UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2015

OR

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________.

Commission file number 000-53316

TRANSBIOTEC, INC.

(Exact name of registrant as specified in its charter)

Delaware	26-0731818
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
400 N. Tustin Ave., Suite 225 Santa Ana, CA	92705
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code (562) 280-0483

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
None	None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.001

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to and post such files). Yes ¨ No x

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10 K or any amendment to this Form 10 K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

Aggregate market value of the voting stock held by non-affiliates: $876,428 as based on last reported sales price of such stock on March 25, 2016. The voting stock held by non-affiliates on that date consisted of 48,690,401 shares of common stock.

Applicable Only to Registrants Involved in Bankruptcy Proceedings During the Preceding Five Years:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ¨ No ¨

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. As of March 25, 2016, there were 67,751,068 shares of common stock, $0.001 par value, issued and outstanding.

Documents Incorporated by Reference

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to rule 424(b) or (c) of the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980). None.

TransBiotec, Inc.

TABLE OF CONTENTS

PART I
ITEM 1 –	BUSINESS	3
ITEM 1A –	RISK FACTORS	9
ITEM 1B –	UNRESOLVED STAFF COMMENTS	13
ITEM 2 –	PROPERTIES	13
ITEM 3 –	LEGAL PROCEEDINGS	13
ITEM 4 –	MINE SAFETY DISCLOSURES	13
PART II
ITEM 5 –	MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	14
ITEM 6 –	SELECTED FINANCIAL DATA	16
ITEM 7 –	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION	16
ITEM 7A –	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	21
ITEM 8 –	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	21
ITEM 9 –	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	21
ITEM 9A –	CONTROLS AND PROCEDURES	21
ITEM 9B –	OTHER INFORMATION	23
PART III
ITEM 10 –	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNACE	24
ITEM 11 –	EXECUTIVE COMPENSATION	28
ITEM 12 –	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	31
ITEM 13 –	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	32
ITEM 14 –	PRINCIPAL ACCOUNTING FEES AND SERVICES	33
PART IV
ITEM 15 –	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	34

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PART I

Explanatory Note

This Annual Report includes forward looking statements within the meaning of the Securities Exchange Act of 1934 (the "Exchange Act"). These statements are based on management's beliefs and assumptions, and on information currently available to management. Forward looking statements include the information concerning possible or assumed future results of operations of the Company set forth under the heading "Management's Discussion and Analysis of Financial Condition or Plan of Operation." Forward looking statements also include statements in which words such as "expect," "anticipate," "intend," "plan," "believe," "estimate," "consider," or similar expressions are used.

Forward looking statements are not guarantees of future performance. They involve risks, uncertainties, and assumptions. The Company's future results and shareholder values may differ materially from those expressed in these forward looking statements. Readers are cautioned not to put undue reliance on any forward looking statements.

ITEM 1 – BUSINESS

Corporate History

We were incorporated under the name Imagine Media, Ltd. on August 10, 2007. From inception through early 2009, our business was to publish and distribute Image Magazine, a monthly entertainment guide for the Denver, Colorado area. We generated only limited revenue and essentially abandoned our business plan in January 2009.

On September 19, 2011, we 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. These directors of TBT were Charles Bennington, Devadatt Mishal, Nicholas Limer, and Sam Satyanarayana. At the time, these shares represented approximately 52% of our outstanding common stock. TBT was a California corporation. In connection with this transaction, two of our officers resigned and Charles Bennington and Nicholas Limer were appointed as directors and as our President, Chief Executive Officer, and Chief Financial Officer, and our Secretary, respectively, and Ronald Williams was appointed as our Chief Technology Officer.

On January 17, 2012, our Board of Directors amended our Certificate of Incorporation changing our name from Imagine Media, Ltd. to TransBiotec, Inc. 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. In connection with this transaction two of our directors resigned and Sam Satyanarayana, Ronald Williams and Devadatt Mishal were appointed directors. As a result of the September 2011 and January 2012 acquisitions of TBT common stock, we currently own approximately 97% of the outstanding shares of TBT, and we control its board of directors and officer positions. The remaining 3% are 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 "us" or "we" includes the business and operations of TBT. Due to our 97% ownership of TBT, its operations are combined with ours in the attached financial statements.

Our offices are located at 400 N. Tustin Ave., Suite 225, Santa Ana, CA, 92705, telephone number (714) 667-7139.

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Business Overview

General

We are a development stage company that has developed an alcohol detection device called "SOBR". The device is a patented device 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: (i) 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 (ii) 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 are also constantly looking for ways to improve the device and will develop it further if we find improvements to the device.

Regarding the use in vehicles, we believe SOBR offers a unique solution to the national drunk driving problem and 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 manufactures will begin installing SOBR as a factory installed option. We will also market SOBR to international car manufacturers which may want to gain a market advantage over domestic auto manufacturers. We will seek to enter other markets as well, such as commercial trucking, as well as seek to have included in federal legislation a requirement that a alcohol sensing devices with ignition locking systems be retrofitted in all vehicles in the U.S.

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.

Currently, we do not have the money or funding to achieve the above goals and based on our revenues, cash on hand and current monthly burn rate of approximately $25,000, we will need to continue borrowing from our shareholders and other related parties, and/or raise money from the sales of our securities, to fund operations.

Our website is www.transbiotec.com.

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Principal Products and Services

(photo of Updated SOBR sensor)

Our only product is SOBR. The SOBR device is a patented device for use in detecting alcohol in a person's system by measuring the ethanol content in their perspiration and determining whether that level is over or under a preset level set by the installer or a trained technician. SOBR works by having an individual touch a sensor for approximately six seconds, the sensor is specific to ethanol. It detects ethanol secreted through sweat that emanates from the hands. The product is produced in two basic forms. The first is an in-vehicle system that can be connected to an interlock system to prevent the operation of the vehicle in the event the sensor detects measurable ethanol content. The second product is a portable unit that can be used anywhere.

The in-vehicle unit can be in any machine, including automobiles, buses, trucks, boats and aircraft. Once the driver touches the sensor for approximately six seconds, the SOBR device detects ethanol secreted through sweat that emanates from the hands. If the vehicle is fitted with an interlock device, then the ethanol level is instantly translated into an engine "start" or "no-start" signal. SOBR can also initiate random real-time tests while the vehicle is operating to ensure that the operator's ethanol level does not increase over the preset limit after the vehicle is started. If the system is tampered with while parked, the vehicle will not start. If the device is tampered with while driving, alarms will activate, such as the vehicle lights and horn, drawing attention to the vehicle. If a vehicle is equipped with a Global Positioning System, or Data Transmission Module, SOBR can alert fleet operators or others monitoring a vehicle of the detection of alcohol above preset levels.

When SOBR is installed in a vehicle the system is virtually unnoticeable, unlike breathalyzer ignition interlock systems. SOBR requires approximately one hour to install in a vehicle. The control box can be mounted under the dash in the interior of the vehicle. In new vehicles the sensor can be installed as part of the steering wheel. In retrofits, the sensor is installed on the dashboard for easy access. We believe that our cost to manufacture a SOBR device will be approximately $100, and if the unit is installed in a vehicle the installation cost will be approximately $75. SOBR requires a semi-annual recalibration much like current smog devices. The recalibration is accomplished with a hand held device plugged into the control box and requires a trained technician approximately one hour to complete.

We plan to license the installation and recalibration rights to the automotive service industry.

The portable unit is similar in size and looks to a black, non-flip mobile telephone and can be temporarily attached to a solid fixture for more convenient usage. The portable unit can be used to test individuals before they are allowed to perform certain functions. As a portable unit the system will signal through the use of lights whether the tested individual is over a preset level. The company utilizing the device may then use the information how it sees fit.

Marketing

We have developed a marketing plan that our management believes will gain market recognition, as well as hopefully generate demand, for the SOBR device, primarily through trade shows, industry publications, general solicitation, social media, and public relations. We plan to sell 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 primary 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.

As a result, we initially plan to market SOBR to the voluntary, commercial market:

· commercial transportation companies that operate tractor trailers, taxis, construction vehicles, boats, trains, aircraft and other vehicles;

· local, state and federal government agencies that operate fire trucks, police cars and public transportation systems; and

· individuals that desire to monitor a family member's vehicle, such as a vehicle operated by a minor.

· a variety of government and military employees, such as sailors in the Navy who might be tested before boarding a ship after off-base leave.

We plan to establish a distribution system of individuals and companies including value-added resellers (VARS), channel sales teams, and independent contractors, to sell the products to the market.

On July 10, 2014, we entered into a Master Distribution Agreement with A.G. Global Capital ("A.G. Global"), pursuant to which A.G. Capital will be the exclusive distributor of our SOBR alcohol testing device in the Republic of Turkey ("Turkey"), the Kingdom of Sweden ("Sweden") and the Gulf Cooperation Council ("GCC") comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates, the Republic of Azerbaijan.

Manufacturing

We manufactured the prototype SOBR devices we have to date (approximately 10 devices) in-house from over-the-counter components. The primary part is the sensor, which is an over-the-counter sensor, which we program in-house with our proprietary programming to have the sensor perform the necessary functions in the SOBR device. Currently, we use one specific sensor from one manufacturer but we believe that we would be able to use other sensor in the event this manufacturer stopped selling the sensor we currently use.

Eventually, if we grow and need to mass manufacture the device, we are planning to manufacture of all components of the SOBR, as well as component assembly, through subcontracted to third parties and perform the final assembly, testing and calibration of the SOBR device at the company's California location. In order to assemble the SOBR device a manufacturer only needs the space, manpower, and common, non-exotic equipment.

Our steps to the point of revenue generation, assuming we have sufficient funding, are as follows: (i) field and clinical testing of the SOBR device, which we estimate to complete in three months at a cost of $40,000; (ii) adjust the device based on the results of the tests, which we estimate to complete in two months at a cost of $60,000; (iii) manufacture, in-house, up to 1,000 units to have inventory on hand in the event of an order, which we estimate to complete in three months at a cost of $100,000; (iv) refine the device based on feedback, if necessary, which we estimate to complete in one month at a cost of $20,000; and (v) identify and contract with manufacturing facilities to build the device in quantity, when necessary, which we estimate to complete in four months at a cost of $15,000. Some of the above steps would run in parallel with other steps so we estimate the overall time to revenue generation would be less than 13 months listed above, likely closer to 8-9 months.

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Competition

Currently, to our knowledge, breath analyzer ignition interlocks are the only products on the market which can detect alcohol and lock the ignition system of a vehicle. There are several limitations inherent with current design of breath analyzers that can be circumvented and are invasive in their appearance and use. At present, their market is substantially made up of the mandated market (the legal market as a punitive testing device). If breath analyzer sales occur outside the mandated market, to our knowledge, that represents a much smaller sales number as percentage of business.

