10-Q: Bubblr Q3 Loss Narrows Amid AI Product Push, Liquidity Concerns Persist

Sentiment:

Quarterly Report 7 November 2025 6:19 AM

Bubblr, Inc. reported a reduced net loss in Q3 2025, driven by lower operating expenses, but faces significant liquidity challenges and internal control weaknesses despite new AI product launches.

Capital raiseManagement intends to secure additional operating funds through equity or debt offerings.The company approved the issuance of up to $500,000 in convertible loan notes on April 4, 2025, with $345,746 added during the nine-month period.A Securities Purchase Agreement for a Convertible Promissory Note of $57,000 was executed on July 15, 2025, with additional tranches of financing available up to $775,000.A second tranche Convertible Promissory Note of $57,000 was executed on August 15, 2025.A third tranche Convertible Promissory Note of $57,000 was executed on October 9, 2025 (subsequent event).The company is exploring potential avenues for fundraising, including the issuance of equity and debt instruments and the licensing of its patents and intellectual property.

Worse than expectedThe company reported a significant working capital deficit of $(2,608,742) as of September 30, 2025, an increase from the prior year.Cash on hand is critically low at $696, indicating severe liquidity issues.Revenue declined by 33% for the nine months ended September 30, 2025, demonstrating a contraction in sales.Management explicitly stated significant doubt about the company's ability to continue as a going concern.Material weaknesses in internal controls over financial reporting were identified, indicating operational and governance deficiencies.

Summary

Bubblr, Inc. (d/b/a Ethical Web AI) reported a net loss of $(886,596) for the nine months ended September 30, 2025, a 46% reduction from the $(1,632,206) loss in the same period of 2024.
Revenue decreased by 33% to $2,718 for the nine months ended September 30, 2025, compared to $4,087 in the prior year.
Operating expenses significantly decreased by 46% to $872,949 for the nine months ended September 30, 2025, primarily due to a 57% reduction in general and administrative expenses following executive terminations in July 2024.
The company's cash balance stood at $696 as of September 30, 2025, down from $41,184 at December 31, 2024.
Current liabilities exceeded current assets by $2,608,735 as of September 30, 2025, indicating a substantial working capital deficit.
Management expressed significant doubt about the company's ability to continue as a going concern due to recurring losses and insufficient working capital.
Bubblr launched AI Vault, an enterprise Generative AI security solution on AWS Marketplace, and continues to develop AI Seek and the Ethical Web Platform, leveraging its patented intellectual property.
The company identified material weaknesses in its internal controls over financial reporting, including insufficient segregation of duties, lack of finance/accounting expertise, and absence of an audit or compensation committee.
New convertible loan notes totaling $345,746 were added during the nine months ended September 30, 2025, and additional convertible promissory notes were issued in July and August 2025, with a third tranche in October 2025.

Sentiment

Score: 2

Explanation: The company faces severe financial distress, evidenced by a critically low cash balance, significant working capital deficit, and explicit going concern doubt. While there's a reduced net loss and new product launches, these are overshadowed by declining revenue and material internal control weaknesses. The reliance on debt financing and the uncertainty of future capital raises contribute to a highly negative outlook.

Positives

Net loss decreased by 46% to $(886,596) for the nine months ended September 30, 2025, compared to $(1,632,206) in the prior year.
Operating expenses decreased by 46% for the nine months ended September 30, 2025, primarily due to a 57% reduction in general and administrative costs.
The company launched AI Vault, an enterprise Generative AI security product on AWS Marketplace, targeting organizations concerned with data leakage.
Bubblr continues to develop and commercialize its patented AI Seek and Ethical Web Platform, with patents granted in multiple countries and pending in others.
Cash provided by financing activities increased by 100% to $407,831 for the nine months ended September 30, 2025, indicating successful, albeit debt-based, capital injections.

Negatives

Revenue declined by 33% to $2,718 for the nine months ended September 30, 2025, compared to $4,087 in the prior year.
The company reported a net comprehensive loss of $(963,671) for the nine months ended September 30, 2025.
Cash on hand is critically low at $696 as of September 30, 2025, a 98% decrease from $41,184 at December 31, 2024.
Current liabilities exceed current assets by $2,608,735 as of September 30, 2025, indicating a severe working capital deficit.
The accumulated deficit reached $(17,747,384) as of September 30, 2025.
Interest expense increased significantly by 482% to $(36,077) for the nine months ended September 30, 2025, due to new convertible loan notes.
The company's disclosure controls and procedures were deemed ineffective as of September 30, 2025, due to identified material weaknesses in internal control over financial reporting.

