UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the fiscal year ended
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DOCUMENTS INCORPORATED BY REFERENCE
None.
TABLE OF CONTENTS
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CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
Some of the statements contained in this Annual Report on Form 10-K 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 the words such as “anticipate,” “plan,” “believe,” “expect,” “estimate”, and the like. Forward-looking statements involve future risks and uncertainties, and there are factors that 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 various 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. Important 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 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 COVID-19 and/or other future 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 larger and 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 normal 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-K.
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PART I
ITEM 1. BUSINESS.
Except as otherwise indicated herein or as the context otherwise requires, references in this Annual Report to “Bubblr,” the “Company,” “Ethical Web.AI,” “we,” “us,” and “our” refer to Bubblr, Inc. and its wholly-owned subsidiaries, including Bubblr Limited and Bubblr Holdings Limited, which are a non-trading company and IP holding company, respectively, both formed and existing under the laws of the United Kingdom.
Overview
Bubblr, Inc., d/b/a Ethical Web.AI is an artificial intelligence or AI company that has patent protected intellectual properties. We compete with a number of large companies who include AI in their suite of product offerings – companies such as Amazon, AI Brain, C3.ai, Data Robot, Inc., Google, IBM, Open AI and Anthropic. All of those companies have far greater financial resources and more populated human assets in the development of AI technology, training data and algorithms than our Company has.
The AI industry also has numerous smaller companies that compete in the AI space without owning any protected intellectual property and that rely heavily, if not totally, on access or linkage to third party search engines and AI.
Here is a simple explanation of Generative AI
Generative artificial intelligence (AI) is a branch of computer science focused on creating programs that can generate new, original content. This technology harnesses the power of AI to produce outputs that a human might otherwise create, ranging from written text to complex code and from stunning images to original music compositions. At its core, generative AI works by synthesizing new forms from familiar elements, drawing from a vast array of data on which it has been trained.
For the uninitiated, it might help to think of generative AI as a sophisticated assistant capable of crafting entirely new creations based on a set of learned patterns and examples. For instance, you could ask this AI to draft an essay, compose a piece of music, or even generate a computer program. It’s not just rehashing what it’s seen before; it’s creating something new from the pieces it knows.
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The concept of generative AI isn’t novel—it’s been around for some time. Consider Google Translate, which has been translating text since 2006, and Siri, Apple’s voice assistant introduced in 2011. These are early examples of generative AI in action, responding to human queries with generated language that seeks to be as close as possible to natural human speech or text. As these technologies have evolved, they have become more integrated into our daily lives, often functioning in the background and smoothing out our interactions with the digital world.
Recent advancements have been groundbreaking. OpenAI’s GPT-4, released in 2023, claimed capabilities surpassing the performance of most humans in standardized tests like the LSAT. This is a testament to how far AI has come in understanding and generating human-like text. GPT-4 can write essays, debug code, create summaries, and even compose music, demonstrating a breadth of capabilities that were once thought to be solely within the realm of human expertise.
The process that allows generative AI to perform these feats is called language modelling. This process involves the AI examining a sequence of words (the context) and predicting what comes next. This isn’t done through a simple count of word frequencies, but through the use of neural networks—complex mathematical models that can learn patterns in data. By training on a massive corpus of text data from diverse sources like Wikipedia, books, and websites, these neural networks learn to anticipate the next word in a sequence with a high degree of accuracy.
Training a generative AI model involves a careful and resource-intensive process. The AI is fed large amounts of text, and during training, it tries to predict parts of the text that are intentionally omitted. This training is iterative and can take months or even years as the model constantly refines its predictions to more closely match reality. Once trained, the model has parameters—essentially, learned weights and biases that guide its predictions. These parameters are fine-tuned through additional training to specialize the AI for particular tasks, a process known as fine-tuning.
Despite the impressive capabilities of generative AI, there are significant considerations and challenges. The technology’s rapid development has sparked discussions about its energy usage, potential to displace jobs, and ability to perpetuate or even create biases and misinformation. For example, the training of large models like GPT-4 requires substantial computational resources, which translates to significant energy consumption and associated carbon emissions. Moreover, as generative AI continues to excel at tasks traditionally performed by humans, there’s concern over job displacement, particularly in fields like customer service, content creation, and programming.
Generative AI also raises questions about the authenticity of content and the propagation of biases. Since the AI learns from existing data, any historical biases present in that data can be reflected in the AI’s outputs. This has led to the development of methods to align AI’s behavior with ethical standards and societal values. OpenAI, for instance, has focused on making GPT helpful, honest, and harmless by fine-tuning it with human feedback to avoid toxic, biased, or offensive content.
In sum, generative AI is a transformative technology with the potential to change how we interact with machines and automate the creation of content. It’s a field that’s evolving rapidly, offering tremendous benefits while also posing new challenges that society must address responsibly. As we continue to harness its power, it’s crucial to balance innovation with ethical considerations, ensuring that generative AI serves as a tool for positive change rather than a source of harm.
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Finally, it is not cheap. Building the training data for Chat GPT 4 was estimated to cost $100 million. It costs even more to process the queries. It is not Skynet, and it will not take over the world. It is simply an incredibly powerful tool to massively enhance productivity for most office-based professionals.
Our Current Business
Bubblr, Inc., d/b/a Ethical Web.AI, stands at the forefront of a technological revolution committed to remedying the fragmented landscape of the current Internet through its advanced, ethically-focused artificial intelligence software platforms. Our Company, fortified by robust patent protections, embodies integrity and innovation in technology, aspiring to mend the dysfunctional aspects of online experiences while promoting digital wellness and ethical engagement.
Our product ecosystem, at the heart of our value proposition, features two trailblazing solutions poised to redefine user interaction within the digital realm:
| 1. | Community-Centric Super App Platform: Our innovative SaaS open-source platform empowers communities to conceive and customize their local ‘super apps.’ Our platform’s distinguishing architecture is a testament to our commitment to consumer privacy and local economic enrichment. These super apps, beyond safeguarding user anonymity, emerge as cost-effective marketing conduits for local businesses and as crucial revenue engines for communities. This expansive platform, nearing its full operational capacity, anticipates its commercial launch shortly, with substantial revenue contributions forecasted for 2024. | |
| 2. | AI Seek: AI Seek is our transformative generative AI application that surpasses the capabilities of existing technologies such as Chat GPT-4. AI Seek champions user anonymity and affordability, being 25% more cost-efficient. Initially introduced to the consumer market, our strategic roadmap encompasses licensing this technology to academic institutions. This initiative not only diversifies universities’ revenue streams, but also arms them with sophisticated tools to authenticate student submissions by detecting AI-generated content, thereby safeguarding academic integrity. |
Ethical Web AI thrives on a business model characterized by low operational costs, yet significant revenue and margin potential, reflective of the SaaS open-source framework’s inherent scalability and profitability. In comparison to peer entities, many of which boast market capitalizations exceeding $1 billion, our Company signifies a compelling investment proposition given our ethical technology differentiation, robust intellectual property suite, and foreseeable market demand.
Mission
At Ethical Web AI, our mission transcends the norms of technological advancement; we are dedicated to fostering a new era of the internet, rooted in the principles of ethical engagement, consumer privacy, and communal prosperity. We champion these ideals by demonstrating the commercial viability and success of our products, which are designed not merely as tools of technology but as extensions of community values and enablers of equitable digital ecosystems.
Our suite of heavily patent-protected products upholds the sanctity of user anonymity, standing as testaments to the possibility of achieving commercial success without relying on invasive online advertising tactics. These offerings are emblematic of our commitment to real decentralization, a principle that forms the bedrock of our design philosophy and operational paradigm.
We endeavor to decentralize profits and authority, channeling control back into the hands of local communities that engage with our technology. This approach disrupts traditional power structures in the digital economy, dismantling monopolistic barriers and facilitating an environment where businesses, irrespective of their scale, can compete fairly and thrive collectively. Such a landscape not only contributes to local economic vibrancy, but also empowers communities, providing them with substantial new revenue streams, thereby promoting self-sufficiency and innovation at a grassroots level.
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Our mission then, in essence, is to promulgate the principles of the ethical web throughout the digital world. By showcasing the success of our business model, we intend to inspire a ripple effect, catalyzing an industry-wide shift towards practices that honor consumer privacy, champion true decentralization, and promote equitable access and opportunity for all entities within the digital space.
In this journey, we remain steadfast in our belief that technology should be a force for communal good, a platform for fair economic participation, and a space that respects and protects individual privacy. Through our innovative products and their principled underpinnings, Ethical Web AI is pioneering this transformative vision for a balanced and conscientious digital future.
The AI Seek App
In the dynamic realm of artificial intelligence, the advent of generative AI applications has marked a significant milestone, challenging even formidable industry giants like Google. One such revelation has been the emergence of Chat GPT models, which, despite their advanced capabilities, have shown certain limitations in adaptability, cost-effectiveness, and data contemporaneity. Ethical Web AI, leveraging its innovative spirit and strategic intellectual property assets, has introduced AI Seek, a state-of-the-art generative AI app crafted to transcend these limitations and offer a superior, consumer-friendly alternative.
Technological Edge and Consumer Anonymity
AI Seek, built on the foundations of our proprietary patents, presents a significant upgrade over existing technologies such as Chat GPT-4. Our version stands out not only in terms of enhanced performance but also in its cost structure, being 25% more affordable. Upholding our commitment to user privacy, AI Seek operates with complete consumer anonymity. This commitment is reflected in its no-registration process, absence of cookies, and a staunch policy against behavioral data tracking, setting a new standard for user privacy in the AI space.
Contemporaneous Data Integration
One of AI Seek’s ground breaking features is its patented ability to incorporate up-to-date information beyond the constraints of the app’s initial training data. This functionality starkly contrasts with models like Chat GPT-4, which possesses data only up until September 2021. Especially for queries requiring current financial figures or trending data, AI Seek proves invaluable, offering precise, real-time insights. This feature significantly enriches the user experience, particularly for professionals and entities requiring the latest information.
Dynamically generated hypertext links
Another groundbreaking feature of AI Seek, which is patented and unique, is that each prompt query result is delivered in a unique web page which includes dynamically generated hypertext links. These hypertext links may include multimedia such as videos and images along with text links to other salient web pages, making it a far superior research tool.
Commercial Strategy and University Collaboration
While AI Seek’s initial phase focuses on direct consumer engagement, our strategic vision extends to licensing partnerships with educational institutions. The plan involves universities adopting a branded version of AI Seek, thereby opening a new revenue channel by offering this advanced tool to their students, faculty and benefactors. Furthermore, this strategy assists academic institutions in maintaining integrity standards by enabling them to assess the extent of AI-generated content in student submissions, thereby limiting the possibility of plagiarism and misattribution.
Revenue Generation and User Feedback
AI Seek, though in its infancy, has already begun to generate revenue, with a small dedicated user base of individuals. The continuous engagement and constructive feedback from these early adopters have been instrumental in refining the app’s functionalities. With a marketing campaign set to launch this year, we anticipate a significant uptick in adoption, forecasting that each app instance could contribute at least $15 monthly.
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In conclusion, AI Seek represents not just a product but a pivotal step toward reshaping the interaction between humans and artificial intelligence. By balancing superior technology with ethical practices and user empowerment, AI Seek is poised to lead the new wave of generative AI applications, carving a niche for itself in the market.
The licensed version will just take 20% of the net margin generated by each University. Our initial estimate indicates this will remain very significant.
Ethical Web AI Licensed Open Source Platform
In the rapidly evolving digital landscape, Ethical Web AI is pioneering a transformative approach to online interactions and transactions with its Licensed Open Source Platform. This platform, a direct innovation from our first granted patent, US Patent No. 10977387, entitled “Internet Search Mechanism,” stands as a beacon of technological advancement and community empowerment.
Innovation Valuation and Global Recognition
Our unique internet search mechanism, granted by the USPTO in April 2021, has not only been recognized in the United States but has also been awarded patents in four other key territories. In an independent valuation, the potential of this patented technology was highlighted, estimating its worth at an impressive $4.7 billion in a hypothetical acquisition scenario by an internet conglomerate. This value underscores the platform’s transformative potential in reshaping the internet’s commercial landscape.
Technological Advancement and Open Source Capabilities
The complexity and breadth of the platform are testament to recent advancements in technology, enabling its rich feature set and extensive scalability. At its core, the platform offers open-source app templates, allowing licensees to construct community-centric super apps tailored to their local needs and economic contexts. Unlike conventional single-purpose applications like Uber Eats or Hotels.com, these super apps present a comprehensive marketplace, accommodating an unlimited array of products and services within a single digital ecosystem.
Revolutionizing Commercial Interactions
What distinguishes our platform further is its revolutionary approach to e-commerce. Businesses, rather than surrendering a high percentage of their transaction value, are charged a fixed monthly listing fee determined by the community licensees. This structure not only fosters a fair, competitive environment for smaller enterprises but also ensures that more revenue remains within local economies.
Anonymity, User Control, and the Future of Search
These community super apps are set to redefine internet search and e-commerce, areas that have seen little fundamental change in the past quarter-century. One of the platform’s innovative features is the “concierge search,” where users can anonymously leave requests for goods or services not immediately available, enabling future transaction fulfilment.
Furthermore, Ethical Web AI takes user privacy and control seriously. Our platform ensures user anonymity and places consumers in full control of communication channels, transforming the way they interact with online marketplaces.
Community Impact and Invitation to Explore
Beyond commercial benefits, our platform represents a new avenue for significant community revenue, fostering local development and self-sustainability. We invite interested parties to explore the diverse potential of our platform through five distinct use-case scenarios detailed on our website. Each illustrates the platform’s versatility and its adaptability to various market sectors.
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Conclusion
In conclusion, the Ethical Web AI Licensed Open Source Platform is more than a technological breakthrough; it’s a new paradigm for online commerce, community growth, and digital privacy. By decentralizing the Internet marketplace, we are building a more equitable, prosperous digital future for communities and especially small businesses alike.
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 different 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 different way for consumers to search for information only, which again is radically 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. It is the confident opinion of our patent agents, Murgatroyd’s, that this patent will be granted in November 2024.
We have also recently 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 is a utility patent that resolves a very significant issue with existing foundation AI LLM, such as Chat GPT and Claude 2, whereby they are unable to provide information that needs contemporaneous data. This is because the established AI LLMs have a training data database that is 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 AI LLM’s output to include references to the necessary contemporaneous data. The technical manifestation of this patent is delivered in version 4 and beyond of our AI Seek consumer app.
Competition
The space for online marketplaces and ad networks is rapidly evolving. The Advertising Technology (Ad-tech) industry includes all kinds of tools, software platforms (Google, Facebook), agencies, data-brokers, etc. It facilitates targeted advertisements that have become exponentially more invasive over the past decade due to massive amounts of personal data collection. It’s a complex and opaque ecosystem that tracks, profiles, discriminates (both personal and business) and manipulates for profit. It’s a multi-billion-dollar industry that is now facing litigation, investigations, and new regulations to curb its practices.
We face intense competition from companies with much larger capital resources than us, and, as a result, we could struggle to attract users and gain market share. Many of our existing or future competitors have greater financial resources and greater brand name recognition than we do and, as a result, may be better positioned to adapt to changes in the industry or the economy as a whole. We will strive to advance our technology in each of these sectors ahead of our competitors to gain market share. We also face intense competition in attracting and retaining qualified employees. Our ability to continue to compete effectively will depend upon our ability to attract new employees, retain and motivate our existing employees and to compensate employees competitively. We face significant competition in several aspects of our business, and such competition might increase, particularly in the market for networks and online marketplaces. A key advantage against better resourced competitors is provisioning our technology and related acquisitions as an Open Source SAAS platform. This pushes all of the consumer and merchant marketing responsibility to the registered partners.
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. Any such increased competition could cause pricing pressure, loss of business or decreased user activity, any of which could adversely affect our business and operating results.
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We believe that we have competitive strengths and protection via our IP which is defensible under the umbrella protection of our granted patents.
Government Regulation
We are subject to a number of 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 a number of 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, most states 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 practically implement. The costs of compliance with these laws and regulations may increase in the future as a result of amendments or changes in interpretation. Furthermore, any failure on our part to comply with these laws and regulations may subject us to significant liabilities.
We are also subject to federal, state, and foreign laws and regulations regarding privacy and protection of data. Our privacy policies describe our practices concerning the use, storage, transmission and disclosure of 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 in a manner that is not consistent 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 ultimately in a loss of users, which could adversely affect our business.
Employees
As of March 19, 2024, we have 5 full-time employees. Our employees are not represented by any labor union.
Legal Proceedings
From time to time, we may become party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of our business. 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.
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Smaller Reporting Company
The Company is a “smaller reporting company” as 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 continue to be available to us.
Implications of Being an Emerging Growth Company
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 or “JOBS Act.”
As an emerging growth company, we may take advantage of reduced or “scaled” disclosure requirements that are otherwise applicable 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 that we provide to our stockholders may be different than 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 to not 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 will not be able to 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.
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 thereto are not intended to be, and are not incorporated into this Annual Report on Form 10-K.
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ITEM 1A – RISK FACTORS.
An investment in our securities involves a high degree of risk. In addition to the other information contained in this Annual Report on Form 10-K, prospective investors should carefully consider the following risks before investing in our securities. If any of the following risks actually occur, as well as other risks not currently known to us or that we currently consider immaterial, our business, operating results and financial condition could be materially adversely affected. As a result, the trading price of our common stock could decline, and you may lose all or part of your investment in our common stock. The risks discussed below also include forward-looking statements, and our actual results may differ substantially from those discussed in these forward-looking statements. See “Cautionary Note on Forward-Looking Statements” in this Annual Report on Form 10-K. In assessing the risks below, you should also refer to the other information contained in this Annual Report on Form 10-K, including the financial statements and the related notes, before deciding to purchase or hold any of our securities.
