BBLR 10-Q
Bubblr Inc. (BBLR)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
| Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For
the quarterly period ended
| Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from __________ to__________
Commission
File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
(Address of principal executive offices)
(Registrant’s telephone number)
(Former name, former address, and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files). ☒
Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.
| ☐ Large accelerated filer | ☐ Accelerated filer | |
| ☐
|
||
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes
Securities registered pursuant to Section 12(b) of the Act: None
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.
Yes ☐ No ☐
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer’s classes of common equity as of the latest practicable date: As of August 21, 2026, there were outstanding shares of the registrant’s Common Stock, $ par value.
INDEX
| 2 |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Our consolidated financial statements included in this Form 10-Q are as follows:
The consolidated financial statements are condensed and have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended June 30, 2026, are not necessarily indicative of results expected for the full year ending December 31, 2026.
| 3 |
BUBBLR INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
| F-1 |
BUBBLR INC.
CONDENSED Consolidated Balance Sheets
| June 30, | ||||||||
| 2026 | December 31, | |||||||
| (Unaudited) | 2025 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Other receivables | ||||||||
| Prepayments | ||||||||
| Total current assets | ||||||||
| Non-current Assets: | ||||||||
| Intangible assets, net | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Due to related parties | ||||||||
| Convertible notes | ||||||||
| Convertible debt derivative liability | ||||||||
| Matured loan notes payable | ||||||||
| Total current liabilities | ||||||||
| Non-current Liabilities: | ||||||||
| Loan payable – related party, non-current portion | ||||||||
| Warrant derivative liability | ||||||||
| Total non-current liabilities | ||||||||
| Total Liabilities | ||||||||
| Stockholders’ Equity (Deficit) | ||||||||
| Series C Convertible Preferred Stock, $ par value, authorized, shares issued and outstanding | ||||||||
| Common stock, $ par value, shares authorized; and shares issued and outstanding | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ||||||||
| Total Stockholders’ Equity (Deficit) | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-2 |
BUBBLR INC.
CONDENSED Consolidated StatementS of Operations and Comprehensive Loss
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue | ||||||||||||||||
| Net sales | $ | $ | $ | $ | ||||||||||||
| Cost of sales | ||||||||||||||||
| Gross profit | $ | $ | $ | $ | ||||||||||||
| Operating Expenses | ||||||||||||||||
| General and administrative | $ | ( | ) | $ | $ | $ | ||||||||||
| Professional fees | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| Amortization and depreciation | ||||||||||||||||
| Research and development | ||||||||||||||||
| Total operating expense | ||||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Other income (expense) | ( | ) | ||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss on derivative issuance | ( | ) | ( | ) | ||||||||||||
| Loss on extinguishment of debt | ( | ) | ( | ) | ||||||||||||
| Gain (loss) on change in fair value of derivative liabilities | ( | ) | ||||||||||||||
| Foreign currency transaction (loss) gain | ( | ) | ( | ) | ( | ) | ||||||||||
| Total other income (expense) | ( | ) | ( | ) | ( | ) | ||||||||||
| Net loss before income tax | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income tax | ||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other comprehensive income (loss) | ||||||||||||||||
| Foreign currency translation gain (loss) | ( | ) | ( | ) | ||||||||||||
| 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 unaudited consolidated financial statements.
| F-3 |
BUBBLR INC.
CONDENSED Consolidated StatementS of Changes in Stockholders’ Deficit
(Unaudited)
Series C Preferred Stock | Common Stock | Additional | Accumulated Other | Total Stockholders’ | ||||||||||||||||||||||||||||
Number of Shares | Amount | Number of Shares | Amount | Paid-in Capital | Accumulated Deficit | Comprehensive Income (Loss) | Equity (Deficit) | |||||||||||||||||||||||||
| Balance -December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
| Issuance of common shares for series C preferred shares conversion | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Vesting of Share Options | ||||||||||||||||||||||||||||||||
| Dividend Series C Preferred Shares | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Net Loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Other comprehensive income | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
| Issuance of common shares for series C preferred shares conversion | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Vesting of Share Options | ||||||||||||||||||||||||||||||||
| Dividend Series C Preferred Shares | ||||||||||||||||||||||||||||||||
| Net Loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Other comprehensive income | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
| Balance December 31, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
| Vesting of Share Options | ||||||||||||||||||||||||||||||||
| Issuance of common shares for convertible note conversion | ( | ) | ||||||||||||||||||||||||||||||
| Net Loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Other comprehensive income | ||||||||||||||||||||||||||||||||
| Balance March 31, 2026 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
| Vesting of Share Options | ||||||||||||||||||||||||||||||||
| Forfeiture of share options | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Issuance of common shares for convertible note conversion | ( | ) | ||||||||||||||||||||||||||||||
| Net Loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Other comprehensive income | ||||||||||||||||||||||||||||||||
| Balance June 30, 2026 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-4 |
BUBBLR INC.
CONDENSED Consolidated Statements of Cash Flows
(Unaudited)
| For the Six Months Ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments for: | ||||||||
| Net loss to net cash used in operating activities: | ||||||||
| Vesting of stock-based compensation | ||||||||
| Forfeiture and expired stock-based compensation | ( | ) | ||||||
| Loss on derivative issuance | ||||||||
| Accretion of derivative liability booked to interest | ||||||||
| Non-cash conversion fee | ||||||||
| Loss on extinguishment of debt | ||||||||
| Gain in fair value of derivative liability | ( | ) | ( | ) | ||||
| Amortization of intangible asset | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| (Increase) decrease in other receivables | ( | ) | ||||||
| Decrease in prepayments | ||||||||
| Increase in accounts payable | ||||||||
| Increase in accrued liabilities | ||||||||
| Increase in amounts due to related parties | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchase of intangible assets | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from convertible notes | ||||||||
| Proceeds of loans payable – related parties | ||||||||
| Repayment of convertible notes | ( | ) | ||||||
| Repayment of loans payable - related parties | ( | ) | ||||||
| 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 income tax | $ | - | $ | - | ||||
| Non-cash investing and financing activities | ||||||||
| Rescission of dividends declared | $ | $ | ||||||
| Issuance of common stock for conversion of debt | $ | $ | ||||||
| Reclassification of derivative liabilities to loan payable upon maturity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-5 |
BUBBLR INC.
Notes to the Unaudited Condensed Consolidated Financial Statements
NOTE 1 - ORGANIZATION, BUSINESS AND LIQUIDITY
Organization and Operations
On December 18, 2019, U.S. Wireless Online, Inc. (“UWRL”), a Wyoming corporation established on May 4, 1998, UWRL Acquisition Inc., and Bubblr Holdings Limited, a company incorporated under the laws of the United Kingdom on December 6, 2016, entered into an Agreement and Plan of Merger.
On March 26, 2020, the transaction was completed, whereby UWRL Acquisition Inc. merged with and into Bubblr Holdings Limited, with Bubblr Holdings Limited surviving as a wholly owned subsidiary of U.S. Wireless Online, Inc. Subsequently, on March 30, 2021, U.S. Wireless Online, Inc. formally changed its corporate name to Bubblr, Inc. (the “Company”).
The Company, doing business as Ethical Web AI (“EW”), is an artificial intelligence (“AI”) corporation focused on advancing its patented intellectual property portfolio. Following an extended period of technical development, the Company is pivoting toward commercialization and commencing its revenue growth phase, driven by the rollout of its first enterprise platform product, AI Vault.
Going Concern Matters
The accompanying
condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the
United States of America (“U.S. GAAP”), which contemplate the Company’s continuation as a going concern. The
Company incurred a net comprehensive loss of $
Management intends to secure necessary operating funds through equity or debt offerings; however, the success of these capital-raising endeavors cannot be guaranteed.
There are no assurances that the Company will be able to attain a revenue level sufficient to generate positive cash flow from operations, or secure additional financing through private placements, public offerings, or debt instruments to satisfy its short-term working capital requirements. If funds from operations or external capital sources prove insufficient, the Company will be required to explore alternative and potentially restrictive sources of working capital. No guarantee exists that such financing will be available to the Company, or if available, on commercially acceptable terms. Failure to obtain sufficient working capital within the required timeframe will compel the Company to reduce, restructure, or cease operations.
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date these financial statements are issued. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, nor the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
| F-6 |
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.
In the opinion of management, all adjustments—consisting of normal recurring accruals—considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2026, are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances, transactions, and unrealized gains or losses have been eliminated in consolidation.
Reclassification
During the current reporting period, the Company reviewed the nature and substance of certain balances previously presented within Accounts Payable and Accrued Liabilities.
As a result of this review, amounts relating to transactions with related parties were identified and determined to be more appropriately classified as Due to Related Parties.
Accordingly, comparative figures have been reclassified to conform to the current period’s presentation.
During the six months ended June 30, 2025, the Company reviewed the nature and substance of certain balances previously presented within Operating Expenses.
As a result of this review, amounts relating to transactions in Sales and Marketing were identified and determined to be more appropriately classified as Professional fees.
