HMBL.Humbl, INC
10-Q: HUMBL Reports Q3 2025 Loss Amid Business Pivot to Minerals
Sentiment:
Quarterly Report
HUMBL, Inc. reported a significant net loss for Q3 2025, driven by a strategic shift from its HUMBL.com technology assets to a new focus on magnesium silicate minerals, alongside substantial non-operating expenses and ongoing legal challenges.
Capital raiseThe company raised $675,000 from proceeds of convertible notes payable during the nine months ended September 30, 2025.The company received $12,000 from related party notes payable during the nine months ended September 30, 2025.Subsequent to the reporting period, on November 10, 2025, the company entered into two separate convertible notes totaling $55,000 (with $50,000 net proceeds).
Worse than expectedNet loss from continuing operations for the nine months ended September 30, 2025, was $(24,695,682), significantly worse than $(2,863,987) for the same period in 2024.Total net loss for the nine months ended September 30, 2025, was $(7,823,409), worse than $(5,235,634) for the same period in 2024.Cash on hand decreased to a critically low $5,461, indicating severe liquidity issues.Operating expenses increased by $2,356,383, driven by higher settlement expenses and professional fees.A substantial loss of $13,303,179 was incurred on the investment in WSCG HoldCo, reflecting a significant write-down or unfavorable exchange.
Summary
- HUMBL, Inc. completed the sale of its HUMBL.com assets to WSCG, Inc. on February 27, 2025, for $3,037,500 in cash/debt cancellation and $17,000,000 in WSCG HoldCo Units.
- The company acquired 99% of FinCapital, a Brazilian entity whose sole asset is 41,500 tons of magnesium silicate valued at $20,000,000, from Ybyr Capital S.A. on December 2, 2024.
- A settlement agreement on September 9, 2025, cancelled Ybyr's right to receive $20,000,000 in common stock for FinCapital, instead issuing 850 million common shares to Thiago Moura, who resigned as CEO and director.
- Brian Foote became the controlling stockholder of the company following the September 9, 2025 settlement.
- The company recorded a net loss from continuing operations of $24,695,682 for the nine months ended September 30, 2025, a significant increase from $2,863,987 in the prior year.
- Total net loss for the nine months ended September 30, 2025, was $7,823,409, compared to $5,235,634 for the same period in 2024.
- Cash on hand as of September 30, 2025, was critically low at $5,461.
- The working capital deficit improved from $23,693,753 at December 31, 2024, to $2,434,301 at September 30, 2025, primarily due to the settlement of a $20 million stock liability and reductions in notes payable.
- Management has determined there is substantial doubt about the company's ability to continue as a going concern due to operating losses and the working capital deficit.
- The company exchanged approximately 83% of its WSCG HoldCo Units for Series C Preferred Shares redemption, resulting in a $13,303,179 loss on investment.
- A joint venture agreement with Multicortex, LLC, for artificial intelligence and high-performance computing, was terminated on July 21, 2025, and previously issued shares were cancelled.
Sentiment
Score: 2
Explanation: The sentiment is overwhelmingly negative due to substantial and increasing net losses from continuing operations, critically low cash reserves, explicit 'going concern' doubt, and significant losses on investments and conversions. While liabilities decreased and working capital deficit improved, these are overshadowed by the severe operational and financial distress, and the uncertainty of the new business model.
Positives
- The working capital deficit significantly improved from $23,693,753 at December 31, 2024, to $2,434,301 at September 30, 2025.
- Total liabilities decreased substantially from $26,686,146 at December 31, 2024, to $3,669,272 at September 30, 2025.
- A gain of $16,835,929 was recognized on the disposal of HUMBL.com assets, contributing to a net gain from discontinued operations of $16,872,273.
- Net cash used in operating activities decreased by $289,157 for the nine months ended September 30, 2025, compared to the prior year.
Negatives
- The company reported a net loss from continuing operations of $24,695,682 for the nine months ended September 30, 2025, a substantial increase from $2,863,987 in the prior year.
- Cash on hand is extremely low at $5,461 as of September 30, 2025.
- Management has expressed substantial doubt about the company's ability to continue as a going concern.
- Significant non-operating expenses were incurred, including a $13,303,179 loss on investment in WSCG HoldCo and $1,258,172 loss on conversion of convertible notes payable.
