Disclaimer Regarding Forward Looking Statements

Our Management's Discussion and Analysis or Plan of Operations contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national and local general economic and market conditions; demographic changes; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission ("SEC").

Although the forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.





Overview

We have developed an alcohol detection device called "SOBR", for which we are still performing beta testing. The device is a patented system for use in detecting alcohol in a person's system by measuring the ethanol content in their perspiration. Once SOBR is developed and tested, we plan to market the device to four primary business segments: (i) as an aftermarket-installed device to companies and institutions that employ or contract with vehicle drivers, such as trucking companies, limousine companies, and taxi cab companies, where the system will be marketed as a preventative drunk driving detection system, with a possible ignition locking device, (ii) the original equipment manufacturing (OEM) market, where the device would be installed in new vehicles during the original building of a vehicle, (iii) companies and institutions that have an interest in monitoring their employees' or contractors' alcohol level due to their job responsibilities, such as surgeons prior to entering surgery, pilots prior to flying aircraft, mineworkers prior to entering a mine, or the military for personnel returning to a military base from off-base leave or prior to leaving for a mission, and (iv) companies that would want to provide knowledge to their customers of their current alcohol level, such as lounge and bar owners, or customers attending a golfing event. We believe SOBR offers a unique solution to the national alcohol abuse problem.

We have developed a marketing plan that our management believes will gain market recognition for the SOBR device, primarily through trade shows, industry publications, general solicitation, social media, and public relations, as well as hopefully generating the demand for the SOBR device through the use of selling groups, such as channel sales, distributors, and independent sales contractors. We believe the primary market for the in-vehicle SOBR device initially is the commercial vehicle market, such as trucking companies, taxi cab companies, limousine companies, and bus companies. Many of these companies have a significant financial interest in eliminating drunk drivers from their operations. Secondarily, individuals may desire to monitor a family member's vehicle, such as an automobile operated by a minor or a family member with a past alcohol issue.






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We believe the primarily market for the portable SOBR device is its use by companies and institutions that have an interest in monitoring their employees' or contractors' alcohol level due to their job responsibilities, such as surgeons prior to entering surgery, pilots prior to flying aircraft, mineworkers prior to entering a mine, or the military for personnel returning to a military base from off-base leave.

On May 6, 2019, we signed a definitive Asset Purchase Agreement (the "APA") with IDTEC, LLC, to acquire certain assets related to robotics equipment, which our management believes is synergistic with our current assets, from IDTEC in exchange for shares of our common stock equal to 60% of our then outstanding common stock. The APA is subject to several conditions precedent, primarily: (i) we must be current in our reporting requirements under the Securities Exchange Act of 1934, as amended, (ii) we must complete a reverse stock split of our common stock such that approximately 8,000,000 shares will be outstanding immediately prior to closing the transaction with no convertible instruments other than as set forth in the APA and our authorized common stock must be reduced to 100,000,000 shares, and (iii) we must not have more than approximately $150,000 in current liabilities. We do not believe we will close this transaction until early 2020. At the time of the closing of the transaction we estimate we will have approximately 257,000,000 shares of our common stock outstanding before factoring in any reverse stock split.

In advance of closing the transaction, IDTEC and a few other affiliated parties have been advancing funds to us and/or on our behalf for the costs related to the transaction, as well as for further developing and enhancing our current SOBR product. The funds advanced will be turned into promissory notes at the closing of the APA and are expected to be around $1 million by the time we close the transaction.

The description of the APA set forth in this Quarterly Report is qualified in its entirety by reference to the full text of that document, which is attached as Exhibit 10.6 to this Current Report on Form 8-K and is incorporated herein by reference.

If the closing occurs, the assets being acquired under the APA are the same assets that were subject to the Letter of Intent with First Capital Holdings, LLC we previously announced in our Current Report on Form 8-K filed on November 6, 2018.





Corporate Overview

We were formed in August 2007 to publish and distribute Image Magazine, a monthly guide and entertainment source for the Denver, Colorado area. We generated only limited revenue and essentially abandoned the business plan in January 2009.

