Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 31, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Entity Registrant Name | SOBR SAFE, INC | ||
Entity Central Index Key | 0001425627 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Current Reporting Status | Yes | ||
Document Period End Date | Dec. 31, 2022 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2022 | ||
Entity Common Stock Shares Outstanding | 17,209,570 | ||
Entity Public Float | $ 7,230,975 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity File Number | 000-53316 | ||
Entity Incorporation State Country Code | DE | ||
Entity Tax Identification Number | 26-0731818 | ||
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 | ||
Security 12b Title | Common Stock, $0.00001 par value | ||
Trading Symbol | SOBR | ||
Security Exchange Name | NASDAQ | ||
Entity Interactive Data Current | Yes | ||
Icfr Auditor Attestation Flag | false | ||
City Area Code | 844 | ||
Local Phone Number | 762-7723 | ||
Auditor Firm Id | 324 | ||
Auditor Name | Macias Gini & O’Connell LLP | ||
Auditor Location | Irvine, CA |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets | ||
Cash | $ 8,578,997 | $ 882,268 |
Accounts receivable | 30,322 | 0 |
Inventory | 215,493 | 39,461 |
Prepaid expenses | 200,905 | 12,553 |
Total current assets | 9,025,717 | 934,282 |
SOBR Safe Intellectual Technology, net of accumulated amortization of $995,782 and $610,318 at December 31, 2022 and December 31, 2021, respectively | 2,858,893 | 3,244,357 |
Other assets | 27,427 | 30,576 |
Total Assets | 11,912,037 | 4,209,215 |
Current liabilities | ||
Accounts payable | 142,965 | 270,150 |
Accrued expenses | 392,282 | 463,900 |
Accrued interest payable | 469,691 | 252,110 |
Related party payables | 1,887 | 82,883 |
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 December 31, 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 $145,548 and none at December 31, 2022 and December 31, 2021, respectively | 866,262 | 11,810 |
Current portion notes payable - non-related parties | ||
* Includes unamortized debt discount related to warrants and beneficial conversion features of $144,878 and none at December 31, 2022 and December 31, 2021, respectively | 948,597 | 104,183 |
Total current liabilities | 2,821,684 | 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 December 31, 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 December 31, 2022 and December 31, 2021, respectively | 0 | 356,420 |
Total Liabilities | 2,821,684 | 4,692,808 |
Stockholders' Equity (Deficit) | ||
Preferred stock, value | 0 | 0 |
Common stock, $0.00001 par value; 100,000,000 shares authorized; 16,984,570 and 8,778,555 shares issued and outstanding including shares held in treasury at December 31, 2022 and December 31, 2021, respectively | 170 | 88 |
Treasury stock, at cost; 12,329 and no shares as of December 31, 2022 and December 31, 2021, respectively | (38,015) | 0 |
Additional paid-in capital | 87,509,666 | 57,041,447 |
Accumulated deficit | (78,327,845) | (57,471,492) |
Total SOBR Safe, Inc. stockholders' equity (deficit) | 9,144,006 | (429,957) |
Noncontrolling interest | (53,636) | (53,653) |
Total Stockholders' Equity (Deficit) | 9,090,353 | (483,593) |
Total Liabilities and Stockholders' Equity (Deficit) | 11,912,037 | 4,209,215 |
Series A Convertible Preferred stock | ||
Stockholders' Equity (Deficit) | ||
Preferred stock, value | 0 | 0 |
Series A 1 Convertible Preferred stock | ||
Stockholders' Equity (Deficit) | ||
Preferred stock, value | 0 | 0 |
Series B Convertible Preferred stock | ||
Stockholders' Equity (Deficit) | ||
Preferred stock, value | $ 30 | $ 0 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 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 | $ 995,782 | $ 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 | 145,548 | 145,548 |
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 | 144,878 | 144,878 |
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 |
Treasury stock, at cost; 12,329 | 12,329 | 0 |
Common stock, shares par value | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 16,984,570 | 8,778,555 |
Common stock, shares outstanding | 16,984,570 | 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 Convertible Preferred stock | ||
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 |
Series B Convertible Preferred stock | ||
Preferred stock, shares par value | $ 0.00001 | $ 0.00001 |
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-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 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||
Revenues | $ 35,322 | $ 0 |
Cost of goods sold | 19,315 | 0 |
Gross profit | 16,007 | 0 |
Operating expenses: | ||
General and administrative | 7,606,218 | 3,882,706 |
Stock-based compensation expense | 1,426,178 | 473,748 |
Research and development | 1,397,053 | 1,198,780 |
Total operating expenses | 10,429,449 | 5,555,234 |
Loss from operations | (10,413,442) | (5,555,234) |
Other income (expense): | ||
Other income | 230,414 | 0 |
Gain on debt extinguishment, net | 245,105 | 0 |
Gain (loss) on fair value adjustment - derivatives | 1,040,000 | (60,000) |
Interest expense | (2,535,519) | (1,420,063) |
Amortization of interest - debt discount | (921,488) | (835,081) |
Total other expense, net | (1,941,488) | (2,315,144) |
Loss before provision for income taxes | (12,354,930) | (7,870,378) |
Provision for income taxes | 0 | 0 |
Net loss | (12,354,930) | (7,870,378) |
Net loss attributable to noncontrolling interest | 17 | 106 |
Net loss attributable to SOBR Safe, Inc. | (12,354,913) | (7,870,272) |
Deemed dividends related to underwritten public offering warrants down round provision | (5,005,857) | 0 |
Deemed dividend related to Original Warrants and New Warrant down round provision | (3,495,583) | 0 |
Net loss attributable to common stockholders | $ (20,856,353) | $ (7,870,272) |
Basic and diluted loss per common share | $ (1.90) | $ (0.91) |
Weighted average number of common shares outstanding | 11,003,049 | 8,658,616 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) | Total | Preferred Stock [Member] | Common Stock [Member] | Treasury Stock | Additional Paid-In Capital | Retained Earnings (Accumulated Deficit) | 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 | $ 0 | $ 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 | 0 | 107,880 | 0 | 107,880 | 0 |
Common stock issued for facility lease, shares | 5,333 | |||||||
Common stock issued for facility lease, amount | 49,600 | 0 | $ 0 | 0 | 49,600 | 0 | 49,600 | 0 |
Common stock issued to settle common stock subscriptions payable, shares | 34,806 | |||||||
Common stock issued to settle common stock subscriptions payable, amount | 145,805 | 0 | $ 1 | 0 | 145,804 | 0 | 145,805 | 0 |
Common stock issued upon exercise of stock warrants, shares | 58,980 | |||||||
Common stock issued upon exercise of stock warrants, amount | 88,470 | 0 | $ 1 | 0 | 88,469 | 0 | 88,470 | 0 |
Common stock issued upon exercise of stock options, shares | 24,368 | |||||||
Common stock issued upon exercise of stock options, amount | 19,258 | 0 | $ 0 | 0 | 19,258 | 0 | 19,258 | 0 |
Paid-in capital - fair value of stock options and restricted stock units vested | 1,087,318 | 0 | 0 | 0 | 1,087,318 | 0 | 1,087,318 | 0 |
Paid-in capital - relative fair value of stock warrants granted | 1,939,756 | 0 | 0 | 0 | 1,939,756 | 0 | 1,939,756 | 0 |
Paid-in capital - beneficial conversion feature | 909,214 | 0 | 0 | 0 | 909,214 | 0 | 909,214 | 0 |
Net loss | (7,870,378) | 0 | $ 0 | 0 | 0 | (7,870,272) | (7,870,272) | (106) |
Deemed dividends related to underwritten public offering warrants down round provision | 0 | |||||||
Balance, shares at Dec. 31, 2021 | 8,778,555 | |||||||
Balance, amount at Dec. 31, 2021 | (483,593) | 0 | $ 88 | 0 | 57,041,447 | (57,471,492) | (429,957) | (53,636) |
Common stock issued upon exercise of stock options, shares | 48,106 | |||||||
Common stock issued upon exercise of stock options, amount | 38,015 | 0 | $ 0 | 0 | 38,015 | 0 | 38,015 | 0 |
Paid-in capital - fair value of stock options and restricted stock units vested | 3,008,395 | 0 | 0 | 0 | 3,008,395 | 0 | 3,008,395 | 0 |
Paid-in capital - relative fair value of stock warrants granted | 864,000 | 0 | 0 | 0 | 864,000 | 0 | 864,000 | 0 |
Net loss | (12,354,930) | 0 | $ 0 | 0 | 0 | (12,354,913) | (12,354,913) | (17) |
Common stock issued for restricted stock units vested, shares | 191,919 | |||||||
Common stock issued for restricted stock units vested, amount | 2 | 0 | $ 2 | 0 | 0 | 0 | 2 | 0 |
Common stock issued for convertible debt, shares | 7,917 | |||||||
Common stock issued for convertible debt, amount | 47,500 | $ 0 | $ 0 | 0 | 47,500 | 0 | 47,500 | 0 |
Common stock exchanged for convertible preferred stock, shares | 3,000,000 | (1,000,000) | ||||||
Common stock exchanged for convertible preferred stock, amount | 0 | $ 30 | $ (10) | 0 | (20) | 0 | 0 | 0 |
Additional common stock issued upon reverse stock split, shares | 1,012 | |||||||
Additional common stock issued upon reverse stock split, amount | 0 | 0 | $ 0 | 0 | 0 | 0 | 0 | 0 |
Common stock and warrants issued in public equity offering, net of issuance costs, shares | 2,352,942 | |||||||
Common stock and warrants issued in public equity offering, net of issuance costs, amount | 8,694,363 | 0 | $ 24 | 0 | 8,694,339 | 0 | 8,694,363 | 0 |
Common stock and warrants issued in private equity offering, net of issuance costs, shares | 1,925,677 | |||||||
Common stock and warrants issued in private equity offering, net of issuance costs, amount | 5,121,973 | 0 | $ 19 | 0 | 5,121,954 | 0 | 5,121,973 | 0 |
Common stock issued upon exercise of stock warrants, net of issuance costs, shares | 3,775,942 | |||||||
Common stock issued upon exercise of stock warrants, net of issuance costs, amount | 3,328,143 | 0 | $ 38 | $ 0 | 3,328,105 | 0 | 3,328,143 | 0 |
Purchase of treasury stock, shares | (12,329) | |||||||
Purchase of treasury stock, amount | (38,015) | 0 | $ 0 | $ (38,015) | 0 | 0 | (38,015) | 0 |
Common stock issued for services, shares | 902,500 | |||||||
Common stock issued for services, amount | 864,500 | 0 | $ 9 | 0 | 864,491 | 0 | 864,500 | 0 |
Deemed dividends related to underwritten public offering warrants down round provision | (5,005,857) | 0 | 0 | 0 | 5,005,857 | (5,005,857) | 0 | 0 |
Deemed dividends related to Original Warrants and New Warrant down round provisions | $ 0 | $ 0 | $ 0 | 3,495,583 | (3,495,583) | 0 | 0 | |
Balance, shares at Dec. 31, 2022 | 3,000,000 | 16,984,570 | 12,329 | |||||
Balance, amount at Dec. 31, 2022 | $ 9,090,353 | $ 30 | $ 170 | $ (38,015) | $ 87,509,666 | $ (78,327,845) | $ 9,144,006 | $ (53,653) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Operating Activities: | ||
Net loss | $ (12,354,930) | $ (7,870,378) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Amortization | 385,464 | 385,464 |
Amortization of interest - conversion features | 921,488 | 835,081 |
Amortization of interest | 423,782 | 1,231,661 |
Gain on debt extinguishment, net | (245,105) | 0 |
Change in fair value of derivative liability | (1,040,000) | 60,000 |
Stock issued for professional services | 864,500 | 0 |
Stock warrants expense | 950,316 | 0 |
Stock options expense | 1,582,217 | 723,262 |
Stock-based compensation expense | 1,426,178 | 473,748 |
Changes in assets and liabilities: | ||
Accounts receivable | (30,322) | 0 |
Inventory | (176,032) | (39,461) |
Prepaid expenses | 86,238 | 42,585 |
Other assets | 3,148 | (21,896) |
Accounts payable | (127,185) | 168,842 |
Accrued expenses | 1,037,486 | 150,865 |
Accrued interest payable | 217,581 | 117,666 |
Related party payables | (80,996) | 54,259 |
Net cash used in operating activities | (6,156,172) | (3,688,302) |
Financing Activities: | ||
Proceeds from public equity offering | 10,004,245 | 0 |
Cost of public equity offering | (1,309,882) | 0 |
Proceeds from private equity offering | 5,997,873 | 0 |
Cost of private equity offering | (875,900) | 0 |
Proceeds from exercise of stock warrants, net | 3,328,143 | 88,470 |
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 | (242,797) | 0 |
Proceeds from convertible debenture payable | 0 | 2,500,000 |
Repayments of convertible debenture payable | (3,048,781) | 0 |
Debt issuance costs | 0 | (275,000) |
Proceeds from exercise of stock options | 0 | 19,258 |
Net cash provided by financing activities | 13,852,901 | 4,337,728 |
Net Change In Cash | 7,696,729 | 649,426 |
Cash At The Beginning Of The Period | 882,268 | 232,842 |
Cash At The End Of The Period | 8,578,997 | 882,268 |
Schedule Of Non-Cash Investing And Financing Activities: | ||
Deemed dividends related to underwritten public offering warrants down round provision | 5,005,857 | 0 |
Deemed dividends related to Original Warrants and New Warrant down round provision | 3,495,583 | 0 |
Financing of prepaid insurance expenses | 274,589 | 0 |
Non-related party debt converted to common shares | 47,500 | 0 |
Exchange of common shares from exercise of stock options | 38,015 | 0 |
Reclassification of common shares from reverse stock | 155 | 0 |
Reclassification of elective shareholder conversion of common shares to preferred shares | 30 | 0 |
Issuance of common stock for rent | 0 | 49,600 |
Issuance of common stock for prior year accrued dividends | 0 | 107,880 |
Issuance of common stock to settle prior year stock subscriptions payable | 0 | 145,805 |
Intrinsic value-beneficial conversion feature | 0 | 909,214 |
Relative fair value of stock warrants granted | 0 | 1,939,756 |
Convertible debenture payable discount | 0 | 823,781 |
Fair value of embedded conversion feature | 0 | 980,000 |
Supplemental Disclosure: | ||
Cash paid for interest | 30,722 | 72,672 |
Cash paid for income taxes | $ 0 | $ 0 |
ORGANIZATION OPERATIONS AND SUM