We believe SOBR has the following advantages over the majority of traditional breath analyzers:

· Can be programmed to work during the entire operation of the vehicle without distracting the driver;

· The system can be considered as non-invasive comparatively

· Easy retro fit installation;

· Unobtrusive in the vehicle;

· Difficult to circumvent;

· Possible opportunity for the consumer to obtain insurance discounts that could offset some costs of the system. Although presently no insurance company is offering a premium discount, nor do we see that happening in the near future.

To date the breath analyzer companies are predominantly focused on the mandated market and are not pursuing the commercial market with the same effort.

Intellectual Property

As a portable unit the system will signal through the use of lights that the tested individual is over a preset level.

When SOBR is installed in a vehicle the system is less noticeable than the most common breathalyzer ignition interlock systems. SOBR requires approximately one hour to install in a vehicle. The control box can be mounted under the dash in the interior of the vehicle. In new vehicles the sensor can be installed as part of the steering wheel as well as many other places in the vehicle that are convenient easily assessable to the driver. In retrofits, the sensor is installed on the dashboard for easy access. We believe that our cost to manufacture a SOBR device will be approximately $100, and if the unit is installed in a vehicle the installation cost will be approximately $75. SOBR requires a semi-annual recalibration much like current smog devices. The recalibration is accomplished with a hand held device plugged into the control box and requires a trained technician approximately one hour to complete.

We plan to license the installation and recalibration rights to various retail and service businesses in the automotive service industry.

SOBR is protected by the following three patents, filed with the United States Patent and Trademark Office.

1.	Patent 6620108, which expires on December 26, 2021, pertains to the technology that identifies the vehicle's operator.
2.	Patent 7173536, which expires on August 28, 2024, pertains to the substance detection and alarm system.
3.	Patent 7377186, which expires on April 6, 2025, pertains to the interface system between the substance detection system and vehicle ignition system.

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Government Regulation

At the present time, only the judicially-mandated market is regulated. Devices sold into this market must be approved by state government agencies. Since we plan to enter this market last, we will not, initially, be subject to government regulation. Although we realize we would be subject to regulation if and when we were to enter the mandated market.

Regarding the use in vehicles, we believe SOBR offers a unique solution to the national drunk driving problem and have been and are continuing to perform 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 as well as potential cost savings will generate a demand for alcohol sensing technology. We hope that auto manufactures will begin installing SOBR as a factory installed option. If that happens we expect it would occur for some time in the future. We will also market SOBR to international car manufacturers which may want to gain a market advantage over domestic auto manufacturers. We will seek to enter other markets as well, such as commercial trucking, as well as seek to have included in federal legislation a requirement that alcohol sensing devices with ignition locking systems be retrofitted in all vehicles in the U.S. France is one country that has created laws that mandate vehicles to have an alcohol detection device on all private vehicles.

Regarding the use in monitoring employees and contractors in certain industries, such as surgeons, pilots and the military, we are in the process of meeting with potential customers in certain identified business segments.

Currently, we do not have the money or funding to achieve the above goals and we will not be able to achieve our goals unless we are successful in obtaining funding through this offering and potentially future offerings as well, all which may serve to dilute the ownership position of our current and future shareholders.

Employees

As of March 30, 2016 we do not have any employees. Our sole officer is an independent contractor.

Available Information

We are a fully reporting issuer, subject to the Securities Exchange Act of 1934. Our Quarterly Reports, Annual Reports, and other filings can be obtained from the SEC's Public Reference Room at 100 F Street, NE., Washington, DC 20549, on official business days during the hours of 10 a.m. to 3 p.m. You may also obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission at http://www.sec.gov.

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ITEM 1A – RISK FACTORS.

As a smaller reporting company we are not required to provide a statement of risk factors. However, we believe this information may be valuable to our shareholders for this filing. We reserve the right to not provide risk factors in our future filings. Our primary risk factors and other considerations include:

We have a limited operating history and 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 existing and new products. If we fail to do so, it could materially harm our business and impair the value of our common stock. Even if we accomplish these objectives, we may not generate the positive cash flows or profits we anticipate in the future. We were incorporated in Delaware on August 10, 2007. Our business to date business 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, competition, product development, and inadequate sales and marketing. The failure by us to meet any of these conditions would have a materially adverse effect upon us and may force us to reduce or curtail 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 products, cash flow from operations, and competing market developments. We will need additional capital in the near future. Any equity financings will result in dilution to our then-existing stockholders. Sources of debt financing may result in high interest expense. 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 additional funding, our product development and commercialization efforts may be reduced or discontinued and we may not be able to continue 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 for the foreseeable future. As discussed in our financial statements, there exists substantial doubt regarding our ability to continue as a going concern.

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 but not limited to, issuing additional equity or debt.

In addition, we may also raise additional capital through additional equity offerings, and licensing our future products in development. While we will continue to explore these potential opportunities, there can be no assurances that we will be successful in raising sufficient capital on terms acceptable to us, or at all, or that we will be successful in licensing our future products. Based on our current projections, we believe we have insufficient cash on hand to meet our obligations as they become due based on current assumptions. The uncertainties surrounding our future cash inflows have raised substantial doubt regarding our ability to continue as a going concern.

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

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 the 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 a negative impact on our business plans. 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.

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 factors 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 products do not gain expected market acceptance, prospects for our sales revenue may be 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, 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, the 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 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.

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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 may 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 these companies were to terminate their agreements with us 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 products could contain defects or they may be installed or operated incorrectly, which could reduce sales of those products or result in claims against us.

Although we have quality assurance practices to ensure good product quality, defects still may 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 cause us difficulty in recruiting or retaining a sufficient number of qualified technical personnel, which could harm our ability to develop new products. If we are unable to attract and retain necessary key talents, it would harm our ability to develop competitive product and retain good customers and could adversely affect 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.

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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 divert our technical and management 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.

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 been thinly traded and we cannot predict the extent to which a trading market will develop.

Our common stock is quoted on the OTC Markets. Our common stock is thinly traded compared to larger more widely known companies. 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.

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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, like 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 or quoted on NASDAQ. 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 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.

ITEM 1B – UNRESOLVED STAFF COMMENTS

This Item is not applicable to us as we are not an accelerated filer, a large accelerated filer, or a well-seasoned issuer; however, we have not received written comments from the Commission staff regarding our periodic or current reports under the Securities Exchange Act of 1934 within the last 180 days before the end of our last fiscal year.

ITEM 2 – PROPERTIES

Our executive offices, consisting of approximately 1,850 square feet, are located at 400 N. Tustin Avenue, Suite 225, Santa Ana, California 92705. We do not own our own manufacturing facility but plan to outsource with third party manufacturing companies for our manufacturing.

ITEM 3 – LEGAL PROCEEDINGS

On December 6, 2006, Orange County Valet and Security Patrol, Inc. filed a lawsuit against us in Orange County California State Superior Court for Breach of Contract in the amount of $9,720.00. A default judgment was taken against us in this matter. In mid-2013 we learned the Plaintiff's perfected the judgment against us, but we have not heard from the Plaintiffs for a long period of time.

We currently have one outstanding judgment against us involving a past employee of the company. The matter is under the purview of the State of California, Franchise Tax Board, Industrial Health and Safety Collections. We currently owe approximately $28,277, plus accrued interest, to our ex-employee for unpaid wages under these Orders and are working to get this amount paid off.

In the ordinary course of business, we are from time to time involved in various pending or threatened legal actions. The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations. However, in the opinion of our management, other than as set forth herein, matters currently pending or threatened against us are not expected to have a material adverse effect on our financial position or results of operations.

ITEM 4 – MINE SAFETY DISCLOSURES

There is no information required to be disclosed under this Item.

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PART II

ITEM 5 – MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is currently quoted on the OTC Markets under the symbol "IMLE." We were listed on March 18, 2009. The following table sets forth the high and low bid information for each quarter within the fiscal years ended December 31, 2015 and 2014, as best we could estimate from publicly-available information. The information reflects prices between dealers, and does not include retail markup, markdown, or commission, and may not represent actual transactions.

Fiscal Year Ended		Bid Prices
December 31,	Period	High		Low
2014	First Quarter	$	0.0255	$	0.0071
	Second Quarter	$	0.0213	$	0.007
	Third Quarter	$	0.0098	$	0.0060
	Fourth Quarter	$	0.015	$	0.0019
2015	First Quarter	$	0.0024	$	0.0019
	Second Quarter	$	0.0032	$	0.0017
	Third Quarter	$	0.0040	$	0.0024
	Fourth Quarter	$	0.0087	$	0.0025

The Securities Enforcement and Penny Stock Reform Act of 1990 requires additional disclosure relating to the market for penny stocks in connection with trades in any stock defined as a penny stock. The Commission has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to a few exceptions which we do not meet. Unless an exception is available, the regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated therewith.

We have not adopted any stock option or stock bonus plans.

Holders

As of December 31, 2015, there were approximately 60,251,068 shares of our common stock outstanding held by 140 holders of record and numerous shares held in brokerage accounts. As of March 25, 2016, there were 67,751,068 shares of our common stock outstanding held by 148 holders of record. Of these shares, 48,690,401 were held by non-affiliates. On the cover page of this filing we value the 48,690,401 shares held by non-affiliates at $876,428. These shares were valued at $0.018 per share, based on our share price on March 25, 2016.

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Options

There is currently three outstanding options to purchase TransBiotec, Inc. common stock, one with the option purchase 25,000 shares of TransBiotec, Inc.'s common stock at $0.25 per share, and one with the option purchase 250,000 shares of TransBiotec's common stock at $0.007 per share, and one with the option purchase for 450,000 shares at $0.068 and no warrants to purchase shares of our common stock. We do have convertible debentures outstanding that permit the holder to convert the outstanding obligation into shares of our common stock. The company has 38,038,041 options outstanding at December 31, 2015.

Dividends

There have been no cash dividends declared on our common stock, and we do not anticipate paying cash dividends in the foreseeable future. Dividends are declared at the sole discretion of our Board of Directors.

Securities Authorized for Issuance Under Equity Compensation Plans

There are no outstanding options or warrants to purchase shares of our common stock under any equity compensation plans.

Currently, we do not have any equity compensation plan. As a result, we did not have any options, warrants or rights outstanding as of December 31, 2015 under those plans.

Recent Issuance of Unregistered Securities

During the three months ended December 31, 2015, we issued, or agreed to issue, the following unregistered securities:

On November 20, 2015, we entered into a Debt Conversion and Series A Convertible Preferred Stock Purchase Agreement with Mr. Michael Lanphere, under which Mr. Lanphere agreed to convert $520,643 of debt owed to him into 520,643 shares of our Series A Preferred Stock. Our shares of Series A Convertible Preferred Stock are convertible into shares of our common stock at any time at a 35% discount to the average of our closing stock price for the last fifteen (15) days prior to conversion, so long as the minimum average closing price for our common stock is at least $0.05 per share during the pricing period. Since our common stock is currently trading at less than $0.05 per share, for the purposes of calculating Mr. Lanphere's beneficial ownership hereunder we have used $0.05 per share as the average closing stock price. As a result, Mr. Lanphere's shares of Series A Convertible Preferred Stock are convertible into 16,019,785 shares of our common stock. Based on the representations of the investor in the purchase agreement, the issuance of the shares was exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933. The investor was accredited and sophisticated, familiar with our operations, and there was no solicitation.

