SOBR Safe Inc. Strengthens Balance Sheet; Minimally Dilutive Financing Accelerates Accretive Growth Initiatives ($SOBR)
SOBR Safe, Inc. (NASDAQ: SOBR) has historically proven it can decouple from weak broader markets. Now, they’re showing off another strength: despite its smallcap size, they can raise capital on shareholder-friendly terms. Not many other companies with roughly $30 million market caps can make the same claim. Quite to the contrary, in fact, as most in that arena must succumb to terms more representative of vulture financing, with terms ambivalent to whether the genuine interest of the investor is to support growth or to make money by flipping the cheap warrants that usually come with the deal.
The truth is institutional investors often feast on weakness. Thus, investors should be sure to recognize that companies needing cash, especially in the current environment of rising interest rates, have more than just business potential but also a clear path to achieve their objectives. With this deal, SOBR now has added capital to maximize its potential and expedite its ability to enhance already disruptive alcohol-screening technology well ahead of its original 2024 plan. In addition to extending its financial runway, the deal paves the way for SOBR to be even more opportunistic in executing its sales, integration, and licensing strategy.
Investors responded well to the news by sending SOBR shares higher by over 6% on Friday, decoupling from fragile markets last week. And as investors position for best-in-breed companies, particularly those blazing a new trail to market with unrivaled technologies, those gains could be the precursor for more.
Deals, Financing Support A Higher Valuation
That’s a likely proposition, supported by tangibles. Most recently, SOBR announced signing a software as a service (SaaS) agreement with a prominent Native American tribe, a Self-Governing Nation in the United States serving thousands of members. The deal calls for initially implementing the SOBRcheck™ technology to ensure its transit fleet is 100% alcohol-free. An unintrusive method of supporting safe operations is good news for all, but here’s why investors should be most excited about that agreement.
If SOBR delivers the client’s desired results – which existing data suggests it can – then that deal could lead to additional implementations across other critical, safety-sensitive functions and potentially expedite the pathway to earning revenue-generating business from among the 574 sovereign tribal nations in the United States. Still, while the inherent potential from this deal can be significant, SOBR has plenty more contributing to an expected business surge in 2023. A growing presence in the manufacturing and telematics markets could fuel that intention.
In fact, by monetizing near and long-term marketability opportunities in those markets, modeling for higher share prices based on revenue multiples alone is a warranted and conservative expectation.
SOBRcheck: Best-In-Class Alcohol Screening Technology
Sure, that’s speculative. However, it’s a sentiment supported by SOBR inking substantial deals and from its technology earning major industry accolades, including Occupational Health & Safety 2022 New Product of the Year and Child Safety Networks Safe Family Seal of approval for Safety Monitoring Devices. That recognition can be rocket fuel to its 2023 mission by immediately adding industry credibility that can accelerate market penetration and product adoption in multiple markets faster than expected. Incidentally, in addition to the demand generated from the private sector, SOBR is ideally positioned to benefit from legislation written more proactively than ever to protect businesses, schools, and highways from incidents and catastrophes related to over-the-limit alcohol consumption.
That position isn’t a coincidence; it’s a result of SOBR bringing to market unique alcohol screening technologies that improve upon existing solutions. Unlike other detection systems, SOBRcheck measures alcohol presence through finger touch technology, requiring no breath test or blood draw. Moreover, it facilitates clients to start screening on the fly from SOBRcheck’s easy implementation and seamless integration into a company’s cyber infrastructure. These two reasons have become primary drivers of client interest and platform adoption as they address the shortcomings of traditional screening methods.
Undoubtedly, the more critical consideration driving SOBRcheck adoption is that the device and platform effectively screen drivers. Often implemented at facility entry points, workers place a fingertip or palm on a device that generates a reading within 20 seconds. If the test detects alcohol, a report is generated that immediately flags the employee for management intervention, likely resulting in them not receiving the keys to a motorized vehicle, whether an 18-wheel truck or a forklift. However, SOBRcheck is more than just a door monitor.
Beyond managing employee entrances, the SOBRcheck platform interfaces client infrastructures by creating reports and aggregating data via real-time reporting and analytics. SOBR believes that advantage can forever change how companies monitor and manage zero-tolerance compliance.
94% Accuracy Is Best In Class Performance
Of course, the platform must be accurate, especially with life and livelihoods at stake. SOBRcheck checks that box, scoring an accuracy rate of 94% compared to low to mid 80% for current commercial breathalyzer technology. As mentioned, its innovative method of analyzing the natural humidity and vapor of the skin is a welcome departure from the most commonly used alcohol detection methods requiring breath, saliva, or blood. What’s more, its uses can scale.
SOBR offers additional detection devices, including the SOBRsure™ wristband, which utilizes the same touch technology but as a wearable device. This feature provides a considerable competitive advantage because it allows for initial and ongoing employee management. Don’t disparage that capability, by the way. SOBR’s technologies are not designed to assist in the micromanagement of employees but rather to support companies in doing the right thing: keeping intoxicated drivers off the highways and equipment.
And if SOBRcheck results in a single life saved, its value extends for generations. Considering its applications can be used for DUI management, school bus companies, ride-share companies, and last-mile fleet businesses, that’s a likely outcome.