ORGANIZATION OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 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., a Delaware corporation, (the “Company”, “we”, “us”, and “our”) is a hardware and software company headquartered in Greenwood Village, Colorado. Our company integrates proprietary software with our patented touch-based alcohol detection products, SOBRcheck™ and SOBRsure™, enabling non-invasive alcohol detection, biometric identity verification, and real-time cloud-based alerts and reporting. Currently our principal markets are located in North America. On April 28, 2022, we effected a 1-for-3 reverse stock split with our planned listing on Nasdaq. All share and per share amounts have been adjusted in these consolidated financial statements to reflect the effect of the reverse stock split. On May 16, 2022, our common stock began trading on the Nasdaq exchange under the ticker symbol “SOBR.” Prior to this, our common stock was quoted on the “OTCQB” tier of the OTC Markets, also under the ticker symbol “SOBR.” Basis of Presentation The accompanying audited consolidated financial statements 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”) for the presentation of annual financial information. In management’s opinion, the audited consolidated financial statements reflect all adjustments (including reclassifications and normal recurring adjustments) necessary to present fairly the financial position at December 31, 2022 and December 31, 2021, and results of operations and cash flows for the years ended December 31, 2022 and December 31, 2021. Principles of Consolidation The accompanying audited consolidated financial statements include the accounts of the Company and its majority owned subsidiary, TransBiotec-CA, of 98.62%. We have eliminated all intercompany transactions and balances between entities consolidated in these audited financial statements. Use of Estimates The preparation of audited 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 The Company is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The fair value hierarchy is based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company prioritizes the inputs into three levels that may be used to measure fair value: 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 receivable, accounts payable, accrued expenses, accrued interest payable, related party payables, notes payable, convertible debentures, and other liabilities. 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 on a recurring basis at fair value as of December 31, 2022 and December 31, 2021: December 31, 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 December 31, 2022 and December 31, 2021. Accounts Receivable Accounts receivable is derived from sales to a limited number of customers during the year ended December 31, 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 December 31, 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 component parts and finished products. The Company evaluates the need for reserves for excess or obsolete inventory determined primarily based upon estimates of future demand for the Company’s products. The Company had no reserves for obsolescence at December 31, 2022 and December 31, 2021. 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 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 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 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 December 31, 2022 and December 31, 2021. The Company accounts for these minority, or noncontrolling interests 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 years ended December 31, 2022 and 2021, respectively. 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 the Company’s offering and accounted for as a combined performance obligation, or the specific components may be generally distinct and accounted for as separate performance obligations. Revenue is recognized when control of these software products and/or services are transferred to the customer in an amount that reflects the consideration the Company expects to be entitled in exchange for these respective services and devices. The Company determines revenue recognition through five steps 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 is 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 uses the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (warrants, options, and restricted stock units). The fair value of each warrant and option is estimated on the date of grant using the Black-Scholes options pricing model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. The Company has not paid dividends historically and does not expect to pay them in the future. Expected volatilities are based on weighted averages of the historical volatility of the Company’s common stock estimated over the expected term of the awards. The expected term of options granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus the contract term as historically the Company had limited activity surrounding its awards. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term. The grant date fair value of a restricted stock unit equals the closing price of our common stock on the trading day of the grant date. Research and Development 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 products. Advertising and Marketing Costs Advertising and marketing costs are charged to operations as incurred. Advertising and marketing costs were $169,010 and $104,738 during the years ended December 31, 2022 and December 31, 2021, respectively. Income Tax Deferred taxes are provided on an asset and liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company has a deferred tax asset of approximately $7,283,000 and $4,129,000 that is offset by a 100% valuation allowance at December 31, 2022 and December 31, 2021, respectively. Therefore, the Company has not recorded any deferred tax assets or liabilities at December 31, 2022 and December 31, 2021. 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 Risk Credit Risk – Concentration of Customers Concentration of Suppliers Impact of COVID-19 December 2019, ( COVID-19 March 2020, may may 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 | 12 Months Ended |
Dec. 31, 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, generate cash flow from operations, and assess competing market developments. The Company may need additional capital in the future. As of December 31, 2022, the Company has an accumulated deficit of approximately $78,300,000. During the year ended December 31, 2022, the Company also experienced negative cash flows from operating activities of approximately $6,100,000 and has $2,005,000 of convertible notes payable due in various amounts between March and May 2023. It appears these principal conditions or events, considered in the aggregate, could 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. However, 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 18, 2022, we received approximately $8,700,000 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 (the “Common Warrants”) each to purchase one share of Common Stock. 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 satisfying all amounts due and accrued under the default, including penalty, damages and interest provisions of the loan agreement (see Note 8). On September 28, 2022, as a result of the PIPE Offering, the Common Warrants exercise price was adjusted to $2.125 per share. During the year ended December 31, 2022, 1,647,564 common warrants were exercised from which the Company received approximately $3,328,000 of proceeds net of issuance costs. 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. On September 30, 2022, the Company received approximately $5,120,000 of net proceeds from the PIPE Offering. Senior Convertible Debt Offering (“Debt Offering”) On March 9, 2023, the Company received approximately $2,500,000 of net proceeds from a Debt Offering pursuant to a Purchase Agreement (the “Agreement”) and Registration Rights Agreement with institutional investors. (see Note 16). The Debt Offering includes 15% Original Issue Discount Convertible Notes (the “Notes”) and Common Stock Purchase Warrants (the “Warrants”). Under the terms of the Agreement, the Company received $3,000,000 from the Purchasers and in exchange issued the Notes in principal amounts of $3,529,412 and Warrants to purchase up to 386,998 shares of the Company’s common stock. The Notes are convertible voluntarily by the Purchaser at any time the principal amounts are outstanding into shares of our common stock at a conversion price of $2.28. The Notes are due March 10, 2025, and accrue interest quarterly at 5% per annum. The accrued interest is payable by way of inclusion in the convertible amount. The Warrants are exercisable at any time through March 9, 2028, into shares of our common stock at an exercise price of $2.52 per share. The Company is obligated for convertible notes issued in 2021 plus interest at 12% per annum. Total principal balances of the convertible notes at December 31, 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. As of March 3, 2023, the Company paid $600,000 of the notes that matured as of that date. On March 31, 2023, the Company will pay $500,000 of the notes due on that date. On March 13, 2023, the Company provided a 30-day notice to the note holders with amounts due on April 16, 2023 and May 31, 2023, that it will prepay the principal and all accrued interest due on April 12, 2023. The March 2023 Debt Offering requires that the $2,005,000 of the convertible notes payable due in March, April and May 2023 be paid by April 24, 2023. Management believes that the net offering proceeds, including warrants exercised, of approximately $19,646,000 from the Underwritten Public Offering and PIPE Offering in 2022 and the Debt Offering in March 2023, after the 2023 payments required for the convertible notes payable and accrued interest of approximately $2,439,000, provide adequate working capital for operating activities for the next twelve months after the date the financial statements are issued. As such, substantial doubt about the entity’s ability to continue as a going concern was alleviated. |
INVENTORY
INVENTORY | 12 Months Ended |
Dec. 31, 2022 | |
INVENTORY | |
INVENTORY | NOTE 3. INVENTORY Inventory at December 31, 2022 and December 31, 2021 consisted of the following: December 31, December 31, 2022 2021 Component parts $ 68,643 $ - Finished goods 146,850 39,461 Inventory $ 215,493 $ 39,461 |
PREPAID EXPENSES
PREPAID EXPENSES | 12 Months Ended |
Dec. 31, 2022 | |
PREPAID EXPENSES | |
PREPAID EXPENSES | NOTE 4. PREPAID EXPENSES Prepaid expenses at December 31, 2022 and December 31, 2021 consisted of the following: December 31, December 31, 2022 2021 Insurance $ 150,344 $ 4,286 Deposit 15,736 - Rent - 8,267 Other 34,825 - Prepaid expenses $ 200,905 $ 12,553 On February 26, 2021, the Company entered into a lease agreement for its office facility for a 12-month term beginning March 1, 2021. 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, which was amortized over the lease term. 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 $221,357 of insurance expense related to the prepaid Directors & Officers insurance during the year ended December 31, 2022. During October 2022, the Company entered into a 12-month agreement for investor relations services in exchange for the issuance of 27,500 common shares and 60,000 warrants at $2.56 per share with a fair value on the date of issuance of $39,453, which will be recognized over the period of service. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2022 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | NOTE 5. INTANGIBLE ASSETS Intangible assets consisted of the following at December 31, 2022: Gross Carrying Accumulated Net Intangible Amortization Period Amount Amortization Asset (in years) SOBR Safe Intellectual Technology $ 3,854,675 $ 995,782 $ 2,858,893 10 Intangible assets consisted 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 Amortization expense was $385,464 for the years ended December 31, 2022 and 2021. Estimated future amortization expense for device technology intangible assets is as follows: 2023 2024 2025 2026 2027 Thereafter $ 385,464 $ 385,464 $ 385,464 $ 385,464 $ 385,464 $ 931,573 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 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 Waiver Under Asset Purchase Agreement and Post-Closing Covenant Agreement. The warrant exercise price is $1.50 per share. With the proceeds of the exercise, we paid $88,469 during the year 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. 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, an entity owned by a Company’s director and another director’s family member. The principal amount of the secured convertible debentures are convertible at $9 per share, and include warrants to purchase in total 91,667 shares of the Company’s common stock at $9 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 per share, and include warrants to purchase in total 75,000 shares of the Company’s common stock at $9 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 12). 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 continued through March 1, 2023. The Company issued 75,000 shares of the Company’s Common Stock to the Consultant for the professional services at a fair value of $70,500 (see Note 11). |
ACCRUED EXPENSES
ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2022 | |
ACCRUED EXPENSES | |
ACCRUED EXPENSES | NOTE 7. ACCRUED EXPENSES Accrued expenses at December 31, 2022 and December 31, 2021 consisted of the following: December 31, 2022 December 31, 2021 Registration rights and default damages and penalties (see Note 8) $ - $ 189,663 Consulting services 197,897 163,647 Other 194,385 110,590 Accrued expenses $ 392,282 $ 463,900 |
CONVERTIBLE DEBENTURE PAYABLE
CONVERTIBLE DEBENTURE PAYABLE | 12 Months Ended |
Dec. 31, 2022 | |
CONVERTIBLE DEBENTURE PAYABLE | |