- Operating expenses increased by $2,356,383 for the nine months ended September 30, 2025, primarily due to higher settlement expenses ($2,086,171) and professional fees ($980,946).
- The company continues to face two shareholder derivative class action lawsuits alleging federal securities law violations and false/misleading statements.
Risks
- Substantial doubt exists about the company's ability to continue as a going concern due to recurring operating losses and a working capital deficit.
- The company's new business model, focused on magnesium silicate minerals, has not yet generated revenue, and profitability is uncertain.
- Reliance on the sale of magnesium silicate for future profitability, with plans to transfer the asset back to Ybyr if no buyer is found by year-end 2025.
- Ongoing shareholder derivative class action lawsuits could result in unspecified monetary damages and significant legal costs.
- The company's disclosure controls and procedures were deemed not effective as of September 30, 2025, indicating potential weaknesses in financial reporting.
- Significant dilution of common stock has occurred and may continue due to conversions of convertible notes and preferred stock, and issuance for settlements and compensation.
- The company's cash position is extremely limited, posing a liquidity risk for ongoing operations and debt obligations.
Future Outlook
The company anticipates entering into profitable businesses upon the sale of the magnesium silicate. Management expects professional fees to decrease in the next 12 months as the company scales back on outside contract labor due to the change in business operations. However, professional fees related to regulatory filings are expected to increase during the remainder of 2025 as the company transitions out of the HUMBL.com business. The company is no longer pursuing its strategy of acquiring Brazilian assets and operations and is actively pursuing new business opportunities.
Management Comments
- Management has determined that there is substantial doubt about the Company's ability to continue as a going concern.
- We intend to vigorously defend the actions of the defendants and contest what we believe are baseless claims regarding the ongoing legal proceedings.
Industry Context
HUMBL, Inc. has undergone a dramatic pivot, divesting its technology-focused HUMBL.com assets and shifting its core business to the ownership and potential sale of magnesium silicate minerals in Brazil. This move represents a complete departure from its previous ventures in mobile wallets, marketplaces, blockchain services, and financial products. The company is now operating in the industrial raw materials sector, specifically fertilizer, construction, ceramics, and fireproofing, a stark contrast to its former digital and financial technology aspirations. This strategic change places the company in an entirely different competitive landscape, requiring new expertise and market penetration strategies, with no current revenue generation from its new primary asset.
Comparison to Industry Standards
- NA The company has undergone a complete business model pivot, making direct comparisons to its former industry (fintech/digital services) irrelevant. Its new focus on magnesium silicate minerals has not yet generated revenue, precluding meaningful comparisons to established companies in the mining or industrial raw materials sector.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| CEO and Director | Thiago Moura | NA (Brian Foote became controlling stockholder, Gregory L. Hopkins is current CEO per signature) | 2025-09-09 | Resignation as part of a settlement agreement. |
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Authorized Common Stock Increase | Increased authorized common shares to 85,000,000,000 pursuant to a Definitive 14C filing. | 2025-05-21 | Enables significant future equity issuances, potentially leading to further shareholder dilution. |
| Preferred Stock Designation | Designated Series D Preferred Stock, authorizing up to 250,000 shares with 500,000 common votes per share and no conversion rights. | 2024-07-16 | Concentrates voting power with holders of Series D Preferred Stock, potentially impacting common shareholders' influence. |
| Board of Director Agreements | Entered into agreements with three board members for monthly cash compensation of $7,500 each and granted 1,875,000,000 stock options. | 2025-09-01 | Increases fixed operating expenses and introduces significant potential dilution from stock option grants. |
Legal Proceedings
- Shareholder derivative class action lawsuit (Pasquinelli v. HUMBL, LLC, et al.) alleging federal securities law violations, false/misleading statements, and sales of unregistered securities. A motion to dismiss was granted without prejudice, but plaintiffs filed an amended complaint, which the company is again seeking to dismiss.
- Shareholder derivative class action lawsuit (Armstrong v. Brian Foote, et al.) in Delaware Chancery Court, alleging similar claims as the Pasquinelli litigation. This case is currently stayed pending the outcome of the Pasquinelli lawsuit.
