Blackboxstocks(BLBX) - 2025 Q3 - Quarterly Report

FORM 10-Q Filing Information This section details the Form 10-Q filing for Blackboxstocks Inc., a Nevada corporation, for the period ended September 30, 2025 Filing Details This document is a Quarterly Report on Form 10-Q for Blackboxstocks Inc., covering the period ended September 30, 2025, identifying the company as a Nevada corporation, non-accelerated filer, smaller reporting company, and emerging growth company - The report is a Quarterly Report on Form 10-Q for the period ended September 30, 2025[2] - Blackboxstocks Inc. is a Nevada corporation with Commission File No. 001-41051[2] Registrant Status | Status | Indication | | :----------------------- | :--------- | | Large accelerated filer | ☐ | | Accelerated filer | ☐ | | Non-accelerated filer | ☒ | | Smaller reporting company| ☒ | | Emerging growth company | ☒ | Table of Contents This section provides an overview of the report's structure and content Introductory Comment This section provides introductory remarks and context for the financial report Caution Regarding Forward-Looking Statements This section outlines important cautionary statements regarding forward-looking information in the report PART I – FINANCIAL INFORMATION This part presents the unaudited condensed consolidated financial statements and management's discussion for the period Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements of Blackboxstocks Inc. for the periods ended September 30, 2025, and December 31, 2024, including balance sheets, statements of operations, stockholders' equity, and cash flows, along with accompanying notes Condensed Consolidated Balance Sheets The company's total assets decreased by approximately 10.8% from December 31, 2024, to September 30, 2025, primarily due to a significant reduction in current assets, particularly the note receivable, while total liabilities also decreased and stockholders' equity saw a decline Condensed Consolidated Balance Sheets (Unaudited) | Item | September 30, 2025 | December 31, 2024 | | :---------------------------- | :----------------- | :---------------- | | Assets | | | | Cash | $93,186 | $17,036 | | Accounts receivable | $13,675 | $7,217 | | Note receivable | $- | $1,100,000 | | Total current assets | $154,415 | $1,172,597 | | Total assets | $8,818,588 | $9,890,690 | | Liabilities | | | | Accounts payable | $1,583,552 | $1,629,803 | | Unearned subscriptions | $515,550 | $928,203 | | Senior secured convertible debenture, net of issuance costs | $1,347,889 | $- | | Convertible note payable | $164,000 | $- | | Merchant cash advance | $- | $187,921 | | Evtec advances payable | $- | $1,293,000 | | Total current liabilities | $3,860,350 | $4,267,710 | | Total liabilities | $4,034,443 | $4,496,495 | | Stockholders' Equity | | | | Total stockholders' equity | $4,784,145 | $5,394,195 | - Cash increased significantly from $17,036 at December 31, 2024, to $93,186 at September 30, 2025[15] - A $1,100,000 note receivable was eliminated by September 30, 2025, contributing to the decrease in total current assets[15] - New debt instruments, including a senior secured convertible debenture ($1,347,889) and a convertible note payable ($164,000), were recorded by September 30, 2025[15] Condensed Consolidated Statements of Operations Nine-month revenues decreased by 9.0%, leading to lower gross margin and an increased net loss despite reduced operating expenses Condensed Consolidated Statements of Operations (Unaudited) | Item | Three Months Ended Sep 30, 2025 | Three Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :---------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Subscriptions | $644,316 | $646,792 | $1,725,075 | $1,979,514 | | Other revenues | $52,679 | $1,050 | $77,781 | $2,460 | | Total revenues | $696,995 | $647,842 | $1,802,856 | $1,981,974 | | Cost of revenues | $322,905 | $293,426 | $1,017,467 | $1,007,401 | | Gross margin | $374,090 | $354,416 | $785,389 | $974,573 | | Total operating expenses | $812,980 | $1,088,582 | $3,255,398 | $3,397,622 | | Operating loss | $(438,890) | $(734,166) | $(2,470,009) | $(2,423,049) | | Total other (income) expense | $281,717 | $46,667 | $349,000 | $99,438 | | Net loss | $(720,607) | $(780,833) | $(2,819,009) | $(2,522,487) | | Net loss per share - basic and diluted | $(0.19) | $(0.22) | $(0.77) | $(0.76) | - For the three months ended September 30, 2025, total revenues increased by 7.6% YoY, while net loss decreased by 7.7% YoY[18] - For the nine months ended September 30, 2025, total revenues decreased by 9.0% YoY, and net loss increased by 11.8% YoY[18] - Gross margin for the nine months ended September 30, 2025, was 43.6%, down from 49.2% in the prior year period[18] Condensed Consolidated Statement of Stockholders' Equity Stockholders' equity decreased to $4,784,145, reflecting common stock issuances, option