Complicated know-how corporate disrupting the alcohol control trade through that specialize in preventive answers as a substitute of reactive processes.

Through Thomas Kerr, CFA

NASDAQ:SOBR

OVERVIEW

SOBR Secure, Inc, (“SOBRsafe”) (NASDAQ:SOBR) develops and offers organizations with a non-invasive know-how to temporarily and safely determine possible alcohol problems with their staff or contractors. If left undetected, alcohol linked using injuries and office incidents may lead to harm, dying, reputational hurt, and greater insurance coverage charges. Those merchandise and applied sciences are built-in inside a strong and scalable knowledge platform that produces statistical and measurable person and trade knowledge. The corporate’s mentioned venture is to save lots of lives, building up productiveness, and create financial receive advantages for its consumers.

The corporate has advanced a scalable, patent pending SOBRsafe™ {hardware}/instrument platform for non-invasive alcohol detection and id verification. This resolution has possible packages in business automobile fleets, production and warehousing amenities, building, DUI probation, third-party alcohol trying out, outpatient alcohol rehabilitation and formative years drivers. The great day by day use of this tool may lead to subject material insurance coverage financial savings throughout employees’ repayment, common legal responsibility, umbrella and fleet insurance policies.

In 2021, the corporate effectively finished a number of pilot trying out systems involving the SOBRsafe™ gadget with the SOBRcheck tool. This tool is a palm sized detector used for non-invasive alcohol detection and id verification. After a success validation of the instrument platform and {hardware} tool, the corporate has now advanced to business manufacturing, release and sale of the SOBRcheck™ units and instrument way to preliminary consumers with an preliminary focal point on final mile supply fleets.

The corporate has advanced a 2d tool which is a wearable wristband branded as SOBRsure™. The wristband makes use of the similar SOBRsafe™ sensor know-how and instrument platform, which used to be validated all through the SOBRcheck™ building procedure. The principle meant use for this band is for controlled care / alcohol rehabilitation and business protection fleet control, with an extra possible utility for younger particular person drivers. The wearable band is now commercially to be had and anticipated to be offered within the shopper markets as neatly beginning in 2023.

The addressable marketplace for those units and answers may means $30 billion in general cost. This comprises final mile supply or trucking fleets, warehouses, production amenities, building websites, younger drivers, or alcohol linked rehabilitation amenities and processes. The yearly value of alcohol abuse within the U.S. throughout quite a lot of avenues is roughly $250 billion.

In Would possibly 2022, the corporate raised $10 million in gross proceeds from a public providing. Internet proceeds to the corporate had been $8.7 million of which $3.0 million used to be used to pay off present debt balances. In keeping with present ranges of money, the corporate believes it has enough capital to fund operations via March 2023.

PRODUCTS AND TECHNOLOGY

SOBRcheck is a palm sized tool that makes use of finger contact know-how to locate the presence of alcohol within the frame. The tool takes the herbal humidity within the pores and skin and checks the herbal vapor for alcohol elements. The SOBRcheck is positioned at access issues to amenities or motive force facilities and staff position their arms/hands at the tool to ensure and scan for alcohol. Staff who obtain a inexperienced gentle are then given the keys to their specific automobile.

In contrast to conventional breathalyzer checks, the SOBRcheck could be very hygienic without having for blood, saliva or breath-based elements. The effects are nearly on the spot, and the corporate has reported it might take a look at 180 staff in line with hour. In step with the corporate’s analysis, the dependability or accuracy charge is 97% in comparison to reasonable accuracy charges of 84% for traditional breathalyzer machines, which is a 60-year-old know-how.

Some of the key aggressive benefits of the program is the tool connects to a formidable cloud-based reporting and information control gadget. This database and reporting gadget aggregates knowledge with the intention to deal with compliance and protection discounting with insurers in addition to create protection control and incident reporting for shoppers. Present and possible partnerships with belongings & casualty insurers is a key focal point with regards to product building, insurer enhance, and consumer productiveness and value financial savings.

The corporate’s 2d tool is a wearable wristband branded as SOBRsure and is the cellular model of the corporate’s core SOBRsafe applied sciences. It is a steady on particular person tracking tool that can be utilized in markets similar to teenage using, far off tracking of final mile and fleet control packages, alcohol rehabilitation enhance and company wellness efforts. The product is commercially to be had now with an preliminary focal point on alcohol rehabilitation amenities and habit systems. SOBRsure is anticipated to be to be had for shopper acquire in 2023.

