S-1/A: Givbux Faces Severe Financial Distress Amidst New Convertible Note Financing and Going Concern Doubts

Givbux, Inc. has filed an S-1/A registration statement detailing significant financial losses, a substantial accumulated deficit, and a going concern warning, despite securing new convertible note financing and reporting revenue growth.

Summary

• Givbux, Inc. reported a net loss of $3,316,192 for the year ended December 31, 2024, a significant increase from $1,106,962 in 2023.
• The company's accumulated deficit reached $7,480,177 as of March 31, 2025, with current liabilities exceeding current assets by $3,636,150, raising substantial doubt about its ability to continue as a going concern.
• Givbux secured a Securities Purchase Agreement with Kips Bay Select, LP on May 7, 2025, for up to $11,111,111.11 in senior secured convertible notes and warrants, with an initial tranche providing $510,000 in gross proceeds.
• The initial proceeds from the Kips Bay financing are earmarked for past due rent and immediate operational costs, while future tranches are intended for Super App development, executive compensation, and operational costs.
• The company's common stock is considered a 'Penny Stock' and is thinly traded on the Pink Market of the OTC, with very limited liquidity and significant limitations on shareholders' ability to resell shares.
• As of March 31, 2025, the company had only $17,153 in cash, with substantial debt including $927,359 in notes payable to related parties, $525,150 in loans payable, and $464,993 in convertible notes.
• Numerous existing loans and convertible notes are in default, including nine loans with an unpaid balance of $304,000 and fourteen convertible notes with an unpaid balance of $275,779 as of March 31, 2025.
• The company's previous auditor, Olayinka Oyebola & Co., was charged by the SEC, leading to a change in auditors to Lao Professional Services in April 2025.
• Givbux's revenue grew to $544,327 in 2024 from $196,326 in 2023, representing a 277% growth rate, driven by facilities rentals, subscription, and transactional revenue.
• The company's 'Super App' is designed for mobile payments, rewards, charity donations, and communication, with 258 retailers and 11,202 users as of December 31, 2024.
• A network marketing strategy is being adopted to grow users, associates, and merchants, with plans for future expansion into Mexico and Canada.

Sentiment

Score: 2

Explanation: The company is in severe financial distress with increasing losses, a large accumulated deficit, and a going concern warning. While new financing has been secured, it primarily addresses immediate liquidity needs and comes with significant potential for dilution. The stock's 'penny stock' status and limited liquidity further compound the high investment risk.

Positives

• Revenue increased by 277% from $196,326 in 2023 to $544,327 in 2024, indicating significant top-line growth.
• Beta testing of the GivBux Super App in the latter half of 2024 resulted in a 99% increase in transactional revenue over the prior year's corresponding period, demonstrating proof of concept.
• The company has a growing ecosystem with 11,202 users, 258 retailers (mostly national brands), and 140 charities as of December 31, 2024.
• The GivBux Super App offers a comprehensive suite of features including rewards, chat/voice/video communication, social media integration, blockchain technologies, augmented reality, cloud biometrics, and charity donation capabilities.
• The 'GivBux' name is trademarked, and the Super App's source code is owned by the company, providing intellectual property protection.
• A new network marketing strategy is in place to drive exponential growth by engaging leaders with access to large associate networks.
• The company successfully closed an initial tranche of convertible note financing with Kips Bay Select, LP, securing $510,000 in gross proceeds.

Negatives

• The company has a history of generating net losses, with a significant increase from $1,106,962 in 2023 to $3,316,192 in 2024, and a net loss of $526,819 for the three months ended March 31, 2025.
• An accumulated deficit of $7,480,177 as of March 31, 2025, highlights a persistent lack of profitability.
• Current liabilities of $3,655,626 significantly exceed current assets of $19,476 as of March 31, 2025, resulting in a working capital deficit of $3,636,150.
• The company's auditor has expressed substantial doubt about its ability to continue as a going concern.
• Cash on hand is extremely low at $17,153 as of March 31, 2025, indicating severe liquidity constraints.
• A significant portion of existing loans and convertible notes are in default, with nine loans totaling $304,000 and fourteen convertible notes totaling $275,779 in default as of March 31, 2025.
• The company incurred substantial stock-based compensation expenses of $2,280,000 in 2024 for marketing services, which may not directly translate to immediate cash flow or revenue.
• The common stock is classified as a 'Penny Stock' and trades on the Pink Market of the OTC, characterized by very limited liquidity and significant restrictions on resale, making it difficult for investors to exit positions.
• The new convertible note financing, while providing capital, introduces significant potential for shareholder dilution, with up to 34,523,278 shares offered for resale by the selling stockholder.
• The company's senior management team has limited experience managing a public company, which could pose challenges in navigating regulatory compliance and investor relations.
• The company does not expect to pay any cash dividends for the foreseeable future, limiting investor returns to stock price appreciation.
• Revenue for Q1 2025 ($66,023) dropped significantly compared to Q4 2024 ($214,008), and gross profit also declined from $41,812 to $10,873 in the same period, indicating inconsistent performance.
• Increased interest expense and a substantial loss on the change in fair value of derivative liabilities contributed to a higher net loss in Q1 2025.