Risk Related to Covid 19
A novel strain of coronavirus (COVID-19) was first identified in December 2019 and subsequently declared a global pandemic by the World Health Organization on March 11, 2020. As a result of the outbreak, many companies have experienced disruptions in their operations and in the markets served. The Company has instituted some and may take additional temporary precautionary measures intended to help ensure the well-being of its employees and minimize business disruption. The Company considered the impact of COVID-19 on the assumptions and estimates used and determined that there were no material adverse impacts on the Company’s results of operations and financial position as of and for the year ended December 31, 2023.
Most of the restrictions imposed by governments worldwide have now been relaxed. The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities at the date of issuance of these financial statements.
If there is a re-occurrence of government restrictions due to a new Covid-19 outbreak that may cause many companies to experience disruptions in their operations and in markets served, there is a risk that these estimates may change, as new events occur, and additional information is obtained.
Risk Factors Related to the Financial Condition of the Company
Because our auditor has issued a going concern opinion regarding our company, there is an increased risk associated with an investment in our company.
We have continually operated at a loss with an accumulated deficit of $496,125 as of December 31, 2023. We have not generated significant revenues and are dependent upon obtaining financing to continue operations for the next twelve months. Our future is dependent upon our ability to obtain financing or upon future profitable operations. We reserve the right to seek additional funds through private placements of our common stock, public offerings of our common stock and/or through debt financing.
Because we have a limited operating history, you may not be able to accurately evaluate our operations.
We have had limited operations to date. Therefore, we have a limited operating history upon which to evaluate the merits of investing in our company. Potential investors should be aware of the difficulties normally encountered by new companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the operations that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to the ability to generate sufficient cash flow to operate our business and additional costs and expenses that may exceed current estimates. We expect to continue to incur significant losses into the foreseeable future. We recognize that if the effectiveness of our business plan is not forthcoming, we will not be able to continue business operations. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and it is doubtful that we will generate any significant operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail.
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Risk Factors Related to Business of the Company
Our operating results may fluctuate, which could have a negative impact on our ability to grow our client base, establish sustainable revenues and succeed overall.
Our results of operations may fluctuate as a result of a number of factors, some of which are beyond our control including but not limited to:
| ● | General economic conditions in the geographies and industries where we sell our services and conduct operations; legislative policies where we sell our services and conduct operations; | |
| ● | The budgetary constraints of our customers; | |
| ● | The success of our strategic growth initiatives; | |
| ● | Costs associated with the launching or integration of new or acquired businesses; | |
| ● | Timing of new product introductions by us, our partners and our competitors; product and service mix, availability, utilization and pricing; | |
| ● | The mix, by state and country, of our revenues, personnel and assets; | |
| ● | Movements in interest rates or tax rates; | |
| ● | Protection of or intellectual property assets; | |
| ● | Changes in the regulations applicable to us; and | |
● |
Litigation matters. |
As a result of these factors, we may not succeed in our business, and we could go out of business.
If the market for our open-source platform does not experience significant growth or if our projects do not achieve broad acceptance, we will not be able to sustain or grow our revenues.
We hope to achieve revenues from our open-source partnerships. We cannot accurately predict, however, future growth rates or the size of the market for application in the United States, United Kingdom and other markets we engage in. Demand for our platform and IP may not occur as anticipated, or may decrease, either generally or in specific geographic markets, during particular time periods. The expansion of our mobile application in the market depends on a number of factors, such as:
| ● | The cost, performance and appearance of our mobile application offered by our competitors; | |
| ● | Public perceptions regarding our mobile application and the effectiveness and value of it; | |
| ● | Customer satisfaction with our mobile application; and | |
| ● | Marketing efforts and publicity regarding the needs for application and the public demand for it. |
Even if our platform gains wide market acceptance, we may not adequately address market requirements and may not be able to expand market acceptance. If our products do not achieve wide market acceptance, we may not be able to achieve our anticipated level of growth, we may not achieve revenues and results of operations would suffer.
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If we are unable to gauge trends and react to changing partners preferences in a timely manner, our sales will decrease, and our business may fail.
We believe our success depends in substantial part on our ability to offer our intellectual property and our supporting platform that reflect current needs and anticipate, gauge and react to changing partner and consumer demands in a timely manner. Our business is vulnerable to changes in partner and consumer preferences. If we misjudge their needs for our platform, our ability to generate sales could be impaired resulting in the failure of our business. There are no assurances that our mobile application will be successful, and in that regard, any unsuccessful consumer reaction could also adversely affect our business.
If we are unable to successfully manage growth, our operations could be adversely affected.
Our progress is expected to require the full utilization of our management, financial and other resources, which to date has occurred with limited working capital. Our ability to manage growth effectively will depend on our ability to improve and expand operations, including our financial and management information systems, and to recruit, train and manage sales personnel. There can be no absolute assurance that management will be able to manage growth effectively.
If we do not properly manage the growth of our business, we may experience significant strains on our management and operations and disruptions in our business. Various risks arise when companies and industries grow quickly. If our business or industry grows too quickly, our ability to meet customer demand in a timely and efficient manner could be challenged. We may also experience development delays as we seek to meet increased demand for our products. Our failure to properly manage the growth that we or our industry might experience could negatively impact our ability to execute on our operating plan and, accordingly, could have an adverse impact on our business, our cash flow and results of operations, and our reputation with our current or potential customers.
Our commercial success depends significantly on our ability to develop and commercialize our open-source platform without infringing the intellectual property rights of third parties.
Our commercial success will depend, in part, on operating our business without infringing the trademarks or proprietary rights of third parties. Third parties that believe we are infringing on their rights could bring actions against us claiming damages and seeking to enjoin the development, marketing and distribution of our products. If we become involved in any litigation, it could consume a substantial portion of our resources, regardless of the outcome of the litigation. If any of these actions are successful, we could be required to pay damages and/or to obtain a license to continue to develop or market our products, in which case we may be required to pay substantial royalties. However, any such license may not be available on terms acceptable to us or at all. Ultimately, we could be prevented from commercializing a product or forced to cease some aspect of our business operations as a result of patent infringement claims, which would harm our business.
A decline in general economic conditions could lead to reduced consumer/business adoption and could negatively impact our business operation and financial condition, which could have a material adverse effect on our business, financial condition and results of operations.
Our operating and financial performance may be adversely affected by a variety of factors that influence the general economy. Consumer search habits are affected by, among other things, prevailing economic conditions, levels of unemployment, salaries and wage rates, prevailing interest rates, income tax rates and policies, consumer confidence and consumer perception of economic conditions. In addition, consumer purchasing patterns may be influenced by consumers’ disposable income. In the event of an economic slowdown, consumer search habits could be adversely affected and we could experience lower net sales than expected on a quarterly or annual basis which could have a material adverse effect on our business, financial condition and results of operations.
The success of our business depends on our ability to maintain and enhance our reputation and brand.
We believe that our reputation in the online marketplace is of significant importance to the success of our business. A well-recognized brand is critical to increasing our customer base and, in turn, increasing our revenue. Since the industry is highly competitive, our ability to remain competitive depends to a large extent on our ability to maintain and enhance our reputation and brand, which could be difficult and expensive. To maintain and enhance our reputation and brand, we need to successfully manage many aspects of our business, such as cost-effective marketing campaigns to increase brand recognition and awareness in a highly competitive market. We will continue to conduct various marketing and brand promotion activities. We cannot assure you, however, that these activities will be successful and achieve the brand promotion goals we expect. If we fail to maintain and enhance our reputation and brand, or if we incur excessive expenses in our efforts to do so, our business, financial conditions and results of operations could be adversely affected.
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We use artificial intelligence in our business, and challenges with properly managing its use could result in reputational harm, competitive harm, and legal liability, and adversely affect our results of operations.
We will incorporate artificial intelligence (“AI”) solutions into our platform, offerings, services and features, and these applications may become increasingly important in our operations over time. Our competitors or other third parties may incorporate AI into their products more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations. Additionally, if the content, analyses or recommendations that our AI applications assist in producing are or are alleged to be deficient, inaccurate or biased, our business, financial condition and results of operations may be adversely affected.
The use of AI applications has resulted in, and may in the future result in, cybersecurity incidents that implicate the personal data of end users of such applications. Any such cybersecurity incidents related to our use of AI applications could adversely affect our reputation and results of operations. AI also presents emerging ethical issues and if our use of AI becomes controversial, we may experience brand or reputational harm, competitive harm or legal liability. The rapid evolution of AI, including potential government regulation of AI, will require significant resources to develop, test and maintain our platform, offerings, services and features to help us implement AI ethically in order to minimize unintended, harmful impact.
One of the major risks associated with AI is the potential for bias in the data used to train AI systems. If the algorithms data sets we use to train our AI system is biased, the resulting model may make inaccurate or unfair decisions, leading to negative consequences for customers, employees and other stakeholders. If we fail to protect the data we use to train our AI against bias, then our business, brand, reputation, financial condition and results of operations may by adversely affected.
Reliance on information technology means a significant disruption could affect our communications and operations.
We increasingly rely on information technology systems for our internal communications, controls, reporting and relations with customers and suppliers and information technology is becoming a significantly important tool for our sales staff. Our marketing and distribution strategy are dependent upon our ability to closely monitor consumer and market trends on a highly specified level, for which we are reliant on our highly sophisticated data tracking systems, which are susceptible to disruption or failure. In addition, our reliance on information technology exposes us to cyber-security risks, which could have a material adverse effect on our ability to compete. Security and privacy breaches may expose us to liability and cause us to lose customers or may disrupt our relationships and ongoing transactions with other entities with whom we contract throughout our supply chain. The failure of our information systems to function as intended, or the penetration by outside parties’ intent on disrupting business processes, could result in significant costs, loss of revenue, assets or personal or other sensitive data and reputational harm.
Security and privacy breaches may expose us to liability and cause us to lose customers.
Federal and state laws require us to safeguard our wholesalers’ and retailers’ financial information, including credit information. Although we have established security procedures to protect against identity theft and the theft of our customers’ and distributors’ financial information, our security and testing measures may not prevent security breaches and breaches of privacy may occur and could harm our business. Typically, we rely on encryption and authentication technology licensed from third parties to enhance transmission security of confidential information in relation to financial and other sensitive information that we have on file. Advances in computer capabilities, new discoveries in the field of cryptography, inadequate facility security or other developments may result in a compromise or breach of the technology used by us to protect customer data. Any compromise of our security could harm our reputation or financial condition and, therefore, our business. In addition, a party who is able to circumvent our security measures or exploit inadequacies in our security measures, could, among other effects, misappropriate proprietary information, cause interruptions in our operations or expose customers and other entities with which we interact to computer viruses or other disruptions. Actual or perceived vulnerabilities may lead to claims against us. To the extent the measures we have taken prove to be insufficient or inadequate, we may become subject to litigation or administrative sanctions, which could result in significant fines, penalties or damages and harm to our reputation.
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We may be unable to support our technology to further scale our operations successfully.
Our plan is to grow rapidly through further integration of our technology in partnerships in with our open-source platform and other partnership electronic platforms. Our growth will place significant demands on our management and technology development, as well as our financial, administrative and other resources. We cannot guarantee that any of the systems, procedures and controls we put in place will be adequate to support the commercialization of our operations. Our operating results will depend substantially on the ability of our officers and key employees to manage changing business conditions and to implement and improve our financial, administrative and other resources. If we are unable to respond to and manage changing business conditions, or the scale of our products, services and operations, then the quality of our services, our ability to retain key personnel and our business could be harmed.
Developing and implementing new and updated applications, features and services for our portals may be more difficult than expected, may take longer and cost more than expected and may not result in sufficient increases in revenue to justify the costs.
Attracting and retaining partner developers and users of our open-source platform requires us to continue to improve the technology underlying those portals and to continue to develop new and updated applications, features and services. If we are unable to do so on a timely basis or if we are unable to implement new applications, features and services without disruption to our existing ones, we may lose potential users and clients. The costs of development of these enhancements may negatively impact our ability to achieve profitability.
We rely on a combination of internal development, strategic relationships, licensing and acquisitions to develop our open-source platform, portals and related applications, features and services. Our development and/or implementation of new technologies, applications, features and services may cost more than expected, may take longer than originally expected, may require more testing than originally anticipated and may require the acquisition of additional personnel and other resources. There can be no assurance that the revenue opportunities from any new or updated technologies, applications, features or services will justify the amounts spent.
Our success is dependent in part on obtaining, maintaining and enforcing our proprietary rights and our ability to avoid infringing on the proprietary rights of others.
We seek patent protection for those inventions and technologies for which we believe such protection is suitable and is likely to provide a competitive advantage to us. A Patent on our Internet-Search Mechanism (“IBSM”) has been granted in the United States, Canada, Australia, New Zealand and South Africa. The patent is currently pending in the European Union and United Kingdom. Because patent applications in the United States are maintained in secrecy until either the patent application is published or a patent is issued, we may not be aware of third-party patents, patent applications and other intellectual property relevant to our products that may block our use of our intellectual property or may be used in third-party products that compete with our products and processes. In the event a competitor or other party successfully challenges our products, processes, patents or licenses or claims that we have infringed upon their intellectual property, we could incur substantial litigation costs defending against such claims, be required to pay royalties, license fees or other damages or be barred from using the intellectual property at issue, any of which could have a material adverse effect on our business, operating results and financial condition.
We also rely substantially on trade secrets, proprietary technology, nondisclosure and other contractual agreements, and technical measures to protect our technology, application, design, and manufacturing know-how, and work actively to foster continuing technological innovation to maintain and protect our competitive position. We cannot assure you that steps taken by us to protect our intellectual property and other contractual agreements for our business will be adequate, that our competitors will not independently develop or patent substantially equivalent or superior technologies or be able to design around patents that we may receive, or that our intellectual property will not be misappropriated.
Our business will suffer if our network systems, or open-source platform fails or become unavailable.
A reduction in the performance, reliability and availability of our network infrastructure would harm our ability to distribute our products to our users, as well as our reputation and ability to attract and retain customers. Our systems and operations could be damaged or interrupted by fire, flood, power loss, telecommunications failure, Internet breakdown, earthquake and similar events. Our systems could also be subject to viruses, break-ins, sabotage, acts of terrorism, acts of vandalism, hacking, cyber-terrorism and similar misconduct. We might not carry adequate business interruption insurance to compensate us for losses that may occur from a system outage. Any system error or failure that causes interruption in availability of our product or an increase in response time could result in a loss of potential customers, which could have a material adverse effect on our business, financial condition and results of operations. If we suffer sustained or repeated interruptions, then our products and services could be less attractive to our users and our business would be materially harmed.
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We face significant competition for developers, users, advertisers, and distributors.
Our intellectual property can face significant competition from online search engines, sites offering integrated internet products and services, social media and networking sites, e-commerce sites, companies providing analytics, monetization and marketing tools for mobile and desktop developers, and digital, broadcast and print media. A number of these competitors are significantly larger than we are and have access to vastly greater financial resources. Additionally, in a number of international markets, we face substantial competition from local Internet service providers and other entities that offer search, communications, and other commercial services.
A number of our competitors offer products and services that directly compete for users of our platform offerings. Further, emerging start-ups may be able to innovate and provide new products and services faster than we can. In addition, competitors may consolidate or collaborate with each other, and new competitors may enter the market. Some of our competitors in international markets have a substantial competitive advantage over us because they have dominant market share in their territories, have greater local brand recognition, are focused on a single market, are more familiar with local tastes and preferences, or have greater regulatory and operational flexibility due to the fact that we may be subject to both U.S. and foreign regulatory requirements.
If our competitors are more successful than we are in developing and deploying compelling products or in attracting and retaining users, developers, or distributors, our users and growth rates could decline.
Changes in regulations or user concerns regarding privacy and protection of user data, or any failure to comply with such laws, could adversely affect our business.
Federal, state, and international laws and regulations govern the collection, use, retention, disclosure, sharing and security of data that we receive from and about our users. The use of consumer data by online service providers is a topic of active interest among federal, state, and international regulatory bodies, and the regulatory environment is unsettled. Many states have passed laws requiring notification to users where there is a security breach for personal data, such as California’s Information Practices Act. We face similar risks in international markets where our products and services are offered. Any failure, or perceived failure, by us to comply with or make effective modifications to our policies, or to comply with any applicable federal, state, or international privacy, data-retention or data-protection-related laws, regulations, orders or industry self-regulatory principles could result in proceedings or actions against us by governmental entities or others, a loss of user confidence, damage to our business and brand, and a loss of users, which could potentially have an adverse effect on our business.
In addition, various federal, state and foreign legislative or regulatory bodies may enact new or additional laws and regulations concerning privacy, data retention, data transfer and data protection issues, including laws or regulations mandating disclosure to domestic or international law enforcement bodies, which could adversely impact our business, our brand or our reputation with users. For example, some countries are considering or have enacted laws mandating that user data regarding users in their country be maintained in their country. In addition, there currently is a data protection regulation applicable to member states of the European Union that includes operational and compliance requirements that are different than those currently in place and that also includes significant penalties for non-compliance.
