Blackboxstocks(BLBX) - 2025 Q2 - Quarterly Report

Introductory Comment This section defines the terms and references used throughout the report, specifically identifying Blackboxstocks Inc - The terms "we," "us," "our," "Blackboxstocks," or the "Company" refer to Blackboxstocks Inc., a Nevada corporation[8] Caution Regarding Forward-Looking Statements This section warns about inherent uncertainties and risks in forward-looking statements, noting actual results may differ - This report contains forward-looking statements that involve substantial uncertainties and risks, and actual results may differ materially from those included within these statements[9] - Readers are cautioned not to place undue reliance on these statements, and the Company undertakes no obligation to publicly release revisions to reflect future events or unanticipated occurrences[9] - Estimates and plans related to the Company and its industry are based on assumptions that may not be accurate, and there is no assurance that business growth estimates will be achieved[10] Part I – Financial Information This part presents unaudited condensed consolidated financial statements and management's discussion and analysis Item 1. Condensed Consolidated Financial Statements This section presents Blackboxstocks Inc.'s unaudited condensed consolidated financial statements for interim reporting Condensed Consolidated Balance Sheets The balance sheets show a slight decrease in total assets and a significant increase in current liabilities, primarily driven by new debt, while stockholders' equity declined due to accumulated deficits | Metric | June 30, 2025 ($) | December 31, 2024 ($) | | :-------------------------------- | :-------------- | :---------------- | | Total Assets | $9,880,892 | $9,890,690 | | Current Assets | $1,198,689 | $1,172,597 | | Cash | $38,164 | $17,036 | | Accounts Receivable | $155 | $7,217 | | Total Current Liabilities | $6,103,035 | $4,267,710 | | Senior Secured Debenture, net | $1,879,523 | $- | | Convertible Note | $164,000 | $- | | Total Stockholders' Equity | $3,585,077 | $5,394,195 | Condensed Consolidated Statements of Operations The statements of operations reveal a decline in total revenues and gross margins for both the three and six months ended June 30, 2025, compared to the prior year, leading to increased operating and net losses | Metric | 3 Months Ended June 30, 2025 ($) | 3 Months Ended June 30, 2024 ($) | 6 Months Ended June 30, 2025 ($) | 6 Months Ended June 30, 2024 ($) | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Revenues | $518,783 | $684,712 | $1,105,861 | $1,334,132 | | Gross Margin | $167,224 (32.2%) | $328,695 (48.0%) | $411,299 (37.2%) | $620,157 (46.5%) | | Operating Loss | $(1,143,453) | $(824,917) | $(2,031,119) | $(1,688,883) | | Net Loss | $(1,269,269) | $(877,943) | $(2,098,402) | $(1,741,654) | | Net Loss Per Share (Basic & Diluted) | $(0.35) | $(0.27) | $(0.58) | $(0.54) | - Revenue declined by 24.2% for the three months and 17.1% for the six months ended June 30, 2025, primarily due to fewer subscribers and lower average revenue per subscriber from promotional offerings[77][82] - Gross margin decreased from 48.0% to 32.2% for the three months and from 46.5% to 37.2% for the six months, driven by lower absorption of fixed costs and reduced average revenue per subscriber[78][83] Condensed Consolidated Statement of Stockholders' Equity The statement of stockholders' equity shows a decrease in total equity, primarily due to accumulated net losses, partially offset by increases in additional paid-in capital from stock-based compensation and financing-related share issuances | Metric | December 31, 2024 ($) | June 30, 2025 ($) | | :-------------------------------- | :---------------- | :-------------- | | Total Stockholders' Equity | $5,394,195 | $3,585,077 | | Accumulated Deficit | $(22,956,118) | $(25,054,520) | | Additional Paid in Capital | $28,343,505 | $28,632,680 | | Common Stock Shares Outstanding | 3,538,038 | 3,647,474 | - The accumulated deficit increased by $2,098,402 for the six months ended June 30, 2025, reflecting the net loss incurred during the period[18][20] - Additional paid-in capital increased by $289,175, primarily due to stock-based compensation ($239,634) and shares issued for financing costs ($49,650)[20][38][41] Condensed Consolidated Statements of Cash Flows Cash flows from operating activities significantly increased usage, while financing activities provided substantial cash, primarily from new debt, resulting in a net increase in cash for the period, though lower than the prior year | Cash Flow Activity | 6 Months Ended June 30, 2025 ($) | 6 Months Ended June 30, 2024 ($) | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net Cash Used in Operating Activities | $(1,693,863) | $(687,198) | | Net Cash Provided by Investing Activities | $0 | $3,303 | | Net Cash Provided by Financing Activities | $1,714,991 | $1,266,680 | | Net Increase in Cash | $21,128 | $582,785 | | Cash - End of Period | $38,164 | $1,055,482 | - The