SOBR Safe (SOBR) risk factors, FY2024 10-K

Other

1. 01Our business plan, which is focused on the development and commercialization of alcohol monitoring and detection devices, is dependent upon our SOBRsafe™ technology
2. 02We have a limited operating history and historical financial information upon which you may evaluate our performance
3. 03Our quarterly and annual operating results may fluctuate significantly and may not fully reflect the underlying performance of our business. This makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide
4. 04introduction of new products or technologies that compete with our products
5. 05Unfavorable global economic conditions could adversely affect our business, financial condition, or results of operations
6. 06Expansion of our operations and sales internationally may subject us to additional risks, including risks associated with unexpected events
7. 07Regulations, laws and tax laws require compliance efforts that can increase our cost of doing business. Changes to these laws and regulations could impact financial results
8. 08We may not be able to meet our future capital needs
9. 09If we cannot obtain, achieve or sustain profitability or additional funding, our technology, product development and commercialization efforts may be reduced or discontinued, and we may not be able to continue operations
10. 10Development efforts for our technology, products and software are highly dependent on the amount of cash and cash equivalents on hand combined with our ability to raise additional capital to support our future operations through one or more methods, including but not limited to, issuing additional equity or debt
11. 11We need to maintain insurance coverage, which could become very expensive or have limited availability
12. 12If we are unable to recruit and retain qualified personnel, our business could be harmed
13. 13We are a relatively small company with a limited number of products and staff. Sales fluctuations and employee turnover may adversely affect our business
14. 14We may be dependent on outside advisors or consultants to assist us
15. 15Changes in financial accounting standards or practices may cause adverse, unexpected financial reporting fluctuations and affect our reported results of operations
16. 16We rely on third-party intellectual property licenses and agreements to provide and facilitate the basis for and production of our patent-pending technology including our manufactured SOBRcheck and SOBRsure devices
17. 17We may be unable to adequately protect our proprietary rights
18. 18We may become involved in lawsuits to protect or enforce our patents that would be expensive and time-consuming
19. 19Substantial costs could be incurred defending against claims of intellectual property infringement
20. 20We may be unable to protect our trademarks, trade secrets, and other intellectual property rights that are important to our business
21. 21Rapid technological change could cause our products to become obsolete and if we do not enhance our product offerings through our research and development efforts, we may be unable to effectively compete
22. 22achieve adequate coverage and reimbursement for our products
23. 23Failure to keep pace with the latest technological changes could negatively impact our projected revenues
24. 24Because our technology is innovative and disruptive, we may require additional time to enter the market due to the need to further discover the profile companies within our target markets
25. 25If our products do not gain market acceptance, prospects for our sales revenue may be affected
26. 26Enterprise and consumer customers may not use our products in sufficient numbers, which could result in decreased revenue projections and profits
27. 27We are currently selling our products through direct sales and channel partners, and will need time to develop brand awareness and recognition, define market verticals, potential market share, and support relationships in order to secure customers and grow revenue
28. 28We need to ensure strong product performance and reliability to maintain and grow our business
29. 29Although we have quality assurance practices in place to ensure good product quality, defects still may be found in the future in our future products
30. 30Because we may face direct competition, we may not be able to operate profitably in our markets
31. 31Any new competitor could be larger than us and have greater financial and other resources than we do, and those advantages could make it difficult for us to compete with them

Risks Related to Manufacturing

1. 32We have limited experience manufacturing our products in large-scale commercial quantities, and we face a number of manufacturing risks that may adversely affect our manufacturing abilities which could delay, prevent or impair our growth
2. 33difficulty identifying and qualifying, and obtaining new regulatory approvals, for alternative suppliers for components in a timely manner
3. 34A third-party manufacturer’s inability to produce our products’ components on time and to our specifications could result in lost revenue
4. 35If we need to replace manufacturers, our expenses and cost of goods could increase, resulting in low profit margins
5. 36Our business could be adversely affected by reliance on sole suppliers
6. 37We could experience cost increases or disruptions in supply of raw materials or other components used in our products
7. 38We currently anticipate and prepare in advance to avoid supply chain issues through direct communication and planning with our supply chain vendors, but if for reasons out of our control parts are not available, it could impact customer contracts and revenue
8. 39If our contract manufacturers fail to meet our requirements for quality, quantity and timeliness, our business growth could be harmed
9. 40Although we do not manufacture the products we distribute, if one of the products distributed by us proves to be defective or is misused by an enterprise or consumer customer, we may be subject to liability that could adversely affect our financial condition and results of operations

Risks Related to Security

1. 41Cyber-attacks and security vulnerabilities could lead to reduced revenue, increased costs, liability claims, or harm to our competitive position
2. 42Our internal computer systems, or those used by our contractors or consultants, may fail or suffer security breaches, and such failure could negatively affect our business, financial condition, results of operations and cash flows

Risks Related to Ownership of Our Securities

1. 43The market price of our common stock may be volatile and may be affected by market conditions beyond our control
2. 44general economic conditions and slow or negative growth of related markets
3. 45Our stock price could become more volatile and your investment could lose value
4. 46Our common stock has been thinly traded and we cannot predict the extent to which a trading market will develop
5. 47The issuance of additional common stock and/or the resale of our issued and outstanding common stock could cause substantial dilution to investors
6. 48Our existing stockholders may experience dilution if we elect to raise equity capital
7. 49Conversion of our convertible senior notes into common stock may dilute the ownership interests of existing stockholders or may otherwise depress the price of our common stock
8. 50Future sales of our common stock in the public market could lower the price of our common stock and impair our ability to raise funds in future securities offerings
9. 51Our management has discretion as to how to use any proceeds from the sale of securities
10. 52We may be subject to the significant influence of our current stockholders, and their interests may not always coincide with those of our other stockholders
11. 53Reverse stock splits may decrease the liquidity of the shares of our common stock
12. 54We may not be able to maintain our listing on the Nasdaq, which could have a material adverse effect on us and our stockholders
13. 55On October 4, 2024, the Company received a letter from the Staff notifying that the Company does not currently meet the Minimum Float Requirement. The Staff granted the Company until October 11, 2024, to provide the Panel with its views with respect to this additional deficiency
14. 56On October 15, 2024, the Company provided an update to the Panel outlining the steps it had taken to regain and sustain compliance with the Bid Price Requirement, Minimum Float Requirement, and the Stockholders’ Equity Rule, within the 180-day Panel extension
15. 57If our common stock is delisted from the Nasdaq and becomes subject to the penny stock rules, it would become more difficult to trade our shares