The interpretation and application of privacy, data protection, data transfer and data retention laws and regulations are often uncertain and in flux in the United States and internationally. These laws may be interpreted and applied inconsistently from country to country and inconsistently with our current policies and practices, complicating long-range business planning decisions. If privacy, data protection, data transfer or data retention laws are interpreted and applied in a manner that is inconsistent with our current policies and practices, we may be fined or ordered to change our business practices in a manner that adversely impacts our operating results. Complying with these varying international requirements could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business and operating results.
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We may be subject to legal liability associated with providing online services or content.
We host and provide a wide variety of services and technology products that enable and encourage individuals and businesses to exchange information; upload or otherwise generate photos, videos, text, and other content; advertise products and services; conduct business; and engage in various online activities both domestically and internationally. The law relating to the liability of providers of online services and products for activities of their users is currently unsettled both within the United States and internationally. We may be subject to domestic or international actions alleging that certain content we have generated or third-party content that we have made available within our services violates laws in domestic and international jurisdictions.
It is also possible that if any information provided directly by us contains errors or is otherwise wrongfully provided to users, third parties could make claims against us. For example, we offer web-based e-mail services, which expose us to potential risks, such as liabilities or claims, by our users and third parties, resulting from unsolicited e-mail, lost or misdirected messages, illegal or fraudulent use of e-mail, alleged violations of policies, property interests, or privacy protections, including civil or criminal laws, or interruptions or delays in e-mail service. We may also face purported consumer class actions or state actions relating to our online services, including our fee-based services. In addition, our customers, third parties, or government entities may assert claims or actions against us if our online services or technologies are used to spread or facilitate malicious or harmful code or applications.
Investigating and defending these types of claims are expensive, even if the claims are without merit or do not ultimately result in liability and could subject us to significant monetary liability or cause a change in business practices that could negatively impact our ability to compete.
Our business depends on continued and unimpeded access to the Internet by us and our users. Internet access providers may be able to block, degrade, or charge for access to certain of our products and services, which could lead to additional expenses and the loss of users and advertisers.
Our products and services depend on the ability of our users to access the Internet, and certain of our products require significant bandwidth to work effectively. Currently, this access is provided by companies that have significant market power in the broadband and internet access marketplace, including incumbent telephone companies, cable companies, mobile communications companies, and government-owned service providers. Some of these providers may take, or have stated that they may take, measures that could degrade, disrupt, or increase the cost of user access to certain of our products by restricting or prohibiting the use of their infrastructure to support or facilitate our offerings, or by charging increased fees to us or our users to provide our offerings. Such interference could result in a loss of existing users and advertisers, and increased costs, and could impair our ability to attract new users and advertisers, thereby harming our revenues and growth. The adoption of any laws or regulations that limit access to the Internet by blocking, degrading or charging access fees to us or our users for certain services could decrease the demand for, or the usage of, our products and services, increase our cost of doing business and adversely affect our operating results.
Risks Related with Management and Control Persons
We are dependent on the continued services of our Chief Executive Officer, Chief Financial Officer and Chief Technology Officer, and if we fail to keep them or fail to attract and retain qualified senior executive and key technical personnel, our business will not be able to expand.
We are dependent on the continued availability of Stephen Morris, our interim Chief Technology Officer, Timothy Burks, our Chief Executive Officer, and David Chetwood, our Chief Financial Officer, and the availability of new skilled employees to implement our business plans. The market for skilled employees is highly competitive, especially for employees in our industry. Although we expect that our planned compensation programs will be intended to attract and retain the employees required for us to be successful, there can be no assurance that we will be able to retain the services of all our key employees or a sufficient number to execute our plans, nor can there be any assurance we will be able to continue to attract new employees as required.
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Our personnel may voluntarily terminate their relationship with us at any time, and competition for qualified personnel is intense. The process of locating additional personnel with the combination of skills and attributes required to carry out our strategy could be lengthy, costly and disruptive.
If we lose the services of key personnel or fail to replace the services of key personnel who depart, we could experience a severe negative effect on our financial results and stock price. The loss of the services of any key personnel, marketing or other personnel or our failure to attract, integrate, motivate and retain additional key employees could have a material adverse effect on our business, operating and financial results and stock price.
Our officers and directors have limited experience managing a public company.
Our officers and directors have limited experience managing a public company. Consequently, we may not be able to raise any funds or run our public company successfully. Our executive’s officer’s and director’s lack of experience of managing a public company could cause you to lose some or all of your investment.
Risks Related to the Market for our Stock
We will likely conduct further offerings of our equity securities in the future, in which case your proportionate interest may become diluted.
We will likely be required to conduct equity offerings in the future to finance our current projects or to finance subsequent projects that we decide to undertake. If our common stock shares are issued in return for additional funds, the price per share could be lower than that paid by our current shareholders. We anticipate continuing to rely on equity sales of our shares of common stock in order to fund our business operations. If we issue additional shares of common stock or securities convertible into shares of our common stock, your percentage interest in us could become diluted.
We have the right to issue additional common stock and preferred stock without consent of stockholders. This would have the effect of diluting investors’ ownership and could decrease the value of their investment.
We have additional authorized, but unissued shares of our common stock that may be issued by us for any purpose without the consent or vote of our stockholders that would dilute stockholders’ percentage ownership of our company.
In addition, our certificate of incorporation authorizes the issuance of shares of preferred stock and/or the conversion of existing outstanding preferred stock into common stock, the rights, preferences, designations and limitations of which may be set by the Board of Directors. Our certificate of incorporation has authorized issuance of up 3,000,000,000 shares of common stock, par value $0.01 per share, and up to 25,000,000 shares of preferred stock, par value $0.001 per share, in the discretion of our Board.
The shares of authorized but unissued preferred stock may be issued upon Board of Directors approval; no further stockholder action is required. If issued, the rights, preferences, designations and limitations of such preferred stock would be set by our Board and could operate to the disadvantage of the outstanding common stock. Such terms could include, among others, preferences as to dividends and distributions on liquidation.
The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control.
Our stock price is subject to a number of factors, including:
| ● | Technological innovations or new products and services by us or our competitors; | |
| ● | Government regulation of our products and services; | |
| ● | The establishment of partnerships with other ethical web companies; | |
| ● | Intellectual property disputes; | |
| ● | Additions or departures of key personnel; | |
| ● | Sales of our common stock; | |
| ● | Our ability to integrate operations, technology, products and services; | |
| ● | Our ability to execute our business plan; | |
| ● | Operating results below or exceeding expectations | |
| ● | Whether we achieve profits or not; | |
| ● | Loss or addition of any strategic relationship; | |
| ● | Industry developments; | |
| ● | Economic and other external factors; and | |
| ● | Period-to-period fluctuations in our financial results. |
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Our stock price may fluctuate widely as a result of any of the above. In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.
Because we are subject to the “Penny Stock” rules, the level of trading activity in our stock may be reduced.
The Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be any listed, trading equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. 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 risks in the penny stock market. The broker-dealer must also 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 monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, the penny stock rules generally require that prior to a transaction in a penny stock, the broker-dealer 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. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules which may increase the difficulty Purchasers may experience in attempting to liquidate such securities.
We do not expect to pay dividends in the foreseeable future. Any return on investment may be limited to the value of our common stock.
We do not anticipate paying cash dividends on our common stock in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting it at such time as the board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on your investment will occur only if our stock price appreciates.
General Risks
We are a development stage company with a limited operating history, making it difficult for you to evaluate our business and your investment.
Our operations are subject to all of the risks inherent in the establishment of a new business enterprise, including, but not limited to, the absence of any meaningful operating history, lack of fully-developed or commercialized products, insufficient capital, expected substantial and continual losses for the foreseeable future, limited experience in dealing with regulatory issues, lack of manufacturing and marketing experience, need to rely on third parties for the development and commercialization of our existing and proposed products, a competitive environment characterized by well-established and well-capitalized competitors and reliance on key personnel.
We may not be successful in carrying out our business objectives. The revenue and income potential of our proposed business and operations are unproven as the lack of operating history makes it difficult to evaluate the future prospects of our business. There is nothing at this time on which to base an assumption that our business operations will prove to be successful or that we will ever be able to operate profitably. Accordingly, we have no track record of successful business activities, strategic decision-making by management, fund-raising ability, and other factors that would allow an investor to assess the likelihood that we will be successful in our business. There is a substantial risk that we will not be successful in fully implementing our business plan, or if initially successful, in thereafter generating material operating revenues or in achieving profitable operations.
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We are an “emerging growth company” and any decision on our part to comply with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make shares of our common stock less attractive to investors.
We are an “emergency growth company,” as defined in Section 2(a) of the Securities Act. For as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to have our independent registered public accounting firm audit our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Investors could find our shares less attractive if we choose to rely on these exemptions. If some investors find our shares less attractive as a result of any choice to reduce future disclosure, there may be a less active trading market for our shares and our share price may be more volatile.
For as long as we are an “emerging growth company,” our independent registered public accounting firm will not be required to attest to the effectiveness of our internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act. An independent assessment of the effectiveness of our internal controls could detect problems that our management’s assessment might not. Undetected material weaknesses in our internal controls could lead to financial statement restatements and require us to incur the expense of remediation.
If we identify material weaknesses in our internal control over financial reporting, or if we are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting when and if required, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our securities could be negatively affected, and the we could become subject to investigations by the stock exchange on which our securities are listed, if any, the SEC, or other regulatory authorities, which could require additional financial and management resources.
Additionally, we are a “smaller reporting company” as defined in Item 10(f) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of any fiscal year for so long as either: (i) the market value of our shares com common stock held by non-affiliates does not equal or exceed $250 million as of the prior June 30th, or (ii) our annual revenues did not equal or exceed $100 million during such completed fiscal year. To the extent we take advantage of such reduced disclosure obligations, it may also make the comparison of our financial statements with other public companies difficult or impossible.
The requirements of being a public company may strain our resources and divert management’s attention.
As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (which we refer to as the Sarbanes-Oxley Act), the Dodd-Frank Wall Street Reform and Consumer Protection Act (which we refer to as the Dodd-Frank Act), the rules of the marketplace we area on, and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources, particularly after we are no longer a “smaller reporting company.” The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management’s attention may be diverted from other business concerns, which could adversely affect our business and operating results. We may need to hire more employees in the future or engage outside consultants to comply with these requirements, which will increase our costs and expenses.
In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be adversely affected.
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As a smaller reporting company we are exempt from certain disclosure requirements, which could make our Common Stock less attractive to potential investors.
Rule 12b-2 of the Exchange Act defines a “smaller reporting company” as an issuer that is not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent that is not a smaller reporting company and that:
| ● | had a public float of less than $250 million as of the last business day of our most recently completed second fiscal quarter, computed by multiplying the aggregate worldwide number of shares of our voting and non-voting common equity held by non-affiliates by the price at which the common equity was last sold, or the average of the bid and asked prices of common equity, in the principal market for the common equity; or | |
| ● | in the case of an initial registration statement under the Securities Act, or the Exchange Act, for shares of our common equity, had a public float of less than $250 million as of a date within 30 days of the date of the filing of the registration statement, computed by multiplying the aggregate worldwide number of such shares held by non-affiliates before the registration plus, in the case of a Securities Act registration statement, the number of such shares included in the registration statement by the estimated public offering price of the shares; or | |
| ● | in the case of an issuer whose public float as calculated under paragraph (1) or (2) of this definition was zero, had annual revenues of less than $100 million during the most recently completed fiscal year for which audited financial statements are available. |
As a smaller reporting company, we will not be required and may not include a Compensation Discussion and Analysis section in our proxy statements; we will provide only two years of financial statements; and we need not provide the table of selected financial data. We also will have other “scaled” disclosure requirements that are less comprehensive than issuers that are not smaller reporting companies which could make our Common Stock less attractive to potential investors, which could make it more difficult for our stockholders to sell their shares.
If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our share price and trading volume could decline.
The trading market for our common stock will, to some extent, depend on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade our shares or change their opinion of our shares, our share price would likely decline. If one or more of these analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.
Foreign currency exchange rates may adversely affect our financial results.
Sales and purchases in currencies other than the United States dollar expose us to fluctuations in foreign currencies relative to the United States dollar and may adversely affect our financial results. Increased strength of the United States dollar increases the effective price of our products sold in United States dollars into other countries, which may require us to lower its prices or adversely affect sales to the extent we do not increase local currency prices. Decreased strength of the United States dollar could adversely affect the cost of materials, products and services we purchase from non-United States denominated locations. Sales and expenses of our non-United States businesses are also translated into United States dollars for SEC reporting purposes and the strengthening or weakening of the United States dollar could result in unfavorable translation effects. We also face exchange rate risk from our investments in subsidiaries owned and operated in foreign countries.
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Current economic and political conditions make tax rules in any jurisdiction subject to significant change.
We are subject to income taxes as well as non-income based taxes, in both the U.S. and ultimately various jurisdictions outside the U.S. where we intend to operate. We cannot predict the overall impact that changes or revisions to any such tax laws and regulations, whether in in the United States or in jurisdictions outside the United States, may have on our business. We may be subject to ongoing tax audits in various jurisdictions, and the tax authorities conducting such audits may disagree with certain taxation positions we have taken and assess additional taxes. Although we intend to regularly assess the likely outcomes of these audits in order to determine the appropriateness of our tax obligations, there can be no assurance that we will accurately predict the outcomes of these audits, and the actual outcomes of these audits could have a material adverse effect on our financial condition and business operations.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 2. PROPERTIES.
We own no property.
The Company rents on a month-to-month basis virtual space at 21 West 46th St, New York, NY 10036. The monthly rate is $200. This lease is exempt from ASC 842 lease accounting due to its short term.
ITEM 3. LEGAL PROCEEDINGS.
We may from time to time be involved in various claims and legal proceedings of a nature we believe are normal and incidental to our business. These matters may include product liability, intellectual property, employment, personal injury cause by our employees, and other general claims. We are not presently a party to any legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
The Company’s Common Stock is quoted on the OTCQB under the symbol “BBLR.” The OTCQB is operated by OTC Markets Group, Inc., an electronic inter-dealer quotation medium for equity securities; The market for the Company’s Common Stock is limited, volatile and sporadic and the price of the Company’s Common Stock could be subject to wide fluctuations in response to quarterly variations in operating results, news announcements, trading volume, sales of Common Stock by officers, directors and principal shareholders of the Company, general market trends, changes in the supply and demand for the Company’s shares, and other factors. The following table sets forth the high and low sales prices for each quarter relating to the Company’s Common Stock for the last two fiscal years. These quotations reflect inter-dealer prices without retail mark-up, markdown, or commissions, and may not reflect actual transactions.
| Fiscal 2023 | High | Low | ||||||
| First Quarter(1) | $ | 0.400 | $ | 0.120 | ||||
| Second Quarter (1) | $ | 0.198 | $ | 0.095 | ||||
| Third Quarter(1) | $ | 0.150 | $ | 0.033 | ||||
| Fourth Quarter (1) | $ | 0.113 | $ | 0.030 | ||||
| Fiscal 2022 | High | Low | ||||||
| First Quarter(1) | $ | 1.820 | $ | 0.300 | ||||
| Second Quarter(1) | $ | 0.420 | $ | 0.180 | ||||
| Third Quarter(1) | $ | 0.295 | $ | 0.160 | ||||
| Fourth Quarter (1) | $ | 0.270 | $ | 0.101 | ||||
| (1) | This represents the closing bid information for the stock on the OTCQB. The bid and ask quotations represent prices between dealers and do not include retail markup, markdown or commission. They do not represent actual transactions and have not been adjusted for stock dividends or splits. |
The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (i) that a broker or dealer approve a person’s account for transactions in penny stocks and (ii) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person’s account for transactions in penny stocks, the broker or dealer must (i) obtain financial information and investment experience and objectives of the person; and (ii) make a reasonable determination that the transactions in penny stocks are suitable for that person and that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, which, in highlight form, (i) sets forth the basis on which the broker or dealer made the suitability determination and (ii) that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading, and about commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
Shareholders should be aware that, according to SEC Release No. 34-29093 dated April 17, 1991, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. The occurrence of these patterns or practices could increase the volatility of our share price.
Our management is aware of the abuses that have occurred historically in the penny stock market.
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Holders
As of March 19, 2024, we had 159,690,447 shares of our common stock outstanding, and there were approximately 2,400 stockholders of record of our common stock. There were 903 shares of preferred stock outstanding as of the same date, and two shareholders held the shares.
Common Stock
Our authorized common stock consists of 3,000,000,000 shares of common stock with a par value of $0.01 per share. As of March 19, 2024, 159,690,447 shares of our common stock were issued and outstanding.
Preferred Stock
Our authorized preferred stock consists of 25,000,000 shares of preferred stock with a par value of $0.001 per share. As of March 19, 2024, 903 shares of our preferred stock were issued and outstanding.
Special 2019 Series A Preferred Stock
We have a designated class of preferred stock known as Special 2019 Series A Preferred Stock. The holders of Special 2019 Series A Preferred Stock are entitled to vote 60% of all votes (including, but not limited to, Common Stock, and Preferred Stock (including on an as converted basis)) entitled to vote at each meeting of stockholders of the Corporation (and written actions of stockholders in lieu of meetings) with respect to any and all matters presented to the stockholders of the Corporation for their action or consideration.
On September 6, 2022, we entered into an agreement with Bubblr Limited and Mr. Morris to add £52,088 ($60,000) to the principal of a loan in exchange for Mr. Morris canceling his Special 2019 Series A Preferred Stock, which has super voting rights. As of September 6, 2022, there are no outstanding shares of Special 2019 Series A Preferred Stock.
