Units [Member] | |||||
Share issued | 2,128,378 | ||||
Price per share | $ 2.125 | ||||
Preferred Stock [Member] | |||||
Public offering, exercise price | $ 4.25 |