10-Q: GivBux Q3 2025: Net Gain Amidst Mounting Debt & Governance Woes

GivBux Inc. reported a net gain for Q3 2025 driven by derivative fair value changes, but faces significant going concern doubts, increasing debt defaults, and internal control weaknesses.

Summary

• A net gain of $3,339,513 was reported for the three months ended September 30, 2025, compared to a net loss of $224,406 for the same period in 2024, primarily due to a $4,242,649 positive change in the fair value of derivative liabilities.
• Revenue for the three months ended September 30, 2025, decreased to $89,988 from $257,920 in the prior year, while gross profit for the quarter decreased to $54,224 from $115,718.
• Operating expenses for the quarter increased to $511,222 from $250,520, mainly due to legal fees for a Securities Purchase Agreement (SPA) and S1 registration.
• For the nine months ended September 30, 2025, the company incurred a net loss of $3,292,137, an increase from $3,019,598 in the prior year.
• The accumulated deficit reached $33,393,365 as of September 30, 2025, and current liabilities exceeded current assets by $5,408,839, raising substantial doubt about the company's ability to continue as a going concern.
• The company issued $1,257,359 in convertible notes during the nine months ended September 30, 2025.
• As of September 30, 2025, 21 convertible notes with an unpaid balance of $509,229 and 9 loans with an unpaid balance of $300,350 are in default.
• A new Securities Purchase Agreement with LABRYS FUND II, L.P. was executed on September 3, 2025, for a $220,000 convertible promissory note, with a purchase price of $200,000.
• A special dividend to shareholders in the form of warrants was approved on May 15, 2025, allowing the purchase of one common share at $4 for every ten shares owned as of May 31, 2025, with a recognized fair value of $23,147,870.
• Material weaknesses in internal controls over financial reporting were identified, including a lack of documented policies, no audit committee, risk of management override, and insufficient segregation of duties.
• The company was required to refile its 2024 10-K and redo 2023 year-end financials due to issues with its previous accounting firm having a suspended license.

Sentiment

Score: 2

Explanation: While there was a quarterly net gain, it was driven by non-operating derivative fair value changes. The underlying operational performance is weak, with declining revenue, increasing debt defaults, significant accumulated deficit, and critical internal control deficiencies, all pointing to severe financial distress and operational challenges.

Positives

• Reported a net gain of $3,339,513 for the three months ended September 30, 2025, a significant improvement from a net loss of $224,406 in the prior year's quarter, primarily driven by a positive change in derivative liabilities' fair value.
• Cash balance increased to $82,383 as of September 30, 2025, from $18,374 at December 31, 2024.
• Successfully secured new financing through convertible notes, including a $220,000 principal amount note from LABRYS FUND II, L.P. and an amendment to an existing SPA allowing for up to $11,111,111.11 in aggregate principal amount of notes.
• Gross profit percentage improved in Q3 2025 due to reduced sales promotions, despite lower overall revenue.

Negatives

• Substantial doubt exists about the company's ability to continue as a going concern due to significant net losses, an accumulated deficit of $33,393,365, and current liabilities exceeding current assets by $5,408,839.
• Revenue for the nine months ended September 30, 2025, decreased to $211,814 from $330,319 in the prior year.
• Net loss for the nine months ended September 30, 2025, increased to $3,292,137 from $3,019,598 in the prior year.
• Total current liabilities significantly increased to $5,602,227 as of September 30, 2025, from $3,132,468 at December 31, 2024.
• A large number of convertible notes (21 with $509,229 unpaid balance) and loans (9 with $300,350 unpaid balance) are in default.
• 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 company was required to refile its 2024 10-K and redo 2023 year-end financials due to using an accounting firm with a suspended license.
• Interest expense significantly increased for both the three and nine-month periods ended September 30, 2025.
• A negative change in the fair value of derivative liabilities for the nine-month period contributed to the increased net loss.