This reclassification has been made to better reflect the underlying nature of these balances and to enhance the usefulness and transparency of the financial statements.
The reclassification had no impact on total assets, total liabilities, shareholders’ equity, or net income for the periods presented.
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.
Intangible Assets - Capitalized Product Development Costs
Accounting Standards Codification (“ASC”) Topic 350-40, “Internal-Use Software,” applies to software developed for internal use or to provide a service, where the customer does not acquire a contractual right to take possession of the software. Our products incorporate embedded software developed internally by Bubblr, a critical component that facilitates communication among components. The product’s functionality depends on this software.
Expenditures associated with product development are capitalized until technological feasibility is achieved. Such costs encompass subcontractor fees, personnel wages, and other related expenses incurred during the development phase. The Company considers technological feasibility achieved once all high-risk development challenges have been addressed. Upon the product’s availability for general release to the Company’s customers, the Company discontinues capitalizing development costs, and any additional expenses incurred thereafter are recognized as expenses. The capitalized costs are amortized on a straight-line basis.
| F-7 |
Impairment of Long-Lived Assets
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable or its useful life is no longer appropriate. Recoverability is assessed by comparing the carrying amount of the asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount exceeds the undiscounted cash flows, an impairment loss is recognized for the amount by which the carrying amount exceeds the asset’s estimated fair value.
Convertible Financial Instruments
The Company bifurcates conversion options from their host instruments and accounts for them as free-standing derivative financial instruments if specific criteria are met. 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 to measure them at the end of 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 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 amounts of the Company’s financial instruments, including cash, other receivables, accounts payable, accrued
liabilities, and amounts due to related parties, approximate their fair value due to the short-term nature of these instruments. The
warrant derivative liabilities and convertible debt derivative liability are Level 3 financial instruments measured at fair value on
a recurring basis. The Company utilizes the Black-Scholes option-pricing model to estimate the fair value of these derivatives. As
of June 30, 2026, the fair value of the warrant liabilities was $
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, net-share settlement, or (2) give the Company a choice of net-cash settlement or settlement in its shares (either physical or net-share). Contracts that (1) require net-cash settlement (including cases where the contract must be settled in cash if an event occurs outside the Company’s control), (2) provide the counterparty with a choice between net-cash settlement or settlement in shares (physical or net-share), or (3) contain reset provisions that do not qualify for the scope exception are classified as liabilities. The Company evaluates the classification of its common stock purchase warrants and other derivatives at each reporting date to determine if a change from liabilities to equity is necessary.
| F-8 |
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 consolidated financial statements based on the stock awards’ fair values on the grant date. That expense is recognized over the period required to provide services in exchange for the award, known as the requisite service period (typically the vesting period).
In accordance with ASC 718, cumulative compensation expenses previously recognized for these unvested awards in prior periods are credited back to the general and administrative expense line item in the period of forfeiture.
During the three and six-month period ended June 30, 2026, general and administrative expenses include a $ credit recorded within general administration resulting from these forfeitures.
Pursuant to ASC 260, “Earnings Per Share,” basic net income and net loss per share are computed by dividing the net income and net loss by the weighted average number of common shares outstanding. Diluted net income and net loss per share are the same as basic net income and net loss per share when their inclusion would have an anti-dilutive effect due to our continuing net losses.
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| (Shares) | (Shares) | |||||||
| Series C Preferred Stock | ||||||||
| Warrants | ||||||||
| Equity Incentive Plan Awards | 21,618,750 | 23,255,000 | ||||||
| Total | ||||||||
Income Taxes
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Income Taxes.” The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carry forwards. 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 it believes is more likely than not to be realized.
As of June 30, 2026, and 2025, the Company did not have any amounts recorded for uncertain tax positions.
Foreign Currency Translations
The functional currency of the Company’s international subsidiaries is the British pound (GBP). Local currency assets and liabilities are translated at the exchange rates as of the balance sheet date, and local currency revenues and expenses are translated at the weighted average exchange rate for the period. Equity accounts are translated at historical rates. The resulting translation adjustments are recorded directly into accumulated other comprehensive income.
Three Months Ended June 30, | Six Months Ended June 30, |
December 31, | ||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | 2025 | ||||||||||||||||
| Period-end GBP£: U.S.$ exchange rate | ||||||||||||||||||||
| Weighted average GBP£: U.S.$ exchange rate | ||||||||||||||||||||
| F-9 |
Segment Reporting
Accounting
Standards Codification (“ASC”) 280, “Segment Reporting,” requires public companies to report financial and descriptive
information about their reportable operating segments. The Company identifies operating segments based on how our Chief Financial Officer
evaluates separate financial information, business activities, and management responsibilities. Accordingly, the Company has
| Six Months Ended | ||||||||
| June 30, | ||||||||
| Net sales: | 2026 | 2025 | ||||||
| North America | $ | $ | ||||||
| Europe | ||||||||
| Totals | $ | $ | ||||||
| Long-lived assets, net (property and equipment and intangible assets): | June 30, 2026 | December 31, 2025 | ||||||
| North America | $ | $ | ||||||
| Europe | ||||||||
| Totals | $ | $ | ||||||
Recent Accounting Pronouncements
The Company has reviewed all recently issued.
In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024 03”), and in January 2025, the FASB issued ASU No. 2025-01, Clarifying the Effective Date (“ASU 2025-01”). The amendments are intended to enhance disclosures regarding an entity’s costs and expenses by requiring additional disaggregated information disclosures about certain income statement expense line items. The amendments, as clarified by ASU 2025-01, are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the effect of adopting the new disclosure requirements.
In September 2025, the FASB issued ASU No. 2025-06, Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). The amendments are intended to clarify and modernize the accounting for costs related to internal-use software. The guidance removes all references to project stages and clarifies the threshold entities apply to begin capitalizing costs. The amendments are effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years, with early adoption permitted. The Company does not expect the adoption to have a material impact on the Company’s financial statements.
NOTE 3 – OTHER RECEIVABLES
Other receivables consisted of the following:
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| UK VAT receivable | $ | $ | ||||||
| Total other receivables | $ | $ | ||||||
NOTE 4 - INTANGIBLE ASSETS
Intangible assets consisted of the following:
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Intellectual properties | $ | $ | ||||||
| Patents | ||||||||
| Capitalized acquisition costs | ||||||||
| Total intellectual properties | ||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Total intellectual properties, net | $ | $ | ||||||
| F-10 |
| ● | Patents |
A Patent on the Internet-Search Mechanism (“IBSM”) has been granted in the United States, South Africa, New Zealand, Canada, and Australia. The patent is pending in the European Union and the United Kingdom.
Patents on Contextual Enveloping of Dynamic Hypertext Links and Sensitive Data Protection are pending in the United States.
Patents
are reported at cost, less accumulated amortization, and accumulated impairment loss. Costs include expenditures directly attributable
to the acquisition of the asset. Once a patent has been granted and provides economic benefit to the Company, amortization is provided
on a straight-line basis over the expected useful lives of
| ● | Intellectual Property |
Intellectual
Property capitalizes the Company’s qualifying internal research and development costs. It is amortized over its useful life of
Amortization
expenses were $
NOTE 5 – ACCOUNTS PAYABLE
Accounts payable consist entirely
of short-term, non-interest-bearing obligations due to trade vendors and suppliers for goods and services. Standard payment terms range
from 30 to 60 days. As of June 30, 2026, and December 31, 2025,
accounts payable were $
NOTE 6 – ACCRUED LIABILITIES
Accrued liabilities consisted of the following:
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Interest payable | $ | $ | ||||||
| Other accruals | ||||||||
| Salaries payable | ||||||||
| Settlements payable | ||||||||
| Total Accrued Liabilities | $ | $ | ||||||
NOTE 7 – DUE TO RELATED PARTIES (CURRENT)
The Company had the following amounts due to related parties classified within current liabilities as of June 30, 2026, and December 31, 2025:
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Accrued Salaries and Benefits – Directors and Officers | $ | $ | ||||||
| Reimbursable Expenses – Directors and Officers | ||||||||
| Related Party Short-Term Loans – Shareholders | ||||||||
| Total Due to Related Parties | $ | $ | ||||||
As
of June 30, 2026, accrued salaries and benefits for directors and officers totalled $
The remaining balances due to related parties represent short-term obligations for operational expense reimbursements and working capital cash advances provided by certain shareholders. These current liabilities are unsecured, non-interest-bearing, and payable on demand.
NOTE 8 – CONVERTIBLE NOTES (HOST DEBT INSTRUMENT)
As
of June 30, 2026, the Company’s outstanding convertible debt host instruments classified within current liabilities had an aggregate
carrying value of $
These components represent the unamortized allocation blocks of the underlying short-term debt host instruments as of the balance sheet date. Pursuant to ASC 835-30, these host tranches are stated net of their respective unamortized debt discounts, which were initially generated by the detachment and fair value bifurcation of their embedded derivative liabilities at the inception of the respective offerings. These discounts are being systematically amortized to interest expense over the remaining contractual maturities of the underlying credit facilities.
