UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
| Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended
| Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from __________ to__________
Commission File Number:
(Exact name of registrant as specified in its charter)
|
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
(Address of principal executive offices)
(Registrant’s telephone number)
(Former name, former address, and former fiscal year, if changed since last report)
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.
☒
Indicate by check mark whether the registrant has
submitted electronically 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 submit and post such files).
☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.
| ☐ Large accelerated filer | ☐ Accelerated filer | |
| ☐ |
||
If an emerging growth company, indicate by check mark
if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes
Securities registered pursuant to Section 12(b) of the Act: None
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.
Yes ☐ No ☐
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer’s classes of common equity as of the latest practicable date: As of May 15, 2025, there were outstanding shares of the registrant’s Common Stock, $ par value.
INDEX
| 2 |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Our consolidated financial statements included in this Form 10-Q are as follows:
The consolidated financial statements are condensed and have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended March 31, 2025, are not necessarily indicative of the results that can be expected for the full year ending December 31, 2025.
| 3 |
BUBBLR INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2025
| F-1 |
BUBBLR INC.
Consolidated Balance Sheets
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Other receivables | ||||||||
| Total current assets | ||||||||
| Non-current Assets: | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Total current liabilities | ||||||||
| Non-current Liabilities: | ||||||||
| Loan payable – related party, non-current portion | ||||||||
| Warrant derivative liability | ||||||||
| Total non-current liabilities | ||||||||
| Total Liabilities | ||||||||
| Stockholders’ Equity (Deficit) | ||||||||
| Series C Convertible Preferred Stock, $ par value, authorized, and shares issued and outstanding | ||||||||
| Common stock, $ par value, shares authorized; and shares issued and outstanding | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ||||||||
| Total Stockholders’ Equity (Deficit) | ( | ) | ( | |||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-2 |
BUBBLR INC.
Unaudited Consolidated Statement of Operations and Comprehensive Loss
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenue | ||||||||
| Sales | ||||||||
| Cost of sales | ||||||||
| Gross profit | ||||||||
| Operating Expenses | ||||||||
| General and administrative | $ | $ | ||||||
| Professional fees | ||||||||
| Sales and marketing | ||||||||
| Amortization and depreciation | ||||||||
| Research and development | ||||||||
| Total operating expense | ||||||||
| Operating loss | ( | ) | ( | ) | ||||
| Other income (expense) | ||||||||
| Other income | ||||||||
| Interest expense | ( | ) | ||||||
| Disposal of fixed assets | ( | |||||||
| Gain (loss) on change in fair value of warrant derivative liability | ( | ) | ||||||
| Foreign currency transaction (loss) gain | ( | ) | ||||||
| Total other income (expense) | ( | |||||||
| Net loss before income tax | $ | ( | ) | $ | ( | ) | ||
| Provision for income tax | ||||||||
| Net loss after income tax | $ | ( | ) | $ | ( | ) | ||
| Other comprehensive income (loss) | ||||||||
| Net comprehensive loss | $ | ( | ) | $ | ( | ) | ||
| Net loss per common share, basic and diluted | $ | $ | ) | |||||
| Weighted average number of common shares outstanding, basic, and diluted | ||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-3 |
BUBBLR INC.
Unaudited Consolidated Statement of Changes in Stockholders’ Deficit
(Unaudited)
Series C Preferred Stock | Common Stock | Additional | Accumulated Other | Total Stockholders’ | ||||||||||||||||||||||||||||
Number of Shares | Amount | Number of Shares | Amount | Paid-in Capital | Accumulated Deficit | Comprehensive Income (Loss) | Equity (Deficit) | |||||||||||||||||||||||||
| Balance -December 31, 2023 | $ | | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||
| Issuance of common shares for advisory board services | ||||||||||||||||||||||||||||||||
| Vesting of share options | ||||||||||||||||||||||||||||||||
| Forfeiture and expired share options | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Dividend Series C Preferred Shares | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Net Loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Other comprehensive income | ||||||||||||||||||||||||||||||||
| Balance December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
| Issuance of common shares for series C preferred shares conversion | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Vesting of Share Options | ||||||||||||||||||||||||||||||||
| Dividend Series C Preferred Shares | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Net Loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Other comprehensive income | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-4 |
BUBBLR INC.
Unaudited Consolidated Statement of Cashflows
(Unaudited)
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments for: | ||||||||
| Net loss to net cash used in operating activities: | ||||||||
| Vesting of stock-based compensation | ||||||||
| Change in fair value of warrant derivative liability | ( | ) | ||||||
| Disposal of fixed assets | ||||||||
| Amortization of debt discount | ||||||||
| Amortization of intangible asset | ||||||||
| Depreciation | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| (Increase) decrease in other receivables | ( | ) | ( | ) | ||||
| Increase in accounts payable | ||||||||
| Increase in accrued liabilities. | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchase of intangible assets | ( | ) | ( | ) | ||||
| Proceeds from the sale of fixed assets | ||||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash flows from financing activities | ||||||||
| Repayment of loans payable | ( | ) | ||||||
| Proceeds from loans payable - related party | ||||||||
| Net cash provided by financing activities | ||||||||
| Effects of exchange rate changes on cash | ||||||||
| Net Change in Cash | ( | ) | ( | ) | ||||
| Cash - Beginning of Period | ||||||||
| Cash - End of Period | $ | $ | ||||||
| Supplemental information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
| Non-cash investing and financing activities | ||||||||
| Declared dividends | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-5 |
BUBBLR INC.
Notes to the Unaudited Consolidated Financial Statements
NOTE 1 - ORGANIZATION, BUSINESS AND LIQUIDITY
Organization and Operations
On March
26, 2020, Bubblr Holdings Ltd. (a UK company formed on December 6, 2016) merged into U.S. Wireless Online, Inc. (“UWRL”),
a Wyoming corporation formed on
Bubblr, Inc. is an artificial intelligence company that has patent-protected (granted and pending) intellectual properties, on the cusp of launching a new enterprise product.
Going Concern Matters
The accompanying
consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States
of America (“GAAP”), which contemplates the Company’s continuation as a going concern. The Company incurred a net comprehensive
loss of $
Management intends to raise additional operating funds through equity or debt offerings. However, the management’s success is not guaranteed.
There are no assurances that the Company will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations or (2) obtain additional financing through either private placement, public offerings, or bank financing necessary to support its working capital requirements. To the extent that funds generated from operations and any private placements, public offerings, or bank financing are insufficient, the Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is unavailable to the Company, it may be required to curtail or cease its operations.
Due to uncertainties related to these matters, substantial doubt exists about the company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Business
The accompanying consolidated interim financial statements include the accounts of the Company and its subsidiaries: Bubblr Holdings Limited., and Bubblr Limited.
Principles of Consolidation
The consolidated financial statements include the accounts of Bubblr, Inc. and its subsidiaries. Inter-company balances and transactions have been eliminated on consolidation.
