Business context and reporting period
This filing is for the quarter and six months ended June 30, 2017, and was filed August 14, 2017. The filing identifies the registrant as Blackboxstocks Inc., not REALLOYS INC. The company develops and markets a real-time analytics and subscription software platform for securities traders. Domestic subscriptions began in September 2016.
Key financial results
| Metric | Three months ended June 30, 2017 | Six months ended June 30, 2017 |
|---|---|---|
| Revenue | $196,945 | $324,558 |
| Cost of operations | $133,192 | $229,472 |
| Gross profit and margin | $63,753; 32.4% | $95,086; 29.3% |
| Operating expenses | $415,707 | $638,390 |
| Operating loss | $(351,954) | $(543,304) |
| Net loss | $(352,472) | $(544,270) |
| Basic loss per share | $(0.02) | $(0.02) |
| Net cash used in operations | $(264,162) for the six months |
At June 30, cash was $386,470, current assets were $753,585, current liabilities were $378,168, and working capital was $375,417. Total assets were $781,496 and stockholders’ equity was $403,328. The balance sheet presents no borrowings; interest expense for the six months was $966. The company reported an accumulated deficit of $1,977,114.
Changes versus the prior comparable period
- Revenue rose from zero in both 2016 comparison periods as the domestic subscription platform launched in September 2016 and licensing activity began in 2017.
- Six-month net loss increased to $544,270 from $304,287. Operating expenses rose to $638,390 from $304,287, including higher software development and general and administrative costs.
- Cash declined from $703,638 at December 31, 2016 to $386,470 at June 30, 2017. Operating cash use was partly offset by increases in accounts payable and $150,000 of unearned licensing fees.
- Current liabilities increased from $89,961 at year-end 2016 to $378,168, including $150,000 in unearned licensing fees and $208,683 in accounts payable.
Outlook, risks, and notable items
- Management said subscription revenue had not reached a level sufficient to cover overhead and did not expect profitable operations before the end of the third quarter of 2017; it cautioned that profitability might never be achieved.
- The company stated that it might need additional capital. It also said existing working capital was expected to fund operating deficiencies and development costs through the end of 2018, absent a significant change in cash requirements. These statements are uncertain and not guarantees.
- On August 9, 2017, the company entered a licensing agreement with EIGH8T TECHNOLOGIES INC. for a customized system using Asian exchange data. The filing says the licensee remitted a $250,000 advance on May 15, 2017, of which $100,000 was recognized as licensing revenue by June 30; $150,000 remained unearned. A principal of the licensee reportedly owns approximately 13% of Blackboxstocks’ common stock.
- A related-party advance receivable of $79,678 was unsecured and non-interest-bearing. The company also reported $36,700 of prepaid expenses with a company wholly owned by its CEO and controlling stockholder.
- Disclosure controls were concluded to be ineffective as of June 30. Management identified lack of segregation of duties, stemming from having one director and executive officer handling general administrative and financial matters, as a material weakness. No material litigation or off-balance-sheet arrangements were reported.
Important facts for investors to verify
- Confirm the correct issuer: the supplied filing is for Blackboxstocks Inc., despite the request metadata naming REALLOYS INC.
- Assess whether subscription and licensing revenue can grow enough to cover operating and development costs, and whether additional funding will be needed.
- Review the terms, revenue recognition, collections, and related-party connections associated with the BBTR license and advances.
- Track remediation of the disclosed material weakness and any changes in disclosure controls.
- Reconcile the company’s stated cash runway with actual cash burn, working-capital changes, and subsequent-period results.