NOTE 9 - DERIVATIVE LIABILITY
On
April 4, 2025, the Company approved the issuance of up to $
On
July 15, 2025, the Company approved the issuance of up to $
The following table presents the roll-forward of the Company’s derivative liability measured at fair value using Level 3 inputs for the six months ended June 30, 2026, and the year ended December 31, 2025:
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Opening Balance | $ | $ | ||||||
| Face value of new issuances | ||||||||
| Loss on derivative issuance | ||||||||
| Payments derivative liability | ( | ) | ||||||
| Conversions | ( | ) | ||||||
| Change in fair value of derivative liability | ( | ) | ( | ) | ||||
| Ending Balance | $ | $ | ||||||
| F-11 |
The
Company’s derivative financial instruments are classified as derivative liabilities and are measured at fair value on a recurring
basis. On January 1, 2025, and January 1, 2026, the derivative liability balance was $
During the six months ended
June 30, 2026, the derivative liability balance changed due to the face value of new issuances of $
Additionally, the Company recognized
a non-cash gain of $
As of June 30, 2026, the total outstanding derivative liability balance
was $
In accordance with SEC Staff Accounting Bulletin No. 108, management evaluated these items and concluded that the underlying errors were immaterial to all prior periods, both individually and in the aggregate. Accordingly, the adjustments were recognized entirely within the current quarter’s Consolidated Statement of Operations.
During
the preparation of the condensed consolidated financial statements for the quarter ended June 30, 2026, management identified an accounting
omission regarding the historical non-cash interest expense associated with the accretion of debt discounts on certain notes payable
issued during fiscal year 2025. Specifically, the Company had omitted periodic straight-line accretion of debt discounts from inception
through March 31, 2026, on its $
In
accordance with SEC Staff Accounting Bulletin (“SAB”) No. 108, Considering the Effects of Prior Year Misstatements when
Quantifying Misstatements in Current Year Financial Statements, and SAB No. 99, Materiality, the Company evaluated the quantitative
and qualitative materiality of these errors on all affected prior interim and annual financial periods. Management determined that the
cumulative under-recording of non-cash interest expense of $
Accordingly,
the Company recorded a cumulative out-of-period catch-up correction of $
NOTE 10 – MATURED LOAN NOTES PAYABLE
As
of June 30, 2026 and December 31, 2025, the Company had outstanding matured loan notes payable within current liabilities of $
These outstanding balances consist of short-term convertible loan notes previously recorded as derivative liabilities that reached their contractual maturity dates during the six months ended June 30, 2026, without undergoing cash repayment or conversion into common stock. Upon maturity, the embedded conversion features expired, and the associated bifurcated embedded derivative liabilities were derecognized.
In
a non-cash financing transaction, the aggregate carrying value of $
NOTE 11 – LOANS PAYABLE TO RELATED PARTIES
The Company had the following loans payable to related parties:
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Beginning balance: Loans 1 - payable to Stephen Morris | $ | $ | ||||||
| Additions | ||||||||
| Paydown | ( | ) | ||||||
| Foreign currency translation adjustments | ( | ) | ||||||
| Net change in Loan 1 | ( | ) | ||||||
| Ending balance Loan 1 – payable to Stephen Morris | ||||||||
| Loan 2 - payable to Stephen Morris | ||||||||
| — | ||||||||
| Total loan payable to related parties | ||||||||
| Less current portion | ||||||||
| Total – non-current | $ | $ | ||||||
| ● | Loan 1 (January 16, 2016) - Stephen Morris, Founder, CTO, and Chair. |
On January 16, 2016, our wholly owned subsidiary, Bubblr Limited, entered into a Loan Agreement (the “Loan Agreement”) with Mr. Stephen Morris. The Loan Agreement is unsecured and bears no interest. It was payable on demand and is intended for working capital or as the Company deems appropriate. The Loan is available for drawing by the Company in multiple tranches.
On
September 30, 2024, the parties desired to amend the loan such that the principal amount of the loan shall be due and payable by Borrower
to Lender on the earlier of (i) the completion of an equity offering by Bubblr, Inc., for no less than $
Loan 1 is denominated in British Pounds (GBP) and translated into U.S. Dollars (USD) at each reporting date. Accordingly, the periodic fluctuations in the carrying values of both instruments were driven by non-cash foreign currency translation adjustments moving through the statement of comprehensive income.
| F-12 |
| ● | Loan 2 (September 7, 2022) - Stephen Morris, Founder, CTO, and Chair. |
On
September 7, 2022, our wholly owned subsidiary, Bubblr Limited, entered into a new loan agreement (the “Loan Agreement”)
with Mr. Morris for $
On September 30, 2024, the parties agreed to amend the loan, with the maturity date set three years from the date of this amendment.
Loan 2 is denominated in British Pounds (GBP) and translated into U.S. Dollars (USD) at each reporting date. Accordingly, the periodic fluctuations in the carrying values of both instruments were driven entirely by non-cash foreign currency translation adjustments moving through the statement of comprehensive income.
NOTE 12 – WARRANT LIABILITY
The Company analyzed the warrants issued in connection with the Series C Convertible Preferred Stock (see Note 6) for derivative accounting consideration under ASC 815, “Derivatives and Hedging,” and determined that the instruments should be classified as liabilities due to reset provisions and exercise price variability. These features result in there being no fixed value or explicit limit to the number of shares to be delivered upon exercise.
ASC 815 requires the Company to assess the fair value of derivative liabilities at the end of each reporting period and recognize any change in fair value within current period earnings as other income or expense.
The Company determined its warrant liabilities to be Level 3 fair value measurements based on the use of significant unobservable inputs. Management used the Black-Scholes pricing model to calculate the fair value at each reporting date. The Black-Scholes model requires six basic inputs: the exercise price, time to expiration, risk-free interest rate, current stock price, estimated future stock price volatility, and expected dividend yield. Changes to these inputs could produce a significantly higher or lower fair value measurement.
| Six Months Ended | ||||
| June 30, 2026 | ||||
| Expected term (years) | ||||
| Expected average volatility | % | |||
| Expected dividend yield | % | |||
| Risk-free interest rate | % | |||
The following table summarizes the changes in the warrant liabilities during the six months ended June 30, 2026:
| Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | ||||
| Warrant liability December 31, 2025 | $ | |||
| Addition of new warrants | $ | |||
| Change in fair value of warrant liability | ( | ) | ||
| Warrant liability as of June 30, 2026 | $ | |||
NOTE 13 - STOCKHOLDERS’ EQUITY
Preferred Stock
The Company has authorized preferred shares with a par value of $ per share. The Board of Directors is authorized to divide the authorized shares of Preferred Stock into one or more series, each of which should be so designated as to distinguish the shares thereof from the shares of all other series and classes.
Series C Convertible Preferred Stock
On March 4, 2023, the Company filed a Certificate of Designation with the Wyoming Secretary of State, establishing shares of the Company’s Series C Convertible Preferred Stock with a Stated Value of $ per share.
| F-13 |
The Company reserves the right to redeem Series C Convertible Preferred Stock in accordance with the following schedule.
| ● | If all of the Series C Convertible Preferred Stock are redeemed within 90 calendar days from the issuance date thereof, the Company shall have the right to redeem the Series C Convertible Preferred Stock upon three business days of written notice at a price equal to 115% of the Stated Value together with any accrued but unpaid dividends. | |
| ● | If all of the Series C Convertible Preferred Stock is redeemed after 90 calendar days from the issuance date thereof, the Company shall have the right to redeem the Series C Convertible Preferred Stock upon three business days of written notice at a price equal to 120% of the Stated Value together with any accrued but unpaid dividends; and | |
| ● | The Company shall pay an 8% per annum dividend 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. The dividend shall be deemed to accrue from the date of issuance of the Series C Convertible Preferred Stock, whether earned or declared, and whether there are profits, surplus, or other funds of the Company legally available for the payment of dividends. However, during 2025, the Company determined that it was insolvent and, accordingly, ceased accruing dividends on the Series C Convertible Preferred Stock and reversed previously accrued dividends. This determination was based on the applicable requirements under Wyoming law, which restrict a corporation from making a distribution if, after giving effect to such distribution, the corporation would be unable to pay its debts as they become due in the usual course of business or would otherwise fail the applicable balance-sheet test. Accordingly, as the Company was insolvent and the applicable financial-condition requirements for a lawful dividend distribution were not satisfied, the Company did not accrue or declare dividends on the Series C Convertible Preferred Stock during the applicable period. |
The Series C Convertible Preferred Stock shall have voting rights alongside the common stock on an as-converted basis, subject to the Beneficial Ownership Limitations as outlined in the Certificate of Designation.
During
the year ended December 31, 2025, the Company converted shares of Series C Preferred Stock with a stated value of $
As of June 30, 2026, and December 31, 2025, the Company had shares of Series C Preferred Stock issued and outstanding.