Series C Convertible Preferred Stock
On March 4, 2022, the Company filed a Certificate of Designation with the Wyoming Secretary of State, which established Two Thousand (2,000) shares of the Company’s Series C Convertible Preferred Stock, having such designations, rights and preferences as set forth therein.
Below is a summary description of the material rights, designations and preferences of the Series C Convertible Preferred Stock (all capitalized terms not otherwise defined herein shall have that definition assigned to it as per the Certificate of Designation).
The Company has the right to redeem the Series C Convertible Preferred Stock, in accordance with the following schedule:
| ● | If all of the Series C Convertible Preferred Stock are redeemed within ninety (90) calendar days from the issuance date thereof, the Company shall have the right to redeem the Series C Convertible Preferred Stock upon three (3) business days’ of written notice at a price equal to one hundred and fifteen percent (115%) of the Stated Value together with any accrued but unpaid dividends. |
| ● | If all of the Series C Convertible Preferred Stock are redeemed after ninety (90) calendar days from the issuance date thereof, the Company shall have the right to redeem the Series C Convertible Preferred Stock upon three (3) business days of written notice at a price equal to one hundred and twenty percent (120%) of the Stated Value together with any accrued but unpaid dividends; and |
The Stated Value of the Series C Convertible Preferred Stock is $1,200 per share.
The Company shall pay a dividend of eight percent (8%) per annum on the Series C Convertible Preferred Stock. Dividends shall be paid quarterly, and at the Company’s discretion, in cash or Series C Convertible Preferred Stock. Dividend shall be deemed to accrue from the date of issuance of the Series C Convertible Preferred Stock whether or not earned or declared and whether or not there are profits, surplus or other funds of the Company legally available for the payment of dividends.
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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).
Each share of the Series C Convertible Preferred Stock is convertible, at any time and from time to time from and after the issuance at the option of the Holder thereof, into that number of shares of Common Stock (subject to Beneficial Ownership Limitations) determined by dividing the Stated Value of such share by the Conversion Price (as set forth in the Certificate of Designation).
There are also Purchase Rights and Most Favored Nation Provisions.
As of March 19, 2024, there were 903 outstanding shares of Series C Convertible Preferred Stock outstanding.
Options and Warrants
On March 4, 2022, we issued warrants to purchase 941,599 shares of common stock at an exercise price of $0.3404 per share.
On March 9, 2022, we issued warrants to purchase 472,923 shares of common stock at an exercise price of $0.3404 per share.
On April 25, 2022, we issued warrants to purchase 562,149 shares of common stock at an exercise price of $0.3505 per share.
On May 25, 2022, we issued warrants to purchase 281,074 shares of common stock at an exercise price of $0.2170 per share.
On June 25, 2022, we issued warrants to purchase 281,074 shares of common stock at an exercise price of $0.2236 per share.
A summary of activity during the year ended December 31, 2023, is as follows:
| Warrants Outstanding | Weighted Average | |||||||||||
| Number of | Weighted Average | Remaining life | ||||||||||
| Warrants | Exercise Price | (years) | ||||||||||
| Outstanding, December 31, 2021 | - | $ | - | - | ||||||||
| Granted | 2,358,101 | 0.32 | 4.27 | |||||||||
| Exercised | - | - | - | |||||||||
| Forfeited/canceled | - | - | - | |||||||||
| Outstanding, December 31, 2022 | 2,358,101 | $ | 0.32 | 4.27 | ||||||||
| Granted | - | - | - | |||||||||
| Exercised | - | - | - | |||||||||
| Forfeited/canceled | - | - | - | |||||||||
| Outstanding, December 31, 2023 | 2,358,101 | 0.32 | 3.27 | |||||||||
| Exercisable, December 31, 2023 | 2,538,101 | $ | 0.32 | 3.27 | ||||||||
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The following table summarizes information relating to outstanding and exercisable warrants as of December 31, 2023:
| Warrants Outstanding | Warrants Exercisable | |||||||||||||||||
| Number of | Weighted Average Remaining Contractual life | Weighted Average | Number of | Weighted Average | ||||||||||||||
| Warrants | (in years) | Exercise Price | Shares | Exercise Price | ||||||||||||||
| 941,599 | 3.18 | 0.34 | 941,599 | 0.34 | ||||||||||||||
| 472,205 | 3.19 | 0.34 | 472,205 | 0.34 | ||||||||||||||
| 562,149 | 3.32 | 0.35 | 562,149 | 0.35 | ||||||||||||||
| 281,074 | 3.40 | 0.22 | 281,074 | 0.22 | ||||||||||||||
| 281,074 | 3.48 | 0.22 | 281,074 | 0.22 | ||||||||||||||
| 2,538,101 | 3.27 | 0.32 | 5,538,101 | 0.32 | ||||||||||||||
As of December 31, 2023, the intrinsic value of the warrants is $0, as the price of the Company’s stock was below the warrant exercise price.
Debt Securities
In January 2021 the Company commenced an offering for a convertible promissory note. The offering closed June 30, 2021. Funds raised during the six months ended June 30, 2021 was $2,112,150, less an original issuance discount of $104,572. The notes matured after eighteen (18) months from issue or on the following events:
Voluntary Conversion. Investor may, at his/her/its sole option, at any time after nine (9) months, convert all or any portion of the accrued interest and unpaid principal balance of this Note into fully paid and non- assessable shares of common stock of the Company at the conversion price of $1.15 per share.
Mandatory Conversion. Upon sixty (60) days from the date the Company files a registration statement with the Securities and Exchange Commission (the “SEC”), all of the accrued interest and unpaid principal balance of this Note shall automatically convert into fully paid and non- assessable shares of common stock of the Company at the conversion price of $1.15 per share.
Interest at the rate equal to 2% per annum, computed on the basis of the actual number of days elapsed and a year of 365 days will be due on all outstanding notes.
Interest accrual and debt discount amortization commenced July 1, 2021 upon the closing of the convertible promissory note offering.
In November 2021 the Company commenced an offering for a convertible promissory note. The offering closed November 30, 2021. Funds raised as of November 30, 2021 was $175,630. The notes matured after eighteen (18) months from issue or on the following events:
Voluntary Conversion. Investor may, at his/her/its sole option, at any time after nine (9) months, convert all or any portion of the accrued interest and unpaid principal balance of this Note into fully paid and non- assessable shares of common stock of the Company at the conversion price of $1.15 per share.
Mandatory Conversion. Upon sixty (60) days from the date the Company files a Form 10 registration statement with the Securities and Exchange Commission (the “SEC”), all of the accrued interest and unpaid principal balance of this Note shall automatically convert into fully paid and non- assessable shares of common stock of the Company at the conversion price of $1.15 per share.
Interest at the rate equal to 2% per annum, computed on the basis of the actual number of days elapsed and a year of 365 days will be due on all outstanding notes.
Interest accrual commenced December 1, 2021 upon the closing of the convertible promissory note offering.
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On September 1, 2022, the note holders of the convertible promissory notes issued June 30, 2021 and November 30, 2021 passed, by a majority an amendment to Section 6 of the notes. After the amendment, Section 6 of each of the notes read as follows:
Voluntary Conversion. Investor may, at his/her/its sole option, at any time after nine (9) months, convert all or any portion of the accrued interest and unpaid principal balance of this Note into fully paid and non- assessable shares of common stock, par value $0.01 per share, of the Company at the conversion price of $1.15 per share (the “Conversion Price”). A notice of Conversion is included as Exhibit “A.” If the Company shall at any time or from time to time after issuance of this Note, effect a stock split of the outstanding common stock, the applicable Conversion Price in effect immediately prior to the stock split shall be proportionately decreased. If the Company shall at any time or from time to time after the issuance of this Note, combine the outstanding shares of common stock, the applicable Conversion Price in effect immediately prior to the combination shall be proportionately increased. Any adjustments under this Section 6 shall be effective at the close of business on the date the stock split or combination occurs.
On December 15, 2022, the note holders of the convertible promissory notes issued June 30, 2021 and November 30, 2021 passed, by a majority another amendment to Section 6 of the notes. After the amendment, Section 6 of each of the notes now read as follows:
Voluntary Conversion. Investor may, at his/her/its sole option, at any time after nine (9) months, convert all or any portion of the accrued interest and unpaid principal balance of this Note into fully paid and non-assessable shares of common stock, par value $0.01 per share, of the Company at the conversion price of $0.50 per share (the “Conversion Price”). A notice of Conversion is included as Exhibit “A.” If the Company shall at any time or from time to time after issuance of this Note, effect a stock split of the outstanding common stock, the applicable Conversion Price in effect immediately prior to the stock split shall be proportionately decreased. If the Company shall at any time or from time to time after the issuance of this Note, combine the outstanding shares of common stock, the applicable Conversion Price in effect immediately prior to the combination shall be proportionately increased. Any adjustments under this Section 6 shall be effective at the close of business on the date the stock split or combination occurs.”
On December 15, 2022, the note holders of the convertible promissory note issued June 30, 2021 and November 30, 2021 issued to the Company their request to convert the promissory notes held, plus any accrued interest to common shares. As a result, the Company issued 4,076, 096 common shares for total note and interest conversion of $2,353,048.
Dividends
The Company has not declared any cash dividends on Common Stock since inception and does not anticipate paying any cash dividends in the foreseeable future. The payment of cash dividends is within the discretion of the Board of Directors and will depend on the Company’s earnings, capital requirements, financial condition, and other relevant factors.
Notwithstanding the foregoing, so long as any Series C Convertible Preferred Stock shall remain outstanding, the Company shall not pay or declare any dividend unless each holder of Series C Convertible Preferred Stock shall be entitled to receive, dividends on shares of Preferred Stock equal to (on an as-if-converted-to- Common-Stock basis) and in the same form as dividends actually paid on shares of the Common Stock when, as and if such dividends are paid on shares of the Common Stock.
The Company is required to pay a dividend of eight percent (8%) per annum on the Series C Convertible Preferred Stock. Dividends shall be paid quarterly, and at the Company’s discretion, in cash or Series C Convertible Preferred Stock. Dividend shall be deemed to accrue from the date of issuance of the Series C Convertible Preferred Stock whether or not earned or declared and whether or not there are profits, surplus or other funds of the Company legally available for the payment of dividends.
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Equity Compensation Plans
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 28,400,000 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 intended to encourage participants to acquire and maintain ownership interests in our company and to attract and retain the services of talented individuals upon whose judgment and special efforts the successful conduct of our business is mainly dependent.
If the participant is terminated, the participant will forfeit non-vested Restricted Stock Units awarded to date.
During the year ended December 31, 2022, the Company issued pursuant to the 2022 Equity Incentive Plan, a total of 8,400,000 shares of common stock to two Company executives as restricted stock units pursuant to their employment agreements. On January 31, 2023, the executives forfeited the award of 8,400,000 shares of common stock upon termination.
The shares were valued at $2,259,600, based on the market price of the common stock on the respective dates of the agreements, which was $0.269 per share and amortized over their two-year vesting period on a straight-line basis. During the year ended December 31, 2022, the Company recorded stock-based compensation of $659,052 and had unamortized deferred stock compensation of $1,600,548 as of December 31, 2022.
During the year ended December 31, 2023, the Company granted options for purchasing our Common stock to certain employees and non-employees as consideration for services rendered. The terms of the stock option grants are determined by our Board of Directors consistent with our 2022 Equity Incentive Plan, which the Board adopted on May 22, 2022. Our stock option grant general policy is options vest 40% on the Grant Date, which is 90 days after commencement of service, and the remaining vest monthly over two years and has a maximum term of ten years. Two executives with long-term service over two years and nine months were 100% vested on the Grant Date.
Recent Sales of Unregistered Securities
In the two years preceding the filing of this annual report, we have issued and sold the following securities that were not registered under the Securities Act of 1933, as amended:
On February 2, 2022, we issued 103,000 shares of common stock to White Lion Capital LLC for an equity incentive.
On February 23, 2022, we issued 147,960 shares of common stock for Services.
On March 4, 2022, we issued 587,039 shares of common stock for an Equity incentive to GHS Investments, LLC.
On March 17, 2022, we issued 19,250 shares of common stock for investor relations services, as per the contract signed on July 1, 2021.
On March 22, 2022, we issued 103,000 shares of common stock in connection with a Termination and Release Agreement that terminated the Common Stock Purchase Agreement and Registration Rights Agreement with White Lion Capital LLC.
In March 2022, we issued 503 Series C Convertible Preferred Stock shares.
On April 21, 2022, we issued 200 Series C Convertible Preferred Stock shares.
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On May 1, 2022, we issued 21,807 shares of common stock for investor relations services, as per the contract signed on March 25, 2021.
On May 25, 2022, we issued 100 Series C Convertible Preferred Stock shares.
On June 24, 2022, we issued 26,022 shares of common stock for Investor Relation services, as per the contract signed on March 25, 2021.
On June 24, 2022, we issued 7,597,244 shares of common stock in connection with Consultancy as per the contract signed on June 15, 2019.
On June 24, 2022, we issued 100 Series C Convertible Preferred Stock shares.
On July 29, 2022, we issued 29,045 shares of common stock for Investor Relation services, as per the contract signed on March 25, 2021
On August 23, 2022, we issued 33,333 shares of common stock for Investor Relation services, as per the contract signed on March 25, 2021
On September 2, 2022, we issued 345,220 shares of common stock as compensation 345,220 shares as compensation for a loan waiver under the Series C Convertible Preferred Stock share purchase agreement.
On September 2, 2022, we issued 34,146 shares of common stock for Investor Relation services, as per the contract signed on March 25, 2021
On October 20, 2022, we issued 36,939 shares of common stock for Investor Relation services, as per the contract signed on March 25, 2021
On November 28, 2022, we issued 175,000 shares of common stock for Investor Relation services, as per the contract signed on March 25, 2021
On December 15, 2022, we issued 4,706,096 shares of common stock as per the voluntary conversion of promissory notes issued on June 30, 2021, and November 5, 2021
On December 21, 2022, we issued 166,799 shares of common stock as payment of dividend of Series C Convertible Preferred Stock, declared September 30, 2022
On December 21, 2022, we issued 41,322 shares of common stock for Investor Relation services, as per the contract signed on March 25, 2022
On January 23, 2023, we issued 58,091 shares of common stock for Investor Relation services, as per the contract signed on March 25, 2022
On February 24, 2023, 46,574 shares of common stock valued at $7,000 were issued to a consultant for investor relation services, as per the contract signed on March 25, 2022
On February 24, 2023, we issued 1,000,000 shares of common stock for Investor Relation services, as per the contract signed February 14, 2023
On February 24, 2023, we issued 312,500 shares of common stock for Investor Relation services, as per the contract signed on February 23, 2023
On June 16, 2023, we issued 500,000 shares of common stock for Legal services, as per the contract signed on June 14, 2023.
On June 16, 2023, we issued 127,483 shares of common stock for Series C Convertible Preferred Stock Dividends.
On August 2, 2023, we issued 312,500 shares of common stock for Investor Relation services, as per the contract signed on February 23, 2023
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On December 27, 2023, we issued 2,489,186 shares of common stock for a Loan Resolution Agreement, as signed December 27, 2023
The offers, sales, and issuances of the securities described above were deemed to be exempt from registration under the Securities Act in reliance on Regulation S, Section 4.(a)(2) of the Securities Act or Regulation D promulgated thereunder as transactions by an issuer not involving a public offering. The recipients of securities in each of these transactions acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the securities issued in these transactions. Each recipient of securities in these transactions was an accredited or sophisticated person and had adequate access, through employment, business, or other relationships, to information about us.
ITEM 6. [RESERVED].
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our results of operations and financial condition should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in this Annual Report on Form 10-K. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. See “Cautionary Note Regarding Forward-Looking Statements” at the beginning of this Annual Report on Form 10-K.
Results of Operation for Years Ended December 31, 2023, and 2022
Revenues
| Year Ended December 31, | ||||||||||||||||
| 2023 | 2022 | Change | ||||||||||||||
| Sales | $ | 2,620 | $ | - | $ | 2,620 | 100 | % | ||||||||
| Total revenue | $ | 2,620 | $ | - | $ | 2,620 | 100 | % | ||||||||
In 2023, revenues were $2,620. We did not achieve revenues from operations in 2022. We will not achieve higher revenues unless we can develop, market, support, and deliver our products and service offerings. There can be no assurances that we can achieve significant revenues despite our efforts.
Operating Expenses
Our operations for the year ended December 31, 2023, and 2022 are outlined below:
Year Ended December 31, | ||||||||||||||||
| 2023 | 2022 | Change | % | |||||||||||||
| General and administrative | $ | 1,859,969 | $ | 736,775 | $ | 1,123,194 | 152 | % | ||||||||
| Professional Fees | 288,176 | 2,879,759 | (2,591,653 | ) | (90 | %) | ||||||||||
| Sales and marketing | 514,911 | 198,455 | 316,456 | 159 | % | |||||||||||
| Amortization and depreciation | 197,322 | 387,302 | (189,980 | ) | (49 | %) | ||||||||||
| Research and development | 61,106 | 94,645 | (33,539 | ) | (35 | %) | ||||||||||
| Total operating expense | $ | 2,921,414 | $ | 4,296,936 | $ | (1,375,522 | ) | (32 | %) | |||||||
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General and administrative
General and administrative expenses consist primarily of compensation and costs associated with non-specific costs of running the business. These include, but are not limited to, office costs, computer software, and telecoms
The increase in general and administrative costs was primarily due to accrued compensation, stock options, and director fees for new executives, offset by the forfeiture of restricted stock units.
