UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For
the quarterly period ended
For the transition period from ______ to ______
Commission
File No.
(Exact name of Registrant as specified in its charter)
| (State or other jurisdiction of | (IRS Employer | |
| incorporation or organization) | Identification No.) |
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
None.
Securities registered pursuant to Section 12(g) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
| OTC Pink |
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for at least the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
There were shares of the Registrant’s common stock outstanding as of June 5, 2025.
HUMBL, Inc.
INDEX
| i |
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2025
Table of Contents
| 1 |
HUMBL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (IN US$)
MARCH 31, 2025 (UNAUDITED) AND DECEMBER 31, 2024
| MARCH 31, | DECEMBER 31, | |||||||
| 2025 | 2024 | |||||||
| (UNAUDITED) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Investment - WSCG HoldCo | ||||||||
| Current assets of discontinued operations | ||||||||
| Total Current Assets | ||||||||
| Non-Current Assets: | ||||||||
| Minerals | ||||||||
| Non-current assets of discontinued operations | ||||||||
| Total Non-Current Assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| LIABILITIES | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accounts payable - related party | ||||||||
| Derivative liabilities | ||||||||
| Liability for stock to be issued - acquisition of FinCapital | ||||||||
| Advances on purchase of assets by WSCG | ||||||||
| Current portion of notes payable | ||||||||
| Current portion of notes payable - related parties | ||||||||
| Convertible notes payable - related parties, net of discount | ||||||||
| Current portion of convertible notes payable, net of discount | ||||||||
| Current liabilities of discontinued operations | ||||||||
| Total Current Liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and contingency | ||||||||
| STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Preferred stock, shares Series A Preferred stock authorized, Series B Preferred stock authorized, Series C Preferred stock authorized and Series D Preferred stock authorized | ||||||||
| Series A Preferred, par value $, and shares issued and outstanding, respectively | ||||||||
| Series B Preferred, par value $, and shares issued and outstanding, respectively | ||||||||
| Series C Preferred, par value $, and shares issued and outstanding, respectively | ||||||||
| Series D Preferred, par value $, and shares issued and outstanding, respectively | ||||||||
| Common stock, par value, $, shares authorized, and issued and outstanding, respectively | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income (loss) | ||||||||
| Total Stockholders’ Equity (Deficit) | ( | ) | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | $ | $ | ||||||
| 2 |
HUMBL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (IN US$)
FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024
| MARCH 31, | MARCH 31, | |||||||
| 2025 | 2024 | |||||||
| CONTINUING OPERATIONS: | ||||||||
| REVENUES | $ | $ | ||||||
| COST OF REVENUES | ||||||||
| GROSS (LOSS) PROFIT | ||||||||
| OPERATING EXPENSES | ||||||||
| Professional fees | ||||||||
| Settlement of payables | ||||||||
| General and administrative expenses | ||||||||
| Total Operating Expenses | ||||||||
| OPERATING LOSS | ( | ) | ( | ) | ||||
| NON-OPERATING INCOME (EXPENSE) | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Gain on sale of HUMBL Financial assets | ||||||||
| Amortization of debt discounts | ( | ) | ( | ) | ||||
| Loss on investee | ( | ) | ||||||
| Change in fair value of derivative liability | ||||||||
| Derivative expense | ( | ) | ||||||
| Loss on exchange of warrants to common stock | ( | ) | ||||||
| Loss on exchange of Series C Preferred Stock to common stock | ( | ) | ||||||
| Loss on conversion of convertible notes payable | ( | ) | ( | ) | ||||
| Total Non-Operating Income (Expenses) | ( | ) | ||||||
| NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE DISCONTINUED OPERATIONS AND PROVISION FOR INCOME TAXES | ( | ) | ||||||
| DISCONTINUED OPERATIONS: | ||||||||
| Loss from discontinued operations | ( | ) | ( | ) | ||||
| Gain on disposal of discontinued operations | ||||||||
| Total discontinued operations | ( | ) | ||||||
| NET INCOME (LOSS) FROM OPERATIONS BEFORE PROVISION FOR INCOME TAXES | ( | ) | ||||||
| Provision for income taxes | ||||||||
| NET INCOME (LOSS) | $ | $ | ( | ) | ||||
| Other comprehensive income (loss) | ||||||||
| Foreign currency translations adjustment | ( | ) | ||||||
| Comprehensive income (loss) | $ | $ | ( | ) | ||||
| Net income (loss) per share - basic and diluted | ||||||||
| Continuing operations | $ | ) | $ | |||||
| Discontinued operations | $ | $ | ) | |||||
| Net income (loss) per share - basic | $ | $ | ( | ) | ||||
| Net income (loss) per share - diluted | ||||||||
| Continuing operations | $ | ) | $ | |||||
| Discontinued operations | $ | $ | ) | |||||
| Net income (loss) per share - diluted | $ | $ | ( | ) | ||||
| Weighted average common shares outstanding - basic | ||||||||
| Weighted average common shares outstanding - diluted | ||||||||
| 3 |
HUMBL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) (UNAUDITED) (IN US$)
THREE MONTHS ENDED MARCH 31, 2025 AND 2024
| Accumulated | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Series A Preferred | Series B Preferred | Series C Preferred | Series D Preferred | Common Stock | Additional Paid-In | Other Comprehensive | Accumulated | |||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Income (Loss) | Deficit | Total | |||||||||||||||||||||||||||||||||||||||||||
| Balance - January 1, 2024 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| Stock issued for: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Services | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of convertible notes | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of Series B Preferred to common shares | - | ( | ) | - | - | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued in warrant exchange | - | - | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation - warrants | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation - options | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of contingent consideration - restricted stock units | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Change in comprehensive income | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||
| Net loss for the period | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance - March 31, 2024 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| Balance - January 1, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Stock issued for: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accrued expenses | - | - | - | - | # | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Exchange of warrants | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of convertible notes | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of Series C Preferred to common shares | - | - | ( | ) | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt discount on convertible notes | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation - warrants | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income for the period | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance - March 31, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||||||||||||||||||||
| 4 |
HUMBL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN US$)
THREE MONTHS ENDED MARCH 31, 2025 AND 2024
| MARCH 31, | MARCH 31, | |||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES FROM CONTINUING OPERATIONS | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities | ||||||||
| Loss on conversion of convertible notes payable | ||||||||
| Loss on exchange of warrants for common stock | ||||||||
| Loss on exchange of Series C Preferred Stock to common stock | ||||||||
| Fee added to convertible notes | ||||||||
| Interest expense recorded for discounts | ||||||||
| Amortization of debt discounts | ||||||||
| Loss on investee | ||||||||
| Stock-based compensation | ||||||||
| Gain on disposal of HUMBL.com | ( | ) | ||||||
| Derivative expense | ||||||||
| Change in fair value of derivative liability | ( | ) | ( | ) | ||||
| Gain on sale of HUMBL Financial assets | ( | ) | ||||||
| Changes in assets and liabilities, net of acquired amounts | ||||||||
| Accounts payable - related party | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Total adjustments | ( | ) | ( | ) | ||||
| Net cash used in operating activities of continuing operations | ( | ) | ( | ) | ||||
| Net cash provided by operating activities of discontinued operations | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Cash received in acquisition by WSCG | ||||||||
| Net cash provided by investing activities | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from related party notes payable | ||||||||
| Repayment of convertible notes payable | ( | ) | ||||||
| Proceeds from convertible notes payable | ||||||||
| Net cash provided by financing activities | ||||||||
| NET (DECREASE) IN CASH AND RESTRICTED CASH | ( | ) | ||||||
| CASH - BEGINNING OF PERIOD | ||||||||
| CASH - END OF PERIOD | $ | $ | ||||||
| CASH PAID DURING THE PERIOD FOR: | ||||||||
| Interest expense | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| SUPPLEMENTAL INFORMATION - NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Conversion of preferred stock into common stock | $ | $ | ||||||
| Common shares issued in settlement with BRU for accrued expenses | $ | $ | ||||||
| Shares of common stock issued for warrant exchanges | $ | $ | ||||||
| Conversion of convertible notes payable, derivative liability and accrued interest for common stock | $ | $ | ||||||
| Changes in SAS 121 recognition of assets and liabilities | $ | $ | ||||||
| Vesting of contingent consideration | $ | $ | ||||||
| 5 |
HUMBL, INC .
