BUBBLR INC. The following discussion and analysis of our results of operations and financial condition should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in this Annual Report on Form 10-K. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. See "Cautionary Note Regarding Forward-Looking Statements" at the beginning of this Annual Report on Form 10-K.
Results of Operation for Years Ended
Revenues
We did not achieve revenues from our current operations for the year ended
Operating Expenses
Our operations for the year ended
Year Ended December 31,
2022 2021 Change %
General and administrative $ 65,551 $ 126,399 $ (60,848 ) (48)%
Professional Fees $ 2,879,759 $ 2,069,876 $ 809,883 39%
Market and regulation costs $ 198,455 $ 170,441 $ 28,014 16%
Compensation $ 671,224 $ 612,735 $ 58,489 10%
Amortization and depreciation $ 387,302 $ 379,887 $ 7,415 2%
Research and development $ 94,645 $ 302,808 (208,163 ) (69)%
Total $ 4,296,936 $ 3,662,146 $ 634,790 17%
General and administrative
General and administrative expenses consist mainly of costs associated with non-specific costs of running the business. These include but are not limited to the costs of office provision, computer software not associated with research and development, travel, and telecoms.
The decrease in the costs have been mainly due to the decreased costs associated with general advertising spending undertaken in 2021 that was not repeated in 2022.
Professional fees
Professional fees consist of cost in relation to legal, accounting, marketing matters as well as the costs of consultants for our executive and advisory board.
The increase in consultancy costs from 2021 to 2022 is mainly due to the
issuance of common stock for consultancy work, and legal fees associated with
increased reporting requirements with the
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Market and regulation expenses
Market and regulation costs are cost incurred specifically in relation to fees and expenses for investor relations, our transfer agent, compliance consultancy and/or market public relations firm.
The increase in costs from 2021 to 2022 is the result of increase in investor relations and market application fee costs as the Company pursues in stated objective of increasing market awareness and progressing with an application for up-listing.
Compensation
Compensation costs are costs incurred by the company in relation to its employees and includes salaries, health insurance, pension costs, training, and any taxes due on employment.
The increase in costs from 2021 to 2022 was due to the increase of costs
regarding the recognition of earned stock-based awards under the 2022 incentive
plan offset by savings in salaries and general employment costs from 2021 and
2022 as the Company reduced its
Amortization and depreciation
The significant portion of the costs recorded by the Company in regards
amortization and depreciation are from the amortization of patents and
intellectual property. The majority of patents and intellectual property are
held in the
Increase in costs from 2021 to 2022 are due to the additional amortization
applied to intellectual property added in Q4 2021 and patents costs of patents
granted in 2021 for our patent entitled "Internet-Search Mechanism" patent,
being offset by the adverse effects of foreign currency fluctuation on the value
of the Great British Pound which has fallen significantly against the United
States Dollar in the 12 months to
Research and Development
Cost incurred in relation to development of the Company's platform includes mainly costs associated with development staff and specialist software for product development and deployments.
The reduction in costs from 2021 to 2022 resulted from the Company reducing the number of software development contractors as we focused on corporate and financing issues.
Our operating expenses are expected to increase as we further implement our
business plan and the added expenses associated with this offering and reporting
with the
Other Income (Expenses) Our other income for the year endedDecember 31, 2022 and 2021 are outlined below: Year Ended December 31, 2022 2021 Change % Interest income$ 1,553 $ 1,554 $ (1 ) - % Other income$ 142,212 $ 75,263 $ 66,949 89% Gain on settlement of debt $ -$ 5,000 $ (5,000 ) - % Interest expense$ (575,777 ) $ (65,316 ) $ (510,461 ) 782% Gain on change in fair value of warrant derivative liability$ 494,753 $ -$ 494,753 - %
Foreign currency transaction loss
Total $ (128,713 ) $ (31,341 ) $ (497,372 ) 311%
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Interest Income
The Company earns interest income on its cash reserves and on advances receivable. Any gain on interest from the advances receivable was offset in part by the decrease in interest income from the Company's cash, which decreased during the year.
As ofDecember 31, 2022 and 2021, interest income was received on the following sources: Year Ended December 31, 2022 2021 Change % Advances receivable$ 1,473 $ 1,407 $ 66 5% Cash$ 80 $ 147 $ (67 ) (46)% Total$ 1,553 $ 1,554 $ (1 ) - % As ofDecember 31, 2022 and 2021, advances receivable consisted of the following: December 31, 2022 2021 Advance receivable -G$ 58,606 $ 54,529 Advance receivable -J 21,643 21,643 Repayment received (1,231 ) - Interest due 1,891 4,079 Assignment of receivables (71,540 ) -
Effects of currency translation (9,369 ) -
Total advances receivable $ -
The advance labelled Advance principal receivable-G carried an interest rate of
3%. The advance principal labelled Advance receivable -J is non-interest
bearing. Repayment of
On
Interest Expense
Interest expense consists mainly of interest the Company has to pay on its
borrowings and on vehicle financing held by the Company. In
The principal amounts outstanding for the Company's borrowings as of
December 31,
2022 2021 Change %
Vehicle Financing $ 22,452 $ 35,918 $ (12,957 ) (36)%
Convertible Notes, net $ - $ 2,218,066 $ (2,218,066 ) -
Loans Payable - Related Party $ 917,461 $ 509,339 $ 408,122 80%
Total $ 939,913 $ 2,763,323 $ (1,823,410 ) (66)%
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The decrease in interest expense during the year ended
Funds raised via the issuance of convertible notes as of
Gain on change in fair value of warrant derivative liability
The Company analyzed the warrants issued in connection with the Series C Convertible Preferred Stock for derivative accounting consideration under ASC 815, Derivatives and Hedging. ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item.