exercises, financing costs, and net losses - Total stockholders' equity decreased from $5,394,195 at December 31, 2024, to $4,784,145 at September 30, 2025[16][21] - Common stock shares outstanding increased from 3,538,038 at December 31, 2024, to 3,962,093 at September 30, 2025, due to various issuances[15][21] - Additional paid-in capital increased from $28,343,505 to $30,552,080 during the nine months ended September 30, 2025[16][21] - Accumulated deficit increased from $(22,956,118) to $(25,775,127) over the same period, reflecting ongoing net losses[16][21] Condensed Consolidated Statements of Cash Flows For the nine months ended September 30, 2025, the company experienced a significant increase in cash provided by financing activities, primarily from debenture issuances and ATM offerings, which offset the substantial cash used in operating activities, resulting in a net increase in cash Condensed Consolidated Statements of Cash Flows (Unaudited) | Cash Flow Activity | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(2,649,753) | $(681,353) | | Net cash provided by investing activities | $- | $(1,096,697) | | Net cash provided by financing activities | $2,725,903 | $1,366,274 | | Net increase (decrease) in cash | $76,150 | $(411,776) | | Cash - end of period | $93,186 | $60,921 | - Cash used in operating activities significantly increased to $2,649,753 for the nine months ended September 30, 2025, compared to $681,353 in the prior year[23] - Financing activities provided $2,725,903 in cash in 2025, primarily from stock issuances ($1,036,670) and notes payable ($1,990,000), a substantial increase from $1,366,274 in 2024[23] - The company reported a net increase in cash of $76,150 for the nine months ended September 30, 2025, contrasting with a net decrease of $411,776 in the same period of 2024[23] Notes to Condensed Consolidated Financial Statements These notes provide critical context and detail for the condensed consolidated financial statements, covering significant accounting policies, going concern considerations, investment activities, changes in stockholders' equity, incentive plans, related party transactions, debt instruments, and commitments and contingencies, including a significant merger agreement and subsequent events 1. Summary of Significant Accounting Policies This section outlines the basis of presentation for the financial statements, highlights the company's going concern risk due to recurring losses and negative cash flows, and details ongoing efforts to secure financing and a significant merger agreement with REalloys Inc. to address liquidity concerns - The company incurred an operating loss of $2,470,009 and a net loss of $2,819,009 for the nine months ended September 30, 2025, raising substantial doubt about its ability to continue as a going concern[27] - A Merger Agreement with REalloys Inc. is expected to result in REalloys becoming a wholly-owned subsidiary, with pre-Closing Blackboxstocks stockholders retaining approximately 7.3% of the post-Close common stock[28] - REalloys is expected to raise $5,000,000 upon completion of the Merger, which is subject to SEC and Nasdaq approvals, and stockholder approval[28] - The company secured up to $2,300,000 in financing through a debenture with Five Narrow Lane LP, of which $2,050,000 was received by September 30, 2025[29] - An At-The-Market (ATM) Issuance Sales Agreement allows the company to sell up to $5,795,000 of common stock, with $1,445,712 raised as of October 15, 2025[30] Potential Dilutive Securities (September 30, 2025) | Security | Amount/Shares | | :---------------------------- | :------------ | | Series A Convertible Preferred Shares | 3,269,998 |\n| Common shares after conversion| 654,000 |\n| Option shares | 132,625 |\n| Warrant shares | 114,198 |\n| Senior Secured Debentures | $1,440,350 |\n| Shares (conversion rate $5.46)| 263,800 |\n| Convertible note | $164,000 |\n| Shares (conversion rate $5.46)| 30,036 | 2. Investments The company terminated its Share Exchange Agreement with Evtec Aluminium Limited and subsequently entered into a settlement agreement, resulting in a $93,000 gain - The Share Exchange Agreement with Evtec Aluminium Limited was terminated on January 13, 2025[37] - A settlement agreement with Evtec on August 13, 2025, cancelled a $1,150,000 note due by Evtec and a $1,293,000 advance due by the Company, in return for a $100,000 note from Blackbox.io to Evtec[38] - The settlement resulted in a gain of $93,000 for the company[38] 3. Stockholders' Equity During the nine months ended September 30, 2025, the company issued common stock for consulting services, financing costs, and cashless exercise of options, and raised $1,120,795 in gross proceeds from its At-The-Market (ATM) offering - Issued 30,000 shares of common stock valued at $104,300 for consulting services[39] - Issued 