OFFERING MEMORANDUM

Convertible Debentures

Maximum Offering: $3,000,000 Minimum Offering: $200,000

Minimum Investment: $10,000

This offering memorandum (“Offering Memorandum”) describes the private offering (“Offering”) of up to $3,000,000 in principal amount of unsecured convertible debentures (“Debentures”) of TransBiotec, Inc., a Delaware corporation (the “Company,” “we,” “our,” “us”). The Debentures will mature 36 months after issuance. They will not be redeemable during the first year after issuance, and after the first year the Debentures will be redeemable at 115% of face value. Interest on the Debentures will accrue at a rate of 12% per annum and will be payable annually. Interest for the first year will be paid in cash out of net proceeds of the Offering reserved and held in an escrow account (the “Escrow Account”) with FundAmerica Securities, LLC as escrow agent (the “Escrow Agent”) for that purpose. Interest for the second and third years will, in our discretion, be paid either in cash or by payment in kind (“PIK”) in the form of shares of our common stock. The Debentures will be convertible at any time, and from time to time, beginning twelve months after issuance, into shares of our common stock (the “Shares”). The Debentures, together with the underlying Shares are collectively referred to as the “Securities.” The Debentures will be convertible at a 35% discount rate to the average closing price per share of our common stock for the last fifteen trading days immediately prior to conversion (the “Conversion Price”); provided, however, that the right of conversion will be limited by the terms of the Debentures to the extent necessary to ensure that each Debenture holder will never beneficially own more than 4.9% of our class of common stock at any one time while any portion of the holder’s Debenture remains outstanding.

An investment in the Securities is subject to significant risks, including risks associated with floating rate Debenture conversion prices. See “Risk Factors.”

We are offering the Debentures pursuant to an exemption from the registration requirements of the Securities Act provided by Section 4(a)(2) of the Securities Act and Rule 506(c) of Regulation D thereunder (“Regulation D”). Each purchaser of Debentures in the Offering must qualify as an “accredited investor,” as defined in Rule 501(a) of Regulation D, and must verify their status as an accredited investor in accordance with Rule 506(c) before investing. All Securities offered hereby will be “restricted securities,” as defined in Rule 144(a)(3) under the U.S. Securities Act and will be required to bear one or more restrictive legends until the legends are no longer required under applicable federal and state securities laws.

Instructions for investing and for verifying your accredited investor status are included at the beginning of the Debenture Purchase Agreement, which is attached as Annex A to this Offering Memorandum (“Purchase Agreement”). The Debentures are offered on a “best efforts” basis through Arrowroot Partners (the “Placement Agent”), which is acting as the managing dealer and syndicate manager for the Offering, and a group of selling broker-dealers (the “Selling Group”). The Placement Agent and each of the Participants in the Selling Group is registered as a broker-dealer with the United States Securities and Exchange Commission (the “SEC”) and is regulated by the Financial Industry Regulatory Authority (“FINRA”). We will pay placement fees (“Placement Fees”) of up to 8% of the total amount raised in the Offering, of which 3% will be allocated to the Placement Agent for conducting due diligence and organizing the Selling Group, and the remaining up to 5% will be offered to selling brokers in the Selling Group. Debentures may be purchased in increments of $5,000, with the minimum investment being $10,000. Each prospective purchaser is required to remit the amount they wish to invest when submitting their Debenture Purchase Agreement. This amount will be held in the Escrow Account until the earlier of a closing of the Offering, the rejection of the offer to purchase Debentures, or the cancellation of the Offering. The Offering will be made on a continuous basis until 5:00 p.m. on June 30, 2016 (the “Termination Date”), unless earlier terminated or canceled. The Termination Date may be extended at our discretion for up to an additional three months, through September 30, 2016. There will be no closing of the Offering until a minimum of $200,000 is raised. After an initial closing is held, offers to purchase Debentures will be aggregated for subsequent closings to be held on a monthly basis until the maximum of $3,000,000 has been raised or until the Termination Date, whichever is earlier. The Offering may be canceled by the Company and the Placement Agent at any time, and will in any event be canceled if no closing has occurred before the Termination Date. In the event that your offer to purchase Debentures is rejected or the Offering is canceled, then the amount you have remitted will be promptly returned to you, without interest or deduction. Estimated Offering Offering Price (1) Expenses (2) Net Proceeds Minimum Offering (3) $ 200,000 $ 20,000 $ 180,000 Maximum Offering (4) $3,000,000 $ 275,000 $ 2,715,000 ___________________ (1) You may offer to purchase Debentures in increments of $5,000, with a minimum investment of $10,000. (2) Estimated offering expenses include an 8% Placement Agent Fee and anticipated legal, accounting and escrow costs. (3) We must receive offers to purchase a minimum of $200,000 of Debentures before we will hold an initial closing of

the Offering. (4) Up to a maximum of $3,000,000 may be raised in the Offering in one or more closings.

The date of this Offering Memorandum is March 1, 2016

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LEGAL NOTICES

No person is authorized in connection with the Offering to give any information or to make any representation not contained in this Offering Memorandum, and, if given or made, such other information or representation must not be relied upon as having been authorized by us, by the Placement Agent, or by any of our respective representatives. This Offering Memorandum does not constitute an offer to sell Debentures to any person in any jurisdiction where it is unlawful to make such an offer. The Company is offering the Securities in reliance upon exemptions from registration under the Securities Act for offers and sales of securities that do not involve a public offering. The Securities have not been registered under the Securities Act or any state securities laws and may not be resold except pursuant to an exemption from, or in a transaction not subject to, those registration requirements. As a prospective investor, you should be aware that you might be required to bear the financial risks of an investment in the Securities for an indefinite period of time. In deciding whether to invest, you must rely on your own examination of our company and the terms of the Offering, including the merits and risks involved. Neither we nor the Placement Agent, nor any of our respective representatives, is making any representation regarding the advisability or legality of an investment in the Securities under any applicable legal investment or similar laws or regulations. You should not construe the contents of this Offering Memorandum as legal, business or tax advice, and you should consult your own counsel, accountants, investment, tax, financial, and other advisers as to the legal, business, tax, investment and financial aspects of a purchase of the Securities. You and your own advisers should carefully review this Offering Memorandum, including annexes, and should focus carefully on the risks described in the Offering Memorandum and annexes, before deciding whether to invest. This Offering Memorandum contains summaries we believe are accurate with respect to the documents described, but you must refer to the actual documents themselves for complete information. All such summaries are qualified in their entirety by such reference. Copies of documents referred to in this Offering Memorandum are either annexed to this Offering Memorandum or will be made available to you by the Company upon request. We reserve the right to modify or withdraw the Offering at any time and to reject any commitment to purchase Debentures, in whole or in part, for any or no reason. We will respond to any questions that you or your representatives or advisers may have concerning the terms and conditions of the Offering and will make available for examination by you or your representatives or advisers any additional information that we possess or can acquire without unreasonable effort or expense that is necessary to verify the accuracy of the information furnished in the Offering Memorandum. The terms and conditions of the Offering and of the Securities offered hereby are governed by this Offering Memorandum, the Purchase Agreement between each purchaser and the Company, the form of which is attached as Annex A and the form of Debenture which is attached as Annex B (the “Debenture”). The description of any matters in the text of this Offering Memorandum is subject to and qualified in its entirety by reference to the annexes to this Offering Memorandum.