On September 19, 2011, we, Imagine Media, Ltd., a Delaware corporation, acquired approximately 52% of the outstanding shares of TransBiotec, Inc., ("TBT") from TBT's directors in exchange for 12,416,462 shares of our common stock. The accounting for this transaction was identical to that resulting from a reverse acquisition, except that no goodwill or other intangibles were recorded, as our shareholders retained the majority of the outstanding common stock of Imagine Media LTD after the share exchange. At the time, these shares represented approximately 52% of our outstanding common stock. TBT was a California corporation.

On January 17, 2012, our Board of Directors amended our Certificate of Incorporation changing our name from Imagine Media, Ltd. to TransBiotec, Inc.






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On January 31, 2012, we acquired approximately 45% of the remaining outstanding shares of TBT in exchange for 10,973,678 shares of our common stock. Because of the September 2011 and January 2012 acquisitions of TBT common stock, we currently own approximately 98.62% of the outstanding shares of TBT, and we control its board of directors and officer positions. The remaining 1.38% is owned by non-affiliated individuals that did not participate in the share exchange.

As a result of the acquisition, TBT's business is our business, and, unless otherwise indicated, any references to "we" or "us" include the business and operations of TBT.

We have developed and patented a high technology, state-of-the-art transdermal sensing system that detects blood alcohol levels through a person's skin.





The following discussion:



    ·   summarizes our plan of operation; and

    ·   analyzes our financial condition and the results of our operations for the
        three months ended March 31, 2019 and 2018.

This discussion and analysis should be read in conjunction with TBT's financial statements included as part of this Quarterly Report on Form 10-Q, as well as TBT's financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2018.






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Results of Operations for Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018

Summary of Results of Operations





                                                       Three Months Ended March 31,
                                                          2019                2018
Revenue                                              $             -       $         -

Operating expenses:

General and administrative                                    69,014            79,843
Total operating expenses                                      69,014            79,843


Operating loss                                               (69,014 )         (79,843 )

Other expense:
Loss on fair value adjustment-derivatives                       (800 )               -
Interest expense                                             (63,886 )         (64,027 )
Amortization of interest - beneficial conversion
feature                                                       (5,356 )               -
Total other expense                                          (70,042 )         (64,027 )

Net loss                                             $      (139,289 )     $  (143,870 )




Operating Loss; Net Loss

Our net loss decreased by $4,581 from $143,870 to $139,289, from the three month period ended March 31, 2018 compared to the three month period ended March 31, 2019. Our operating loss decreased by $10,829, from $79,843 to $69,014 for the same periods. The change in our net loss for the three months ended March 31, 2019, compared to the prior year period, is primarily a result of us having a loss on fair value adjustment from derivatives in 2019 compared to none in 2018, a decrease in interest expense related to full amortization of debt issuance costs, and a decrease in general and administrative expenses in 2019 compared to 2018. The changes are detailed below.





Revenue

We have not had any revenues since our inception. Since September 2011, we have been involved in the development, testing and marketing of SOBR, our unique alcohol sensor technology. Although we have not had any sales to date, we believe we are close to our first sales and revenue, but that will be dependent upon our ability to raise sufficient funds to bring the SOBR device to market.

General and Administrative Expenses

General and administrative expenses decreased by $10,829, from $79,843 for the three month period ended March 31, 2018 to $69,014 for the three month period ended March 31, 2019, primarily due to a decrease in insurance and consulting expenses.

Fair Value Adjustment - Derivatives

Loss on fair value adjustment - derivatives was $800 for the three month period ended March 31, 2019, compared to $0 for the three month period ended March 31, 2018. This increase was due to us not having a derivative liability at March 31, 2018, but having one at March 31, 2019. The loss on fair value adjustment - derivative liability we recorded during the three month period ended March 31, 2019 was an adjustment due to us having a convertible note payable that contains an embedded derivative.