2023 Deals Expedite SOBR’s Growth
Proving that intended result could come sooner than later. Last month, SOBR announced that product development and manufacturing firm BGM Electronic Services, Inc. is implementing SOBRcheck™ as its new front-line alcohol screening solution, an agreement expediting SOBR’s entry into the $4 billion U.S. manufacturing market. Inherent to the deal are expectations for it to fast-track introductions and relationships with major auto manufacturers, including BGM clients Ford (NYSE: F), GM (NYSE: GM), and Stellantis (NYSE: STLA) (Chrysler-Fiat). The revenue-generating opportunity can be substantial even as a 3rd party relationship through BGM. Keep in mind that during the height of the COVID pandemic, General Motors contracted BGM for the GM/Ventec/U.S. Government Ventilator Project, successfully delivering 390,000 electronic assemblies for 30,000 ventilators in just 150 days. Said more precisely, SOBR is now inherently well-connected.
By the way, BGM’s work didn’t go unrecognized. GM designated them its 2020 Supplier of the Year – Over Drive Achievement Award. That validation could help put businesses from logistics and defense manufacturing powerhouses like United Parcel Service (NYSE: UPS), FedEx (NYSE: FDX), and Lockheed Martin (NYSE: LMT) in SOBR’s sights. Again, either directly related or through a third party, SOBR is a winner. There’s more to like.
Expertise To Capitalize On The $8 Billion Telematics Market
The company hired Chris Burton as Director of Commercial Development. He brings over 15 years of enterprise technology sales success and is well-connected to expedite the introduction of SOBRsafe to the $8 billion U.S. telematics market through established industry relationships, including original equipment manufacturers (OEMs) Daimler, Freightliner, Continental, and Thomas Built Buses. Telematics is the “brain” inside a vehicle that provides real-time, remote reporting on driver behavior, performance, and fitness for duty.
Remember, legislative voices are rising, and here’s the loudest one that could help usher in SOBR’s shift to hypergrowth: the National Transportation Safety Board (NTSB) wants the most effective technology to screen for alcohol implemented as quickly as possible. NTSB Chair Jennifer Homendy has not minced words about the urgency in making the agency’s plan the law, recently saying, “We need to implement the technologies we have right here, right now, to save lives.” People should and probably are letting her know that through SOBR, practical measures of protecting the roads, workplaces, and people on and in them are available. So, why is her statement timely to SOBR and its investors?
Because SOBRsafe’s passive alcohol detection platform, SOBRcheck™, can already meet, integrate, and expedite embedding the objectives the NTSB refers to. In fact, with deals to ensure driver safety for companies like Continental Services and its 1,800 employees across four states, they already are. By providing an effective solution to proactively manage alcohol policy while complementing existing safety procedures, SOBR can benefit nearly any industry.
Another fact to remember is that the NTSB wants drug and alcohol screening mandates met by 2025. Thus, a momentum-fueled wave of business could be headed SOBR’s way.
Screening Applications For Air, RideShare, Child Safety
That business will come from more than companies managing highway and industrial vehicles. Partner company Butterfield Onsite Drug Testing is broadening SOBR’s reach into the airline industry by building a SOBRsafe sales team to represent the company to a potentially global audience. Additional working partnerships expand company coverage.
For example, SOBR established a distribution deal with the public benefit corporation Reconnect, which aims to renovate outdated substance management systems. The SOBRsafe platform provides a centralized space for participants within the justice space to digitally record data and access management systems. Similar deals with North-Star Care, Continental Services, and RecoveryTrek also help members regulate test results, expanding SOBR’s reach further. That’s not all.
SOBR’s partnership with the ride-share app RubiRides is another example of a practical solution to dangerous potential and liability. RubiRides specializes in trustworthy transportation for kids, creating a need for drivers to be reliably tested. SOBRcheck™ wristbands are the perfect tool to meet that challenge since they can continually monitor alcohol-free safety, upload data to the cloud in real-time, and ensure sober driving.
As voices get louder, the same wristband technology should see adoption among school bus companies and their drivers without delay. Needless to say, the revenue-generating potential from that market opportunity could reach the billion-dollar-plus level.
Deserving Of Its Rally
Thus, considering the confluence of contributions, SOBR’s recent share price rally is well deserved. And despite the run, current valuations still keep a ground-floor investment opportunity in play. Keep in mind that off of its YTD highs, SOBR is better positioned to accelerate revenue growth than at any time in its history. Moreover, unlike most smallcaps trying to develop a product or find a niche, SOBR has a marketed product that has earned the OSHA New Product of the Year award and the Child Safety Networks Safe Family Seal of Approval for safety monitoring devices. Those awards serve not only as recognition but as validations likely to contribute to an expected breakout year in 2023.
Keep in mind that plenty of groundwork has been completed to reach this point in its business lifecycle and that the rewards should show through escalating revenue growth. Once numbers get reported, which the SOBR bulls expect to be impressive, updated revenue models should support a trajectory toward reclaiming its 52-week high of $9.57, roughly 376% higher than the current. Based on what SOBR is telling the markets, moving toward that target may be the path of least resistance.
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