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Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Debentures and/or Shares or passed upon the adequacy or accuracy of this Offering Memorandum. Any representation to the contrary is a criminal offense. An investment in Debentures and underlying Securities involves a high degree of risk and illiquidity and should be considered only by persons who can afford to sustain a loss of their entire investment. See “Risk Factors.” There will not be any trading market for the Debentures, and our shares of common stock are only thinly traded in the over-the-counter market. The Securities are subject to restrictions on transferability and resale under applicable securities laws. As of the date of this Offering Memorandum, we have 100,000,000 shares of common stock authorized and 25,000,000 shares of preferred stock authorized. As of the date of Offering Memorandum, we have 65,251,068 shares of common stock outstanding, with an additional (estimated) 78,779,293 shares due to be issued upon conversions of outstanding securities convertible into our common stock. As a result, we do not have sufficient authorized common stock to honor the conversions of our currently outstanding convertible instruments if they were all converted (for this purposes we are disregarding the limiters contained in some of the convertible instruments that would disallow conversions if such conversion would cause the holder to beneficially own more than 4.9% of our outstanding common stock) and, therefore, also do not currently have sufficient authorized common stock to effect conversions of the Debentures related to this Offering. As a result, we have agreed to set aside $15,000 from the Offering proceeds, which is the amount we estimating will be required in order to file the required proxy statement or information statement with the Securities and Exchange Commission, as well as the mailing of the materials to our shareholders, in order to effect the increase in our authorized common stock to an amount reasonably likely to cover conversions of the Debentures related to this Offering, at least sufficient to cover us in the event we receive total gross offering proceeds of up to $500,000. See “Use of Proceeds” and “Capitalization” for additional information. The Securities may not be transferred or resold except pursuant to registration under the Securities Act and applicable state laws or exemptions from such registration. As a result, you will be required to bear the financial risks of your investment in Debentures and the underlying Securities for an indefinite period of time. In making an investment decision, investors must rely on their own examination of the Company, the Securities and the terms of the Offering, including the merits and risks involved.

By accepting delivery of this Offering Memorandum, you acknowledge and agree that this Offering Memorandum has been prepared and furnished to you solely for your use and the use of your advisers so you can consider and evaluate an investment in the Securities offered by this Offering Memorandum. This Offering Memorandum and the information contained herein may not be reproduced, distributed or used for any other purpose without our express written consent. You agree to make any of your representatives and advisers with whom you share this Offering Memorandum aware of the terms of this paragraph and to indemnify us and the Placement Agent, and our respective affiliates, employees and agents, for your failure and/or the failure of such representatives and advisers to abide by these conditions. Likewise, you agree that you will not, directly or indirectly, make any statements, any public announcements, or any release to any trade publication or to the press with respect to the subject matter of this Offering Memorandum without our prior written consent. If you decide not to participate in the Offering, you agree to promptly return this Offering Memorandum and any accompanying documentation to the Placement Agent.

FORWARD-LOOKING STATEMENTS

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This Offering Memorandum contains forward-looking statements. These statements are based on management’s beliefs and assumptions, and on information currently available to management. You should not place undue reliance on these statements. Forward-looking statements include information concerning possible or assumed future results, among other things. These statements are typically identified by words such as “believe,” “anticipate,” “expect,” “plan,” “intend,” “estimate” and similar expressions. We have based these statements on assumptions we have made in light of our experience and perception of historical trends, current conditions, expected future developments and other factors that we believe are appropriate to consider under the circumstances. As you read and consider the information in this Offering Memorandum, you should understand that these statements are not guarantees of performance or results. They involve assumptions, uncertainties and risks. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, you should nevertheless be aware that many factors could affect our actual financial and other results and could cause actual results to differ materially from those expressed in the forward-looking statements. For a discussion of factors that could cause actual results to differ materially from those expressed in the forward-looking statements, see “Risk Factors.” In light of these risks and uncertainties, there can be no assurance that the results and events contemplated by the forward-looking statements contained in this Offering Memorandum will, in fact, transpire.

DESCRIPTION OF BUSINESS TransBiotec, Inc. is a Delaware corporation. Our address is 400 N. Tustin Avenue, Suite 225, Santa Ana, California 92705, and our telephone number is (714) 667-7139.

We are a development stage company. We have developed an alcohol detection device called “SOBR.” The device is patented for use in detecting alcohol in a person’s system by testing the ethanol content in their perspiration. We plan to market the device to two primary business segments:

• Companies and institutions that employ or contract with vehicle drivers, where the system will be marketed as a preventative drunk driving detection system, with a possible ignition locking device, and

• 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, and the military for personnel returning to a military base from off-base leave.

Currently, we have several “prototype” units fully-developed that we believe are ready for use, but we are also constantly looking for ways to further develop and improve the device.

Regarding the use in vehicles, we believe SOBR offers a unique solution to the national drunk driving problem, and we are currently performing beta testing of SOBR for this use. Our objective is to grow our sales and manufacturing of SOBR by aggressively pursuing the original equipment market (“OEM”) once final beta testing is completed. We intend to seek an experienced OEM partner to introduce SOBR to the new automotive market. We believe that an increase in public awareness and consumer interest will generate a demand for alcohol sensing technology and we hope that auto manufacturers will begin installing SOBR as a factory installed option. We will also market SOBR to international car

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manufacturers that may want to gain a market advantage over domestic auto manufacturers. We will seek to enter other markets as well, such as commercial trucking, and we will seek to have included in federal legislation a requirement that an alcohol-sensing device with ignition locking system be retrofitted in all vehicles in the United States.

Regarding the use in monitoring employees and contractors in certain industries, such as surgeons, pilots and the military, we are in the process of soliciting potential customers interested in purchasing either interlocking or portable devices in various industries.

