Company: SOBR
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001477932-25-008092
Chunk: 45

Company: SOBR Safe, Inc.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 1
Chunk 45
---
 cost of goods and services for the nine months ended September 30, 2024 was $81,929 resulting in a gross profit of $66,381. The prior period cost of goods and services included an inventory cost adjustment of $23,410 resulting in an adjusted gross margin of 58.4%. The decrease in gross margin is primarily driven by an increase in cost of goods associated with product replacements during the third quarter of 2025. The replacements were linked to specific product quality issues that have since been identified and addressed. While this impacted gross margin in the short term, the Company has implemented corrective actions, including enhanced quality assurance processes and supplier performance reviews, to mitigate similar issues going forward. We expect these efforts to support margin recovery in future periods while maintaining our focus on customer satisfaction and product integrity. The gross margin adjusted for these replacements was 59.7%.

General and Administrative Expenses  

General and administrative expenses increased by $1,445,347, or 33.5%, from $4,310,791 for the nine months ended September 30, 2024, to $5,756,138 for the nine months ended September 30, 2025. This increase is primarily attributable to an increase in professional services spend of $852,678 principally for the 2025 consumer and commercial marketing programs launched for the first time, an increase in payroll costs of $548,060, an increase in business development expense of $80,494 offset by a decrease in insurance spend of $28,748.

 31Table of Contents

Stock-Based Compensation Expense

The Company had stock-based compensation expense of $370,180 for the nine months ended September 30, 2025, compared to $584,551 for the nine months ended September 30, 2024. The reduction in stock-based compensation expense is due to previously issued equity compensation awards becoming fully vested and no issuance of new awards in 2025.

Research and Development

Research and development expenses for the nine months ended September 30, 2025, and 2024, decreased by $335,226, or 55.4%, from $604,927 for the nine months ended September 30, 2024, to $269,701 for the nine months ended September 30, 2025. The decrease in research and development is due to the Company making improvements to its existing SOBRsafe software platform and enhancements to its mobile application, whereas the prior year spend was primarily driven by more expensive hardware development initiatives