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (IN US$)
MARCH 31, 2025
(UNAUDITED)
NOTE 1: NATURE OF OPERATIONS
HUMBL, Inc. (“Company” or “HUMBL”) was incorporated in the state of Oklahoma on November 12, 2009. The Company was redomiciled on November 30, 2020 to the state of Delaware.
On
December 3, 2020, HUMBL, LLC (“HUMBL LLC”) merged into the Company in what is accounted for as a reverse merger. Under the
terms of the Merger Agreement, HUMBL LLC exchanged
The
FINRA approval for both the increase in the authorized common shares and reverse stock split occurred on February 26, 2021. To assume
control of the Company, the former CEO, Henry Boucher assigned his shares of Series A Preferred Stock as well as
shares of common stock to Brian Foote, the President and CEO of HUMBL LLC for a $
On
June 1, 2023,
| 6 |
On
July 16, 2024, the Company designated a new Series D Preferred Stock and authorized the issuance of up to shares of this new
series.
On October 1, 2024, the Company increased its authorized common shares to shares pursuant to the Definitive 14C filed in September 2024. On May 21, 2024, the Company increased its authorized common shares to shares pursuant to the Definitive 14C filed in April 2025.
Due to the sale of the HUMBL.com assets to WSCG, Inc. as disclosed below, which was finalized February 27, 2025, all former operations of HUMBL.com were sold. As a result, all corporate events and operation summaries prior to the sale of HUMBL.com and purchase of minerals that occurred on December 2, 2024 have been removed. Refer to the Form 10-K filed on May 9, 2025 for the details of those events and summaries.
On
December 2, 2024, following execution of the Stock Purchase Agreement, the Company entered into an Asset Purchase Agreement (the “Asset
Purchase Agreement”) with WSCG, Inc. (“WSCG”), and WSCG Humbl SPV, a series of SPV Management, LLC (“HoldCo”).
Pursuant to Asset Purchase Agreement, the Company sold all of its assets to WSCG. In consideration for the purchase of the Company’s
assets, WSCG agreed to: (a) pay the Company $
The
HoldCo Units represent approximately
On
December 2, 2024, the Company entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Ybyrá
Capital S.A. (“Ybyrá”) and Brian Foote, the former CEO and current director. Pursuant to the Stock Purchase Agreement:
(a) HUMBL purchased
FinCapital
is now a
| 7 |
As a result of the WSCG purchase of the Company assets, the previous operations of the Company will be reflected as discontinued operations, and the assets that were sold are all reflected as assets under discontinued operations.
Going Concern
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.
During the past two years, we devoted a substantial amount of capital to build out our platform and as a result our working capital deficit and accumulated deficit have increased significantly. In addition, we have incurred significant debt from both unrelated and related parties to assist in supporting our operations.
As
of March 31, 2025, we had $
We
had a working capital deficit of $
Net
cash used in operating activities was $
We
had no activities from investing activities in the three months ended March 31, 2025 and 2024 other than the balance of the proceeds
received from WSCG for the sale of HUMBL.com in the amount of $
Cash
provided by financing activities was $
The consolidated financial statements of the Company have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable period. The consolidated financial statements of the Company do not include any adjustments that may result from the outcome of the uncertainties.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies only relate to the Company’s operations post-December 2, 2024 transactions as noted above in Note 1.
Basis of Presentation
The accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the United States Securities and Exchange Commission (the “Commission” or the “SEC”). It is management’s opinion that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation.
| 8 |
Principles of Consolidation
The consolidated financial statements include the accounts of HUMBL, Inc. and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
The Company applies the guidance of Topic 805 Business Combinations of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”).
Reclassification
The Company has reclassified certain amounts in the 2024 financial statements to comply with the 2025 presentation. These principally relate to classification of certain expenses and liabilities. The reclassifications had no impact on total net loss or net cash flows for the three months ended March 31, 2025.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. These estimates include, but are not limited to, management’s estimate of provisions required for permanent and temporary differences related to income taxes, liabilities to accrue, estimates of the fair value of investments and determination of the fair value of stock awards. Actual results could differ from those estimates.
Cash
Cash
consists of cash and demand deposits with an original maturity of three months or less. The Company holds
Fixed Assets and Long-Lived Assets
ASC 360 requires that long-lived assets and certain identifiable intangibles held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company has adopted Accounting Standard Update (“ASU”) 2017-04 Intangibles – Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment.
The Company reviews recoverability of long-lived assets on a periodic basis whenever events and changes in circumstances have occurred which may indicate a possible impairment. The assessment for potential impairment is based primarily on the Company’s ability to recover the carrying value of its long-lived assets from expected future cash flows from its operations on an undiscounted basis. If such assets are determined to be impaired, the impairment recognized is the amount by which the carrying value of the assets exceeds the fair value of the assets.
Fixed assets and intangible assets with finite useful lives are stated at cost less accumulated amortization and impairment. Intangible assets with infinite lives, such as digital currency are valued at costs and reviewed for indicators of impairment at least annually, or more depending on circumstances.
The Company assesses the impairment of identifiable intangibles whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors the Company considers to be important which could trigger an impairment review include the following:
1. Significant underperformance relative to expected historical or projected future operating results;
| 9 |
2. Significant changes in the manner of use of the acquired assets or the strategy for the overall business; and
3. Significant negative industry or economic trends.
When the Company determines that the carrying value of intangibles may not be recoverable based upon the existence of one or more of the above indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flows, the Company records an impairment charge. The Company measures any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in the current business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows.
The Company’s minerals are considered long-lived assets and accounted for under these standards.
Revenue Recognition
Prior to December 2, 2024, the Company accounted for revenues based on the verticals in which they were earned: HUMBL Mobile Wallet, HUMBL Marketplace, HUMBL Blockchain Services, HUMBL Search Engine, HUMBL Tickets, as well as all merchandise sales and service revenues. As a result of the sale of the HUMBL assets, all revenues were reclassified to discontinued operations. For a summary of the prior revenue recognition policy, see the Form 10-K for the year ended December 31, 2023 filed March 28, 2024.
The Company has revenue from continuing operations for the three months ended March 31, 2025 and 2024, respectively.
Income Taxes
Income taxes are accounted under the asset and liability method. The current charge for income tax expense is calculated in accordance with the relevant tax regulations applicable to the entities. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Differences between statutory tax rates and effective tax rates relate to permanent tax differences.
Uncertain Tax Positions
The Company follows ASC 740-10 Accounting for Uncertainty in Income Taxes. This requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach. Management evaluates their tax positions on an annual basis.
The Company files income tax returns in the U.S. federal tax jurisdiction and various state tax jurisdictions. The federal and state income tax returns of the Company are subject to examination by the IRS and state taxing authorities, generally for three years after they were filed.
The Company follows ASC 718 Compensation – Stock Compensation and has adopted ASU 2017-09 Compensation – Stock Compensation (Topic 718) Scope of Modification Accounting. The Company calculates compensation expense for all awards granted, but not yet vested, based on the grant-date fair values. Share-based compensation expense for all awards granted is based on the grant-date fair values. The Company policy is to recognize these compensation costs, on a pro rata basis over the requisite service period of each vesting tranche of each award for service-based grants, and as the criteria is achieved for performance-based grants, when such grants are made. For stock options and warrants, the Company uses the Black-Scholes model to estimate the value of those grants. The Company has not had any forfeitures of these grants, and these estimates of value will include a percentage of forfeitures when that percentage is able to be estimated.
| 10 |
The Company adopted ASU 2016-09 Improvements to Employee Share-Based Payment Accounting. Cash paid when shares are directly withheld for tax withholding purposes will be classified as a financing activity in the statement of cash flows.
Fair Value of Financial Instruments
ASC 825 Financial Instruments requires the Company to disclose estimated fair values for its financial instruments. Fair value estimates, methods, and assumptions are set forth below for the Company’s financial instruments: The carrying amount of cash, accounts receivable, prepaid and other current assets, accounts payable and accrued liabilities, and amounts payable to related parties, approximate fair value because of the short-term maturity of those instruments.
Leases
The Company follows ASC 842 Leases in accounting for leased properties, when they exceed a one-year term. When the Company enters into leases with a term in excess of one year, they will recognize a lease liability and right of use asset in accordance with the provisions of ASC 842.