increase in cash used in operating activities in 2025 was partly due to the absence of $875,000 in financial support from Evtec Aluminium Limited received in the prior year[71] - Net cash provided by financing activities in 2025 was primarily driven by $2,050,000 in proceeds from the issuance of a debenture to Five Narrow Lane LP, partially offset by issuance costs and merchant cash advance payments[73] Notes to Condensed Consolidated Financial Statements These notes provide critical context and detailed explanations for the financial statements, covering accounting policies, the company's going concern status, significant merger and financing activities, equity changes, debt instruments, and subsequent events 1. Summary of Significant Accounting Policies This section outlines the basis of presentation for the interim financial statements, highlights the company's going concern risk due to recurring losses, and details ongoing strategic initiatives like the REalloys merger and various financing efforts to secure capital - The Company's ability to continue as a going concern is in substantial doubt due to operating losses of $2,031,119 and net losses of $2,098,402 for the six months ended June 30, 2025, and significant cash used in operations[25] - A Merger Agreement with REalloys Inc. was entered on March 10, 2025, where REalloys is expected to become a wholly-owned subsidiary, with pre-Closing Blackboxstocks stockholders retaining approximately 7.3% of the post-Close common stock[26] - The Company secured $2,050,000 from a $2,300,000 debenture financing with Five Narrow Lane LP and filed a shelf registration statement for up to $50,000,000 in securities, alongside an At-The-Market (ATM) sales agreement for up to $5,795,000[27][28] Potential Dilutive Securities Outstanding (June 30, 2025) | Security Type | Amount/Shares | Equivalent Common Shares | | :-------------------------------- | :-------------- | :----------------------- | | Series A Convertible Preferred Shares | 3,269,998 | 654,000 | | Option shares | 137,625 | 137,625 | | Warrant shares | 88,510 | 88,510 | | Senior Secured Debentures | $2,050,000 | 375,458 | | Convertible note | $164,000 | 29,304 | 2. Investments This section details the termination of the Share Exchange Agreement with Evtec Aluminium Limited and the subsequent settlement of outstanding financial obligations between the parties - The Share Exchange Agreement with Evtec Aluminium Limited was mutually terminated on January 13, 2025[35] - On August 13, 2025, a settlement agreement was reached with Evtec to cancel a $1,150,000 note due by Evtec and a $1,293,000 advance due by the Company, in exchange for a $100,000 note from Blackbox.io to Evtec due June 2026[36][59] 3. Stockholders' Equity This section outlines the common stock issuances during the six months ended June 30, 2025, for various purposes including consulting services, financing costs, and cashless option exercises - During the six months ended June 30, 2025, the Company issued 30,000 shares of common stock valued at $104,300 for consulting services[37] - An additional 15,000 shares of common stock, valued at $49,650, were issued for financing costs[38] - The Company also issued 7,649 shares of common stock for the cashless exercise of options[39] 4. Incentive Stock Plan This section details the valuation methodology for stock options, grants of restricted common stock, and the activity and status of outstanding options as of June 30, 2025 - The fair value of options granted was calculated using the Cox-Ross-Rubinstein binomial pricing model, with inputs including a risk-free interest rate of 4.43% and expected volatility of 153%[40] - 46,787 shares of restricted common stock valued at $161,430 were granted, vesting equally over four quarters in 2025, and 10,000 shares valued at $29,000 vested at issuance[41][42] Options Activity as of June 30, 2025 | Activity | Number of Shares | Weighted Average Exercise Price ($) | | :-------------------------------- | :--------------- | :------------------------------ | | Options as of December 31, 2024 | 144,125 | $9.09 | | Issued | 15,000 | $3.46 | | Exercised | (21,500) | $3.65 | | Options as of June 30, 2025 | 137,625 | $9.33 | | Vested Options (June 30, 2025) | 138,875 | - | | Unvested Options (June 30, 2025) | 7,500 | - | 5. Related Party Transactions This section details the financial transactions with Mr. Kepler, a related party, including advances received and repayments made, and the outstanding balance at the end of the period - During the six months ended June 30, 2025, Mr. Kepler advanced the Company $360,000, and the Company repaid Mr. Kepler $436,209[45] - Advances due to Mr. Kepler decreased from approximately $101,000 at December 31, 2024, to $25,000 at June 30, 2025[45] 6. Debt This section provides details on the Senior Secured Debenture, a Convertible Note Payable, and amendments to Merchant Cash Advances, outlining their terms, financing, and repayment structures - The Company entered into a Securities Purchase Agreement with