To date we have not had the funding needed to achieve the foregoing goals. We have not had any revenues. Our monthly burn rate has been approximately $25,000, so we have had to borrow from our shareholders and other related parties and convert indebtedness to common stock in order to fund operations. We are seeking to address this shortage of cash and to facilitate the implementation of our business plan by making the offering of Debentures described in this Offering Memorandum.

AVAILABLE INFORMATION

In addition to the information presented in, and annexed to, this Offering Memorandum, you and your advisers should review the financial information and other information presented in the following reports that we have filed with the SEC, which are available on the EDGAR system at www.sec.gov:

• Form 10-Q Quarterly Report for nine-month period ended September 30, 2015, which was filed on November 20, 2015;

• Form 10-Q Quarterly Report for the six-month period ended June 30, 2015, which was filed on August 18, 2015;

• Form 10-Q Quarterly Report for the three-month period ended March 31, 2015, which was filed on May 20, 2015; and

• Form 10-K Annual Report for the year ended December 31, 2014, which was filed on April 15, 2015.

SUMMARY OF THE OFFERING

Below is a summary of the terms of the Debentures offered pursuant to this Offering Memorandum and a summary of the other terms of the Offering. For a more complete description of the terms of the Debentures, see the form of Debenture attached to this Offering Memorandum as Annex B.

Terms of the Offering Minimum Investment: Debentures may be purchased in increments of $10,000, with the

minimum investment being $5,000. Minimum Offering: $200,000 is the minimum amount may be raised in the offering. No

closing may be held until this minimum amount has been raised. Maximum Offering: $3,000,000 is the maximum amount that may be raised in the offering. Offering Period: The Offering will be made on a continuous basis until 5:00 p.m. on June

30,2016 (the “Termination Date”), unless earlier terminated or canceled. The Termination Date may be extended at our discretion for up to an additional three months, through September 30, 2016. The Offering may be canceled by the Company and the Placement Agent at any time,

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and will in any event be canceled if no closing has occurred before the Termination Date. In the event that your offer to purchase Debentures is rejected or the Offering is canceled, then the amount you have remitted will be promptly returned to you, without interest or deduction.

Closings: There will be no closing of the Offering until the minimum of $200,000

is raised. After an initial closing is held, offers to purchase Debentures will be aggregated for subsequent closings to be held on a monthly basis until the maximum of $3,000,000 has been raised or until the Termination Date, whichever is earlier.

Escrow Account: Each prospective purchaser is required to remit the amount they wish to

invest when submitting their Debenture Purchase Agreement. This amount will be held in the Escrow Account with FundAmerica Securities, LLC until the earlier of a closing of the Offering, the rejection of the offer to purchase Debentures, or the cancellation of the Offering. FundAmerica Securities, LLC is acting only as Escrow Agent in connection with the Offering and has not endorsed, recommended or guaranteed the purchase, value or repayment of the Securities offered.

Restrictions on Transfer: We are offering the Debentures pursuant to an exemption from the

registration requirements of the Securities Act provided by Section 4(a)(2) of the Securities Act and Rule 506(c) of Regulation D thereunder. Therefore, the Debentures and other Securities offered hereby will be “restricted securities,” as defined in Rule 144(a)(3) under the U.S. Securities Act and will be required to bear one or more restrictive legends until the legends are no longer required under applicable federal and state securities laws.

Qualifications to Invest: You must qualify as an accredited investor, as defined in Rule 501(a) of

Regulation D under the Securities Act to participate in the Offering, and you must verify your status as an accredited investor as required by Rule 506(c) of Regulation D in before you may invest. See “How to Invest” for additional information about verifying your status as an accredited investor.

Placement Agent and Selling Group: The Debentures are offered on a “best efforts” basis through the

Placement Agent, which is acting as the managing dealer and syndicate manager for the Offering, and a syndicate of broker-dealers (the “Selling Group”). The Placement Agent and each of the participants in the Selling Group are registered as broker-dealers with the SEC and are regulated by FINRA.

Placement Fees: We will pay Placement Fees of up to 8% of the total amount raised in the

Offering, of which 3% will be allocated to the Placement Agent for conducting due diligence and organizing the Selling Group, and the remaining up to 5% will be offered to selling brokers in the Selling Group.

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Risk Factors: An investment in the Securities is speculative and subject to significant risks, including risks associated with floating rate conversion and exercise prices. See “Risk Factors.”

Terms of the Debentures

Maturity: The Debentures will mature 36 months after the date of issuance. Redemption: The Debentures will be non-redeemable during the first year after the

date of issuance, and thereafter they will be redeemable at 115% of face value.

Interest: Interest will accrue on the Debentures at a rate of 12% per annum,

payable annually. Interest for the first year will be paid in cash out of net proceeds of the Offering reserved and held in the Escrow Account with FundAmerica Securities, LLC for that purpose. Interest for the second and third years will, in our discretion, be paid either in cash or PIK in the form of shares of our common stock. If interest is paid in common stock, the price per share will be calculated as the average closing price per share for the last 15 trading days immediately prior to the date that the interest is due.

Conversion: The Debentures will be convertible at any time, and from time to time,

beginning twelve months after issuance, into shares of our common stock. The Debentures, together with the underlying Shares, are collectively referred to as the “Securities.”

Conversion Price: The Conversion Price will be calculated using a 35% discount rate to the

average closing price per share of our common stock for the last fifteen trading days immediately prior to conversion; provided, however, that the right of conversion will be limited by the terms of the Debentures to the extent necessary to ensure that each Debenture holder will never beneficially own more than 4.9% of our class of common stock at any one time. See “Risk Factors – Discounted floating rate conversion and exercise prices present significant risks to the Company and our stockholders.”

Conversion Period: The Debentures will be convertible at any time and from time to time

beginning twelve months after issuance. However, the right of conversion will be limited such that each Debenture holder will never beneficially own more than 4.9% of our class of common stock at any one time.

Tax Considerations: You are responsible for conferring with your own tax advisers regarding

the tax consequences of an investment in the Debentures and underlying Securities. Neither we, nor the Placement Agent, nor any of our respective employees, representatives, agents or affiliates, assumes any responsibility for the tax consequences of this transaction to any investor.

USE OF PROCEEDS

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We estimate that our use of the proceeds from the Offering will be roughly as follows if the minimum or maximum offering amounts are raised. However, these are only rough estimates, and these estimates are likely to change based on changing assumptions and circumstances.