Common Stock
The Company has authorized ordinary shares with a par value of $ per share. Each common share entitles the holder to one vote, in person or by proxy, on any matter on which action of the corporation’s stockholders is sought.
During the years ended December 31, 2025, and the six months ended June 30, 2026, the Company issued common shares as follows:
Year ended December 31, 2025
| ● |
shares for the conversion of Series C Convertible Preferred Stock with a stated value of $ |
Three months ended March, 2026
| ● |
shares for the conversion of Convertible Promissory Notes with a value of $ |
Six months ended June 30, 2026
| ● |
shares for the conversion of Convertible Promissory Notes with a value of $ |
The Company had and shares of common stock issued and outstanding as of June 30, 2026, and December 31, 2025, respectively.
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 constitutes an embedded derivative because the conversion price includes a reset provision, which could result in adjustments to the redemption value and the number of shares issued upon exercise (see Note 8 - Warrant Liability).
| F-14 |
A summary of activity during the six months ended June 30, 2026, follows:
| Warrants Outstanding | Weighted Average | |||||||||||
| Number of | Weighted Average |
Remaining life | ||||||||||
| Warrants | Exercise Price | (years) | ||||||||||
| Outstanding, December 31, 2025 | $ | |||||||||||
| Granted | - | |||||||||||
| Exercised | - | |||||||||||
| Forfeited/canceled | - | |||||||||||
| Outstanding, June 30, 2026 | $ | |||||||||||
| Exercisable Warrants, June 30, 2026 | $ | |||||||||||
The following table summarizes information relating to outstanding and exercisable warrants as of June 30, 2026:
| Number of Warrants | Weighted Average Remaining Contractual life (in years) |
Weighted Average Exercise Price |
|||||||
| $ | |||||||||
| $ | |||||||||
As of June 30, 2026, 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 Plan”), which will remain in effect, unless earlier terminated, until May 25, 2032. Up to shares of common stock may be issued under the 2022 Plan.
The 2022 Plan aims to enhance our ongoing financial stability and increase shareholder value by motivating performance through incentive compensation. It is designed to encourage participants to acquire and maintain ownership interests in our organization, while also attracting and retaining talented individuals whose judgment and efforts are essential to our enterprise’s success.
On January 14, 2025, an executive forfeited unvested stock options to purchase shares of our common stock upon termination of service.
On April 4, 2025, our Board of Directors authorized the implementation of the Bubblr, Inc. 2025 Employee and Consultant Stock Plan (“2025 Plan”), which shall remain in effect until April 4, 2035, unless terminated sooner. A maximum of shares of common stock may be issued pursuant to the 2025 Plan.
The
Board of Directors establishes the criteria for allocating stock options, aligning with the stipulations outlined in our 2022 and 2025
Plans.
On April 15, 2025, the Company granted stock options to an executive to purchase shares of our Common Stock.
On May 20, 2025, the Company granted stock options to consultants to purchase shares of our Common Stock.
| F-15 |
On June 11, 2025, the Company granted stock options to an employee to purchase shares of our Common Stock.
On June 11, 2025, an executive forfeited unvested options to purchase our common stock upon the termination of their service.
On June 13, 2025, the Company granted stock options to an attorney to purchase the Company’s common stock.
On June 19, 2025, the Company granted stock options to six consultants to purchase the Company’s common stock.
On November 5, 2025, the Company granted stock options to an executive to purchase shares of our Common Stock.
On November 18, 2025, the Company granted stock options to a non-executive director to purchase shares of our Common Stock.
On April 16, 2025, an executive forfeited unvested options to purchase our common stock due to termination of their service.
The weighted-average fair value of stock options granted was determined using the Black-Scholes option-pricing model with the following weighted-average assumptions. See below for reference to the Company’s valuation methodologies for these grants.
| Six
Months Ended June 30, 2026 | Year
Ended December 31, 2025 | |||||||
| Expected life in years | – | – | ||||||
| Risk-free interest rate | % | % | ||||||
| Annual forfeiture rate | % | % | ||||||
| Volatility | % | % | ||||||
| Expected dividend yield | % | % | ||||||
No stock options were granted in the six months ended June 30, 2026.
| Number of Shares | ||||||||
| Six
Months Ended June 30, 2026 | Year
Ended December 31, 2025 | |||||||
| Outstanding at the beginning of the period | ||||||||
| Granted | ||||||||
| Forfeited | ( | ) | ( | ) | ||||
| Outstanding at the end of the period | ||||||||
| Weighted-average contractual life in years | ||||||||
| Weighted-average Exercise Price | $ | $ | ||||||
| Number of Shares | ||||||||
| Six
Months Ended June 30, 2026 | Year
Ended December 31, 2025 | |||||||
| Outstanding at the beginning of the period | ||||||||
| Vested | ||||||||
| Forfeited | ( | ) | ||||||
| Outstanding at the end of the period | ||||||||
| Weighted-average contractual life in years | ||||||||
| Weighted-average Exercise Price | $ | $ | ||||||
| Intrinsic value | $ | $ | ||||||
| F-16 |
The total intrinsic value of the options is zero because the closing stock price was below the weighted-average exercise price.
| Number of Shares | ||||
| Non-vested as of December 31, 2025 | ||||
| Granted | ||||
| Forfeited or expired | ||||
| Vested | ( | ) | ||
| Non-vested as of June 30, 2026 | ||||
The Company recognized compensation costs of $ and $ for the three months ended June 30, 2026, and June 30, 2025. And $ and $ for the six months ended June 30, 2026, and June 30, 2025, respectively.
There were $ and $ of unrecognized compensation costs for the six months ended June 30, 2026, and June 30, 2025, respectively. The cost is related to non-vested share options, which we will realize over the next two months.
NOTE 14 - COMMITMENTS AND CONTINGENCIES
Employment Agreements
Stephen Morris, Founder, Chief Executive Officer, and Director
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
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 $
On
October 17, 2024, the Company entered into a Third Amended Employment Agreement with David Chetwood, reducing his base pay from $
Patrick Ensor, Chief Revenue Officer and Director
On
August 5, 2025, the Company entered into an Employment Agreement with Mr. Patrick Ensor, which provides him with an annual salary of
$
Manfred Ebensberger, Former Chief Executive Officer and Director
On
October 17, 2024, the Company entered into an Executive Consulting Agreement with Manfred Ebensberger, Former Chief Executive Officer,
under which he is paid $
Mr. Ebensberger resigned on January 14, 2025.
| F-17 |
Tom Symonds, Former Chief Executive Officer and Director
On
January 15, 2025, the Company entered into an Executive Employment Agreement with Tom Symonds, Former Chief Executive Officer, under
which he is paid an annual salary of $
Mr. Symonds resigned on June 11, 2025.
We may occasionally become involved in various claims and legal proceedings that are considered normal and incidental to our business. These might include product liability, intellectual property, employment issues, personal injury claims from our employees’ actions, and other general claims. Regardless of the outcome, litigation can adversely affect us, including increased defense costs and settlements, diversion of management resources, and other impacts. As of June 30, 2026, the Company has not accrued any liabilities for loss contingencies, as no outstanding claims are deemed probable and reasonably estimable under ASC 450.
NOTE 15 - SUBSEQUENT EVENTS
The Company evaluated subsequent events through August 21, 2026, the date the consolidated financial statements were available for issuance. Management determined that no subsequent events require recognition or disclosure, except as described below.
On
July 2, 2026, the Company issued shares
of common stock upon the conversion of certain outstanding convertible promissory notes with an aggregate principal and interest
value of $
On
July 6, 2026, the Company issued shares of common stock upon the conversion of certain outstanding convertible promissory notes
with an aggregate principal and interest value of $
On July 22, 2026, the Company issued shares of common stock upon the conversion of certain outstanding
convertible promissory notes with an aggregate principal value of $
On July 22, 2026, the Company
issued shares of common stock upon the conversion of certain outstanding convertible promissory notes with an aggregate principal
and interest value of $
| F-18 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
Some statements in this Quarterly Report on Form 10-Q of Bubblr, Inc. (hereinafter referred to as the “Company,” “Bubblr,” “BBLR,” “Ethical Web.AI,” “EW”, “we,” “us,” or “our”) discuss future expectations, include projections of our plans for operations or financial condition, or contain other forward-looking information. In this Quarterly Report, forward-looking statements are identified by words such as “anticipate,” “plan,” “believe,” “expect,” “estimate,” and similar terms. These forward-looking statements involve future risks and uncertainties, and certain factors could cause actual results or plans to differ significantly from those expressed or implied. These statements are subject to known and unknown risks, uncertainties, and other factors that could lead to material differences in actual results compared to those contemplated by the statements. The forward-looking information is based on numerous factors and assumptions. Readers should not place undue reliance on these forward-looking statements, which are only applicable as of the date of this Quarterly Report. Key factors that could cause actual results to differ from projections include, for example:
| ● | Our strategies, prospects, plans, expectations, forecasts, or objectives; | |
| ● | Our ability to achieve marketable products and the costs and timing thereof; | |
| ● | Acceptance of our products by our target market and our ability to compete in such a market; | |
| ● | Our ability to raise additional financing when needed and the terms and timing thereof; | |
| ● | Our ability to expand, protect, and maintain our intellectual property rights; | |
| ● | Our future operations, financial position, revenues, costs, expenses, uses of cash, capital requirements, our need for additional financing, or the period for which our existing cash resources will be sufficient to meet our operating requirements; | |
| ● | Our analysis of the target market for our platform; | |
| ● | Regulatory developments in the United States and other countries; | |
| ● | Our compliance with all applicable laws, rules, and regulations, including those of the Securities and Exchange Commission, or SEC; | |
| ● | Our ability to compete in the United States and internationally with more substantial companies; | |
| ● | General economic, business, political, and social conditions; | |
| ● | Our reliance on and our ability to retain (and, if necessary, timely recruit and replace) our officers, directors, and key employees, and their ability to timely and competently perform; | |
| ● | Our ability to generate significant revenues and achieve profitability; | |
| ● | Our ability to manage the growth of our business; | |
| ● | The commercialization of our platform, 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 Quarterly Report; and | |
| ● | Various other matters, many of which are beyond our control. |
Readers are advised not to rely too heavily on the forward-looking statements in this document, which speak only as of the date hereof. The Company believes the information in this Form 10-Q to be accurate as of the same date. However, changes may happen after this date. The Company will not update that information unless required by law or as part of our usual public disclosure practices. Also, the discussion of our financial condition and results of operations should be read together with the financial statements and notes included in this Form 10-Q.