CONVERTIBLE DEBENTURE PAYABLE | NOTE 8. CONVERTIBLE DEBENTURE PAYABLE Convertible debenture payable at December 31, 2022 and December 31, 2021 consisted of the following: December 31, 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 was March 27, 2022, does not accrue interest unless there is an event of default under the terms of the Debenture. The Original Warrant was exercisable at any time through September 28, 2026 into shares of our common stock at an exercise price of $6 per share, unless an event of default occurs, at which time the exercise price will adjust to $3 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 required the Company to register for resale and maintain effectiveness of such Registration Statement for all 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, the 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 the liquidated damages within seven days after the date payable, the Company will pay interest at 18% until such amounts are paid in full. Although the Company completed the Registration Statement filings required, it did not meet the filing date requirements. The filing date requirements were cured in February 2022. Total unpaid RRA damages and estimated related costs of none and approximately $189,700, are included in accrued expenses at December 31, 2022 and December 31, 2021, respectively (see Note 7). Total RRA damages and estimated related costs of approximately $5,000 and $190,000 for the years ended December 31, 2022 and December 31, 2021, respectively are included in general and administrative expenses in the consolidated statement of operations. The Company recorded interest expense of $5,443 and none for the years ended December 31, 2022 and December 31 2021, respectively. 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 approximately $915,000 are included in general and administrative expense in the consolidated statement of operations for the year ended December 31, 2022. In exchange for the Waiver of the default penalties the Company agreed to: (i) amend that certain Common Stock Warrant (the “Original Warrant”) issued by the Company to the Purchaser dated September 27, 2021 to extend the Termination Date (as defined in the Original Warrant) from September 28, 2026 to September 28, 2028; and (ii) issue the Purchaser a second Common Stock Purchase Warrant (the “New Warrant”) entitling the Purchaser to subscribe for and purchase up to an additional 101,626 shares of our common stock, expiring March 29, 2029, with all other terms of the New Warrant the same as the Original Warrant. The Company 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 embedded derivatives 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 under the interest method. The debt discount amortization expense recorded as amortization of interest in the consolidated statements of operations was $465,635 and $514,365 for the years ended December 31, 2022 and December 31, 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. Pursuant to agreements related to the issuance of 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 were issued (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 December 31, 2022 and December 31, 2021, the SPA warrants outstanding are 2,258,355 and 406,504, respectively. The relative fair market value of the related stock warrants granted during the years ended December 31, 2022 and December 31, 2021 was $4,359,583 and $847,048, respectively. The unamortized discount at December 31, 2022 and December 31, 2021 was none and $402,465, respectively. Stock warrants amortization expense recorded as interest expense was $402,465 and $444,583 for the years ended December 31, 2022 and December 31, 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. Interest expense related to the Original Issue Discount and debt issuance costs was $423,782 and $399,999 for the years ended December 31, 2022 and December 31, 2021, respectively. The unamortized discount and issuance costs at December 31, 2022 and December 31, 2021 was none and $423,782, 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 year ended December 31, 2022. |
NOTES PAYABLE
NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2022 | |
NOTES PAYABLE | |
NOTES PAYABLE | NOTE 9. NOTES PAYABLE RELATED PARTIES Related party notes payable at December 31, 2022 and December 31, 2021 consisted of the following: December 31, 2022 December 31, 2021 Convertible Notes Payable with Warrants $ 1,000,000 $ 1,000,000 Conventional Non-Convertible Notes Payable 11,810 11,810 Unamortized Debt Discount (145,548 ) (645,547 ) Net Related Party Notes Payable $ 866,262 $ 366,263 Current Portion (866,262 ) (11,810 ) Net Long-Term Portion $ - $ 354,453 Total interest expense for related party notes was $120,000 and $85,397 for the years ended December 31, 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 per share, that have a total principal balance of $1,000,000 as of December 31, 2022 and 2021. The notes, secured by the Company’s patents and patents applications, include interest at 12%, are convertible at $9 per share of the Company’s common stock and are due 24 months after issuance. The 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 may 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 per share for five (5) consecutive trading days while listed on Nasdaq. The Company evaluated the convertible notes payable for embedded derivatives and beneficial conversion features. 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 – debt discount in the consolidated statements of operations was $224,500 and $157,657 for the years ended December 31, 2022 and December 31, 2021, respectively. The unamortized beneficial conversion feature at December 31, 2022 and December 31, 2021 was $66,843 and $291,343, respectively. As of December 31, 2022 and 2021, these notes carry outstanding warrants of 166,667. The relative fair market value of the related stock warrants granted during the years ended December 31, 2022 and 2021 was none and $551,001, respectively. Stock warrants amortization expense recorded as interest expense was $275,500 and $196,796 for the years ended December 31, 2022 and December 31, 2021, respectively. The unamortized discount at December 31, 2022 and December 31, 2021 was $78,705 and $354,204, respectively. Related Party Note Payable The Company has one non-convertible note payable that has a principal balance of $11,810 as of December 31, 2022 and 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 December 31, 2022 and December 31, 2021 consisted of the following: December 31, 2022 December 31, 2021 Convertible Notes Payable with Warrants $ 1,005,000 $ 1,005,000 Convertible Notes Payable 9,183 56,683 Non-Convertible Notes Payable 17,500 47,500 Premium Financing Note Payable 61,792 - Unamortized Debt Discount (144,878 ) (648,580 ) Net Non-Related Party Notes Payable $ 948,597 $ 460,603 Current Portion (948,597 ) (104,183 ) Net Long-Term Portion $ - $ 356,420 Total interest expense for non-related party notes was $134,628 and $98,647 for the years ended December 31, 2022 and 2021, respectively. Convertible Notes Payable with 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 per share, that have a total principal balance of $1,005,000 as of December 31, 2022 and 2021. The notes, secured by the Company’s patents and patents applications, include interest at 12%, are convertible at $9 per share of the Company’s common stock and are due 24 months after issuance with maturity dates in March, April, and May 2023. 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 may 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 per share for five (5) consecutive trading days while listed on Nasdaq. The Company evaluated the convertible notes payable for embedded derivatives and beneficial conversion features. 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 $231,353 and $163,059 for the years ended December 31, 2022 and December 31, 2021, respectively. The unamortized beneficial conversion feature was $65,803 and $297,156 at December 31, 2022 and December 31, 2021, respectively. As of December 31, 2022 and 2021, these notes carry outstanding warrants of 167,500. The relative fair market value of the related stock warrants granted during the year ended December 31, 2022 and December 31, 2021 was none and $541,707, respectively. Stock warrants amortization expense recorded as interest expense was $272,350 and $190,283 for the years ended December 31, 2022 and December 31, 2021, respectively. The unamortized discount at December 31, 2022 and December 31, 2021 was $79,074 and $351,424, respectively. Convertible Notes Payable The Company has two convertible notes payable that have a principal balance of $9,183 at December 31, 2022 and three convertible notes payable that have a principal balance of $56,683 at December 31, 2021. These notes carry interest rates ranging from 5% - 12% and have due dates ranging from February 2013 to March 2022. The two notes with a principal balance of $9,183 are currently in default. The notes carry conversion prices ranging from $6.00- $32.2857 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. The Company evaluated these convertible notes payable for embedded derivatives and beneficial conversion features. The Company determined that there were beneficial conversion features to record. The conversion features were fully amortized prior to 2021. Non-Convertible Notes Payable The Company has two notes payable that have a principal balance of $17,500 at December 31, 2022, and four notes payable that have a principal balance of $47,500 at December 31, 2021. These notes carry interest rates ranging from 5% - 10% and have due dates ranging from December 2013 to June 2022. The two notes with a principal balance of $17,500 are currently in default. Premium Financing Note Payable 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 financing liability balance at December 31, 2022 was $61,792. |
DERIVATIVE LIABILITY
DERIVATIVE LIABILITY | 12 Months Ended |
Dec. 31, 2022 | |
DERIVATIVE LIABILITY | |
DERIVATIVE LIABILITY | NOTE 10. DERIVATIVE LIABILITY 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 and determined the embedded conversion features should be classified as a derivative because the exercise price of the convertible note is subject to a variable conversion rate and should therefore be accounted for at fair value. The Company bifurcated the conversion feature of the debenture and recorded a derivative liability. The embedded derivative for the debenture is carried on the Company’s balance sheet at fair value. The derivative liability is marked to market each measurement period and any unrealized change 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 fair value the embedded derivative was estimated 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 year ended December 31, 2022. The fair value of the embedded derivative recorded on the balance sheet as a liability was none at December 31, 2022. A summary of the activity of the derivative liability is shown below: Balance at December 31, 2020 $ - Fair value of derivatives issued 980,000 Fair value adjustments 60,000 Balance at December 31, 2021 $ 1,040,000 Balance at December 31, 2021 $ 1,040,000 Fair value of derivatives issued - Fair value adjustments (1,040,000 ) Balance at December 31, 2022 $ - |
COMMON STOCK
COMMON STOCK | 12 Months Ended |
Dec. 31, 2022 | |
COMMON STOCK | |
COMMON STOCK | NOTE 11. COMMON STOCK The Company’s common stock transactions for the year ended December 31, 2022 consisted of the following: The Company issued 191,919 shares of its common stock for 175,252 RSUs vested during 2022 and 16,667 RSUs vested during 2021. The Company issued 7,917 shares of common stock upon conversion 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 12). The Company issued 1,012 shares of common stock in connection with the rounding provision of the 1-for-3 reverse stock split effective on April 28, 2022. 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 $8,700,000 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. 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 $5,120,000 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”). The Company issued 1,647,564 shares of its common stock under the terms of the May 2022 underwritten public offering at the stock warrant exercise price of $2.125 per share. The Company issued 2,128,378 shares of its common stock under the terms of the September 2022 PIPE offering at the Prefunded stock warrant exercise price of $0.001 per share. The Company issued 48,106 shares of its common stock at the stock options exercise price of $0.79026 per share. Proceeds from the options exercised included 12,329 shares of the Company’s previously issued common stock surrendered by the option holders and classified as Treasury Stock at December 31, 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. The Company issued 75,000 shares of its common stock to a beneficial owner of the Company for the professional services (see Note 6). The common shares were issued at $0.94 per share with a fair value on the date of issuance of $70,500. The Company issued 27,500 shares of its common stock to a consultant as prepayment for investor relation services. The common shares were issued at $2.73 per share with a fair value on the date of issuance of $75,000. The Company’s common stock transactions for the year ended December 31, 2021 consisted 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 5,334 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 issued 34,806 shares of its common stock valued at $145,805 previously recorded in stock subscriptions payable for contracted consulting services. The Company issued 58,980 shares of its common stock to IDTEC at the stock warrant exercise price of $1.50 per share. The Company issued 24,368 shares of its common stock at the stock options exercise price of $0.79026 per share. |
PREFERRED STOCK
PREFERRED STOCK | 12 Months Ended |
Dec. 31, 2022 | |
PREFERRED STOCK | |