Basis of Presentation
The consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
The results of our operations for the three months ended March 31, 2025, are not necessarily indicative of results to be expected for the year ending December 31, 2025, or any other period. These consolidated financial statements should be read in conjunction with our financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the Securities and Exchange Commission (“SEC”) on March 31, 2025.
| F-6 |
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the 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 expenses during the reporting period. Some of these judgments can be subjective and complex, and, consequently, actual results may differ from these estimates.
Long-Lived Assets
Long-lived assets are evaluated for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on comparing the undiscounted future cash flows to the recorded value of the asset. The asset is written down to its estimated fair value if impairment is indicated.
Intangible Assets - Capitalized Product Development Costs
Accounting Standards Codification (“ASC”) Topic 350, “Intangibles - Goodwill and Other,” includes software that is part of a product or process to be sold to a customer and shall be accounted for under Subtopic 985-20. Our products contain embedded software internally developed by Bubblr, which is an integral part of these products because it allows the various components of the products to communicate with each other, and the products are clearly unable to function without this coding.
The costs of product development that are capitalized once technological feasibility is determined (noted as Technology in progress in the Intangible Assets table, in Note 5 to Notes to Consolidated Financial Statements) include sub-contractor expenses, payroll, employee benefits, and other headcount-related expenses associated with product development. The Company determines that technological feasibility for products is reached after all high-risk development issues have been resolved. Once the products are available for general release to the Company’s customers, the Company ceases capitalizing the product development costs, and any additional costs, if any, are incurred. The capitalized product development costs are amortized on a straight-line amortization basis. The amortization begins in the year following capitalization.
Impairment of Assets
Long-lived assets are evaluated for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be recoverable in full or that the useful lives of these assets are no longer appropriate. Each impairment test is based on comparing the undiscounted future cash flows to the recorded value of the asset. The asset is written down to its estimated fair value if impairment is deemed to be indicated.
Fair Value of Financial Instruments
The Company accounts for financial instruments in accordance with ASC 820, “Fair Value Measurements and Disclosures.” ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under ASC 820 are described below:
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2 - Quoted prices in non-active or active markets for similar assets or liabilities, observable inputs other than quoted prices, and inputs that are not directly observable but are corroborated by observable market data.
Level 3 - Prices or valuations that require inputs that are significant to the fair value measurement and unobservable.
The carrying
value of the Company’s current assets and liabilities is deemed to be their fair value due to their short-term maturity and realization.
During the year ended December 31, 2022, the Company acquired warrant derivative liabilities, which are Level 3 financial instruments
adjusted to fair market value on reporting dates. On March 31, 2025, and December 31, 2024, the warrant liabilities balances were $
| F-7 |
Common Stock Purchase Warrants and Derivative Financial Instruments
Common stock purchase warrants and other derivative financial instruments are classified as equity if the contracts (1) require physical settlement or net-share settlement or (2) give the Company a choice of net-cash settlement or settlement in its shares (physical settlement or net-share settlement). Contracts which (1) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company), (2) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement), or (3) that contain reset provisions that do not qualify for the scope exception are classified as liabilities. The Company assesses the classification of its common stock purchase warrants and other derivatives at each reporting date to determine whether a change in classification between equity and liabilities is required.
The Company accounts for stock-based compensation in accordance with ASC Topic 718, “Compensation–Stock Compensation,” which prescribes accounting and reporting standards for all share-based payment transactions in which employee and non-employee services are acquired. Share-based payments to employees and non-employees, including grants of stock options, are recognized as compensation expenses in the financial statements based on the fair values of the stock awards on the grant date. That expense is recognized over the period required to provide services in exchange for the award, known as the requisite service period (usually the vesting period). Restricted stock units (“RSUs”) issued as compensation in accordance with the Company’s 2022 Equity Incentive Plan (see Note 13 – Stockholders’ Equity (Deficit)) are deemed to be unissued until fully vested. RSU compensation is recognized as expense over the vesting period, with any unrecognized compensation expensed immediately upon forfeiture of the award due to unfulfillment of obligations, such as termination of employment, before the award is fully vested.
Pursuant to ASC 260, “Earnings Per Share,” basic net income and net loss per share are computed by dividing the net income and net loss by the weighted average number of common shares outstanding. Diluted net income and net loss per share are the same as basic net income and net loss per share when their inclusion would have an anti-dilutive effect due to our continuing net losses.
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| (Shares) | (Shares) | |||||||
| Series C Preferred Stock | ||||||||
| Warrants | ||||||||
| Total | ||||||||
Income Taxes
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Income Taxes.” The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount believed more likely than not to be realized.
As of March 31, 2025, and December 31, 2024, the Company did not record any amounts about uncertain tax positions.
| F-8 |
Foreign Currency Translations
The functional currency of the Company’s international subsidiaries is generally their local currency of Great Britain Pounds (GBP). Local currency assets and liabilities are translated at the exchange rates on the balance sheet date, and local currency revenues and expenses are translated at weighted average exchange rates during the period. Equity accounts are translated at historical rates. The resulting translation adjustments are recorded directly into accumulated other comprehensive income.
Aggregate translation gains or
losses, including gains or losses related to foreign-denominated cash and cash equivalents and the re-measurement of certain inter-company
balances, are included in the statement of operations as other income and expense. Gains on foreign exchange translation totaling $
| March 31, | December 31, | |||||||||||
| 2025 | 2024 | 2024 | ||||||||||
| Period-end GBP£: U.S.$ exchange rate | ||||||||||||
| Weighted average GBP£: U.S.$ exchange rate | ||||||||||||
Segment Reporting
Accounting Standards Codification (“ASC”) 280, “Segment Reporting,” requires public companies to report financial and descriptive information about their reportable operating segments. The Company identifies operating segments based on how our Chief Financial Officer internally evaluates separate financial details, business activities, and management responsibility. Accordingly, the Company has one reportable segment, consisting of fees for App usage.
| Three Months Ended | ||||||||
| March 31, | ||||||||
| Net sales: | 2025 | 2024 | ||||||
| North America | $ | $ | ||||||
| Europe | ||||||||
| Totals | $ | $ | ||||||
| Long-lived assets, net (property and equipment and intangible assets): | March 31, 2025 | December 31, 2024 | ||||||
| North America | $ | $ | ||||||
| Europe | ||||||||
| Totals | $ | $ | ||||||
Recent Accounting Pronouncements
The Company has reviewed all recently issued but not yet effective accounting pronouncements and does not expect the future adoption of any such pronouncements to have a material impact on our financial statements.
NOTE 3 – OTHER RECEIVABLES
Other receivables consisted of the following:
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| UK VAT receivable | $ | $ | ||||||
| Total other receivables | $ | $ | ||||||
| F-9 |
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Motor vehicles | $ | $ | ||||||
| Computer equipment | ||||||||
| Total property and equipment | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Total property and equipment, net | $ | $ | ||||||
NOTE 5 - INTANGIBLE ASSETS
Intangible assets consisted of the following:
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Intellectual properties | $ | $ | ||||||
| Patents | ||||||||
| Capitalized acquisition costs | ||||||||
| Total intellectual properties | ||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Total intellectual properties, net | $ | $ | ||||||
| ● | Patents |
A Patent on the Internet-Search Mechanism (“IBSM”) has been granted in the United States, South Africa, New Zealand, Canada, and Australia. The patent is pending in the European Union and the United Kingdom.