On November 20, 2015, we entered into a Debt Conversion and Series A Convertible Preferred Stock Purchase Agreement with non-affiliate third party, under which he agreed to convert $867,932 of debt owed to him into 867,932 shares of our Series A Preferred Stock. Our shares of Series A Convertible Preferred Stock are convertible into shares of our common stock at any time at a 35% discount to the average of our closing stock price for the last fifteen (15) days prior to conversion, so long as the minimum average closing price for our common stock is at least $0.05 per share during the pricing period. Since our common stock is currently trading at less than $0.05 per share, for the purposes of calculating the holder's beneficial ownership hereunder we have used $0.05 per share as the average closing stock price. As a result, the shares of Series A Convertible Preferred Stock are convertible into 26,705,600 shares of our common stock. Based on the representations of the investor in the purchase agreement, the issuance of the shares was exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933. The investor was accredited and sophisticated, familiar with our operations, and there was no solicitation.

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On December 31, 2015, Mr. Lanphere agreed to accept 962,494 shares of our common stock in lieu of $86,624, which was one-half of the then-current legal fees owed we owed him for legal services he provided to the company through that date. Based on the fact Mr. Lanphere is an accredited and sophisticated, familiar with our operations, and there was no solicitation the issuance will be exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933.

If our stock is listed on an exchange we will be subject to the Securities Enforcement and Penny Stock Reform Act of 1990 requires additional disclosure relating to the market for penny stocks in connection with trades in any stock defined as a penny stock. The Commission has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to a few exceptions which we do not meet. Unless an exception is available, the regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated therewith.

ITEM 6 – SELECTED FINANCIAL DATA

As a smaller reporting company we are not required to provide the information required by this Item.

ITEM 7 – MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

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.

Although the forward-looking statements in this Annual 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 are a development stage company that has developed an alcohol detection device called "SOBR". 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.

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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.

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.

We are currently performing beta testing of SOBR.

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 its business plan in January 2009. On September 19, 2011 we acquired approximately 52% of the outstanding shares of TBT from TBT's directors, in exchange for 12,416,462 shares of our common stock.

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.

Between the acquisitions in September 2011 and January 2012 we own approximately 97% of the outstanding shares of TBT.

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.

TBT as the accounting acquirer in the transaction recorded the acquisition as the issuance of stock for our net monetary assets accompanied by a recapitalization. This accounting for the transaction was identical to that resulting from a reverse acquisition, except that no goodwill or other intangible assets were recorded.

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 year ended December 31, 2014.

This discussion and analysis should be read in conjunction with TBT's financial statements included as part of this Annual Report.

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Results of Operations for the Years Ended December 31, 2015 and 2014

Results of Operations

Summary of Results of Operations

	Year Ended December 31,
	2015			2014
Revenue	$	-		$	-
Operating expenses:
General and administrative		446,983			505,552
Amortization and Depreciation		454			776
Total expenses		447,437			506,328
Operating loss		(447,437	)		(506,328	)
Interest expense		(251,500	)		(188,046	)
Interest expense – beneficial conversion feature		(23,750	)		(32,996	)
Gain (loss) on fair value adjustment – derivatives		25,456			(21,559	)
Gain on debt reversal		485			-
Net loss	$	(696,746	)	$	(748,929	)

Operating Loss; Net Loss

Our net loss decreased by $52,183, from $748,929 to $696,746 from the year ended 2014 compared to 2015. Our operating loss decreased by $58,891, from $506,328 to $447,437 for the same period. The change in our net loss for the year ended December 31, 2015, compared to the prior year is primarily a result of a decrease in our general and administrative expenses and a gain on fair value adjustment – derivatives and a gain on debt reversals, offset by an increase in our interest expense. These 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 SOBR, our unique alcohol sensing technology. Although we have not had any sales to date, we believe we are close to our first sales and revenue, possibly during the first six months of our fiscal year ended December 31, 2016, but we believe that will be dependent upon on our ability to raise sufficient money to bring the SOBR device to market.

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General and Administrative Expenses

General and administrative expenses decreased by $58,569, from $505,552 for the year ended December 31, 2014 to $446,983 for the year ended December 31, 2015, primarily due to decrease in operating expenses, which is due to a decrease in consulting fees in 2015.

Interest Income/Expense

Interest expense increased by $63,454 to $251,500 for the year ended December 31, 2015. The increase relates to the fact we incurred more interest expense on certain loans where we borrowed money during 2015 compared to 2014.

Gain (Loss) on Fair Value Adjustment - Derivatives

During the year ended December 31, 2015, we incurred a gain on fair value adjustment – derivatives of $25,456, compared to a loss of ($21,559) for the year ended December 31, 2014, primarily due to the impact of a decrease in our stock price on certain convertible instruments we have outstanding.

Gain on Debt Reversals

During the year ended December 31, 2015, we incurred a gain on a forgiveness of debt of $485, compared to $0 for the year ended December 31, 2014.

Liquidity and Capital Resources

Introduction

During the years ended December 31, 2015 and 2014, because of our operating losses, we did not generate positive operating cash flows. Our cash on hand as of December 31, 2015 was $7,851 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 short terms promissory notes. 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 will be successful in the future satisfying these needs through the proceeds from the sales of our securities.

Our cash, current assets, total assets, current liabilities, and total liabilities as of December 31, 2015 and 2014, respectively, are as follows:

	December 31, 2015		December 31, 2014		Change
Cash	$	7,851	$	623	$	7,228
Total Current Assets		7,851		623		7,228
Total Assets		7,851		454		7,397
Total Current Liabilities		2,162,376		3,052,573		(890,197	)
Total Liabilities	$	2,162,376	$	3,095,871	$	(933,495	)

Our current assets increased by $7,228 as of December 31, 2015 as compared to December 31, 2014. The increase in our current assets between the two periods was attributed to an increase in our cash on hand of $7,228.

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Our current liabilities decreased by $890,197, as of December 31, 2015 as compared to December 31, 2014. A large portion of this decrease was due to decreases in our notes payable to related parties through conversions to equity, our notes payable-current, and our accrued interest payable, partially offset by increases in our related party payables and accounts payable. As a result, our total liabilities also decreased by $933,495.

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.

Cash Requirements

We had cash available as of December 31, 2015 of $7,851 and $623 on December 31, 2014. Based on our revenues, cash on hand and current monthly burn rate of approximately $25,000, we will need to continue borrowing from our shareholders and other related parties, and/or raise money from the sales of our securities, to fund operations.

Sources and Uses of Cash

Operations

We had net cash used by operating activities of ($120,749) for the year ended December 31, 2015, as compared to ($310,909) for the year ended December 31, 2014. In 2015, the net cash used for operating activities consisted primarily of our net loss of $691,734, adjusted primarily by a change in fair value of derivative liability of ($25,456), and note payable beneficial conversion expense of ($23,750) and stock options expense of (26,229); and changes in assets and liabilities of accounts payable of $221,678, stock subscription payable of $27,815 accrued interest payable of ($136,726), related party payable of $116,391, notes payable of $321,172 and other payable of ($4,322). In 2014, the net cash used in operating activities consisted primarily of our net loss of $744,562, adjusted primarily by stock based compensation of $69,888, note payable beneficial conversion expense of $32,996, and change in fair value of derivative liabilities of $21,559, in addition to changes in assets and liabilities of accounts payable of $64,730, accrued interest payable of $138,734, related party payable of $105,500, and other payable of $(530). 

Investments

We did not have any cash used for investing activities in the years ended December 31, 2015 and December 31, 2014.

Financing

Our net cash provided by financing activities for the year ended December 31, 2015 was $127,977, compared to $311,532 for the year ended December 31, 2014. For 2015, our financing activities related to proceeds from share issuances of $502, net proceeds from notes payable of $154,315, and net payments from notes payable of ($27,840). For 2014, our financing activities related to notes and loans payable – borrowings of $347,266, and note and loans payable – payments of $35,734. 

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Contractual Obligations

As of December 31, 2015, we had the following contractual obligations for 2016 through 2020:

	2016 (1)		2017		2018		2019		2020		Total
Debt obligations	$	-	$	-	$	-	$	-	$	-	$	-
Capital leases		-		-		-		-		-		-
Operating leases		49,200		49,200		49,200		24,600		-		172,200
	$	49,200	$	49,200	$	49,200	$	24,600	$	-	$	172,200

________

(1) The interest amount for the contractual obligation for 2016 has been estimated.

Off Balance Sheet Arrangements

We have no off balance sheet arrangements.

ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company we are not required to provide the information required by this Item.

ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

For a list of financial statements and supplementary data filed as part of this Annual Report, see the Index to Financial Statements beginning at page F-1 of this Annual Report.

ITEM 9 – CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

There are no items required to be reported under this Item.

ITEM 9A – CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer (our Principal Accounting Officer), of the effectiveness of our disclosure controls and procedures (as defined) in Exchange Act Rules 13a – 15(c) and 15d – 15(e)). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer, who are our principal executive officer and principal financial officers, respectively, concluded that, as of the end of the period ended December 31, 2015, our disclosure controls and procedures were not effective (1) to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms and (2) to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to us, including our chief executive and chief financial officers, as appropriate to allow timely decisions regarding required disclosure.

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Our Chief Executive Officer and Chief Financial Officer (our Principal Accounting Officer) do not expect that our disclosure controls or internal controls will prevent all error and all fraud. No matter how well conceived and operated, our disclosure controls and procedures can provide only a reasonable level of assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented if there exists in an individual a desire to do so. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Furthermore, smaller reporting companies face additional limitations. Smaller reporting companies employ fewer individuals and find it difficult to properly segregate duties. Often, one or two individuals control every aspect of the company's operation and are in a position to override any system of internal control. Additionally, smaller reporting companies tend to utilize general accounting software packages that lack a rigorous set of software controls.

(b) Management's Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act, as amended, as a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer (our Principal Financial Officer), and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States and includes those policies and procedures that:

· Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and any disposition of our assets;

· Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

· Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

 

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2015. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on this assessment, Management has identified the following three material weaknesses that have caused management to conclude that, as of December 31, 2015, our disclosure controls and procedures, and our internal control over financial reporting, were not effective at the reasonable assurance level:

1. We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

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2. We have not documented our internal controls. We have limited policies and procedures that cover the recording and reporting of financial transactions and accounting provisions. As a result we may be delayed in our ability to calculate certain accounting provisions. While we believe these provisions are accounted for correctly in the attached audited financial statements our lack of internal controls could lead to a delay in our reporting obligations. We were required to provide written documentation of key internal controls over financial reporting beginning with our fiscal year ending December 31, 2009. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

3. Effective controls over the control environment were not maintained. Specifically, a formally adopted written code of business conduct and ethics that governs our employees, officers, and directors was not in place. Additionally, management has not developed and effectively communicated to our employees its accounting policies and procedures. This has resulted in inconsistent practices. Further, our Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.

