10-K/A: GivBux 2024 Annual Report Reveals Growth Amidst Mounting Losses

GivBux Inc. reports significant revenue growth in 2024 driven by its Super App, but faces substantial net losses and a going concern doubt, highlighting critical funding needs.

Summary

• GivBux, a Fin-Tech company, operates the GivBux Super App for mobile payments, rewards, and charitable donations.
• The Super App allows users to purchase from authorized retailers, earn rewards, and donate a portion to charity.
• A network marketing system is in place for users to recruit new members and associates, with associates paying a signup fee of $149.95 and a monthly fee of $29.95.
• The company retains 30% of marketing fees from merchants, with 70% returned to users and affiliates.
• Transactional revenues for the year ended December 31, 2024, were $325,962, with an additional $61,329 in subscription revenue.
• Total revenue for 2024 was $544,327, a 277% increase from $196,326 in 2023.
• Net loss for 2024 was $3,316,192, significantly higher than $1,106,962 in 2023.
• Accumulated deficit as of December 31, 2024, reached $6,953,358.
• Current liabilities exceeded current assets by $3,109,331 as of December 31, 2024.
• The company had $18,374 in cash as of December 31, 2024.
• There is substantial doubt about the company's ability to continue as a going concern without additional financing.
• The company estimates it requires approximately $1 million in funding ($400K for convertible notes, $600K for product development and business growth).
• As of December 31, 2024, there were 11,202 users, 258 merchants, 140 charities, and 1,233 GivBux Associates.
• A newer version of the Super App is scheduled for release early 2025.
• The company changed its auditor to Lao Professional Services in April 2025 due to issues with the previous auditor.

Sentiment

Score: 2

Explanation: The company exhibits severe financial distress, including a substantial and increasing net loss, a significant accumulated deficit, and a critical working capital deficit. The auditor's 'Going Concern' warning, coupled with numerous defaulted debts and heavy reliance on related party funding, indicates a high risk of operational failure. While revenue growth is positive, it is insufficient to offset the escalating expenses and liabilities. The identified material weaknesses in internal controls and the change in auditors due to the previous auditor's SEC charges further erode confidence.

Positives

• Revenue grew by 277% from $196,326 in 2023 to $544,327 in 2024.
• Transactional revenue increased significantly to $325,962 in 2024 from $4,366.97 in 2023, indicating increased app usage.
• Successful beta testing with sales associates has proven the Super App's functionality in a live environment.
• An active campaign to recruit new influencers is underway, with anticipated rapid increases in user numbers.
• The GivBux Super App is free to use and available on both Google Play Store (Android) and Apple App Store (iOS).
• The company has 258 retailers, predominantly National Brands, and is actively recruiting more local merchants.
• GivBux rewards users for purchases and network activity, offering options for cash redemption or charitable donations.
• The 'GuvBux' name is trademarked, providing brand protection.

Negatives

• Net loss significantly increased to $3,316,192 in 2024 from $1,106,962 in 2023.
• The accumulated deficit grew to $6,953,358 as of December 31, 2024.
• Current liabilities of $3,132,468 significantly exceed current assets of $23,137, resulting in a working capital deficit of $3,109,331.
• The auditor's report includes a 'Going Concern' paragraph, indicating substantial doubt about the company's ability to continue operations.
• Cash on hand decreased to $18,374 as of December 31, 2024, from $41,870 in 2023.
• Significant debt includes $955,165 payable to related parties and $526,150 in other loans payable.
• Seven loans with unpaid balances totaling $203,000 are in default as of December 31, 2024, incurring a 5% penalty.
• Twelve convertible notes with unpaid balances of $273,279 are in default as of December 31, 2024.
• Heavy reliance on management (Kenyatto Jones) to fund operations through advances.
• Identified material weaknesses in internal controls over financial reporting, including lack of documented policies, no audit committee, risk of management override, and lack of segregation of duties.
• The previous auditor was charged by the SEC with aiding and abetting antifraud violations, necessitating a change in auditors.
• The company's stock is classified as a 'Penny Stock' and trades on OTC Pink Sheets, which limits liquidity and trading activity.
• Management team has limited experience managing a public company, potentially impacting regulatory compliance and investor relations.