The Company did not issue any warrants in 2021.
The Company analyzed the warrants issued during 2022 in connection with the Series C Convertible Preferred Stock for derivative accounting consideration under ASC 815, Derivatives and Hedging. ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item.
For the year ended
Year Ended
December 31, 2022
Expected term 2.09 - 2.50 years
Expected average volatility 177 - 220%
Expected dividend yield 8.33%
Risk-free interest rate 1.50 - 4.73%
The following table summarizes the changes in the warrant liabilities during the
period ended
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Warrant liability as of
$ -
Addition of new warrant liabilities 721,275
Day-one loss (28,043 )
Change in fair value of warrant liability (494,753 )
Warrant liability as of December 31, 2022 $ 198,479 The market price of the common stock has decreased from the initial award of
warrants in the period ending
31 Table of Contents Net Loss
We finished the year ended
Liquidity and Capital Resources
Working Capital
The following table provides selected financial data about our company as of
December 31,
2022 2021 Change %
Current Assets $ 42,417 $ 161,184 $ (118,767 ) (74 )%
Current Liabilities $ 595,856 $ 744,820 $ (148,964 ) (20 )%
Working Capital Deficit $ (553,439 ) $ (583,636 ) $ 30,197 (5 )%
We require cash to fund our operating expenses and working capital requirements,
including outlays for capital expenditures. As of
During the last two years, and the beginning of this year, we have faced an
increasingly challenging liquidity situation that has limited our ability to
execute our operating plan. We will need to obtain capital to continue
operations. There is no assurance that we will be able to secure such funding on
acceptable terms. During the year ended
As of
As of
As no revenues are generated from our current operations, we will require additional capital to continue to operate our business, and to further expand our business. Sources of additional capital through various financing transactions or arrangements with third parties may include equity or debt financing, bank loans or revolving credit facilities. We may not be successful in locating suitable financing transactions in the time period required or at all, and we may not obtain the capital we require by other means. Unless we can attract additional investment, our operating as a going concern is in doubt.
We are now obligated to file annual, quarterly and current reports with the
Management has determined that additional capital will be required. There is no assurance that management will be able to raise capital on terms acceptable to us, or at all.
If we are unable to obtain sufficient amounts of additional capital, we may have to cease filing the required reports and cease operations completely. If we obtain additional funds by selling any of our equity securities or by issuing common stock to pay current or future obligations, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution, or the equity securities may have rights preferences or privileges senior to the common stock.
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Cash Flow
Year ended 31 December,
2022 2021 Change
Cash used in Operating Activities $ (1,169,701 ) $ (1,577,936 ) $ 408,235
Cash used in Investing Activities
Cash on Hand $ 32,533 $ 62,967 $ (30,434 )
Operating Activities
During the year ended
Investing Activities
During the year ended
Financing Activities
During the year ended
for vehicle financing,
We also plan to seek additional financing in a private or public equity offering to secure funding for operations. There can be no assurance that we will be successful in raising additional funding. If we are not able to secure additional funding, the implementation of our business plan will be impaired. There can be no assurance that such additional financing will be available to us on acceptable terms or at all.
GHS Investments LLC
On
On
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The Company agreed to issue 587,039 shares of Common Stock to GHS in
consideration for entering into the Equity Finance Agreement valued at
On
On
On
Proactive Capital Group
On
The Company agreed to issue Proactive commitment shares of 8 shares of Series C Convertible Preferred Stock and 472,205 warrant shares (the "Warrant"). Warrant shares represent 75% of the number of shares of common stock issuable upon conversion of the Series C Convertible Preferred Stock (the "Warrant Shares"). The Company agreed to register the shares of common stock issuable pursuant to the conversion of the Series C Convertible Preferred Stock and the Warrant Shares.
On
Stephen Morris (Founder)
The Company has 2 separate loans from our founder,
Loan 1.
On
In addition, on a date no later than five (5) business days from the completion
of bridge financing of no less than
On
On
34 Table of Contents Loan 2.
On
The Company received
Minority Shareholder
On
Critical Accounting Policies and Significant Judgments and Estimates
This discussion and analysis of our financial condition and results of
operations is based on our financial statements, which have been prepared in
accordance with generally accepted accounting principles in
We believe our most critical accounting policies and estimates relate to the following:
• Foreign Currency Translations • Intangible Assets • Long-lived Assets • Income Taxes
Foreign Currency Translations
The functional currency of the Company's international subsidiaries is generally their local currency of Great British pounds (GBP). Local currency assets and liabilities are translated at the rates of exchange on the balance sheet date, and local currency revenues and expenses are translated at weighted average rates of exchange during the period. Equity accounts are translated at historical rates. The resulting translation adjustments are recorded directly into accumulated other comprehensive income.
Intangible Assets
The cost of intangible assets with determinable useful lives is amortized to reflect the pattern of economic benefits consumed on a straight-line basis over the estimated periods benefited. Patents, technology and other intangibles with contractual terms are generally amortized over their respective legal or contractual lives. When certain events or changes in operating conditions occur, an impairment assessment is performed and lives of intangible assets with determinable lives may be adjusted.
35 Table of Contents Long-Lived Assets
Long-lived assets are evaluated for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted future cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value.
Income Taxes
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, "Income Taxes". The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
Recent Accounting Pronouncements
For discussion of recently issued and adopted accounting pronouncements, please
see Note 2 to the audited consolidated financial statements as of and for the
years ended
Off Balance Sheet Arrangements
As of
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