Five Narrow Lane LP (FNL) for a Senior Secured Debenture, providing up to $2,300,000 in financing, of which $2,050,000 was received by June 30, 2025[46] - The Senior Secured Debenture matures on the earlier of January 17, 2026, or the completion of the Merger with REalloys, and incurred approximately $255,000 in issuance costs[47][48] - A $164,000 7% convertible note payable was issued to Palladium Capital Group to settle placement agent issuance costs, convertible at $5.46 per common stock share[49] - Merchant cash advances were amended in February 2025 to reduce weekly payments, and 15,000 shares valued at $49,650 were issued as consideration for these amendments, with an unpaid balance of $15,338 at June 30, 2025[51][52][53] 7. Commitments and Contingencies This section details the significant Merger Agreement with REalloys Inc., outlining the terms, ownership structure post-merger, and conditions for closing, as well as the Company's shelf registration statement for future securities offerings - The Merger Agreement with REalloys Inc. (March 10, 2025) stipulates that REalloys will merge into a wholly-owned subsidiary, with pre-Closing Blackboxstocks stockholders retaining approximately 7.3% and REalloys holders receiving approximately 92.7% of the post-Close common and preferred stock[54] - The merger is subject to customary closing conditions, including SEC declaration of the registration statement's effectiveness, Nasdaq listing approval for REalloys, and stockholder approval, and will be accounted for as a reverse merger with REalloys as the accounting acquiror[54] - A registration statement on Form S-3 was filed on January 31, 2025, for the sale of up to $50,000,000 of securities, subject to limitations based on the Company's public float[55] 8. Subsequent Events This section reports on key events that occurred after June 30, 2025, including an amendment to the Merger Agreement, the initiation of an At-The-Market (ATM) offering, and a settlement agreement with Evtec - On July 1, 2025, a First Amendment to the Merger Agreement allowed Blackboxstocks to conduct an At-The-Market (ATM) offering of up to 250,000 shares without impacting the calculation of Company Merger Shares[56][58] - An ATM Issuance Sales Agreement was entered on July 1, 2025, with Alexander Capital, L.P. for up to $5,795,000 in common stock sales; as of August 12, 2025, $618,829 gross proceeds were raised from 85,000 shares[58] - On August 13, 2025, the Company and Evtec entered a settlement agreement to cancel a $1,150,000 note due by Evtec and a $1,293,000 advance due by the Company, in exchange for a $100,000 note from Blackbox.io to Evtec[59] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Blackboxstocks Inc.'s financial performance and condition, including an overview of its business, assessment of liquidity and capital resources, and a detailed analysis of the results of operations for the three and six months ended June 30, 2025, compared to the prior year Overview Blackboxstocks Inc. operates a financial technology and social media hybrid platform, the 'Blackbox System,' which provides real-time analytics and news for stock and options traders using AI-enhanced predictive technology. The company employs a subscription-based SaaS model and serves users globally - Blackboxstocks Inc. is a financial technology and social media hybrid platform offering real-time proprietary analytics and news for stock and options traders[61] - The 'Blackbox System' uses AI-enhanced predictive technology to identify volatility and unusual market activity across major exchanges (NYSE, NASDAQ, CBOE) and options markets[61] - The platform includes an interactive social media dashboard with live audio/video features, real-time alerts, scanners, financial news, and institutional-grade charting, operating on a subscription-based Software as a Service (SaaS) model with users in over 40 countries[61][62] Basis of Presentation This section reiterates the company's going concern risk due to persistent operating and net losses, outlining the strategic merger with REalloys and various capital-raising initiatives as crucial steps to secure sufficient financing and ensure continued operations - The Company's ability to continue as a going concern is in substantial doubt due to operating losses of $2,032,119 and net losses of $2,098,402 for the six months ended June 30, 2025, and cash flows used in operations of $1,693,863[65] - The Merger Agreement with REalloys Inc. is expected to provide $5,000,000 upon completion, with pre-Closing Blackboxstocks stockholders retaining approximately 7.3% of the post-Close common stock[65] - Ongoing financing efforts include $2,050,000 received from a convertible debenture with FNL (with an additional $250,000 expected), a shelf registration for up to $50,000,000 in securities, and an At-The-Market (ATM) agreement that has raised $618,829 as of August 12, 2025[66][67][68] Significant Accounting Policies This section confirms that there have been no changes to the significant