To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented. Accordingly, we believe that the consolidated financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.

(c) Remediation of Material Weaknesses

In order to remediate the material weakness in our documentation, evaluation and testing of internal controls, we hope to hire additional qualified and experienced personnel to assist us in remedying this material weakness.

(d) Changes in Internal Control over Financial Reporting

There are no changes to report during our fiscal quarter ended December 31, 2015.

ITEM 9B – OTHER INFORMATION

There are no events required to be disclosed by the Item.

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PART III

ITEM 10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers

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	71	President, Chief Operating Officer, Principal Financial Officer, Principal Accounting Officer, Secretary (July 2013) and a Director (December 2006)
Ronald Williams	70	Chief Technology Officer and Director (October 2005)
Devadatt Mishal	67	Director (June 2010)
Daljit Khangura	49	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.

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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 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.

25

Involvement in Certain Legal Proceedings

Our directors and executive officers have not been involved in any of the following events during the past ten years:

1.	Other than the involuntary bankruptcy proceeding mentioned herein, no bankruptcy petition has been filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
2.	any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
3.	being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities;
4.	being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
5.	being the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (i) any federal or state securities or commodities law or regulation; or (ii) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
6.	being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Securities Exchange Act of 1934), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Committees

All proceedings of the board of directors for the year ended December 31, 2015 were conducted by resolutions consented to in writing by the board of directors and filed with the minutes of the proceedings of our board of directors. Our company currently does not have nominating, compensation or audit committees or committees performing similar functions nor does our company have a written nominating, compensation or audit committee charter. Our board of directors does not believe that it is necessary to have such committees because it believes that the functions of such committees can be adequately performed by the board of directors.

We do not have any defined policy or procedural requirements for shareholders to submit recommendations or nominations for directors. The board of directors believes that, given the stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. Our company does not currently have any specific or minimum criteria for the election of nominees to the board of directors and we do not have any specific process or procedure for evaluating such nominees. The board of directors will assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment.

A shareholder who wishes to communicate with our board of directors may do so by directing a written request addressed to our president at the address appearing on the first page of this annual report.

26

Audit Committee Financial Expert

Our board of directors has determined that it does not have an audit committee member that qualifies as an "audit committee financial expert" as defined in Item 407(d)(5)(ii) of Regulation S-K. We believe that the audit committee members are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. In addition, we believe that retaining an independent director who would qualify as an "audit committee financial expert" would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated revenues to date.

Nomination Procedures For Appointment of Directors

As of December 31, 2015, we did not effect any material changes to the procedures by which our stockholders may recommend nominees to our board of directors.

Code of Ethics

We do not have a code of ethics.

Section 16(a) Beneficial Ownership

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers and persons who own more than ten percent of a registered class of the Company's equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors and greater than ten percent shareholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.

During the most recent fiscal year, to the Company's knowledge, the following delinquencies occurred:

Name	No. of Late Reports		No. of Transactions Reported Late		No. of Failures to File
Charles Bennington		0		0		0
Ronald Williams		0		0		0
Devadatt Mishal		0		0		0
Daljit Khangura		0		0		0
Michael Lanphere		0		0		10

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ITEM 11 – EXECUTIVE COMPENSATION

The particulars of compensation paid to the following persons:

(a)	all individuals serving as our principal executive officer during the year ended December 31, 2015;
(b)	each of our two most highly compensated executive officers other than our principal executive officer who were serving as executive officers at December 31, 2015 who had total compensation exceeding $100,000; and
(c)	up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at December 31, 2015,

who we will collectively refer to as the named executive officers, for the years ended December 31, 2015, 2014 and 2013, are set out in the following summary compensation table:

Summary Compensation

The following table provides a summary of the compensation received by the persons set out therein for each of our last three fiscal years:

SUMMARY COMPENSATION TABLE

Name  and Principal  Position	Year	Salary  ($)(2)		Bonus  ($)		Stock  Awards  ($)		Option  Awards  ($)		Non-Equity  Incentive  Plan  Compensation  ($)		Change in  Pension  Value and  Nonqualified  Deferred  Compensation  Earnings  ($)		All  Other  Compensation  ($)		Total  ($)
Charles Bennington	2015		120,000		-0-		-0-		-0-		-0-		-0-		-0-		120,000
President, CFO, COO,	2014		120,000		-0-		-0-		-0-		-0-		-0-		-0-		120,000
Secretary (former CEO)	2013		120,000		-0-		-0-		-0-		-0-		-0-		-0-		120,000
Ronald Williams	2015		-0-		-0-		-0-		-0-		-0-		-0-		-0-		-0-
CTO	2014		-0-		-0-		-0-		-0-		-0-		-0-		-0-		-0-
	2013		-0-		-0-		-0-		-0-		-0-		-0-		-0-		-0-
Nicholas Limer	2013		-0-		-0-		-0-		-0-		-0-		-0-		-0-		-0-
(Former Secretary)(1)

____________

(1) Mr. Limer resigned as our Secretary on July 30, 2013.

(2) Includes amounts paid and/or accrued.

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Employment Contracts

In May 2011 we entered into an employment agreement with Mr. Bennington which expires on the earlier of December 31, 2016 or Mr. Bennington's death. The employment agreement provides that we will pay Mr. Bennington a salary of $120,000 during the first year of the agreement, $156,000 during the second year of the agreement, $172,000 during the third year of the agreement, $190,000 during the fourth year of the agreement and $208,000 during the fifth year of the agreement. In addition the agreement allows Mr. Bennington to participate in all employee benefit plans generally available to our employees.

Long-Term Incentive Plans. We do not provide its officers or employees with pension, stock appreciation rights, long-term incentive or other plans and has no intention of implementing any of these plans for the foreseeable future.

Employee Pension, Profit Sharing or other Retirement Plans. We do not have a defined benefit, pension plan, profit sharing or other retirement plan, although it may adopt one or more of such plans in the future.

Director Compensation

The following table sets forth director compensation for 2015:

Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Charles Bennington		-0-		-0-		-0-		-0-		-0-		-0-		-0-
Ronald Williams		-0-		-0-		-0-		-0-		-0-		-0-		-0-
Devadatt Mishal		-0-		-0-		-0-		-0-		-0-		-0-		-0-
Daljit Khangura		-0-		-0-		-0-		-0-		-0-		-0-		-0-

No director received compensation for the fiscal years December 31, 2015 and December 31, 2014. We have no formal plan for compensating our directors for their service in their capacity as directors, although such directors are expected in the future to receive stock options to purchase common shares as awarded by our board of directors or (as to future stock options) a compensation committee which may be established. Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our board of directors. Our board of directors may award special remuneration to any director undertaking any special services on our behalf other than services ordinarily required of a director.

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Outstanding Equity Awards at Fiscal Year-End

The following table sets forth certain information concerning outstanding stock awards held by the Named Executive Officers on December 31, 2015:

	Option Awards									Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)		Option Exercise Price ($)		Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested ($)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Charles Bennington		-0-		-0-		-0-	N/A		N/A		-0-		-0-		-0-		-0-
Ronald Williams		-0-		-0-		-0-	N/A		N/A		-0-		-0-		-0-		-0-
Devadatt Mishal		-0-		-0-		-0-	N/A		N/A		-0-		-0-		-0-		-0-
Daljit Khangura		450,000		-0-		-0-	$	0.068	10/2019		-0-		-0-		-0-		-0-

 

Outstanding Equity Awards at Fiscal Year-End

There were no outstanding stock options or stock appreciation rights granted to our executive officers and directors at December 31, 2015.

Aggregated Option Exercises

There were no options exercised by any officer or director of our company during our twelve month period ended December 31, 2015.

Long-Term Incentive Plan

Currently, our company does not have a long-term incentive plan in favor of any director, officer, consultant or employee of our company.

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ITEM 12 – SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth, as of March 25, 2016, 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			8.0	%
Common Stock	Daljit Khangura (3)	Director		946,357	(4)		1.4	%
Common Stock	Michael A. Lanphere	5% Shareholder		48,935,703	(5)		41.9	%
	All Officers and Directors as a Group (4 persons)			7,335,590	(4)		10.7	%

_______________

(1)	Unless otherwise indicated, based on 67,751,068 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.
(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.

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ITEM 13 – CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

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.

On November 20, 2015, we entered into a Debt Conversion and Series A Convertible Preferred Stock Purchase Agreement with Mr. Lanphere, under which Mr. Lanphere agreed to convert $520,643 of debt owed to him into 520,643 shares of our Series A Preferred Stock. Our shares of Series A Convertible Preferred Stock are convertible into shares of our common stock at any time at a 35% discount to the average of our closing stock price for the last fifteen (15) days prior to conversion, so long as the minimum average closing price for our common stock is at least $0.05 per share during the pricing period. Since our common stock is currently trading at less than $0.05 per share, for the purposes of calculating Mr. Lanphere's beneficial ownership hereunder we have used $0.05 per share as the average closing stock price. As a result, Mr. Lanphere's shares of Series A Convertible Preferred Stock are convertible into 16,019,785 shares of our common stock.

On December 31, 2015, Mr. Lanphere agreed to accept 3,160,519 shares of our common stock in lieu of $284,500, which was one-half of the then-current legal fees owed we owed him for legal services he provided to the company through that date.

As a result of the above, Mr. Lanphere currently owns, or has a right to have issued to him, a total of 46,737,678 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 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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Corporate Governance

As of December 31, 2015, our Board of Directors consisted of Charles Bennington, Ronald Williams, and Devadatt Mishal. Daljit Khangura. As of December 31, 2015, Mr. Mishal qualified as "independent directors" as the term is used in NASDAQ rule 5605(a)(2).

ITEM 14 – PRINCIPAL ACCOUNTING FEES AND SERVICES

Audit fees

The aggregate fees billed for the two most recently completed fiscal periods ended December 31, 2015 and December 31, 2014 for professional services rendered by Anton & Chia, LLP for the audit of our annual consolidated financial statements, quarterly reviews of our interim consolidated financial statements and services normally provided by the independent accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:

	Year Ended  December 31,  2015		Year Ended  December 31,  2014
Audit Fees and Audit Related Fees	$	27,030	$	24,180
Tax Fees		0		0
All Other Fees		0		0
Total	$	27,030	$	24,180

In the above table, "audit fees" are fees billed by our company's external auditor for services provided in auditing our company's annual financial statements for the subject year. "Audit-related fees" are fees not included in audit fees that are billed by the auditor for assurance and related services that are reasonably related to the performance of the audit review of our company's financial statements. "Tax fees" are fees billed by the auditor for professional services rendered for tax compliance, tax advice and tax planning. "All other fees" are fees billed by the auditor for products and services not included in the foregoing categories.