Patents on Contextual Enveloping of Dynamic Hypertext Links, Real-Time Data Processing, and Sensitive Data Protection are pending in the United States.
Patents are reported at cost, less accumulated amortization, and accumulated impairment loss. Costs include expenditures directly attributable to the acquisition of the asset. Once a patent has been granted and provides economic benefit to the Company, amortization is provided on a straight-line basis over the expected useful lives of 20 years for all patents.
| ● | Intellectual Property |
Intellectual Property capitalizes the Company’s
qualifying internal research and development costs. It is amortized over its useful life of
Amortization expenses were $
| F-10 |
NOTE 6 – ACCRUED LIABILITIES
Accrued liabilities consisted of the following:
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Director fees | $ | $ | ||||||
| Dividends payable | ||||||||
| Other accruals | ||||||||
| Settlement and severance | ||||||||
| Salaries payable | ||||||||
| Total Accrued liabilities | $ | $ | ||||||
NOTE 7 – LOANS PAYABLE TO RELATED PARTIES
The Company had the following loans payable to related parties:
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Beginning balance Loans 1 - payable to Stephen Morris | $ | $ | ||||||
| Additions | ||||||||
| Ending balance loan 1 – payable to Stephen Morris | ||||||||
| Loan 2 - payable to Stephen Morris | ||||||||
| Total loan payable to related parties | ||||||||
| Less current portion | ||||||||
| Total – non-current | $ | $ | ||||||
| ● | Loan 1 (January 16, 2016) - Stephen Morris, Founder, CTO, and Chair. |
On January 16, 2016, our wholly owned subsidiary, Bubblr Limited, entered into a Loan Agreement (the “Loan Agreement”) with Mr. Stephen Morris. The Loan Agreement is unsecured and does not carry any interest. It was payable on demand and is intended for working capital or as the Company deems appropriate. The Loan is available for drawing by the Company in multiple tranches.
On September 30,
2024, the parties desired to amend the loan such that the principal amount of the loan shall be due and payable by Borrower to Lender
on the earlier of (i) the completion of an equity offering by Bubblr, Inc., for no less than $
| ● | Loan 2 (September 7, 2022) - Stephen Morris, Founder, CTO, and Chair. |
On September 7, 2022, our wholly owned subsidiary,
Bubblr Limited, entered into a new loan agreement (the “Loan Agreement”) with Mr. Morris for $
On September 30, 2024, the parties agreed to amend the loan, with the maturity date set three years from the date of this amendment.
NOTE 8 - RELATED PARTY TRANSACTIONS
The Company had the following related party transactions:
| ● | Loans payable to Stephen Morris |
Loans payable to related party transactions are disclosed in Note 7.
| F-11 |
NOTE 9 – WARRANT LIABILITY
The Company analyzed the warrants issued in connection with the Series C Convertible Preferred Stock (see Note 10) for derivative accounting consideration under ASC 815, Derivatives and Hedging, and determined that the instruments should be classified as a liability due to reset provisions and variability in exercise price resulting in there being no fixed value or explicit limit to the number of shares to be delivered upon exercise. ASC 815 requires us to assess the fair market value of the derivative liability at the end of each reporting period and recognize any change in fair market value as an income or expense item.
The Company determined our warrant liabilities to be a Level 3 fair value measurement during the year, based on management’s estimate of the expected future cash flows required to settle the liabilities. We used the Black-Scholes pricing model to calculate the fair value as of March 31, 2025. The Black-Scholes model requires three basic data inputs: the exercise or strike price, the time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each warrant is estimated using the Black-Scholes valuation model.
For the period ended March 31, 2025, the estimated fair values of the warrant liabilities measured on a recurring basis are as follows:
| Three Months Ended | ||||
| March 31, 2025 | ||||
| Expected term (years) | ||||
| Expected average volatility | ||||
| Expected dividend yield | ||||
| Risk-free interest rate | ||||
The following table summarizes the changes in the warrant liabilities during the three months ended March 31, 2025:
| Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | ||||
| Warrant liability December 31, 2024 | $ | |||
| Addition of new warrants | $ | |||
| Change in fair value of warrant liability | ( | ) | ||
| Warrant liability as of March 31, 2025 | $ | |||
NOTE 10 - STOCKHOLDERS’ EQUITY
Preferred Stock
The Company has authorized preferred shares with a par value of $ per share. The Board of Directors is authorized to divide the authorized shares of Preferred Stock into one or more series, each of which shall be so designated as to distinguish the shares thereof from the shares of all other series and classes.
Series C Convertible Preferred Stock
On March 4, 2023, the Company filed a Certificate of Designation with the Wyoming Secretary of State, which established shares of the Company’s Series C Convertible Preferred Stock with a Stated Value of $ per share.
The Company has the right to redeem the Series C Convertible Preferred Stock in accordance with the following schedule:
| ● | ||
| ● | The Company shall pay an |
| F-12 |
The Series C Convertible Preferred Stock will vote together with the common stock on an as-converted basis subject to the Beneficial Ownership Limitations (as set forth in the Certificate of Designation).
As of March 31, 2025, and December 31, 2024, the Company had and shares of Series C Preferred Stock issued and outstanding, respectively.
Common Stock
The Company has authorized common shares with a par value of $ per share. Each common share entitles the holder to one vote, in person or by proxy, on any matter on which action of the corporation’s stockholders is sought.
During the year ending December 31, 2024, the Company issued the following unregistered securities:
| ● | shares for Advisory Board services valued at $ |
During the three months ended March 31, 2025, the Company issued the following unregistered securities.
| ● | for the conversion of Series C Convertible Preferred Stock valued at $ |
On March 31, 2025, and December 31, 2024, the Company had and shares of common stock issued and outstanding, respectively.
The above securities were issued in reliance on the exemption from registration provided by Section 4.(a)(2) of the Securities Act of 1933, as amended, and in reliance on the exception from registration provided by Regulation S promulgated under the Securities Act of 1933, as amended.
Warrants
The Company identified conversion features embedded within warrants issued during the three months ended March 31, 2023. The Company has determined that the conversion feature of the Warrants represents an embedded derivative, as the conversion price includes a reset provision that could result in adjustments to the redemption value and the number of shares issued upon exercise (see Note 9—Warrant Liability).