| 4 |
Business Overview
Bubblr, Inc., doing business as EthicalWeb AI (“EW”), is an artificial intelligence company built on a foundation of patented intellectual property. The Company is entering a phase of anticipated revenue growth driven by its enterprise-focused products, which are designed to capture emerging opportunities in the artificial intelligence (“AI”) and data-driven technology markets.
The rapid expansion of generative AI across consumer and enterprise segments underscores how EW’s combination of advanced technical expertise, proprietary intellectual property (“IP”), and agile development practices positions the Company to identify, pursue, and monetize high-value market opportunities.
AI Vault
The rise of generative AI presents substantial opportunities for organizations to increase productivity by automating and streamlining tasks and workflows. While the enterprise generative AI market is in its preliminary stages, adoption of large language model (“LLM”) applications—most notably ChatGPT—has accelerated rapidly. Simultaneously, data security and privacy remain critical concerns, as many widely used consumer tools lack clear, enforceable controls to prevent the upload of sensitive corporate information.
As a result, many organizations restrict or prohibit the use of generative AI tools due to concerns regarding data leakage beyond their controlled environments. In some cases, these restrictions take the form of blanket bans on external tools based on perceived privacy and security risks. Nonetheless, third-party industry reports indicate that employees continue to utilize such tools without corporate authorization, including by entering sensitive, non-public corporate data and proprietary details into these open platforms.
EW has identified strong market demand for a solution that enables enterprises to realize the productivity benefits of generative AI while minimizing the operational risks associated with managing and exposing proprietary corporate data. In response, EW has developed and launched AI Vault, an enterprise solution available through the Amazon Web Services (“AWS”) Marketplace. AI Vault is designed to provide a secure, controlled environment for generative AI, allowing enterprises to harness AI-driven productivity gains while maintaining robust protections for their most sensitive data assets.
| 5 |
EthicalWeb.AI Search Platform
The EthicalWeb.AI search platform is the technical implementation of U.S. Patent No. 10,977,387. This platform enables search functionality across inventory and related data, providing users with real-time insights and an enhanced user experience. EW believes the platform has the potential to serve as a transformative white-label solution for leading technology companies and firms across strategic sectors. The Company continues to actively pursue commercial partnerships that utilize this and other elements of its patented intellectual property portfolio.
Key functional areas of the EthicalWeb.AI search platform include:
| ● | Decentralized Network Architecture: Implements decentralized control, revenue collection, and delivery, enabling partners to establish a global network of locally managed “super apps” that share a single database. | |
| ● | Data Anonymization: Utilities capabilities to anonymize user data and suppress behavioral data tracking, significantly improving privacy protections for end users. | |
| ● | Ad-Free Commercial Structure: Supports an advertisement-free commercial model, allowing suppliers of goods and services to operate on a subscription basis rather than through traditional ad-supported business frameworks. |
Intellectual Property
EW has developed a search system titled “AN INTERNET-BASED SEARCH MECHANISM,” which has been granted patents in South Africa (2016/06947), New Zealand (725014), the United States (Utility Patent No. US 10,977,387), and Canada (2962520). Patents are pending for related processes in Australia (2015248619), the European Union (157239906), and the United Kingdom (PCT/GB2015/051130). This system offers an alternative economic model to traditional search and is intended to better serve all key participant groups. Its technical implementation is based on the Ethical Web ATI Open-Source Platform.
EW has filed a related U.S. patent application, Patent Application No. 17/980298. It is titled “Contextual Enveloping of Dynamic Hypertext Links.” This utility patent describes a groundbreaking technology that significantly differs from traditional search engines. The key technical feature of this patent is the AI Seek AI LLM, which is designed to enhance conversational search alongside foundational models such as ChatGPT and Claude.
Furthermore, EW has filed U.S. Patent Application No. 18/376,101, titled “Computer-Implemented Method and System.” This application addresses the limitations of foundational AI LLMs that are typically constrained by specific training data cutoff dates, providing a system that dynamically incorporates contemporaneous, real-time data into prompt responses. In addition, EW has filed U.S. Patent Application No. 19/055,968, titled “Sensitive Data Protection for Generative AI.” This application describes processes for detecting and managing sensitive terms in generative AI prompts in real time, with the objective of strengthening privacy and data protection controls for enterprise deployments.
Competition
The enterprise generative AI market for security-focused products remains in its early stages, and no dominant participants have yet emerged. Existing market participants offer solutions that often require substantial infrastructure integration work and bespoke software development. Because the competitive landscape is highly dynamic, existing, or future competitors may introduce products, services, or technical enhancements that better address industry developments or customer requirements. These advancements may include improved encryption features, broader mobile accessibility, or a targeted focus on niche corporate segments.
Increased competition may result in pricing pressure, customer attrition, or reduced user engagement, any of which could adversely affect the Company’s business operations, results of operations, and financial condition.
EW believes that its portfolio of granted patents and pending applications, together with its broader proprietary intellectual property and engineering capabilities, provides meaningful competitive differentiation. However, there can be no assurance that EW’s perceived competitive advantages and intellectual property protections will be sufficient to prevent well-capitalized competitors from developing or marketing products and services that are similar to, or more effective than, those of the Company.
| 6 |
Government Regulation
The Company is subject to a wide range of domestic and international laws and regulations applicable to companies conducting business online, and these legal structures continue to evolve in ways that could adversely affect our business, financial condition, and results of operations.
In the United States and globally, legal regimes governing the liability of online service providers for the activities of their users and other third parties are being heavily evaluated and reinterpreted through continuous claims and regulatory actions. These matters include, among others, alleged invasion of privacy, unfair competition, copyright and trademark infringement, and various changing legal theories concerning the nature, ranking, and content of search results and user-generated content.
In certain jurisdictions outside the United States, governments also impose additional regulatory requirements or licensing regimes on online businesses, such as those governing employment-related services, recruiting, and news- or media-related activities. Any adverse court ruling, legislative development, or governmental action that expands the obligations or liability of online service providers for user or third-party conduct could require us to modify our products or business practices, increase our compliance costs, or otherwise negatively impact our operations. In addition, heightened global concerns about the potential misuse of online and social networking technologies for unlawful or harmful purposes—such as the unauthorized disclosure of national security information, money laundering, or facilitating criminal activities—may prompt the adoption of new laws, regulations, or stricter monitoring measures. These could require changes to our platform, impose additional reporting obligations, restrict key features of our services, or cause users to reduce their engagement with our platform.
We are also subject to numerous and increasingly stringent federal, state, and international laws and regulations relating to information security, data protection, and privacy. Many jurisdictions require organizations to implement reasonable security measures to protect personal data and to notify individuals and regulators in the event of data breaches. These requirements are often complex, ambiguously drafted, and difficult to implement in practice. The costs associated with compliance, including ongoing investments in security technology, compliance personnel, and external advisors, may increase over time due to new legislation or evolving enforcement practices. Any failure or perceived failure by us to comply with these laws could subject us to regulatory investigations, enforcement actions, structural fines, private litigation, or other liabilities.
Our privacy policies describe our practices regarding the collection, use, storage, transmission, and disclosure of personal information, including information relating to visitors and users of our platform. If our actual practices differ from those described in our policies, our contractual commitments, or applicable privacy and data protection laws, The Company may be subject to inquiries or enforcement actions by consumer protection agencies and data protection regulators.