Policy on Pre-Approval by Audit Committee of Services Performed by Independent Auditors

The board of directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the board of directors before the respective services were rendered.

The board of directors has considered the nature and amount of fees billed by Anton & Chia, LLP and believes that the provision of services for activities unrelated to the audit is compatible with maintaining Anton & Chia, LLP's independence.

33

PART IV

ITEM 15 – EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)(1) Financial Statements

For a list of financial statements and supplementary data filed as part of this Annual Report, see the Index to Financial Statements beginning at page F-1 of this Annual Report.

(a)(2) Financial Statement Schedules

We do not have any financial statement schedules required to be supplied under this Item.

(a)(3) Exhibits

Refer to (b) below.

(b) Exhibits

3.1 (1)	Articles of Incorporation of Imagine Media, Ltd.
3.2	Articles of Amendment to Articles of Incorporation to TransBiotec, Inc.
3.3 (1)	Bylaws of Imagine Media, Ltd.
10.1 (1)	Spin-of Trust Agreement by and between Gregory A. Bloom and Imagine Holding Corp. dated August 10, 2007
10.2 (1)	Form of Work For Hire Agreement
10.3 (1)	Assignment and Assumption Agreement by and between Imagine Holding Corp. and Imagine Media, Ltd. dated August 23, 2007
10.4 (2)	Investment Agreement by and between TransBiotec, Inc. and Kodiak Capital Group, LLC dated August 15, 2012
10.5 (3)	Amendment No. 1 to Investment Agreement by and between TransBiotec, Inc. and Kodiak Capital Group, LLC dated October 18, 2012
10.6 (2)	Registration Rights Agreement by and between TransBiotec, Inc. and Kodiak Capital Group, LLC dated August 15, 2012

34

31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer (filed herewith)
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Accounting Officer (filed herewith)
32.1	Section 1350 Certification of Chief Executive Officer (filed herewith).
32.2	Section 1350 Certification of Chief Accounting Officer (filed herewith).
101.INS **	XBRL Instance Document
101.SCH **	XBRL Taxonomy Extension Schema Document
101.CAL **	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF **	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB **	XBRL Taxonomy Extension Label Linkbase Document
101.PRE **	XBRL Taxonomy Extension Presentation Linkbase Document

________________

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registrati0n statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

(1)	Incorporated by reference from our Registration Statement on Form SB-2, filed with the Commission on January 31, 2008.
(2)	Incorporated by reference from our Current Report on Form 8-K, filed with the Commission on September 11, 2012
(3)	Incorporated by reference from our Registration Statement on Form S-1, filed with the Commission on November 6, 2012

35

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	TransBiotec, Inc.
Dated: April 13, 2016	By:	/s/ Charles Bennington
		Charles Bennington
	Its:	President (Principal Executive Officer) and Principal Accounting Officer

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Dated: April 13, 2016	By:	/s/ Charles Bennington
		Charles Bennington
		Director, President, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer), Secretary
Dated: April 13, 2016	By:	/s/ Ronald Williams
		Ronald Williams
		Director and Chief Technology Officer
Dated: April 13, 2016	By:	/s/ Devadatt Mishal
		Devadatt Mishal
		Director
Dated: April 13, 2016	By:	/s/ Daljit Khangura
		Daljit Khangura
		Director

36

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX

	Page
Financial Statements:
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheet	F-3
Consolidated Statement of Operations	F-4
Consolidated Statements of Changes in Stockholders' Equity	F-5
Consolidated Statement of Cash Flows	F-6
Notes to Consolidated Financial Statements	F-7
Supplementary Data
Not applicable

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

TransBiotec, Inc.

194 N Marina Dr., Suite 202

Long Beach, CA 90803 

We have audited the accompanying consolidated balance sheets of TransBiotec, Inc. (the "Company") as of December 31, 2015 and 2014, and their related consolidated statements of operations, changes in shareholders' deficit and cash flows for each of the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company was not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2015 and 2014, and the results of its operations and its cash flows for the each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 7 to the consolidated financial statements, the Company has had no revenues and income since inception. These conditions, among others, raise substantial doubt about the Company's ability to continue as a going concern. Management's plans concerning these matters are also described in Note 7, which includes the raising of additional funds through equity or debt financing and by generating revenue. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Anton & Chia, LLP                                  

Newport Beach, CA 

April 13, 2016

F-2

TransBiotec, Inc.

CONSOLIDATED BALANCE SHEETS

	Dec. 31, 2015			Dec. 31, 2014
ASSETS
Current assets
Cash	$	7,851		$	623
Total current assets		7,851			623
Fixed assets - net		-			454
Total Assets	$	7,851		$	1,077
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	622,129		$	484,260
Accrued interest payable		182,678			407,684
Notes payable - current - related parties		489,095			697,225
Notes payable - current, net		157,324			871,694
Notes payable - derivitive liability payable		-			25,456
Stock subscription payable		55,882			28,067
Related party payables		412,656			296,265
Other payables		242,612			241,922
Total current liabilties		2,162,376			3,052,573
Long-Term Liabilities
Notes payable - related parties		-			43,298
Total Liabilities		2,162,376			3,095,871
Stockholders' Deficit
Preferred stock, $.00001 par value; 25,000,000 shares authorized; No shares issued and outstanding as of December 31, 2015 and December 31, 2014, respectively		-			-
Series A Convertible Preferred stock, $.00001 par value; 3,000,000 shares authorized; No shares issued and outstanding as of December 31, 2015 and December 31, 2014, respectively		-			-
Common stock, $.00001 par value; 100,000,000 shares authorized; 60,251,068 and 58,416,660 shares issued and outstanding as of December 31, 2015 and December 31, 2014, respectively		602			585
Additional paid in capital		14,353,628			12,716,630
Accumulated deficit		(16,468,956	)		(15,777,222	)
Total Transbiotec, Inc. stockholders' deficit		(2,114,726	)		(3,060,007	)
Noncontrolling interest		(39,799	)		(34,787	)
Total Stockholders' Deficit		(2,154,525	)		(3,094,794	)
Total Liabilities and Stockholders' Deficit	$	7,851		$	1,077

 

The accompanying notes are an integral part of the consolidated financial statements.

F-3

TransBiotec, Inc.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended			Year Ended
	Dec. 31, 2015			Dec. 31, 2014
Revenues	$	-		$	-
Operating expenses:
Amortization & depreciation		454			776
General and administrative		446,983			505,552
		447,437			506,328
Loss from operations		(447,437	)		(506,328	)
Other income (expense):
Gain (Loss) on fair value adjustment - derivatives		25,456			(21,559	)
Gain on debt reversals		485			-
Interest expense		(251,500	)		(188,046	)
Interest expense - beneficial conversion feature		(23,750	)		(32,996	)
		(249,309	)		(242,601	)
Loss before provision for income taxes		(696,746	)		(748,929	)
Provision for income tax		-			-
Net loss		(696,746	)		(748,929	)
Less: Net loss attributable to noncontrolling interest		5,012			4,367
Net loss attributable to TranBioTec, Inc.	$	(691,734	)	$	(744,562	)
Net loss per share
(Basic and fully diluted)	$	(0.01	)	$	(0.02	)
Weighted average number of common shares outstanding		59,261,114			39,215,919

The accompanying notes are an integral part of the consolidated financial statements.

F-4

TransBiotec, Inc.

(A Development Stage Company)

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT

										Stockholders'
	Common Stock				Additional					Deficit-			Total
			Amount		Paid in		Accumulated			TransBiotec			Stockholders'			Noncontrolling
	Shares		($.0001 Par)		Capital		Deficit			Inc.			Deficit			Interest
Balances at January 1, 2013		34,146,712	$	342	$	12,415,639	$	(15,032,660	)	$	(2,616,679	)	$	(2,647,099	)	$	(30,420	)
Stock issued for services		154,520		2		3,057		-			3,059			3,059			-
Stock conversion of note payable		24,115,428		241		66,878		-			67,119			67,119			-
Paid in capital - beneficial conversion feature		-		-		15,000		-			15,000			15,000			-
Paid in capital - Stock option expense		-		-		69,886		-			69,886			69,886			-
Paid in capital - Equity obligation settlement at fair value		-		-		146,170		-			146,170			146,170			-
Share exchange - noncontrolling interest		-		-		-		-			-			(4,367	)		(4,367	)
Net loss for the year		-		-		-		(744,562	)		(744,562	)		(744,562	)		-
Balances at December 31, 2014		58,416,660		585		12,716,630		(15,777,222	)		(3,060,007	)		(3,094,794	)		(34,787	)
Stock issued for cash		834,408		7		1,495		-			1,502			1,502			-
Stock conversion of note payable		1,000,000		10		3,890		-			3,900			3,900			-
Paid in capital - beneficial conversion feature		-		-		25,000		-			25,000			25,000			-
Paid in capital - stock option expense		-		-		26,229		-			26,229			26,229			-
Paid in capital - Gain on related party debt conversion		-		-		1,472,384		-			1,472,384			1,472,384			-
Paid in capital - Gain on related party forgiveness of debt		-		-		108,000		-			108,000			108,000			-
Share exchange - noncontrolling interest		-		-		-		-			-			(5,012	)		(5,012	)
Net loss for the year		-		-		-		(691,734	)		(691,734	)		(691,734	)		-
Balances at December 31, 2015		60,251,068		602	$	14,353,628	$	(16,468,956	)	$	(2,114,726	)	$	(2,154,525	)	$	(39,799	)

The accompanying notes are an integral part of the consolidated financial statements.