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Interest Expense

Interest expense decreased by $141, from $64,027 for the three month period ended March 31, 2018 to $63,886 for the three month period ended March 31, 2019. For both periods these amounts are largely due to the interest on outstanding debt.

Amortization of Interest - Beneficial Conversion Feature

During the three month period ended March 31, 2019, our amortization of interest - beneficial conversion feature was $5,356, compared to none during the three month period ended March 31, 2018. The expense in 2019 is related to an unamortized discount on convertible non-related party notes payable that contain a beneficial conversion feature.

Liquidity and Capital Resources for Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018





Introduction

During the three months ended March 31, 2019 and 2018, because of our operating losses, we did not generate positive operating cash flows. Our cash on hand as of March 31, 2019 was $1,148 and our monthly cash flow burn rate is approximately $25,000. As a result, we have significant short term cash needs. These needs are being satisfied through proceeds from the sales of our securities and loans from both related parties and third parties. We currently do not believe we will be able to satisfy our cash needs from our revenues for some time, and there is no guarantee we will be successful in the future satisfying these needs through the proceeds generated from the sales of our securities.





Our cash, current assets, total assets, current liabilities, and total
liabilities as of March 31, 2019 and as of December 31, 2018, respectively, are
as follows:



                             March 31,       December 31,
                               2019              2018           Change

Cash                        $     1,148     $           89     $  1,059
Total Current Assets        $    13,679     $       13,080     $    599
Total Assets                $    13,679     $       13,080     $    599
Total Current Liabilities   $ 3,506,388     $    3,436,511     $ 69,877
Total Liabilities           $ 3,506,388     $    3,436,511     $ 69,877

Our current assets increased slightly as of March 31, 2019, as compared to December 31, 2018, due to us having more cash on hand, offset by slightly less prepaid expenses at March 31, 2019. The increase in our total assets between the two periods was also related to the increased cash on hand as of March 31, 2019, offset by the slightly less prepaid expenses.

Our current liabilities increased by $69,877 as of March 31, 2019 as compared to December 31, 2018. This increase was primarily due to increases in notes payable - related parties, notes payable - non-related parties, derivative liabilities, and accrued interest payable, offset by decreases in accounts payable, accrued expenses and related party payables.

In order to repay our obligations in full or in part when due, we will be required to raise significant capital from other sources. There is no assurance, however, that we will be successful in these efforts.






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Sources and Uses of Cash



Operations

We had net cash used for operating activities of $111,691 for the three month period ended March 31, 2019, as compared to net cash used for operating activities of $20,211 for the three month period ended March 31, 2018. For the period in 2019, the net cash used in operating activities consisted primarily of our net loss of $139,506, offset by stock warrants expense of $6,982, amortization - beneficial conversion feature of $5,356, and change in fair value of derivative liability of $800, and changes in our accounts payable of $17,741, accrued expenses of $1,749, accrued interest payable of $35,857, related party payables of $3,003, stock subscriptions payable of $403, and prepaid expenses of $460. For the period in 2018, the net cash used in operating activities consisted primarily of our net loss of $143,049, offset by stock warrants expense of $9,694, and changes in our accounts payable of $110,654, accrued interest payable of $42,374, related party payables of $168,658, accrued expenses of $14,179, and prepaid expenses of 1,413.





Investments

We had no cash provided by or used for investing activities during the three month period ended March 31, 2019 or March 31, 2018.





Financing

Our net cash provided by financing activities for the three month period ended March 31, 2019 was $112,750, compared to $20,300 for the three month period ended March 31, 2018. For the three month period ended March 31, 2019, our net cash from financing activities consisted of proceeds from notes payable - related parties of $44,750, proceeds from notes payable - non-related parties of $29,000, and proceeds from issuances of common stock - non-related parties of $39,000. For the three month period ended March 31, 2018, our net cash from financing activities consisted entirely of net proceeds from notes payable - related parties of $20,300.

Off Balance Sheet Arrangements

We have no off balance sheet arrangements as of March 31, 2019 and December 31, 2018.

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