15,000 shares of common stock valued at $49,650 for financing costs[39] - Issued 10,610 shares of common stock for cashless exercise of options[39] - Raised gross proceeds of $1,120,795 from the ATM offering by selling 160,276 shares of common stock as of September 30, 2025[40] - Issued a warrant for 33,700 shares with an exercise price of $5.46 and a 5-year term, valued at $233,010, in connection with the Senior Secured Debenture[42] 4. Incentive Stock Plan The company granted restricted common stock and options during the period, with fair values calculated using the Cox-Ross-Rubinstein binomial pricing model, and as of September 30, 2025, 132,625 options were outstanding, with most being vested - Granted 46,787 shares of restricted common stock valued at $161,430, vesting in equal amounts quarterly through December 31, 2025[44] - Granted 10,000 shares of restricted common stock valued at $29,000, which vested at issuance[45] Options Activity (September 30, 2025) | Item | Number of Shares | Weighted Average Exercise Price | | :---------------------------- | :--------------- | :------------------------------ | | Options as of December 31, 2024 | 144,125 | $9.09 |\n| Issued | 15,000 | $3.46 |\n| Exercised | (26,500) | $3.65 |\n| Options as of September 30, 2025 | 132,625 | $9.54 | - As of September 30, 2025, 128,875 options were vested, with 3,750 remaining unvested, for which the company expects to incur $12,800 in expenses[48] 5. Related Party Transactions During the nine months ended September 30, 2025, Mr. Kepler, a related party, advanced $360,000 to the company, and the company repaid $436,209, resulting in no outstanding advances due to him at period end - Mr. Kepler advanced $360,000 to the company and was repaid $436,209 during the nine months ended September 30, 2025[49] - No advances were due to Mr. Kepler at September 30, 2025, compared to approximately $101,000 at December 31, 2024[49] 6. Debt This section details the company's debt instruments, including a Senior Secured Debenture with Five Narrow Lane LP, a Convertible Note Payable to Palladium Capital Group, a Note Payable to Evtec, and the full repayment of Merchant Cash Advances - The company entered into a Senior Secured Debenture with Five Narrow Lane LP (FNL) for up to $2,300,000, with $2,050,000 received by September 30, 2025[50] - FNL converted $609,650 of the debenture into 111,658 shares of common stock as of September 30, 2025[50] - Issuance costs of approximately $255,000 related to the debenture are being amortized over its life[51] - A 7% convertible note payable for $164,000 was issued to Palladium Capital Group to settle issuance costs related to the FNL debenture, convertible at $5.46 per share[53][54] - A $100,000 unsecured note payable at 10% interest was issued to Evtec on August 13, 2025, as part of a settlement agreement[55] - Merchant cash advances were fully repaid as of September 30, 2025, after amendments to weekly payments and the issuance of 15,000 shares of common stock for the amendments[57][58][59][60] 7. Commitments and Contingencies This section details the ongoing Merger Agreement with REalloys Inc., including amendments related to an at-the-market offering and the definition of 'Permitted Transfer' for CVRs, also mentioning a shelf registration statement for up to $50,000,000 of securities and the absence of material legal proceedings - The Merger Agreement with REalloys Inc. is ongoing, with REalloys expected to become a wholly-owned subsidiary and its stockholders receiving approximately 92.7% of the post-Close common and preferred stock[61] - The First Amendment to the Merger Agreement allows for an at-the-market offering of up to 250,000 shares of Blackboxstocks common stock without affecting the merger share calculation[62] - The Second Amendment revised the definition of 'Permitted Transfer' for Contingent Value Rights (CVRs) to allow for various non-market transfers[64] - A registration statement on Form S-3 was filed for the sale of up to $50,000,000 of securities, subject to public float limitations[65] - No material legal proceedings are expected to impact the company's financial position or results of operations[66] 8. Subsequent Event Subsequent to September 30, 2025, Five Narrow Lane LP converted an additional $982,800 of the Senior Secured Debenture into 180,000 shares of common stock, bringing the total converted amount to $1,592,450 - Between October 1, 2025, and October 15, 2025, FNL converted an additional $982,800 of the Additional Debenture into 180,000 shares of common stock[67] - Total conversions by FNL reached $1,592,450 out of the $2,050,000 Additional Debenture[67] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial performance, liquidity, and capital resources, detailing the business overview, going concern issues, financing efforts, and analysis of