Basic net income (loss) per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (“EPS”) include additional dilution from common stock equivalents, such as convertible notes, preferred stock, stock issuable pursuant to the exercise of stock options and warrants. As of March 31, 2025, the Company has approximately 10 billion shares of common stock equivalents.
Common stock equivalents are not included in the computation of diluted earnings per share when the Company reports a loss because to do so would be anti-dilutive for periods presented, so only the basic weighted average number of common shares are used in the computations.
Derivative Financial Instruments
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. Management evaluates all of the Company’s financial instruments, including convertible notes and warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives.
The Company generally uses a Black-Scholes model, as applicable, to value the derivative instruments at inception and subsequent valuation dates when needed. The classification of derivative instruments, including whether such instruments should be recorded as liabilities, is remeasured at the end of each reporting period.
In 2024, the Company adopted ASU No. 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplified the accounting for convertible instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. ASU 2020-06 also requires the application of the if-converted method for calculating diluted earnings per share and the treasury stock method will be no longer available.
Fair Value Measurements
ASC 820 Fair Value Measurements defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosure about fair value measurements. ASC 820 classifies these inputs into the following hierarchy:
Level 1 inputs: Quoted prices for identical instruments in active markets.
| 11 |
Level 2 inputs: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3 inputs: Instruments with primarily unobservable value drivers.
Equity Method Investments
The Company accounts for investments in entities over which it has significant influence, but not control or joint control, using the equity method of accounting under ASC 323. Significant influence is generally presumed to exist when the Company holds 20% or more of the voting power of the investee, unless it can be clearly demonstrated that such influence does not exist.
Under the equity method, the investment is initially recognized at cost, and the carrying amount is subsequently adjusted to recognize the Company’s share of the investee’s net income or loss, which is recognized in the consolidated statement of operations. The carrying amount of the investment is also adjusted for the Company’s share of other comprehensive income or loss of the investee and is reduced by any dividends received from the investee.
If the Company’s share of losses in the equity method investee exceeds the interest in the investee, the carrying amount of the investment is reduced to zero, and recognition of further losses is discontinued unless the Company has incurred obligations or made payments on behalf of the investee.
The Company assesses its equity method investments for indicators of impairment at each reporting period. If impairment indicators exist and the fair value of the investment has declined below its carrying value and is deemed to be other than temporary, an impairment loss is recognized in the consolidated statements of operations.
The Company eliminates unrealized gains and losses on transactions with equity method investees to the extent of the interest in the investee.
Segment Reporting
In 2024, the Company adopted Accounting Standards Update 2023-07 (“ASU 2023-07”). ASU 2023-07 improves segment reporting disclosures for public companies. ASU 2023-07 requires more detailed information about reportable segments and expenses including the requirement to disclose qualitative information about factors used to identify reportable segments and quantitative information about profit and loss measures and significant expense categories. The Company has effective December 2, 2024, entered into an agreement to sell their operating business to WSCG, and as a result has reflected those operating revenues and expenses within discontinued operations, and has not yet begun generating revenue from its planned principal operations and operates as a single reportable segment. The chief operating decision maker is the Company’s chief financial officer who assesses performance based on total expenses, cash flows, and progress made in the Company’s ongoing development efforts. All of the Company’s long-lived assets are located in Brazil. The Company analyzed ASU 2023-07 and determined that the required information is presented within the consolidated financial statements and footnote disclosures herein.
Recent Accounting Pronouncements
The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.
NOTE 3: DISCONTINUED OPERATIONS
IXAYA
Effective April 1, 2024, the Company and Ixaya agreed to terminate the Ixaya SPA and continue working together on certain projects in a contractor role. In this agreement, Ixaya will keep the shares previously issued to them when they were acquired and the Company would deconsolidate Ixaya as of April 1, 2024. The operations of Ixaya for the three months ended March 31, 2024 are reflected in discontinued operations.
The Company reclassified the following operations to discontinued operations for the three months ended March 31, 2024.
| Revenue | $ | |||
| Operating expenses | ||||
| Other non-operating expenses | ||||
| Net loss from discontinued operations | $ | ( | ) |
The Company reflected the following loss on disposal for the year ended December 31, 2024 related to the deconsolidation of Ixaya:
| Cash | $ | ( | ) | |
| Accumulated comprehensive income | ( | ) | ||
| Bank loan | ||||
| Accounts payable and accrued expenses | ||||
| Due to officer | ||||
| Net loss on disposal | $ | ( | ) |
| 12 |
HUMBL.com
Effective
December 2, 2024, the Company entered into an Asset Purchase Agreement with WSCG to sell their assets to WSCG as discussed in Note 1.
The Company received $
The Company reclassified the following operations to discontinued operations for the three months ended March 31, 2025.
| Revenue | $ | |||
| Operating expenses | ||||
| Net loss from discontinued operations | $ | ( | ) |
The Company reclassified the following operations to discontinued operations for the three months ended March 31, 2024.
| Revenue | $ | |||
| Operating expenses | ||||
| Net loss from discontinued operations | $ | ( | ) |
The Company reflected the following gain on disposal for the three months ended March 31, 2025 related to the sale of HUMBL.com, which includes the ownership of HoldCo:
| Cash | $ | ( | ) | |
| Prepaid expenses and other current assets | ( | ) | ||
| Inventory | ( | ) | ||
| Investment - Avrio | ( | ) | ||
| Safeguarding of digital assets (asset) | ( | ) | ||
| Fixed assets | ( | ) | ||
| Intangible assets | ( | ) | ||
| Investment in HoldCo | ||||
| Exchange deposit | ||||
| Safeguarding of digital assets (liability) | ||||
| Net gain on disposal | $ |
Current assets as of December 31, 2024 – Discontinued Operations:
| December 31, 2024 | ||||
| Safeguarding of digital assets | $ | |||
| Inventory | ||||
| Prepaid expenses | ||||
| Investment - Avrio | ||||
| $ | ||||
| 13 |
Non-current assets as of December 31, 2024 – Discontinued Operations:
| December 31, 2024 | ||||
| Fixed assets, net | $ | |||
| Intangible assets, net | ||||
| $ | ||||
Current liabilities as of December 31, 2024 – Discontinued Operations:
| December 31, 2024 | ||||
| Safeguarding of digital assets | $ | |||
| $ | ||||
NOTE 4: INVESTMENTS
FINCAPITAL
On
December 2, 2024, the Company entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Ybyrá
Capital S.A. (“Ybyrá”) and Brian Foote, the former CEO and current director. Pursuant to the Stock Purchase Agreement:
(a) HUMBL purchased
The
Company’s magnesium silicate is a raw material used in the creation of fertilizer and other industrial applications. The Company
agreed to issue $
AVRIO
The
Company on February 23, 2024 entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Avrio Worldwide, PBC
(“Avrio”). Pursuant to the Purchase Agreement, the Company sold the assets associated with its HUMBL Financial product line,
including all BLOCK ETXs and BLOCK Indexes (but not including any active trading algorithms or strategies) to Avrio.
| 14 |
WSCG Holdco
On
December 2, 2024, following execution of the Stock Purchase Agreement, the Company entered into an Asset Purchase Agreement with WSCG,
and HoldCo. Pursuant to Asset Purchase Agreement, the Company sold all of its assets to WSCG. In consideration for the purchase of the
Company’s assets, WSCG agreed to: (a) pay the Company $
The
HoldCo Units represent approximately
The
Company accounts for the
| Balance – January 1, 2025 | $ | |||
| Initial investment | ||||
| Share of net loss | ( | ) | ||
| Dividends received | ||||
| Balance – March 31, 2025 | $ |
For the period February 27, 2025 through March 31, 2025, there have been no indicators of impairment identified.
NOTE 5: MINERALS
FinCapital
owns
The Company’s minerals are located in Minas Gerais in Brazil. Magnesium silicate is a residue with a variable amount of silicon, formed from the melting of metals and is called slag in the steel industry. Several research studies have shown that the addition of this element in the form of fertilizer has shown considerable increases in productivity in various crops.
The Company received a valuation report which reflected market information that was analyzed along with the collection of macroeconomic, market and financial data, which were all used to determine the unit value. The model used in the valuation of Magnesium Silicate Stock was calculated using the comparative market method. This methodology defines the value by comparing it with similar market data in terms of the intrinsic characteristics of the assets. In this evaluation, similar assets were obtained from suppliers in order to detect the unit value per ton responsible for forming the fair market value of the asset.