Related Party Transactions
- Accounts payable of $51,570 outstanding to WSCG, Inc. as of September 30, 2025.
- Repaid $404,711 in related party notes and $750,000 in other related party notes payable during the nine months ended September 30, 2025.
- Received $12,000 from a trust related to a director on January 21, 2025.
- A convertible promissory note from the Monster Creative purchase (related party) has an outstanding balance of $321,830 as of September 30, 2025.
- Settlement agreement with Ybyr Capital S.A., Brian Foote, and Thiago Moura, involving cancellation of Ybyr's stock rights, issuance of 850 million shares to Thiago Moura, and monthly cash/stock payments to Ybyr.
- Board of Director agreements effective September 1, 2025, with three board members for $7,500 per month in cash and 1,875,000,000 stock options.
Stakeholder Impact
- Shareholders face significant dilution from the issuance of billions of common shares for settlements, conversions, and compensation, and potential future dilution from authorized shares and options.
- Shareholders are exposed to substantial financial risk due to the company's 'going concern' doubt, recurring losses, and critically low cash reserves.
- Creditors holding convertible notes face uncertainty regarding repayment or conversion terms, especially with notes in default and fixed conversion prices.
- Employees (specifically directors) benefit from new compensation agreements including cash payments and substantial stock option grants.
- The strategic pivot to minerals introduces uncertainty for all stakeholders regarding the company's long-term viability and ability to generate revenue in a new industry.
Next Steps
- Actively pursue new business opportunities following the abandonment of the Brazilian assets and operations strategy.
- Seek a buyer for the 41,500 tons of magnesium silicate, with a plan to transfer it back to Ybyr by December 31, 2025, if no buyer is found.
- Continue to defend against the amended complaint in the Pasquinelli shareholder derivative lawsuit.
- Await the court's decision on the Motion to Dismiss the amended complaint in the Pasquinelli lawsuit.
- Continue to pay Ybyr $10,000 per month in cash and $5,000 per month in common stock until the assignment of FinCapital shares occurs on or before December 31, 2025.
- Address the identified ineffectiveness of disclosure controls and procedures.
Key Dates
| Date | Description |
|---|---|
| 2020-11-30 | Company redomiciled to the state of Delaware. |
| 2020-12-03 | HUMBL, LLC merged into the Company in a reverse merger. |
| 2021-02-26 | FINRA approval for increase in authorized common shares and reverse stock split. |
| 2021-07-21 | Company established the HUMBL, Inc. 2021 Stock Incentive Plan. |
| 2022-05-19 | Company named as defendant in Matt Pasquinelli and Bryan Paysen v. HUMBL, LLC shareholder derivative class action lawsuit. |
| 2022-07-14 | Company named as defendant in Mike Armstrong v. Brian Foote, et al. shareholder derivative class action lawsuit. |
| 2023-06-01 | Company amended Certificate of Incorporation to change conversion terms of Series B Preferred Stock. |
| 2023-07-07 | United States District Court for the Southern District of California granted motion to transfer venue for Pasquinelli lawsuit to District Court of Delaware. |
| 2023-07-27 | Company increased authorized common stock to 12,500,000,000 shares. |
| 2023-08-01 | Company entered into Master Consulting Agreement and Promissory Note with BRU, LLC. |
| 2023-10-24 | Company filed Certificate of Designation for Series C Preferred Stock. |
| 2023-10-30 | Company filed Motion to Dismiss Pasquinelli lawsuit with the District Court of Delaware. |
| 2023-12-19 | Company issued a Promissory Note in the amount of $220,000. |
| 2024-01-26 | Company increased authorized common stock to 22,500,000,000 shares. |
| 2024-02-23 | Company entered into Asset Purchase Agreement with Avrio Worldwide, PBC, selling HUMBL Financial product line assets. |
| 2024-03-13 | Company issued a Promissory Note in the amount of $121,000. |
| 2024-03-26 | Company issued a Promissory Note in the amount of $121,000. |
| 2024-04-01 | Ixaya deconsolidated from the Company. |
| 2024-04-02 | Company issued a Promissory Note in the amount of $121,000. |