PREFERRED STOCK | NOTE 12. PREFERRED STOCK On November 20, 2015, the Company’s Board of Directors authorized a class of stock designated as preferred stock with a par value of $0.00001 per share comprising 25,000,000 shares, 3,000,000 shares of which were classified as Series A Convertible Preferred Stock. In each calendar year, the holders of the Series A Convertible Preferred Stock are entitled to receive, when, as and if, declared by the Board of Directors, out of any funds and assets of the Company legally available, non-cumulative dividends, in an amount equal to any dividends or other Distribution on the common stock in such calendar year (other than a Common Stock Dividend). No dividends (other than a Common Stock Dividend) shall be paid and no distribution shall be made with respect to the common stock unless dividends shall have been paid or declared and set apart for payment to the holders of the Series A Convertible Preferred Stock simultaneously. Dividends on the Series A Convertible Preferred Stock shall not be mandatory or cumulative, and no rights or interest shall accrue to the holders of the Series A Convertible Preferred Stock by reason of the fact that the Company shall fail to declare or pay dividends on the Series A Convertible Preferred Stock, except for such rights or interest that may arise as a result of the Company paying a dividend or making a distribution on the common stock in violation of the terms. The holders of each share of Series A Convertible Preferred Stock then outstanding shall be entitled to be paid, out of the Available Funds and Assets, and prior and in preference to any payment or Distribution (or any setting part of any payment or Distribution) of any Available Funds and Assets on any shares of common stock, and equal in preference to any payment or Distribution (or any setting part of any payment or Distribution) of any Available Funds and Assets on any shares of any other series of preferred stock that have liquidation preference, an amount per share equal to the Original Issue Price of the Series A Convertible Preferred Stock plus all declared but unpaid dividends on the Series A Convertible Preferred Stock. A reorganization, or any other consolidation or merger of the Company with or into any other corporation, or any other sale of all or substantially all of the assets of the Company, shall not be deemed a liquidation, dissolution, or winding up of the Company. Shares of the Series A Convertible Preferred Stock are convertible at a 35% discount rate to the average closing price per share of the Company’s common stock (either as listed on a national exchange or as quoted over-the-market) for the last 15 trading days immediately prior to conversion. However, no conversions of the Series A Convertible Preferred Stock to shares of common stock can occur unless the average closing price per share of the Corporation’s common stock (either as listed on a national exchange or as quoted over-the-market) for the last 15 trading days immediately prior to conversion is at least $5.01. The shares of Series A Convertible Preferred Stock vote on a one for one basis. The right of conversion is limited by the fact the holder of the Series A Convertible Preferred Stock may not convert if such conversion would cause the holder to beneficially own more than 4.9% of the Company’s common stock after giving effect to such conversion. On December 9, 2019, the Company’s Board of Directors created a class of preferred stock designated as 8% Series A-1 Convertible Preferred Stock comprising of 2,000,000 shares. During 2020, the authorized shares were increased to 2,700,000 shares. The rights and preferences of the 8% Series A-1 Convertible Preferred Stock are as follows: (a) dividend rights of 8% per annum based on the original issuance price of $1 per share, (b) liquidation preference over the Company’s common stock, (c) conversion rights into shares of the Company’s common stock at $3 per share (not to be affected by any reverse stock split in connection with the Asset Purchase Agreement with IDTEC), (d) redemption rights such that we have the right, upon 30 days written notice, at any time after one year from the date of issuance, to redeem all or part of the Series A-1 Convertible Preferred Stock for 150% of the original issuance price, (e) no call rights by the Company, and (f) each share of Series A-1 Convertible Preferred Stock will vote on an “as converted” basis. On March 1, 2022 the Board of Directors approved the designation of 3,000,000 shares of the Company’s Preferred Stock as “Series 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 convertible preferred stock is classified as a permanent equity instrument. The exchange of common stock for the convertible preferred stock results in no value transfer from the common shareholders to the preferred shareholders and vice versa should the preferred stock be converted back to common. The rights and preferences of the Series B Convertible Preferred Stock are as follows: (a) dividends shall not be mandatory or cumulative, (b) liquidation preference over the Company’s common stock at an amount per share equal to the original issue price of the Series B Convertible Preferred Stock plus all accrued but unpaid dividends on the Series B Convertible Preferred Stock, (c) each three shares of Series B Convertible Preferred Stock shall be convertible, at the option of the holder, beginning on the date that is six months from the date the Holder acquired the shares of Series B Convertible Preferred Stock, and without the payment of additional consideration by the holder , into one share of common stock, (d) no redemption rights by the Company, (e) no call rights by the Company, and (f) each share of Series B Convertible Preferred Stock will vote on an “as converted” basis. |
STOCK WARRANTS STOCK OPTIONS AN
STOCK WARRANTS STOCK OPTIONS AND RESTRICTED STOCK UNITS | 12 Months Ended |
Dec. 31, 2022 | |
STOCK WARRANTS STOCK OPTIONS AND RESTRICTED STOCK UNITS | |
STOCK WARRANTS, STOCK OPTIONS AND RESTRICTED STOCK UNITS | NOTE 13. 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 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 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 per share. The warrants expire two years after the date of issuance. On September 28, 2021 and March 30, 2022 the Company issued 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 per share. On September 28, 2022, as a result of the PIPE Offering, the Original Warrants and New Warrants exercise price was adjusted to $1.35 per share. The difference with respect to the adjusted warrant exercise price is treated as a deemed dividend and a reduction in net income available to common shareholders. 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 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 per share, respectively. The warrants expire five years from the date of issuance and were valued using the Monte Carlo simulation option pricing model at approximately $5,700,000. On September 28, 2022, as a result of the PIPE Offering, the Offering and Underwriter Warrants exercise price was adjusted to $2.125 per share. The difference with respect to the adjusted warrant exercise price is treated as a deemed dividend and a reduction in net income available to common shareholders. As of December 31, 2022, 3,482,436 warrants remain outstanding. 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. Pursuant to agreements related to the issuance of 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 the PIPE Offering initiated the Adjustment and an aggregate 1,750,225 warrants were issued (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 difference with respect to the adjusted additional warrants is treated as a deemed dividend and a reduction in net income available to common shareholders. The additional Original Warrants and New Warrants were valued at approximately $3,495,000 using the Monte Carlo simulation option pricing model. As of December 31, 2022, there were a total of 2,258,355 Original Warrants and New Warrants outstanding. 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. The PIPE Warrants 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. On October 12, 2022, the Company issued 60,000 warrants, in exchange for professional services, to purchase common stock of the Company at an exercise price of $2.56 per warrant. The warrants expire one year from the date of issuance and were valued at approximately $39,453 using the Black-Scholes option pricing model. The total outstanding balance of all Company stock warrants is 10,387,877 and 836,464 at December 31, 2022 and December 31 2021, respectively. There were 13,375,461 detached free-standing stock warrants granted during the year ended December 31, 2022, and 740,671 detached free-standing stock warrants granted during the year ended December 31, 2021. The fair value of these non-employee stock warrants granted during the years ended December 31, 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: December 31, 2022 December 31, 2021 Exercise Price $ 1.35-$6.00 $ 9.00-$6.00 Dividend Yield 0 % 0 % Volatility 110%-160 % 120%-158 % Risk-free Interest Rate 2.45%-4.62 % 0.14%–0.98 % Life of Warrants 1-7 Years 2-5 Years The following table summarizes the changes in the Company’s outstanding warrants during the years ended December 31, 2022 and 2021: 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 13,375,461 $ 1.35 – 5.3125 4.38 Years $ 1.94 $ - Warrants Exercised (3,775,942 ) $ 0.001 – 2.125 $ 0.88 Warrants Expired (48,106 ) $ 3.118 $ 3.118 Balance at December 31, 2022 10,387,877 $ 1.35 – 9.00 5.11 Years $ 1.56 $ - (1) 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 194,772 $ 1.50 – 6.00 3.80 Years $ 2.8239 $ 1,173,737 Warrants Granted 740,671 $ 9.00-6.00 3.15 Years $ 7.3500 $ 1,152,852 Warrants Exercised (58,979 ) $ 1.50 $ 1.5000 Warrants Expired/Forfeited (40,000 ) $ 6.00 $ 6.0000 Balance at December 31, 2021 836,464 $ 1.50 – 9.00 3.04 Years $ 6.7800 $ 1,784,838 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 December 31, 2022 and December 31, 2021, the Company has granted stock options to acquire 1,086,813 and 1,036,588 shares of common stock under the Plan, respectively. As of December 31, 2022, the Plan had 930,573 vested options and 173,009 non-vested options. As of December 31, 2021, the Plan had 618,841 vested options and 417,747 non-vested options. The stock options are held by our officers, directors, employees, and certain key consultants. For the years ended December 31, 2022 and 2021, the Company recorded in general and administrative expense $1,582,217 and $723,261, respectively, of share-based compensation related to stock options. The unrecognized compensation expense as of December 31, 2022 was $1,075,631 which will be recognized over periods ranging from 7 to 21 months. On November 4, 2022, the Company’s Board of Directors approved for a total of 305,000 stock options having exercise prices ranging from $8.25 - $10.56 to be repriced at 110% ($2.39) and 100% ($2.17) of the current price of the Company’s stock for employees and Board members, respectively. The incremental fair value of the options as a result of the repricing was determined to be $55,859. Of this amount, $29,900 related to vested options and was recognized as compensation expense in 2022. The remaining $25,959 of unrecognized expense will be recognized over periods ranging from 9 to 21 months. In applying the Black-Scholes options pricing model, assumptions used to compute the fair value of the stock options granted or repriced during the years ended December 31, 2022 and 2021 were as follows: December 31, 2022 December 31, 2021 Exercise Price $ 1.54-9.075 $ 8.316-10.725 Dividend Yield 0% 0% Volatility 89%-192% 138%-198% Risk-free Interest Rate 0.78%-4.01% 0.10%-0.79% Expected Life 1-3 years 2.7-6.2 years The following tables summarize the changes in the Company’s outstanding stock options during the years ended December 31, 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 802,409 $ 0.79 - 9.90 7.86 Years $ 1.01 $ 6,292,844 Options Granted 386,667 $ 8.31 - 10.74 3.87 Years $ 9.69 $ - Options Exercised (24,369 ) $ 0.79 $ 0.79 Options Cancelled (79,085 ) $ 0.79 - 9.87 $ 8.70 Options Expired/Forfeited (32,266 ) $ 0.79 - 9.87 $ 8.29 Balance at December 31, 2021 1,053,356 $ 0.79 - 10.74 6.21 Years $ 3.40 $ 5,804,517 Exercisable at December 31, 2021 635,610 $ 0.79 - 10.74 6.7 Years $ 1.59 $ 4,655,089 Options Outstanding Number of Shares Exercise Price Per Share Weighted Average Remaining Contractual Life Weighted Average Exercise Price Per Share Aggregate Intrinsic V alue Balance at December 31, 2021 1,053,356 $ 0.79 - 10.74 6.21 Years $ 3.40 $ 5,804,517 Options Granted 120,000 $ 1.54 - 9.08 3.42 Years $ 5.79 $ - Options Exercised (48,106 ) $ 0.79 $ 0.79 Options Cancelled - Options Expired/Forfeited (21,667 ) $ 4.94 - 10.73 $ 9.33 Balance at December 31, 2022 1,103,583 $ 0.79 - 9.30 5.33 Years $ 1.71 $ - Exercisable at December 31, 2022 930,573 $ 0.79 - 9.30 5.83 Years $ 1.60 $ - 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. During the year ended December 31, 2022, the Company granted 281,667 service based RSUs to executive officers and employees and 140,000 service based RSUs to directors. All RSUs granted in 2022 vest during various periods between November 2022 and January 2024. During the year ended December 31, 2021, the Company granted 61,918 service based RSUs to executive officers and 16,667 service based RSUs to its legal counsel. All RSUs granted in 2021 vested during various periods between May and November 2022. The following table summarizes RSU activity under the Plan for the years ended December 31, 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 78,585 $ 8.52 1.35 Years Vested (16,667) $ 8.97 Unvested at December 31, 2021 133,585 $ 8.58 1.00 Years Granted 421,667 $ 2.64 0.76 Years Vested (175,252 ) $ 8.17 Unvested at December 31, 2022 380,000 $ 2.17 0.74 Years For the years ended December 31, 2022 and 2021, the Company recorded in stock-based compensation expense $1,426,178 and $364,057, respectively, of RSU based compensation. The fair value of RSUs granted during the years ended December 31, 2022 and 2021 was $1,112,725 and $669,750, respectively. As of December 31, 2022, total unrecognized compensation costs of RSUs granted and outstanding but not yet vested was $615,970 which is expected to be recognized over 5 months. Executive Officers Stock Options and RSUs The Company had 537,371 outstanding executive officers stock options exercisable at $0.7902 to $2.387 per share with a weighted average remaining contractual life of 5 years as of December 31, 2022 and 823,482 outstanding executive stock options exercisable at $0.7902 to $10.131 per share with a weighted average remaining contractual life of 6.9 years as of December 31, 2021. The Company had 200,000 unvested RSUs granted to executive officers with a remaining weighted average vesting period of 5 months as of December 31, 2022. The Company had 61,919 unvested RSUs granted to