Blackboxstocks(BLBX) - 2020 Q4 - Annual Report

Part I Business Overview Blackboxstocks, Inc. operates a SaaS financial technology and social media platform, offering AI-enhanced real-time analytics for stock and options traders - The company operates a SaaS business model, providing a subscription-based financial technology and social media platform to users in 42 countries[15] - The Blackbox System uses AI-enhanced predictive technology to scan over 8,000 stocks and 1,000,000 options contracts per second, delivering real-time alerts and analytics[15][16] - Key platform features include an Options Flow Scanner, a Dark Pool Scanner, and TradeStation integration for direct trading from the dashboard[17] - Future development plans include native iOS/Android mobile apps, a cryptocurrency analytics platform, and a portfolio management system, with an estimated cost of $250,000[19] Marketing and Customer Referral Expenditures (2019-2020) | Expense Category | 2020 ($) | 2019 ($) | | :--- | :--- | :--- | | Advertising and Marketing | $705,706 | $261,470 | | Customer Referral Expenditures | $272,908 | $121,227 | - The company identifies Trade Ideas, Flow Algo, Trade Alert, and Wall Street Jesus as potential competitors based on similar features and price points[25] Risk Factors As a smaller reporting company, Blackboxstocks, Inc. is exempt from providing specific risk factor disclosures - The company is not required to provide risk factors as it qualifies as a smaller reporting company[30] Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - There are no unresolved staff comments[31] Properties The company leases its principal office in Dallas, Texas, with reported rental expenses and future minimum commitments Office Rental Expenses and Future Commitments | Period | Amount ($) | | :--- | :--- | | 2020 Expense | $59,597 | | 2019 Expense | $54,631 | | 2021 Future Payment | $61,800 | | 2022 Future Payment | $46,863 | Legal Proceedings The company reports no material pending legal or governmental proceedings - There are currently no material pending legal proceedings[33] Mine Safety Disclosures This item is not applicable to the company's business - Not applicable[35] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on the OTC Pink market, with details on outstanding shares, record holders, and dividend policy - The company's common stock is quoted on the OTC Pink market under the symbol BLBX[38] Quarterly Common Stock Bid Prices (2019-2020) | Quarter Ended | High ($) | Low ($) | | :--- | :--- | :--- | | Dec 31, 2020 | 3.35 | 2.15 | | Sep 30, 2020 | 3.10 | 2.00 | | Jun 30, 2020 | 2.55 | 2.21 | | Mar 31, 2020 | 2.75 | 1.99 | | Dec 31, 2019 | 4.95 | 4.74 | | Sep 30, 2019 | 6.60 | 2.50 | | Jun 30, 2019 | 9.00 | 6.60 | | Mar 31, 2019 | 14.97 | 3.00 | - As of March 17, 2021, 8,579,877 shares of common stock were outstanding, held by 696 record holders[40][5] - The company has not declared any dividends and does not anticipate paying any in the foreseeable future[41] Selected Financial Data This section is not required as the company is a smaller reporting company - Not required[50] Management's Discussion and Analysis of Financial Condition and Results of Operations The company achieved significant revenue growth and improved gross margin in 2020, reducing its net loss and bolstering liquidity with a new $1 million loan Results of Operations Comparison (2020 vs. 2019) | Metric | 2020 ($) | 2019 ($) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $3,367,563 | $1,062,573 | +216.9% | | Cost of Revenues | $1,201,320 | $695,076 | +72.8% | | Gross Margin | $2,166,243 | $367,497 | +489.5% | | Gross Margin % | 64.3% | 34.6% | +29.7 pts | | Operating Expenses | $2,578,941 | $1,372,530 | +87.9% | | Operating Loss | ($412,698) | ($1,005,033) | -59.0% | Liquidity and Working Capital (as of Dec 31) | Metric | 2020 ($) | 2019 ($) | | :--- | :--- | :--- | | Cash Balance | $972,825 | $21,172 | | Working Capital Deficit | ($990,738) | ($3,525,306) | - The company secured a $1,000,000 loan agreement on November 12, 2020, at a 12% interest rate maturing November 12, 2022, with proceeds used for debt repayment and working capital[82][56] - Management believes new financing and operational cash flows provide sufficient capital for the next twelve months, despite an accumulated deficit of $7.18 million[56] Quantitative and Qualitative Disclosures About Market Risk This section is not required as the company is a smaller reporting company - Not required[90] Financial Statements and Supplementary Data This section incorporates the company's audited financial statements for 2019-2020, which received an unqualified opinion from Turner, Stone & Company, L.L.P - The independent registered public accounting firm, Turner, Stone & Company, L.L.P., issued an unqualified audit opinion on the financial statements[153] Key Balance Sheet Data (as of Dec 31) | Account | 2020 ($) | 2019 ($) | | :--- | :--- | :--- | | Assets | | | | Cash | $972,825 | $21,172 | | Total Current Assets | $1,008,476 | $26,917 | | Total Assets | $1,157,849 | $280,639 | | Liabilities & Equity | | | | Total Current Liabilities | $1,999,214 | $3,552,223 | | Total Liabilities | $2,915,603 | $3,618,938 | | Accumulated Deficit | ($7,184,818) | ($6,829,907) | | Total Stockholders' Deficit | ($1,757,754) | ($3,338,299) | Key Income Statement Data (Year Ended Dec 31) | Account | 2020 ($) | 2019 ($) | | :--- | :--- | :--- | | Total Revenues | $3,367,563 | $1,062,573 | | Gross Margin | $2,166,243 | $367,497 | | Operating Loss | ($412,698) | ($1,005,033) | | Net Loss | ($354,911) | ($2,983,438) | | Net Loss Per Share (basic) | ($0.04) | ($0.38) | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants regarding accounting principles, disclosures, or auditing scope - None reported[94] Controls and Procedures Management concluded that disclosure controls and procedures were ineffective as of December 31, 2020, due to a material weakness in internal control over financial reporting - The principal executive and financial officer concluded that the company's disclosure controls and procedures were not effective as of December 31, 2020[95] - A material weakness was identified in internal controls over financial reporting due to a shortage of accounting resources and inadequate segregation of duties[100][104] - The annual report does not include an attestation report from the registered public accounting firm regarding internal control, as non-accelerated filers are exempt[101] Other Information The company reports no other information for this item - None[105] Part III Directors, Executive Officers and Corporate Governance The company's leadership includes Gust Kepler as sole Director and CEO, with no formal Code of Ethics or separate board committees due to its small size Directors and Executive Officers | Name | Age | Position(s) | | :--- | :--- | :--- | | Gust Kepler | 56 | Director, President, CEO, CFO, Secretary | | Jeff Sharrock | 56 | Vice President of Operations | - The company has not adopted a Financial Code of Ethics due to its small management team[113] - There are no separate audit, nominating, or compensation committees; the entire Board of Directors performs these functions[114] Executive Compensation Executive compensation for Gust Kepler and Jeff Sharrock for 2019-2020 consists of salary and bonuses, with no retirement or stock option programs Summary Compensation Table (2019-2020) | Name and Principal Position | Year | Salary ($) | All Other Compensation ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | | Gust Kepler, CEO, CFO, etc. | 2020 | 12,000 | 11,120 | 23,120 | | | 2019 | 12,000 | -- | 12,000 | | Jeff Sharrock, VP of Operations | 2020 | 73,000 | 6,352 | 79,352 | | | 2019 | 73,008 | 500 | 73,508 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Gust Kepler, CEO and sole director, is the controlling shareholder, owning 27% of Common Stock and 100% of Series A Preferred Stock Security Ownership of Beneficial Owners and Management (as of March 17, 2021) | Name / Group | Class | Shares Owned | Percent of Class | | :--- | :--- | :--- | :--- | | Gust Kepler | Common Stock | 2,331,668 | 27% | | David Kyle | Common Stock | 833,334 | 10% | | Eric Pharis | Common Stock | 791,615 | 9% | | Stephen Chiang | Common Stock | 1,000,000 | 12% | | Gust Kepler | Series A Preferred Stock | 5,000,000 | 100% | Certain Relationships and Related Transactions, and Director Independence The company disclosed several related party transactions, including a repaid loan from the CEO, payments to stockholder-owned firms, and a prepaid balance with a CEO-owned entity - CEO Gust Kepler repaid a $9,823 debt to the company during 2020[128] - The company paid EDM Operators, owned by stockholders Eric Pharis and David Kyle, $40,200 in 2020 and $13,500 in 2019 for application development services[130] - A prepaid balance of $36,700 exists with G2 International, Inc., wholly owned by CEO Gust Kepler, for future public relations and marketing services[131] - The Board of Directors is composed of one member who does not qualify as an independent director[132] Principal Accountant Fees and Services The company paid Turner, Stone & Company, L.L.P. for audit and tax services, with all fees pre-approved by the Board of Directors Accountant Fees (2019-2020) | Fee Category | 2020 ($) | 2019 ($) | | :--- | :--- | :--- | | Audit Fees | $41,500 | $37,095 | | Tax Fees | $3,000 | $2,325 | | All Other Fees | $0 | $0 | Part IV Exhibits and Financial Statement Schedules This section lists the financial statements and exhibits filed as part of the Annual Report on Form 10-K, including corporate governance documents and material contracts - Lists the financial statements filed with the report, including the Balance Sheets, Statements of Operations, and Statements of Cash Flows[141] - Provides a list of exhibits filed or incorporated by reference, such as corporate governance documents, material contracts, and officer certifications[143][144] Form 10-K Summary No summary is provided for this item - None[145]