accounting policies previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no changes from the Summary of Significant Accounting Policies described in the Company's Annual Report on Form 10-K for the year ended December 31, 2024[70] Liquidity and Capital Resources The Company's liquidity remains challenged by significant cash usage in operations, necessitating reliance on financing activities, including new debentures, shelf registrations, and an ATM offering, with the REalloys merger being a key component of future capital strategy Cash Position and Cash Flows (6 Months Ended June 30) | Metric | 2025 ($) | 2024 ($) | | :-------------------------------- | :----------- | :----------- | | Cash at Period End | $38,164 | $1,055,482 | | Net Cash Used in Operating Activities | $(1,693,863) | $(687,198) | | Net Cash Provided by Financing Activities | $1,714,991 | $1,266,680 | - The increase in cash used in operating activities in 2025 was partly due to the absence of $875,000 in financial support from Evtec Aluminium Limited received in 2024[71] - Financing activities in 2025 were primarily driven by $2,050,000 from the FNL debenture, with an additional $250,000 expected, and the ATM Agreement has raised $618,829 as of August 12, 2025, for future operations[73][74] - There is no assurance that the planned Merger with REalloys will be completed or provide sufficient liquidity, and the Company may need to raise additional debt or equity capital on acceptable terms[76] Results of Operations This section analyzes the Company's financial performance, detailing the decline in revenue and gross margins, and the increase in operating expenses, which collectively led to a higher operating loss for both the three and six months ended June 30, 2025, compared to the previous year Comparison of Three Months Ended June 30, 2025 and 2024 For the three months ended June 30, 2025, revenue decreased by 24.2% due to fewer subscribers and lower average revenue per subscriber, leading to a reduced gross margin and an increased operating loss, primarily from higher professional fees and stock-based compensation Key Financials (3 Months Ended June 30) | Metric | 2025 ($) | 2024 ($) | Change (%) | | :-------------------------------- | :----------- | :----------- | :--------- | | Revenue | $518,783 | $684,712 | -24.2% | | Average Subscribers | 2,707 | 2,996 | -9.7% | | Average Monthly Revenue per Subscriber | $63.88 | $76.11 | -16.1% | | Gross Margin | 32.2% | 48.0% | -15.8 pp | | Operating Expenses | $1,310,677 | $1,153,612 | +13.7% | | Operating Loss | $(1,143,453) | $(824,917) | +38.6% | - Selling, general and administrative expenses increased by $192,001, driven by $96,916 in higher professional fees related to the REalloys Merger and $79,301 in higher stock-based compensation[79] - Advertising and marketing expenses decreased by 32.0% to $75,906 as the Company repositions its marketing strategy[79] Comparison of Six Months Ended June 30, 2025 and 2024 For the six months ended June 30, 2025, revenue decreased by 17.1% due to fewer subscribers and lower average revenue per subscriber, resulting in a lower gross margin and a $342,236 increase in operating loss, primarily from higher professional fees related to the REalloys Merger Key Financials (6 Months Ended June 30) | Metric | 2025 ($) | 2024 ($) | Change (%) | | :-------------------------------- | :----------- | :----------- | :--------- | | Revenue | $1,105,861 | $1,334,132 | -17.1% | | Average Subscribers | 2,709 | 2,989 | -9.4% | | Average Monthly Revenue per Subscriber | $66.50 | $74.31 | -10.5% | | Gross Margin | 37.2% | 46.5% | -9.3 pp | | Operating Expenses | $2,442,418 | $2,309,040 | +5.87% | | Operating Loss | $(2,031,119) | $(1,688,883) | +20.3% | - Selling, general and administrative expenses increased by $244,593, primarily due to $217,372 in higher professional fees associated with the pending Merger with REalloys[84] - Advertising and marketing expenses decreased by 42.2% to $141,235 as the Company continues to reposition its marketing strategy[84] EBITDA (Non-GAAP Financial Measure) This section defines EBITDA as a non-GAAP financial measure used by management to evaluate operating performance and provides a reconciliation from net loss, emphasizing that it should not be considered in isolation from GAAP measures - EBITDA is defined as net income (loss) before interest expense, income tax, depreciation and amortization expense, and certain non-cash items, used by management for performance comparison, planning, and evaluation[88] Reconciliation of Net Loss to EBITDA (6 Months Ended June 30) | Metric | 2025 ($) | 2024 ($) | | :-------------------------------- | :-------------- | :-------------- | | Net loss | $(2,098,402) | $(1,741,654) | | Adjustments: | | | | Interest expense (income) | $47,146 | $(181) | | Amortization of debt issuance costs | $84,958 | $- | | Other depreciation and amortization expense | $3,500 | $11,411 | | Financing costs | $92,725 | $23,012 | | Stock based compensation | $239,634 | $219,332 | | Total adjustments | $467,963 | $253,574 | | EBITDA | $(1,630,439) | $(1,488,080) | Off Balance Sheet Arrangements This section states that as of June 30, 2025, the Company did not have any material off-balance sheet arrangements - As of June 30, 2025, the Company did not have any material off-balance sheet arrangements[90] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Blackboxstocks Inc. is exempt from providing the detailed quantitative and qualitative disclosures about market risk typically required under this Item - The Company is a "smaller reporting company" and is not required to provide information on quantitative and qualitative disclosures about market risk[91] Item 4. Controls and Procedures This section reports that the Company's disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025, with no material changes to internal control over financial reporting. It also acknowledges the inherent limitations of any control system - The Company's principal executive and financial officers concluded that disclosure controls and procedures were effective as of June 30, 2025[92] - There were no material changes in internal controls over financial reporting during the quarter ended June 30, 2025[93] - Control systems, despite being well-designed, provide only reasonable assurance and are subject to inherent limitations such as human error, resource constraints, and potential circumvention[94] Part II – Other Information This part covers non-financial disclosures, including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings This section states that there are no legal proceedings to report for the Company - There are no legal proceedings to report[96] Item 1A. Risk Factors This section directs readers to the comprehensive risk factors detailed in the Company's Annual Report on Form 10-K and subsequent registration statements, acknowledging that additional unforeseen risks may also impact the business - Important risk factors are described in Part I, Item 1A, "Risk Factors" of the Annual Report on Form 10-K filed on March 21, 2025, and supplemented by registration statements on Form S-4 and S-3[97] - The Company acknowledges that additional risks and uncertainties, currently unknown or believed to be immaterial, may become significant factors adversely affecting its business or results of operations[97] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports on specific instances of unregistered sales of equity securities, including common stock issued for consulting services and a senior convertible debenture issued to a placement agent, all conducted under exemptions from SEC registration requirements - The Company issued 10,000 shares of Common Stock to Eadwacer Holdings LLC for consulting services related to the REalloys Merger on April 3 and April 26, 2025, under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D[98] - A Senior Convertible Debenture of up to $184,000 was issued to Palladium Capital Group, LLC on April 30, 2025, to settle placement agent fees, convertible into Common Stock at a price of 175% of the closing price (minimum $5.00 per share)[99] - The Placement Agent Debenture was also issued pursuant to an exemption from registration requirements under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D[99] Item 3. Defaults Upon Senior Securities This section states that there are no defaults upon senior securities to report for the Company - There are no defaults upon senior securities[100] Item 4. Mine Safety Disclosures This section indicates that the disclosure requirements for mine safety are not applicable to the Company - Mine Safety Disclosures are not applicable to the Company[101] Item 5. Other Information This section states that there is no other information to report under this item - There is no other information to report[102] Item 6. Exhibits This section provides a comprehensive list of exhibits filed with the Quarterly Report on Form 10-Q, including foundational corporate documents, various agreements related to financing and the REalloys merger, and required certifications - Exhibits include Articles of Incorporation, Certificates of Designation for Preferred Stock, Amended and Restated Bylaws, and a Description of Securities[104] - Key agreements filed as exhibits include the Termination Agreement with Evtec, Securities Purchase Agreements and Debentures with Five Narrow Lane LP, and the Agreement and Plan of Merger with REalloys Inc., along with related support and security agreements[104][106] - The report also includes certifications from the Principal Executive Officer and Principal Financial Officer as required by Rule 13a-14a/Rule 14d-14(a) and 18 U.S.C. Section 1350, as well as Inline Interactive Data Files[106][111] Signatures This section confirms the official signing of the report by the Company's principal executive and financial officers - The report was duly signed on August 14, 2025, by Gust Kepler, President, Chief Executive Officer and Secretary, and Robert Winspear, Chief Financial Officer and Secretary[109]