10-K: HUMBL Inc. Reports Full Year 2023 Results, Focuses on Digital Commerce Platform

Sentiment:

Annual Results 28 March 2024 4:36 PM

HUMBL Inc., a Web3 digital commerce company, released its annual report for 2023, highlighting a shift towards its consumer division and strategic platform development.

Capital raiseThe company may need to raise additional funds through public or private debt or equity financings to meet various objectives.The raising of additional capital will dilute current stockholders ownership interests.Any additional debt or equity financing that the company may need may not be available on terms favorable to the company, or at all.

Worse than expectedThe company's operating losses and working capital deficiency raise substantial doubt about its ability to continue as a going concern.The company's net loss, while improved from the previous year, is still significant.The company's reliance on debt financing and stock issuance for acquisitions and operations is not sustainable in the long term.

Summary

HUMBL Inc. is a Web3 digital commerce company focused on connecting consumers, businesses, and governments in the digital economy.
The company operates through two divisions: HUMBL Consumer and HUMBL Commercial, with a primary focus on the consumer division in 2023.
HUMBL's core offerings include a digital wallet, HUMBL.com, and commercial services, aiming to simplify digital economy participation.
The HUMBL Wallet, a 4.9-star rated app, provides a search engine, social media, marketplace, and digital payment functionalities.
HUMBL.com features a search engine, ticketing services (primary and secondary), and HUMBL Authentics for verified merchandise.
The company is the Official Technology Platform of the Arena Football League (AFL) through 2028, offering ticketing and digital services.
HUMBL's revenue for 2023 was $1,005,856, compared to $454,080 in 2022, primarily due to merchandise sales and services from its Mexican subsidiary, Ixaya.
Operating expenses decreased to $13,947,458 in 2023 from $38,009,471 in 2022, due to reduced development costs, professional fees, and non-cash charges.
The company reported a net loss of $4,022,449 for 2023, a significant decrease from the $48,567,938 loss in 2022.
As of December 31, 2023, HUMBL had a working capital deficit of $4,690,800 and cash of $368,480.
Management has expressed substantial doubt about the company's ability to continue as a going concern due to operating losses and working capital deficiency.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While there are positive developments like revenue growth and reduced operating expenses, the significant net loss, working capital deficit, and going concern issues raise serious concerns. The company's strategic partnerships and platform development are promising, but the financial risks are substantial.

Positives

The company experienced a significant increase in revenue year-over-year.
Operating expenses were substantially reduced in 2023.
The net loss was significantly reduced compared to the previous year.
The company has secured a major partnership with the Arena Football League.
HUMBL has a functional digital wallet available in over 130 countries.
The sale of the HUMBL Financial product line provides a potential revenue stream and equity stake in Avrio.

Negatives

The company has a significant accumulated deficit of $(103,241,196) as of December 31, 2023.
There is a working capital deficit of $4,690,800 as of December 31, 2023.
Management has expressed substantial doubt about the company's ability to continue as a going concern.
Pacific Lion has defaulted on a Securities Purchase Agreement, leading to a lawsuit.
The HUMBL Wallet no longer allows customers to buy, sell, or swap digital assets.
The company has terminated its NFT marketplace.

Risks

The company's operating losses and working capital deficiency raise substantial doubt about its ability to continue as a going concern.
There is a risk that the company may not be able to raise capital when needed, which could force it to delay or reduce its operations.
The company may experience difficulties in managing its growth and expansion into new markets.
There is a risk of cybersecurity breaches and data loss.
The company faces substantial competition in its various verticals.
The company's stock is considered a penny stock and is subject to specific rules governing its sale.
The company's stock price may be volatile.

Future Outlook

The company expects that the consolidation of its platform into HUMBL.com and its arrangement with the AFL will bring about revenue-producing operations to improve liquidity. However, the effect of the industry on capital markets may limit the ability to raise additional capital.

Industry Context

The document highlights HUMBL's efforts to simplify and package complex technologies like blockchain for broader adoption, similar to how companies like Facebook, Apple, Amazon, and Netflix packaged e-commerce and cloud technologies. The company is positioning itself within the growing Web3 space, focusing on digital commerce and verified user experiences.