F-5

TransBiotec, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For The Year Ended
	December 31,
	2015			2014
Operating Activities:
Net loss	$	(691,734	)	$	(744,562	)
Adjustments to reconcile net loss to net cash provided by (used for) operating activities:
Amortization & depreciation		454			776
Change in fair value of derivative liability		(25,456	)		21,559
Note payable benefical conversion expense		23,750			32,996
Stock Options Expense		26,229			-
Stock Based Compensation		-			69,888
Changes in assets and liabilities:
Accounts payable		221,678			64,730
Stock subscription payable		27,815
Accrued interest payable		(136,726	)		138,734
Related party payable		116,391			105,500
Notes payable		321,172
Other payable		(4,322	)		(530	)
Net cash used for operating activities		(120,749	)		(310,909	)
Investing Activities:
Net cash used for investing activities		-			-
Financing Activities:
Proceeds from share issuances		1,502			-
Net proceeds from notes payable		154,315			347,266
Net payments from notes payable		(27,840	)		(35,734	)
Net cash provided by financing activities		127,977			311,532
Net Change In Cash		7,228			623
Cash At The Beginning Of The Period		623			-
Cash At The End Of The Period	$	7,851		$	623
Schedule Of Non-Cash Investing And Financing Activities
Debt converted to capital	$	1,472,384		$	96,470
Issuances of shares to settle accrued interest	$	3,900		$	-
Gain on forgiveness of debt - related party	$	108,000		$	-
Supplemental Disclosure
Cash paid for interest	$	13,825		$	9,000
Cash paid for income taxes	$	-		$	-

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

F-6

TransBiotec, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2015 AND 2014

NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

TransBiotec, Inc. ("TransBiotec – DE"), formerly Imagine Media LTD., was incorporated August, 2007 in the State of Delaware. A corporation also named TransBiotec, Inc. ("TransBiotec – CA") was formed in the state of California July 4, 2004. Effective September 19, 2011 TransBiotec - DE was acquired by TransBiotec - CA in a transaction classified as a reverse acquisition as the shareholders of TransBiotec - CA retained the majority of the outstanding common stock of TransBiotec - DE after the share exchange. The financial statements represent the activity of TransBiotec - CA from July 4, 2004 forward, and the consolidated activity of TransBiotec - DE and TransBiotec - CA from September 19, 2011 forward. TransBiotec - DE and TransBiotec - CA are hereinafter referred to collectively as the "Company". The Company has developed and plans to market and sell a non-invasive alcohol sensing system which includes an ignition interlock. The Company has not generated any revenues from its operations.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") as promulgated in the United States of America.

Principles of consolidation

The accompanying consolidated financial statements include the amounts of the Company and its majority owned subsidiary, Transbiotec-CA. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Specifically, such estimates were made by the Company for the valuation of derivative liability, stock compensation and beneficial conversion feature expenses. Actual results could differ from those estimates.

Cash

The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents. The Company does not have any cash equivalents as of December 31, 2015 and December 31, 2014.

F-7

TransBiotec, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2015 AND 2014

NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

Property and equipment

Property and equipment are recorded at cost and depreciated under straight line methods over each item's estimated useful life.

Income tax

The Company accounts for income taxes pursuant to ASC 740. Under ASC 740 deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Net loss per share

The net loss per share is computed by dividing the net loss by the weighted average number of shares of common outstanding. Diluted net loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would then share in the income of the Company, subject to anti-dilution limitations. The Company has 30,038,041 stock options that can be converted to common stock if exercised.

Financial Instruments

SC Topic 820 defines fair value, establishes a framework for measuring fair value, establishes a three-level valuation hierarchy for disclosure of fair value measurement and enhances disclosure requirements for fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The carrying value of cash, accounts payable, accrued expenses, notes payable, related party payables, and other payable approximates their fair values due to their short-term maturities.

F-8

TransBiotec, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2015 AND 2014

Long-Lived Assets

In accordance with ASC 350, the Company regularly reviews the carrying value of intangible and other long-lived assets for the existence of facts or circumstances, both internally and externally, that may suggest impairment. If impairment testing indicates a lack of recoverability, an impairment loss is recognized by the Company if the carrying amount of a long-lived asset exceeds its fair value.

Beneficial Conversion Features

From time to time, the Company may issue convertible notes that may contain an embedded beneficial conversion feature. A beneficial conversion feature exists on the date a convertible note is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the remaining unallocated proceeds of the note after first considering the allocation of a portion of the note proceeds to the fair value of the warrants, if related warrants have been granted. The intrinsic value of the beneficial conversion feature is recorded as a debt discount with a corresponding amount to additional paid in capital. The debt discount is amortized to interest expense over the life of the note using the effective interest method.

Derivative Instruments

The fair value of derivative instruments is recorded and shown separately under current liabilities. Changes in fair value are recorded in the consolidated statement of income under other income (expenses).

The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instruments is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, the Company uses a weighted average Black-Sholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

Stock based compensation

The Company has share-based compensation plans under which employees, consultants, suppliers and directors may be granted restricted stock, as well as options and warrants to purchase shares of Company common stock at the fair market value at the time of the grant. Stock-based compensation cost to employees is measured by the Company at the grant date, based on the fair value of the award, over the requisite service period under ASC718. For options issued to employees, the Company recognizes stock compensation costs utilizing the fair value methodology over the related period of benefit. Grants of stock to non-employees and other parties are accounted for in accordance with the ASC 505.

F-9

TransBiotec, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2015 AND 2014

Recent accounting pronouncement

In June 2014, the FASB issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders' equity. The amendments in ASU 2014-10 will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted. The Company adopted ASU 2014-10 during the quarter ended June 30, 2014, thereby no longer presenting or disclosing any information required by Topic 915.

In August 2014, the FASB issued the FASB Accounting Standards Update No. 2014-15 "Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern ("ASU 2014-15"). In connection with preparing financial statements for each annual and interim reporting period, an entity's management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). Management's evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued (or at the date that the financial statements are available to be issued when applicable). Substantial doubt about an entity's ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued (or available to be issued). The term probable is used consistently with its use in Topic 450, Contingencies.

When management identifies conditions or events that raise substantial doubt about an entity's ability to continue as a going concern, management should consider whether its plans that are intended to mitigate those relevant conditions or events will alleviate the substantial doubt. The mitigating effect of management's plans should be considered only to the extent that (1) it is probable that the plans will be effectively implemented and, if so, (2) it is probable that the plans will mitigate the conditions or events that raise substantial doubt about the entity's ability to continue as a going concern.

If conditions or events raise substantial doubt about an entity's ability to continue as a going concern, but the substantial doubt is alleviated as a result of consideration of management's plans, the entity should disclose information that enables users of the financial statements to understand all of the following (or refer to similar information disclosed elsewhere in the footnotes):

a.	Principal conditions or events that raised substantial doubt about the entity's ability to continue as a going concern (before consideration of management's plans).
b.	Management's evaluation of the significance of those conditions or events in relation to the entity's ability to meet its obligations.
c.	Management's plans that alleviated substantial doubt about the entity's ability to continue as a going concern.

 

If conditions or events raise substantial doubt about an entity's ability to continue as a going concern, but the substantial doubt is not alleviated after consideration of management's plans, an entity should include a statement in the footnotes indicating that there is substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued (or available to be issued). Additionally, the entity should disclose information that enables users of the financial statements to understand all of the following:

a.	Principal conditions or events that raise substantial doubt about the entity's ability to continue as a going concern.
b.	Management's evaluation of the significance of those conditions or events in relation to the entity's ability to meet its obligations.
c.	Management's plans that are intended to mitigate the conditions or events that raise substantial doubt about the entity's ability to continue as a going concern.

 

The amendments in this Update are effective for the annual period ending after December 15, 2016, and for the annual periods and interim periods thereafter. Early application is permitted. The Company is currently evaluating the impact of the adoptions of ASU 2014-15 on its consolidated financial statements.

F-10

TransBiotec, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2015 AND 2014

Minority interest (Noncontrolling interest)

A subsidiary of the Company has minority members, representing ownership interests of 1.38% at December 31, 2015 and December 31, 2014. The Company accounts for these minority, or noncontrolling interests pursuant to ASC 810-10-65 whereby gains and losses in a subsidiary with a noncontrolling interest are allocated to the noncontrolling interest based on the ownership percentage of the noncontrolling interest, even if that allocation results in a deficit noncontrolling interest balance.

NOTE 2. RELATED PARTY TRANSACTIONS

As of December 31, 2015 and December 31, 2014, the Company had payables due to officers, for accrued compensation and services of $412,656 and $296,265 respectively.

The Company amended a note payable agreement with Lanphere Law Group, the company's largest shareholder, which forgave $108,000 of the principal balance. The original principal balance on the note was $214,334.50 and the new principal balance on the note after the debt forgiveness is $106,334.50.

The Company entered into a lease agreement with Lanphere Law Group, whereas the Company is the tenant and is paying monthly rent of $4,100.

NOTE 3. PROPERTY & EQUIPMENT

Property and equipment values recorded at cost are as follows:

	Dec. 31,			Dec. 31,
	2015			2014
Office and Lab Equipment	$	32,127		$	32,127
Furniture and fixtures		11,556			11,556
		43,683			43,683
Less accumulated depreciation		(43,683	)		(43,229	)
Property & Equipment, Net	$	-		$	454

Depreciation expense for the years ended December 31, 2015 and 2014 was $454 and $776, respectively.

F-11

TransBiotec, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2015 AND 2014

NOTE 4. NOTES PAYABLE

	December 31, 2015		December 31, 2014
Note payable to related party, unsecured, due 8/3/2012, interest rate 0%. Currently in default.	$	1,950	$	1,950
Notes payable to related party, unsecured, due 12/31/2012, interest rate 0%. Currently in default.	$	11,810	$	11,810
Note payable to related party, unsecured, $731,763, 5-years at 0% simple interest, due 7/1/2016, payment amounts vary each month, various late penalties.	$	180,001	$	726,763
Note payable to non-related party, unsecured, due 2/8/12, quarterly interest due, convertible at holder's option at $0.3235688 per TBT - DE share, interest rate 30%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.	$	10,000	$	10,000
Note payable to non-related party, unsecured, due 2/8/12, quarterly interest due, convertible at holder's option at $0.3235688 per TBT - DE share, interest rate 30%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.	$	25,000	$	25,000
Note payable to non-related party, unsecured, due 2/17/12, quarterly interest due, convertible at holder's option at $0.3235688 per TBT - DE share, interest rate 30%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.	$	25,000	$	25,000
Note payable to non-related party, unsecured, due 2/18/12, quarterly interest due, convertible at holder's option at $0.3235688 per TBT - DE share, interest rate 30%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.	$	10,000	$	10,000
Note payable to non-related party, unsecured, due 2/18/13, annual interest due, convertible at holder's option at $0.3235688 per TBT-DE share, interest rate 18%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.	$	750	$	750
Note payable to non-related party, unsecured, due 2/18/13, annual interest due, convertible at holder's option at $0.3235688 per TBT-DE share, interest rate 18%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.	$	6,875	$	6,875
Note payable to non-related party, unsecured, due 2/15/13, annual interest due, convertible at holder's option at $0.3235688 per TBT-DE share, interest rate 12%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.	$	2,500	$	2,500
Note payable to non-related party, unsecured, due 2/20/13, annual interest due, convertible at holder's option at $0.3235688 per TBT-DE share, interest rate 12%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.	$	3,750	$	3,750
Note payable to non-related party, unsecured, due 2/21/13, annual interest due, convertible at holder's option at $0.3235688 per TBT-DE. share, interest rate 12%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.	$	2,625	$	2,625