Professional fees
Professional fees consist of costs concerning legal, accounting, and consulting services.
The decrease in professional fees was primarily due to issuing shares of common stock valued at $1,993,081 in 2022 for consulting services.
Sales and marketing
Sales and marketing costs are costs incurred for investor relations, advertising, marketing, press releases, and public relations.
The cost increase is primarily due to new investor relations services contracts paid for by issuing shares of common stock.
Amortization and depreciation
Amortization and depreciation costs are primarily from the amortization of patents and intellectual property. Most of the patents and intellectual property are held in the UK subsidiary, Bubblr Ltd.
The reduction in costs is primarily due to lower amortization of Intellectual Property as IP added in 2016 of $1.68m (£1.3m) is fully amortized.
Research and Development
The costs incurred concerning the research and development of the Company’s platform and products include costs associated with development staff and specialist software for product development and deployments.
Other Income (Expenses)
Our other income for the year ended December 31, 2023, and 2022 are outlined below:
| December 31, | ||||||||||||||||
| 2023 | 2022 | Change | ||||||||||||||
| Other income | $ | 71,975 | $ | 142,212 | $ | (70,237 | ) | (49 | %) | |||||||
| Interest income | 104 | 1,553 | (1,449 | ) | (93 | %) | ||||||||||
| Interest expense | (13,476 | ) | (575,777 | ) | 562,301 | ) | (98 | %) | ||||||||
| Gain on change in fair value of warrant derivative liability | 159,363 | 494,753 | (335,390 | ) | (68 | %) | ||||||||||
| Foreign currency transaction (gain) loss | 50,178 | (191,454 | ) | 241,632 | (126 | %) | ||||||||||
| Total other income (expense) | $ | 268,144 | $ | (128,713 | ) | $ | 396,857 | (308 | %) | |||||||
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Other Income
Other income consists primarily of R&D tax credits of $78,497 and $142,212 in 2023 and 2022 respectively.
Interest Income
The Company earns interest income from its cash reserves, which decreased during the year.
Interest Expense
Interest expense consists primarily of interest the Company has to pay on its borrowings, vehicle financing, and convertible notes.
The decrease in interest expense during the year ended December 31, 2023, as compared to 2022, is due to the Company converting its convertible notes issued in 2021. On December 15, 2022, noteholders approved a second amendment to the convertible notes for the conversion price to be reduced to $0.50 from $1.15 and immediately elected to voluntarily request that their notes be converted to common shares at a conversion rate of $0.50. As a result, the company issued 4,706,096 shares of common shares.
Gain on change in fair value of warrant derivative liability
The Company analyzed the warrants issued concerning the Series C Convertible Preferred Stock for derivative accounting consideration under ASC 815, Derivatives and Hedging. ASC 815 requires us to assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense items.
For the year ended December 31, 2023, the estimated fair values of the warrant liabilities measured on a recurring basis are as follows:
| Year Ended | ||||
| December 31, 2023 | ||||
| Expected term | 1.59 - 2.50 years | |||
| Expected average volatility | 177 - 220% | |||
| Expected dividend yield | 8.33% | |||
| Risk-free interest rate | 1.50 – 5.46% | |||
The following table summarizes the changes in the warrant liabilities during the period ended December 31, 2023:
| Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | ||||
| Warrant liability as of December 31, 2021 | $ | - | ||
| Addition of new warrant liabilities | 721,275 | |||
| Day-one loss | (28,043 | ) | ||
| Change in fair value of warrant liability | (494,753 | ) | ||
| Warrant liability as of December 31, 2022 | 198,479 | |||
| Addition of new warrant liabilities | - | |||
| Change in fair value of warrant liability | (159,363 | ) | ||
| Warrant liability as of December 31, 2023 | $ | 39,116 | ||
The market price of the common stock has decreased from the initial award of warrants in the period ending March 31, 2022. If the warrants were exercised on December 31, 2023, at their respective exercise price determined at issue, the Company would realize a gain due to the difference between the cash received on conversion and the issue cost to the Company of $0.033 per share, the fair value market price of the common stock at December 31, 2023.
Net Loss
We finished the year ended December 31, 2023, with a net loss of $2,650,650 as compared to a loss of $4,425,649 during the year ended December 31, 2022.
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Liquidity and Capital Resources
Working Capital
The following table provides selected financial data about our company as of December 31, 2023, and 2022.
| December 31, | ||||||||||||||||
| 2023 | 2022 | Change | ||||||||||||||
| Current Assets | $ | 95,171 | $ | 42,417 | $ | 52,754 | 124 | % | ||||||||
| Current Liabilities | 1,487,471 | $ | 595,856 | $ | 891,615 | 150 | % | |||||||||
| Working Capital Deficit | $ | (1,392,300 | ) | $ | (553,439 | ) | $ | (838,861 | ) | 152 | % | |||||
Current Assets
Current assets consist of cash and other receivables.
The decrease in current assets was primarily due to a decrease in cash.
Current Liabilities
Current Liabilities consist of accounts payable, accrued liabilities, and loans.
The increase in current liabilities was primarily due to increases of $141,817 in accounts payable, $90,000 in accrued director fees, $519,242 in accrued wages and salaries, $166,986 for a settlement agreement with former executives, offset by a reduction of $237,361 in additional related-party loans.
Working Capital Deficit
The working capital deficit increased by $838,861.
Liquidity
During the last two years, and through 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. There is no assurance that we can secure such funding on acceptable terms.
As minimal 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 secure financing or obtain the capital we require by other means. Unless we can attract additional investment, our operating 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 expect these rules and regulations to increase our legal and financial compliance costs and to make some activities of ours more time-consuming and costly. To meet the needs to comply with the requirements of the Exchange Act, we will need an investment of capital.
If we are unable to obtain sufficient additional capital, we may have to cease filing our SEC reports and cease operations completely. If we obtain additional funds by selling any of our equity securities or by issuing common stock to pay current or future obligations, the percentage ownership of our stockholders will be reduced, and stockholders may experience additional dilution, or the equity securities may have rights preferences or privileges senior to the common stock.
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Cash Flow
| Year ended 31 December, | ||||||||||||
| 2023 | 2022 | Change | ||||||||||
| Cash provided by/(used) in Operating Activities | $ | 565,886 | $ | (1,169,701 | ) | $ | 1,735,587 | |||||
| Cash used in Investing Activities | $ | (248,371 | ) | $ | (237,666 | ) | $ | (10,705 | ) | |||
| Cash (used) in/provided by Financing Activities | $ | (302,187 | ) | $ | 1,196,849 | $ | (1,499,036 | ) | ||||
| Cash on Hand | $ | 7,668 | $ | 32,533 | $ | (24,865 | ) | |||||
Operating Activities
The decrease in net cash used in operating activities was primarily due to increased accrued liabilities.
Investing Activities
Net cash used in investing activities was on Patents and Trademarks.
Financing Activities
The reduction in net cash provided by financing activities was primarily due to $789,000 received in 2022 from Series C Preferred Stock issuance.
Cash on Hand
The reduction of cash on hand was primarily due to a reduction in fundraising in 2023.
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 prospectus, 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 |
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 rates of exchange during the period. Equity accounts are translated at historical rates. The resulting translation adjustments are recorded directly into accumulated other comprehensive income.
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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 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 that is believed more likely than not to be realized.
Recent Accounting Pronouncements
For discussion of recently issued and adopted accounting pronouncements, please see Note 2 to the audited consolidated financial statements as of and for the years ended December 31, 2023, and 2022, included herein.
Off-Balance Sheet Arrangements
As of December 31, 2023, there were no off-balance sheet arrangements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not required for smaller reporting companies.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See Index to Financial Statements and Financial Statement Schedules appearing on pages F-1 to F-29 of this Annual Report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
On March 17, 2023, we dismissed Pinnacle Accountancy Group of Utah, a DBA of the PCAOB-registered firm Heaton & Company, PLLC (the “Former Accountant”) as our independent registered public accounting firm and we engaged BF Borgers CPA PC (the “New Accountant”) as our independent registered public accounting firm. The engagement of the New Accountant was approved by our Board of Directors.
We filed a Form 8-K on March 17, 2023 with the Securities and Exchange Commission regarding the change in our independent accounting firm.
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ITEM 9A. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as that term is 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 time 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 interim CEO, who acts as our principal executive officer, and our CFO, who acts 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 December 31, 2023. 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.
Management’s Report on Internal Controls over Financial Reporting
Our management, including our CEO, who acts as our principal executive officer, and our CFO, who acts as our principal financial officer, are responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our internal control over financial reporting as of December 31, 2023. Our management’s evaluation of our internal control over financial reporting was based on the Internal Control-Integrated Framework (2013) framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that as of December 31, 2023, our internal control over financial reporting was ineffective.
Our financial reporting was ineffective due to a lack of adequate segregation of duties, internal controls, and accounting functions, resulting from our limited resources.
A material weakness is a deficiency or a combination of control 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.
Limitations on Effectiveness of Controls
Our CEO, who acts as our principal executive officer, and our CFO, who acts as our principal financial officer, do not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud. No matter how well conceived and operated, a control system can provide only reasonable, not absolute, assurance that the objectives of the control system are met. 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 our company have been detected. These inherent limitations include the reality that decision-making judgments can be faulty and that breakdowns can occur because of a simple error or mistake. Additional controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to SEC rules that permit us to provide only management’s report on internal control over financial reporting in this annual report on Form 10-K.
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Changes in Internal Control over Financial Reporting
There was no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934) during the year ended December 31, 2023, that has materially affected, or is reasonably likely to affect materially, the Company’s internal control over financial reporting.
ITEM 9B. OTHER INFORMATION.
None.
ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The following information sets forth our current directors and executive officers’ names, ages, and positions.
| Name | Age | Positions and Offices Held | ||
| Stephen Morris | 68 | Chief Technical Officer, Chairman of the Board and Director | ||
| Timothy Burks | 56 | Chief Executive Officer and Director | ||
| David Chetwood | 62 | Chief Financial Officer and Director | ||
| Paul Morrissey | 71 | Director |
Set forth below is a brief description of the background and business experience of each of our current executive officers and directors.
Stephen Morris
Prior to founding Bubblr in 2015 and working on it full-time, Mr. Morris also worked as an agile coach and scrum master consultant at various companies. From July 2017 to June 2018 – he worked at the Royal London Group in Edinburgh, Scotland. From 2016 to February 2017, he worked for Accenture in Newcastle Upon Tyne, England. From January 2016 to October 2016, he worked at Sky Broadcasting in Livingstone, Scotland.
Aside from that provided above, Mr. Morris does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.
On May 30, 2022, Mr. Stephen Morris resigned as a member of the board of directors.
On January 25, 2023, Mr. Stephen Morris was appointed to the Board of Directors and Chief Platform Officer.
On February 2, 2023, Mr. Stephen Morris was appointed as interim Chief Executive Officer.
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On February 12, 2023, Mr. Stephen Morris was appointed as Chairman of our Board of Directors.
On April 1, 2023, Mr. Stephen Morris was appointed as Chief Technical Officer.
Mr. Morris is qualified to serve on our Board of Directors because of his experience and expertise as the Bubblr concept and Ethos creator and the founder of Bubblr Ltd in 2014, a wholly owned subsidiary of Bubblr Inc.
Timothy Burks
Prior to joining Bubblr on April 1, 2023, Tim was CEO of Santech Solutions, a boutique consulting company focused on helping customers create new products and services in the IT, telecommunications, and data center fields. Prior to Santech, Tim was COO of Telecom Asset Management, a global Telecom and Data Center Infrastructure Advisory firm. Prior to joining TAM, Tim was a Partner with Accenture, where he led both organic and acquisition-based new business launches. He also served as the COO for Accenture Marketing Sciences and Managing Director of Accenture Business Resilience Services. Prior to joining Accenture, Tim co-founded and served as Senior Vice President and Chief Operating Officer for London-based CityReach International, Ltd, a Pan-European provider of complex data center facilities management and managed IT hosting services. Mr. Burks held international leadership positions with internet pioneers PSINet and ANS Communications, the networking division of America-On-Line. his early career was spent in the U.S. Army as an Electronic Warfare and Communications Systems Specialist in the U.S., Europe, and Asia.
Aside from that provided above, Mr. Burks does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.
David Chetwood
Mr. Chetwood joined Bubblr on February 10, 2023. Mr. Chetwood retired in 2016. From 2004 to 2016 he was CFO and Secretary for Westmont Industries Group in California. From 1999 to 2004, he worked at Compass Aerospace and his final position was EVP Finance. From 1977 to 1999, he worked at several divisions of GKN Aerospace and his final role was CFO of GKN Aerospace North America.
Aside from that provided above, Mr. Chetwood does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.
Professor Paul Morrissey
Professor Morrissey joined Bubblr on April 6, 2023. He is a Globally renowned figure in the world of Telecommunications and Media. He is a serial technology entrepreneur and a visiting Professor at some of the leading Universities in Europe, including Liverpool John Moores University, where he is the ‘Entrepreneur in Residence.’ The Professor is also the Global Ambassador for AI, Big Data Analytics, and Customer Experience at TM Forum, the Global Standards body for Telecommunications. He is also an active advisory board member at the industry-agnostic entity AI Forum and has recently been appointed to the inaugural Board of the World Broad-Band Association (WBBA). In 2022, he was appointed to the Advisory Board of the All-Party Parliamentary Group (APPG) at the UK House of Lords, overseeing policy directives for the safe use of Web3.0 and the Metaverse. He also sits on the advisory board of EXFO, the Canadian Fibre Monitoring company.
Aside from that provided above, Professor Morrissey does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.
Term of Office
Our directors are appointed for a one-year term to hold office until our shareholders’ next annual general meeting or until removed from the office per our bylaws. Our board of directors appoints our officers and hold office until removed by the board, subject to their respective employment agreements.
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Significant Employees
We have no significant employees other than our officers and directors.
Family Relationships
No family relationships exist between or among the directors, executive officers, or persons nominated or chosen by us to become directors or executive officers.
Involvement in Certain Legal Proceedings
During the past 10 years, none of our current directors, nominees for directors or current executive officers has been involved in any legal proceeding identified in Item 401(f) of Regulation S-K, including:
| 1. | Any petition under the Federal bankruptcy laws or any state insolvency law filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he or she was a general partner at or within two years before the time of such filing, or any corporation or business association of which he or she was an executive officer at or within two years before the time of such filing; | |
| 2. | Any conviction in a criminal proceeding or being named a subject of 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 him or her from, or otherwise limiting, the following activities: |
| a. | Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; | |
| b. | Engaging in any type of business practice; or | |
| c. | Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws; |
| 4. | Being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any type of business regulated by the Commodity Futures Trading Commission, securities, investment, insurance or banking activities, or to be associated with persons engaged in any such activity; | |
| 5. | Being found by a court of competent jurisdiction in a civil action or by the SEC to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated; | |
| 6. | Being found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated; |
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| 7. | Being subject to, 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: |
| a. | Any Federal or State securities or commodities law or regulation; or | |
| b. | 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 | |
| c. | Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity or |
| 8. | Being subject to, 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 Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Committees of the Board
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. Historically, our directors believed that it is not necessary to have such committees because the functions of such committees can be adequately performed by the board of directors.
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics that applies to, among other persons, our principal executive officers, principal financial officer, principal accounting officer or controller, and persons performing similar functions. The Code of Business Conduct is available on our website at www.bubblr.com. Our Nominating and Governance Committee is responsible for overseeing the Code of Conduct, and our board of directors must approve any waivers of the Code of Conduct. In addition, we intend to post on our website all disclosures that are required by law concerning any amendments to, or waivers from, any provision of the Code of Conduct.
ITEM 11. EXECUTIVE COMPENSATION.
The table below summarizes all compensation awarded to, earned by, or paid to our former or current executive officers for the fiscal years ended December 31, 2023, and 2022.
| Name and principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | All Other Compensation ($) (1)(2) | Total ($) | |||||||||||||||||||||
| Rik Willard(1) | 2022 | 120,750 | - | 423,676 | - | - | 544,426 | |||||||||||||||||||||
| CEO and Director | 2023 | - | - | - | - | - | - | |||||||||||||||||||||
| Steven Saunders(2) | 2022 | 257,567 | - | 235,376 | - | - | 492,943 | |||||||||||||||||||||
| CCO and Director | 2023 | - | - | - | - | - | - | |||||||||||||||||||||
| Stephen Morris(3) | 2022 | 122,643 | - | - | - | - | 122,643 | |||||||||||||||||||||
| CTO and Director | 2023 | - | - | - | 628,320 | - | 628,320 | |||||||||||||||||||||
| Neeta Shah(4) | 2022 | 15,000 | - | - | - | - | 15,000 | |||||||||||||||||||||
| CFO | 2023 | - | - | - | - | - | - | |||||||||||||||||||||
| Timothy Burks | 2022 | - | - | - | - | - | - | |||||||||||||||||||||
| CEO and Director | 2023 | - | - | - | 649,440 | - | 649,440 | |||||||||||||||||||||
| David Chetwood | 2022 | - | - | - | - | - | - | |||||||||||||||||||||
| CFO and Director | 2023 | - | - | - | 546,000 | - | 546,000 | |||||||||||||||||||||
| (1) | On January 23, 2023, the Company entered into a Separation Agreement with Mr. Willard. | |
| (2) | On January 23, 2023, the Company entered into a Separation Agreement with Mr. Saunders. | |
| (3) | Mr. Morris resigned as a Director on May 30, 2022. This allowed Mr. Morris to concentrate all of his abilities on the creation of the ethical web platform. On January 25, 2023, Mr. Morris was appointed to the Board of Directors. On February 2, 2023, Mr. Morris was appointed interim Chief Executive Officer. On February 10, 2023, Mr. Morris was appointed Chairperson of the Board of Directors. On April 1, 2023, Mr. Morris resigned as Interim Chief Executive Officer. | |
| (4) | On January 29, 2022, the Company dismissed Ms. Nita Shah. |
| 40 |
Management Compensation
On July 1, 2021, the Company entered into an employment agreement with Stephen Morris, our Founder and Chief Technology Officer. Mr. Morris is to receive cash compensation of $144,000 annually. This compensation will be increased to $180,000 annually if $5,000,000 in debt or equity funding has been received.