results of operations for the three and nine months ended September 30, 2025, compared to the prior year Overview Blackboxstocks Inc. provides an AI-enhanced, subscription-based SaaS platform for real-time stock and options trading analytics - Blackboxstocks Inc. provides a financial technology and social media hybrid platform with real-time proprietary analytics and news for stock and options traders[69] - The 'Blackbox System' uses AI-enhanced predictive technology to identify volatility and unusual market activity across NYSE, NASDAQ, CBOE, and other options markets[69] - The company operates on a subscription-based Software as a Service (SaaS) business model, serving users in over 40 countries[69] Basis of Presentation The company's financial statements are prepared under the assumption of a going concern, despite significant operating and net losses and negative cash flows from operations, as the company pursues a merger with REalloys Inc. and has secured various financing arrangements to address liquidity concerns - The company's ability to continue as a going concern is dependent on obtaining sufficient financing or achieving profitability, given operating losses of $2,470,009 and net losses of $2,819,009 for the nine months ended September 30, 2025[73] - A merger with REalloys Inc. is anticipated, where REalloys stockholders will receive approximately 92.7% of the post-merger common and preferred stock, and REalloys is expected to provide $5,000,000 in financing upon completion[73] - The company received $2,050,000 from a $2,300,000 convertible debenture with Five Narrow Lane LP and has raised $1,445,712 through an At-The-Market (ATM) Issuance Sales Agreement as of October 15, 2025[74][76] Liquidity and Capital Resources The company's cash balance increased to $93,186 at September 30, 2025, from $17,036 at December 31, 2024, driven by significant cash provided by financing activities, including proceeds from a debenture and ATM offerings, which offset substantial cash used in operations - Cash balance increased to $93,186 at September 30, 2025, from $17,036 at December 31, 2024[79] - Cash used in operations was $2,649,753 for the nine months ended September 30, 2025, compared to $381,353 for the prior year period (excluding Evtec financial support)[79] - Net cash provided by financing activities was $2,725,903 for the nine months ended September 30, 2025, primarily from $2,050,000 from the FNL debenture and $1,036,645 from ATM issuances[81] - The company expects an additional $250,000 funding from FNL upon the SEC declaring the Merger consideration registration statement effective[81] Results of Operations Revenue increased 7.6% for three months but decreased 9.0% for nine months, impacting gross margin and operating loss Revenue and Subscriber Metrics (YoY Comparison) | Metric | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | | :----------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total Revenues | $696,995 | $647,842 | $1,802,856 | $1,981,874 |\n| Change in Revenue (YoY) | +7.6% | N/A | -9.0% | N/A |\n| Average Subscribers | 2,876 | 2,940 | 2,759 | 2,975 |\n| Average Monthly Revenue per Subscriber | $74.68 | $73.34 | $69.48 | $73.93 | Operating Performance (YoY Comparison) | Metric | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | | :------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Cost of Revenues | $322,905 | $293,426 | $1,017,467 | $1,007,401 |\n| Gross Margin | 53.7% | 54.7% | 43.6% | 49.2% |\n| Total Operating Expenses | $812,980 | $1,088,582 | $3,255,398 | $3,397,622 |\n| Operating Loss | $(438,890) | $(734,166) | $(2,470,009) | $(2,423,049) |\n| Other (income) expense | $281,717 | $46,667 | $349,000 | $99,438 | - The decrease in gross profit margin for the nine months was driven by lower absorption of fixed costs and lower average revenue per subscriber due to promotional offerings[90] - Advertising and marketing expenses decreased by 47.0% for the three months and 43.5% for the nine months, as the company repositioned its marketing strategy with new pricing tiers[86][91] EBITDA (Non-GAAP Financial Measure) EBITDA, a non-GAAP measure, shows nine-month operating performance at $(1,933,739), an improvement from the prior year - EBITDA is presented as a non-GAAP measure to provide a more meaningful understanding of ongoing operating performance, used for comparison, planning, and performance evaluation[94] Reconciliation of Net Loss to EBITDA | Item | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | | :---------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net loss | $(720,607) | $(780,833) | $(2,819,009) | $(2,522,487) |\n| Adjustments: | | | | |\n| Interest expense (income) | $55,172 | $58 | $102,318 | $(123) |\n| Amortization of debt issuance costs | $78,016 | $- | $162,974 | $- |\n| Other depreciation and amortization expense | $1,235 | $2,536 | $4,735 | $13,947 |\n| Financing costs | $242,254 | $46,609 | $335,254 | $69,621 |\n| Stock based compensation | $40,355 | $81,737 | $279,989 | $301,069 |\n| Total adjustments | $510,032 | $130,940 | $885,270 | $384,514 |\n| EBITDA | $(210,575) | $(649,893) | $(1,933,739) | $(2,137,973) | Off Balance Sheet Arrangements As of September 30, 2025, the company did not have any material off-balance sheet arrangements - The company had no material off-balance sheet arrangements as of September 30, 2025[97] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a 'smaller reporting company,' Blackboxstocks Inc. is not required to provide quantitative and qualitative disclosures about market risk in this report - The company is exempt from providing quantitative and qualitative disclosures about market risk due to its status as a smaller reporting company[98] Item 4. Controls and Procedures Disclosure controls and procedures were effective as of September 30, 2025, with no material changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures The principal executive officer and principal financial officer evaluated the effectiveness of the company's disclosure controls and procedures as of September 30, 2025, and concluded they were effective - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2025[99] Changes in Internal Control Over Financial Reporting There were no changes in the company's internal controls over financial reporting during the quarter ended September 30, 2025, that materially affected or are reasonably likely to materially affect them - No material changes in internal controls over financial reporting occurred during the quarter ended September 30, 2025[100] Limitations on the Effectiveness of Controls Management acknowledges that while disclosure controls and procedures provide reasonable assurance, no control system can prevent all human error or circumvention, and their effectiveness is subject to inherent limitations and resource constraints - Management acknowledges that control systems, despite being well-designed, can only provide reasonable, not absolute, assurance due to inherent limitations like human error, faulty judgment, and potential circumvention[101] PART II – OTHER INFORMATION This part covers other information including legal proceedings, risk factors, and exhibits Item 1. Legal Proceedings The company reported no material legal proceedings - There are no legal proceedings to report[103] Item 1A. Risk Factors The company refers to the risk factors detailed in its Annual Report on Form 10-K for the year ended December 31, 2024, and subsequent registration statements, noting that additional unknown or immaterial risks may also arise - Important risk factors are described in the company's Annual Report on Form 10-K for the year ended December 31, 2024, and supplemented by various registration statements[104] - The company acknowledges that additional unknown or currently immaterial risks may adversely affect its business or results of operations[104] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds during the period - There were no unregistered sales of equity securities or use of proceeds to report[105] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - There were no defaults upon senior securities to report[106] Item 4. Mine Safety Disclosures This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[107] Item 5. Other Information Gust Kepler, the company's CEO, entered into a Rule 10b5-1 trading arrangement on September 15, 2025, for the potential sale of up to 250,000 shares of common stock, with sales permitted starting 91 days after the adoption date or later, and the arrangement expiring on September 15, 2026 - Gust Kepler, CEO, entered into a Rule 10b5-1 trading arrangement on September 15, 2025[108] - The arrangement allows for the potential sale of up to 250,000 shares of the company's common stock[108] - Sales under the arrangement are permitted starting the later of 91 days after adoption or the third business day following disclosure of financial results for the completed fiscal quarter, and the arrangement expires on September 15, 2026[108] Item 6. Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including various corporate documents, amendments to the merger agreement, and the At-The-Market Issuance Sales Agreement - Exhibits include Articles of Incorporation, Certificates of Designation for Preferred Stock, Amended and Restated Bylaws, and Description of Securities[109] - Recent exhibits include the First and Second Amendments to the Agreement and Plan of Merger, and the At-The-Market Issuance Sales Agreement with Alexander Capital, L.P[111] SIGNATURES This section contains the required signatures for the Form 10-Q filing EXHIBIT INDEX This section provides a comprehensive list of all exhibits filed with the Form 10-Q