The Company’s plan is to market this asset to entities for use in the agriculture market and potentially sell the magnesium silicate in its current form. If unable to negotiate an adequate transaction, the Company will look to alternative ways to monetize the asset.
| 15 |
NOTE 6: NOTE PAYABLE - BANK
On
March 3, 2022 with the acquisition of Ixaya, the Company assumed a loan with Citibanamex. The loan was due in monthly payments of $
Refer to the Form 10-K for the year ended December 31, 2024 filed May 9, 2025 for a full description of notes that existed as of December 31, 2024 and 2023. All note balances that were either converted or repaid as of December 31, 2024 have been excluded from this disclosure.
The
Company entered into a note payable with an individual on September 4, 2024 that matures
The
Company entered into a note payable with an individual on October 16, 2024 that matures
On
August 1, 2023, the Company entered into a Master Consulting Agreement (the “Agreement”) and Promissory Note (“Note”)
with BRU, LLC (“BRU”). Under the terms of the Agreement, BRU will provide information technology support to the Company for
a three-year term. The Company has agreed to pay compensation in common stock and cash. The initial stock consideration is
shares of common stock as compensation for past due invoices owed to BRU’s predecessor in interest with a 24-month price floor
of $
Additional shares of common stock will be issued to BRU based on milestones to be mutually agreed to by the Company and BRU by August 11, 2023. The Company will issue shares of its common stock (the “Additional Shares”) upon completion of the milestones that shall not be more than two years after execution of the Agreement. The value of the Additional Shares shall be equal to the number of Additional Shares multiplied by $ (the “Additional Share Value”). On each anniversary of the execution date (the “Anniversary Date”) until the milestones are met, but in no event more than two years from the execution date, the Additional Share Value shall equal the value of the common stock on the Anniversary Date, based on the closing price of the Company’s common stock on the Anniversary Date (the “Anniversary Value”) (as may be adjusted for any reverse split). To the extent the Anniversary Value is lower than the public market value of the Company’s common stock, the Company will issue additional shares to BRU equal to the amount necessary for the total number of common stock and Additional Shares issued under the Agreement to equal the Anniversary Share Value that in no event will be less than $ per share, or, at the Company’s election, pay in cash the difference between the public market value of the Company’s common stock and the Anniversary Share Value.
| 16 |
The Company amended this agreement on December 17, 2024, and adjusted the schedule of payments due to BRU. In accordance with the revised payment schedule, the Company paid BRU:
| (a) | $ | |
| (b) | First share tranche million shares December 17, 2024; and | |
| (c) | Second tranche of billion shares January 8, 2025. |
Both
share issuances have been made and the $
As
of March 31, 2025, the Company has $
NOTE 8: NOTES PAYABLE – RELATED PARTIES
The Company entered into notes payable – related parties as follows as of March 31, 2025 and December 31, 2024. The chart below does not include notes payable that were repaid or converted during 2024, or notes payable that were reclassified to liabilities of discontinued operations or disposed of. Refer to the Form 10-K for the year ended December 31, 2024 filed May 9, 2025 for a full description of those notes:
March 31, 2025 | December 31, 2024 | |||||||
| Note payable with a trust related to a director of the Company dated May 13, 2024 for a period of one year maturing | $ | $ | ||||||
| Note payable with a trust related to a director of the Company dated June 27, 2024 for a period of one year maturing | ||||||||
| Note payable with a trust related to a director of the Company dated January 21, 2025 for a one-year
period maturing | ||||||||
| Note payable with a partnership controlled by the family of one of the Company’s directors dated August 7, 2024 at | ||||||||
| Total | ||||||||
| Less: Current portion | ( | ) | ( | ) | ||||
| Less: Discount | ||||||||
| Long-term debt | $ | $ | ||||||
Maturities of notes payable – related parties as of March 31 is as follows:
| 2026 | $ | |||
| $ |
Interest
expense for the three months ended March 31, 2025 and 2024 was $
The
Company received $
All of the notes outstanding as of March 31, 2025 were repaid in April 2025.
| 17 |
The
Company received $
On
August 7, 2024, the Company issued a Secured Promissory Note in the original principal amount of $
NOTE 9: CONVERTIBLE PROMISSORY NOTES
March 31, 2025 | December 31, 2024 | |||||||
| Convertible notes entered into July 26, 2023 due | $ | $ | ||||||
| Convertible note up to $ | ||||||||
| Convertible note payable entered into December 19, 2023, with a maturity date of | ||||||||
| Convertible note payable entered into March 13, 2024, with a maturity date of | ||||||||
| Convertible note payable entered into March 26, 2024, with a maturity date of | ||||||||
| Convertible note payable entered into April 2, 2024, with a maturity date of | ||||||||
| Convertible note payable entered into April 23, 2024, with a maturity date of | ||||||||
| Convertible note payable entered into April 15, 2024, with a maturity date of | ||||||||
| Convertible note payable entered into May 22, 2024, with a maturity date of | ||||||||
| Convertible note payable entered into December 5, 2024, with a maturity date of | ||||||||
| Convertible note payable entered into February 4, 2025, with a maturity date of | ||||||||
| Convertible note payable entered into March 14, 2025, with a maturity date of | ||||||||
| Less: Current portion | ( | ) | ( | ) | ||||
| Less: Discounts | ( | ) | ( | ) | ||||
| Long-term debt | $ | $ | ||||||
| 18 |
On
July 26, 2023, the Company entered into Securities Purchase Agreements with three different investors (the “Purchase Agreements”).
Pursuant to the Purchase Agreements, the Company issued three convertible promissory notes in the original principal amount of $
On
December 19, 2023, the Company issued a Promissory Note in the amount of $
On
March 13, 2024, the Company issued a Promissory Note in the amount of $
On
March 26, 2024, the Company issued a Promissory Note in the amount of $
On
April 2, 2024, the Company issued a Promissory Note in the amount of $
On
April 15, 2024, the Company entered into a Securities Purchase Agreement pursuant to which it sold a Convertible Promissory Note in the
amount of $
| 19 |
On
April 23, 2024, the Company entered into a Securities Purchase Agreement pursuant to which it sold a Convertible Promissory Note in
the amount of $
On
May 22, 2024, the Company entered into a Securities Purchase Agreement pursuant to which it sold a Convertible Promissory Note in
the amount of $
On
December 5, 2024, the Company entered into a Securities Purchase Agreement pursuant to which it sold a Convertible Promissory Note in
the amount of $
On
February 4, 2025, the Company entered into a Securities Purchase Agreement pursuant to which it sold a Convertible Promissory Note in
the amount of $
On
March 14, 2025, the Company issued a $
All of the convertible promissory notes as of March 31, 2025 are due in the next fiscal year, and therefore are current.
The Company evaluated the terms of the convertible notes and determined that there were derivative liabilities to be recorded at inception of the notes as there were sufficient shares to net share settle the notes at the discounted values.
Interest
expense for the three months ended March 31, 2025 and 2024 was $
The
Company recognized a loss on conversion of notes of $
| 20 |
NOTE 10: CONVERTIBLE PROMISSORY NOTES – RELATED PARTIES
The Company issued convertible notes payable – related parties as follows as of March 31, 2025 and December 31, 2024. The chart below does not include convertible notes payable – related parties that were repaid or converted during 2024. Refer to the Form 10-K for the year ended December 31, 2024 filed May 9, 2025 for a full description of those notes:
March 31, 2025 | December 31, 2024 | |||||||
| Monster Creative purchase – June 30, 2021 | $ | $ | ||||||
| Less: Current portion | ( | ) | ( | ) | ||||
| Long-term debt | $ | $ | ||||||
The convertible promissory notes – related parties are in default and reflected in current liabilities as of March 31, 2025 and December 31, 2024.
On
June 30, 2021, the Company acquired Monster Creative, LLC. The Monster Purchase Price included: (a) a convertible note to Phantom Power,
LLC in the amount of $
The Company evaluated the terms of the convertible notes and determined that there were no terms that would necessitate the recognition of any derivative liabilities.