Comparison to Industry Standards

HUMBL Wallet competes with established players like Metamask and Coinbase in the digital wallet space.
HUMBL Search Engine competes with giants like Google and Microsoft.
HUMBL Tickets competes with major ticketing platforms such as StubHub and Ticketmaster.
HUMBL Authentics competes with online marketplaces like eBay.
HUMBL Social competes with social media platforms like Twitter.
The company's financial results, particularly the net loss and working capital deficit, are concerning when compared to more established companies in the tech and digital commerce sectors.
The company's reliance on debt financing and stock issuance for acquisitions and operations is not uncommon for early-stage tech companies, but the level of debt and the lack of profitability are significant risks.

Legal Proceedings

The company is a defendant in a shareholder derivative class action lawsuit filed in the United States District Court for the Southern District of California.
The company is a defendant in a shareholder derivative class action lawsuit filed in the Delaware Chancery Court.
HUMBL filed a lawsuit against Pacific Lion on March 13, 2024, to enforce its rights under a Securities Purchase Agreement.

Related Party Transactions

The company has engaged in several loan transactions with Sartorii, LLC, an entity owned by the CEO's parents.
The company has entered into notes payable with a company whose managing member is related to an officer and director of the Company.
The company has entered into convertible notes payable with a company whose managing member is related to an officer and director of the Company.

Stakeholder Impact

Shareholders face the risk of dilution from potential capital raises and the risk of loss due to the company's financial instability.
Employees may be affected by potential cost-cutting measures or restructuring due to the company's financial challenges.
Customers may experience changes in the company's services or offerings as it focuses on its core products.
Suppliers and creditors face the risk of non-payment or delayed payments due to the company's financial difficulties.

Next Steps

The company plans to consolidate its platform into HUMBL.com.
The company will continue to develop its digital wallet and web platform.
The company will seek to expand its partnerships with sports leagues, stadiums, and arenas.
The company will focus on driving revenue through its various channels, including the HUMBL Wallet, HUMBL.com, and HBS Commercial Services.

Key Dates

Date	Description
2000-05-03	Company formed under the name Ponca Acquisition Corporation.
2008-11-18	Company filed Form 15 with the SEC to terminate its registration.
2009-03-12	Company redomiciled to Oklahoma.
2009-03-16	Company changed its name to Tesoro Distributors, Inc.
2009-11-12	Tesoro Enterprises, Inc. incorporated as a subsidiary.
2010-03-11	Company changed its name to Tesoro Enterprises, Inc.
2020-11-04	Henry J. Boucher sold his controlling interest to Brian Foote.
2020-11-30	Company changed its domicile to Delaware.
2020-12-03	Company merged with HUMBL LLC through a reverse merger.
2020-12-23	Company filed a Certificate of Amendment to effect a 1:4 reverse split and change its name to HUMBL, Inc.
2021-02-26	FINRA announced the change of the company's name and trading symbol.
2021-03-26	Change of trading symbol from TSNP to HMBL became effective.
2021-06-03	Company acquired Tickeri, Inc.
2021-06-30	Company acquired Monster Creative, LLC.
2022-02-12	Company entered into an asset purchase agreement with BizSecure, Inc.
2022-03-03	Company acquired Ixaya Business SA de CV.
2022-11-02	Company acquired BM Authentics.
2022-11-15	Company entered into a Settlement Agreement with Forwardly, Inc.
2023-01-31	Company sold Tickeri back to its former owners.
2023-05-10	Company entered into an Equity Financing Agreement with Pacific Lion.
2023-06-01	Company amended their Certificate of Incorporation to amend the conversion terms of their Series B Preferred Stock.
2023-06-30	Company sold Monster Creative, LLC back to its former owners.
2023-07-19	Company entered into a Settlement Agreement with BizSecure, Inc.
2023-10-03	Company signed a Securities Purchase Agreement with Pacific Lion.
2023-10-24	Company filed a Certificate of Designation of the Series C Preferred Stock.
2024-02-23	Company entered into an Asset Purchase Agreement with Avrio Worldwide, PBC.
2024-03-13	HUMBL filed a lawsuit against Pacific Lion.
2024-03-28	Date of the report.

Keywords

digital commerce, Web3, digital wallet, blockchain, ticketing, merchandise, Arena Football League, financial results, going concern, HUMBL

Disclaimer:The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.