Business context and reporting period
The supplied filing is Blackboxstocks Inc.’s unaudited Form 10-Q for the quarter ended September 30, 2023, filed November 14, 2023. This does not match the requested company name, REALLOYS INC.; verify the issuer before relying on this summary. Blackboxstocks operates a subscription SaaS financial analytics and social platform for traders.
The income statement reports both the three and nine months ended September 30, 2023, although one column heading is printed as “six months.” The accompanying cash-flow statement and MD&A identify the year-to-date period as nine months.
Financial results and liquidity
| Metric | Three months ended September 30 | Nine months ended September 30 |
|---|---|---|
| Revenue, 2023 | $728,468 | $2,324,870 |
| Revenue, 2022 | $1,219,150 | $3,890,951 |
| Gross margin dollars, 2023 | $400,540 | $1,122,336 |
| Gross margin rate, 2023 | 55% | 48% |
| Operating loss, 2023 | $(869,229) | $(4,247,332) |
| Net loss, 2023 | $(671,745) | $(3,996,607) |
| Net loss, 2022 | $(1,308,442) | $(3,866,984) |
| Basic loss per share, 2023 | $(0.21) | $(1.24) |
- Quarterly revenue fell about 40% year over year. Average users declined to 3,174 from 5,197; average monthly revenue per user was $76.37 versus $78.19.
- Nine-month revenue fell about 40%; average members were 3,564 versus 5,695, and average monthly revenue per user was $72.23 versus $75.64.
- Operating expenses were $1.27 million for the quarter, down 34%, but $5.37 million year to date, down about 6%. Nine-month SG&A increased $470,000, primarily reflecting stock-based compensation of $1.33 million, up $965,000 year over year.
- Cash used in operating activities was $3.20 million for the nine months, versus $3.49 million in the comparable period. Cash was $463,288 at September 30; cash plus marketable securities was $465,564, down from $3.64 million at December 31, 2022. Investing activities provided $3.27 million, mainly reflecting liquidation of marketable securities.
- Total assets were $9.58 million, including an $8.424 million Evtec investment. Current liabilities were $1.49 million. Note payable totaled $46,824; lease liabilities were $282,624, including $66,079 current. Stockholders’ equity was $7.85 million.
- Reported non-GAAP EBITDA was a loss of $513,026 for the quarter and $2.70 million for the nine months. The company cautions that EBITDA is not a GAAP measure and may not be comparable to other companies’ measures.
Material changes and unusual items
- Quarterly net loss narrowed year over year, while nine-month net loss increased. Lower revenue and gross margin, plus higher stock compensation, drove the larger year-to-date operating loss.
- The company recorded $188,760 of expected Employee Retention Credit income. The claim may be audited; the company says it may have to repay some or all of the credit if the IRS denies eligibility.
- In June 2023, Blackboxstocks issued 2.4 million Series B preferred shares, valued at $8.424 million, for Evtec preferred shares. The filing says the holding would represent 14% of Evtec’s ordinary shares upon conversion under specified conditions.
- The company also reported a binding letter of intent to acquire Evtec Group Limited and Evtec Aluminium Limited through a reverse merger, with Evtec expected to receive shares representing approximately 91.6% of post-acquisition common shares. Completion and the transaction’s effect on liquidity are uncertain.
- A one-for-four reverse stock split took effect in April 2023. The company also repurchased and retired shares from its CEO in March at $0.28 per share, reducing his 2022 cash bonus.
Outlook, risks and contingencies
- Management disclosed substantial doubt about the company’s ability to continue as a going concern, citing recurring losses and $3.20 million of operating cash use in the first nine months. Management is pursuing product development, revised marketing and expense reductions, and may need additional financing; there is no assurance these steps or the proposed Evtec transaction will provide sufficient capital.
- Management expected SG&A to remain stable or decrease, excluding unusually high first-half stock compensation; software development costs to decline as Stock Nanny nears release; and marketing spending to remain near current levels until launch. No quantitative revenue or earnings guidance was provided.
- Management attributed weaker revenue to macroeconomic conditions and increased competition. It cited lower quarterly users and lower gross margin, partly due to fixed costs not declining as quickly as revenue.
- The filing reports no material off-balance-sheet arrangements and no legal proceedings. It identifies ordinary-course litigation as not expected to materially affect the financial statements.
- Disclosure controls were assessed as effective at providing reasonable assurance; the filing reports no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Confirm the issuer: the supplied filing is for Blackboxstocks Inc. (BLBX), not REALLOYS INC.
- Review the proposed Evtec acquisition’s status, financing, closing conditions, dilution and expected liquidity impact; distinguish it from the existing Evtec investment.
- Assess the going-concern disclosure against cash burn, remaining liquidity and the company’s ability to raise capital.
- Verify the ERC claim’s eligibility and potential repayment exposure.
- Reconcile the 3,197,815 common shares reported at September 30 with 3,187,815 shares outstanding on November 12, and review the potential dilution from preferred stock, options and warrants.
- Check the income-statement period heading discrepancy and confirm the nine-month figures against the underlying filing.