executive officers with a remaining weighted average vesting period of 1 year as of December 31, 2021. On August 17, 2021, the Company entered into an Employment Agreement with Scott Bennett to serve as the Company’s Executive Vice President of Business Operations beginning on October 18, 2021. Under the terms of the agreement, the Company granted Mr. Bennett under the Plan stock options to acquire 33,334 shares of our common stock at an exercise price of $9.21 per share, repriced effective November 4, 2022 to an exercise price of $2.387 per share, and 16,667 RSUs. The stock options vest in equal quarterly installments over a two-year period during the term of his Employment Agreement. The RSUs per share weighted average fair value at grant date was $8.40. Prior to his hiring as an executive officer, under a prior employment agreement with the Company, he was granted in May 2021 under the Plan stock options to acquire 33,333 shares of our common stock at an exercise price of $10.14 per share, repriced effective November 4, 2022 to an exercise price of $2.387 per share, and 3,333 RSUs. The stock options vest in equal monthly installments over a three-year period. The RSUs per share weighted average fair value at grant date was $9.21. On November 4, 2022, Mr. Bennett was granted 50,000 RSUs that vest June 1, 2023. The RSUs per share weighted average fair value at grant date was $2.17. A total of 39,351 stock options were vested as of December 31, 2022. None of the vested stock options have been exercised and no shares have been issued as of December 31, 2022. A total of 20,000 RSUs vested in 2022 and common shares were issued in the same amount. On October 18, 2021, the Company entered into an Employment Agreement with Michael Watson to serve as the Company’s Executive Vice President of Sales and Marketing and Revenue Officer. Under the terms of the agreement, the Company granted Mr. Watson under the Plan stock options to acquire 83,333 shares of our common stock at an exercise price of $9.21 per share, repriced effective November 4, 2022 to an exercise price of $2.387 per share. The stock options vest in equal quarterly installments over a two-year period during the term of his Employment Agreement. On November 4, 2022, Mr. Watson was granted 75,000 RSUs that vest June 1, 2023. The RSUs per share weighted average fair value at grant date was $2.17. A total of 52,083 stock options were vested as of December 31, 2022. None of the vested stock options have been exercised and no shares have been issued as of December 31, 2022. On January 1, 2022, the Company entered into an Employment Agreement with Jerry Wenzel to serve as the Company’s Chief Financial Officer for a two-year period. Under the terms of the agreement, the Company granted Mr. Wenzel under the Plan stock options to acquire 66,667 shares of our common stock at an exercise price of $8.25 per share, repriced effective November 4, 2022 to an exercise price of $2.387 per share, and 16,667 RSUs. The stock options vest in equal quarterly installments over a two-year period during the term of his Employment Agreement. On November 4, 2022, Mr. Wenzel was granted 75,000 RSUs that vest June 1, 2023. The RSUs per share weighted average fair value at grant date was $2.17. A total of 33,334 stock options were vested as of December 31, 2022. None of the vested stock options have been exercised and no shares have been issued as of December 31, 2022. A total of 16,667 RSUs vested in 2022 and common shares were issued in the same amount. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2022 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 14. 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 required monthly base rent payments of $6,000 and the issuance of 5,333 shares of the Company’s common stock. The value of the common stock of $49,600 was 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 $157,488 and $158,096 for the years ended December 31, 2022 and 2021, respectively. Legal Proceedings On December 6, 2006, Orange County Valet and Security Patrol, Inc. filed a lawsuit against us in Orange County California State Superior Court for Breach of Contract in the amount of $11,164. A default judgment was taken against us in this matter. In mid-2013, we learned the Plaintiff’s perfected the judgment against us, but we have not heard from the Plaintiffs as of December 2022. As of December 31, 2022, 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, in connection with us closing a 2020 asset purchase transaction with IDTEC, to pay the amount for us in exchange for shares of our common stock. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
INCOME TAXES | NOTE 15. INCOME TAXES Deferred income taxes arise from the temporary differences between financial statement and income tax recognition of net operating losses. These loss carryovers are limited under the Internal Revenue Code should a significant change in ownership occur. For the years ended December 31, 2022 and 2021, the Company incurred net losses and therefore has no tax liability. The Company began operations in 2007 and has net operating loss carry-forwards of approximately $30,473,000 that will be carried forward and can be used through the year 2027 and beyond to offset future taxable income. In the future, the cumulative net operating loss carry forward for income tax purposes may differ from the cumulative financial statement loss due to timing differences between financial and tax reporting. At December 31, 2022 and 2021, the Company has net operating loss carry forwards of approximately $30,473,000 and $18,300,000, respectively, that may be offset against future taxable income, if any. These carry-forwards are subject to review by the Internal Revenue Service. As of December 31, 2022 and 2021, the deferred tax asset of approximately $7,283,000 and $4,129,000, respectively, created by the net operating losses has been offset by a 100% valuation allowance because the likelihood of realization of the tax benefit cannot be determined. The change in the valuation allowance in 2022 and 2021 was approximately $3,154,000 and $1,299,000, respectively. There is no current or deferred tax expense for the years ended December 31, 2022 and 2021. The Company has not filed its tax returns for the years 2012 through 2022; however, management believes there are no taxes due as of December 31, 2022 and 2021. The Company includes interest and penalties arising from the underpayment of income taxes in general and administrative expense in the consolidated statements of operations. The provision for Federal income tax consisted of the following for the years ended December 31, 2022 and 2021: December 31, 2022 December 31, 2021 Income tax benefit attributable to: Net loss $ (12,354,930 ) $ (7,870,378 ) Permanent differences 1,732,832 2,924,431 Valuation allowance 10,622,098 4,945,947 Net provision for income tax $ - $ - The cumulative tax effect at the expected federal tax rate of 21% of significant items comprising our net deferred tax amount is as follows on December 31, 2022 and 2021: December 31, 2022 December 31, 2021 Deferred tax asset attributable to: Net operating loss carry forward $ 5,759,000 $ 3,212,000 Valuation allowance (5,759,000 ) (3,212,000 ) Net deferred tax asset $ - $ - The cumulative tax effect at the expected state tax rate of 5% of significant items comprising our net deferred tax amount is as follows on December 31, 2022 and 2021: December 31, 2022 December 31, 2021 Deferred tax asset attributable to: Net operating loss carry forward $ 1,524,000 $ 917,000 Valuation allowance (1,524,000 ) (917,000 ) Net deferred tax asset $ - $ - Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of approximately $30,473,000 for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be further limited to use in future years. The Company has identified the United States Federal tax returns as its “major” tax jurisdiction. The United States Federal tax return years 2012 – 2022 are still subject to tax examination by the United States Internal Revenue Service; however, we do not currently have any ongoing tax examinations. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 16. SUBSEQUENT EVENTS The Company has evaluated subsequent events for recognition and disclosure through March 31, 2023, which is the date the consolidated financial statements were available to be issued. On March 7, 2023, the Company entered into a Debt Offering pursuant to a Purchase Agreement (the “Agreement”) and Registration Rights Agreement with institutional investors. The Debt Offering closed on March 9, 2023. The Debt Offering includes 15% Original Issue Discount Convertible Notes (the “Notes”) and Common Stock Purchase Warrants (the “Warrants”). Under the terms of the Agreement, the Company received $3,000,000 from the Purchasers and in exchange issued the Notes in principal amounts of $3,529,412 and Warrants to purchase up to 386,998 shares of the Company’s common stock. The Notes are convertible voluntarily by the Purchaser at any time the principal amounts are outstanding into shares of our common stock at a conversion price $2.28. The Notes are due March 10, 2025, and accrue interest quarterly at 5% per annum. The accrued interest is payable by way of inclusion in the convertible amount. The Warrants are exercisable at any time through March 9, 2028, into shares of the Company’s common stock at an exercise price of $2.52 per share. The Company received approximately $2,500,000 of net proceeds from the Debt Offering after offering related costs. On January 30, 2023, the Company entered into an Employment Agreement with David Gandini to continue to serve as our Chief Executive Officer through December 31, 2025 (the “Term”). The Term will automatically renew for additional terms of one year unless written notice not to renew is otherwise given by either Mr. Gandini or the Company. Under the terms of the Employment Agreement, Mr. Gandini will receive an annual base salary of $300,000. For each subsequent calendar year of the Term and Renewal Terms, Mr. Gandini will receive salary adjustments as recommended by the Compensation Committee and approved by the Company’s Board of Directors (the “Board”). Mr. Gandini is also entitled to participate in the Company’s Annual Bonus Plan and any and all other incentive payments available to executives of the Company. Mr. Gandini may also be provided with regular equity grants commensurate with his role and as awarded by the Board pursuant to the Company’s 2019 Equity Incentive Plan. On January 1, 2023, the Company entered into a six-month agreement with a consultant to provide investor services and in exchange issued 225,000 shares of restricted common stock and 225,000 warrants to purchase common stock of the Company at an exercise price of $1.35 per warrant. The warrants expire three years from the date of issuance. |
ORGANIZATION OPERATIONS AND S_2
ORGANIZATION OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
ORGANIZATION OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | The accompanying audited consolidated financial statements 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”) for the presentation of annual financial information. In management’s opinion, the audited consolidated financial statements reflect all adjustments (including reclassifications and normal recurring adjustments) necessary to present fairly the financial position at December 31, 2022 and December 31, 2021, and results of operations and cash flows for the years ended December 31, 2022 and December 31, 2021. |
Principles of Consolidation | The accompanying audited consolidated financial statements include the accounts of the Company and its majority owned subsidiary, TransBiotec-CA, of 98.62%. We have eliminated all intercompany transactions and balances between entities consolidated in these audited financial statements. |
Use of Estimates | The preparation of audited 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 | The Company is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The fair value hierarchy is based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company prioritizes the inputs into three levels that may be used to measure fair value: 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 receivable, accounts payable, accrued expenses, accrued interest payable, related party payables, notes payable, convertible debentures, and other liabilities. 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 on a recurring basis at fair value as of December 31, 2022 and December 31, 2021: December 31, 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 December 31, 2022 and December 31, 2021. |
Accounts Receivable | Accounts receivable is derived from sales to a limited number of customers during the year ended December 31, 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 December 31, 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 component parts and finished products. The Company evaluates the need for reserves for excess or obsolete inventory determined primarily based upon estimates of future demand for the Company’s products. The Company had no reserves for obsolescence at December 31, 2022 and December 31, 2021. |
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 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 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 | 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 December 31, 2022 and December 31, 2021. The Company accounts for these minority, or noncontrolling interests 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 years ended December 31, 2022 and 2021, respectively. |