Risks

Significant doubt exists regarding the company's ability to continue as a going concern due to recurring losses and insufficient working capital.
Inability to secure additional operating funds through equity or debt offerings, which is not guaranteed.
Failure to attain a revenue level sufficient to generate adequate cash flow from operations.
Intense competition in the nascent enterprise Generative AI market, with potential for new products or enhancements from competitors.
Evolving domestic and international laws and regulations concerning online service provider liability, data privacy, and data protection, which could increase compliance costs or lead to legal liabilities.
Potential for cybersecurity breaches, attacks, or system failures despite established measures, leading to service interruptions, financial detriments, legal liabilities, or reputational harm.
Material weaknesses in internal control over financial reporting, including insufficient segregation of duties, lack of finance/accounting expertise, and absence of an audit or compensation committee, posing a risk of material misstatements.

Future Outlook

The company anticipates that higher revenues will not be realized until further development, marketing, support, and delivery of its products and services are accomplished. Management intends to secure additional operating funds through equity or debt offerings and is exploring avenues for fundraising, including the issuance of equity and debt instruments and the licensing of its patents and intellectual property. There is no assurance that substantial revenue growth will be achieved or that necessary financing will be secured on acceptable terms.

Management Comments

"Management intends to secure additional operating funds through equity or debt offerings. However, success in this endeavor is not guaranteed."
"There are no assurances that the Company will be able to (1) attain a revenue level sufficient to generate adequate cash flow from operations or (2) secure additional financing through private placements, public offerings, or loans necessary to support its working capital requirements."
"We are confident that our competitive advantages and protections are defensible through our granted patents and intellectual property."
"Our management is committed to enhancing internal controls when adequate resources are available."

Industry Context

Bubblr operates in the rapidly evolving Generative AI market, which is still in its nascent stages for enterprise security products. The company aims to capitalize on the demand for solutions that enhance productivity while addressing critical data security and privacy concerns, particularly given the widespread, often clandestine, use of generative AI tools by employees. Its patented intellectual property, including solutions for contextual search and real-time data integration into LLMs, positions it to offer differentiated products like AI Vault and AI Seek in a market where data security and privacy are paramount concerns for organizations.

Comparison to Industry Standards

The enterprise Generative AI market for security products is in its nascent stages, with no definitive dominant participants identified, suggesting a fragmented competitive landscape.
Current providers often require substantial integration and bespoke development, which Bubblr aims to differentiate from with its AI Vault solution on AWS Marketplace.
The company's patented intellectual property, including an Internet-Search Mechanism and contextual enveloping via dynamically generated hypertext links, provides a unique approach compared to traditional text-based search engines and existing LLMs like ChatGPT and Claude Sonnet.
Bubblr's focus on anonymizing user data and suppressing behavioral data tracking addresses a key industry concern regarding data privacy, which is a differentiator in the current market.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Chief Executive Officer and Director	Stephen Morris	Stephen Morris	2023-12-31	Annual base salary reduced from $450,000 to $90,000, and $360,000 in deferred compensation was forfeited via Third Amended Employment Agreement.
Chief Financial Officer and Director	David Chetwood	David Chetwood	2023-12-31	Annual base salary reduced from $450,000 to $180,000, and $236,200 in deferred compensation was forfeited via Second Amended Employment Agreement.
Chief Financial Officer and Director	David Chetwood	David Chetwood	2024-10-17	Annual base salary further reduced from $180,000 to $90,000, and granted 3,000,000 stock options in consideration of compensation forfeiture via Third Amended Employment Agreement.
Chief Revenue Officer and Director		Patrick Ensor	2025-08-05	New employment agreement with an annual salary of €75,000 (initially €3,000/month until $2M funding) and a grant of 2,250,000 Stock Options.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Internal Control Weakness	Lack of sufficient segregation of duties within accounting functions.	2025-09-30	Results in ineffective oversight and monitoring of internal processes, controls, and procedures, increasing the risk of material misstatements.
Internal Control Weakness	Lack of enough personnel with the necessary expertise in essential finance and accounting areas.	2025-09-30	Results in ineffective oversight and monitoring of internal processes, controls, and procedures, increasing the risk of material misstatements.
Internal Control Weakness	Lack of a functioning audit committee, a compensation committee, or independent directors on the board.	2025-09-30	Results in ineffective oversight and monitoring of internal processes, controls, and procedures, increasing the risk of material misstatements.

Legal Proceedings

The company is not a party to any current material legal proceedings.

Related Party Transactions

Loans payable to Stephen Morris, Founder, CTO, and Chair, totaling $1,250,885 as of September 30, 2025. Loan 1 is unsecured, non-interest bearing, and due upon an equity offering of $5,000,000 or three years from September 30, 2024. Loan 2 is unsecured, non-interest bearing, non-convertible, and matures three years after September 30, 2024.