The interpretation and application of privacy, data protection, and data security laws in the context of online services are subject to differing and sometimes conflicting regulatory and judicial views. While historical frameworks like the U.S.–EU Safe Harbor and subsequent Privacy Shield agreements were systematically invalidated by European courts, cross-border data transfers between the European Union and the United States are currently evaluated under the EU-U.S. Data Privacy Framework. However, ongoing uncertainty surrounding international data transfer, data localization, and strict regional data protection requirements continues to pose compliance hurdles. Regulation varies significantly from state to state within the U.S. (such as the California Consumer Privacy Act) and from country to country internationally, creating a complex patchwork of requirements. Because our platform is globally accessible, foreign authorities may assert jurisdiction over our operations even where The Company does not have a physical corporate entity or local infrastructure. Complying with these diverse requirements may increase our operational costs and permanently limit our ability to offer certain features or services in key regional markets.
Employees
As of August 21, 2026, The Company has one full-time employee based in the US and five full-time employees based in the UK, none of whom are represented by a labor union.
| 7 |
Smaller Reporting Company
The Company is a “smaller reporting company” as defined in Rule 12b-2 under the Exchange Act. As a smaller reporting company, and are eligible to utilize certain scaled disclosure exemptions, including: (1) providing scaled executive compensation disclosures; and (2) providing only two years of audited financial statements, rather than three years, in our annual filings.
Additionally, as a non-accelerated filer, the Company is exempt from the internal control auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002. We will continue to utilize these scaled disclosure and reporting exemptions for as long as we maintain smaller reporting company and non-accelerated filer status.
Implications of Being an Emerging Growth Company
The company qualifies as an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).
Consequently, we may elect to take advantage of various scaled disclosure requirements otherwise applicable to public reporting entities. These exemptions include:
| ● | Presenting reduced historical financial statements and corresponding management discussions in our periodic filings. | |
| ● | An exemption from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002. | |
| ● | We utilize reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements, and registration statements. | |
| ● | An exemption from holding non-binding advisory votes on executive compensation and obtaining stockholder approval of any unapproved golden parachute payments. |
The Company elected to utilize certain reduced disclosure obligations within our periodic reports, including this quarterly report. The Company may take advantage of other scaled reporting requirements in future SEC filings. As a result, the information we provide to our stockholders may differ from disclosures made by other public reporting companies that are not emerging growth companies.
The JOBS Act also provides that an emerging growth company may use an extended transition period to comply with new or revised accounting standards. The Company have irrevocably elected to opt out of this extended transition period. Therefore, the Company is 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
Upon the termination of our emerging growth company status, the Company will no longer be eligible to utilize certain exemptions available under the Jumpstart Our Business Startups (JOBS) Act. However, if the Company continues to qualify as a “smaller reporting company” as defined under Rule 12b-2 of the Exchange Act following such termination, the Company will remain eligible to take advantage of the scaled disclosure provisions available to smaller reporting companies. These include providing scaled executive compensation disclosures and presenting only two years of audited financial statements in our annual filings. The Company intends to utilize these scaled reporting exemptions for as long as the Company maintains smaller reporting company status.
Available Information
The Company makes available, free of charge, on or through its website at EthicalWeb AI, its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission (“SEC”).
The SEC maintains an internet site at the SEC Official Page that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The Company’s website and the information contained therein or connected to it are not intended to be and are not incorporated into this Quarterly Report on Form 10-Q.
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Results of Operation
Three months ended June 30, 2026, compared to the three months ended June 30, 2025
| Three Months Ended June 30, | Changes | |||||||||||||||
| 2026 | 2025 | Amount | % | |||||||||||||
| Revenue | ||||||||||||||||
| Net sales | $ | 33 | $ | 712 | $ | (679 | ) | -95 | % | |||||||
| Cost of sales | - | 100 | (100 | ) | -100 | % | ||||||||||
| Gross profit | 33 | 612 | (579 | ) | -95 | % | ||||||||||
| Operating Expenses | ||||||||||||||||
| General and administrative | (17,970 | ) | 147,028 | (164,998 | ) | -112 | % | |||||||||
| Professional fees | 40,249 | 13,567 | 26,682 | 197 | % | |||||||||||
| Sales and marketing | 1,875 | 71,460 | (69,585 | ) | -97 | % | ||||||||||
| Amortization and depreciation | 64,167 | 55,394 | 8,773 | 16 | % | |||||||||||
| Research and development | 92,282 | 64,547 | 27,735 | 43 | % | |||||||||||
| Total operating expense | 180,603 | 351,996 | (171,393 | ) | -49 | % | ||||||||||
| Operating loss | (180,570 | ) | (351,384 | ) | 170,814 | 49 | % | |||||||||
| Other income (expense) | ||||||||||||||||
| Other income | (191 | ) | - | (191 | ) | N/A | ||||||||||
| Interest income | - | - | - | 0 | % | |||||||||||
| Interest expense | (411,734 | ) | (4,017 | ) | (407,717 | ) | -10,150 | % | ||||||||
| Loss on derivative issuance | (2,279 | ) | - | (2,279 | ) | N/A | ||||||||||
| Loss on extinguishment of debt | (60,542 | ) | - | (60,542 | ) | N/A | ||||||||||
| Gain on change in fair value of derivative liability | 214,743 | (16,358 | ) | 231,101 | 1,413 | % | ||||||||||
| Foreign currency transaction (loss) gain | 12 | (445 | ) | 457 | 103 | % | ||||||||||
| Total other income (expense) | (259,991 | ) | (20,820 | ) | (239,171 | ) | -1,149 | % | ||||||||
| Net loss before income tax | (440,561 | ) | (372,204 | ) | (68,357 | ) | 18 | % | ||||||||
Revenue and Gross Profit:
Net sales decreased by $679, or 95%, to $33 for the three months ended June 30, 2026, compared to $712 for the three months ended June 30, 2025. The decline was driven primarily by the removal of the AI Seek Application from the Apple App Store. Cost of sales decreased by $100, or 100% to $0 during the period. As a result, gross profit declined by $579, or 95% to $33. Future revenue growth remains constrained, and the company assurances that it will generate significant revenues without securing additional financing.
Operating Expenses:
Total operating expenses decreased by $171,393, or 49%, to $180,603 for the three months ended June 30, 2026, compared to $351,996 for the three months ended June 30, 2025. This decrease was driven primarily by reductions in general and administrative expenses and sales and marketing costs, which were partially offset by increases in research and development, professional fees, and depreciation and amortization.
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General and administrative expenses decreased by $164,998, or 112%, resulting in a net credit balance of $17,970 for the three months ended June 30, 2026, compared to an expense of $147,028 for the three months ended June 30, 2025. This reduction and net credit were primarily driven by a $144,148 credit for forfeited stock options recorded within general administration. This credit resulted from the forfeiture of share options due to employee separations.
Sales and marketing expenses decreased by $69,585, or 97%, to $1,875 from $71,460 in the three months ended June 30, 2025. This reduction was due to liquidity constraints, which required the Company to scale back promotional and marketing activities.
These cost reductions were partially offset by a $27,735, or 43%, increase in research and development expenses, which rose to $92,282 from $64,547. This increase was primarily due to the capitalization of certain development costs in the three months ended June 30, 2025, resulting in a lower R&D expense base in the current period relative to the prior period.
Professional fees increased by $26,682, or 197%, to $40,249 from $13,567 due to higher legal and accounting compliance costs and $10,500 in legal fees for note conversions.
Amortization and depreciation expenses rose by $8,773, or 16%, to $64,167 from $55,394 due to recent asset placements.
As a result of the overall reduction in operating spend, operating loss decreased by $170,814, or 49%, to $180,570 for the three months ended June 30, 2026, compared to $351,384 for the three months ended June 30, 2025.
Other Income (Expense)
Total other income (expense), net increased by $239,171, or 1,149%, resulting in a net other expense of $259,991 for the three months ended June 30, 2026, compared to a net other expense of $20,820 for the three months ended June 30, 2025.
This unfavorable shift into a net expense position was primarily driven by a $407,717 increase in interest expense, which rose to $411,734 for the three months ended June 30, 2026, compared to $4,017 for the three months ended June 30, 2025. This increase included $372,779 interest accretion. This increase was further impacted by a $60,542 loss recognized on the extinguishment of debt and a $2,279 loss on derivative issuance.
These negative impacts were partially offset by a $231,101, improvement in the fair value of derivative liabilities, which swung to a gain of $214,743 for the three months ended June 30, 2026, from a loss of $16,358 for the three months ended June 30, 2025.
As a result of these operational and other income shifts, net loss before income taxes increased by $68,357, or 18%, to $440,561 for the three months ended June 30, 2026, compared to $372,204 for the three months ended June 30, 2025.