Interest
expense for the three months ended March 31, 2025 and 2024 was $
NOTE 11: DERIVATIVE LIABILITIES
The Company entered into several convertible notes payable, that terms include variable conversion prices (see Note 14). The Company evaluated these terms and determined that the conversion option on the convertible notes payable contained characteristics that required the Company to classify them as derivative liabilities. The Derivative Instruments have been accounted for utilizing ASC 815 “Derivatives and Hedging.” The Company has incurred a liability for the estimated fair value of Derivative Instruments. The estimated fair value of the Derivative Instruments has been calculated using the Black-Scholes fair value option-pricing model with key input variables provided by management, as of the date of issuance, with changes in fair value recorded as gains or losses on revaluation in other income (expense).
The Company identified embedded features in some of the agreements which were classified as liabilities. These embedded features included a variable conversion price that would convert those instruments into a variable number of common shares. The accounting treatment of derivative financial instruments requires that the Company treat the instrument as liability and record the fair value of the instrument as derivatives as of the inception date of the instrument and to adjust the fair value of the instrument as of each subsequent balance sheet date.
The Company determined the derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of March 31, 2025. The Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate.
| 21 |
Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each conversion option is estimated using the Black-Scholes valuation model. The following assumptions were used on March 31, 2025:
Three Months Ended March 31, 2025 | ||||
| Expected term | ||||
| Expected volatility | % | |||
| Expected dividend yield | ||||
| Risk-free interest rate | % | |||
| Market price | $ | – $ | ||
Activity related to the derivative liabilities for the period ended March 31, 2025 and December 31, 2024 is as follows:
| March 31, 2025 | December 31, 2024 | |||||||
| Beginning balances | $ | $ | ||||||
| Recognition of derivative liability on conversion options of notes | ||||||||
| Derivative expense | ||||||||
| Conversion of note payable | ( | ) | ( | ) | ||||
| Change in fair value of derivative liabilities | ( | ) | ( | ) | ||||
| Ending balances | $ | $ | ||||||
NOTE 12: STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred Stock
As of March 31, 2025 and December 31, 2024, the Company has shares of Preferred Stock authorized, designated as follows: shares of Series A Preferred Stock authorized, shares of Series B Preferred Stock, shares of Series C Preferred Stock, and shares of Series D Preferred Stock authorized. All shares of preferred stock have a par value of $.
Series A Preferred Stock
Dividends. Shares of Series A Preferred Stock shall be entitled to receive, out of funds legally available for that purpose, on the same terms and conditions as that of holders of common stock, as may be declared by the Board of Directors.
Conversion. There are no conversion rights.
Redemption.
| 22 |
Voting
Rights.
Liquidation. Upon any liquidation, dissolution, or winding-up of the Company, whether voluntary or involuntary, the holders of Series A Preferred Stock shall be entitled to receive out of the assets, whether capital or surplus, of the Company an amount equal to the liquidation value of the Series A Preferred Stock before any distribution or payment shall be made to the holders of any junior securities, and if the assets of the Company is insufficient to pay in full such amounts, then the entire assets to be distributed to the holders of the Series A Preferred Stock shall be ratably distributed among the holders in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full.
The shares were issued to a former officer of the Company and assigned to the new CEO at the time of the reverse merger of HUMBL.
Series B Preferred Stock
Prior to the amendment of the Certificate of Incorporation on October 29, 2021, the criteria established for the Series B Preferred Stock was as follows:
Dividends. Shares of Series B Preferred Stock shall be entitled to receive, out of funds legally available for that purpose, on the same terms and conditions as that of holders of common stock, as may be declared by the Board of Directors.
Conversion. Each share of Series B Preferred Stock shall be convertible at the option of the holder thereof at any time after December 3, 2021 at the office of the Company or any transfer agent for such stock, into ten thousand () fully paid and nonassessable shares of common stock subject to adjustment for any stock split or distribution of securities or subdivision of the outstanding shares of common stock.
Redemption.
Voting
Rights.
Liquidation. Upon any liquidation, dissolution, or winding-up of the Company, whether voluntary or involuntary, the holders of Series B Preferred Stock shall be entitled to receive out of the assets, whether capital or surplus, of the Company an amount equal to the liquidation value of the Series B Preferred Stock before any distribution or payment shall be made to the holders of any junior securities, and if the assets of the Company is insufficient to pay in full such amounts, then the entire assets to be distributed to the holders of the Series B Preferred Stock shall be ratably distributed among the holders in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full.
During the three months ended March 31, 2025 and 2024, there were and shares of Series B Preferred Stock converted into and shares of common stock, respectively.
As of March 31, 2025, the Company has shares of Series B Preferred Stock issued and outstanding.
| 23 |
Series C Preferred Stock
On October 24, 2023, the Company filed a Certificate of Designation with the State of Delaware to designate shares to be authorized for Series C Preferred Stock.
The criteria established for the Series C Preferred Stock was as follows:
Dividends. Shares of Series C Preferred Stock shall not be entitled to receive any dividend.
Conversion.
(a) Automatic Conversion – upon such time the Company shall become listed on a national securities exchange, the Series C Preferred
stock shall automatically convert into shares of the Company’s common stock at a conversion price equal to a
Redemption. The Series C Preferred Stock shall not be subject to mandatory redemption.
Voting Rights. Holders of Series C Preferred Stock shall have no voting rights.
Liquidation. In the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary (“Liquidation Event”), before any distribution or payment shall be made to the holders of the Series C Preferred Stock, and after the distribution or payment to the Series A Preferred Stock and Series B Preferred Stock, in accordance with their respective terms, the holders of the Series C Preferred Stock shall be entitled to receive an amount per share equal to the sum of the initial issuance price applicable to such Series C Preferred Stock for each outstanding share of Series C Preferred Stock plus any declared but unpaid dividends on such share. The initial issuance price shall mean $ per share (as adjusted for stock splits, stock dividends, recapitalizations, and similar transactions). If upon, any Liquidation Event, the assets of the Company shall be insufficient to make payment in full to the holders of the Series C Preferred Stock of the applicable Liquidation Preference, then such assets shall be distributed among the holders of the Series C Preferred Stock at the time outstanding, ratably in proportion to the full preferential amounts to which they would otherwise be entitled.
In the period October 24, 2023 through December 31, 2023, the Company issued shares of Series C Preferred Stock for cash, exchange of debt and exchange of warrants.
During the three months ended June 30, 2024, the Company issued shares of Series C Preferred Stock in connection with financing activities.
During
the three months ended March 31, 2025, there were shares of Series C Preferred Stock exchanged into shares of common
stock. The Company lost $
As of March 31, 2025, there are shares of Series C Preferred Stock issued and outstanding.
Series D Preferred Stock
On
July 16, 2024, the Company designated a new Series D Preferred Stock and authorized the issuance of up to shares of this new
series.
| 24 |
Common Stock
The Company has shares of common stock, par value $, authorized as of May 21, 2025, increased from . The Company has and shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively. On May 26, 2023 the Board of Directors agreed to increase the number of common shares authorized from shares to shares. The stockholders approved this action on May 29, 2023. This action became effective on July 27, 2023. On January 26, 2024, the Board of Directors agreed to increase the authorized common shares to shares. On October 1, 2024, the Company increased its authorized common shares to shares pursuant to the Definitive 14C filed in September 2024. On May 21, 2025, the Company increased its authorized common shares to pursuant to the Definitive 14C filed April 30, 2025.
In
the three months ended March 31, 2024, the Company: (a) issued shares for services rendered valued at $
In
the three months ended June 30, 2024, the Company: (a) issued shares for services rendered valued at $
In
the three months ended September 30, 2024, the Company: (a) issued shares for services rendered valued at $
In
the three months ended December 31, 2024, the Company: (a) issued shares for services rendered valued at $
In
the three months ended March 31, 2025, the Company: (a) issued shares for an accrued expense valued at $
Stock Incentive Plan
On July 21, 2021, the Company established the HUMBL, Inc. 2021 Stock Incentive Plan (the “Plan”) for a total issuance not to exceed shares of common stock. The purpose of the Plan is to promote the long-term growth and profitability of the Company by (i) providing key people with incentives to improve stockholder value and to contribute to the growth and financial success of the Company, and (ii) enabling the Company to attract, retain and reward the best-available persons.