On January 31, 2023, the Company entered into Separation Agreements with Steven Saunders, our then-Chief Commercial Officer. Mr. Saunders is no longer an officer or director of our Company, and all prior agreements are terminated in their entirety. To satisfy all amounts due, Mr. Saunders and the Company agreed to a settlement total sum of $116,000. On December 31, 2023, the amount due to Mr. Saunders was $79,250.
On January 31, 2023, the Company entered into Separation Agreements with Rik Willard, our then-Chief Executive Officer. Mr. Willard is no longer an officer or director of our Company, and all prior agreements are terminated in their entirety. To satisfy all amounts due, Mr. Willard and the Company agreed to a settlement total sum of $112,418. On December 31, 2023, the amount due to Mr. Willard was $86,811.
On February 10, 2023, the Company entered into an employment agreement with David Chetwood, our Chief Financial Officer. Mr. Chetwood is to receive cash compensation of $180,000 annually. This compensation will be increased to $360,000 annually if $5,000,000 in debt or equity funding has been received. After 90 days service, Mr. Chetwood is entitled to receive 102,540 shares of common stock and will be eligible to participate in our 2022 Incentive Plan.
On April 1, 2023, the Company entered into an employment agreement with Timothy Burks, our Chief Executive Officer. The Company will compensate Mr. Burks $600,000 per annum with payments reduced by 60% to $240,000 per annum until the Company has secured $5,000,000 in debt or equity financing. The Company also agreed to grant Mr. Burks an option to purchase 4,800,000 shares of common stock at $0.1353 per share ($649,440), with 40% vesting after 90 days of service and 60% vesting monthly over the following two years, under the 2022 Incentive Plan.
On April 1, 2023, the Company entered into an Amended Employment Agreement with David Chetwood, our Chief Financial Officer. The Company will compensate Mr. Chetwood $450,000 per annum with payments reduced by 60% to $180,000 per annum until the Company has secured $5,000,000 in debt or equity financing. The Company also agreed to grant Mr. Chetwood an option to purchase 3,360,000 shares of common stock at $0.1625 per share ($546,000), with 40% vesting after 90 days of service and 60% vesting monthly over the following two years, under the 2022 Incentive Plan.
On April 1, 2023, the Company entered into an Amended Employment Agreement with Stephen Morris, our Chief Technical Officer. The Company will compensate Mr. Morris $450,000 per annum with payments reduced by 60% to $180,000 per annum until the Company has secured $5,000,000 in debt or equity financing. The Company also agreed to grant Mr. Morris an option to purchase 3,360,000 shares of common stock at $0.187 per share ($628,320), with 100% vesting, under the 2022 Incentive Plan.
On December 31, 2023, the Company entered into an Amended Employment Agreement with Timothy Burks, Chief Executive Officer. Mr. Burks agreed to reduce his base pay from $600,000 to $240,000 per annum and forfeit $270,000 of deferred compensation.
On December 31, 2023, the Company entered into an Amended Employment Agreement with David Chetwood, Chief Financial Officer. Mr. Chetwood agreed to reduce his base pay from $450,000 to $180,000 per annum and forfeit $236,200 of deferred compensation.
| 41 |
On December 31, 2023, the Company entered into a Second Amended Employment Agreement with Stephen Morris, our Founder, Chief Technology Officer and Chair. Mr. Morris agreed to reduce his base pay from $450,000 to $90,000 per annum and forfeit $270,000 of deferred compensation.
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 28,400,000 shares of common stock may be issued under the 2022 Equity Incentive Plan through the grant of non-qualified options (the “Non-qualified Options”), incentive options (the “Incentive Options” and together with the Non-qualified Options, the “Options”) and restricted stock (the “Restricted Stock”) restricted stock units, stock appreciation rights (“SARs”) and other equity-based awards to directors, officers, consultants, attorneys, advisors and employees. The purpose of the 2022 Equity Incentive Plan is 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 intended to encourage participants to acquire and maintain ownership interests in our company and to attract and retain the services of talented individuals upon whose judgment and special efforts the successful conduct of our business is largely dependent.
During the year ending December 31, 2023, the Company issued under the 2022 Equity Incentive Plan a total of 14,400,000 stock options to Company executives and employees according to their employment agreements.
The shares were valued at $2,246,736, based on the common stock’s market price on the agreements’ respective dates, which ranged from $0.1870 to $0.1353 per share. The options vest at 40% after 90 days of service and 60% monthly over two years.
Compensation of Directors
All Directors shall receive reimbursement for reasonable travel expenses incurred to attend Board and Committee meetings.
Pension, Retirement or Similar Benefit Plans
There are no arrangements or plans in which we provide pension, retirement, or similar benefits to our directors or executive officers. We have no material bonus or profit-sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the board of directors or a committee thereof.
Health Insurance costs were accrued in 2023 for Timothy Burks and David Chetwood.
Indebtedness of Directors, Senior Officers, Executive Officers and Other Management
None of our directors or executive officers or any associate or affiliate of our company during the last two fiscal years is or has been indebted to our company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table sets forth, as March 19, 2024, certain information as to shares of our voting stock owned by (i) each person known by us to beneficially own more than 5% of our outstanding voting stock, (ii) each of our directors, and (iii) all of our executive officers and directors as a group.
Unless otherwise indicated below, to our knowledge, all persons listed below have sole voting and investment power with respect to their shares of voting stock, except to the extent authority is shared by spouses under applicable law. Unless otherwise indicated below, and for security purposes, each entity or person listed below maintains an address of 21 West 46th Street, New York, New York 10036.
| 42 |
The number of shares beneficially owned by each stockholder is determined under rules promulgated by the SEC. The information is not necessarily indicative of beneficial ownership for any other purpose. Under these rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting or investment power and any shares as to which the individual or entity has the right to acquire beneficial ownership within 60 days through the exercise of any stock option, warrant or other right. The inclusion in the following table of those shares, however, does not constitute an admission that the named stockholder is a direct or indirect beneficial owner.
| Common Stock | ||||||||
| Name of Beneficial Owner | Number of Shares Owned (1) | Percent of Class (2) | ||||||
| Stephen Morris | 30,867,159 | 19.33 | % | |||||
| Timothy Burks | 300,000 | 0.19 | % | |||||
| David Chetwood | 4,035,000 | (3) | 2.53 | % | ||||
| All Directors and Executive Officers as a Group (3 persons) | 35,202,159 | 22.05 | % | |||||
| Common Stock | ||||||||
| 5% Holders | Number of Shares Owned (1) | Percent of Class (2) | ||||||
| Stephen Morris | 30,867,159 | 19.33 | % | |||||
| (1) | Unless otherwise indicated, each person or entity named in the table has sole voting power and investment power (or shares that power with that person’s spouse) with respect to all shares of voting stock listed as owned by that person or entity. | |
| (2) | Pursuant to Rules 13d-3 and 13d-5 of the Exchange Act, beneficial ownership includes any shares as to which a shareholder has sole or shared voting power or investment power, and also any shares which the shareholder has the right to acquire within 60 days, including upon exercise of common shares purchase options or warrants. The percent of class is based on 159,690,487 voting shares as of March 19, 2024. | |
| (3) | These shares are held of record by The Chetwood Revocable Living Trust, of which David Chetwood has sole voting and dispositive power and control |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Other than described below or the transactions described under the heading “Executive Compensation,” there have not been, and there is not currently proposed, any transaction or series of similar transactions to which we were or will be a participant in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any director, executive officer, holder of 5% or more of any class of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest.
We have two loans from Stephen Morris, our Founder, totaling $678,549.
The first loan of $374,018 at December 31, 2021 (December 31, 2021: $428,177).
| 43 |
On December 27, 2023, Stephen Morris converted $821,431.87 in principal amount of promissory notes payable and due to him from the Company into 2,489,186 shares of Common Stock at a conversion price of $0.33 per share.
On September 7, 2022, our wholly owned subsidiary, Bubblr Limited, entered into a new loan agreement (the “Loan Agreement”) with Mr. Morris for $552,639 (£434,060) The Loan Agreement is unsecured, carries no interest, is non-convertible and is due upon maturity, which is 3 years after the date of the agreement.
Director Independence
The Board of Directors is currently composed of four members. One of them qualifies as independent in accordance with the published listing requirements of the NASDAQ Global Market. The NASDAQ independence definition includes a series of objective tests, such as that the Director is not, and has not been for at least three years, one of the Company’s employees and that neither the Director, nor any of his family members has engaged in various types of business dealings with us.
Indemnification
Our Articles of Incorporation contain provisions that eliminate the liability of our directors for monetary damages to our Company and shareholders. Our bylaws also require us to indemnify our officers and directors. We may also have contractual indemnification obligations under our agreements with our directors, officers and employees. The foregoing indemnification obligations could result in our company incurring substantial expenditures to cover the cost of settlement or damage awards against directors, officers and employees that we may be unable to recoup. These provisions and resulting costs may also discourage our company from bringing a lawsuit against directors, officers and employees for breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our shareholders against our directors, officers and employees even though such actions, if successful, might otherwise benefit our Company and shareholders.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
On March 17, 2023, our Board of Directors agreed to dismiss the Company’s independent registered public accounting firm, Pinnacle Accountancy Group of Utah, a DBA of the PCAOB-registered firm Heaton & Company, PLLC (the “Former Accountant”), effective as of March 17, 2023. Also on March 17, 2023, the Company engaged the accounting firm of BF Borgers CPA PC (the “New Accountant”) as the Company’s new independent registered public accounting firm. The Board approved the dismissal of the Former Accountant and the engagement of the new Accountant.
The following table sets forth the fees billed to our company for the years ended December 31, 2023, and 2022 for professional services rendered by our independent registered public accounting firms:
| Fees | 2022 | 2023 | ||||||
| Audit Fees | $ | 50,000 | $ | 50,600 | ||||
| Audit-Related Fees | - | - | ||||||
| Tax Fees | - | - | ||||||
| All Other Fees | 3,750 | - | ||||||
| Total | $ | 53,750 | $ | 55,660 | ||||
| 44 |
Audit Fees
Audit fees were for professional services rendered for the audits of our annual financial statements and for review of our quarterly financial statements during the 2023 and 2022 fiscal years. The audit fee for our December 31, 2023 financial statements was $30,000.
Audit-related Fees
This category consists of assurance and related services by the independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees”.
Tax Fees
As our independent registered public accountants did not provide any services to us for tax compliance, tax advice and tax planning during the fiscal years ended December 31, 2023 and 2022, no tax fees were billed or paid during those fiscal years.
All Other Fees
The Former Accountants reviewed all Form S-1’s prior to submission to the Securities and Exchange Commission by the Company during the 2022 fiscal year.
Pre-Approval Policies and Procedures
Our board of directors, which acts as our audit committee, pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by our board of directors before the respective services were rendered.
Our board of directors has considered the nature and amount of fees billed by our independent registered public accounting firm and believe that the provision of services for activities unrelated to the audit is compatible with maintaining their respective independence.
| 45 |
PART IV
ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES.
(a) 1. Financial Statements
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
| 46 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the board of directors of Bubblr, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Bubblr, Inc. as of December 31, 2023 and 2022, the related statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company’s operating losses raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting 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.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/S/
BF
Borgers CPA PC (PCAOB ID
We have served as the Company’s auditor since 2023
March 20, 2024
| F-1 |
FINANCIAL STATEMENTS
BUBBLR INC.
Consolidated Balance Sheets
December 31, 2023 and 2022
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| 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 | ||||||||
| Loan payable, current portion | ||||||||
| Loan payable - related party | ||||||||
| Total current liabilities | ||||||||
| Non-current Liabilities: | ||||||||
| Loan payable, non-current portion | ||||||||
| 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 at December 31, 2023, and 2022 | ||||||||
| Common stock, $ par value, shares authorized; and shares issued and outstanding at December 31, 2023, and 2022 | ||||||||
| 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 consolidated financial statements.
| F-2 |
BUBBLR INC.
Consolidated Statements of Operations and Comprehensive Loss
For the years ended December 31, 2023 and 2022
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| Revenue | $ | $ | ||||||
| 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 income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Gain on change in fair value of warrant derivative liability | ||||||||
| Foreign currency transaction (gain) loss | ( | ) | ||||||
| Total other income (expense) | ( | ) | ||||||
| Net loss before income tax | ( | ) | ( | ) | ||||
| Provision for income tax | ||||||||
| Net loss after income tax | $ | ( | ) | $ | ( | ) | ||
| Other comprehensive income (loss) | ||||||||
| Foreign currency translation (loss) gain | ( | ) | ||||||
| Total 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 consolidated financial statements.
| F-3 |
BUBBLR INC.
Consolidated Statement of Changes in Stockholders’ Equity (Deficit)
For the years ended December 31, 2023 and 2022
2019 Series A Preferred Stock | Series B Preferred Stock | Series C Convertible Preferred Stock | Common Stock | Additional | Accumulated Other Comprehensive | Total Stockholders’ | ||||||||||||||||||||||||||||||||||||||||||||||
Number of Shares | Amount | Number of Shares | Amount | Number of Shares | Amount | Number of Shares | Amount | Paid-in Capital | Accumulated Deficit | Income (Loss) | Equity (Deficit) | |||||||||||||||||||||||||||||||||||||||||
| Balance - December 31, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares for Services - -Executive Board | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares for Services – Consulting | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares for Equity Finance Agreement Incentive | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares for debt conversion | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares for loan waiver | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares for note conversion | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares for Series C Preferred Shares Dividend | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of Series C Preferred Shares | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase and cancellation of Special 2019 Series A Preferred Stock via issuance of related party note payable | ( | ) | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Series C Preferred Shares Dividend | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance -December 31, 2022 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares for investor relations | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares for consultancy | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares for professional services | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common shares Series C Preference Share Dividends | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Loan resolution | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Forfeit restrictive stock units | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Vesting of share options | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Series C Preferred Shares Dividend | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Balance -December 31, 2023 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-4 |
Bubblr Inc.
Consolidated Statements of Cashflows
For the year ended December 31, 2023 and 2022
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments for: | ||||||||
| Net loss to net cash used in operating activities: | ||||||||
| Stock based compensation | ||||||||
| Vesting of restricted stock units | ||||||||
| Stock issued for payment of debt | ||||||||
| Forfeit of deferred stock compensation | ( | ) | ||||||
| Stock based finance incentive | ||||||||
| Disposal of fixed assets | ||||||||
| Impairment of fixed assets | ||||||||
| Gain on change in fair value of warrant derivative liability | ( | ) | ( | ) | ||||
| Amortization of debt discount | ||||||||
| Amortization of intangible asset | ||||||||
| Depreciation | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| (Increase) decrease in other receivables | ( | ) | ||||||
| Increase (decrease) in accounts payable | ||||||||
| Increase in accrued liabilities | ||||||||
| Net cash provided by/(used) in operating activities | ( | ) | ||||||
| Cash flows from investing activities | ||||||||
| Proceeds from repayment of advances receivable | ||||||||
| Purchase of intangible assets | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities | ||||||||
| Increase in dividends payable | ( | ) | ( | ) | ||||
| Proceeds from loans payable | ||||||||
| Payment of loans payable | ( | ) | ( | ) | ||||
| Proceeds from loans payable – related party | ||||||||
| Repayment of loans payable – related party | ( | ) | ( | ) | ||||
| Net proceeds from issuance of Series C Preferred Stock and associated warrants | ||||||||
| 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 | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-5 |
BUBBLR, INC.
Notes to the Consolidated Financial Statements
December 31, 2023 and 2022
NOTE 1 – ORGANIZATION, BUSINESS AND LIQUIDITY
Organization and Operations
On
March 26, 2020, Bubblr Holdings Ltd. (a UK company formed on February 18, 2016) merged into U.S. Wireless Online, Inc. (“UWRL”),
a Wyoming corporation formed on
Bubblr, Inc. is an application software company that is currently developing its disruptive Ethical Web platform. This WEB.Ɛ platform will provide a holistic view of progress in developing digital products, services, and teams — designed to inform our ability to use our in-house code and that of our partners, lead advances in development criteria, and respond quickly to shifts in trends and applications.
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 and debt offerings. However, there can be no assurance management will be successful in its endeavors.
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, and 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 ability of the Company 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
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with GAAP. The Company’s fiscal year-end is December 31.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries: Bubblr Holdings Ltd., Bubblr Ltd., and Bubblr CLN Ltd. All significant inter-company balances and transactions have been eliminated in consolidation.
| 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.
Convertible Financial Instruments
The Company bifurcates conversion options from their host instruments and accounts for them as free-standing derivative financial instruments if certain criteria are met. The 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. The Company uses the Black Scholes Options Pricing Model to estimate the value of its derivative liabilities and measure them at each reporting period.
