NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

In the opinion of management, all adjustments—consisting of normal recurring accruals—considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2026, are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances, transactions, and unrealized gains or losses have been eliminated in consolidation.

Reclassification

During the current reporting period, the Company reviewed the nature and substance of certain balances previously presented within Accounts Payable and Accrued Liabilities.

As a result of this review, amounts relating to transactions with related parties were identified and determined to be more appropriately classified as Due to Related Parties.

Accordingly, comparative figures have been reclassified to conform to the current period’s presentation.

During the six months ended June 30, 2025, the Company reviewed the nature and substance of certain balances previously presented within Operating Expenses.

As a result of this review, amounts relating to transactions in Sales and Marketing were identified and determined to be more appropriately classified as Professional fees.

This reclassification has been made to better reflect the underlying nature of these balances and to enhance the usefulness and transparency of the financial statements.

The reclassification had no impact on total assets, total liabilities, shareholders’ equity, or net income for the periods presented.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP 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 the reported amounts of expenses during the reporting period. Some of these judgments can be subjective and complex, and, consequently, actual results may differ from these estimates.

Intangible Assets - Capitalized Product Development Costs

Accounting Standards Codification (“ASC”) Topic 350-40, “Internal-Use Software,” applies to software developed for internal use or to provide a service, where the customer does not acquire a contractual right to take possession of the software. Our products incorporate embedded software developed internally by Bubblr, a critical component that facilitates communication among components. The product’s functionality depends on this software.

Expenditures associated with product development are capitalized until technological feasibility is achieved. Such costs encompass subcontractor fees, personnel wages, and other related expenses incurred during the development phase. The Company considers technological feasibility achieved once all high-risk development challenges have been addressed. Upon the product’s availability for general release to the Company’s customers, the Company discontinues capitalizing development costs, and any additional expenses incurred thereafter are recognized as expenses. The capitalized costs are amortized on a straight-line basis.

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable or its useful life is no longer appropriate. Recoverability is assessed by comparing the carrying amount of the asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount exceeds the undiscounted cash flows, an impairment loss is recognized for the amount by which the carrying amount exceeds the asset’s estimated fair value.

Convertible Financial Instruments

The Company bifurcates conversion options from their host instruments and accounts for them as free-standing derivative financial instruments if specific criteria are met. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not remeasured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. The Company uses the Black-Scholes options pricing model to estimate the value of its derivative liabilities and to measure them at the end of each reporting period.

Fair Value of Financial Instruments

The Company accounts for financial instruments in accordance with ASC 820, “Fair Value Measurements and Disclosures,” which establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under ASC 820 are described below:

Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2 – Quoted prices in non-active markets or in active markets for similar assets or liabilities, observable inputs other than quoted prices, and inputs that are not directly observable but are corroborated by observable market data.

Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

The carrying amounts of the Company’s financial instruments, including cash, other receivables, accounts payable, accrued liabilities, and amounts due to related parties, approximate their fair value due to the short-term nature of these instruments. The warrant derivative liabilities and convertible debt derivative liability are Level 3 financial instruments measured at fair value on a recurring basis. The Company utilizes the Black-Scholes option-pricing model to estimate the fair value of these derivatives. As of June 30, 2026, the fair value of the warrant liabilities was $0, and the convertible debt derivative liability was $212,102. There were no changes to the fair value hierarchy during the six months ended June 30, 2026, or 2025.

Common Stock Purchase Warrants and Derivative Financial Instruments

Common stock purchase warrants and other derivative financial instruments are classified as equity if the contracts (1) require physical settlement, net-share settlement, or (2) give the Company a choice of net-cash settlement or settlement in its shares (either physical or net-share). Contracts that (1) require net-cash settlement (including cases where the contract must be settled in cash if an event occurs outside the Company’s control), (2) provide the counterparty with a choice between net-cash settlement or settlement in shares (physical or net-share), or (3) contain reset provisions that do not qualify for the scope exception are classified as liabilities. The Company evaluates the classification of its common stock purchase warrants and other derivatives at each reporting date to determine if a change from liabilities to equity is necessary.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC Topic 718, “Compensation—Stock Compensation,” which prescribes accounting and reporting standards for all share-based payment transactions in which employee and non-employee services are acquired. Share-based payments to employees and non-employees, including grants of stock options, are recognized as compensation expenses in the consolidated financial statements based on the stock awards’ fair values on the grant date. That expense is recognized over the period required to provide services in exchange for the award, known as the requisite service period (typically the vesting period).

In accordance with ASC 718, cumulative compensation expenses previously recognized for these unvested awards in prior periods are credited back to the general and administrative expense line item in the period of forfeiture.

During the three and six-month period ended June 30, 2026, general and administrative expenses include a $144,148 credit recorded within general administration resulting from these forfeitures.

Basic and Diluted Net Loss per Common Share

Pursuant to ASC 260, “Earnings Per Share,” basic net income and net loss per share are computed by dividing the net income and net loss by the weighted average number of common shares outstanding. Diluted net income and net loss per share are the same as basic net income and net loss per share when their inclusion would have an anti-dilutive effect due to our continuing net losses.

For the six months ended June 30, 2026, and 2025, the following outstanding stock was excluded from the computation of diluted net loss per share as the result was anti-dilutive.

SCHEDULE OF COMPUTATION OF DILUTED NET LOSS PER SHARE 

Income Taxes

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Income Taxes.” The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount it believes is more likely than not to be realized.

As of June 30, 2026, and 2025, the Company did not have any amounts recorded for uncertain tax positions.

Foreign Currency Translations

The functional currency of the Company’s international subsidiaries is the British pound (GBP). Local currency assets and liabilities are translated at the exchange rates as of the balance sheet date, and local currency revenues and expenses are translated at the weighted average exchange rate for the period. Equity accounts are translated at historical rates. The resulting translation adjustments are recorded directly into accumulated other comprehensive income.

SCHEDULE OF FOREIGN CURRENCY TRANSLATION ADJUSTMENTS  

Segment Reporting

Accounting Standards Codification (“ASC”) 280, “Segment Reporting,” requires public companies to report financial and descriptive information about their reportable operating segments. The Company identifies operating segments based on how our Chief Financial Officer evaluates separate financial information, business activities, and management responsibilities. Accordingly, the Company has one reportable segment, consisting of fees for App usage.

 SCHEDULE OF SEGMENT REPORTING 

Recent Accounting Pronouncements

The Company has reviewed all recently issued.

In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024 03”), and in January 2025, the FASB issued ASU No. 2025-01, Clarifying the Effective Date (“ASU 2025-01”). The amendments are intended to enhance disclosures regarding an entity’s costs and expenses by requiring additional disaggregated information disclosures about certain income statement expense line items. The amendments, as clarified by ASU 2025-01, are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the effect of adopting the new disclosure requirements.

In September 2025, the FASB issued ASU No. 2025-06, Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). The amendments are intended to clarify and modernize the accounting for costs related to internal-use software. The guidance removes all references to project stages and clarifies the threshold entities apply to begin capitalizing costs. The amendments are effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years, with early adoption permitted. The Company does not expect the adoption to have a material impact on the Company’s financial statements.