A summary of activity during the three months ended March 31, 2025, follows:
| Warrants Outstanding | Weighted Average | |||||||||||
| Number of | Weighted Average | Remaining life | ||||||||||
| Warrants | Exercise Price | (years) | ||||||||||
| Outstanding, December 31, 2024 | $ | |||||||||||
| Granted | - | |||||||||||
| Exercised | - | |||||||||||
| Forfeited/canceled | ( | ) | ||||||||||
| Outstanding, March 31, 2025 | $ | |||||||||||
| Exercisable Warrants, March 31, 2025 | $ | |||||||||||
| F-13 |
The following table summarizes information relating to outstanding and exercisable warrants as of March 31, 2025:
| Warrants Outstanding and Exercisable | |||||||||||||
Number of Warrants | Weighted Average Remaining Contractual life (in years) | Weighted Average Exercise Price | Value of Warrants | ||||||||||
| $ | $ | ||||||||||||
| $ | $ | ||||||||||||
As of March 31, 2025, the intrinsic value of the warrants is $, as the price of the Company’s stock was below the warrant exercise price.
Equity Incentive Plan
On May 25, 2022, our board of directors and majority shareholders approved the adoption of the Bubblr, Inc. 2022 Equity Incentive Plan (the “2022 Equity Incentive Plan”) and, unless earlier terminated, will continue until May 25, 2032. A total of shares of common stock may be issued under the 2022 Equity Incentive Plan.
The 2022 Equity Incentive Plan aims to foster and promote our long-term financial success and increase stockholder value by motivating performance through incentive compensation. The 2022 Equity Incentive Plan is designed to encourage participants to acquire and maintain ownership interests in our company and to attract and retain the services of talented individuals whose judgment and special efforts are crucial to the successful operation of our business.
On July 9, 2024, unvested options to purchase our Common Stock were forfeited upon termination of service.
On October 9, 2024, options to purchase our Common Stock expired because they were not exercised within three months of the termination of service.
On October 17, 2024, the Company granted options to purchase our Common Stock to executives, management, and professional service providers. Our Board of Directors determines the terms of the stock option grants and is consistent with our 2022 Equity Incentive Plan.
On October 17, 2024, the Company canceled and granted options to purchase our Common Stock to a provider of professional services.
On January 14, 2025, unvested options to purchase our Common Stock were forfeited upon termination of service.
Our Board
of Directors determines the terms of stock option grants, which are consistent with our 2022 Equity Incentive Plan.
| F-14 |
| Number of Shares | ||||||||
| Three Months Ended March 31, 2025 | Year Ended December 31, 2024 | |||||||
| Outstanding at the beginning of the year | ||||||||
| Granted | ||||||||
| Exercised | ||||||||
| Forfeited | ( | ) | ( | ) | ||||
| Expired\Cancelled | ( | ) | ||||||
| Outstanding at the end of the year | ||||||||
| Exercisable | ||||||||
| Weighted-average Exercise Price | $ | $ | ||||||
| Year Ended | ||||
| December 31, 2024 | ||||
| Expected life in years | – | |||
| Risk-free interest rate | ||||
| Annual forfeiture rate | ||||
| Volatility | ||||
| Expected dividend yield | % | |||
| Number of Shares | ||||
| Non-vested as of December 31, 2023 | ||||
| Granted | ||||
| Forfeited or expired | ( | ) | ||
| Vested | ||||
| Non-vested as of December 31, 2024 | ||||
| Options | Options | |||||||
| Outstanding | Exercisable | |||||||
| Number of shares | ||||||||
| Weighted-average contractual life in years | ||||||||
| Weighted-average price | $ | $ | ||||||
| Intrinsic value | $ | $ | ||||||
The total intrinsic value of options is zero because the closing stock price was below the weighted average exercise value.
The Company recognized compensation costs of $ and $ for the three months ended March 31, 2025, and March 31, 2024, respectively.
There
were $
| F-15 |
NOTE 11 - COMMITMENTS AND CONTINGENCIES
Employment Agreements
| ● | Stephen Morris, Founder, Chief Technical Officer, and Director |
On April 1, 2023, . The options were fully vested as Mr. Morris had completed two years and three months of service.
On December 31, 2023,
the Company entered into a Second Amended Employment Agreement with Stephen Morris, reducing his annual base pay from $ to $
and requiring him to forfeit $
| ● | David Chetwood, Chief Financial Officer and Director |
On December 31, 2023,
the Company entered into a Second Amended Employment Agreement with David Chetwood, reducing his annual base pay from $ to $
and requiring him to forfeit $
On October 17, 2024,
the Company entered into a Third Amended Employment Agreement with David Chetwood, reducing his annual base pay from $
| ● | Tim Symonds, Chief Executive Officer and Director |
On January 15, 2025,
the Company entered into an Employment Agreement with Mr. Symonds, which will compensate him with an annual salary of $
NOTE 12 - SUBSEQUENT EVENTS
The Company evaluated subsequent events through May 15, 2024, when the financial statements were available for issuance. The Company has determined that no subsequent events require further disclosure.
| F-16 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
Some of the statements contained in this Quarterly Report on Form 10-Q of Bubblr, Inc. (hereinafter the “Company,” “Bubblr,” “BBLR,” “Ethical Web.AI,” “we,” “us,” or “our”) discuss future expectations, contain projections of our plan of operation or financial condition or state other forward-looking information. In this Annual Report, forward-looking statements are generally identified by words such as “anticipate,” “plan,” “believe,” “expect,” “estimate,” and the like. Forward-looking statements involve future risks and uncertainties, and some factors could cause actual results or plans to differ materially from those expressed or implied. These statements are subject to known and unknown risks, uncertainties, and other factors that could cause the actual results to differ materially from those contemplated by the statements. The forward-looking information is based on numerous factors and is derived using numerous assumptions. A reader should not place undue reliance on these forward-looking statements, which apply only as of the date of this Annual Report. Key factors that may cause actual results to differ from projections include, for example:
| ● | our strategies, prospects, plans, expectations, forecasts, or objectives; | |
| ● | our ability to achieve marketable products and the costs and timing thereof; | |
| ● | acceptance of our products by our target market and our ability to compete in such a market; | |
| ● | our ability to raise additional financing when needed and the terms and timing thereof; | |
| ● | our ability to expand, protect, and maintain our intellectual property rights; | |
| ● | our future operations, financial position, revenues, costs, expenses, uses of cash, capital requirements, our need for additional financing, or the period for which our existing cash resources will be sufficient to meet our operating requirements; | |
| ● | our analysis of the target market for our platform; | |
| ● | the impact of pandemics and other adverse public health developments on our operations and our industry; | |
| ● | regulatory developments in the United States and other countries; | |
| ● | our compliance with all applicable laws, rules, and regulations, including those of the Securities and Exchange Commission, or SEC; | |
| ● | our ability to compete in the United States and internationally with more substantial companies; | |
| ● | general economic, business, political, and social conditions; | |
| ● | our reliance on and our ability to retain (and, if necessary, timely recruit and replace) our officers, directors, and key employees and their ability to timely and competently perform; | |
| ● | our ability to generate significant revenues and achieve profitability; | |
| ● | our ability to manage the growth of our business; | |
| ● | our commercialization of our platform and marketing capabilities and strategies; | |
| ● | our ability to expand, protect, and maintain our intellectual property position; | |
| ● | the success of competing third-party platforms; | |
| ● | our ability to fully remediate our identified internal control material weaknesses; | |
| ● | our ability to comply with regulatory requirements relating to our business and the costs of compliance with those requirements; | |
| ● | the specific risk factors discussed under the heading “Risk Factors” set forth in this Annual Report; and | |
| ● | various other matters, many of which are beyond our control. |
Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date hereof. We believe the information contained in this Form 10-K to be accurate as of the date hereof. Changes may occur after that date. We will not update that information except as required by law in the ordinary course of our public disclosure practices. Additionally, the discussion regarding our financial condition and results of operations should be read in conjunction with the financial statements and related notes included in this Form 10-Q.