F-12

TransBiotec, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2015 AND 2014

Note payable to non-related party, unsecured, due 3/20/13, annual interest due, convertible at holder's option at $0.3235688 per TBT-DE share, interest rate 12%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.	$	5,433	$	5,433
Note payable to non-related party, unsecured, due 3/22/13, annual interest due, convertible at holder's option at $0.3235688 per TBT-DE share, interest rate 12%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.	$	3,203	$	3,203
Note payable to non-related party, unsecured, due 4/19/13, annual interest due, convertible at holder's option at 51% of market as defined, interest rate 8%, conversion limited to total beneficial ownership of 4.99%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue and/or the continued conversion of the company's stock.	$	-	$	6,605
Note payable to non-related party, unsecured, due 08/29/2013, simple interest 8% convertible at holder's option at $.249 per TBT-CA share.	$	15,000	$	15,000
Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.
Note payable to related party, unsecured, due 03/01/2013, simple interest 9%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.	$	5,000	$	5,000
Note payable to non-related party, unsecured, due 12/13/2013, simple interest 7%. Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	5,342
Note payable to non-related party, unsecured, due 01/31/2013, simple interest 18%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.	$	3,938	$	3,938
Note payable to non-related party, unsecured, due 01/07/2014, simple interest 7%, default interest 10%, Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	15,000
Note payable to non-related party, unsecured, due 01/15/2014, simple interest 7%, default interest 10%, Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	5,000
Note payable to non-related party, unsecured, due 01/20/2014, simple interest 7%, default interest 10%,	$	-	$	65,272
Stock option issued as an additional transaction cost for receipt of funds from note payable.
Note payable to related party, unsecured, due 01/23/2014, simple interest 9%. Currently in default.	$	50,000	$	50,000
Note payable to non-related party, unsecured, due 03/28/2013, $13,000 in interest (1 month).	$	-	$	17,000

F-13

TransBiotec, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2015 AND 2014

Note payable to non-related party, unsecured, due 04/28/2014, simple interest 7%, default interest 10%, Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	9,440
Note payable to non-related party, unsecured, due 05/05/2014, simple interest 7%, default interest 10%, Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	50,060
Note payable to related party, unsecured, due 07/02/2014, simple interest 9%.	$	15,000	$	15,000
Note payable to non-related party, unsecured, due 09/19/2014, simple interest 7%, default interest 10%, Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	10,000
Note payable to non-related party, unsecured, due 07/29/2014, simple interest 7%, default interest 10%, Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	1,900
Note payable to non-related party, unsecured, due 07/25/2013, simple interest 18%. Currently in default.	$	2,000	$	2,000
Note payable to non-related party, unsecured, due 09/19/2014, simple interest 7%, default interest 10%, Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	65,000
Note payable to non-related party, unsecured, due 12/27/2013, simple interest 9% quarterly, Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.	$	15,000	$	15,000
Note payable to non-related party, unsecured, due 09/29/2014, simple interest 7%, default interest 10%, Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	20,000
Note payable to non-related party, unsecured, due 10/28/2014, simple interest 7%, default interest 10%, Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	2,500
Note payable to non-related party, unsecured, due 10/29/2014, simple interest 7%, default interest 10%, Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	10,000
Note payable to non-related party, unsecured, due 11/10/2014, simple interest 7%, default interest 10%, Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	5,000
Note payable to related party, unsecured, due 11/12/2014, simple interest 9%, Convertible at $0.04 per share, currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.	$	11,000	$	11,000

F-14

TransBiotec, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2015 AND 2014

Note payable to non-related party, unsecured, due 11/20/2014, simple interest 7%, default interest 10%, Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	20,000
Note payable to non-related party, unsecured, due 12/02/2014, simple interest 7%, default interest 10%, Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	5,000
Note payable to non-related party, unsecured, due 1/27/2014, simple interest 10%.	$	-	$	4,235
Note payable to non-related party, unsecured, due 1/07/2015, simple interest 7%, default interest 10%, Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	25,000
Note payable to non-related party, unsecured, due 1/28/2015, simple interest 7%, default interest 10%, Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	1,253
Note payable to non-related party, unsecured, due 1/29/2015, simple interest 7%, default interest 10%, Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	3,500
Note payable to non-related party, unsecured, due 2/10/2015, simple interest 7%, default interest 10%, Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	990
Note payable to non-related party, unsecured, due 2/17/2015, simple interest 7%, default interest 10%, Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	4,500
Note payable to non-related party, unsecured, due 2/20/2015, simple interest 7%, default interest 10%, Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	5,000
Note payable to non-related party, unsecured, due 3/10/2015, simple interest 7%, default interest 10%, Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	2,500
Note payable to non-related party, unsecured, due 3/31/2015, simple interest 7%, default interest 10%, Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	2,500
Note payable to non-related party, unsecured, due 4/03/2015, simple interest 7%, default interest 10%. Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	5,890

F-15

TransBiotec, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2015 AND 2014

Note payable to related party, unsecured, due 4/08/2015, simple interest 7%, Convertible at $0.0072 per share. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.	$	15,000	$	15,000
Note payable to non-related party, unsecured, due 4/10/2015, simple interest 7%, default interest 10%. Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	4,331
Note payable to non-related party, unsecured, due 4/27/2015, simple interest 7%, default interest 10%. Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	2,500
Note payable to non-related party, unsecured, due 5/13/2015, simple interest 7%, default interest 10%. Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	5,360
Note payable to non-related party, unsecured, due 5/26/2015, simple interest 7%, default interest 10%. Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	895
Note payable to non-related party, unsecured, due 9/11/2014, simple interest 10%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue. Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	5,000	$	5,000
Note payable to non-related party, unsecured, due 6/10/2015, simple interest 7%, default interest 10%. Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	3,207
Note payable to non-related party, unsecured, due 6/17/2015, simple interest 7%, default interest 10%. Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	600
Note payable to related party, unsecured, due 8/05/2015, simple interest 7%, default interest 10%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue. Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	10,000	$	10,000
Note payable to non-related party, unsecured, due 7/09/2015, simple interest 7%, default interest 10%. Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	3,750
Note payable to non-related party, unsecured, due 9/03/2015, simple interest 7%, default interest 10%. Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	1,000
Note payable to non-related party, unsecured, due 10/19/2015, simple interest 7%, default interest 10%. Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-	$	1,486

F-16

TransBiotec, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2015 AND 2014

Note payable to non-related party, unsecured, due 10/22/2015, simple interest 7%, default interest 10%. Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-		$	3,500
Note payable to non-related party, unsecured, due 10/28/2015, simple interest 7%, default interest 10%.  Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-		$	4,360
Note payable to non-related party, unsecured, due 11/11/2015, simple interest 7%, default interest 10%. Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-		$	5,810
Note payable to non-related party, unsecured, due 11/19/2015, simple interest 7%, default interest 10%. Stock option issued as an additional transaction cost for receipt of funds from note payable.	$	-		$	15,000
Note payable to related party unsecured, due 12/02/2015, simple interest 7%, default interest 10%. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue. Currently in default.	$	106,334		$	214,334
Note payable to non-related party, unsecured, due 3/26/2016, simple interest 8%, convertible at $0.0017 per share. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue. Currently in default.	$	25,000		$	-
Note payable to related party, unsecured, due 4/11/2016, simple interest 10%.	$	13,000		$	-
Note payable to related party, unsecured, due 11/11/2015, simple interest 10%. Currently in default.	$	45,000		$	-
Note payable to non-related party, unsecured, due 11/11/2015, simple interest 10%. Currently in default.	$	2,500		$	-
Note payable to related party, unsecured, due 12/26/2015, simple interest 10%. Currently in default.	$	25,000		$	-
	$	652,669		$	1,617,217
Less note discounts		(6,250	)		(5,000	)
Less current - related parties		(489,095	)		(697,225	)
Less current – non-related parties		(157,324	)		(871,694	)
Long-term – related parties	$	-		$	43.298

F-17

TransBiotec, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2015 AND 2014

Required principal payments from December 31, 2015 forward are as follows:

2016	$	652,669
2017	$	-
2018	$	-
2019	$	-
2020	$	-
	$	652,669

Interest expense under notes payable for the years ended December 31, 2014 and December 31, 2015 was $188,046 and $198,327, respectively.

During the years ended December 31, 2014 and December 31, 2015 the Company recognized a beneficial conversion feature expense on borrowing from convertible notes of $32,996 and $23,750, respectively.

During the years ended December 31, 2014 and December 31, 2015 the unamortized note discount from the beneficial conversion feature was $5,000 and $6,250, respectively.

In 2012 the company borrowed $110,000 under convertible notes with a variable conversion price based on a percentage of market price. Notes converted at December 31, 2014 and December 31, 2015 were $103,395 and $103,395, respectively. The Company determined that these notes have an embedded derivative and are therefore accounted for at fair value. The Company recorded fair market value adjustments for the years ended ended December 31, 2014 and December 31, 2015 of $21,559 and $(25,456), respectively. The fair market value adjustments were based on the Black-Sholes method using the following assumptions: risk free rates ranging between 0.10% - 0.21%, dividend yield of 0%, expected life of 1 year, volatility between 128% - 354%. The fair value derivative liability under the notes as of December 31, 2014 and December 31, 2015 was $25,456 and none, respectively.

NOTE 5. INCOME TAXES

Deferred income taxes arise from the temporary differences between financial statement and income tax recognition of net operating losses. These loss carryovers are limited under the Internal Revenue Code should a significant change in ownership occur.

At December 31, 2014 and 2015 the Company had net operating loss carry forwards of approximately $6,383,000 and $7,048,000 respectively, that may be offset against future taxable income, if any, ratably through 2035. These carry-forwards are subject to review by the Internal Revenue Service.

The deferred tax asset of at each date of $1,277,000 and $1,410,000 created by the net operating losses has been offset by a 100% valuation allowance because the likelihood of realization of the tax benefit cannot be determined. The change in the valuation allowance in 2014 and 2015 was $123,000 and $133,000.

The effects of temporary differences that gives rise to significant portions of deferred tax assets at December 31, 2015 and 2014 are as follows:

	Dec. 31, 2015			Dec. 31, 2014
Deferred tax asset
Federal	$	1,057,000		$	958,000
State		353,000			319,000
Valuation allowance		(1,410,000	)		(1,277,000	)
Net deferred tax asset	$	-		$	-

There is no current or deferred tax expense for the years ended December 31, 2015 and 2014. The Company has not filed tax returns however management believes there are no taxes due as of December 31, 2014 and 2015.

There was no Federal income tax expense for the years ended December 31, 2015 and 2014 due to the Company's net losses. For the years ended December 31, 2015 and 2014 state income tax expense was zero.

The company includes interest and penalties arising from the underpayment of income taxes in the consolidated statements of operations in general and administrative expenses.

The tax years that remain subject to examination by major taxing jurisdictions are those for the tax year of 2015, 2014, and 2013.

F-18

TransBiotec, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2015 AND 2014

NOTE 6. STOCK OPTIONS AND SUBSCRIPTIONS PAYABLE

The Company accounts for employee and non-employee stock options under ASC 718 and ASC 505, whereby option costs are recorded based on the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. Unless otherwise provided for, the Company covers option exercises by issuing new shares.

