SOBR Safe (SOBR) risk factors, FY2025 10-K

Risks Related to Ownership of Our Securities

1. 01The Company received a deficiency letter from Nasdaq regarding the closing bid stock price. The Company may not be able to maintain its listing on Nasdaq, which could have a material adverse effect on us and our stockholdersNew
2. 02The notification has no immediate effect on the Company’s Nasdaq listing and the Company’s common stock will continue to trade on Nasdaq under the ticker symbol “SOBR.” In addition, it does not affect the Company’s business, operations or reporting requirements with the Securities and Exchange CommissionNew
3. 03Nasdaq has proposed a change to its ongoing listing requirements, increasing the required market value of listed securities from $2.5 million to $5 millionNew
4. 04The market price of our common stock may be volatile and may be affected by market conditions beyond our control
5. 05general economic conditions and slow or negative growth of related markets
6. 06Our stock price could become more volatile and your investment could lose value
7. 07Our common stock has been thinly traded and we cannot predict the extent to which a trading market will develop
8. 08The issuance of additional common stock and/or the resale of our issued and outstanding common stock could cause substantial dilution to investors
9. 09Our existing stockholders may experience dilution if we elect to raise equity capital
10. 10Future 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
11. 11Our management has discretion as to how to use any proceeds from the sale of securities
12. 12We may be subject to the significant influence of our current stockholders, and their interests may not always coincide with those of our other stockholders34% rewritten
13. 13Reverse stock splits may decrease the liquidity of the shares of our common stock
14. 14If 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
15. 15Our business plan, which is focused on the development and commercialization of personal alcohol awareness tracking devices, is dependent upon our SOBRsafe technology37% rewritten
16. 16We may not be able to meet our future capital needs
17. 17If 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 operations22% rewritten
18. 18Development 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
19. 19We have a limited operating history and historical financial information upon which you may evaluate our performance
20. 20Our 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
21. 21introduction of new products or technologies that compete with our products
22. 22Unfavorable global economic conditions could adversely affect our business, financial condition, or results of operations
23. 23Expansion of our operations and sales internationally may subject us to additional risks, including risks associated with unexpected events
24. 24Regulations, laws and tax laws require compliance efforts that can increase our cost of doing business. Changes to these laws and regulations could impact financial results99% rewritten
25. 25We need to maintain insurance coverage, which could become very expensive or have limited availability
26. 26If we are unable to recruit and retain qualified personnel, our business could be harmed
27. 27We are a relatively small company with a limited number of products and staff. Sales fluctuations and employee turnover may adversely affect our business
28. 28We may be dependent on outside advisors or consultants to assist us
29. 29Changes in financial accounting standards or practices may cause adverse, unexpected financial reporting fluctuations and affect our reported results of operations
30. 30We need to ensure strong product performance and reliability to maintain and grow our business
31. 31Our products could contain defects, or they may be installed or operated incorrectly, which could reduce sales of those products or result in claims against usNew
32. 32Rapid 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
33. 33achieve adequate coverage and reimbursement for our products
34. 34Failure to keep pace with the latest technological changes could negatively impact our projected revenues
35. 35Because 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
36. 36If our products do not gain market acceptance, prospects for our sales revenue may be affected
37. 37Enterprise and consumer customers may not use our products in sufficient numbers, which could result in decreased revenue projections and profits
38. 38We 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
39. 39We 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
40. 40We may be unable to adequately protect our proprietary rights
41. 41We may become involved in lawsuits to protect or enforce our patents that would be expensive and time-consuming
42. 42Substantial costs could be incurred defending against claims of intellectual property infringement
43. 43We may be unable to protect our trademarks, trade secrets, and other intellectual property rights that are important to our business

Risks Related to Manufacturing

1. 44We 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. 45difficulty identifying and qualifying, and obtaining new regulatory approvals, for alternative suppliers for components in a timely manner
3. 46A third-party manufacturer’s inability to produce our products’ components on time and to our specifications could result in lost revenue
4. 47If we need to replace manufacturers, our expenses and cost of goods could increase, resulting in low profit margins
5. 48Our business could be adversely affected by reliance on sole suppliers
6. 49We could experience cost increases or disruptions in supply of raw materials or other components used in our products
7. 50We 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. 51If our contract manufacturers fail to meet our requirements for quality, quantity and timeliness, our business growth could be harmed22% rewritten
9. 52Although 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
10. 53Because we may face direct competition, we may not be able to operate profitably in our markets
11. 54Any 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 them27% rewritten

Risks Related to Security

1. 55Cyber-attacks and security vulnerabilities could lead to reduced revenue, increased costs, liability claims, or harm to our competitive position
2. 56Our 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