Risks

• Failure to establish and maintain effective internal control over financial reporting and disclosure controls and procedures may lead to inaccurate or untimely financial reporting.
• Operating as a public company places considerable strain on financial and management systems, processes, and controls, as well as personnel.
• Identified material weaknesses in internal controls over financial reporting, including issues with the financial statement close process, unusual/infrequent transactions, complicated stock transactions, and revenue recognition, may result in material misstatements or failure to meet periodic reporting obligations.
• Rapid growth has strained accounting systems, financial close, and reporting processes.
• As an 'emerging growth company,' reduced disclosure requirements may make the Class A common stock less attractive to investors.
• Significant costs are incurred as a result of operating as a public company, including legal and financial compliance costs.
• The senior management team has limited experience managing a public company, potentially diverting attention from day-to-day business.
• The common stock is considered a 'penny stock' (market price less than $5.00 and not NASDAQ/NYSE listed), which may reduce trading activity and make it more difficult to sell.
• Amended Rule 15c2-11 may make it more difficult for security holders to deposit common stock with a broker-dealer and trade the securities on the Pink Sheets.
• There is very limited liquidity in the company's common stock.
• Significant state law restrictions ('Blue Sky laws') may limit investors' ability to resell shares.
• Future equity issuances for acquisitions, capital market transactions, or employee awards could dilute existing shareholders' ownership.
• Certain provisions in the company's articles of incorporation, bylaws, and Nevada law may prevent or delay an acquisition, potentially decreasing the stock price.
• The company does not expect to pay any cash dividends for the foreseeable future, meaning investment returns depend solely on stock price appreciation.
• Lack of research or unfavorable research by securities or industry analysts could cause the stock price and trading volume to decline.
• There is a risk of management override, given that officers have a high degree of involvement in day-to-day operations, and there is no effective separation of duties.

Future Outlook

Management intends to raise additional operating funds through equity and/or debt offerings. The company is continuing to develop and refine its disclosure controls and other procedures and improve internal control over financial reporting, including hiring additional accounting and financial personnel. It also plans to implement an internal audit and compliance function in the upcoming years.

Management Comments

• The company reduced its sales promotions for the quarter ending 9/30/25, resulting in fewer sales but a much higher gross profit in percentage of sales when compared to the previous quarter ending 9/30/24.
• The main increase in expenses is attributed to legal fees as the company closed a SPA which could bring up to $11 million in funds for the company. As well there were legal fees for the completion of the S1.
• Management is currently evaluating the steps to address these material weaknesses [in internal controls].

Industry Context

The filing does not provide specific industry context or trends, focusing primarily on the company's internal financial and operational status. The company's business activities are broadly related to a yacht charter business and a finders agreement for fundraising, marketing, and facility booking services, but no comparative industry data is presented.

Corporate Governance

Legal Proceedings

• There are no legal proceedings against the company at this time.

Related Party Transactions

• During the nine months ended September 30, 2025, the company obtained $7,250 in loans from related parties and repaid $120,509 to related parties.
• As of September 30, 2025, notes payable to related parties totaled $723,491, with accrued interest of $137,904.
• Due to related party was $3,275 as of September 30, 2025.

Stakeholder Impact

• Shareholders face potential for significant dilution from future equity issuances (convertible notes, warrants, stock-based compensation). The 'penny stock' status and limited liquidity are ongoing concerns, while anti-takeover provisions may limit shareholder influence.
• Creditors and noteholders face high risk due to numerous defaulted convertible notes and loans. New convertible notes include strong default remedies (18% default interest, 130% mandatory premium, lower conversion prices, $25,000 monthly monitoring fee) to protect investors.
• Employees and management are under strain due to public company obligations and are focused on addressing critical internal control weaknesses.
• Customers and suppliers may face indirect impacts due to the company's 'going concern' doubt and financial instability, although no direct impacts are mentioned.

Next Steps

• Management intends to raise additional operating funds through equity and/or debt offerings.
• Continue to develop and refine disclosure controls and procedures.
• Improve internal control over financial reporting, including hiring additional accounting and financial personnel.
• Implement an internal audit and compliance function in the upcoming years.
• Await response from the SEC regarding the refiled S1/A registration statement.
• Evaluate steps to address identified material weaknesses in internal controls.

Key Dates

Recommendation

The company faces severe financial distress, evidenced by a substantial accumulated deficit, current liabilities far exceeding current assets, and explicit 'going concern' doubts. While the Q3 2025 net gain was positive, it was primarily driven by non-operating derivative fair value adjustments, masking underlying operational weaknesses like declining revenue and increasing interest expenses. The high number of defaulted convertible notes and loans, coupled with identified material weaknesses in internal controls and the need to refile past financials due to an accounting firm's license suspension, indicate significant governance and operational risks. The 'penny stock' status and limited liquidity further exacerbate investment risk. Despite ongoing capital raising efforts, the fundamental financial health and control environment are deeply concerning, making the stock a strong sell for investors.

Keywords

GivBux, GBUX, SEC Filing, 10-Q, Quarterly Report, Financial Results, Convertible Notes, Debt Default, Going Concern, Internal Controls, Derivative Liabilities, Capital Raise, Penny Stock, Corporate Governance, Risk Factors, Shareholder Dilution, SEC Comments, Financial Reporting