Business Context and Reporting Period
Company: SOBR Safe, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: September 28, 2021
Event: Entry into a Material Definitive Agreement (Financing Transaction)
On September 28, 2021, SOBR Safe, Inc. closed a financing transaction with a leading healthcare fund (the "Purchaser"). The company is incorporated in Delaware and maintains its principal executive offices in Boulder, Colorado.
Key Financial Metrics and Transaction Details
This filing reports a specific capital raise rather than periodic financial performance metrics (revenue, profit, cash flow). The transaction details are as follows:
- Proceeds Received: $2,500,000
- Instrument 1 (Debenture): 18% Original Issue Discount Convertible Debenture with a principal amount of $3,048,780.50.
- Instrument 2 (Warrant): Common Stock Purchase Warrant to purchase up to 1,219,512 shares.
- Warrant Exercise Price: $2.00 per share (adjusts to $1.00 per share upon an event of default).
- Debenture Maturity: March 27, 2022.
- Interest: Does not accrue interest unless an event of default occurs.
Material Changes and Terms
The filing discloses the issuance of unregistered securities exempt under Section 4(a)(2) of the Securities Act of 1933. Key terms include:
- Conversion Price (Debenture): Voluntary conversion is at the lesser of 100% of the closing price on the trading day prior to the Closing Date or 75% of the average VWAP during the 5 trading days prior to conversion. Automatic conversion upon a Qualified Offering occurs at the lesser of the Conversion Price or 75% of the offering price.
- Warrant Duration: Exercisable for five years.
- Cashless Exercise: Available only if the company fails to have an effective registration statement six months from the warrant date.
Guidance, Outlook, and Risks
Management Commentary: The company issued a press release on September 29, 2021, announcing the closing of the transaction. The filing does not provide specific forward-looking guidance, revenue projections, or operational outlook beyond the capital raise.
Risks and Contingencies:
- Dilution Risk: The conversion of the debenture and exercise of the warrant will result in the issuance of new common stock, subject to discount mechanisms (25% discount on VWAP).
- Default Provisions: The debenture contains industry-standard default provisions. An event of default triggers interest accrual and adjusts the warrant exercise price to $1.00.
- Liquidity: The transaction provides immediate liquidity of $2.5 million but creates a debt obligation maturing in March 2022.
Investor Verification Checklist
- Verify the current trading price and 5-day VWAP of SOBR Safe common stock to calculate the potential conversion price of the debenture.
- Review the full text of the Debenture (Exhibit 10.1) and Warrant (Exhibit 10.2) for specific default triggers and anti-dilution adjustments.
- Confirm the company's ability to maintain an effective registration statement to avoid cashless exercise provisions on the warrant.
- Assess the company's cash burn rate to determine if the $2.5 million proceeds are sufficient to reach the March 27, 2022 maturity date without refinancing.