The Plan permits the granting of Stock Options (including incentive stock options qualifying under Code Section 422 and nonqualified stock options), Stock Appreciation Rights, restricted or unrestricted Stock Awards, Restricted Stock Units, Performance Awards, other stock-based awards, or any combination of the foregoing.
| 25 |
Warrants
Warrants issued in 2025 and 2024 consisted of the following:
On
January 31, 2024, the Company issued
On
February 12, 2024, the Company issued
On
March 12, 2024, the Company issued
On
March 26, 2024, the Company issued
On
April 8, 2024, the Company issued
On
April 16, 2024, the Company issued
On
May 22, 2024, the Company issued
On
May 24, 2024, the Company issued
The following represents a summary of the warrants:
Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | |||||||||||||||
| Number | Weighted Average Exercise Price | Number | Weighted Average Exercise Price | |||||||||||||
| Beginning balance | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ||||||||||||||||
| Forfeited/Exchanged | ( | ) | ( | ) | ||||||||||||
| Expired | ||||||||||||||||
| Ending balance | $ | $ | ||||||||||||||
| Intrinsic value of warrants | $ | $ | ||||||||||||||
| Weighted Average Remaining Contractual Life (Years) | ||||||||||||||||
As of March 31, 2025, warrants are vested.
For the three months ended March 31, 2025 and 2024, the Company incurred stock-based compensation expense of $ and $, respectively for the warrants in accordance with ASC 718-10-50-1 and ASC 718-10-50-2. The fair value of the grants was calculated based on the black-scholes calculation using the assumptions reflected in the chart below for both the service-based grants and the performance-based grants.
As of March 31, 2025, there remains unrecognized stock-based compensation expense related to these warrants of $ comprising of service-based grants through June 30, 2026.
The Company recorded $
| 26 |
Options
As of March 31, 2025, of the May 26, 2022 options as well as options issued in 2021 have been forfeited. As of March 31, 2025, options are exercisable.
Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | |||||||||||||||
| Number | Weighted Average Exercise Price | Number | Weighted Average Exercise Price | |||||||||||||
| Beginning balance | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ||||||||||||||||
| Forfeited | ||||||||||||||||
| Expired | ||||||||||||||||
| Ending balance | $ | $ | ||||||||||||||
| Intrinsic value of options | $ | $ | ||||||||||||||
| Weighted Average Remaining Contractual Life (Years) | ||||||||||||||||
For the three months ended March 31, 2025 and 2024, the Company incurred stock-based compensation expense of $ and $, respectively for the options in accordance with ASC 718-10-50-1 and ASC 718-10-50-2. The fair value of the grants was calculated based on the Black-Scholes calculation using the assumptions reflected in the chart below for the service-based grants.
Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each option/warrant is estimated using the Black-Scholes valuation model. The following assumptions were used for the periods as follows:
| Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | |||||||
| Expected term | - | - | ||||||
| Expected volatility | % | % | ||||||
| Expected dividend yield | ||||||||
| Risk-free interest rate | % | % |
Restricted Stock Units (RSUs)
On February 12, 2022, the Company granted RSUs in the acquisition of the asserts of BizSecure that was recorded as contingent consideration. These RSUs commenced vesting on April 1, 2022.
Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | |||||||||||||||
| Number | Weighted Average Exercise Price | Number | Weighted Average Exercise Price | |||||||||||||
| Beginning balance | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ||||||||||||||||
| Forfeited | ||||||||||||||||
| Vested | ( | ) | ||||||||||||||
| Ending balance | $ | $ | ||||||||||||||
| 27 |
On December 30, 2022, the Company and BizSecure negotiated a settlement of all claims resulting from the Company’s inability to timely register the shares of common stock issued February 12, 2022 and RSUs that vested during 2022. As a result, the shares of common stock and the RSUs were rescinded effective December 30, 2022. The remaining RSUs will continue to vest in accordance with the original terms and the Company will continue the process to get those RSUs registered for resale and re-negotiate the terms of the common shares to be issued to BizSecure. For the year ended December 31, 2023, RSUs vested. In 2023 of these shares were issued for the vested RSUs. For the three months ended March 31, 2024 RSUs vested, and no shares were issued for vested RSUs.
For
the three months ended March 31, 2024, the Company amortized $
NOTE 13: RELATED-PARTY TRANSACTIONS
During the year ended December 31, 2024 we issued shares to a Trust of our former CEO in conversion of their Series B preferred shares.
As
of March 31, 2025, the Company has outstanding $
NOTE 14: LEGAL PROCEEDINGS
On May 19, 2022, we were named as a defendant in a putative shareholder derivative class action lawsuit filed in the United States District Court for the Southern District of California styled Matt Pasquinelli and Bryan Paysen v. HUMBL, LLC, Brian Foote, Jeffrey Hinshaw and George Sharp, Case No. 22CV0723 AJB BLM. The complaint alleges federal securities law violations by the Company, including false or misleading statements regarding our business and operations, that the HUMBL Pay App did not have the functionality that it promised to investors and that several international business partnerships had a low chance of contributing material revenues to our bottom line, and sales of unregistered securities through our BLOCK Exchange Traded Index products, which plaintiffs allege caused a decline in the market value of our shares of common stock. Plaintiffs seek unspecified monetary damages. On July 7, 2023, the United States District Court for the Southern District of California granted our Motion to Transfer Venue and transferred the case to the District Court of Delaware. On October 30, 2023, we filed a Motion to Dismiss the lawsuit with the District Court of Delaware which the parties have fully briefed. On March 27, 2025, the court granted our motion and dismissed the case without prejudice. On April 10, 2025, the plaintiffs filed an amended complaint. We intend to vigorously defend the actions of the defendants and contest what we believe are baseless claims.
On July 14, 2022, we were named as a defendant in a shareholder derivative class action lawsuit filed in the Delaware Chancery Court styled Mike Armstrong, derivatively on behalf of HUMBL, Inc. v. Brian Foote, Jeffrey Hinshaw, George Sharp, Michele Rivera, and William B. Hoagland (Case No. 2022-0620). This case alleges the same claims as the Pasquinelli litigation described above and also seeks unspecified monetary damages. There are no other updates to this case.
NOTE 15: COMMITMENTS
On
August 1, 2023, the Company entered into a Master Consulting Agreement (the “Agreement”) and Promissory Note (“Note”)
with BRU, LLC (“BRU”). Under the terms of the Agreement, BRU will provide information technology support to the Company for
a three-year term. The Company has agreed to pay compensation in common stock and cash. The initial stock consideration is
shares of common stock as compensation for past due invoices owed to BRU’s predecessor in interest with a 24-month price floor
of $
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Additional shares of common stock will be issued to BRU based on milestones to be mutually agreed to by the Company and BRU by August 11, 2023. The Company will issue shares of its common stock (the “Additional Shares”) upon completion of the milestones that shall not be more than two years after execution of the Agreement. The value of the Additional Shares shall be equal to the number of Additional Shares multiplied by $ (the “Additional Share Value”). On each anniversary of the execution date (the “Anniversary Date”) until the milestones are met, but in no event more than two years from the execution date, the Additional Share Value shall equal the value of the common stock on the Anniversary Date, based on the closing price of the Company’s common stock on the Anniversary Date (the “Anniversary Value”) (as may be adjusted for any reverse split). To the extent the Anniversary Value is lower than the public market value of the Company’s common stock, the Company will issue additional shares to BRU equal to the amount necessary for the total number of common stock and Additional Shares issued under the Agreement to equal the Anniversary Share Value that in no event will be less than $ per share, or, at the Company’s election, pay in cash the difference between the public market value of the Company’s common stock and the Anniversary Share Value.
The Company amended this agreement on December 17, 2024, and adjusted the schedule of payments due to BRU. In accordance with the revised payment schedule, the Company paid BRU:
| (a) | $ | |
| (b) | First share tranche million shares December 17, 2024; and | |
| (c) | Second tranche of billion shares January 8, 2025. |
Both
share issuances have been made and the $
NOTE 16: SUBSEQUENT EVENTS
On
April 3, 2025,
On
April 1, 2025, the $
On
April 3, 2025, the $
On
April 4, 2025, the Company repaid the related party note payable with Sartorii plus accrued interest in the amount of $
On April 23, 2025, the Company repaid all amounts owed under notes with a related party whose trustee is related to the former CEO of the Company.
In
June 2025, the Company exchanged shares of Series C Preferred Stock for approximately
Additionally
in June, 2025, the Company granted BRU approximately
On May 12, 2025, the Company issued shares of common stock to Pacific Lion in exchange for shares of Series C Preferred Stock.