Fair Value of Financial Instruments
The Company accounts for financial instruments in accordance with ASC 820, “Fair Value Measurements and Disclosures,” which 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 markets or in 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 both significant to the fair value measurement and unobservable.
The
carrying value of the Company’s current assets and liabilities are deemed to be their fair value due to the short-term maturity
and realization. During the year ended December 31, 2023, the Company acquired warrant derivative liabilities, which are Level 3 financial
instruments that are adjusted to fair market value on reporting dates. At December 31, 2023, the warrant liabilities balance was $
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.
| 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 own 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.
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 is 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.
| December 31, | ||||||||
| 2023 (Shares) | 2022 (Shares) | |||||||
| Series C Preferred Stock | ||||||||
| Warrants | ||||||||
| Total | ||||||||
Leases
We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities – current, and operating lease liabilities – noncurrent on the balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in our balance sheets.
ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated interest rate for collateralized borrowing over a similar term of the lease payments at the commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. The expense for lease payments is recognized straight-line over the lease term.
The Company leases office space that meets the definition of a short-term lease because the lease term is 12 months or less. Consequently, consistent with the Company’s accounting policy election, the Company does not recognize the right-of-use asset and the lease liability arising from this lease.
Intangible Assets
The cost of intangible assets with determinable useful lives is amortized to reflect the pattern of economic benefits consumed on a straight-line basis 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.
| F-8 |
Research and Development
Research and Development costs are evaluated by the Company to determine if they meet the requirements to be capitalized as intellectual property. The criteria the Company uses to determine the treatment of research and development are:
| ● | There is a clearly defined project | |
| ● | Expenditure is separately identifiable | |
| ● | The project is commercially viable | |
| ● | The project is technically feasible | |
| ● | Project income is expected to outweigh the cost | |
| ● | Resources are available to complete the project |
Any research and development costs that do not meet the requirements are expensed in the period in which they occur.
United Kingdom tax incentive reduces company Research and Development costs by offering tax offsets for eligible Research and Development expenditures. Eligible companies with a turnover of less than $20 million receive a refundable tax offset, allowing the benefit to be paid as a cash refund if they are in a tax loss position.
For
the years ended December 31, 2023, and 2022, the Company received other income of $
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.
Property and Equipment
Property and equipment are stated at cost. Depreciation is computed using the straight-line method. The depreciation and amortization methods are designed to amortize the cost of the assets over their estimated useful lives, in years, of the respective assets as follows:
| Computer equipment | |
| Fixtures and Furniture | |
| Vehicles |
Maintenance and repairs are charged to expense as incurred. Improvements of a major nature are capitalized. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts and any gains or losses are reflected in other income.
| F-9 |
Beneficial Conversion Feature
In August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20 “Debt—Debt with “Conversion and Other Options” and ASC subtopic 815-40 “Hedging—Contracts in Entity’s Own Equity.” The standard reduced the number of accounting models for convertible debt instruments and convertible preferred stock. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting; and, (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. The amendments in this update are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company early-adopted the new guidance on January 1, 2021. As the result of the adoption of this ASU, no beneficial conversion feature was recorded on convertible notes described in Note 8 – Convertible Notes Payable.
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 rates of exchange on the balance sheet date, and local currency revenues and expenses are translated at weighted average rates of exchange during the period. Equity accounts are translated at historical rates. The resulting translation adjustments are recorded directly into accumulated other comprehensive income.
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| Year-end GBP£:US$ exchange rate | ||||||||
| Annual average GBP£:US$ exchange rate | ||||||||
Aggregate
transaction 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. Losses on foreign exchange
transactions totaled $
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 that is believed more likely than not to be realized.
As of December 31, 2023, and 2022, the Company did not have any amounts recorded pertaining to uncertain tax positions.
UK Taxes
We do not consider ourselves to be engaged in a trade or business in the UK and, as such, do not expect to be subject to UK corporate income taxation. We have subsidiaries based in the UK that are subject to the tax laws of that country. Under current law, those subsidiaries are taxed at the applicable corporate income tax rates. Should any UK subsidiaries be deemed to undertake business activities in the US, they would be subject to US corporate income tax in respect of their US activities only. Relief would then be available against the UK tax liabilities in respect of the overseas taxes arising from US activities. At present, this is not applicable as our UK subsidiaries only undertake activities in the UK. Our UK subsidiaries file separate UK income tax returns.
| F-10 |
UK Tax Risk
Companies which are incorporated outside the UK may become subject to UK taxes in a number of circumstances, including circumstances in which (1) they are deemed resident in the UK for tax purposes by reason of their central management and control being exercised from the UK or (2) they are treated as carrying on a trade, investing or carrying on any other business activity in the UK, whether or not through a UK Permanent Establishment (“PE”).
In addition, the Finance Act 2015 introduced a new tax known as the diverted profits tax (“DPT”) which is charged at 25% of any “taxable diverted profits.” The DPT has had effect since April 1, 2015 and may apply in circumstances including: (1) where arrangements are designed to ensure that a non-UK resident company does not carry on a trade in the UK through a PE; and (2) where a tax reduction is obtained through the involvement of entities or transactions lacking economic substance. We intend to operate in such a manner that none of our companies should be subject to the UK DPT and that none of our companies (other than those companies incorporated in the UK) should: (1) be treated as resident in the UK for tax purposes; (2) carry on a trade, invest or carry on any other business activity in the UK (whether or not through a UK PE).
However, this result is based on certain legal and factual determinations, and since the scope and the basis upon which the DPT will be applied by HM Revenue & Customs (“HMRC”) in the UK remains uncertain and since applicable law and regulations do not conclusively define the activities that constitute conducting a trade, investment or business activity in the UK (whether or not through a UK PE), and since we cannot exclude the possibility that there will be a change in law that adversely affects the analysis, HMRC might successfully assert a contrary position. The terms of an income tax treaty between the UK and the home country of the relevant Bubblr subsidiary, if any, could contain additional protections against UK tax.
Any arrangements between UK-resident entities of Bubblr and other entities of Bubblr are subject to the UK transfer pricing regime. Consequently, if any agreement between a UK resident entity of Bubblr and any other Bubblr entity (whether that entity is resident in or outside of the UK) is found not to be on arm’s length terms and as a result a UK tax advantage is being obtained, an adjustment will be required to compute UK taxable profits as if such an agreement were on arm’s length terms. Any transfer pricing adjustment could adversely impact the tax charge incurred by the relevant UK resident entities of Bubblr.
Recent Accounting Pronouncements
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on our financial statements.
NOTE 3 – OTHER RECEIVABLES
As of December 31, 2023 and 2022, other receivables consisted of the following:
| December 31, 2023 | December 31, 2022 | |||||||
| Deposit | $ | $ | ||||||
| UK R&D Credit | ||||||||
| UK VAT receivable | ||||||||
| Total other receivables | $ | $ | ||||||
| F-11 |
NOTE 4 – ADVANCES RECEIVABLE
As of December 31, 2023, and 2022, cash advances receivable consisted of the following:
| December 31, 2023 | December 31, 2022 | |||||||
| Advance receivable – G | $ | $ | ||||||
| Advance receivable – J | ||||||||
| Repayment received | ( | ) | ||||||
| Interest due | ||||||||
| Assignment of receivable | ( | ) | ||||||
| Effects of Currency translation | ( | |||||||
| Total advances receivable | $ | $ | ||||||
The
advance labeled Advance principal receivable-G carries an interest rate of
On
December 20, 2022, our founder, Mr. Stephen Morris, came to an agreement with the Company to have all risks and responsibilities in connection
to the collection of the advances assigned to him. As a result, the loan payable to Mr. Morris was reduced by the same amount of $
NOTE 5 – PROPERTY AND EQUIPMENT
As of December 31, 2023, and 2022, property and equipment consisted of the following:
Motor Vehicles | Computer Equipment | Office Equipment | Total | |||||||||||||
| Cost | ||||||||||||||||
| At December 31, 2022 | $ | $ | $ | $ | ||||||||||||
| Additions | ||||||||||||||||
| Disposals | ( | ) | ( | ) | ||||||||||||
| Impairment | ( | ) | ( | ) | ||||||||||||
| Effects of currency translation | ||||||||||||||||
| At December 31, 2023 | $ | $ | $ | $ | ||||||||||||
| Less accumulated depreciation | ||||||||||||||||
| At December 31, 2022 | $ | $ | $ | $ | ||||||||||||
| Disposals | ( | ) | ( | ) | ||||||||||||
| Depreciation expense | ||||||||||||||||
| Effects of currency translation | ||||||||||||||||
| At December 31, 2023 | $ | $ | $ | $ | ||||||||||||
| Net book value | ||||||||||||||||
| At December 31, 2023 | $ | $ | $ | $ | ||||||||||||
| At December 31, 2022 | $ | $ | $ | $ | ||||||||||||
During
the years ended December 31, 2023, and 2022, the Company recorded purchases of $ and $
| F-12 |
NOTE 6 – INTANGIBLE ASSETS
Patents
A Patent on the Internet-Search Mechanism (“IBSM”) has been granted in the United States, South Africa, Canada, New Zealand. And Australia. The patent is currently pending in the European Union and the United Kingdom.
A Patent entitled “Contextual Enveloping Via Dynamically Generated Hyperlinking.” (US Patent Application No. 17/980,298) has been filed. This will define an alternative mobile search system purely for information rather than goods and services, which our original patent covers.
A Patent
Patents
are reported at cost, less accumulated amortization, and accumulated impairment loss. Costs include expenditures that are directly attributable
to the acquisition of the asset. Once a patent provides economic benefit to the Company, amortization is provided on a straight-line
basis on all patents over their expected useful lives of
Intellectual Property
Intellectual
property represents capitalized costs of the Company’s qualifying internal research and developments. Intellectual property
is amortized over its useful life of
Trademarks
The Company has the following trademarks.
| Mark | Category | Proprietor | Country | Class(es) | Status | Reg. Date. | File No. | |||||||
| CITIZENS JOURNALIST | Words | Bubblr Limited | European Union | 9 38 | REGISTERED | 16-Nov-2019 | 206382.EM.01 | |||||||
| CITIZENS JOURNALIST | Word | Bubblr Limited | United Kingdom | 9 38 | REGISTERED | 05-Jul-2019 | 206382.GB.01 | |||||||
| CITIZENS JOURNALIST | Words | Bubblr Limited | United Kingdom | 9 38 | REGISTERED | 16-Nov-2019 | 206382.GB.02 | |||||||
| CITIZENS JOURNALIST | Word | Bubblr Limited | United States | 9 38 41 42 | REGD-DEC USE | 08-Feb-2022 | 206382.US.01 | |||||||
 |
Words and Color Device | Bubblr Limited | European Union | 9 38 | REGISTERED | 16-Nov-2019 | 206383.EM.01 | |||||||
 |
Series of Logos | Bubblr Limited | United Kingdom | 9 38 | REGISTERED | 05-Jul-2019 | 206383.GB.01 | |||||||
 |
Words and Color Device | Bubblr Limited | United Kingdom | 9 38 | REGISTERED | 16-Nov-2019 | 206383.GB.02 | |||||||
 |
Words and Device | Bubblr Limited | United States | 9 38 41 42 | ACCEPTED | 206383.US.01 | ||||||||
| BAU NOT OK/BAU Not OK | Series of Marks | Bubblr Limited | United Kingdom | 9 38 | REGISTERED | 11-Oct-2019 | 208674.GB.01 | |||||||
| NEWZMINE/NewzMine | Series of Marks | Bubblr Limited | United Kingdom | 9 38 42 | REGISTERED | 25-Dec-2020 | 227753.GB.01 |
The Company capitalizes trademark costs where the likelihood of acceptance is expected. Each trademark has been determined to have an infinite useful life and is assessed each reporting period for impairment. If there has been a reduction in the value of the trademark or if the trademark is not successfully registered, the asset will be impaired and charged to expense in the period of impairment.
| F-13 |
As of December 31, 2023, and 2022, trademarks consisted of the following:
| December 31, 2023 | December 31, 2022 | |||||||
| Trademarks: | ||||||||
| NewzMineTM | $ | $ | ||||||
| Citizens Journalist™ | ||||||||
| Effects of currency translation | ( | ) | ( | |||||
| $ | $ | |||||||
As of December 31, 2023, and 2022, intangible assets consisted of the following:
| Cost | Patents | Trademarks | Intellectual Property | Capitalized Acquisition Costs | Total | |||||||||||||||
| At December 31, 2022 | $ | $ | $ | $ | $ | |||||||||||||||
| Additions | ||||||||||||||||||||
| Effects of currency translation | ||||||||||||||||||||
| At December 31, 2023 | $ | $ | $ | $ | $ | |||||||||||||||
| Less accumulated amortization | ||||||||||||||||||||
| At December 31, 2022 | $ | $ | $ | $ | $ | |||||||||||||||
| Amortization expense | ||||||||||||||||||||
| Effects of currency translation | ||||||||||||||||||||
| At December 31, 2023 | $ | $ | $ | $ | $ | |||||||||||||||
| Net book value | ||||||||||||||||||||
| At December 31, 2023 | $ | $ | $ | $ | $ | |||||||||||||||
| At December 31, 2022 | $ | $ | $ | $ | $ | |||||||||||||||
During
the year ended December 30, 2023, and 2022, the Company purchased $
During
the years ended December 31, 2023, and 2022, impairment of $
| Year ended December 31, | Patents | Intellectual Property | Capitalized Acquisition Costs | Total | ||||||||||||
| 2024 | $ | $ | $ | $ | ||||||||||||
| 2025 | ||||||||||||||||
| 2026 | ||||||||||||||||
| 2027 | ||||||||||||||||
| 2028 | ||||||||||||||||
| Thereafter | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
NOTE 7 – ACCRUED LIABILITIES
As of December 31, 2023, and 2022, accrued liabilities consisted of the following:
| December 31, 2023 | December 31, 2022 | |||||||
| Auditor fees | $ | $ | ||||||
| Director fees | ||||||||
| Dividends payable | ||||||||
| Interest | ||||||||
| Other accruals | ||||||||
| Settlement payable | ||||||||
| Wages and salaries | ||||||||
| Total accrued liabilities | $ | $ | ||||||
| F-14 |
NOTE 8 – CONVERTIBLE NOTES PAYABLE
In
January 2021, the Company commenced offering a convertible promissory note. The offering closed on June 30, 2021. Funds raised during
the six months ended June 30, 2021, totaled $
| ● | ||
| ● | ||
| ● | ||
| ● |
In
November 2021 the Company commenced an offering for a convertible promissory note. The offering closed on November 5, 2021. Funds raised
as of November 5, 2021, totaled $
| ● | ||
| ● |
| |
| ● |
| |
| ● |
On September 1, 2022, the noteholders of the convertible promissory note issued June 30, 2021, and November 5, 2021, passed, by a majority, an amendment of Section 6 of the Notes.
Section 6 of each of the Notes is hereby amended and restated in its entirety as follows:
| F-15 |
On December 15, 2022, the noteholders of the convertible promissory note issued June 30, 2021, and November 5, 2021, passed, by a majority, an amendment of Section 6 of the Notes.
Section 6 of each of the Notes is hereby amended and restated in its entirety as follows:
There were no accounting ramifications as a result of the above amendments.
At December 31, 2023, and 2022, convertible notes consisted of the following.
| December 31, 2023 | December 31, 2022 | |||||||
| Promissory notes – issued in the fiscal year | $ | $ | ||||||
| Total convertible notes payable | ||||||||
| Less: unamortized debt discount | ||||||||
| Less: notes converted to common stock | ( | ) | ||||||
| Less: current portion of convertible notes | ||||||||
| Long-term convertible notes | $ | $ | ||||||
During
the years ended December 31, 2023, and 2022, the Company recorded interest expense of $
NOTE 9 – LOAN PAYABLE
On
February 4, 2022, the Company issued a promissory note for the principal sum of $
The
Company has purchased a vehicle under a capital finance arrangement. The term of this loan is
At
December 31, 2023, remaining payments in 2024 are $
| F-16 |
NOTE 10 – RELATED PARTY TRANSACTIONS
Loans from Related Parties
The
Company has a loan from our founder, Stephen Morris, with a balance of $
Loan 1 Stephen Morris, Founder, CTO and Chair.
On
September 6, 2022, the Company entered into a second amendment (the “Amendment”) with Bubblr Limited and Mr. Morris to add
$
On
December 20, 2022, the Company entered into a third amendment (the “Amendment”) with Bubblr Limited and Mr. Morris to reduce
the outstanding principal amount of the loan by $
On
December 27, 2023, Stephen Morris converted $
At
December 31, 2023, and 2022, loan payable obligations included in current liabilities were $
Loan 2 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 $
The
Company received $
At
December 31, 2023, and 2022, loan payable obligations included in non-current liabilities were $
| F-17 |
Activity on related party loans during the years ended December 31, 2023, and 2022 is as follows:
| Year Ended | Year Ended | |||||||
| December 31, 2023 | December 31, 2022 | |||||||
| Beginning balance – related party loans | $ | $ | ||||||
| Current: | ||||||||
| Beginning balance – current | ||||||||
| Effects of currency translation | ( | ) | ||||||
| Conversions from (into) preferred stock | ||||||||
| Additions | ||||||||
| Interest | ||||||||
| Assignment of advances receivable | ( | ) | ||||||
| Loan resolution agreement – Stephen Morris | ( | ) | ||||||
| Ending balance Loan 1 (current) | ||||||||
| Non-current: | ||||||||
| Beginning balance | ||||||||
| Additions | ||||||||
| Effects of currency translation | ||||||||
| Ending balance non-current | ||||||||
| Ending balance – related party loans | $ | $ | ||||||
On December 31, 2021, the Company received a loan from minority shareholders totaling $. The loan is non-interest-bearing and due for repayment on . An agreement was reached to extend repayment of the loan to April 30, 2022, with no penalties. All outstanding amounts were paid by this date.