The Company's stock option activity is described below.

Non-employee stock options

At the beginning of 2012, the Company had 22,500 options outstanding for shares in Transbiotec – CA. The fair value of the option grants was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: risk free interest rate of 2.67%, dividend yield of 0%, expected life of five years, volatility of 100%. During the year ended December 31, 2012 no options were exercised or expired, leaving a December 31, 2012 outstanding balance of 22,500 non-employee stock options, exercisable at prices from $0.10 - $0.15 per share with the option terms expiring from January 2012 through January 2015. All of these options are for the stock of TransBiotec - CA. During the year ended December 31, 2014, 20,000 options were exercised, leaving a December 31, 2014 outstanding balance of 2,500 non-employee stock options, exercisable at $0.10 per share with the option terms expiring in January 2015. During the year ended December 31, 2015, no options were exercised as all outstanding options expired in January 2015 leaving no outstanding balance of non-employee stock options in the stock of Transbiotec-CA at December 31, 2015.

During 2012 the Company granted 29,678 stock options for shares in Transbiotec - DE. The fair value of the option grants was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: risk free interest rate of 0.8%, dividend yield of 0%, expected life of five years, volatility of 189%. No options were exercised or expired, leaving a December 31, 2012 outstanding balance of 29,678 options for Transbiotec – DE. The Company incurred and recorded compensation expense under these stock option grants of $4,042 in 2012. Vested immediately.

During 2013 the Company granted 5,321,735 stock options for shares in Transbiotec - DE. The fair value of the option grants was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: risk free interest rates between 7% - 14%, dividend yield of 0%, expected life of five years, volatility between 179% - 186%. No options were exercised or expired, leaving a December 31, 2013 outstanding balance of 5,351,413 options for Transbiotec – DE. The Company incurred and recorded compensation expense under these stock option grants of $145,997 in 2013. Vested immediately.

During 2014 the Company granted 8,403,633 stock options for shares in Transbiotec - DE. The fair value of the option grants was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: risk free interest rates between 1.55% - 1.77%, dividend yield of 0%, expected life of five years, volatility between 147% - 178%. No options were exercised or expired, leaving a December 31, 2014 outstanding balance of 13,755,046 options for Transbiotec – DE. The Company incurred and recorded compensation expense under these stock option grants of $69,886 in 2014. Vested immediately.

F-19

TransBiotec, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2015 AND 2014

 

During the year ended December 31, 2015, the Company granted 16,282,995 stock options for shares in Transbiotec - DE. The fair value of the option grants was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: risk free interest rate between 1.37% - 1.68%, dividend yield of 0%, expected life of five years, a volatility range of 172% - 174%. No options were exercised or expired, leaving a December 31, 2015 outstanding balance of 30,038,041 options for Transbiotec – DE. The Company incurred and recorded compensation expense under these stock option grants of $27,731 during the year ended December 31, 2015. Vested immediately.

A summary of stock option activity for California is as follows:

	Number of Shares		Weighted Average Exercise Price
Outstanding at December 31, 2014		2,500	$	.10
Granted		-		-
Exercised		-		-
Forfeited		2,500		.10
Outstanding at December 31, 2015		-	$	-

A summary of stock option activity for Delaware is as follows:

	Number of Shares		Weighted Average Exercise Price
Outstanding at December 31, 2014		13,755,046	$	.0295
Granted		16,282,995		.0015
Exercised		-		-
Forfeited		-		-
Outstanding at December 31, 2015		30,038,041	$	.0143

F-20

TransBiotec, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2015 AND 2014

  

Following is a summary of the status of options for Delaware outstanding at December 31, 2015:

Exercise Price		Number of Shares		Remaining Contractual Life	Weighted Average Exercise Price	Exercised at December 31, 2015
$	0.0900		29,678	2 years	0.0900		-
$	0.1700		83,333	3 years	0.1700		-
$	0.1700		27,778	3 years	0.1700		-
$	0.1700		362,624	3 years	0.1700		-
$	0.1300		80,914	3 years	0.1300		-
$	0.1300		429,086	3 years	0.1300		-
$	0.0600		38,000	3 years	0.0600		-
$	0.0400		250,000	3 years	0.0400		-
$	0.0400		1,625,000	3 years	0.0400		-
$	0.0500		400,000	3 years	0.0500		-
$	0.0400		75,000	3 years	0.0400		-
$	0.0400		300,000	3 years	0.0400		-
$	0.0200		300,000	3 years	0.0200		-
$	0.0200		1,200,000	3 years	0.0200		-
$	0.0400		150,000	3 years	0.0400		-
$	0.0125		1,200,000	4 years	0.0125
$	0.0150		50,137	4 years	0.0150		-
$	0.0150		140,000	4 years	0.0150		-
$	0.0190		31,256	4 years	0.0190		-
$	0.0161		167,702	4 years	0.0161		-
$	0.0147		204,082	4 years	0.0147		-
$	0.0200		75,000	4 years	0.0200		-
$	0.0198		75,758	4 years	0.0198		-
$	0.0213		165,915	4 years	0.0213		-
$	0.0195		133,262	4 years	0.0195		-
$	0.0188		79,787	4 years	0.0188		-
$	0.0140		229,714	4 years	0.0140		-
$	0.0190		50,000	4 years	0.0190		-
$	0.0127		42,283	4 years	0.0127		-
$	0.0090		213,833	4 years	0.0090		-
$	0.0074		48,649	4 years	0.0074		-
$	0.0060		375,000	4 years	0.0060		-
$	0.0098		612,245	4 years	0.0098		-
$	0.0098		61,224	4 years	0.0098		-
$	0.2500		25,000	4 years	0.2500		-
$	0.0680		450,000	4 years	0.0680		-
$	0.0072		123,828	4 years	0.0072		-
$	0.0056		375,000	4 years	0.0056		-
$	0.0070		250,000	4 years	0.0070		-
$	0.0070		373,714	4 years	0.0070		-
$	0.0041		850,244	4 years	0.0041		-
$	0.0045		2,000,000	4 years	0.0045		-
$	0.0024		150,000	5 years	0.0024		-
$	0.0010		7,625,544	5 years	0.0010		-
$	0.0024		1,770,000	5 years	0.0024		-
$	0.0023		400,782	5 years	0.0023		-
$	0.0012		275,000	5 years	0.0012		-
$	0.0017		1,764,706	5 years	0.0017		-
$	0.0018		2,463,333	5 years	0.0018		-
$	0.0021		285,714	5 years	0.0021		-
$	0.0018		333,333	5 years	0.0018		-
$	0.0018		1,083,333	5 years	0.0018		-
$	0.0018		131,250	5 years	0.0018		-
Total			30,038,041		0.0143

F-21

TransBiotec, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2015 AND 2014

Employee stock options

The parent company had no outstanding employee stock options.

Stock subscriptions received

At December 31, 2015, the Company had stock subscriptions received of $55,868 for 6,049,578 common shares to be issued.

At December 31, 2015, the Company had stock subscriptions received of $14 for 1,388,575 preferred shares to be issued.

NOTE 7. GOING CONCERN

The Company has suffered recurring losses from operations and has a working capital deficit and stockholders' deficit, and in all likelihood will be required to make significant future expenditures in connection with continuing marketing efforts along with general administrative expenses. As of December 31, 2015, the accumulated deficit is $16,468,956. These conditions raise substantial doubt about the Company's ability to continue as a going concern.

The Company may raise additional capital through the sale of its equity securities, through an offering of debt securities, or through borrowings from financial institutions or others. By doing so, the Company hopes to generate revenues from sales of its alcohol sensing and ignition lock systems. Management believes that actions presently being taken to obtain additional funding provide the opportunity for the Company to continue as a going concern.

NOTE 8. COMMON STOCK

On February 10, 2014, the Company converted a note payable of $4,650 into 1,291,667 shares of its common stock, with a purchase price $0.0036 per share.

On April 24, 2014, the Company exchanged 20,000 of TBT-CA shares for 154,520 TBT-Publico shares at an exchange rate of $7.7263 per share.

On May 13, 2014, the Company converted a note payable of $9,000 into 1,764,706 shares of its common stock, with a purchase price $0.0051 per share.

On May 30, 2014, the Company converted a note payable of $265, including $210 of accrued interest into 50,000 shares of its common stock, with a purchase price $0.0095 per share.

On June 3, 2014, the Company converted a note payable of $5,600, including $1,500 in accrued interest into 1,690,476 shares of its common stock, with a purchase price $0.0042 per share.

F-22

TransBiotec, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2015 AND 2014

On July 2, 2014, the Company converted a note payable of $6,360 into 1,766,667 shares of its common stock, with a purchase price $0.0036 per share.

On August 19, 2014, the Company converted a note payable of $7,135 into 2,038,571 shares of its common stock, with a purchase price $0.0035 per share.

On October 21, 2014, the Company converted a note payable of $6,520 into 2,037,500 shares of its common stock, with a purchase price $0.0032 per share.

On October 22, 2014, the Company converted a note payable of $6,270 into 1,959,375 shares of its common stock, with a purchase price $0.0032 per share.

On October 29, 2014, the Company converted a note payable of $5,780 into 2,140,741 shares of its common stock, with a purchase price $0.0027 per share.

On November 20, 2014, the Company converted a note payable of $4,690 into 2,345,000 shares of its common stock, with a purchase price $0.0020 per share.

On November 24, 2014, the Company converted a note payable of $3,985 into 2,344,118 shares of its common stock, with a purchase price $0.0017 per share.

On December 16, 2014, the Company converted a note payable of $3,280 into 2,342,857 shares of its common stock, with a purchase price $0.0014 per share.

On December 30, 2014, the Company converted a note payable of $1,875 into 2,343,750 shares of its common stock, with a purchase price $0.0008 per share.

On June 11, 2015, as an inducement for a loan, the Company issued 834,408 shares of its common stock on said date valued at $1,502 with a purchase price of $0.0018 per share.

On August 20, 2015, the Company converted accrued interest of $3,900 into 1,000,000 shares of its common stock, with a purchase price $0.0039 per share.

NOTE 9. COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company leases its office space under a long-term operating lease expiring in June 2019. Rent expense under this lease was $24,600 and none for the years ended December 31, 2015 and 2014, respectively.

As of December 31, 2015, future minimum annual payments under operating lease agreements for years ending December 31 are as follows.

	2016		2017		2018		2019		2020		Total
Operating leases		49,200		49,200		49,200		24,600		-		172,200
	$	49,200	$	49,200	$	49,200	$	24,600	$	-	$	172,200

NOTE 10. SUBSEQUENT EVENTS

As of April 4, 2016, there were 67,751,068 shares of our common stock outstanding held by 148 holders of record and numerous shares held in brokerage accounts. Of these shares, 48,690,401 shares were held by non-affiliates.

F-23