Risks

• Failure to manage growth effectively could strain operational capacity, negatively impacting business execution, service levels, and customer satisfaction.
• Inability to attract new users, retain existing users, and increase platform usage would severely impact revenue and business success.
• The company may not be able to sustain revenue growth in future periods, as past growth rates are not indicative of future performance and can fluctuate due to various factors.
• A limited operating history in an evolving industry makes future prospects difficult to evaluate and increases the risk of business failure.
• Dependency on offering payment processing services with desired functionality at attractive prices, and the risk of not integrating emerging payment technologies, could hinder merchant attraction and retention.
• Revenue and gross profit from payment processing services can vary significantly due to factors beyond control, such as consumer spending levels and economic conditions.
• A majority of merchants are SMBs and individuals, which are more difficult and costly to retain and more susceptible to economic fluctuations.
• Reliance on subscription revenue means downturns in sales are not immediately reflected, and rapid revenue increases are difficult to achieve.
• Future revenue depends on expanding financial technology services and increasing their adoption, which may require new partnerships, regulatory compliance, and significant costs.
• The company may be unable to repay notes payable and convertible notes payable, potentially leading to bankruptcy or inability to operate, and significant share dilution if convertible notes are exercised.
• Failure to maintain and enhance brand recognition in a cost-effective manner could harm business, financial condition, and results of operations.
• Loss of key senior management or technical employees could significantly delay or prevent business objectives and harm customer relationships.
• Inability to recruit, retain, and develop qualified personnel, especially sales and technical staff, is critical to success and growth.
• Conflicts of interest may arise as executive officers and directors allocate time to other business activities, potentially impacting the company's ability to consummate business combinations or asset acquisitions.
• Inability to obtain additional financing when required could compel the company to restructure or abandon potential transactions, and hinder the growth of acquired businesses.
• Limited revenues and dependence on management's willingness to fund reporting obligations and administrative costs pose a risk to continued operations and growth.
• Executive officers are in a position to influence certain actions requiring shareholder vote due to super-voting preferred stock provisions.
• Exposure to various legal proceedings, including claims, lawsuits, and government investigations, could result in substantial damages, settlement costs, fines, and harm to reputation.
• Risks associated with handling customer funds, including fraud, unauthorized transactions, and financial institution insolvency, could lead to financial loss and reputational harm.
• Failure to offer high-quality customer support could adversely affect relationships with users and overall business performance.
• Challenges in expanding successfully into international markets due to lack of experience, established competitors, and new regulatory requirements.
• Dependence on the security of the platform for transmitting sensitive and personal information, with any actual or perceived breach materially impacting the business and reputation.
• Interruptions or performance problems with technology and infrastructure could adversely affect business and operating results.
• The need to continually enhance platform performance, reliability, and features in a rapidly changing industry, with risks of new technologies, defects, and insufficient investment.
• Risk management strategies may not be fully effective in mitigating all types of risk, especially with new services or markets.
• Unfavorable conditions in the FinTech industry or global economy could limit business growth and impact financial performance, particularly for SMBs.
• Results of operations may be adversely affected by changes in foreign currency exchange rates.
• 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 stock price volatility.
• Reliance on third-party insurance policies, with risks of insufficient coverage or insurer insolvency.
• Intense competition in the markets, including from other mobile wallets, payment gateways, and potential new entrants, could adversely affect operating results.
• Potential changes in the competitive landscape, including disintermediation from other participants in the payments chain, could harm the business.
• Significant resources expended on sales opportunities may not result in closed sales, adversely affecting financial condition.
• Substantial reliance on a single third-party payment processor, with risks of service disruption, increased fees, or contract termination.
• Failure to comply with applicable requirements of payment networks (e.g., Payment Network Rules, PCI DSS) could result in fines, suspension, or termination of registrations.
• Increases in Payment Network fees or new regulations could negatively affect earnings, especially if competitive pressures prevent passing costs to users.
• Reliance on merchants on the platform, with risks related to their service levels, operating costs, and potential price increases.
• Primary reliance on Amazon Web Services for platform delivery, with risks of disruption or interference.
• Dependence on the interoperability of the platform across third-party applications and services not controlled by the company.
• Reliance on third-party sources for market estimates and information, with risks of inaccuracies harming reputation and investment evaluation.
• Partnerships with third parties are an important source of new business, and a reduction in referrals could adversely affect revenue growth.
• Subject to a variety of U.S. laws and regulations, many of which are unsettled and developing, with non-compliance leading to claims or adverse effects.
• Changes in legislative and regulatory policy affecting payment processing could have a material adverse effect.
• Failure to comply with NACHA Rules 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 compliance costs and liabilities increasing as laws evolve.
• Evolving government regulation of the Internet, mobile devices, and e-commerce could substantially adversely affect the business.
• New products and services may be subject to the authority of the Consumer Financial Protection Bureau, increasing scrutiny and compliance costs.
• Failure to adequately protect intellectual property rights could impair competitive position, lead to lost assets, reduced revenue, and costly litigation.
• Exposure 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 licenses, potentially affecting product sales and leading to litigation.
• Inability to continue using existing domain names or prevent third parties from acquiring similar ones could harm brand value.
• Operating as a public company incurs significant costs and regulatory compliance obligations, potentially straining financial and management systems.
• Identified material weaknesses in internal controls over financial reporting, which may result in material misstatements or failure to meet reporting obligations.
• As an emerging growth company, reduced disclosure requirements may make the stock less attractive to investors.
• Senior management has limited experience managing a public company, potentially diverting attention from day-to-day business.
• The common stock is a 'Penny Stock,' which reduces secondary market trading activity.
• Very limited liquidity of the common stock makes it difficult for shareholders to resell shares.
• Significant limitations on a shareholder's ability to resell shares due to lack of market or state Blue Sky laws.
• Future dilution of ownership percentage due to equity issuances for acquisitions, capital market transactions, or equity awards.
• Certain provisions in articles of incorporation, bylaws, and Nevada law may prevent or delay an acquisition, potentially decreasing stock price.
• No expectation of cash dividends for the foreseeable future means investment gain depends solely on stock price appreciation.
• Lack of research or inaccurate/unfavorable research by securities or industry analysts could cause stock price and trading volume to decline.
• Previous auditor charged by SEC, leading to auditor change and potential disruptions.
• Sales of common stock by the selling stockholder could cause the stock price to decline and encourage short sales.