On February 15, 2022, the Company received a loan from a minority shareholder for $. The loan bears interest at a rate of % and is due for repayment on . All amounts outstanding were paid on that date.
Paul Morrissey, Director
On
September 8, 2022, the Company entered into a new loan agreement (the “Loan Agreement”) with Professor Paul Morrissey for
$
NOTE 11 – WARRANT LIABILITY
The Company analyzed the warrants issued in connection with the Series C Convertible Preferred Stock (see Note 13) for derivative accounting consideration under ASC 815, “Derivatives and Hedging,” and determined that the instrument 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 derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense items.
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 and used the Black Scholes pricing model to calculate the fair value as of December 31, 2022. The Black Scholes model requires six basic data inputs: the exercise or strike price, 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.
| F-18 |
For the year ended December 31, 2023, the estimated fair values of the warrant liabilities measured on a recurring basis are as follows:
| Year Ended | ||||
| December 31, 2023 | ||||
| Expected term | ||||
| Expected average volatility | ||||
| Expected dividend yield | ||||
| Risk-free interest rate | ||||
The following table summarizes the changes in the warrant liabilities during the year ended December 31, 2022:
| Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | ||||
| Warrant liability as of December 31, 2021 | $ | |||
| Addition of new warrant liabilities | ||||
| Day-one loss | ( | ) | ||
| Change in fair value of warrant liability | ( | ) | ||
| Warrant liability as of December 31, 2022 | ||||
| Addition of new warrant liabilities | ||||
| Change in fair value of warrant liability | ( | ) | ||
| Warrant liability as of December 31, 2023 | $ | |||
NOTE 12 – INCOME TAXES
The Company provides for income taxes under ASC 740, “Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.
For the years ended December 31, 2023, and 2022, the local (“United States of America”) and foreign components of loss before income taxes were comprised of the following:
| Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Tax jurisdiction from: | ||||||||
| - Local | $ | ( | ) | $ | ( | ) | ||
| - Foreign | ( | ) | ( | ) | ||||
| Loss before income taxes | $ | ( | ) | $ | ( | ) | ||
| F-19 |
The components of the Company’s deferred tax asset and reconciliation of income taxes computed at the statutory rate to the income tax amount recorded as of December 31, 2023, and 2022, are as follows:
| Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Net Operating loss carryforward | $ | $ | ||||||
| Effective tax rate | % | % | ||||||
| Deferred tax asset | ||||||||
| Foreign taxes | ( | ) | ( | |||||
| Less: valuation allowance | ( | ) | ( | |||||
| Net deferred tax asset | $ | $ | ||||||
The
Company has provided for a full valuation allowance against the deferred tax assets, on the expected future tax benefits from the net
operating loss carryforwards, as the management believes it is more likely than not that these assets will not be realized in the future.
The valuation allowance decreased by $
United States of America
Bubblr,
Inc. is registered in the State of Wyoming and is subject to the tax laws of United States of America at a standard tax rate of
As
of December 31, 2023, the operations in the United States of America incurred approximately $
The Company’s tax returns are subject to examination by United States tax authorities beginning with the year ended December 31, 2018.
United Kingdom
The
Company’s subsidiaries operating in the United Kingdom (“UK”) are subject to tax at a standard income tax rate of
As
of December 31, 2022, the operations in the UK incurred approximately $
The Company’s tax returns are subject to examination by HM Revenue & Customs, for the years ended 2023 and 2022.
NOTE 13 - STOCKHOLDERS’ EQUITY (DEFICIT)
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.
Special 2019 Series A Preferred Stock
The Company has designated one () share of Series A Preferred Stock, par value $.
| F-20 |
On
September 6, 2022, the Company repurchased $
As of December 31, 2022, the Company had shares of 2019 Series A Preferred stock issued and outstanding, respectively.
Series C Convertible Preferred Stock
On March 4, 2022, the Company filed a Certificate of Designation with the Wyoming Secretary of State, establishing shares of the Company’s Series C Convertible Preferred Stock, with a stated value of $ per share.
During
the year ended December 31, 2022, the Company declared dividends of $
The Company has the right to redeem the Series C Convertible Preferred Stock in accordance with the following schedule:
| ● | ||
| ● | ||
| ● | The
Company shall pay an |
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).
On
March 4, 2022, the Company entered into a Securities Purchase Agreement (the “GHS Securities Purchase Agreement”) with GHS
Investments, LLC (“GHS”), whereby GHS agreed to purchase, in tranches, up to $
On
March 4, 2022, the Company issued to GHS the first tranche of shares of Series C Convertible Preferred Stock, as well as commitment
shares of shares of Series C Convertible Preferred Stock and warrant shares (the “GHS Warrant”). Warrant shares
represent
| F-21 |
GHS
delivered gross proceeds of $
On March 9, 2022, the Company entered a Securities Purchase Agreement with Proactive Capital Partners LP (“Proactive”), whereby Proactive agreed to purchase Series C Preferred Stock shares.
The
Company agreed to issue Proactive commitment shares of Series C Convertible Preferred Stock shares and warrant shares (the
“Warrant”). Warrant shares represent
On
March 9, 2022, the Company issued shares of Series C Convertible Preferred stock to Proactive Capital Partners LP as per the Securities
Purchase Agreement. Proactive delivered gross proceeds of $
On
April 24, 2022, the Company issued the second tranche of shares of Series C Convertible Preferred Stock and warrant shares
as per its Securities Purchase Agreement (the “GHS Securities Purchase Agreement”) with GHS Investments, LLC (“GHS”),
of March 4, 2022. GHS delivered gross proceeds of $
On
May 25, 2022, the Company issued the third tranche of shares of Series C Convertible Preferred Stock and warrant shares as
per its Securities Purchase Agreement (the “GHS Securities Purchase Agreement”) with GHS Investments, LLC (“GHS”),
of March 4, 2022. GHS delivered gross proceeds of $
On
June 24, 2022, the Company issued the fourth tranche of shares of Series C Convertible Preferred Stock and warrant shares
as per its Securities Purchase Agreement (the “GHS Securities Purchase Agreement”) with GHS Investments, LLC (“GHS”),
of March 4, 2022. GHS delivered gross proceeds of $
On
September 7, 2022, our wholly owned subsidiary, Bubblr Limited, entered into a new loan agreement (the “Loan Agreement”)
with Mr. Morris for £
As
a result of the above transactions, the Company received total net proceeds of $
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 proxy, on any matter on which action of the corporation’s stockholders is sought.
| F-22 |
During the years ended December 31, 2023, and 2022, the Company issued common shares as follows:
Year ended December 31, 2022
| ● |
shares for Executive Board Chair services valued at $ | |
| ● |
shares for Investor Relations and Consulting services valued at $ | |
| ● |
shares for Debt conversion of Investor Relations fee valued at $ | |
| ● |
shares as commitment shares under the Equity Financing Agreement valued at $ | |
| ● | shares as compensation for loan waiver under Series C Preferred Stock share purchase agreement valued at $. | |
| ● |
shares for conversion of convertible notes issued in 2021 valued at $ | |
| ● |
shares for dividend due on Series C Preferred Stock to September 30, 2022, valued at $ |
Year ended December 31, 2023
| ● |
shares for Investor Relations valued at $ | |
| ● |
shares for Consulting Services valued at $ | |
| ● |
shares for Professional Services valued at $ | |
| ● |
shares for Series C Preference Share Dividends valued at $ | |
| ● |
shares for Loan Resolution Agreement valued at $ |
As at December 31, 2023, and 2022, the Company had and shares, respectively, of common stock issued and outstanding.
Warrants
The Company identified conversion features embedded within warrants issued during the year ended December 31, 2022. The Company has determined that the conversion feature of the Warrants represents an embedded derivative since the conversion price includes a reset provision, which could cause adjustments in redemption value and number of shares issued upon exercise (see Note 11 - Warrant Liability).
A summary of activity during the period ended December 31, 2023, and 2022 follows:
| Warrants Outstanding | ||||||||||||
| Number of | Weighted Average | Weighted Average Remaining life | ||||||||||
| Warrants | Exercise Price | (years) | ||||||||||
| Outstanding, December 31, 2021 | $ | — | ||||||||||
| Granted | ||||||||||||
| Exercised | — | |||||||||||
| Forfeited/canceled | — | |||||||||||
| Outstanding, December 31, 2022 | ||||||||||||
| Granted | — | |||||||||||
| Exercised | — | |||||||||||
| Forfeited/canceled | — | |||||||||||
| Outstanding, December 31, 2023 | $ | |||||||||||
| F-23 |
The following table summarizes information relating to outstanding and exercisable warrants as of December 31, 2023:
| Warrants Outstanding | Warrants Exercisable | |||||||||||||||||
Number of Warrants | Weighted Average Remaining Contractual life (in years) | Weighted Average Exercise Price | Number of Shares | Weighted Average Exercise Price | ||||||||||||||
| $ | $ | |||||||||||||||||
| $ | $ | |||||||||||||||||
As at December 31, 2023 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 intended to encourage participants to acquire and maintain ownership interests in our company and to attract and retain the services of talented individuals upon whose judgment and special efforts the successful conduct of our business is mainly dependent.
During the year ended December 31, 2022, the Company issued pursuant to the 2022 Equity Incentive Plan, the Company elected to award RSUs to two Company executives pursuant to their employment agreements, with % vesting on June 1, 2023, and June 1, 2024.
The executives forfeited the award of RSUs upon their termination of employment on January 31, 2023.
On
April 1, 2023, the
Number of Shares | Weighted-Average Exercise Price (per share) | |||||||
| Outstanding as of December 31, 2022 | $ | |||||||
| Granted | ||||||||
| Exercised | ||||||||
| Forfeited or expired | ||||||||
| Outstanding at December 31, 2023 | $ | |||||||
| Exercisable at December 31, 2023 | ||||||||
| Weighted-average fair value of options granted in the period | $ | |||||||
| F-24 |
The total intrinsic value of options on December 31, 2023, is zero because the closing stock price was below the weighted average exercise value. The weighted average fair value of stock options granted during 2023 was based on the Black-Scholes option pricing model using the following weighted average assumptions. See below for reference to the Company’s valuation methodologies for these grants.
| Year Ended | ||||
| December 31, 2023 | ||||
| Expected life in years | ||||
| Risk-free interest rate | % | |||
| Annual forfeiture rate | % | |||
| Volatility | % | |||
| Expected dividend yield | % | |||
| Number of Shares | Weighted-Average Grant Date Fair Value | |||||||
| Non-vested as of December 31, 2022 | $ | |||||||
| Granted | ||||||||
| Forfeited or expired | ||||||||
| Vested | ( | ) | ||||||
| Non-vested as of December 31, 2023 | $ | |||||||
| Options | Options | |||||||
| Outstanding | Exercisable | |||||||
| Number of shares | ||||||||
| Weighted-average contractual life in years | ||||||||
| Weighted-average exercise price | $ | $ | ||||||
| Intrinsic value | $ | $ | ||||||
As
of December 31, 2023, the Company recognized $
Equity Financing Agreements
On
February 1, 2022, Bubblr, Inc. entered into a Stock Purchase Agreement (the “SPA”) and Registration Rights Agreement with
White Lion Capital LLC (“WLC”).
In
consideration of entering into the SPA, on February 1, 2022, the Company issued shares of common stock to WLC valued at $
| F-25 |
On
March 22, 2022, the Company entered into a Termination and Release Agreement with WLC to extinguish the SPA and Registration Rights Agreement
in exchange for the issuance of shares of common stock. The stock was issued on March 22, 2022, and was valued at $
On
March 4, 2022, the Company entered into an Equity Financing Agreement (“EFA”) and Registration Rights Agreement with GHS
Investments LLC (“GHS”). Under the terms of the EFA, GHS agreed to provide the Company with up to $
The
registration statement on Form S-1 was effective as of June 24, 2022. During the year ended December 31, 2022, GHS has provided $
In
consideration for entering into the EFA, on March 4, 2022, the Company issued shares of common stock to GHS valued at $
NOTE 14 - COMMITMENTS AND CONTINGENCIES
Lease
The
Company rents on a month-to-month basis virtual space at 21 West 46th St, New York, NY 10036.
The monthly rate is $
During
the years ended December 31, 2023, and 2022, the Company paid $
Investor Relations
On
February 14, 2023, the Company entered into a Consulting Agreement with Beyond Media SEZC. The term of the agreement is twelve months.
Beyond Media will receive $ monthly in cash and will be issued shares of common stock valued at $
On
June 15, 2023, the Company entered into a Consulting Agreement with Launchpad LLC. The term of the agreement is six months. Launchpad
LLC will receive $
Steven Saunders, Former Chief Commercial Officer and Director
On
May 31, 2022, the Company entered into an Amended Employment Agreement with Stephen Saunders.
The Company will compensate Mr. Willard with a $
On May 31, 2022, the Company agreed to further compensate Mr. Saunders with restricted stock units, which vests on June 1, 2023, and 2024, under the Equity Incentive Plan.
On
January 31, 2023, the Company entered into Separation Agreements with Steven Saunders. He is no longer an officer or director of our
Company, and all prior agreements are terminated in their entirety. To satisfy all amounts due, Mr. Saunders and the Company agreed to
a settlement total sum of $
| F-26 |
Rik Willard, Former Chief Executive Officer and Director
On
August 15, 2021, the Company entered into an employment agreement with Rik Willard, Chief Executive Officer and Director. The term is
1 year commencing. Mr. Willard will receive monthly cash compensation of $
On
May 25, 2022, the Company entered into an Amended Employment Agreement with Rik Willard.
The Company will compensate Mr. Willard with a $
On May 25, 2022, the Company agreed to further compensate Mr. Willard with restricted stock units, which vests on June 1, 2023, and 2024, under the Equity Incentive Plan.
On
January 31, 2023, the Company entered into Separation Agreements with Rik Willard, our then-Chief Executive Officer. Mr. Willard is no
longer an officer or director of our Company, and all prior agreements are terminated in their entirety. To satisfy all amounts due,
Mr. Willard and the Company agreed to a settlement total sum of $
Stephen Morris, Founder, Chief Technical Officer and Director
On
April 1, 2023, the Company entered into an Amended Employment Agreement with Stephen Morris, Founder, Chief Technical Officer, and Chair.
The Company will compensate Mr. Morris $
On April 1, 2023, the . The options were fully vested as Mr. Morris completed over two years and three months of service
On
December 31, 2023, the Company entered into a Second Amended Employment Agreement with Stephen Morris to reduce his base pay from $
to $ per annum and forfeit $
David Chetwood, Chief Financial Officer and Director
On
April 1, 2023, the Company entered into an Amended Employment Agreement, effective February 10, 2023, with David Chetwood, Chief Financial
Officer and Director. The Company will compensate Mr. Chetwood $
On May 12, 2023, the , under the 2022 Incentive Plan. As of December 31, 2023, there were non-vested share options, which we will recognize over the next 16 months.
On
December 31, 2023, the Company entered into a Second Amended Employment Agreement with David Chetwood to reduce his base pay from $
to $ per annum and forfeit $
Timothy Burks, Chief Executive Officer and Director
On April 1, 2023, the
On July 1, 2023, the , under the 2022 Incentive Plan. As of December 31, 2023, there were $ non-vested share options, which we will recognize over the next 18 months.
On
December 31, 2023, the Company entered into an Amended Employment Agreement with Timothy Burks to reduce his base pay from $ to
$ per annum and forfeit $
Paul Morrissey, Director
On April 6, 2023, the
On July 6, 2023, the , under the 2022 Incentive Plan. As of December 31, 2023, there were $ non-vested share options, which we will recognize over the next 18 months.
On
December 31, 2023, the Company entered into an Amended Non-Executive Director Agreement with Morrissey to reduce his director fee from
$ to $ per annum and forfeit $
NOTE 15 - SUBSEQUENT EVENTS
The Company has evaluated subsequent events through March 20, 2024 when the financial statements were available to be issued. The Company has concluded no subsequent events have occurred that require disclosure.
| F-27 |
2. Financial Statement Schedules
All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission (the “Commission”) are either not required under the related instructions, are not applicable (and therefore have been omitted), or the required disclosures are contained in the financial statements included herein.
3. Exhibits (including those incorporated by reference).
(b) The following exhibits are filed as a part of this Annual Report on Form 10-K:
| 47 |
* Filed herewith.
** Furnished herewith.
ITEM 16. FORM 10-K SUMMARY.
None.
| 48 |
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.
| March 20, 2024 | Bubblr, Inc. | |
| By: | /s/ Timothy Burks | |
| Timothy Burks | ||
| Chief Executive Officer | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Signature | Title | Date | ||
| /s/ Timothy Burks | Chief Executive Officer, Principal Executive Officer and Director | March 20, 2024 | ||
| Timothy Burks | ||||
| /s/ David Chetwood | Chief Financial Officer, Principal Financial Officer and Principal Accounting Officer | March 20, 2024 | ||
| David Chetwood | ||||
| /s/ Stephen Morris | Chief Technology Officer and Director | March 20, 2024 | ||
| Stephen Morris |
| 49 |