Business Overview
Bubblr, Inc., d/b/a Ethical Web AI (“EW”) is an artificial intelligence (“AI”) company that has patent-protected (granted and pending) intellectual properties. Following a sustained period of technical development led by its founder, Steve Morris, the Company is now entering the phase of revenue growth driven by the launch of a first enterprise product and the establishing of a new executive team. The founding development team has always looked to exploit commercial opportunities from emerging technology. The rapid rise of Generative AI in both the consumer and enterprise space is a good example of how EW’s combination of deep technological know-how and agile development methods can exploit market openings.
| 4 |
AI Vault
The use of Generative AI offers significant opportunities for enterprises to improve productivity by automating and enhancing a wide range of tasks and workflows. The Generative AI Enterprise market is still at a relatively early stage, but adoption of the main Large Language Models (“LLMs”) applications has been rapid, particularly ChatGPT. However, the key area of data security has yet to be fully addressed, with no clear guidelines or functionality in place to ensure that confidential corporate information is not uploaded into the prompts.
EW sees a clear market for a solution that allows an enterprise to leverage the productivity gains without the inherent risks to closely manage and monitor what type of information is shared to generate an output. This new solution is called AI Vault and is now being soft-launched. The target markets for this product are those companies that do not allow their staff to use generative AI products for fear of sensitive data leaving the building. Mainly due to data privacy and security concerns, many corporations have implemented bans on using Gen AI tools like ChatGPT. Despite these prohibitions, reports indicate that employees continue to use such tools clandestinely. A survey by Cisco revealed that 27% of organizations had banned generative AI applications. However, many employees admitted to inputting sensitive data into these tools, including non-public company information (48%) and employee information (45%).
We believe this market opportunity to be significant and are already well advanced in integrating with a global service provider to bundle our proposition within a broader services proposition. This will ensure extremely low customer acquisition costs and the opportunity to scale at an accelerated rate. Based on current pricing, we believe we can deliver a gross margin that will help drive the company towards being cash-flow positive.
AI Seek
Following the successful launch of this product in 2023, which is available in the Apple App Store, we will be driving a white label licensing model that drives towards new strategic partners who have a strong presence in Education and/or the K12 market. The ability to completely customize the search parameters to ensure a “safe” and trackable experience is a key differentiator. As with AI Vault above, we see the primary commercial approach as a partnership model, adapting the user interface and core search parameters to meet the needs of the license partner. We are looking to launch the first pilot in the third quarter of 2025.
Ethical Web Platform
The Ethical Web Search platform is the technical manifestation of patent No. 10977387. These apps search based on inventory, giving the user a current view and improved user experience. This platform continues to be a potentially transformative solution as white label play for significant technology players in key verticals. EW continues to explore potential commercial alliances that leverage the patented IP. The core functionality of the platform covers the following key areas:
| ● | The decentralization of control, revenue collection, and delivery allows a partner to build a global network of locally managed super apps that use the same database. | |
| ● | Ability to completely anonymize user data and suppress all behavioral data tracking | |
| ● | Ability to run an advertisement-free commercial model. Suppliers of goods and services can operate on a subscription-based model. |
Intellectual Property
We have created a new search mechanism, “AN INTERNET-BASED SEARCH MECHANISM,” which has been granted a patent in South Africa (2016/06947), New Zealand (725014), the United States of America (‘Utility Patent No. US 10977387), Canada (2962520), and we have patents pending on the same processes in Australia (2015248619), the European Union (15723990.6) and the United Kingdom (PCT/GB2015/051130), creating an alternative economic ecosystem to tackle the current broken model and better serve all main participant groups. This utility patent defines a profoundly unique way for internet users to search the internet for goods or services rather than text-based search engine solutions. The technical manifestation of this utility patent is the Ethical Web ATI Open-Source Platform.
We have filed a sister patent that is specifically for searching for information rather than goods or services. US Patent Application No. 17/980298 was filed in the USA in November 2022. It is titled “Contextual enveloping via dynamically generated hypertext links.” This utility patent defines a radically unique way for consumers to search for information only, which again is fundamentally different from traditional search engines. The technical manifestation of this patent is the AI Seek AI LLM (Large Language Model), as it works exceptionally well with AI LLMs such as Chat GPT 4 and Claude 2.
We have also filed another patent with the U.S. Patent Office (application number 18/376,101), which currently has a generic title of “computer-implemented method and system.” Again, this utility patent resolves a significant issue with existing foundation AI LLM, such as Chat GPT and Claude 2, whereby they cannot provide information that needs contemporaneous data. This is because the established AI LLMs have a training data database that was limited to some point in the past. For example, Chat GPT’s training data only goes up to September 2021. Claude 2 will be updating their training data to January 2023. This utility patent uses an internally trained AI LLM that identifies those search prompts that require contemporaneous data (for example, stock prices and sports data) and augments the prompt with the necessary contemporaneous data to radically improve the AI LLM’s output to include references to the required contemporaneous data. The technical manifestation of this patent is delivered in version 4 and beyond of our AI Seek consumer app.
| 5 |
Competition
The enterprise Gen AI market for security products is at a very early stage, with no clear established players. The known providers are marketing solutions that require significant levels of integration and bespoke development.
Our competitors may announce new products, services, or enhancements that better address changing industry standards or the needs of users, such as mobile access or different market focus. Such increased competition could lead to pressure on pricing, loss of business, or decreased user activity, any of which could adversely impact our business and operating results.
We believe that we possess competitive strengths and protection through our intellectual property, which is defensible under the umbrella of our granted patents.
Government Regulation
We are subject to many foreign and domestic laws and regulations that affect companies conducting business online, many of which are evolving and could be interpreted in ways that could harm our business. In the United States and abroad, laws and regulations relating to the liability of providers of online services for activities of their users and other third parties are being tested by many claims, including actions based on invasion of privacy and other torts, unfair competition, copyright, and trademark infringement, and other theories based on the nature and content of the materials searched, or the content provided by users. Further, some countries impose regulations regarding or require licenses to conduct various aspects of our business, including employee recruiting and news-related services. Any court ruling or other governmental action that imposes liability on providers of online services for the activities of their users or other third parties could harm our business. In addition, rising concern about the use of social networking technologies for illegal conduct, such as the unauthorized dissemination of national security information, money laundering, or supporting terrorist activities, may in the future produce legislation or other governmental action that could require changes to our website platform, restrict or impose additional costs upon the conduct of our business or cause users to abandon material aspects of our platform.