Future Outlook

The company plans to adopt a network marketing strategy for exponential growth over the next 18 months, focusing on increasing users, associates, and merchants. It intends to continue developing and releasing newer versions of the GivBux Super App with added functions and bug fixes. Future expansion into Mexico and Canada is being prepared. The company expects its costs to increase due to investments in business expansion, sales, marketing, research and development, and public company operations. While existing cash and credit are anticipated to meet needs for the next twelve months, additional financing may be required to respond to business challenges and fund future acquisitions.

Management Comments

• The GivBux Super App has been designed to store, send, receive rewards, communicate with friends via chat/voice/video, create business opportunities for each giver, utilize social media, leverage blockchain technologies to enhance customer experiences using AR (augmented reality), protect giver accounts using cloud biometrics, donate to charity and make real-time purchases at top retail brands, and other venues globally.
• The brands benefit because they are empowered with a data-rich marketing tool to reach and retain consumers through their mobile phones.
• All of the above exists and improvements are constantly being made to the GivBux Super App. Newer versions of the GivBux Super App are scheduled for periodic releases in the coming months as the Company adds functions or fixes bugs.
• The company has adopted a network marketing strategy which will allow us to grow exponentially over the next 18 months.
• The company estimates that it requires approximately $1 million in funding in order to pay back creditors with convertible notes ($400,000) and $600,000 for product development and business growth.
• The convertibles notes do not present a huge financial risk for the Company as they represent only 720,154 shares if fully converted, which is less than 0.65% of the total authorized shares (referring to existing notes, not new Kips Bay notes).
• The audit process allows for a third-party auditor to verify and analyze our financial transactions, allowing for immediate adjustments during the review process if needed. The processes have been improved in order to achieve reporting in a timely manner, allowing for proper analysis and verification and ensuring that we are able to meet regulatory deadlines for financial reporting.