Stakeholder Impact

**Shareholders:** Face significant risk of value dilution due to potential future equity offerings and the company's going concern doubt. Current share price is below warrant exercise price, indicating no intrinsic value for warrants.
**Employees:** Subject to salary reductions for executives and potential uncertainty given the company's liquidity challenges, though new stock options are being granted to incentivize.
**Creditors:** Exposed to risk given the company's substantial working capital deficit and reliance on debt financing, with no guarantee of repayment.
**Customers:** Potential for service interruptions or reduced product development if the company fails to secure adequate funding to sustain operations.

Next Steps

Secure additional operating funds through equity or debt offerings.
Further develop, market, support, and deliver products and services to achieve substantial revenue growth.
Appoint independent directors and establish an audit committee and a compensation committee to address internal control weaknesses.
Appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management.
Adopt sufficient written policies and procedures for accounting and financial reporting.

Key Dates

Date	Description
2016-01-16	Bubblr Limited executed a Loan Agreement (Loan 1) with Mr. Stephen Morris.
2022-05-25	Board of directors and majority shareholders approved the adoption of the Bubblr, Inc. 2022 Equity Incentive Plan.
2022-09-07	Bubblr Limited entered into a new loan agreement (Loan 2) with Mr. Stephen Morris for $501,049.
2023-01-01	Third Amended Employment Agreement with Mr. Stephen Morris became effective, reducing his annual base salary and mandating forfeiture of deferred compensation.
2023-01-01	Second Amended Employment Agreement with Mr. David Chetwood became effective, reducing his annual base salary and mandating forfeiture of deferred compensation.
2023-03-04	Company filed a Certificate of Designation establishing 2,000 shares of Series C Convertible Preferred Stock.
2023-04-01	Company agreed to grant Mr. Morris an option to purchase 3,360,000 shares of common stock.
2024-07-09	1,848,000 unvested stock options were forfeited following termination of employment.
2024-09-30	Loan agreements with Mr. Stephen Morris were amended, setting maturity dates.
2024-10-09	4,872,000 stock options expired as they were not exercised within three months after the end of the service period.
2024-10-17	Company granted 8,305,000 stock options to executives, management, and professional service providers. Third Amended Employment Agreement with Mr. David Chetwood became effective, reducing his annual base salary and granting stock options.
2025-01-14	An executive forfeited 1,395,000 unvested stock options upon termination of service.
2025-04-04	Company approved the issuance of up to $500,000 in convertible loan notes and authorized the Bubblr, Inc. 2025 Employee and Consultant Stock Plan.
2025-04-15	Company granted 3,360,000 stock options to an executive.
2025-05-20	Company granted 2,750,000 stock options to consultants.
2025-06-11	Company granted 500,000 stock options to an employee, and an executive forfeited 840,000 unvested options.
2025-06-19	Company granted 1,500,000 stock options to six consultants.
2025-07-09	Registration statement on Form 10-12G became automatically effective, making the company a mandatory public reporting entity.
2025-07-15	Company executed a Securities Purchase Agreement for a Convertible Promissory Note of $57,000.
2025-08-05	Company entered into an Employment Agreement with Mr. Patrick Ensor as Chief Revenue Officer and Director.
2025-08-08	Company granted 1,000,000 stock options to an attorney.
2025-08-15	Company executed a second tranche Convertible Promissory Note of $57,000.
2025-09-30	End of the quarterly reporting period.
2025-10-03	Company issued 4,228,188 shares of common stock for the conversion of Series C Convertible Preferred Stock.
2025-10-09	Company executed a third tranche Convertible Promissory Note of $57,000.
2025-11-07	Filing date of the 10-Q report and date for outstanding common stock count.

Recommendation

strong sell

Bubblr, Inc. presents a highly speculative investment due to severe financial distress, including a critically low cash balance ($696), a substantial working capital deficit ($2.6 million), and an explicit 'going concern' warning from management. While the net loss has narrowed and new AI products are being launched, revenue continues to decline, and the company's ability to secure necessary funding is uncertain. Furthermore, identified material weaknesses in internal controls and corporate governance issues add significant operational risk. The current financial position and inherent risks suggest a high probability of further share price depreciation and potential business failure, making it an unsuitable investment for all but the most risk-tolerant speculators.

Keywords

AI, Ethical Web AI, Generative AI, AI Vault, AI Seek, Intellectual Property, Patents, SEC Filing, 10-Q, Financial Results, Liquidity, Going Concern, Cybersecurity, Corporate Governance

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