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 the Company’s offering and accounted for as a combined performance obligation, or the specific components may be generally distinct and accounted for as separate performance obligations. Revenue is recognized when control of these software products and/or services are transferred to the customer in an amount that reflects the consideration the Company expects to be entitled in exchange for these respective services and devices. The Company determines revenue recognition through five steps 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 is 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 uses the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (warrants, options, and restricted stock units). The fair value of each warrant and option is estimated on the date of grant using the Black-Scholes options pricing model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. The Company has not paid dividends historically and does not expect to pay them in the future. Expected volatilities are based on weighted averages of the historical volatility of the Company’s common stock estimated over the expected term of the awards. The expected term of options granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus the contract term as historically the Company had limited activity surrounding its awards. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term. The grant date fair value of a restricted stock unit equals the closing price of our common stock on the trading day of the grant date. |
Research and Development | 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 products. |
Advertising and Marketing Costs | Advertising and marketing costs are charged to operations as incurred. Advertising and marketing costs were $169,010 and $104,738 during the years ended December 31, 2022 and December 31, 2021, respectively. |
Income Tax | Deferred taxes are provided on an asset and liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company has a deferred tax asset of approximately $7,283,000 and $4,129,000 that is offset by a 100% valuation allowance at December 31, 2022 and December 31, 2021, respectively. Therefore, the Company has not recorded any deferred tax assets or liabilities at December 31, 2022 and December 31, 2021. |
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 Impact of COVID-19 December 2019, ( COVID-19 March 2020, may may |
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_3
ORGANIZATION OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 1 Months Ended |
Jul. 25, 2022 | |
RSUs [Member] | |
Schedule of assets and liabilities | December 31, 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) | 12 Months Ended |
Dec. 31, 2022 | |
INVENTORY | |
Schedule of inventory | December 31, December 31, 2022 2021 Component parts $ 68,643 $ - Finished goods 146,850 39,461 Inventory $ 215,493 $ 39,461 |
PREPAID EXPENSES (Tables)
PREPAID EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
PREPAID EXPENSES | |
Schedule of prepaid expenses | December 31, December 31, 2022 2021 Insurance $ 150,344 $ 4,286 Deposit 15,736 - Rent - 8,267 Other 34,825 - Prepaid expenses $ 200,905 $ 12,553 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 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 $ 995,782 $ 2,858,893 10 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 |
Schedule of estimated future amortization expense | 2023 2024 2025 2026 2027 Thereafter $ 385,464 $ 385,464 $ 385,464 $ 385,464 $ 385,464 $ 931,573 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
ACCRUED EXPENSES | |
Schedule of Accrued expenses | December 31, 2022 December 31, 2021 Registration rights and default damages and penalties (see Note 8) $ - $ 189,663 Consulting services 197,897 163,647 Other 194,385 110,590 Accrued expenses $ 392,282 $ 463,900 |
CONVERTIBLE DEBENTURE PAYABLE (
CONVERTIBLE DEBENTURE PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
CONVERTIBLE DEBENTURE PAYABLE | |
Schedule of debenture payable | December 31, 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) | 12 Months Ended |
Dec. 31, 2022 | |
NOTES PAYABLE | |
Schedule of notes payables - related parties | December 31, 2022 December 31, 2021 Convertible Notes Payable with Warrants $ 1,000,000 $ 1,000,000 Conventional Non-Convertible Notes Payable 11,810 11,810 Unamortized Debt Discount (145,548 ) (645,547 ) Net Related Party Notes Payable $ 866,262 $ 366,263 Current Portion (866,262 ) (11,810 ) Net Long-Term Portion $ - $ 354,453 |
Schedule of notes payables - non related parties | December 31, 2022 December 31, 2021 Convertible Notes Payable with Warrants $ 1,005,000 $ 1,005,000 Convertible Notes Payable 9,183 56,683 Non-Convertible Notes Payable 17,500 47,500 Premium Financing Note Payable 61,792 - Unamortized Debt Discount (144,878 ) (648,580 ) Net Non-Related Party Notes Payable $ 948,597 $ 460,603 Current Portion (948,597 ) (104,183 ) Net Long-Term Portion $ - $ 356,420 |
DERIVATIVE LIABILITY (Tables)
DERIVATIVE LIABILITY (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
DERIVATIVE LIABILITY | |
Schedule of activity of derivative liability | Balance at December 31, 2020 $ - Fair value of derivatives issued 980,000 Fair value adjustments 60,000 Balance at December 31, 2021 $ 1,040,000 Balance at December 31, 2021 $ 1,040,000 Fair value of derivatives issued - Fair value adjustments (1,040,000 ) Balance at December 31, 2022 $ - |
STOCK WARRANTS STOCK OPTIONS _2
STOCK WARRANTS STOCK OPTIONS AND RESTRICTED STOCK UNITS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
STOCK WARRANTS STOCK OPTIONS AND RESTRICTED STOCK UNITS | |
Schedule of fair value of warrant and stock options granted | December 31, 2022 December 31, 2021 Exercise Price $ 1.35-$6.00 $ 9.00-$6.00 Dividend Yield 0 % 0 % Volatility 110%-160 % 120%-158 % Risk-free Interest Rate 2.45%-4.62 % 0.14%–0.98 % Life of Warrants 1-7 Years 2-5 Years |
Schedule of warrant And Option outstanding Stock | 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 13,375,461 $ 1.35 – 5.3125 4.38 Years $ 1.94 $ - Warrants Exercised (3,775,942 ) $ 0.001 – 2.125 $ 0.88 Warrants Expired (48,106 ) $ 3.118 $ 3.118 Balance at December 31, 2022 10,387,877 $ 1.35 – 9.00 5.11 Years $ 1.56 $ - |
Weighted Average Remaining Contractual Life calculations | 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 194,772 $ 1.50 – 6.00 3.80 Years $ 2.8239 $ 1,173,737 Warrants Granted 740,671 $ 9.00-6.00 3.15 Years $ 7.3500 $ 1,152,852 Warrants Exercised (58,979 ) $ 1.50 $ 1.5000 Warrants Expired/Forfeited (40,000 ) $ 6.00 $ 6.0000 Balance at December 31, 2021 836,464 $ 1.50 – 9.00 3.04 Years $ 6.7800 $ 1,784,838 |
Schedule of options pricing model | December 31, 2022 December 31, 2021 Exercise Price $ 1.54-9.075 $ 8.316-10.725 Dividend Yield 0% 0% Volatility 89%-192% 138%-198% Risk-free Interest Rate 0.78%-4.01% 0.10%-0.79% Expected Life 1-3 years 2.7-6.2 years |
Schedule of outstanding stock options | 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 802,409 $ 0.79 - 9.90 7.86 Years $ 1.01 $ 6,292,844 Options Granted 386,667 $ 8.31 - 10.74 3.87 Years $ 9.69 $ - Options Exercised (24,369 ) $ 0.79 $ 0.79 Options Cancelled (79,085 ) $ 0.79 - 9.87 $ 8.70 Options Expired/Forfeited (32,266 ) $ 0.79 - 9.87 $ 8.29 Balance at December 31, 2021 1,053,356 $ 0.79 - 10.74 6.21 Years $ 3.40 $ 5,804,517 Exercisable at December 31, 2021 635,610 $ 0.79 - 10.74 6.7 Years $ 1.59 $ 4,655,089 Options Outstanding Number of Shares Exercise Price Per Share Weighted Average Remaining Contractual Life Weighted Average Exercise Price Per Share Aggregate Intrinsic V alue Balance at December 31, 2021 1,053,356 $ 0.79 - 10.74 6.21 Years $ 3.40 $ 5,804,517 Options Granted 120,000 $ 1.54 - 9.08 3.42 Years $ 5.79 $ - Options Exercised (48,106 ) $ 0.79 $ 0.79 Options Cancelled - Options Expired/Forfeited (21,667 ) $ 4.94 - 10.73 $ 9.33 Balance at December 31, 2022 1,103,583 $ 0.79 - 9.30 5.33 Years $ 1.71 $ - Exercisable at December 31, 2022 930,573 $ 0.79 - 9.30 5.83 Years $ 1.60 $ - |
Schedule of RSU activity under the Plan | 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 78,585 $ 8.52 1.35 Years Vested (16,667) $ 8.97 Unvested at December 31, 2021 133,585 $ 8.58 1.00 Years Granted 421,667 $ 2.64 0.76 Years Vested (175,252 ) $ 8.17 Unvested at December 31, 2022 380,000 $ 2.17 0.74 Years |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
Schedule of provision for Federal income tax consisted | December 31, 2022 December 31, 2021 Income tax benefit attributable to: Net loss $ (12,354,930 ) $ (7,870,378 ) Permanent differences 1,732,832 2,924,431 Valuation allowance 10,622,098 4,945,947 Net provision for income tax $ - $ - |
Schedule of cumulative tax effect 21% | December 31, 2022 December 31, 2021 Deferred tax asset attributable to: Net operating loss carry forward $ 5,759,000 $ 3,212,000 Valuation allowance (5,759,000 ) (3,212,000 ) Net deferred tax asset $ - $ - |
Schedule of cumulative tax effect 5% | December 31, 2022 December 31, 2021 Deferred tax asset attributable to: Net operating loss carry forward $ 1,524,000 $ 917,000 Valuation allowance (1,524,000 ) (917,000 ) Net deferred tax asset $ - $ - |
ORGANIZATION OPERATIONS AND S_4
ORGANIZATION OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Sep. 28, 2021 | Dec. 31, 2020 |
Derivative liabilites | $ 0 | $ 1,040,000 | $ 980,000 | $ 0 |
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_5
ORGANIZATION OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Advertising and marketing costs | $ 169,010 | $ 104,738 |
Valuation allowance, percentage | 100% | 100% |
Reverse stock split description | we effected a 1-for-3 reverse stock split with our planned listing on Nasdaq. All share and per share amounts have been adjusted in these consolidated financial statements to reflect the effect of the reverse stock split | |
Deferred Tax Asset | $ 7,283,000 | $ 4,129,000 |
Minority Interest [Member] | ||
Ownership interest, percentage | 1.38% | 1.38% |
GOING CONCERN (Details Narrativ
GOING CONCERN (Details Narrative) | 1 Months Ended | 12 Months Ended | ||||
Mar. 09, 2023 USD ($) | Sep. 30, 2022 USD ($) | May 18, 2022 USD ($) $ / shares $ / bbl shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 USD ($) $ / shares | Mar. 31, 2022 $ / shares | |
Accumulated deficit | $ (78,327,845) | $ (57,471,492) | ||||
Convertible notes payable | 2,005,000 | |||||
Net cash used in operating activities | $ (6,156,172) | $ (3,688,302) | ||||
Underwritten public offering units issued | shares | 2,352,942 | |||||
Underwritten public offering, price per unit | $ / bbl | 4.25 | |||||
Common Stock, par value | $ / shares | $ 0.00001 | $ 0.00001 | $ 0.00001 | |||
Net proceeds from the sale of an underwritten public offering | $ 8,700,000 | |||||
Original Issue Discount Convertible Debenture | 18% | |||||
Convertible notes payable loan balance | $ 3,048,781 | |||||
Net offering proceeds from loan | 19,646,000 | |||||
Accrued interest | $ 2,439,000 | |||||
Convertible notes payable annual interest rate | 12% | |||||
Principal balances of convertible notes due, December 31, 2022 | $ 2,005,000 | |||||
Principal balances of convertible notes due, March 2023 | 1,100,000 | |||||
Principal balances of convertible notes due, April 2023 | 155,000 | |||||
Principal balances of convertible notes due, May 2023 | $ 750,000 | |||||
Description of note payment | the Company paid $600,000 of the notes that matured as of that date. On March 31, 2023, the Company will pay $500,000 of the notes due on that date. On March 13, 2023, the Company provided a 30-day notice to the note holders with amounts due on April 16, 2023 and May 31, 2023, that it will prepay the principal and all accrued interest due on April 12, 2023. The March 2023 Debt Offering requires that the $2,005,000 of the convertible notes payable due in March, April and May 2023 be paid by April 24, 2023. | |||||
Common stock closing price per share | $ / shares | $ 9 | $ 6 | ||||
Net proceeds from a Debt Offering | $ 0 | $ 2,500,000 | ||||
Senior Convertible Debt [Member] | ||||||
Warrants exercise price | $ / shares | $ 2.52 | |||||
Net proceeds from a Debt Offering | $ 2,500,000 | |||||
Original Issue Discount Convertible Notes | 15% | |||||
Received from the Purchasers | $ 3,000,000 | |||||
Exchange issued the Notes in principal amounts | $ 3,529,412 | |||||
Issued Warrants to purchase to common stock | shares | 386,998 | |||||
Common stock at conversion price | $ / shares | $ 2.28 | |||||
Interest rate | 5% | |||||
Maturity date | Mar. 10, 2025 | |||||
PIPE Offering [Member] | ||||||
Warrants exercise price | $ / shares | $ 2.125 | |||||
Common warrants exercised | shares | 1,647,564 | |||||
Received of proceeds net of issuance costs | $ 5,120,000 | $ 3,328,000 | ||||
Proceeds from PIPE Offering | $ 5,140,000 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
INVENTORY | ||
Raw materials | $ 68,643 | $ 0 |
Work in process | 0 | 0 |
Finished goods | 146,850 | 39,461 |
Inventory, net | $ 215,493 | $ 39,461 |
PREPAID EXPENSES (Details)
PREPAID EXPENSES (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
PREPAID EXPENSES | ||
Insurance | $ 150,344 | $ 4,286 |
Deposits | 15,736 | 0 |
Rent | 0 | 8,267 |
Other | 34,825 | 0 |
Prepaid expenses | $ 200,905 | $ 12,553 |
PREPAID EXPENSES (Details Narra
PREPAID EXPENSES (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Oct. 31, 2022 | May 25, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Feb. 26, 2021 | |
Insurance annual preminum | $ 349,455 | ||||
Insurance expense | $ 221,357 | ||||
Common stock, shares issued | 16,984,570 | 8,778,555 | |||
Common stock value | $ 170 | $ 88 | |||
Investor [Member] | |||||
Common stock, shares issued | 27,500 | ||||
Warrants | 60,000 | ||||
Fair value of share issuance | $ 39,453 | ||||
Per share value | $ 2.56 | ||||
New Lease Agreement [Member] | |||||
Monthly rent | $ 6,000 | ||||
Common stock, shares issued | 5,333 | ||||
Common stock value | $ 49,600 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Intangible assets, net | $ 2,858,893 | $ 3,244,357 |
Intellectual Technology [Member] | ||
Amortization Period | 10 years | 10 years |
Intangible assets, gross | $ 3,854,675 | $ 3,854,675 |
Accumulated amortization | 995,782 | 610,318 |
Intangible assets, net | $ 2,858,893 | $ 3,244,357 |
INTANGIBLE ASSETS (Details 1)
INTANGIBLE ASSETS (Details 1) | Dec. 31, 2022 USD ($) |
INTANGIBLE ASSETS | |
2024 | $ 385,464 |
2025 | 385,464 |
2026 | 385,464 |
2027 | 385,464 |
Thereafter | $ 931,573 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INTANGIBLE ASSETS | ||
Amortization expense | $ 385,464 | $ 385,464 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |||||
Feb. 12, 2021 | Jul. 25, 2022 | May 31, 2021 | Mar. 31, 2021 | Mar. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Debt conversion rate | $ 9 | $ 9 | $ 9 | ||||