Six months ended June 30, 2026, compared to the six months ended June 30, 2025
| Six Months Ended June 30, | Changes | |||||||||||||||
| 2026 | 2025 | Amount | % | |||||||||||||
| Revenue | ||||||||||||||||
| Net sales | $ | 469 | $ | 1,353 | $ | (884 | ) | -65 | % | |||||||
| Cost of sales | - | 100 | (100 | ) | -100 | % | ||||||||||
| Gross profit | 469 | 1,253 | (784 | ) | -63 | % | ||||||||||
| Operating Expenses | ||||||||||||||||
| General and administrative | 118,888 | 312,050 | (193,162 | ) | -62 | % | ||||||||||
| Professional fees | 62,154 | 30,347 | 31,807 | 105 | % | |||||||||||
| Sales and marketing | 6,225 | 85,798 | (79,573 | ) | -93 | % | ||||||||||
| Amortization and depreciation | 128,628 | 109,348 | 19,280 | 18 | % | |||||||||||
| Research and development | 164,041 | 120,932 | 43,109 | 36 | % | |||||||||||
| Total operating expense | 479,936 | 658,475 | (178,539 | ) | -27 | % | ||||||||||
| Operating loss | (479,467 | ) | (657,222 | ) | 177,755 | 27 | % | |||||||||
| Other income (expense) | ||||||||||||||||
| Other income | 105,301 | 3 | 105,298 | 3,509,933 | % | |||||||||||
| Interest income | 386 | - | 386 | N/A | ||||||||||||
| Interest expense | (446,680 | ) | (4,017 | ) | (442,663 | ) | -11,020 | % | ||||||||
| Loss on derivative issuance | (72,177 | ) | - | (72,177 | ) | N/A | ||||||||||
| Loss of extinguishment of debt | (60,542 | ) | - | (60,542 | ) | N/A | ||||||||||
| Gain on change in fair value of derivative liability | 370,206 | 10,853 | 359,353 | 3,311 | % | |||||||||||
| Foreign currency transaction (loss) gain | (12 | ) | (377 | ) | 365 | 97 | % | |||||||||
| Total other income (expense) | (103,518 | ) | 6,462 | (109,980 | ) | -1,702 | % | |||||||||
| Net loss before income tax | (582,985 | ) | (650,760 | ) | 67,775 | 10 | % | |||||||||
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Revenue and Gross Profit:
Net sales decreased by $884, or 65%, to $469 for the six months ended June 30, 2026, compared to $1,353 for the six months ended June 30, 2025. This decline was driven by the removal of the Company’s AI Seek Application from the Apple App Store. Cost of sales decreased by $100, or 100%, to $0 for the six months ended June 30, 2026, from $100 for the six months ended June 30, 2025, due to volume optimizations. As a result, gross profit decreased by $784, or 63%, to $469 for the six months ended June 30, 2026, compared to $1,253 for the six months ended June 30, 2025. Future growth remains constrained, as the company cannot provide assurances that it will generate significant revenue without securing additional financing.
Operating Expenses
Total operating expenses decreased by $178,539, or 27%, to $479,936 for the six months ended June 30, 2026, compared to $658,475 for the six months ended June 30, 2025. This decrease was driven primarily by reductions in general and administrative expenses and sales and marketing costs, which were partially offset by increases in research and development, professional fees, and depreciation and amortization.
General and administrative expenses decreased by $193,162, or 62%, to $118,888 for the six months ended June 30, 2026, compared to $312,050 for the six months ended June 30, 2025. This reduction was primarily driven by the $144,148 stock-based compensation credit recorded during the three months ended June 30, 2026, resulting from the forfeiture of unvested share options due to employee separations.
Sales and marketing expenses decreased by $79,573, or 93%, to $6,225 for the six months ended June 30, 2026, compared to $85,798 for the six months ended June 30, 2025. This reduction was due to liquidity constraints, which required the Company to scale back promotional activities.
Research and development expenses increased by $43,109, or 36%, to $164,041 for the six months ended June 30, 2026, compared to $120,932 for the six months ended June 30, 2025. This increase was primarily due to the capitalization of certain development costs in the prior year, which lowered the prior period’s expense base.
Professional fees increased by $31,807, or 70%, to $62,154 for the six months ended June 30, 2026, compared to $30,347 for the six months ended June 30, 2025. The increase was driven by higher legal and accounting compliance requirements and $10,500 in legal fees for note conversions.
Amortization and depreciation expenses rose by $19,280, or 18%, to $128,628 for the six months ended June 30, 2026, compared to $109,348 for the six months ended June 30, 2025, due to recent asset placements.
As a result of the overall reduction in operating spend, operating loss decreased by $177,539, or 27%, to $479,936 for the six months ended June 30, 2026, compared to $657,222 for the six months ended June 30, 2025.
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Other Income (Expense) and Net Loss
Total other income (expense), net decreased by $109,980, or 1,702%, resulting in a net other expense of $103,518 for the six months ended June 30, 2026, compared to a net other income of $6,462 for the six months ended June 30, 2025.
This unfavorable shift into a net expense position was primarily driven by a $442,663 increase in net interest expense rising to $446,680 from $4,017 due to interest accretion of $372,779 on outstanding convertible notes, alongside a $72,177 loss on derivative issuance and a $60,542 loss on the extinguishment of debt.
These negative impacts were partially offset by a $359,353 positive change in the fair value of derivative liabilities, which swung to a gain of $370,206 in 2026 from a gain of $10,853 in 2025. Additionally, the variance was aided by $105,301 in other income, primarily from a research and development tax credit received in the United Kingdom.
As a result of these operational and other income shifts, net loss before income taxes decreased by $67,775, or 10%, to $582,985 for the six months ended June 30, 2026, compared to $650,760 for the six months ended June 30, 2025.
Liquidity and Capital Resources
The following table provides selected financial data about our Company:
| June 30, 2026 | December 31, 2025 | Change | % | |||||||||||||
| Current Assets | $ | 7,160 | $ | 18,471 | $ | (11,311 | ) | -61 | % | |||||||
| Current Liabilities | 3,366,231 | 2,918,193 | 448,038 | 15 | % | |||||||||||
| Working Capital Deficit | $ | (3,359,071 | ) | (2,899,722 | ) | $ | (459,349 | ) | -16 | % | ||||||
As of June 30, 2026, the Company had total current assets of $7,160, representing a $11,311, or 61%, decrease from $18,471 as of December 31, 2025. This decrease in liquidity primarily reflects cash used to fund ongoing operating activities.
Current liabilities increased by $448,038, or 15%, to $3,359,071 as of June 30, 2026, compared to $2,918,193 as of December 31, 2025. This increase was driven primarily by an accumulation of obligations related to the Company’s outstanding convertible notes.
Concurrently, the Company’s working capital deficit expanded by $459,349 or 16%, from $2,899,722 as of December 31, 2025, to $3,366,231 as of June 30, 2026. This working capital deficit and limited cash balance raise substantial doubt about the Company’s ability to continue as a going concern. Management continues to evaluate alternative funding sources; however, there can be no assurance that the Company will successfully secure additional financing on commercially acceptable terms, or at all, to sustain operations.
Over the last three years, and as of the date of this Report, the Company has faced an increasingly challenging liquidity situation that has limited our ability to execute our operating plan. The Company will need to obtain capital to continue operations; however, there is no assurance that the Company can secure such funding on commercially acceptable terms, or at all.
As the Company is not generating significant revenues from its current operations, it will require additional debt or equity capital to sustain its business activities and support future expansion. Sources of additional financing or structural arrangements with third parties may include equity or debt financing, financial institution loans, related-party loans, or revolving credit facilities. The Company may not successfully identify or close suitable financing transactions within the required timeframe, and it may not be able to obtain the necessary capital through alternative means. Unless the Company can attract additional investment capital, our ability to continue as a going concern is in doubt.
| 12 |
Furthermore, we are required to 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”) impose various requirements on public companies, including requiring changes in corporate governance practices. The Company anticipates that these rules and regulations will increase our legal and financial compliance costs and render our activities more time-consuming and costly. The Company will require capital investment to satisfy these regulatory and compliance obligations.
If the Company cannot obtain sufficient additional capital, we may be forced to cease its SEC obligations and terminate operations altogether. If additional funds are obtained through sale of equity securities or via issuance of common stock to satisfy current or future obligations, the stockholders may experience substantial dilution. Furthermore, such equity securities may possess rights, preferences, or privileges that are senior to those of the common stock.
Cash Flow
| June 30, 2026 | June 30, 2025 | Change | % | |||||||||||||
| Cash used in Operating activities | $ | (204,919 | ) | $ | (72,619 | ) | $ | (132,300 | ) | -182 | % | |||||
| Cash used in provided by Investing Activities | (6,439 | ) | (157,132 | ) | 150,693 | 96 | % | |||||||||
| Cash provided by Financing Activities | 203,670 | 232,700 | (29,030 | ) | -12 | % | ||||||||||
| Cash on Hand | $ | 335 | 4,104 | $ | (3,769 | ) | -92 | % | ||||||||
Net cash used in operating activities increased by $132,300, or 182%, to $204,919 for the six months ended June 30, 2026, compared to $72,619 for the six months ended June 30, 2025. This expanded cash outflow was primarily driven by changes in working capital items, including an acceleration of payments due to related parties and suppliers, as well as a reduction in cash receipts from revenue contracts.
