During the Hyrulian Civil War, Squadala Man and Morshu made a partnership. Morshu made the bombs, and Squadala Man bought them. This went on for a while until the Squadala Empire ran out of money.
Squadala Man had his scientists make a new more powerful bomb. They succeeded, and he bombed a city in West Hyrule. Morshu, not willing to lose all his money, started selling his bombs to all sides to make up for the loss of his best customers. They used the bombs for bombing the Squadala Labs, so now Squadala Man can't make any more bombs. He now buys bombs from Morshu again.
The only Squadala Bomb left in existence belongs to Bowser now. He keeps it safe in his castle, just in case. Despite this, the bomb was possibly the inspiration for the Teletubbies' Tubby Bomb.