In the area of information security and data protection, we are committed to upholding the highest standards. Most states and countries have enacted laws and regulations requiring notification to users when there is a security breach of personal data or requiring the adoption of minimum information security standards that are often vaguely defined and difficult to implement. The costs of compliance with these laws and regulations may increase in the future due to amendments or changes in interpretation. However, our commitment to data protection remains unwavering. Furthermore, any failure on our part to comply with these laws and regulations may subject us to significant liabilities, which we are actively working to avoid.
We are also subject to federal, state, and foreign laws and regulations regarding data privacy and protection. Our privacy policies describe our practices concerning using, storing, transmitting, and disclosing personal information, including visitor and user data. Any failure by us to comply with these terms or privacy-related laws and regulations could result in proceedings against us by governmental authorities or others, which could harm our business. In addition, the interpretation of privacy and data protection laws and regulations and their application to online services are unclear, evolving, and in a state of flux. For example, in October 2015, the highest court in the European Union invalidated reliance on the US-EU Safe Harbor regime as one of the legally recognized mechanisms under which the personal data of European citizens could be transferred to the United States. There is a risk that these laws and regulations may be interpreted and applied in conflicting ways from state to state, country to country, or region to region, and a manner inconsistent with our current data protection practices or that new laws or regulations will be enacted. In addition, because our platform will be accessible worldwide, certain foreign governments may claim that we are required to comply with their laws and regulations, including with respect to the storage, use, and disclosure of user information, even in jurisdictions where we have no local entity, employees, or infrastructure. Complying with these varying domestic and international requirements could cause us to incur additional costs and change our business practices. Further, any failure by us to adequately protect our users’ privacy and data could result in a loss of user confidence in our services and in a loss of users, which could adversely affect our business.
| 6 |
Employees
As of May 15, 2025, we have one full-time non-union employee in the United States and four non-union employees outside the United States.
Legal Proceedings
From time to time, we may become parties to various lawsuits, claims, and other legal proceedings arising in our business’s ordinary course. We are not currently a party, as plaintiff or defendant, to any legal proceedings that we believe to be material or which, individually or in the aggregate, would be expected to have a material effect on our business, financial condition, or results of operation if determined adversely to us.
Smaller Reporting Company
The Company is a “smaller reporting company” defined in Rule 12b-2 under the Exchange Act. There are certain exemptions available to us as a smaller reporting company, including (1) not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes Oxley Act; (2) scaled executive compensation disclosures; and (3) the requirement to provide only two years of audited financial statements, instead of three years. As long as we maintain our status as a “smaller reporting company,” these exemptions will remain available.
Implications of Being an Emerging Growth Company
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (JOBS Act).
As an emerging growth company, we may take advantage of reduced or “scaled” disclosure requirements that otherwise apply to public companies. These reduced or scaled disclosure requirements include, but are not limited to:
| 1. | being permitted to present only two years of audited financial statements and only two years of related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report; | |
| 2. | not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended; | |
| 3. | being able to take advantage of the reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements, and registration statements, and | |
| 4. | being exempt from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. |
We elected to take advantage of certain of the reduced disclosure obligations in this Annual Report and may elect to take advantage of other reduced reporting requirements in our future filings with the SEC. As a result, the information we provide to our stockholders may be different from what you might receive from other public reporting companies that are not emerging growth companies.
The JOBS Act also provides that an emerging growth company may take advantage of an extended transition period to comply with new or revised accounting standards. We have irrevocably elected not to avail ourselves of this exemption, and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.
Compliance after Termination of Emerging Growth Company Status
After our emerging growth company status is terminated, we cannot take advantage of the reduced or scaled disclosure requirements described in subparagraphs 1 and 4 above. However, in the event we are a “smaller reporting company,” as that term is defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended after our emerging growth company status has terminated, we will still be able to take advantage of the reduced or scaled disclosure requirements described in subparagraphs 2. and 3., above, for as long as we continue to have smaller reporting company status.
| 7 |
Available Information
We make available, free of charge, on or through our website, at www.ethicalweb.ai, our Annual Report on Form 10-K, which includes our audited financial statements, our Quarterly Reports on Form 10-Q, and our Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. The SEC maintains a website that contains these reports and other information at www.sec.gov. Our website and the information contained therein or connected to it are not intended to be and are not incorporated into this Annual Report on Form 10-K.
Results of Operation
| Three Months Ended March 31, | Changes | |||||||||||||||
| 2025 | 2024 | Amount | % | |||||||||||||
| Revenue | ||||||||||||||||
| Net sales | $ | 641 | $ | 1,504 | $ | (863 | ) | -57 | % | |||||||
| Cost of sales | - | 622 | (622 | ) | -100 | % | ||||||||||
| Gross profit | 641 | 882 | (241 | ) | -27 | % | ||||||||||
| Operating Expenses | ||||||||||||||||
| General and administrative | 165,022 | 310,068 | (145,046 | ) | -47 | % | ||||||||||
| Professional fees | 20,622 | 8,028 | 12,594 | 157 | % | |||||||||||
| Sales and marketing | 10,496 | 18,173 | (7,677 | ) | -42 | % | ||||||||||
| Amortization and depreciation | 53,954 | 53,991 | (37 | ) | 0 | % | ||||||||||
| Research and development | 56,385 | 47,865 | 8,520 | 18 | % | |||||||||||
| Total operating expense | 306,479 | 438,125 | (131,646 | ) | -30 | % | ||||||||||
| Operating loss | (305,838 | ) | (437,243 | ) | 131,405 | -30 | % | |||||||||
| Other income (expense) | ||||||||||||||||
| Other income | 3 | 1,478 | (1,475 | ) | -100 | % | ||||||||||
| Interest expense | - | (3,592 | ) | 3,592 | 100 | % | ||||||||||
| Disposal of fixed assets | - | (9,355 | ) | 9,355 | 100 | % | ||||||||||
| Gain on change in fair value of warrant derivative liability | 27,211 | (1,251 | ) | 28,462 | -2,275 | % | ||||||||||
| Foreign currency transaction (loss) gain | 68 | (10,904 | ) | 10,972 | -101 | % | ||||||||||
| Total other income (expense) | 27,282 | (23,624 | ) | 50,906 | -215 | % | ||||||||||
| Net loss before income tax | (278,556 | ) | (460,867 | ) | 182,312 | -40 | % | |||||||||
| - | ||||||||||||||||
| Provision for income tax | - | - | - | - | ||||||||||||
| Net loss after income tax | $ | (278,556 | ) | $ | (460,867 | ) | $ | 182,312 | -40 | % | ||||||
Three months ended March 31, 2025, compared to three months ended March 31, 2024
Revenues: We will not achieve higher revenues until we further develop, market, support, and deliver our products and service offerings. Despite our efforts, we cannot guarantee achieving significant revenues.
