Summary
- SOBR Safe is disrupting the alcohol testing industry.
- The company offers a stationary and a wristband product to replace breathalyzers.
- Alcohol or drugs are involved in the majority of workplace and automotive accidents.
- SOBR Safe's products offer greater flexibility, ease of use, and sanitary advantages.
- The company has no direct competition.
SOBR Safe ( SOBR ) aims to disrupt the alcohol testing industry by replacing breathalyzers with transdermal products. Breathalyzers have been around since 1954 but have not been a solution to the economic and safety issues created by alcohol consumption in the workplace and motor vehicles. Let's take a look at the problem and the SOBR Safe solution.
The Problem
Statistics show that 50% of American adults drink alcohol more than ten times a year and that at least 11% of Americans have an addiction problem. Alcohol and drugs are the leading causes of the workplace and automotive accidents. Studies show that alcohol or drugs contributed to 65 percent of on-the-job accidents and almost half of the workman's compensation claims. It is estimated that these accidents cost employers and insurance companies about $100 billion per year.
The U.S. Department of Transportation reports that alcohol is involved in about 40% of U.S. automobile accidents resulting in, on average, 32 deaths per day.
SOBR Solution
SOBR Safe offers a stationary product called SOBRcheck and a wearable wristband called SOBRsure. Both products identify the subject by biometrics and are transdermal products that detect alcohol evaporating through skin pores.
An employer can have employees place a finger on SOBRcheck at the beginning and end of their work shifts. SOBRcheck identifies the person and alerts if alcohol is detected.
SOBRcheck (SOBR Safe)
SOBRsure is a wristband that uses the same technology as SOBRcheck and is designed to be worn by alcohol rehabilitation patients and employees such as fleet drivers and machine operators. Bluetooth connects SOBRsure to a cell phone. An alarm is sent to a monitoring app if the wristband is removed or alcohol is detected.
SOBRsure (SOBR Sure website)
Product Advantages
SOBR Safe products offer a more sanitary solution than breathalyzers, which is important in this age of COVID, as they do not expose anyone to germs from breathing and saliva. SOBR Safe offers greater ease of use and flexibility. Administering breathalyzer testing at the entrance to a workplace creates a bottleneck, while SOBRcheck takes just seconds to perform, and SOBRsure is automatic. SOBR Safe products do not require constant management and offer effortless and continuous remote supervision and data collection.
There are all kinds of theories on how to trick breathalyzers , from chewing pennies to holding your breath. These theories may or may not be accurate, but the bottom line is that breathalyzer results are notoriously known for being inaccurate . As of this writing, SOBR Safe products do not measure the amount of alcohol in the bloodstream. SOBR Safe claims to be 93% accurate in determining the presence of alcohol. An Independent third-party evaluation is currently being conducted.
Company Strategy
The company is targeting workplace safety and alcohol rehabilitation for its customer base. In workplace safety, the initial goal is to reduce the risk of accidents by testing employees at the beginning and end of the work shift, eliminating the opportunity to work under the influence of alcohol. A by-product of this testing is data aggregation that SOBR Safe will offer insurance companies to create and promote safety program incentives for their clients.
SOBR Safe is not pursuing market share in the entire alcohol rehabilitation space. The company is seeking to attract voluntary alcohol rehabilitation centers and avoid the court-mandated alcohol testing market.
A third market opportunity is developing as drunk driving prevention detectors in every new car sold in the U.S. will be required by law beginning in 2026. To meet this opportunity, SOBR Safe must add blood alcohol measuring capabilities to its technology.
Revenue Model
The company has a direct sales staff of four, including the sales manager and 10 distributors involved solely in marketing drug and alcohol detection products. SOBR Safe is also partnered with a top 100 insurance company encouraging its customers to use SOBR Safe products. The company is working to establish similar partnerships with additional insurance companies.
The compilation of data as SOBR Safe gains new customers will enhance the ability to attract new insurance company partners and companies and government agencies seeking to reduce workplace and motor vehicle accidents. SOBR Safe also offers to license its transdermal technology for third-party use.
SOBR Safe has NDAs or is establishing NDAs with BMW, Ford, and GM to develop a telematics solution to meet the upcoming legislative requirements for alcohol monitoring systems for new automotive vehicles.
Management has created a low capex business plan by partnering with BGM Engineering for design, testing, and manufacturing, with Helm for packaging, distribution, and customer relations, and using distributors as a large portion of their sales team.
The SOBRcheck product is offered at $600, and SOBRsure at $400 per unit. The company charges $30/month per person for monitoring and alcohol detection.
Path to Profitability
There are about 15 million shares. The company has about $8 million in cash and no debt. The burn rate is currently about $6 M/year. $14 million will become available from converting warrants. There is sufficient funding for at least the next twelve months.
The most recently announced SOBR Safe contract is with TerraTech, which has about 200 employees. The contract will cost TerraTech $72K per year if TerraTech puts a SOBR Sure wristband for each employee. Department of Labor statistics indicates that a company with 200 employees, including 100 drivers, incurs over $300K per year n costs due to alcohol and drug-related accidents. This calculation implies a quarter of a million dollars in savings for a company similar to TerraTech utilizing SOBR Safe's technology.
SOBR Safe has announced six contracts since commencing commercial sales last summer. I estimate that SOBR Safe will reap about a quarter of a million dollars over the next 12 months from these contracts factoring in hardware sales and monthly monitor charges. Over 100 customers will be necessary to achieve profitability.
Competition
The only other commercial transdermal alcohol testing device I could find is made by Scram Systems, which merged with LMG Holdings about a year ago. Scram's device is a locked, court-ordered alcohol monitoring ankle bracelet that does not compete with SOBRsure's intended market.
LMG Holdings offers breathalyzers that lock an automotive vehicle's ignition if the subject's alcohol blood level is detected above legal limits. This device targets the court-ordered market and does not compete with SOBR Safe.
The legal requirement to add alcohol detection technology to new motor vehicles will attract new entrants with new technologies and offer SOBR Safe competition. One example is Sensear, a Swedish company, developing sensors that would be placed on a motor vehicle door or on the dashboard with the ability to detect alcohol in the air.
Risks
SOBR Safe is introducing new products and has yet to prove market acceptance. The company has yet to have its accuracy claim independently validated or validated by the marketplace. New technology, such as the touchless technology being developed by Sensear could prove superior alternatives.
The company protects its technology with patents for each of the two products offered and has several patents pending to limit competition as the technology is updated. The company's success depends on defending against reverse engineering on the strength of its patents.
Conclusion
SOBR Safe is a first mover attempting to replace breathalyzers as the most common means of alcohol testing. The company offers products that are more sanitary and easier to use. Statistics demonstrate that alcohol-related workplace and motor vehicle accidents are costly. SOBR Safe provides a proactive means to eliminate entry of alcohol into a workplace environment and for effortless monitoring of voluntary alcohol rehabilitation patients. Management has established an internal and external sales network and a low-capex business plan and secured six customers in just a few months from entering the commercial stage. I've taken a position and will be monitoring on the continuing execution of the company business plan.
For further details see:
SOBR Safe: A First-Mover In Workplace And Motor Vehicle Safety