$200,000 $3,000,000

Uses of Proceeds Minimum Maximum

SEC filings / compliance (1), (2) $ 45,000 $ 45,000 First year’s interest on Debentures (1) 24,000 360,000 Placement Fees(1) 16,000 240,000 Increase Authorized Common Stock (1), (3) 15,000 15,000 General and administrative expenses 31,000 1,390,000 Product development / R&D 20,000 375,000 Marketing and sales 20,000 300,000 Accounting 14,000 84,000 Legal 0 100,000 Deferred payments (legal, etc.) 15,000 30,000 Reserve 0 61,000

Totals $200,000 $3,000,000

(1) These amounts will remain in escrow with the Escrow Agent to be paid directly from the escrow account to the recipient as set forth above. (2) This amount is intended to cover our legal fees and auditor fees for twelve months after the initial closing to help ensure we stay current with periodic filings (10-Qs and 10-K) for at least the next twelve months. (3) We currently to do not have sufficient authorized common stock to effect any conversions of the Debentures. As a result, this amount is being held back in escrow to cover the estimated costs associated with us filing the required proxy statement or information statement with the Securities and Exchange Commission, as well as mailing the materials to our shareholders in order to effect the increase in our authorized common stock. We anticipate that the proceeds from a minimum offering of $200,000 would be adequate to meet our capital needs for approximately six (6) months. We expect that the proceeds from a maximum offering of $3,000,000 would be sufficient to meet our capital needs for approximately 24 months. These timetables could be pushed our further into the future if we are able to generate sales revenues as expected during those periods.

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PRE AND POST OFFERING CAPITALIZATION***

Type of Security No. of Shares of Common Stock(1)

Pre-Offering Fully-Diluted (%)

Minimum Offering Fully-Diluted (%)

Maximum Offering Fully-Diluted (%)

Common Stock 65,251,068 45% 28% 4% Series A Convertible Preferred Stock

42,725,385(2) 30% 19% 3%

Stock Options 29,755,399(3) 21% 13% 2% Convertible Promissory Notes

3,137,990(4) 2% 1% <1%

Convertible A/P 3,160,519(5) 2% 1% <1% Pre-Offering Total 144,030,361(6) 100% N/A N/A

Minimum Offering Securities(7)

87,912,088 N/A 38% N/A

Minimum Offering Total 231,942,449 N/A 100% N/A

Maximum Offering Securities(8)

1,318,681,319 N/A N/A 90%

Maximum Offering Total 1,462,711,680 N/A N/A 100%

(1) For convertible instruments this amount reflects the estimated number of shares of common stock if all instruments were converted.

(2) Our Series A Convertible Preferred Stock is convertible into shares of our common stock at a 35% discount to the average closing price for shares of our common stock over the last fifteen (15) trading days immediately prior to conversion. However, no conversions of Series A Preferred Stock can occur unless average closing price for our common stock is at least $0.05 for the fifteen (15) trading day pricing period. As a result, this table assumes an average of $0.05 closing price per share during the conversion pricing period and a resulting conversion price of $0.325 per share. Some, but not all, of the holders of our Series A Preferred Stock also have a 4.9% limiter in their stock purchase agreements, prohibiting conversions if such conversion would cause them to own more than 4.9% of our outstanding common stock.

(3) These stock options contain an exercise price provision that the exercise price will be the fair market value of our common stock at the time of exercise, which is currently $0.0035/share. If all stock options were exercised the current exercise price would be $104,143.90, which could be paid through the extinguishment of debt by the holder of such stock options. The number of shares has been estimated for the purposes of this capitalization table.

(4) Our convertible promissory notes have different conversion prices, which are set conversion prices and are between $0.016 per share and $0.324 per share.

(5) We have an agreement with one of our service providers that 50% of the outstanding amounts we owe them can be paid in shares of our common stock at $0.09 per share. Currently, based on the amount outstanding, 50% of the outstanding amount would convert into 3,160,519 shares of our common stock.

(6) This share totals assumes the same assumptions as 2-5, above.

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(7) For the purpose of calculating the Minimum Offering securities, we assumed the issuance and conversion of $200,000 principal amount convertible promissory notes at the conversion formula based on our stock price as of January 21, 2016 ($0.0035). The number of shares reflected here would change if the price of our stock price changes.

(8) For the purpose of calculating the Maximum Offering securities, we assumed the issuance and conversion of $3,000,000 principal amount convertible promissory notes at the conversion formula based on our stock price as of January 21, 2016 ($0.0035. The number of shares reflected here would change if the price of our stock price changes.

*** Currently, we do not have sufficient authorized common stock to honor the conversions of our outstanding convertible instruments if they were all converted (for this purposes we are disregarding the limiters contained in some of the convertible instruments that would disallow conversions if such conversion would cause the holder to beneficially own more than 4.9% of our outstanding common stock) and, therefore, also do not currently have sufficient authorized common stock to effect conversions of the Debentures related to this Offering. As a result, we have agreed to set aside $15,000 from the Offering proceeds, which is the amount we estimating will be required in order to file the required proxy statement or information statement with the Securities and Exchange Commission, as well as the mailing of the materials to our shareholders, in order to effect the increase in our authorized common stock to an amount reasonably likely to cover conversions of the Debentures related to this Offering, at least sufficient to cover us in the event we receive total gross offering proceeds of up to $500,000.

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RISK FACTORS

You should be aware that an investment in Debentures involves significant risks, including the possible loss of some or all of your investment. The risks set forth below, and other risks discussed in this Offering Memorandum, are not the only risks facing investors. There may be other risks associated with an investment in our company that we cannot foresee or anticipate. Therefore, you should invest in Debentures only if you are able to bear the risk of losing your entire investment.

Discounted floating rate conversion present significant risks to the Company and our stockholders.

The conversion price of the Debentures are based on a 35% discount to the 15-day trailing market average of the market price of our common stock. Such securities are also known as “future priced securities.” This floating market price based conversion and exercise formula will protect the holders of these convertible securities against price declines and will help to insulate them from market risk, but will subject both the Company and the holders of our common stock to certain risks. Because a discount to market price based conversion formula can lead to dramatic stock price reductions and corresponding negative effects on both the issuer of the securities and its shareholders, convertible security financings with discounted market price based conversion ratios have colloquially been called “floorless,” “toxic,” “death spiral,” and “ratchet” convertibles. Market price based conversion and exercise prices could negatively affect the Company and reduce the value of our securities in the following ways:

• When conversion price allow the holders to convert their securities for common stock at a discount to the market price at the time of conversion, this means that the lower the stock price goes, the more shares we must issue on conversion.