The corporate will make use of a SaaS-based trade fashion for the SOBRsafe platform to create important ranges of habitual revenues. The shoppers will most often interact in an evergreen 60-month contract which is able to scale back churn and create insurance coverage incentives. The SOBRcheck tool will likely be given loose to shoppers, they usually incur a $30 per thirty days price in line with person. The SOBRsure band will likely be offered for about $299.95 and incur person charges of $19.95 per thirty days. This fashion has the possible to create top SaaS-type gross margins of over 70.0%.

OPPORTUNITY AND ADDRESSABLE MARKET

The yearly value of alcohol abuse within the U.S. is $249 billion in keeping with Facilities for Illness Regulate and Prevention (CDC). $179 billion of this is associated with office productiveness. It’s estimated that just about part of all business injuries with accidents are alcohol-related and that 1-in-10 U.S. business drivers take a look at sure for alcohol, which is one of the perfect on the earth. SOBRsafe is inquisitive about a preventative resolution in an trade that has traditionally been reactive, that means breathalyzers.

The corporate believes the full addressable marketplace in possible income bucks may well be $28 billion. This comprises $5.8 billion in native fleet, or last-mile supply services and products. The corporate is focusing its gross sales efforts on Amazon’s Supply Provider Spouse (DSP) program which is a last-mile supply carrier through Amazon the place homeowners most often make use of 40-100 drivers and arrange a fleet of between 20-40 vehicles on reasonable.

Production amenities within the nation additionally constitute a big possible marketplace with an estimated cost of $4.7 billion. The industrial and home building markets constitute an extra $2.5 billion in cost. Warehouses also are a possible $720 million in revenues. For the SOBRsure wristband tool, teenage drivers and alcohol rehabilitation operations constitute a mixed marketplace alternative of over $14 billion.

Those possible alternative estimates are in accordance with general customers in line with vertical occasions present ranges of SOBRsafe pricing fashions. Long run pricing movements on account of the confirmed and validated good fortune of the SOBRsafe platform may materially building up those marketplace alternative values.

FINANCIAL REVIEW

Since inception, the corporate has been working in analysis and building mode and didn’t get started business gross sales of its merchandise till 2022. No revenues had been generated in 2021 and the corporate’s use of money used to be $3.7 million. The corporate has been a success in elevating capital in 2020 and 2021 via debt choices, convertible debentures, and most popular inventory choices.

In Would possibly 2022, the corporate won internet proceeds of $8.8 million from a public providing of which $3.0 million used to be used to redeem the convertible debentures remarkable on the time. As of 6/30/22, coins and equivalents totaled $3.75 million and general remarkable debt balances had been $1.5 million.

For the six-month duration finishing 6/30/22, general revenues had been nominal as anticipated at $3,000 which generated a gross benefit of $1,900. Working bills ramped up considerably from the prior duration as the corporate moved against commercialization with SG&A bills nearly doubling and R&D bills expanding 9.5%. There have been additionally further bills associated with the corporate’s public providing in Would possibly 2022.

GAAP loss from operations for the six-month duration used to be ($4.4) million, on the other hand, because of a lot of non-cash pieces, the money waft working loss used to be best ($2.7) million. GAAP internet loss for the duration used to be ($5.8) million, or ($0.66) in line with proportion. Overall not unusual stocks remarkable as of 8/12/22 used to be 10,973,759 stocks. Totally diluted remarkable stocks are roughly 22,109,472.

RECENT NEWS

SOBRsafe has made more than one bulletins in 2022 that spotlight rising partnerships and distribution channels this is laying the basis for long term enlargement.

On August twenty fourth, the corporate introduced that world production knowledgeable David Crandall has joined SOBRsafe within the function of Marketing consultant to the Board of Administrators. Mr. Crandall brings to SOBRsafe the imaginative and prescient and enjoy to lend a hand maximize present production capability, whilst positioning the corporate for long term global licensing and manufacturing. Mr. Crandall recently serves as govt director of producing and built-in product group lead for an American multinational aerospace and protection know-how corporate.

On August 18th, the corporate introduced that third-party administrator (TPA) Butterfield Onsite Drug Trying out (Butterfield) has introduced its new touch-based detection providing with an preliminary acquire of the SOBRcheck™ know-how. Butterfield has established a big buyer community over its 19 years within the trade which incorporates nationwide airways for trying out of pilots, flight attendants and floor staff. Butterfield is anticipated to have a devoted gross sales skilled constitute SOBRsafe answers to this community.

On August eleventh, the corporate introduced it has signed a distribution settlement with value-add reseller Reconnect. Reconnect is a Public Get advantages Company, dedicated to bettering results for individuals within the justice house. Reconnect leverages know-how to scale back incarceration, recidivism and prices. Reconnect intends to deploy the corporate’s SOBRcheck gadget as a important prescreening software.