Risks

• Failure to manage growth effectively may hinder business plan execution, service levels, and customer satisfaction.
• There is a risk that increased user and associate recruitment may not translate into increased revenues.
• Inability to attract new users, retain existing users, and increase platform usage could adversely affect the business.
• Difficulty in sustaining revenue growth in future periods, with potential declines due to slowing demand, increasing competition, or market maturation.
• A limited operating history in an evolving industry makes future prospects difficult to evaluate and increases the risk of not being successful.
• Dependence on offering payment processing services with desired functionality at attractive prices to attract and retain merchants.
• Operating results are significantly dependent on payment processing services, which can vary due to factors beyond the company's control.
• A majority of merchants are smalland medium-sized businesses (SMBs) and individuals, which are more difficult and costly to retain and more susceptible to adverse economic fluctuations.
• Reliance on subscription contracts means that downturns or upturns in sales are not immediately reflected in full in operating results.
• Future revenue depends on the ability to expand financial technology services and increase adoption, requiring partnerships, regulatory compliance, and significant investment.
• Risks associated with notes payable and convertible notes payable, including liquidity issues if required to pay without enough cash, and dilution of share price from conversions.
• Failure to maintain and enhance brand recognition in a cost-effective manner could harm the business.
• Dependence on the experience and expertise of the senior management team and key technical employees; the loss of any key employee could harm the business.
• Conflicts of interest may arise as management allocates time to other business activities.
• Inability to obtain additional financing, if and when required, could compel the company to restructure or abandon potential transactions.
• Legal proceedings could result in substantial damages, settlement costs, fines, and harm to the company's reputation.
• Exposure to risks associated with the handling of customer funds, including fraud by employees or third parties, unauthorized transactions, or errors.
• Any failure to offer high-quality customer support may adversely affect relationships with users and operating results.
• The long-term potential of the business may be adversely affected if unable to expand successfully into international markets.
• Risks related to platform security, including actual or perceived breaches of sensitive and personal information, could materially impact the business.
• Interruptions or performance problems associated with technology and infrastructure may adversely affect business and operating results.
• Success depends upon the ability to continually enhance the performance, reliability, and features of the platform in a rapidly changing industry.
• Defects, errors, or vulnerabilities in applications, backend systems, hardware, or other technology systems could harm reputation and adversely impact business.
• Risk management strategies may not be fully effective in mitigating all types of risk.
• Operating results may be adversely affected by changes in foreign currency exchange rates as international sales increase.
• The ability to use net operating loss carryforwards and certain other tax attributes may be limited due to ownership changes or regulatory changes.
• Seasonal fluctuations in financial results could cause the stock price to fluctuate.
• Reliance primarily on third-party insurance policies to insure operations-related risks; insufficient coverage could adversely affect the business.
• The markets in which the company participates are intensely competitive, and failure to compete effectively could adversely affect operating results.
• Potential changes in the competitive landscape, including disintermediation from other participants in the payments chain, could harm the business.
• Expending significant resources pursuing sales opportunities without closing sales could adversely affect the business.
• Substantial reliance on one third-party payment processor; failure to manage risks related to this relationship could adversely affect the business.
• Failure to comply with the applicable requirements of payment networks could result in fines, suspension, or termination of registrations.
• Increases in Payment Network fees or new regulations could negatively affect earnings.
• Reliance on merchants on the platform for many aspects of the business; any failure by them to maintain service levels or changes to their operating costs could adversely affect the business.
• Dependence on the interoperability of the platform across third-party applications and services that are not controlled by the company.
• Certain estimates and information are based on third-party sources, and real or perceived inaccuracies may harm reputation.
• Partnerships with third parties are an important source of new business; reduction of referrals could adversely affect revenue.
• The business is subject to a variety of U.S. laws and regulations, many of which are unsettled, and non-compliance could lead to claims or adverse effects.
• Illegal or improper activities of users or customer noncompliance with laws and regulations could expose the company to liability.
• Changes in legislative and regulatory policy affecting payment processing could have a material adverse effect on the business.
• Failure to comply with NACHA Rules and related oversight could materially harm the business.
• Failure to comply with anti-money laundering, economic and trade sanctions regulations, and the U.S. Foreign Corrupt Practices Act could subject the company to penalties.
• Regular collection and storage of personal information subjects the company to domestic and international privacy and data security laws, with evolving laws incurring additional costs and liabilities.
• New products and services may be subject to the authority of the Consumer Financial Protection Bureau, leading to increased scrutiny.
• Failure to adequately protect intellectual property rights could impair the competitive position and lead to costly litigation.
• Subject to intellectual property rights claims by third parties, which are costly to defend and could limit the ability to use certain technologies.
• Use of open-source software components carries risks of non-compliance with license terms, potentially affecting the ability to sell products and leading to litigation.
• Inability to continue using current domain names or prevent third parties from acquiring similar ones could decrease brand value.
• Operating as a public company incurs significant costs and places strain on financial and management systems.
• Senior management team has limited experience managing a public company, and regulatory compliance obligations may divert attention.
• The common stock is considered a 'Penny Stock,' which may increase reporting obligations for transactions and make it more difficult to sell.
• Being quoted on OTC Pink Sheets could depress trading prices, impact future capital raising, increase price volatility, and decrease execution likelihood.
• Significant limitations on shareholders' ability to resell shares due to lack of market or state Blue Sky laws.
• Percentage of ownership in the company may be diluted in the future due to equity issuances.
• Certain provisions in the articles of incorporation and bylaws, and Nevada law, may prevent or delay an acquisition of the company.
• No cash dividends are expected for the foreseeable future.
• If securities or industry analysts do not publish research or publish inaccurate or unfavorable research, the stock price and trading volume could decline.

Future Outlook

A newer version of the GivBux Super App is scheduled for release early 2025. The company anticipates a rapid increase in user numbers due to an active campaign to recruit new influencers. Management expects to continue investing significant additional funds in expanding business, sales, marketing activities, research and development, and customer support. Costs are expected to increase to support operations as a public company. The company intends to continue exploring other financial solutions for its users and expects to require additional financing to maintain its existence for the next twelve months and for future acquisitions.