• The more shares that we issue on conversion, the greater the dilution will be to our stockholders. We will have more shares outstanding after the conversion, revenues and profits (if any) per share will be lower, and individual investors will own proportionally less of the Company. While dilution can occur with either fixed or market price based conversion formulas, the risk of potential adverse effects increases with a market price based conversion formula.

• The greater the dilution, the greater the potential that the stock price per share will fall. The more the stock price falls, the greater the number of shares the Company may have to issue in future conversions and the harder it might be for us to obtain other financing. This could potentially become a repetitive and downward cycle, as multiple investors convert their Debentures at steadily decreasing prices.

• The existence of a large number of outstanding convertible securities with conversion prices discounted to the market price could create a market overhang that exerts constant downward pressure on the market price of the Company’s common stock.

• Increased sales volume of our common stock could put downward pressure on the market price of our shares. This fact could encourage holders of Debentures to sell short our common stock prior to conversion of those securities, thereby potentially causing the market price of our common stock to decline and a greater number of shares to become issuable upon conversion of the Debentures. The holders of those securities could then convert their Debentures and use the shares of common stock received upon conversion to replace the shares sold short. The holders could thereby profit by the decline in the market price of the common stock caused by their short selling.

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The terms of the Debentures include provisions designed to reduce the risk of such a downward spiral in the price of our common stock by limiting the conversion right of any Debenture holder such that the holder cannot become the beneficial owner of more than 4.9% of our class of common stock at any one time. However, after a holder has reached that 4.9% limit, the holder can become free once again to convert additional Debentures after another holder converts their Debentures and thereby increases the number of shares of our common stock outstanding and reduces the first holder’s percentage ownership of the class below 4.9%. In this way, a downward spiral can still potentially occur.

Currently, we do not have sufficient authorized common stock to honor the conversions of our outstanding convertible instruments if they were all converted and, therefore, also do not currently have sufficient authorized common stock to effect conversions of the Debentures related to this Offering.

Currently, we do not have sufficient authorized common stock to honor the conversions of our outstanding convertible instruments if they were all converted (for this purposes we are disregarding the limiters contained in some of the convertible instruments that would disallow conversions if such conversion would cause the holder to beneficially own more than 4.9% of our outstanding common stock) and, therefore, also do not currently have sufficient authorized common stock to effect conversions of the Debentures related to this Offering. To help mitigate this risk, we have agreed to set aside $15,000 from the Offering proceeds, which is the amount we estimating will be required in order to file the required proxy statement or information statement with the Securities and Exchange Commission, as well as the mailing of the materials to our shareholders, in order to effect the increase in our authorized common stock to an amount reasonably likely to cover conversions of the Debentures related to this Offering, at least sufficient to cover us in the event we receive total gross offering proceeds of up to $500,000. In the event we raise more than $500,000 in this Offering we would need to further increase our authorized common stock beyond what is currently contemplated.

We have a limited operating history and limited historical financial information upon which you may evaluate our performance.

You should consider, among other factors, our prospects for success in light of the risks and uncertainties encountered by companies that, like us, are in their early stages of development. We may not successfully address these risks and uncertainties or successfully implement our business plan. If we fail to do so, it could materially harm our business, impair the value of our common stock, and impair our ability to pay interest on, or repay the principal of, the Debentures. Even if we accomplish these objectives, we may not generate positive cash flows or profits in the future. We were incorporated in Delaware on August 10, 2007. Our business to date has focused on developing and improving our product, filing patents, and hiring management and staff personnel. Unanticipated problems, expenses and delays are frequently encountered in establishing a new business and developing new products. These include, but are not limited to, inadequate funding, lack of consumer acceptance, market competition, product development challenges, and inadequate sales and marketing. Our failure to address any of these conditions will have a materially adverse effect on our business and may force us to reduce or curtail planned operations. No assurance can be given that we can or will ever operate profitably.

We may not be able to meet our future capital needs.

To date, we have not generated any revenue and we have limited cash liquidity and capital resources. Our future capital requirements will depend on many factors, including our ability to develop our current product, cash flow from operations, and competing market developments. Even if we raise funds in the Offering, we may need additional capital in the near future. Any future equity financings will result in dilution to our then-existing stockholders. Sources of debt financing may result in high debt service costs.

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Any financing, if available, may be on unfavorable terms. If adequate funds are not obtained, we will be required to reduce or curtail operations.

If we cannot obtain adequate funding in the Offering or through other means, we may be required to reduce or discontinue our product development and commercialization efforts and may be required to discontinue our operations.

We have historically experienced negative cash flows from operations since our inception, and we expect the negative cash flows from operations to continue for the foreseeable future. Unless and until we are able to generate revenues, we expect such losses to continue. As discussed in our financial statements, there exists substantial doubt regarding our ability to continue as a going concern.

Our product development efforts are highly dependent on the amount of cash and cash equivalents on hand combined with our ability to raise additional capital to support our future operations through one or more methods, including through selling Debentures in the Offering.

Based on our current projections, we believe that the minimum Offering amount of $200,000 would meet our working capital needs for approximately six (6) months, and the maximum Offering amount of $3,000,000 would meet our working capital needs for approximately twenty-four months. Because the Offering is a “best efforts” offering, there is no assurance that we will be able to raise the minimum amount needed to close the Offering, or, if we are able to close on the minimum amount, that we will be able to raise additional funds in the Offering above that minimum amount.

We may also seek to raise capital through licensing our future products in development. While we will continue to explore such opportunities, there can be no assurance that we will be successful in licensing our future products.

Current economic conditions and capital markets are in a period of disruption and instability that could adversely affect our ability to access the capital markets, and thus could adversely affect our business and liquidity.

Our business could be jeopardized by stagnant economic conditions and by political, geopolitical, regulatory, financial and other developments in the United States and elsewhere around the world that could further erode the U.S. and world economies, could lead to another recession or prolonged economic stagnation, and could result in significant inflation or deflation and other serious economic consequences.

The current economic conditions and financial crisis have had, and will continue to have, a negative impact on our ability to access the capital markets, and thus have a negative impact on our business and liquidity. The shortage of liquidity and credit combined with substantial losses in worldwide equity markets could lead to an extended worldwide recession. We may face significant challenges if conditions in the capital markets do not improve. Our ability to access the capital markets has been and continues to be severely restricted at a time when we need to access such markets, which could have an ongoing negative impact on our business plans. Under those circumstances, even if we are able to raise capital, it may not be at a price or on terms that are favorable to us. We cannot predict the occurrence of future disruptions or how long the current conditions may continue.

Because we face intense competition, we may not be able to operate profitably in our markets.