On
May 16, 2025, the Company and North Falls Investments, LLC (“NFI”), entered into a Settlement Agreement to settle a dispute.
In accordance with the Settlement Agreement, the parties agreed to fix the conversion price of the two outstanding notes the Company
has with NFI to $
On
May 16, 2025, the Company and KWP 50, LLC (“KWP”), entered into a Settlement Agreement to settle a dispute. In accordance
with the Settlement Agreement, the parties agreed to fix the conversion price of the March 13, 2024 note the Company has with KWP to
$
On
May 16, 2025, the Company and Sellers Properties, LLC (“SP”), entered into a Settlement Agreement to settle a dispute. In
accordance with the Settlement Agreement, the parties agreed to fix the conversion price of the two outstanding notes the Company has
with SP to $
On May 21, 2025, the Company increased its authorized common shares to pursuant to the Definitive 14C filed April 30, 2025, and this has been retrospectively applied as of March 31, 2025.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the consolidated financial statements and the related notes contained herein. In addition to historical information, the following discussion contains forward looking statements based upon current expectations that are subject to risks and uncertainties. Actual results may differ substantially from those referred to herein due to a number of factors, including, but not limited to, risks described in the section entitled “Risk Factors”.
General
Our executive offices are located at 101 W. Broadway, Suite 1450, San Diego, California 92101, telephone (786) 738-9012. Our corporate website address is www.humbl.com.
Overview
On December 2, 2024, HUMBL, Inc. (the “Company” or “HUMBL”) entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with WSCG, Inc. (“WSCG”), and WSCG Humbl SPV, a series of SPV Management, LLC (“HoldCo”). Pursuant to Asset Purchase Agreement, the Company sold all of its assets to WSCG. In consideration for the purchase of the Company’s assets, WSCG agreed to: (a) pay the Company $3,025,000; (b) issue 2,455,556 shares of WSCG Class B Common Stock to HoldCo; and (c) grant 24,555,556 membership units of HoldCo to the Company (the “HoldCo Units”). Of the $3,037,500 payable in cash to the Company, $500,000 was paid in cash by WSCG to the Company prior to the closing date, and $537,500 of indebtedness previously funded to the Company by affiliates of WSCG was cancelled. The remaining $2,000,000 of the cash purchase price was paid by WSCG on April 1, 2025. The value of the HoldCo Units held by the Company at the time of the acquisition by WSCG is $17,000,000 based on the percentage that HoldCo owns in WSCG based on the last valuation of WSCG. The Company agreed that WSCG would not contribute any real estate assets and WSCG would be solely a technology company in exchange for a larger percentage of WSCG owned by the Company through HoldCo.
The HoldCo Units represent approximately 48.6% of the outstanding equity in WSCG. Upon transfer of the HoldCo Units, the Company will own 100% of HoldCo. The Company intends to keep a portion of the HoldCo Units to maintain exposure to WSCG’s performance and the Company assets purchased by WSCG. The Company will also offer to exchange some of the HoldCo Units to holders of Series C Preferred Stock as a way to reduce potential future dilution to common stockholders. The transfer of the Company assets to WSCG took place on February 27, 2025.
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On December 2, 2024, the Company entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Ybyrá Capital S.A. (“Ybyrá”) and Brian Foote, the Company’s former CEO and current director. Pursuant to the Stock Purchase Agreement: (a) HUMBL purchased 99% of the outstanding equity interests of FinCapital Credito Pagamentos e Servicos LTDA, a Brazilian company (“FinCapital”), from Ybyrá; and (b) Brian Foote sold his 7,000,000 shares of Series A Preferred Stock and 100,000 shares of Series D Preferred Stock of the Company (the “Control Shares”) to Ybyrá. With the purchase of the Control Shares, Ybyrá is now the controlling stockholder of the Company. FinCapital had at the time of the purchase one asset which consisted of 41,500 tons of magnesium silicate with a book value of $20,000,000. Magnesium silicate is a raw material used in industrial sectors such as fertilizer, construction, ceramics, and fireproofing
FinCapital is now a 99% owned subsidiary of the Company. The Company agreed to issue $20,000,000 in common shares to Ybyrá for the purchase of the FinCapital equity interest. HUMBL will pay $4,000,000 of the purchase price through the issuance of 10,000,000,000 common share to Ybyrá ($0.0004 per share). The remaining $16,000,000 in common shares will be issued following a recapitalization event that provides sufficient authorized shares to make the issuance.
As a result of the WSCG purchase of the Company assets, the previous operations of the Company will be reflected as discontinued operations, and the assets that were sold are all reflected as assets under discontinued operations.
Following the purchase of FinCapital and the change of control associated with such acquisition, the Company’s business model has changed. For the 2025 fiscal year, HUMBL will no longer be pursuing Web 3 and related technologies. Instead, the Company will adopt a holding a company model. HUMBL will be the parent holding company and will own and operate various subsidiaries, with a particular focus in Brazil and Latin America. FinCapital will be first business operated by HUMBL under the new holding company structure.
FinCapital owns 41,500 tons of magnesium silicate. Magnesium silicate is a raw material that can be used in fertilizer and other industrial applications. FinCapital is currently looking to sell the magnesium silicate and acquire other raw materials or other mining interests.
On April 3, 2025, HUMBL entered into a Joint Venture Agreement with Multicortex, LLC. Multicortex is a company focusing on artificial intelligence and high-performance computing. Pursuant to the agreement, HUMBL acquired a 51% interest in Multicortex. In exchange, HUMBL will contribute 15% of any funds it raises in any Regulation A+ offering (up to $3,000,000) to fund development of Multicortex’s suite of products.
HUMBL’s controlling shareholder, Ybyrá, is a Brazilian holding company with interests in mining, real estate, oil and gas, and related fields. Our CEO, Thiago Moura, is an experienced entrepreneur with deep connections in Brazil and throughout Latin America. Our plan is to find and acquire undervalued assets and business in North and South America, with a particular focus in Brazil, and then operate those businesses as subsidiaries under our corporate umbrella.
Results of Continuing Operations for the Three Months Ended March 31, 2025 and 2024
The following table sets forth the summary operations for the three months ended March 31, 2025 and 2024:
| For the Three Months Ended | ||||||||
| March 31, 2025 | March 31, 2024 | |||||||
| Revenues | $ | - | $ | - | ||||
| Cost of Revenues | $ | - | $ | - | ||||
| Gross Profit | $ | - | $ | - | ||||
| Professional Fees | $ | 391,861 | $ | 319,188 | ||||
| General and Administrative Expenses | $ | 988,632 | $ | 1,213,748 | ||||
| Interest Expense | $ | (1,267,822 | ) | $ | (96,830 | ) | ||
| Gain on sale of HUMBL financial assets | $ | - | $ | 2,800,000 | ||||
| Amortization of Debt Discounts | $ | (117,474 | ) | $ | (67,752 | ) | ||
| Loss on investee | $ | (68,165 | ) | $ | - | |||
| Change in fair value of derivative liabilities | $ | 11,573 | $ | 30,195 | ||||
| Derivative expense | $ | (585,608 | ) | $ | - | |||
| Loss on exchange of warrants to common stock | $ | (109,329 | ) | $ | - | |||
| Loss on exchange of Series C Preferred Stock to common stock | $ | (562,000 | ) | $ | - | |||
| Loss on conversion of convertible notes payable | $ | (577,315 | ) | $ | (331,905 | ) | ||
| Provision for Income Taxes | $ | - | $ | - | ||||
| Net (Loss) Income from Continuing Operations | $ | (4,656,633 | ) | $ | 800,772 | |||
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Revenues and Cost of Revenues and Gross Profit
Revenues, cost of revenues and gross profit for the three months ended March 31, 2025 and 2024 are related to our operations that are reflected in discontinued operations. The Company has recently acquired FinCapital which consisted of one singular asset which were minerals located in Brazil. The minerals are magnesium silicate.
Operating Expenses
Operating expenses for the three months ended March 31, 2024 were $1,532,936 as compared to $1,380,493 for the three months ended March 31, 2025, a decrease of $152,443. Operating expenses consists of professional fees and general and administrative expenses as fully described below. We expect our professional fees to continue to decrease in our next 12 months as we look to scale back on outside contract labor due to the change in our business operations.