On August ninth, the corporate introduced its partnership with rideshare corporate RubiRides, a membership-based carrier that delivers dependable transportation with an emphasis on protection for youngsters via a community of vetted and devoted drivers. SOBRsafe will provide RubiRides’ rising pool of drivers with the SOBRsure wearable wristband. SOBRsafe will empower RubiRides control with a centralized, real-time reporting and protection intelligence platform.

On August third, the corporate introduced it used to be awarded the Occupational Well being & Protection (OH&S) New Made of the 12 months within the Protection Tracking Gadgets class for its SOBRcheck™ gadget. OH&S is a number one e-newsletter within the business well being and protection marketplace. On this 12 months’s OH&S New Product Awards, 26 firms had been decided on for the mag’s annual New Made of the 12 months award throughout 31 classes.

On July twenty sixth, the corporate introduced a partnership with North-Big name Care, an cutting edge digital fact alcohol dependency remedy platform, wherein they’re going to make the most of the SOBRcheck wristband. The settlement requires an preliminary 1,150 white label bands which North-Big name intends to deploy during the 2022 and anticipates as much as 7,500 affected person usage within the first 12 months of this system.

On July thirteenth, the corporate introduced it had signed an settlement with Continental Services and products, a Michigan founded meals distributor. As Michigan’s greatest meals control corporate, Continental has over 1,800 staff throughout six places and its final mile fleet serves greater than 700 company consumers. Continental will make the most of the corporate’s SOBRcheck tool.

On June 2d, the corporate introduced that it signed its first Grasp Distributor Settlement with Virginia-based RecoveryTrek. RecoveryTrek supplies cutting edge alcohol control answers to shoppers national within the behavioral well being, judicial, office and human services and products markets. Beneath the settlement, RecoveryTrek intends to extend SOBRsafe’s nationwide footprint as a reseller of its merchandise.

MANAGEMENT

SOBRsafe is led through a seasoned control group with a few years of enjoy in trade building, know-how, entrepreneurship and finance. Chairman and CEO Dave Gandini is an skilled entrepreneur and has spent his occupation in telecommunications, know-how, instrument and automatic packaging. In his function at SOBRsafe, he’s answerable for capital introduction, new trade acquisition, trade technique & building and partnership income era.

The Leader Monetary Officer for the corporate is Jerry Wenzel. Mr. Wenzel has greater than 40 years of management enjoy in monetary control and reporting, public accounting and auditing. Previous to SOBRsafe, he used to be a spouse within the company B2BCFO from 2018 via 2021, offering strategic monetary management to trade homeowners relating to enlargement and transaction alternatives. From 2016 to 2018, he used to be the Leader Monetary Officer for PRIDE Centric Assets, a countrywide business meals carrier apparatus purchasing workforce.

Scott Bennett is the Government Vice President of Industry Operations and has greater than twenty years’ enjoy as a senior govt in quite a lot of technology-driven enterprises. Previous to becoming a member of SOBRsafe, Scott co-founded cybersecurity company GBprotect, and served as its COO till its a success sale to Nuspire. Along with his technical contributions to GBprotect, Scott used to be additionally answerable for key trade purposes similar to high quality assurance, stock control and customer support.

Leader Income Officer Michael Watson has greater than 25 years’ enjoy as a gross sales and advertising govt in state-of-the-art organizations. He has garnered experience throughout product development, buyer acquisition and partnership formation and optimization. Previous to SOBRsafe, Michael invented and effectively advertised a groundbreaking trade services and products product for the healthcare trade. Michael is achieved in development gross sales techniques and executing product rollouts in each B2B and B2C environments.

SUMMARY

SOBRsafe has taken a management place within the alcohol coverage control trade through that specialize in prevention as opposed to reactive, or after-the-fact processes. The corporate is starting to generate revenues from its SOBRsafe platform with two units focused on explicit finish markets. The corporate’s number one gross sales focal point first of all will likely be last-mile fleet supply firms with a goal measurement of over 250 drivers. The corporate has already won more than one trade endorsements and enhance from belongings & casualty insurers, alcohol trying out suppliers, DUI probation businesses and supply and warehousing organizations.

The corporate has a recession resistant trade fashion wherein the desire for protected using and the desire for companies to be extra value environment friendly is a perennial necessity. Lengthy-term habitual income contracts additionally supply balance to the trade fashion. The corporate will start to generate significant revenues within the 2d part of 2022, on the other hand 2023 is anticipated to be a income leap forward 12 months with regards to standard commercialization of the corporate’s merchandise.

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