Warrants to purchase shares of common stock | 75,000 | 91,667 | 106,667 | ||||
Issuance of new rstricted shares | 75,000 | ||||||
Professional services | $ 70,500 | ||||||
Issuance of convertible notes payable | 350,000 | ||||||
Indirect interest amount recieved | $ 50,000 | $ 200,000 | |||||
Warrants exercise price | $ 9 | ||||||
Convertible notes payable | $ 2,005,000 | ||||||
Repayments of notes payable - related parties | $ 0 | $ 30,000 | |||||
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 | $ 9 | ||||||
Warrants purchased | 106,667 | ||||||
Settelment of outstanding amount | $ 88,469 | ||||||
Settlement of outstanding judgement | $ 88,470 | ||||||
Common stock, shares held | 666,667 | ||||||
Preferred Stock shares issued in exchange for common stock | 666,667 | ||||||
David Gandini [Member] | |||||||
Repayments of notes payable - related parties | $ 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 ($) | Dec. 31, 2022 | Dec. 31, 2021 |
ACCRUED EXPENSES | ||
Registration rights and default damages and penalties (see Note 8) | $ 0 | $ 189,663 |
Consulting services | 197,897 | 163,647 |
Other | 194,385 | 110,590 |
Accrued expenses | $ 392,282 | $ 463,900 |
CONVERTIBLE DEBENTURE PAYABLE_2
CONVERTIBLE DEBENTURE PAYABLE (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
CONVERTIBLE DEBENTURE PAYABLE | ||
Convertible Debenture Payable with Detached Free-standing Warrant | $ 0 | $ 1,756,899 |
Unamortized Debt Discount | 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 | 12 Months Ended | ||||
Sep. 28, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Oct. 12, 2022 | Aug. 03, 2022 | May 19, 2022 | |
Debt face amount | $ 3,048,781 | $ 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 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 | ||||
Conversion feature debt discount | 980,000 | 980,000 | ||||
Interest expense related to debt issuance costs | 5,443 | 5,443 | ||||
Interest expense | 402,465 | 444,583 | ||||
Debt issuance cost | 0 | 0 | ||||
Accrued expenses | 189,700 | 189,700 | ||||
General and administrative expenses | $ 7,606,218 | 3,882,706 | ||||
Outstanding principal amount of debenture, percentage | 130% | |||||
Accrued and unpaid interest, percentage | 100% | |||||
Default penalties included in general and administrative expense | $ 915,000 | |||||
Warrant to purchase additional shares of common stock | 101,626 | |||||
Warrant to purchase additional shares of common stock, expiry date | Mar. 29, 2029 | |||||
Gain on extinguishment | $ 1,109,105 | |||||
Debt issuance costs | $ 275,000 | |||||
Warrant issued | 4,054,055 | 60,000 | 10,000 | |||
Amortization Of Interest | $ 465,635 | 514,365 | ||||
Interest Expense Related To The Original Issue Discount And Debt Issuance Costs | $ 423,782 | $ 399,999 | ||||
Registration Rights Agreement [Member] | Securities Purchase Agreement [Member] | ||||||
Warrant exercisable per share | $ 1.35 | |||||
Armistice Warrants [Member] | ||||||
Warrant issued | 1,750,225 | |||||
Original Warrant | 1,400,180 | |||||
New Warrants | 350,045 |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - Related Party Notes Payable [Member] - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Convertible Notes Payable with Warrants | $ 1,000,000 | $ 1,000,000 |
Conventional Non-Convertible Notes Payable | 11,810 | 11,810 |
Unamortized Debt Discount | (145,548) | (645,547) |
Net Non-Related Party Notes Payable | 866,262 | 366,263 |
Current portion | (866,262) | 11,810 |
Net Long-Term Portion | $ 0 | $ 354,453 |
NOTES PAYABLE (Details 1)
NOTES PAYABLE (Details 1) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Convertible notes payable | $ 2,005,000 | |
Non-Related Party Notes Payable [Member] | ||
Convertible Notes Payable with Warrants | 1,005,000 | $ 1,005,000 |
Convertible notes payable | 9,183 | 56,683 |
Non-Convertible Notes Payable | 17,500 | 47,500 |
Premium Financing Note Payable | 61,792 | 0 |
Unamortized Discount | (144,878) | (648,580) |
Net Non-Related Party Notes Payable | 948,597 | 460,603 |
Current Portion | (948,597) | (104,183) |
Net Long-term Portion | $ 0 | $ 356,420 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2022 | Dec. 31, 2021 | May 25, 2022 | May 31, 2021 | Mar. 31, 2021 | |
Interest expenses for related party notes | $ 120,000 | $ 85,397 | |||
Note payable conversion price per share | $ 9 | $ 9 | $ 9 | ||
Insurance premiums | $ 349,455 | ||||
Note payable due date | May 2022 through May 2023 | ||||
Initial down payment | 74,866 | ||||
Remaining amount | $ 274,559 | ||||
Annual interest rate | 4.37% | ||||
Monthly payments | $ 31,068 | ||||
Financing liability balance | $ 61,792 | ||||
Insurance expense related to prepaid insurance | 3,340 | ||||
Unamortized discount | 0 | 1,291,882 | |||
Interest expense | 2,535,519 | 1,420,063 | |||
Convertible Notes Payable Two [Member] | |||||
Convertible debt, conversion, principal amount | 9,183 | 56,683 | |||
Non-Related Party Two [Member] | |||||
Unamortized discount | 79,074 | 351,424 | |||
Interest expense | 134,628 | 98,647 | |||
Debt discount amortization expense | 272,350 | 190,283 | |||
Convertible notes payable, in default | 17,500 | ||||
Fair market value of warrants | $ 0 | 541,707 | |||
Interest rate | 0% | ||||
Outstanding warrants | 167,500 | ||||
Non-Related Party Notes Payable [Member] | |||||
Debt discount amortization expense | $ 231,353 | 163,059 | |||
Default interest rate | 12% | ||||
Purchase prices of shares issued | $ 9 | ||||
Shares of common stock | $ 47,500 | ||||
Issuance of common stock | 7,917 | ||||
Convertible Notes Payable with Detached Free-standing Warrants | $ 1,005,000 | 1,005,000 | |||
Unamortized beneficial conversion feature | $ 65,803 | 297,156 | |||
Non-Related Party Notes Payable [Member] | Minimum [Member] | |||||
Interest rate | 5% | ||||
Non-Related Party Notes Payable [Member] | Maximum [Member] | |||||
Interest rate | 12% | ||||
Non-Related Party Notes Payable [Member] | Non-Convertible Notes Payable [Member] | |||||
Note payable conversion price per share | $ 6 | ||||
Convertible notes payable, in default | $ 17,500 | 47,500 | |||
Interest rate | 5% | ||||
Non-Related Party Notes Payable [Member] | Non-Convertible Notes Payable [Member] | Minimum [Member] | |||||
Note payable conversion price per share | $ 6 | ||||
Note payable due date | December 2013 | ||||
Interest rate | 5% | ||||
Non-Related Party Notes Payables [Member] | Non-Convertible Notes Payable [Member] | Maximum [Member] | |||||
Note payable conversion price per share | $ 32.2857 | ||||
Note payable due date | June 2022 | ||||
Interest rate | 10% | ||||
Related Party Convertible Notes Payable [Member] | |||||
Unamortized discount | $ 78,705 | 354,204 | |||
Debt discount amortization expense | 275,500 | 196,796 | |||
Fair market value of warrants | $ 551,001 | $ 551,001 | |||
Interest rate | 0% | ||||
Outstanding warrants | 166,667 | ||||
Stock issued during the period | 167,500 |
DERIVATIVE LIABILITY (Details)
DERIVATIVE LIABILITY (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
DERIVATIVE LIABILITY | ||
Derivative liabilities, beginning balance | $ 1,040,000 | $ 0 |
Derivative liabilities, fair value of derivatives issued | 0 | 980,000 |
Derivative liabilities, fair value adjustments | (1,040,000) | 60,000 |
Derivative liabilities, ending balance | $ 0 | $ 1,040,000 |
DERIVATIVE LIABILITY (Details N
DERIVATIVE LIABILITY (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||
Sep. 30, 2022 | Jun. 30, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Sep. 28, 2021 | Dec. 31, 2020 | |
DERIVATIVE LIABILITY | ||||||||||
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 | $ (60,000) | ||
Derivative liabilites | $ 0 | $ 1,040,000 | $ 980,000 | $ 0 |
COMMON STOCK (Details Narrative
COMMON STOCK (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |||
May 18, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Mar. 06, 2022 | Jan. 06, 2022 | |
Public offering, shares sold, shares | 2,352,942 | 5,120,000 | |||
Common stock, shares sold, amount | $ 8,700,000 | $ 4,054,055 | |||
Description of common stock rounding provision | The Company issued 1,012 shares of common stock in connection with the rounding provision of the 1-for-3 reverse stock split effective on April 28, 2022 | ||||
Public offering price | $ 4.25 | $ 1.48 | |||
Common stock, shares sold, shares | 2,352,942 | 2,128,378 | |||
Received of net proceeds from the sale of underwritten public offering | $ 8,779,000 | ||||
Warrant exercise price | $ 0.001 | ||||
Common Stock Shares Issued For Services, Shares | 191,919 | ||||
Issued shares of common stock for service, Value | $ 864,500 | $ 0 | |||
Issuance of new stock, PIPE Offring | 1,925,677 | ||||
Non-Prefunded Warrant [Member] | |||||
Exercise Price | $ 1.35 | ||||
Prefunded Warrant [Member] | |||||
Exercise Price | $ 1.35 | ||||
Stock Option [Member] | |||||
Exercise Price | $ 0.79026 | $ 0.79026 | |||
Common Stock Shares Issued | $ 48,106 | $ 24,368 | |||
Consulting Services [Member] | |||||
Common Stock Shares Issued For Services, Shares | 27,500 | 34,806 | |||
Exercise Price | $ 2.73 | ||||
Issued shares of common stock for service, Value | $ 75,000 | $ 145,805 | |||
Convertible Note Payable [Member] | |||||
Common Stock Shares Issued For Services, Shares | 7,917 | ||||
Issued shares of common stock for service, Value | $ 47,500 | ||||
Professional Services [Member] | |||||
Common Stock Shares Issued For Services, Shares | 75,000 | 34,806 | |||
Exercise Price | $ 0.94 | ||||
Issued shares of common stock for service, Value | $ 70,500 | $ 145,805 | |||
IDTEC [Member] | |||||
Common Stock Shares Issued For Services, Shares | 58,980 | ||||
Exercise Price | $ 1.50 | ||||
PIPE [Member] | |||||
Common Stock Shares Issued For Services, Shares | 2,128,378 | ||||
Exercise Price | $ 0.001 | ||||
RSUs [Member] | |||||
Common Stock Shares Issued For Services, Shares | 175,252 | 16,667 | |||
Strategic Advisory And Digital Marketing Services [Member] | Consultant [Member] | |||||
Common Stock Shares Issued For Services, Shares | 500,000 | ||||
Issued shares of common stock for service, Value | $ 455,000 | ||||
Exercise price | $ 0.91 | ||||
Business Development Consulting Services [Member] | Consultant [Member] | |||||
Common Stock Shares Issued For Services, Shares | 300,000 | ||||
Issued shares of common stock for service, Value | $ 264,000 | ||||
Exercise price | $ 0.88 | ||||
Lease Agreement [Member] | |||||
Debt conversion, converted instrument, shares issued, shares | 5,334 | ||||
Debt Conversion, Converted Instrument, Amount | $ 49,600 | ||||
Agreement expiring date | February 2022 | ||||
Asset Purchase Agreement [Member] | IDTEC [Member] | |||||
Convertible Notes, Conversion Price | $ 1.50 | ||||
Underwritten Public Offering [Member] | |||||
Common Stock Shares Issued For Services, Shares | 1,647,564 | ||||
Exercise Price | $ 2.125 | ||||
Series B Convertible Preferred stock | |||||
Common Stock Shares Issued For Services, Shares | 1,000,000 | ||||
Debt conversion, converted instrument, shares issued, shares | 3,000,000 | ||||
Series A-1 Convertible Preferred stock [Member] | |||||
Common Stock Shares Issued For Services, Shares | 14,390 | ||||
Debt Conversion, Converted Instrument, Amount | $ 107,880 |
PREFERRED STOCK (Details Narrat
PREFERRED STOCK (Details Narratve) - $ / shares | 12 Months Ended | |||||
Dec. 09, 2019 | Dec. 31, 2022 | Dec. 31, 2020 | Mar. 01, 2022 | Dec. 31, 2021 | Nov. 20, 2015 | |
Preferred Stock, Shares Authorized | 25,000,000 | |||||
Asset Purchase Agreement [Member] | SOBR SAFE, LLC [Member] | ||||||
Right Of Dividend | 8% | |||||
Series A Convertible Preferred stock | ||||||
Preferred Stock, Shares Authorized | 3,000,000 | 3,000,000 | 3,000,000 | |||
Preferred Stock, Par Value | $ 0.00001 | $ 0.00001 | $ 0.00001 | |||
Preferred Stock Conversion Description | Series A Convertible Preferred Stock are convertible at a 35% discount rate to the average closing price per share of the Company’s common stock (either as listed on a national exchange or as quoted over-the-market) for the last 15 trading days immediately prior to conversion. However, no conversions of the Series A Convertible Preferred Stock to shares of common stock can occur unless the average closing price per share | |||||
Series B Convertible Preferred stock | ||||||
Preferred Stock, Shares Authorized | 3,000,000 | 3,000,000 | 3,000,000 | |||
Preferred Stock, Par Value | $ 0.00001 | $ 0.00001 | ||||
Exchange shares issued of common stcok | 333,333 | |||||
Common stock held by company | 666,667 | |||||
Series A-1 Convertible Preferred stock [Member] | ||||||
Preferred Stock, Shares Authorized | 2,700,000 | 2,700,000 | ||||
Preferred Stock, Par Value | $ 0.00001 | $ 0.00001 | ||||
Minimum Conversion Rate | $ 5.01 | |||||
Series A-1 Convertible Preferred stock [Member] | SOBR's Director company [Member] | Series A-1 Preferred Stock Purchase Agreement [Member] | SOBR SAFE, LLC [Member] | ||||||
Preferred Stock, Shares Authorized | 2,000,000 | 3,000,000 | ||||
Authorized Shares Increased | 2,700,000 | |||||
Right Of Dividend | 8% | 8% | ||||
Shares Issuance Price | $ 1 | |||||
Preferences And Rights Of Preferred Stock | dividend rights of 8% per annum based on the original issuance price of $1 per share, (b) liquidation preference over the Company’s common stock, (c) conversion rights into shares of the Company’s common stock at $3 per share (not to be affected by any reverse stock split in connection with the Asset Purchase Agreement with IDTEC) |
STOCK WARRANTS STOCK OPTIONS _3
STOCK WARRANTS STOCK OPTIONS AND RESTRICTED STOCK UNITS (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Risk free interest rate | 0.05% | |
Volatility | 120% | |
Warrants [Member] | ||
Dividend yield | 0% | 0% |
Minimum [Member] | Stock Options [Member] | ||
Exercise Price | $ 1.54 | $ 8.316 |
Risk free interest rate | 0.78% | 0.10% |
Life of Warrants | 1 year | 2 years 8 months 12 days |
Volatility | 89% | 138% |
Minimum [Member] | Warrants [Member] | ||
Exercise Price | $ 1.35 | $ 6 |
Risk free interest rate | 2.45% | 0.14% |
Life of Warrants | 1 year | 2 years |
Volatility | 110% | 120% |
Maximum [Member] | Stock Options [Member] | ||