Net cash used in investing activities decreased by $150,693, or 96%, to $6,439 for the six months ended June 30, 2026, compared to $157,132 for the six months ended June 30, 2025. This reduction in cash outflows was due to lower capital expenditures on intangible asset acquisitions.
Net cash provided by financing activities decreased by $29,030, or 12%, to $203,670 for the six months ended June 30, 2026, compared to $232,700 for the six months ended June 30, 2025. This variance was primarily driven by an increase in net proceeds from convertible note issuances and loans from related parties.
As a result of these net cash flows and the effects of exchange rate fluctuations, cash at the end of the period decreased by $3,769, or 92%, to $335 as of June 30, 2026, compared to $4,104 as of June 30, 2025. This limited cash balance constrains the Company’s ongoing operational runway.
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 the Company believes are reasonable under the circumstances, which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. While our significant accounting policies are described in more detail in the notes to our financial statements included elsewhere in this Report, the Company believes 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.
| 13 |
The Company our most critical accounting policies and estimates relate to the following:
| ● | Foreign Currency Translations | |
| ● | Intangible Assets | |
| ● | Long-lived Assets | |
| ● | Income Taxes | |
| ● | Stock-based Compensation | |
| ● | Common Stock Purchase Warrants and Derivative Financial Instruments | |
| ● | Convertible Financial Instruments | |
| ● | Fair Value of Financial Instruments |
Foreign Currency Translations
The functional currency of the Company’s international subsidiaries is generally their local currency, the Great British Pound (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 the weighted-average exchange rates for the period. Equity accounts are translated at historical rates. The resulting translation adjustments are recorded directly into accumulated other comprehensive income.
Intangible Assets
The cost of intangible assets with determinable useful lives is amortized to reflect the pattern of economic benefits consumed, using the straight-line method 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 asset’s recorded value. 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 bases for assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases, 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 more likely than not to be realized.
Convertible Financial Instruments
Under ASC 815, the Company bifurcates conversion options from hybrid host instruments and accounts for them as free-standing derivatives if three criteria are met: (1) the option’s risks are not clearly and closely related to the host; (2) the hybrid instrument is not already marked to fair value through earnings; and (3) the option independently qualifies as a derivative. This bifurcation rule does not apply if the host instrument is deemed conventional under U.S. GAAP.
Fair Value of Financial Instruments
The Company accounts for financial instruments in accordance with ASC 820, “Fair Value Measurements and Disclosures.” ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
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Stock-Based Compensation
The Company accounts for stock-based compensation per ASC Topic 718 Compensation-Stock Compensation, which prescribes accounting and reporting standards for all share-based payment transactions in which employee and non-employee services are acquired. Share-based payments to employees and non-employees, including grants of stock options, are recognized as compensation expenses in the financial statements based on the stock awards’ fair values on the grant date. That expense is recognized over the period required to provide services in exchange for the award, known as the requisite service period (usually the vesting period). Stock Options awarded as compensation per the Company’s 2022 Equity Incentive Plan are deemed unissued until vested. Stock Option compensation is recognized as an expense over the vesting period. Awards forfeited due to the unfulfillment of obligations, such as termination of employment before the award is fully vested, for no cash or other consideration, are not recognized as an expense, and any previously recognized costs are reversed in the period of forfeiture.
Common Stock Purchase Warrants and Derivative Financial Instruments
Common stock purchase warrants and other derivative financial instruments are classified as equity if the contracts (1) require physical settlement or net-share settlement or (2) give the Company a choice of net-cash settlement or settlement in its shares (physical settlement or net-share settlement). Contracts which (1) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company), (2) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement), or (3) contain reset provisions that do not qualify for the scope exception are classified as liabilities. The Company assesses the classification of its common stock purchase warrants and other derivatives at each reporting date to determine whether a change in classification between equity and liabilities is required.
Recent Accounting Pronouncements
For discussion of recently issued and adopted accounting pronouncements, please see Note 2 to the unaudited consolidated financial statements as of and for the three months ended June 30, 2026, and 2025, included herein.
Off-Balance Sheet Arrangements
As of June 30, 2026, there were no off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
Item 4. Evaluation of Disclosure Controls
We maintain “disclosure controls and procedures,” as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Our management, with the participation of our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer), evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2026. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were ineffective as of June 30, 2026, due to the material weaknesses in our internal control over financial reporting described below:
● Lack of Segregation of Duties: We do not maintain sufficient segregation of duties within our accounting functions due to our limited size and resources. Additionally, established oversight protocols and internal controls were not consistently followed or formalized by our Chief Executive Officer. The Chief Financial Officer evaluated these gaps and determined they did not result in misstatements in the accompanying financial statements; however, the lack of formalized segregation and consistent review protocols constitutes a material weakness.
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● Insufficient Accounting Personnel: We possess insufficient personnel with the requisite expertise in GAAP and SEC reporting requirements, which limits our ability to process, analyze, and timely review complex accounting transactions.
● Lack of Independent Board Oversight: Our Board of Directors lacks a functioning audit committee, a compensation committee, or an outside independent director. This lack of independent oversight limits the effective monitoring and enforcement of our internal controls.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the quarter ended June 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Remediation Plan and Status
Management is committed to improving our internal control over financial reporting as additional resources become available. While these material weaknesses persist, there is an increased risk that a material misstatement in our annual or interim consolidated financial statements could occur and not be prevented or detected in a timely manner during our financial close and reporting process. To address these vulnerabilities, management plans to enhance the design and operating effectiveness of our internal controls. We were unable to remediate these material weaknesses during the period covered by this quarterly report on Form 10-Q. However, as capital permits, we plan to implement a structured remediation strategy.
● We intend to appoint additional qualified finance and accounting personnel to facilitate a proper segregation of duties and strengthen our financial risk management framework.
● We plan to adapt, adopt, and enforce comprehensive written policies and procedures to standardize our accounting and financial reporting workflows.
● We plan to restructure our corporate governance by appointing independent directors to our board and establishing a dedicated audit committee and compensation committee to ensure robust independent oversight.
The implementation of these remediation efforts depends heavily on our ability to secure additional financing or generate sufficient revenue to cover the associated personnel and operational costs. If we are unable to obtain the required funding, our ability to successfully execute these changes and fully remediate the underlying material weaknesses will be materially and adversely affected.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings
We may occasionally become involved in various claims and legal proceedings that arise in the ordinary course of our business. These may include product liability, intellectual property, employment matters, personal injury claims, and other general commercial disputes. Regardless of the outcome, litigation can result in significant defense costs, settlements, diversion of management resources, and other adverse impacts on our operations.
We are currently a party to a civil lawsuit pending in the United States District Court for the District of Wyoming (Case No. 1:26-CV-20-ABJ), filed by GHS Investments, LLC, a holder of our preferred stock. The plaintiff seeks the Court’s appointment of a custodian or receiver for Bubblr, Inc. We dispute the allegations and intend to vigorously defend against the lawsuit. We are currently engaged in discussions with the plaintiff regarding a potential settlement and dismissal of the case; however, we cannot predict the ultimate outcome of this matter or estimate the range of potential loss at this time.
Item 1A: Risk Factors
Not applicable.
Item 1b. Unresolved Staff Comments.
None.
Item 1c. Cybersecurity
In today’s digital landscape, cybersecurity is a critical component of our business operations. We are committed to safeguarding information systems, data, and technology infrastructure from potential cyber threats, unauthorized access, and data loss. We have implemented robust policies, procedures, and security measures to mitigate risks, ensure compliance with applicable laws and regulations, and maintain the trust of our stakeholders.
We actively monitor and adapt to the evolving cybersecurity landscape through continuous assessment. Despite these efforts, the potential for breaches, attacks, or system failures remains a risk, which could lead to service disruptions, financial losses, legal liabilities, or reputational harm. We will continue to prioritize investments in cybersecurity to enhance our defenses and resiliency against emerging threats.
In all known cases to date, the company’s systems and protocols have successfully detected and mitigated these attempts with no impact on operations or data integrity.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The information set forth below relates to our issuances of securities without registration under the Securities Act of 1933.
In the three months ended June 30, 2026, the Company did not issue unregistered securities:
Item 3. Defaults upon Senior Securities
None
Item 4. Mine Safety Disclosures
Not applicable
Item 5. Other Information
None
Item 6. Exhibits
See Exhibit Index below for exhibits required by Item 601 of Regulation S-K.
| Exhibit Number | Description of Exhibit | |
| 31.1** | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2** | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1** | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 32.2** | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101** | The following materials are from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, formatted in Extensible Business Reporting Language (XBRL). |
| ** | Provided herewith |
| 17 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| BUBBLR, INC. | |
| Date: August 21, 2026 | /s/ Stephen Morris |
| Stephen Morris | |
| Chief Executive Officer | |
| (Principal Executive Officer) | |
| Date: August 21, 2026 | /s/ David Chetwood |
| David Chetwood | |
Chief Financial Officer (Principal Accounting and Financial Officer) |
| 18 |