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The market for our product is highly competitive and is becoming more so, which could hinder our ability to successfully market our products. We may not have the resources, expertise or other competitive resources to compete successfully in the future. We expect to face additional competition from existing competitors and new market entrants in the future. Many of our competitors have greater name recognition and more established relationships in the industry than we do. As a result, these competitors may be able to:

• develop and expand their product offerings more rapidly; • adapt to new or emerging changes in customer requirements more quickly; • take advantage of acquisition and other opportunities more readily; and • devote greater resources to the marketing and sale of their products and adopt more aggressive

pricing policies than we can.

If our current product does not gain expected market acceptance, prospects for our sales revenue may be adversely affected.

We intend to use the SOBR™ device in the commercial market, as opposed to the judicially-mandated market. Currently, most alcohol sensing devices are breath analyzers used in the judicially-mandated market where the use is usually required by law as a punishment for the committing a crime. We will be asking commercial industries, auto manufacturers, companies that have commercial vehicles as their primary business (limousine companies, taxi cab companies, truck drivers, etc.), and companies and institutions that have an interest in monitoring their employees’ or contractors’ alcohol level due to their job responsibilities (such as surgeons, pilots, and the military) to adopt a new requirement that their employees or contractors must abide in order to remain employed. While we believe this will be attractive to many companies and industries we must achieve some level of market acceptance to be successful. If we are unable to achieve market acceptance our investors could lose their entire investment.

If critical components become unavailable or contract manufacturers delay their production, our business will be negatively impacted.

Currently, we manufacture the limited number of SOBR prototype devices we have developed by applying our proprietary know-how to “off the shelf” parts and components. However, if we are successful in our growth plan, eventually we will have to contract out our manufacturing of the devices. At that time, the stability of component supply will be crucial to determining our manufacturing process. Due to the fact that we currently manufacture the device from “off the shelf” parts and components, all of our critical devices and components are supplied by certain third-party manufacturers, and we may be unable to acquire necessary amounts of key components at competitive prices.

If we are successful in our growth, outsourcing the production of certain parts and components would be one way to reduce manufacturing costs. We plan to select these particular manufacturers based on their ability to consistently produce these products according to our requirements in an effort to obtain the best quality product at the most cost effective price. However, the loss of all or one of these suppliers or delays in obtaining shipments would have an adverse effect on our operations until an alternative supplier could be found, if one can be located at all. If we get to that stage of growth, such loss of manufacturers could cause us to breach any contracts we have in place at that time and would likely cause us to lose sales.

If our contract manufacturers fail to meet our requirements for quality, quantity and timeliness, our business growth could be harmed.

We eventually plan to outsource the manufacturing of SOBR to contract manufacturers. These manufacturers will procure most of the raw materials for us and provide all necessary facilities and labor to manufacture our products. If any of these companies were to terminate their agreements with us

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without adequate notice, or fail to provide the required capacity and quality on a timely basis, we would be delayed in our ability or unable to process and deliver our products to our customers.

Our current product and any future products could contain defects or might be installed or operated incorrectly, which could reduce sales of our product or result in claims against us.

Although we will have quality assurance practices to ensure good product quality, defects still might be found in the future in our future products.

End-users could lose their confidence in our products and company when they unexpectedly use defective products or use our products improperly. This could result in loss of revenue, loss of profit margin, or loss of market share. Moreover, because our products may be employed in the automotive industry, if one of our products is a cause, or perceived to be the cause, of injury or death in a car accident, we would likely be subject to a claim. If we were found responsible it could cause us to incur liability, which could interrupt or even cause us to terminate some or all of our operations.

If we are unable to recruit and retain qualified personnel, our business could be harmed.

Our growth and success highly depend on qualified personnel. Competition in the industry could make it difficult for us to recruit and retain a sufficient number of qualified technical personnel. If we are unable to attract and retain necessary key talents, it will negatively affect our ability to develop competitive products and retain good customers and could adversely impact our business and operating results.

We may be unable to adequately protect our proprietary rights.

We currently have three “use” patents covering the SOBR device and one other pending with the USPTO. These are not patents over the components of the device, but instead covering the use of those components in the SOBR device. Our ability to compete partly depends on the superiority, uniqueness and value of our intellectual property. To protect our proprietary rights, we will rely on a combination of patent, copyright and trade secret laws, confidentiality agreements with our employees and third parties, and protective contractual provisions. Despite these efforts, any of the following occurrences may reduce the value of our intellectual property:

• Our applications for patents relating to our business may not be granted and, if granted, may be challenged or invalidated;

• Issued patents may not provide us with any competitive advantages; • Our efforts to protect our intellectual property rights may not be effective in preventing

misappropriation of our technology; • Our efforts may not prevent the development and design by others of products or technologies

similar to or competitive with, or superior to, those we develop; or • Another party may obtain a blocking patent and we would need to either obtain a license or

design around the patent in order to continue to offer the contested feature or service in our products.

We may become involved in lawsuits to protect or enforce our patents that would be expensive and time consuming.

In order to protect or enforce our patent rights, we may initiate patent litigation against third parties. In addition, we may become subject to interference or opposition proceedings conducted in patent and trademark offices to determine the priority and patentability of inventions. The defense of intellectual property rights, including patent rights through lawsuits, interference or opposition proceedings, and other legal and administrative proceedings, would be costly and would divert our technical and management

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personnel from their normal responsibilities. An adverse determination of any litigation or defense proceedings could put our pending patent applications at risk of not being issued.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. For example, during the course of this kind of litigation, confidential information may be inadvertently disclosed in the form of documents or testimony in connection with discovery requests, depositions or trial testimony. This disclosure could have a material adverse effect on our business and our financial results and condition.

If we fail to maintain an effective system of internal controls or discover material weaknesses in our internal controls over financial reporting, we may not be able to report our financial results accurately or timely or to detect fraud, which could have a material adverse effect on our business.

An effective internal control environment is necessary for us to produce reliable financial reports and is an important part of our effort to prevent financial fraud. We are required to periodically evaluate the effectiveness of the design and operation of our internal controls over financial reporting. Based on these evaluations, we may conclude that enhancements, modifications, or changes to internal controls are necessary or desirable. While management evaluates the effectiveness of our internal controls on a regular basis, these controls may not always be effective. There are inherent limitations on the effectiveness of internal controls, including collusion, management override, and failure of human judgment. In addition, control procedures are designed to reduce rather than eliminate business risks. If we fail to maintain an effective system of internal controls, or if management or our independent registered public accounting firm discovers material weaknesses in our internal controls, we may be unable to produce reliable financial reports or prevent fraud, which could have a material adverse effect on our business, including subjecting us to sanctions or investigation by regulatory authorities, such as the Securities and Exchange Commission. Any such actions could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements, which could cause the market price of our common stock to decline or limit our access to capital.