Exercise Price | $ 9.075 | $ 10.725 |
Risk free interest rate | 4.01% | 0.79% |
Life of Warrants | 3 years | 6 years 2 months 12 days |
Volatility | 192% | 198% |
Maximum [Member] | Warrants [Member] | ||
Exercise Price | $ 6 | $ 9 |
Risk free interest rate | 4.62% | 0.98% |
Life of Warrants | 7 years | 5 years |
Volatility | 160% | 158% |
STOCK WARRANTS STOCK OPTIONS _4
STOCK WARRANTS STOCK OPTIONS AND RESTRICTED STOCK UNITS (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Outstanding at ending of period | 1,103,583 | 1,053,356 |
Weighted Average Remaining Contractual Life , Beginning balance | 6 years 2 months 15 days | 7 years 10 months 9 days |
Weighted Average Remaining Contractual Life, Warrants granted | 3 years 5 months 1 day | 3 years 10 months 13 days |
Weighted Average Remaining Contractual Life, Ending balance | 5 years 3 months 29 days | 6 years 2 months 15 days |
Aggregate Intrinsic Value, Beginning balance | $ 5,804,517 | $ 6,292,844 |
Aggregate Intrinsic Value, Ending balance | $ 0 | $ 5,804,517 |
Warrants [Member] | ||
Outstanding at beginning of period | 836,464 | 194,772 |
Warrants Granted | 13,375,461 | 740,671 |
Warrants Exercised | (3,775,942) | (58,979) |
Warrants Expired | 48,106 | 40,000 |
Outstanding at ending of period | 10,387,877 | 836,464 |
Weighted Average Exercise Price Per Share, Beginning balance | $ 6.78 | $ 2.8239 |
Weighted Average Exercise Price Per Share, Warrants granted | 1.94 | 7.3500 |
Weighted Average Exercise Price Per Share, Warrants exercised | 0.88 | 1.5000 |
Weighted Average Exercise Price Per Share, Ending balance | $ 1.56 | $ 6.7800 |
Weighted Average Remaining Contractual Life , Beginning balance | 3 years 14 days | 3 years 9 months 18 days |
Weighted Average Remaining Contractual Life, Warrants granted | 4 years 4 months 17 days | 3 years 1 month 24 days |
Weighted Average Exercise Price Per Share, Warrants Expired/forfeited | $ 3.118 | $ 6 |
Weighted Average Remaining Contractual Life, Ending balance | 5 years 1 month 9 days | 3 years 14 days |
Aggregate Intrinsic Value, Beginning balance | $ 1,784,838 | $ 1,173,737 |
Aggregate Intrinsic Value, Warrants granted | 0 | 1,152,852 |
Aggregate Intrinsic Value, Ending balance | $ 0 | $ 1,784,838 |
Minimum [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 | 0.001 | 0 |
Exercise Price Per Share, Ending balance | 1.35 | 1.50 |
Maximum [Member] | Warrants [Member] | ||
Exercise Price Per Share, Beginning balance | 9 | 6 |
Exercise Price Per Share, Warrants granted | 5.3125 | 9 |
Exercise Price Per Share, Warrants Exercised | 2.125 | 1.50 |
Exercise Price Per Share, Ending balance | $ 9 | $ 9 |
STOCK WARRANTS STOCK OPTIONS _5
STOCK WARRANTS STOCK OPTIONS AND RESTRICTED STOCK UNITS (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Outstanding at beginning of period | 1,053,356 | 802,409 |
Options Granted | 120,000 | 386,667 |
Options Cancelled | 0 | (79,085) |
Options Expired/Forfeited | (21,667) | (32,266) |
Options Exercised | (48,106) | (24,369) |
Outstanding at ending of period | 1,103,583 | 1,053,356 |
Weighted Average Remaining Contractual Life , Beginning balance | 6 years 2 months 15 days | 7 years 10 months 9 days |
Weighted Average Remaining Contractual Life, Options granted | 3 years 5 months 1 day | 3 years 10 months 13 days |
Weighted Average Remaining Contractual Life, Ending balance | 5 years 3 months 29 days | 6 years 2 months 15 days |
Weighted Average Remaining Contractual Life, Exercisable | 5 years 9 months 29 days | 6 years 8 months 12 days |
Weighted Average Exercise Price Per Share, Beginning balance | $ 3.40 | $ 1.01 |
Weighted Average Exercise Price Per Share, Options exercised | 5.79 | 9.69 |
Weighted Average Exercise Price Per Share, Options exercisable | 1.60 | 1.59 |
Weighted Average Exercise Price Per Share, Options Expired/Forfeited | 9.33 | 8.29 |
Weighted Average Exercise Price Per Share, Options Cancelled | 8.70 | |
Weighted Average Exercise Price Per Share, ending balance | $ 1.71 | $ 3.40 |
Aggregate Intrinsic Value, Beginning balance | $ 5,804,517 | $ 6,292,844 |
Aggregate Intrinsic Value, Options exercisable | 0 | 4,655,089 |
Aggregate Intrinsic Value, Ending balance | $ 0 | $ 5,804,517 |
Minimum [Member] | Stock Options [Member] | ||
Weighted Average Exercise Price Per Share, Options exercisable | $ 0.79 | $ 0.79 |
Exercise Price Per Share, Beginning balance | 0.79 | 0.79 |
Options Granted | 1.54 | 8.31 |
Options Cancelled | 0.79 | |
Options Expired/Forfeited | 4.94 | 0.79 |
Exercise Price Per Share, Ending balance | 0.79 | 0.79 |
Maximum [Member] | Stock Options [Member] | ||
Weighted Average Exercise Price Per Share, Options exercisable | 9.30 | 10.74 |
Exercise Price Per Share, Beginning balance | 10.74 | 9.90 |
Options Granted | 9.08 | 10.74 |
Options Cancelled | 9.87 | |
Options Expired/Forfeited | 10.73 | 9.87 |
Exercise Price Per Share, Ending balance | $ 9.30 | $ 10.74 |
STOCK WARRANTS STOCK OPTIONS _6
STOCK WARRANTS STOCK OPTIONS AND RESTRICTED STOCK UNITS (Details 3) - Restricted Stock Units [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Unvested beginning | 133,585 | 71,667 |
Granted | 421,667 | 78,585 |
Vested | (175,252) | (16,667) |
Unvested Ending | 380,000 | 133,585 |
Weighted Average Vesting Period, beginning balance | 1 year | 1 year 8 months 12 days |
Weighted Average Vesting Period RSU granted | 9 months 3 days | 1 year 4 months 6 days |
Weighted Average Vesting Period, ending balance | 8 months 26 days | 1 year |
Weighted Average Grant Date Fair Value Per Share beginning balance | $ 8.58 | $ 8.75 |
Weighted Average Grant Date Fair Value Per Share RSU granted | 2.64 | 8.52 |
Weighted Average Vest Date Fair Value Per Share RSU granted | 8.97 | |
Weighted Average Grant Date Fair Value Per Share ending balance | 2.17 | 8.58 |
Weighted Average Grant Date Fair Value Per Share Rsu Vested | $ 8.17 | $ 8.17 |
STOCK WARRANTS STOCK OPTIONS _7
STOCK WARRANTS STOCK OPTIONS AND RESTRICTED STOCK UNITS (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||||||||||
Nov. 04, 2022 | Aug. 17, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Oct. 12, 2022 | Sep. 28, 2022 | Aug. 03, 2022 | Jan. 01, 2022 | Oct. 18, 2021 | Sep. 28, 2021 | May 31, 2021 | Oct. 24, 2019 | |
Exercise prices | $ 1.35 | $ 2.56 | $ 4.25 | |||||||||
Warrant issued | 4,054,055 | 60,000 | 10,000 | |||||||||
Warrant issued value | $ 9,300,000 | $ 39,453 | $ 6,000 | |||||||||
General and administrative expense | 7,606,218 | $ 3,882,706 | ||||||||||
Stock based compensation expense | $ 1,426,178 | $ 473,748 | ||||||||||
Prefunded Warrants [Member] | ||||||||||||
Exercise prices | $ 0.001 | |||||||||||
Warrant issued | 2,128,378 | |||||||||||
Warrant issued value | $ 3,150,000 | |||||||||||
Private investment in public equity [Member] | ||||||||||||
Exercise prices | $ 1.35 | |||||||||||
Warrant issued | 1,750,225 | |||||||||||
New Warrants | 2,258,355 | 350,045 | ||||||||||
Original Warrant | 1,400,180 | |||||||||||
Original Warrant value | $ 3,495,000 | |||||||||||
New Warrants value | $ 3,495,000 | |||||||||||
Stock Warrant [Member] | ||||||||||||
Exercise prices | $ 4.25 | $ 1.35 | $ 6 | |||||||||
Number of warrants outstanding | 10,387,877 | 836,464 | ||||||||||
Public offering | 4,705,884 | |||||||||||
Warrants to purchase | 141,177 | |||||||||||
Underwriter exercise prices | $ 4.25 | |||||||||||
Warrants to purchase exercise prices | $ 5.3125 | |||||||||||
Representative Warrants | 5,700,000 | |||||||||||
Common stock purchase | 101,626 | 406,504 | 334,167 | |||||||||
Common stock purchase per share | $ 6 | $ 9 | ||||||||||
Non-employee detached free-standing stock warrants granted | 13,375,461 | 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 | |||||||||||
Stock Options [Member] | ||||||||||||
Stock options to acquire shares of common stock | 1,086,813 | 1,036,588 | ||||||||||
Stock options shares | 305,000 | |||||||||||
Description of exercise prices | exercise prices ranging from $8.25 - $10.56 to be repriced at 110% ($2.39) and 100% ($2.17) of the current price | |||||||||||
Vested shares | 29,900 | 930,573 | 618,841 | |||||||||
Fair value of the options increased | $ 55,859 | |||||||||||
Non-vested shares | 25,959 | 173,009 | 417,747 | |||||||||
General and administrative expense | $ 1,582,217 | $ 723,261 | ||||||||||
Unrecognized compensation expense | $ 1,075,631 | |||||||||||
Pipe Offering [Member] | Stock Warrant [Member] | ||||||||||||
Number of warrants outstanding | 3,482,436 | |||||||||||
Warrants to purchase exercise prices | $ 2.125 | |||||||||||
Representative Warrants | 2,670,456 | |||||||||||
Restricted Stock Units [Member] | ||||||||||||
Common stock issued for RSUs vested | 281,667 | 61,918 | ||||||||||
Common stock issued for RSUs vested to legal counsel | 16,667 | |||||||||||
Outstanding executive stock options | 823,482 | |||||||||||
Stock based compensation expense | $ 1,426,178 | $ 364,057 | ||||||||||
Fair value of RSUs granted | 1,112,725 | $ 669,750 | ||||||||||
Total stock based compensation cost | $ 615,970 | |||||||||||
Remaining weighted average vesting period | 5 years | |||||||||||
Weighted average remaining contractual life | 5 years | |||||||||||
Unvested RSUs granted to executive officers | 537,371 | |||||||||||
Options acquire shares of common stock exercise price description | executive officers stock options exercisable at $0.7902 to $2.387 per share | |||||||||||
Restricted Stock Units [Member] | Executive Vice Presidentof Salesand Marketingand Revenue Officer [Member] | ||||||||||||
Remaining weighted average vesting period | 5 years | 1 year | ||||||||||
Stock options vested | 200,000 | 61,919 | ||||||||||
Options to acquire shares of common stock | 140,000 | |||||||||||
Restricted Stock Units [Member] | Employment Agreement with Scott Bennett [Member] | ||||||||||||
Exercise price | $ 2.387 | $ 9.21 | ||||||||||
Stock options to acquire shares of common stock | 33,334 | |||||||||||
Common stock issued for RSUs vested | 16,667 | |||||||||||
Weighted average fair value of RSU per share | $ 8.40 | |||||||||||
Description of plan stock option | May 2021 under the Plan stock options to acquire 33,333 shares of our common stock at an exercise price of $10.14 per share, repriced effective November 4, 2022 to an exercise price of $2.387 per share, and 3,333 RSUs. The stock options vest in equal monthly installments over a three-year period. The RSUs per share weighted average fair value at grant date was $9.21 | |||||||||||
Restricted Stock Units [Member] | Employment Agreement with Scott Bennett [Member] | November 4, 2022 [Member] | ||||||||||||
Vested shares | 39,351 | |||||||||||
Common stock issued for RSUs vested | 50,000 | 20,000 | ||||||||||
Weighted average fair value of RSU per share | $ 2.17 | |||||||||||
Restricted Stock Units [Member] | Employment Agreement with Michael Watson [Member] | ||||||||||||
Exercise price | $ 2.387 | $ 9.21 | ||||||||||
Stock options to acquire shares of common stock | 83,333 | |||||||||||
Vested shares | 52,083 | |||||||||||
Common stock issued for RSUs vested | 75,000 | |||||||||||
Weighted average fair value of RSU per share | $ 2.17 | |||||||||||
Restricted Stock Units [Member] | Employment Agreement with Jerry Wenzel [Member] | ||||||||||||
Exercise price | $ 2.387 | $ 8.25 | ||||||||||
Stock options to acquire shares of common stock | 66,667 | |||||||||||
Vested shares | 33,334 | |||||||||||
Common stock issued for RSUs vested | 75,000 | 16,667 | ||||||||||
Weighted average fair value of RSU per share | $ 2.17 | |||||||||||
Restricted Stock Units [Member] | Minimum [Member] | ||||||||||||
Exercise price | $ 0.7902 | |||||||||||
Restricted Stock Units [Member] | Maximum [Member] | ||||||||||||
Exercise price | $ 10.131 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |
Jul. 31, 2022 | Dec. 31, 2022 | Dec. 06, 2006 | |
Accrued amount | $ 11,164 | ||
Rent Expense | 157,488 | ||
Accrued Interest | 18,000 | ||
Lawsuit amount | $ 11,164 | ||
Short Term Operating Lease [Member] | |||
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 |
INCOME TAXES (Details)
INCOME TAXES (Details) - Federal Income Tax [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Net loss | $ (12,354,930) | $ (7,870,378) |
Permanent Differences | 1,732,832 | 2,924,431 |
Valuation Allowance | 10,622,098 | 4,945,947 |
Net Provision For Income Tax | $ 0 | $ 0 |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Net Operating Loss Carry Forward | $ 30,473,000 | $ 18,300,000 |
Federal [Member] | ||
Net Operating Loss Carry Forward | 5,759,000 | 3,212,000 |
Valuation Allowance | (5,759,000) | (3,212,000) |
Net Deferred Tax Asset | 0 | 0 |
State [Member] | ||
Net Operating Loss Carry Forward | 1,524,000 | 917,000 |
Valuation Allowance | (1,524,000) | (917,000) |
Net Deferred Tax Asset | $ 0 | $ 0 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INCOME TAXES | ||
Deferred Tax Asset | $ 7,283,000 | $ 4,129,000 |
Rate Of Net Operating Losses Offset By Valuation Allowance | 100% | |
Change In The Valuation Allowance | $ 3,154,000 | $ 1,299,000 |
Federal Tax Rate | 21% | 21% |
Description of loss | net operating loss carry-forwards of approximately $30,473,000 that will be carried forward and can be used through the year 2027 | |
Carryforward Expiration Year | 2027 | |
Net Operating Loss Carry Forward | $ 30,473,000 | $ 18,300,000 |
State Tax Rate | 5% | 5% |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | 1 Months Ended | |||
Mar. 07, 2023 | Jan. 30, 2023 | Jan. 01, 2023 | Mar. 31, 2021 | |
Warrants exercise price | $ 9 | |||
Subsequent Event [Member] | ||||
Warrants issued to purchase common stock shares | 225,000 | |||
Restricted common stock shares issued | 225,000 | |||
Warrants exercise price | $ 1.35 | |||
Subsequent Event [Member] | Purchase Agreement [Member] | ||||
Proceeds from exercise of debt offering | $ 3,000,000 | |||
Proceeds from debt offering after offering related costs | $ 2,500,000 | |||
Warrants exercise price | $ 2.52 | |||
Warrants issued | 386,998 | |||
Principal balance of notes | $ 3,529,412 | |||
Conversion price | $ 2.28 | |||
Interest rate quarterly | 5% | |||
Original Issue Discount | 15% | |||
Subsequent Event [Member] | Employment Agreement with David Gandini [Member] | ||||
Annual salary | $ 300,000 |