| 2024-04-15 | Company sold a Convertible Promissory Note in the amount of $122,000. |
| 2024-04-23 | Company sold a Convertible Promissory Note in the amount of $123,000. |
| 2024-05-22 | Company sold a Convertible Promissory Note in the amount of $123,000. |
| 2024-07-16 | Company designated new Series D Preferred Stock and issued 100,000 shares to CEO for compensation. |
| 2024-09-04 | Company entered into a note payable for $287,500. |
| 2024-10-01 | Company increased authorized common shares to 50,000,000,000. |
| 2024-10-16 | Company entered into a note payable for $250,000. |
| 2024-12-02 | Company entered into Asset Purchase Agreement with WSCG, Inc. to sell all assets; also entered into Stock Purchase Agreement with Ybyr Capital S.A. to purchase FinCapital. |
| 2024-12-05 | Company sold a Convertible Promissory Note in the amount of $93,150. |
| 2024-12-17 | Company amended Master Consulting Agreement with BRU, LLC. |
| 2025-01-08 | Second tranche of 1.15 billion shares issued to BRU, LLC. |
| 2025-01-21 | Company received $12,000 at 6% interest from a trust related to a director. |
| 2025-02-04 | Company sold a Convertible Promissory Note in the amount of $103,500. |
| 2025-02-27 | Transfer of HUMBL.com assets to WSCG finalized. |
| 2025-03-14 | Company issued a $550,000 Convertible Promissory Note to Quail Hollow Capital, LLC. |
| 2025-03-27 | Court granted motion to dismiss Pasquinelli lawsuit without prejudice. |
| 2025-04-01 | Remaining $2,000,000 cash purchase price from WSCG paid to the Company; $750,000 payment to BRU, LLC repaid. |
| 2025-04-03 | HUMBL entered into a Joint Venture Agreement with Multicortex, LLC. |
| 2025-04-10 | Plaintiffs filed an amended complaint in the Pasquinelli lawsuit. |
| 2025-05-15 | Company filed a Motion to Dismiss the amended complaint in the Pasquinelli lawsuit. |
| 2025-05-16 | Company entered into Settlement Agreements with North Falls Investments, LLC, KWP 50, LLC, and Sellers Properties, LLC, to fix conversion prices of outstanding notes. |
| 2025-05-21 | Company increased authorized common shares to 85,000,000,000. |
| 2025-06-09 | Company issued a $110,000 Convertible Promissory Note to Pinnacle Consulting Services, Inc. |
| 2025-07-02 | $100,000 of Monster Creative related party convertible note converted into common stock. |
| 2025-07-21 | Joint Venture Agreement with Multicortex, LLC, terminated. |
| 2025-08-06 | Company accounted for WSCG interest as a cost method investment after exchanges. |
| 2025-09-01 | Company entered into Board of Director agreements with three board members. |
| 2025-09-09 | Settlement Agreement entered into with Ybyr, Brian Foote, and Thiago Moura; Thiago Moura resigned as CEO and director; Brian Foote became controlling stockholder. |
| 2025-09-10 | 850 million shares of common stock issued to Thiago Moura. |
| 2025-10-31 | A related party converted 220 shares of Series C Preferred Stock into 2,200,000,000 shares of Common Stock. |
| 2025-11-10 | Company entered into two separate convertible notes for $27,500 each. |
| 2025-11-14 | Filing date of the 10-Q report. |
| 2025-12-31 | Deadline for assignment of FinCapital shares to Ybyr. |
Recommendation
strong sellThe company faces severe financial distress, evidenced by critically low cash reserves ($5,461), substantial and increasing net losses from continuing operations, and an explicit 'going concern' warning from management. The strategic pivot to magnesium silicate minerals has not yet generated revenue, and its success is highly speculative, with a plan to divest the asset if no buyer is found. Significant shareholder dilution has occurred and is likely to continue. Ongoing legal proceedings add further uncertainty and potential liabilities. Despite some improvements in working capital and total liabilities, the fundamental operational and liquidity issues are profound, making the stock a high-risk, speculative investment with a strong likelihood of further value erosion.
Keywords
Magnesium Silicate, Minerals, Going Concern, SEC Filing, Quarterly Report, Financial Results, HUMBL, WSCG, FinCapital, Convertible Notes, Shareholder Lawsuit, Liquidity, Asset Sale, Business Pivot
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