Our common stock has recently been thinly traded at less than $0.01 per share, and there can be no assurance that a more active trading market with more stable prices will ever develop.

Our common stock is quoted on the OTC Markets. Our common stock is only thinly traded. Thinly traded common stock can be more volatile than common stock trading in an active public market. We cannot predict the extent to which an active public market for our common stock will develop or be sustained after this Offering, if at all. The recent pricing of our common stock has been below $0.01 per share, and there is no assurance that the market price of our common stock will ever increase above current levels.

Because we are subject to the “penny stock” rules, the level of trading activity in our stock may be reduced.

Our common stock is traded on the OTC Markets. Broker-dealer practices in connection with transactions in “penny stocks” are regulated by certain penny stock rules adopted by the Securities and Exchange Commission. Penny stocks, including shares of our common stock, generally are equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide

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the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer's presumed control over the market, and monthly account statements showing the market value of each penny stock held in the customer's account. In addition, broker-dealers who sell these securities to persons other than established customers and “accredited investors” must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. Consequently, these requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security subject to the penny stock rules, and investors in our common stock may find it difficult to sell their shares.

Our business is subject to increased volatility and risk because we have only one product under development.

The Debentures are being offered to raise working capital for development of our SOBR device. Given that we have only one product under development, an investment in our company is subject to greater volatility and is more susceptible to negative outcomes that may result from any single economic, political or regulatory occurrence than would be the case if our business were diversified.

Your ability to transfer Debentures or the underlying Securities is restricted under federal and state securities laws.

We are offering the Debentures and the underlying Securities in reliance on an exemption from registration requirements under the Securities Act for an offer and sale of securities that does not involve a public offering pursuant to Section 4(a)(2) of the Securities Act and Rule 506(c) of Regulation D thereunder. The Securities have not been registered under the Securities Act or under any state securities laws and may not be resold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. As a prospective purchaser, you should be aware that you may be required to bear the financial risk of an investment in the Securities for an indefinite period of time, and you may not be able to liquidate your investment in such securities even in the event of an emergency. Therefore, prospective subscribers who require liquidity in their investments should not invest in the Debentures.

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DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS

The following table sets forth the names and ages of our directors, director nominees, and executive officers as of December 31, 2015, the principal offices and positions with the Company held by each person and the date such person became a director or executive officer of the Company. The executive officers of the Company are elected annually by the Board of Directors. The directors serve one-year terms until their successors are elected. The executive officers serve terms of one year or until their death, resignation, or removal by the Board of Directors. Unless described below, there are no family relationships among any of the directors and officers.

Name Age Position(s) Charles Bennington 69 President, Chief Operating Officer, Principal

Financial Officer, Principal Accounting Officer, Secretary (July 2013) and a Director (December 2006)

Ronald Williams 68 Chief Technology Officer and Director (October

2005) Devadatt Mishal 65 Director (June 2010)

Daljit Khangura 47 Director (November 2013)

Business Experience

The following is a brief account of the education and business experience of each director and executive officer during at least the past five years, indicating each person’s principal occupation during the period, and the name and principal business of the organization by which he was employed.

Charles Bennington has been our President and its Principal Executive, Financial and Accounting Officer since December 2006 and its Secretary since July 2013. Between May 2005 and December 2006 Mr. Bennington was TBT's Chief Operating Officer. Mr. Bennington has been a director of TBT since April 2005. Mr. Bennington holds a Degree in Finance and Banking from the University of Miami, Ohio. Mr. Bennington’s over 35 years of experience of positions held in senior executive management and/or as a member of the Board of Directors, combined with the fact he was TBT’s President at the time we acquired TBT and had experience with managing TBT’s development of the SOBR™ device led us to believe Mr. Bennington is an ideal director for our company considering where we are in our development, as well as our dependence on successfully implementing a strategy to further develop the SOBR™ device and attempt to sell it in various marketplaces.

Ronald Williams has been our Chief Technology Officer since October 28, 2005. Mr. Williams has been a director of TBT since June 3, 2010. Since 1993, Mr. Williams has owned and operated a mixed fruit tree orchard in Fallbrook, California. Since 1972, Mr. Williams has worked as an aerospace engineer and since 2005 Mr. Williams has been employed by the Aerospace Corporation in El Segundo, California. Mr. Williams holds a Bachelor of Science Degree in physics from the University of California at Los Angeles and has performed graduate studies in mechanical and material engineering at Cal State Northridge. Mr. Williams’ experience of over 35 years of engineering experience, combined with the fact

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he was TBT’s Chief Technology Officer at the time we acquired TBT and had assisted with designing and developing the SOBR™ device led us to believe Mr. Williams is an ideal director for our company considering where we are in developing the SOBR™ device.

Devadatt Mishal has been a director since June 3, 2010. Dr. Mishal has been practicing as an Obstetrician and Gynecologist since March 1982 in Downey, California. Dr. Mishal received his medical degree from Lokmanya Tilak. Mr. Mishal’s experience of over 30 years of experience managing his own business, combined with the fact he was one of TBT’s Directors at the time we acquired TBT and had experience with TBT’s development of the SOBR™ device led us to believe Mr. Mishal is an ideal director for our company.

Daljit Khangura has been a director since November 2013. Mr. Khangura has been Sr. Finance Logistics Operations for AT&T, Inc. since June 2010. In this position, Mr. Khangura has managed inventory to approve, write, track and transfer jobs totaling hundreds of millions dollars managing over 900 field project orders, for field engineers and technician and third party vendors, as well as handling a multitude of other functions involving inventory, supply orders, and implementing various software and hardware rollouts. Prior to this position, Mr. Khangura was the Manager Procurement/Transportation for Clorox, Inc. from July 2009 to December 2010. In this position, Mr. Khangura prepared annual department operating budgets, managed expenses based on department budget, and approved budget spending targets, as well as spearheaded a strategic optimization project team consisting of 50 members with multiple functions. Mr. Khangura received a Bachelor of Science in Electrical/Mechanical and Business Management, as a double major, from West Bromwich College, England, UK University of the London, England, United Kingdom. Mr. Khangura’s extensive managerial experience in managing inventory and project orders led us to believe Mr. Khangura is an ideal director for our company.

Term of Office

Our directors hold office until the next annual meeting or until their successors have been elected and qualified, or until they resign or are removed. Our board of directors appoints our officers, and our officers hold office until their successors are chosen and qualify, or until their resignation or their removal.