Management Comments

• Management has determined to direct its efforts and limited resources on the development of the GivBux Super App and to pursue potential new business and/or acquisition opportunities.
• The GivBux Super App revolutionizes shopping by offering a user-friendly tool to make purchases swiftly and easily at over 100 national retailers, along with an expanding roster of local merchants.
• GivBux is forging a new path in ecommerce and charitable giving and aspires to build the largest community of givers, first in the United States and eventually worldwide.
• The total system is being tested by the sales associate team in order to work out any bugs. This includes the registration of new associates, transferring of funds from users bank accounts to the GivBux app, payment and calculation of commissions along with improvements to the onboarding of independent retailers. The processes have been proven and used successfully in a live environment on a daily basis.
• We anticipate this number [of users] will rapidly increase rapidly as there is an active campaign to recruit new influencers.
• Management intends to raise additional operating funds through equity and/or debt offerings.
• The company estimates that it requires approximately $1 million in funding in order to pay back creditors with convertible notes ($400K) and $600K for product development and business growth. Any future acquisitions would require additional funding.

Industry Context

GivBux operates within the dynamic Fin-Tech mobile wallet sector, which is characterized by rapid technological advancements, evolving customer needs, and frequent introductions of new applications. The competitive landscape includes various mobile wallets and payment gateways offering rewards, with competitors varying in size and breadth of services. The market attracts substantial investments, leading to competitive pressures such as discounted services, lower processing rates, and innovative platforms. GivBux aims to differentiate itself through its integrated software and payments platform, emphasizing charitable giving and a network marketing model to build its user base.

Management Changes

Corporate Governance

Legal Proceedings

• No current legal or pending suits against the company.

Related Party Transactions

• As of December 31, 2024, $955,165 was owed to related parties (Bearbull Market Dividends, Inc., Kenyatto Jones principal).
• As of December 31, 2023, $1,026,260 was owed to related parties.
• During 2024, the company borrowed $37,871 from related parties and repaid $135,976.
• During 2023, the company borrowed $157,828 from related parties and repaid $148,552.
• Interest expense to related parties was $27,010 in 2024 and $28,750 in 2023.
• Kenyatto Jones, founder and director, is funding limited operations through advances.
• Promissory notes issued to Bear Bull Market Dividends, Inc. ($679,137), GBX International, Inc. ($27,684), and Kenyatto Jones ($286,570) on April 1, 2021, all bearing 3% interest and due on demand.
• The company accrued $120,000 in management fees for Kenyatto Jones in 2023.
• The company accrued $115,000 in management fees for 2024 and paid $5,000, compared to $120,000 accrued and $0 paid in 2023.

Stakeholder Impact

• Shareholders face potential for significant dilution due to convertible notes and future capital raises, along with illiquidity risks from penny stock status and OTC Pink Sheets trading. Uncertainty surrounds future stock price appreciation given ongoing losses and going concern doubt.
• Employees may experience strain due to rapid growth and limited resources, with a potential risk of key individuals leaving if funding is not secured.
• Customers (Users & Merchants) could face service disruptions due to technology issues or financial instability, though they currently benefit from the rewards program and charitable giving. Merchants benefit from new users and reduced processing fees/chargebacks.
• Creditors face a high risk of default on loans and convertible notes, as several are already in default, leading to uncertainty regarding repayment given the company's precarious financial condition.
• Regulatory Bodies will likely increase scrutiny due to the company's public status and identified internal control weaknesses, requiring strict compliance with Fin-Tech, privacy, and anti-money laundering regulations.

Next Steps

• Release a newer version of the GivBux Super App early 2025.
• Actively campaign to recruit new influencers to rapidly increase user numbers.
• Continue investing in business expansion, sales, marketing, research and development, and customer support.
• Explore and offer additional financial technology solutions to users.
• Raise additional operating funds through equity and/or debt offerings.
• Address material weaknesses in internal controls over financial reporting.
• Implement procedures to ensure segregation of duties.

Key Dates

Recommendation

The company exhibits severe financial distress, including a substantial and increasing net loss, a significant accumulated deficit, and a critical working capital deficit. The auditor's 'Going Concern' warning, coupled with numerous defaulted debts and heavy reliance on related party funding, indicates a high risk of operational failure. While revenue growth is positive, it is insufficient to offset the escalating expenses and liabilities. The identified material weaknesses in internal controls and the change in auditors due to the previous auditor's SEC charges further erode confidence. The penny stock status and limited liquidity make it a highly speculative and risky investment, warranting a 'sell' recommendation for seasoned investors.

Keywords

Fin-Tech, Super App, Mobile Wallet, Payments, Rewards, Charitable Giving, GivBux, GBUX, SEC Filing, Annual Report, Financial Technology, Corporate Governance, Risk Management, Startup, OTC Markets, Penny Stock, Convertible Notes, Debt, Liquidity, Cybersecurity, Data Privacy