General and Administrative—General and administrative expenses primarily consist of compensation and costs associated with non-specific business activities. These include office costs, computer software, and telecoms. The decrease is mainly due to the termination of executives in July 2024.
Professional Fees – Professional fees encompass costs associated with legal, accounting, and consulting services.
| 8 |
Sales and Marketing – Sales and marketing costs are explicitly incurred in relation to fees and expenses for investor relations, advertising, marketing, press releases, and public relations.
Amortization and depreciation – Amortization is related to patents and intellectual property held by the UK subsidiary, Bubblr Ltd.
Research and Development – Costs incurred in developing the Company’s products include those associated with salaries and benefits for development staff, external contractors, and specialist software for product development.
Other Income (Expense) – The majority of other income and expense consists of the gain and losses on the change in fair value of warrant derivative liability and foreign currency translation gains.
Gain (loss) on change in fair value of warrant derivative liability – The Company analyzed the warrants issued in connection with the Series C Convertible Preferred Stock (see Note 10) for derivative accounting consideration under ASC 815, Derivatives and Hedging. ASC 815 requires us to assess the fair market value of the derivative liability at the end of each reporting period and recognize any change in fair market value as other income or expense item.
The average exercise price for warrants determined at issue is $0.32 per share. If the warrants were exercised on March 31, 2025, the Company would realize a gain due to the difference between the cash received upon conversion and the issue cost to the Company of $0.006 per share, which is the fair market value of the common stock on March 31, 2025.
Foreign currency translation gain (loss): Gains and losses in foreign currency translation result from fluctuations in the exchange rates of the U.S. dollar and the British pound sterling.
Liquidity and Capital Resources
The following table provides selected financial data about our Company:
| March 31, 2025 | December 31, 2024 | Change | % | |||||||||||||
| Current Assets | $ | 9,211 | $ | 44,907 | $ | (35,696 | ) | -79 | % | |||||||
| Current Liabilities | 2,200,249 | 2,045,276 | 154,973 | 8 | % | |||||||||||
| Working Capital Deficit | $ | (2,191,038 | ) | (2,000,369 | ) | $ | (190,669 | ) | 10 | % | ||||||
Current Assets
Current assets consist of cash and other receivables. The decrease in current assets was primarily due to the timing of funds received from related-party loans in late 2024.
Current Liabilities
Current Liabilities consist of accounts payable, accrued liabilities, and loans.
The increase in current liabilities was primarily due to increases in accrued director fees, dividends payable, and salaries, offset by a decrease in the current portion of related party loans.
Working Capital Deficit
The working capital deficit increased by $190,669 over the three months ended March 31, 2025.
| 9 |
Liquidity
Over the last three years and as of the date of this Report, we have faced an increasingly challenging liquidity situation that has limited our ability to execute our operating plan. We will need to obtain capital to continue operations, but there is no assurance that we can secure such funding on acceptable terms.
As no significant revenues are generated from our current operations, we will require additional debt or capital to continue operating and expanding our business. Sources of additional financing or arrangements with third parties may include equity or debt financing, bank loans, related-party loans, or revolving credit facilities. We may not successfully locate suitable financing transactions within the required period, and we may not be able to obtain the required capital through alternative means. Unless we can attract additional investment, our ability to operate as a going concern is in doubt.
We voluntarily file annual, quarterly, and current reports with the SEC pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) and the rules subsequently implemented by the SEC and the Public Company Accounting Oversight Board (“PCAOB”) have imposed various requirements on public companies, including requiring changes in corporate governance practices. We anticipate that these rules and regulations will increase our legal and financial compliance costs and render some of our activities more time-consuming and costly. We will need capital investment to comply with the Exchange Act requirements.
If we cannot obtain sufficient additional capital, we may be forced to cease filing our SEC reports and cease operations altogether. Suppose we get additional funds by selling any of our equity securities or by issuing common stock to pay current or future obligations. In that case, the percentage ownership of our stockholders will be reduced, and stockholders may experience additional dilution. Equity securities may have rights, preferences, or privileges that are senior to common stock.
Cash Flow
| March 31, 2025 | December 31, 2024 | Change | % | |||||||||||||
| Cash used in Operating activities | $ | (96,091 | ) | $ | (118,164 | ) | $ | 22,073 | -19 | % | ||||||
| Cash (used) in provided by Investing Activities | (13,728 | ) | 1,394 | (15,122 | ) | -1,085 | % | |||||||||
| Cash provided by Financing Activities | 71,073 | 92,465 | (21,392 | ) | -23 | % | ||||||||||
| Cash on Hand | $ | 2,542 | 951 | $ | 1,591 | 167 | % | |||||||||
Operating Activities
The decrease in net cash used in operating activities was primarily due to an increase in accrued liabilities.
Investing Activities
The net cash used in investing activities was for Patents.
Financing Activities
The increase in net cash provided by financing activities was primarily due to the rise in related-party loans.
Cash on Hand
The Company is currently exploring future fundraising options, including equity, debt, and the sale of/or the licensing of the Company’s Patent(s) and IP, with a holdback of the Company’s rights to use the IP to secure funding for operations. If we cannot secure additional financing, the implementation of our business plan will be impaired. There can be no assurance that such additional funding will be available to us on acceptable terms or at all.
| 10 |
Critical Accounting Policies and Significant Judgments and Estimates
This discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). Preparing these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and various other factors that we believe are reasonable under the circumstances, which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. While our significant accounting policies are described in more detail in the notes to our financial statements included elsewhere in this Report, we believe that the following accounting policies are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.
We believe our most critical accounting policies and estimates relate to the following:
| ● | Foreign Currency Translations | |
| ● | Intangible Assets | |
| ● | Long-lived Assets | |
| ● | Income Taxes | |
| ● | Stock-based Compensation | |
| ● | Common Stock Purchase Warrants and Derivative Financial Instruments | |
| ● | Convertible Financial Instruments | |
| ● | Fair Value of Financial Instruments |
Foreign Currency Translations
The functional currency of the Company’s international subsidiaries is generally their local currency of Great British Pounds (GBP). Local currency assets and liabilities are translated at the exchange rates on the balance sheet date, and local currency revenues and expenses are translated at weighted average exchange rates during the period. Equity accounts are translated at historical rates. The resulting translation adjustments are recorded directly into accumulated other comprehensive income.
Intangible Assets
The cost of intangible assets with determinable useful lives is amortized to reflect the pattern of economic benefits consumed straight-line over the estimated periods benefited. Patents, technology, and other intangibles with contractual terms are generally amortized over their respective legal or contractual lives. When certain events or changes in operating conditions occur, an impairment assessment is performed, and lives of intangible assets with determinable lives may be adjusted.
Long-Lived Assets
Long-lived assets are evaluated for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on comparing the undiscounted future cash flows to the recorded value of the asset. The asset is written down to its estimated fair value if an impairment is indicated.