Family Relationships

There are no family relationships among our directors or officers.

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

We are not involved in any legal matters arising in the normal course of business.

BOARD COMMITTEES Our board of directors does not have a separately designated audit, nominating or compensation committee. However, we do intend to comply with the independent director and committee composition requirements in the future. We maintain a Scientific Advisory Board to assist the Board of Directors by reviewing and evaluating our research and development programs. Dr. Saini serves as our Principal Scientist and Chairman of our Scientific Advisory Board.

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INDEMNIFICATION OF DIRECTORS AND OFFICERS

Article VII of our Articles of Incorporation provides that, to the fullest extent permitted by law, no director or officer shall be personally liable to the corporation or its shareholders for damages for breach of any duty owed to the corporation or its shareholders. In addition, the corporation shall have the power, in its bylaws or in any resolution of its stockholders or directors, to indemnify the officers and directors of the corporation against any liability as may be determined to be in the best interests of this corporation, and in conjunction therewith, to buy, at the corporation’s expense, policies of insurance. Article XIII of our Bylaws further addresses indemnification of our directors and officers and allows us to indemnify our directors in the event they meet certain criteria in terms of acting in good faith and in an official capacity, when such conduct leads them to be involved in a legal action.. Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the “Act”) may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the foregoing provisions, or otherwise, the small business issuer has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.

PRINCIPAL SHAREHOLDERS The following table sets forth, as of December 31, 2015, certain information with respect to our equity securities owned of record or beneficially by (i) each Officer and Director of the Company; (ii) each person who owns beneficially more than 5% of each class of the Company’s outstanding equity securities; and (iii) all Directors and Executive Officers as a group.

Title of Class Name and Address

of Beneficial Owner(2) Nature of

Beneficial Ownership Amount

Percent of Class

(1)

Common Stock Charles Bennington (3)

President, CFO, Secretary and Director

1,004,422

1.5%

Common Stock Ronald Williams (3)

Chief Technology Officer and Director

0

0%

Common Stock Devadatt Mishal (3) Director 5,384,811 8.2% Common Stock Daljit Khangura (3) Director 946,357 (4) 1.4%

Common Stock Michael A. Lanphere 5% Shareholder 48,935,703 (5) 42.9%

All Officers and Directors as a

Group (4 persons) 7,335,590 (4) 11.2%

(1) Unless otherwise indicated, based on 65,251,058 shares of common stock issued and outstanding. Shares of

common stock subject to options or warrants currently exercisable, or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage of the person holding such options or warrants, but are not deemed outstanding for the purposes of computing the percentage of any other person.

(2) Unless indicated otherwise, the address of the shareholder is 194 Marina Drive, Suite 202, Long Beach, CA

90803. (3) Indicates one of our officers or directors.

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(4) Includes options to purchase 450,000 shares of our common stock at $0.068 per shares, which is exercisable

at any time by Mr. Khangura. The options expire in October 2019.

(5) Includes 29,755,399 shares of our common stock issuable to Mr. Lanphere if he exercises the stock option fees under certain loan agreements with us, 16,019,785 shares of our common stock if he converts his shares of Series A Preferred Stock, and 3,160,519 shares of our common stock due to Mr. Lanphere for 50% of his outstanding legal invoices, which he has agreed to take in stock at $0.09 per share.

The issuer is not aware of any person who owns of record, or is known to own beneficially, ten percent or more of the outstanding securities of any class of the issuer, other than as set forth above. The issuer is not aware of any person who controls the issuer as specified in Section 2(a)(1) of the 1940 Act. There are no classes of stock other than common stock issued or outstanding. The Company does not have an investment advisor.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Company has not entered into or been a participant in any transaction in which a related person had or will have a direct or indirect material interest.

Beginning on December 12, 2012, Michael A. Lanphere began loaning us money for a variety of purposes, some for working capital and some to allow us to pay outstanding obligations. Each of these loans was made pursuant to the terms of a Loan Agreement with Promissory Note and Stock Fee (the “Agreements”). Under the terms of Agreements, Mr. Lanphere was not only entitled to repayment of the principal amount loaned to us, with interest, but also what was termed in the Agreements as a “Stock Fee” that requires us to issue a certain number of shares of its common stock or options to purchase shares of our common stock at the request of Mr. Lanphere. The number of shares to be issued to Mr. Lanphere as a Stock Fee under each Agreement varied based on the loan amount and our the price of our common stock on the day of the loan and was calculated by this formula: sixty percent (60%) of the loan amount divided by the Company’s stock price on the day of the loan, but at a price per share no higher than two and one-half cents ($0.025). Each Stock Fee is fully vested immediately and expires five (5) years from the date of the loan. Although the Stock Fee could be taken by Mr. Lanphere as a stock grant or a stock option, due to the fully vested nature of the Stock Fee, Mr. Lanphere is deemed to beneficially own those shares on the date of each Agreement. As a result, Mr. Lanphere currently owns, or has a right to have issued to him, a total of 29,755,399 shares of our common stock, which would cause him to own approximately 42% of our then-outstanding common stock.

On April 10, 2012, we issued 12,416,462 shares of our common stock to our certain individuals, some of whom are now our officers and directors (Charles Bennington – 1,004,422 shares; Devadalt Mishal – 309,053 shares;) pursuant to an Agreement to Exchange Securities dated September 19, 2011, in exchange for 52% of the outstanding shares of TransBiotec, Inc., ("TBT"). The shares issued in connection with the acquisition of TBT were restricted securities, as that term is defined in Rule 144 of the Securities and Exchange Commission. We relied upon the exemption provided by Section 4(a)(2) of the Securities Act of 1933 with respect to the issuance of these shares. The persons who acquired these shares were all provided with information concerning the Company prior to the acquisition of their shares. The certificates representing the shares bear standard Rule 144 restrictive legends stating that the shares may not be offered, sold or transferred other than pursuant to an effective registration statement under the Securities Act of 1933 or pursuant to an applicable exemption from registration.

On March 22, 2012, we issued 75,758 shares our common stock to Devadalt Mishal, one of our directors, in exchange for $25,000. These shares were issued with a standard Rule 144 restrictive legend. Based on

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the representations of the investors in the stock purchase agreements the issuance of the shares was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933. The investors were sophisticated and familiar with our operations.

On February 10, 2010, our Board of Directors authorized the issuance of 10,000 shares to each of the Company's then three directors for services to us during 2009. The shares were valued at $1.00 per share resulting in total compensation expense of $30,000, which was recorded as stock based compensation for the year ended December 31, 2009.

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