Industry Context

Givbux operates in the Fin-Tech mobile wallet sector, positioning its 'Super App' as a comprehensive solution for payments, rewards, and charitable contributions. This market is intensely competitive, with other mobile wallets and payment gateways offering similar reward and donation features, such as PayPal's donation button, Flip Give for fundraising, and various credit card cash-back programs. The company aims to differentiate itself by offering a broad range of integrated services and a network marketing model, while focusing on expanding its local merchant base to reduce dependency on national brands.

Comparison to Industry Standards

• The filing does not provide specific comparable companies, projects, or results to benchmark Givbux's performance against industry standards. It generally mentions that competitors vary in size and scope, and some offer discounted services or lower processing rates.

Corporate Governance

Legal Proceedings

• No legal proceedings material to the business or financial condition are pending, contemplated, or threatened against the company or its subsidiaries.
• The company's previous auditor, Olayinka Oyebola & Co., and its principal, Olayinka Oyebola, have been charged by the SEC with aiding and abetting violations of antifraud provisions of federal securities laws in an unrelated matter. This led to the company changing its auditor.

Related Party Transactions

• As of March 31, 2025, the company had $927,359 in notes payable to related parties (Bull Bear, Inc. and Bear Bull Market Dividends, Inc., controlled by Kenyatto Jones), with $124,841 in accrued interest. These notes are unsecured, 3% interest-bearing, and due on demand.
• As of December 31, 2024, the company had $955,165 in notes payable to related parties and $118,416 in accrued interest.
• As of March 31, 2025, the company had $3,275 due to related parties.
• During the three months ended March 31, 2025, the company obtained $7,250 in loans from related parties and repaid $41,481 to related parties.
• During the year ended December 31, 2024, the company borrowed $37,871 from related parties and repaid $135,976.
• During the year ended December 31, 2023, the company borrowed $157,828 from related parties and repaid $148,552.
• Kenyatto Jones, the Founder and Chief Strategist, controls The Bear Bull, Inc., which owns 74.01% of the company's common stock and holds the trademark for 'GivBux'.

Stakeholder Impact

• Shareholders face significant dilution risk from the conversion of notes and exercise of warrants, as well as potential loss of investment due to the company's going concern risk and limited liquidity of its 'penny stock'.
• Employees' job security and the company's ability to invest in their development and operational improvements are dependent on successful future fundraising.
• Customers (users and merchants) may experience disruptions or limitations in service quality and app functionality if the company's financial challenges persist and hinder development or support.
• Creditors, particularly those holding existing loans and convertible notes, face a high risk of non-payment, as a significant portion of these debts are already in default.
• Suppliers and vendors may face risks of delayed or non-payment for services and goods provided to the company.

Next Steps

• Continue to develop and release newer versions of the GivBux Super App with added functions and bug fixes.
• Implement a network marketing strategy to engage leaders and grow the user, associate, and merchant base exponentially over the next 18 months.
• Focus on recruiting more local merchants to diversify the retailer base and reduce dependency on national brands.
• Prepare for future expansion into international markets, specifically Mexico and Canada.
• Raise additional operating funds through equity and/or debt offerings to support working capital requirements and fund product development and business growth.
• Address and remediate identified material weaknesses in internal controls over financial reporting.
• Maintain compliance with SEC reporting obligations and other regulatory requirements as a public company.

Key Dates

Recommendation

The company is in a precarious financial state, marked by escalating net losses, a substantial accumulated deficit, and a formal 'going concern' warning from its auditor. Its cash reserves are critically low, and a significant portion of its existing debt is in default, indicating severe liquidity issues. While new convertible note financing has been secured, the initial proceeds are primarily allocated to immediate liabilities rather than sustainable growth. The stock's classification as a 'penny stock' with extremely limited liquidity and the potential for massive dilution from the new financing make it a highly speculative and risky investment. The combination of severe financial distress, operational challenges, and high dilution risk presents an overwhelmingly negative outlook for investors.

Keywords

FinTech, Mobile Wallet, Super App, Convertible Notes, Warrants, SEC Filing, Going Concern, Financial Distress, Liquidity, Share Dilution, Penny Stock, OTC Markets, Payment Processing, Rewards Program, Charitable Giving, Network Marketing, Startup, Risk Factors, Corporate Governance, Capital Raise