Professional Fees
Professional fees which consist of contracted individuals and companies, legal, audit and accounting costs for the three months ended March 31, 2024 were $319,188 compared to $391,861 for the three months ended March 31, 2025. The increase in professional fees related to the professional fees incurred in regulatory filings including OTC compliance and reporting. We expect that these costs will decrease during the remainder of 2025 as we transition out of the HUMBL.com business.
General and Administrative
General and administrative expenses for the three months ended March 31, 2024 were $1,213,748 compared with $988,632 for the three months ended March 31, 2025. The decrease in general and administrative expenses was $225,116. Much of the decrease in general and administrative expenses relates to decreases in payroll and payroll-related expenses due to less personnel employed.
Other Income (Expense)
In the three months ended March 31, 2024 we incurred $2,333,708 in net other income, compared to $3,276,140 in other expenses in the three months ended March 31, 2025, an increase of $5,609,848 in other expenses. The other expenses relate to amortization of discounts, interest expense and losses on the conversion of convertible notes and exchanges in warrants and Series C Preferred Stock and a loss on investee. In 2024, we incurred other income from the gain on the sale of HUMBL financial assets in the amount of $2,800,000.
Net Income (Loss) from Continuing Operations
Net income from continuing operations for the three months ended March 31, 2024 was $800,772 as compared to a net loss of ($4,656,633) for the three months ended March 31, 2025. The $5,457,405 increase in the net loss was due to the changes noted herein.
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Liquidity and Capital Resources
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.
During the past two years, we devoted a substantial amount of capital to build out our platform and as a result our working capital deficit and accumulated deficit have increased significantly. In addition, we have incurred significant debt from both unrelated and related parties to assist in supporting our operations.
As of March 31, 2025, we had $2,099,252 in cash. During the last two years we built our platform and grew our operations by acquiring companies to support what we consolidated into HUMBL.com, prior to the sale to WSCG. The acquisitions of Tickeri and Monster, which have since been disposed of, increased our debt and our common shares issued as we spent very little cash in these acquisitions.
We had a working capital deficit of $6,592,161 and $23,693,753 as of March 31, 2025 and December 31, 2024, respectively. The majority of our current liabilities are in the form of our liability to issue common shares in the acquisition of FinCapital, long-term debt and notes payable, and accounts payable and accrued expenses. It is expected that a portion of these liabilities will require cash to settle them. The increase in working capital is the direct result of our investment in WSCG Holdco as well as reductions of notes payable, accrued interest and accrued expenses as well as the receipt of the remaining balance owed by WSCG received in the three months ended March 31, 2025. A significant portion of the investment in WSCG Holdco was exchanged for Series C Preferred shares in May 2025. The Company’s assets as of December 2, 2024 were sold and the Company commenced a new business with the purchase of the magnesium silicate. The Company anticipates entering into profitable businesses upon the sale of the magnesium silicate. As a result of the operating losses and working capital deficit, management has determined that there is substantial doubt about the Company’s ability to continue as a going concern.
Net cash used in operating activities was $298,235 and $807,699 for the three months ended March 31, 2025 and 2024, respectively. The $509,464 decrease in net cash used in operating activities was primarily a result of the change in the net loss and the non-cash charges impacting our net loss from 2024 to 2025, such as the gain on sale of HUMBL Financial assets, losses on the conversion of convertible notes and decreases in our stock-based compensation.
We had no activities from investing activities in the three months ended March 31, 2025 and 2024 other than the balance of the proceeds received from WSCG for the sale of HUMBL.com in the amount of $2,000,000.
Cash provided by financing activities was $377,000 and $471,747 for the three months ended March 31, 2025 and 2024, respectively. In 2024, the Company raised $580,000 from the proceeds from convertible notes, as well as repayments of convertible notes payable of $108,253. In 2025, we raised $365,000 from proceeds of convertible notes payable and $12,000 from related party notes payable.
The consolidated financial statements of the Company have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable period. The consolidated financial statements of the Company do not include any adjustments that may result from the outcome of the uncertainties.
Off-Balance Sheet Arrangements
As March 31, 2025 and December 31, 2024, we had no off-balance sheet arrangements.
Critical Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. These estimates include, but are not limited to, management’s estimate of provisions required for permanent and temporary differences related to income taxes, liabilities to accrue, estimates of the fair value of goodwill and determination of the fair value of stock awards. Actual results could differ from those estimates.
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Fair Value of Financial Instruments
ASC 825 Financial Instruments requires the Company to disclose estimated fair values for its financial instruments. Fair value estimates, methods, and assumptions are set forth below for the Company’s financial instruments: The carrying amount of cash, accounts receivable, prepaid and other current assets, accounts payable and accrued liabilities, and amounts payable to related parties, approximate fair value because of the short-term maturity of those instruments.
Fair Value Measurements
ASC 820 Fair Value Measurements defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosure about fair value measurements. ASC 820 classifies these inputs into the following hierarchy:
Level 1 inputs: Quoted prices for identical instruments in active markets.
Level 2 inputs: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3 inputs: Instruments with primarily unobservable value drivers.
Recent Accounting Pronouncements
The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d)-15(e) under the Exchange Act) as of March 31, 2025. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2025, our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Inherent Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On May 19, 2022, we were named as a defendant in a putative shareholder derivative class action lawsuit filed in the United States District Court for the Southern District of California styled Matt Pasquinelli and Bryan Paysen v. HUMBL, LLC, Brian Foote, Jeffrey Hinshaw and George Sharp, Case No. 22CV0723 AJB BLM. The complaint alleges federal securities law violations by the Company, including false or misleading statements regarding our business and operations, that the HUMBL Pay App did not have the functionality that it promised to investors and that several international business partnerships had a low chance of contributing material revenues to our bottom line, and sales of unregistered securities through our BLOCK Exchange Traded Index products, which plaintiffs allege caused a decline in the market value of our shares of common stock. Plaintiffs seek unspecified monetary damages. On July 7, 2023, the United States District Court for the Southern District of California granted our Motion to Transfer Venue and transferred the case to the District Court of Delaware. On October 30, 2023, we filed a Motion to Dismiss the lawsuit with the District Court of Delaware which the parties have fully briefed. On March 27, 2025, the court granted our motion and dismissed the case without prejudice. On April 10, 2025, the plaintiffs filed an amended complaint. We intend to vigorously defend the actions of the defendants and contest what we believe are baseless claims.
On July 14, 2022, we were named as a defendant in a shareholder derivative class action lawsuit filed in the Delaware Chancery Court styled Mike Armstrong, derivatively on behalf of HUMBL, Inc. v. Brian Foote, Jeffrey Hinshaw, George Sharp, Michele Rivera, and William B. Hoagland (Case No. 2022-0620). This case alleges the same claims as the Pasquinelli litigation described above and also seeks unspecified monetary damages. There are no other updates to this case.
ITEM 1A. RISK FACTORS
Not applicable as we are a smaller reporting company.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
We did not sell any equity securities during the period covered by this Quarterly Report on Form 10-Q that were not registered under the Securities Act of 1933, as amended.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
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ITEM 6. EXHIBITS
| Exhibit | Incorporated by Reference | Filed or Furnished | ||||||||
| No. | Exhibit Description | Form | Date | Number | Herewith | |||||
| 31.1 | Certification of Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002 | Filed | ||||||||
| 31.2 | Certification of Principal Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002 | Filed | ||||||||
| 32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Furnished** | ||||||||
| 32.1 | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Furnished** | ||||||||
| 101.INS | Inline XBRL Instance Document | Filed | ||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | Filed | ||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | Filed | ||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | Filed | ||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | Filed | ||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | Filed | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||||
| * | Certain schedules and exhibits to this agreement have been omitted in accordance with Item 601(a)(5) of Regulation S-K. The Company undertakes to furnish to the SEC a copy of any omitted schedule and/or exhibit upon request. |
| ** | This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K. |
Copies of this report (including the financial statements) and any of the exhibits referred to above will be furnished at no cost to our stockholders who make a written request to our Corporate Secretary at HUMBL Inc., 101 W. Broadway, Suite 1450, San Diego, California 92101, telephone (786) 738-9012.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| HUMBL, Inc. | ||
| Date: June 5, 2025 | By: | /s/ THIAGO MOURA |
| Thiago Moura | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: June 5, 2025 | By: | /s/ JEFFREY HINSHAW |
| Jeffrey Hinshaw | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) | ||
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