Income Taxes
The Company accounts for income taxes using the asset and liability method per ASC 740, “Income Taxes.” The asset and liability method provides that deferred tax bases of assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
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Convertible Financial Instruments
The Company bifurcates conversion options from their host instruments and accounts for them as free-standing derivative financial instruments if specific criteria are met. These criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not remeasured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the host instrument is deemed conventional, as that term is described under applicable U.S. GAAP.
Fair Value of Financial Instruments
The Company accounts for financial instruments per ASC 820, “Fair Value Measurements and Disclosures.” ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
Stock-Based Compensation
The Company accounts for stock-based compensation per ASC Topic 718 Compensation-Stock Compensation, which prescribes accounting and reporting standards for all share-based payment transactions in which employee and non-employee services are acquired. Share-based payments to employees and non-employees, including grants of stock options, are recognized as compensation expenses in the financial statements based on the stock awards’ fair values on the grant date. That expense is recognized over the period required to provide services in exchange for the award, known as the requisite service period (usually the vesting period). Stock Options awarded as compensation per the Company’s 2022 Equity Incentive Plan are deemed unissued until vested. Stock Option compensation is recognized as an expense over the vesting period. Awards forfeited due to the unfulfillment of obligations, such as termination of employment before the award is fully vested, for no cash or other consideration, are not recognized as an expense, and any previously recognized costs are reversed in the period of forfeiture.
Common Stock Purchase Warrants and Derivative Financial Instruments
Common stock purchase warrants and other derivative financial instruments are classified as equity if the contracts (1) require physical settlement or net-share settlement or (2) give the Company a choice of net-cash settlement or settlement in its shares (physical settlement or net-share settlement). Contracts which (1) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company), (2) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement), or (3) contain reset provisions that do not qualify for the scope exception are classified as liabilities. The Company assesses the classification of its common stock purchase warrants and other derivatives at each reporting date to determine whether a change in classification between equity and liabilities is required.
Recent Accounting Pronouncements
For discussion of recently issued and adopted accounting pronouncements, please see Note 2 to the unaudited consolidated financial statements as of and for the three months ended March 31, 2025, and 2024, included herein.
Off-Balance Sheet Arrangements
As of March 31, 2025, there were no off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as defined in Rule 13a-15(e), promulgated by the SEC pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Exchange Act is recorded, processed, summarized, and reported within the periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer to allow timely decisions regarding required disclosure. Our management, with the participation of our CEO, who serves as our principal executive officer, and our CFO, who serves as our principal financial officer, evaluated our company’s disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were ineffective as of March 31, 2025. The ineffectiveness of our disclosure controls and procedures was due to material weaknesses, which we identified in our report on internal control over financial reporting.
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Management’s Report of Internal Control over Financial Reporting
Our CEO and CFO are responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. An evaluation was conducted to assess the effectiveness of our internal control over financial reporting. The evaluation was based on the framework in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
Due to the inherent limitations in all control systems, internal control over financial reporting may not prevent or detect misstatements. Additionally, projections of any effectiveness evaluation in future periods are subject to the risk that controls may become inadequate due to changes in conditions or that the degree of compliance with policies or procedures may deteriorate.
Based on our evaluation under the criteria outlined in the 2013 Internal Control-Integrated Framework, our management concluded that as of March 31, 2025, our internal control over financial reporting was not practical because of the identification of material weaknesses described as follows:
| ● | We do not have sufficient segregation of duties within accounting functions, which is an essential internal control. Due to our size and nature, it may not always be possible or economically feasible to segregate all conflicting duties. However, to the greatest extent possible, individuals should initiate and record transactions separately. Management evaluated the impact of our failure to segregate duties on our disclosure controls and procedures assessment and concluded that the resulting control deficiency represented a material weakness. | |
| ● | We have insufficient personnel with the requisite expertise in the key functional areas of finance and accounting. | |
| ● | We do not have a functioning audit committee, compensation committee, or an outside independent director on our board of directors. This results in ineffective oversight in establishing and monitoring required internal controls and procedures. |
Remediation Plan to Address the Material Weaknesses in Internal Control over Financial Reporting
Our Management is committed to improving its internal controls when we have adequate resources. We will appoint independent directors and establish an audit committee and compensation committee. Due to these material weaknesses, misstatements that could be material to the annual or interim consolidated financial statements may occur, which would not be prevented or detected during our financial close and reporting process.
Our Company plans to enhance and improve the design of our internal controls over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have been unable to remediate the material weaknesses identified above. To remediate such flaws, we plan to implement the following changes:
| 1. | appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management, and | |
| 2. | adopt sufficient written policies and procedures for accounting and financial reporting, and | |
| 3. | appoint an audit committee. |
The remediation efforts outlined are primarily dependent on securing additional financing or revenue to cover the costs of implementing the required changes. Remediation efforts may be materially affected if we do not secure such funds.
Changes in Internal Control over Financial Reporting
In the three months ended March 31, 2025, there were no material changes in our internal control over financial reporting that materially affected or are reasonably likely to affect our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings
We are not a party to any pending legal proceedings and are unaware of any pending legal proceeding in which any of our officers, directors, or beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.
Item 1A: Risk Factors
Not applicable.
Item 1b. Unresolved Staff Comments.
None.
Item 1c. Cybersecurity
In today’s digital landscape, cybersecurity is a critical component of our business operations. We are committed to safeguarding information systems, data, and technology infrastructure from potential cyber threats, unauthorized access, and data loss. We have implemented robust policies, procedures, and security measures to mitigate risks, ensure compliance with applicable laws and regulations, and maintain the trust of our stakeholders.
We actively monitor and adapt to the evolving cybersecurity landscape through continuous assessment. Despite these efforts, the potential for breaches, attacks, or system failures remains a risk, which could lead to service disruptions, financial losses, legal liabilities, or reputational harm. We will continue to prioritize investments in cybersecurity to enhance our defenses and resiliency against emerging threats.
In all known cases to date, the company’s systems and protocols have successfully detected and mitigated these attempts with no impact on operations or data integrity.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The information set forth below relates to our issuances of securities without registration under the Securities Act of 1933.
In the three months ended March 31, 2025, the Company did not issue unregistered securities:
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Item 3. Defaults upon Senior Securities
None
Item 4. Mine Safety Disclosures
Not applicable
Item 5. Other Information
None
Item 6. Exhibits
See Exhibit Index below for exhibits required by Item 601 of Regulation S-K.
| Exhibit Number | Description of Exhibit | |
| 31.1** | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2** | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1** | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 32.2** | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101** | The following materials are from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, formatted in Extensible Business Reporting Language (XBRL). | |
| **Provided herewith |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| BUBBLR, INC. | |
| Date: May 15, 2025 | /s/ Tom Symonds |
| Tom Symonds | |
| Chief Executive Officer | |
| (Principal Executive Officer) | |
| Date: May 15, 2025 | /s/ David Chetwood |
| David Chetwood | |
|
Chief Financial Officer (Principal Accounting and Financial Officer) |
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