Blackboxstocks Inc. — Form 10-Q Summary
Entity note: The supplied filing is for Blackboxstocks Inc. (Nasdaq: BLBX), not Realloys Inc. It covers the quarter and six months ended June 30, 2023; the financial statements are unaudited.
Business context
Blackboxstocks operates a subscription-based SaaS platform providing real-time analytics, news, and a social community for stock and options traders. The filing describes a planned reverse merger with Evtec, a UK automotive-parts supplier, and a June 2023 securities exchange in which Blackboxstocks issued Series B preferred shares for Evtec preference shares.
Financial performance and liquidity
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | $737,398 | $1,399,315 | $1,596,402 | $2,671,801 |
| Gross margin dollars / percentage | $310,423 / 42% | $899,888 / 64% | $721,796 / 45% | $1,592,412 / 60% |
| Operating loss | $(1,431,299) | $(1,168,766) | $(3,378,103) | $(2,189,920) |
| Net loss | $(1,424,494) | $(1,316,099) | $(3,324,862) | $(2,558,542) |
| Basic loss per share | $(0.45) | $(0.40) | $(1.03) | $(0.78) |
Q2 revenue declined about 47%, while six-month revenue declined about 40%. For Q2, average members fell to 3,987 from 6,202 and average monthly revenue per member was $62.47 versus $75.21. Management attributed weaker revenue to macroeconomic conditions and increased competition. Six-month operating expenses rose to $4.10 million from $3.78 million, primarily due to higher stock-based compensation; six-month stock-based compensation was $1.17 million.
Cash used in operating activities was $2.72 million for the six months, versus $2.04 million a year earlier. Cash declined to $272,564 from $425,578 at year-end 2022; cash plus marketable securities was $945,738 versus $3.64 million. Investing activities provided $2.59 million, largely reflecting net sales of marketable securities. The company reported total assets of $10.19 million, including an $8.424 million Evtec investment, and stockholders’ equity of $8.37 million.
At June 30, total note payable was $54,016, including $28,877 current and $25,139 long-term; the note is a 1% PPP loan due in 2025. Lease liabilities totaled approximately $300,038, of which $67,371 was current. Current liabilities were $1.57 million. No material off-balance-sheet arrangements were reported.
Material changes and transactions
- On June 9, Blackboxstocks issued 2.4 million Series B convertible preferred shares, valued at $8.424 million, in exchange for 4,086 Evtec Group preference shares. The Evtec shares represent 14% of Evtec Group’s outstanding common stock upon conversion, subject to the stated conversion conditions.
- Management described a planned reverse merger in which Evtec would receive approximately 91.6% of post-merger common shares. The filing also refers in different passages to a non-binding letter of intent and a binding letter of intent; completion and financing are not assured.
- The company completed a 1-for-4 reverse stock split in April 2023. It repurchased 5,000 shares under its repurchase plan during Q2 and separately bought 282,501 shares from the CEO for $79,100, in lieu of a 2022 cash bonus.
Outlook, risks, and unusual items
Going concern: Management states that substantial doubt exists about the company’s ability to continue as a going concern, citing recurring losses and operating cash outflows. It is pursuing product development, revised marketing, and expense reductions, but says additional capital may be needed and neither financing nor the Evtec transaction is assured.
Management expected selling, general and administrative expenses to remain stable or decrease, excluding unusually high stock compensation; software-development spending was expected to decline as the Stock Nanny product neared release. Marketing spending was expected to remain near current levels until the anticipated launch later in 2023. No quantified revenue or earnings guidance was provided. Management cited competition and macroeconomic conditions as revenue risks. Normal-course litigation was disclosed, but the company did not expect a material financial-statement effect.
Six-month EBITDA, a non-GAAP measure, was a loss of $2.18 million versus a loss of $1.93 million in 2022. The Evtec investment was recorded as a noncash equity exchange; its valuation was based on Blackboxstocks’ prior-day closing share price.
Investor verification priorities
- Confirm the current status, binding terms, approvals, timing, and financing implications of the proposed Evtec reverse merger, including the projected 91.6% ownership allocation.
- Assess liquidity and going-concern risk against cash burn, remaining marketable securities, and the company’s ability to raise additional capital.
- Verify the basis and realizability of the $8.424 million Evtec investment valuation and the conditions for converting the Evtec preference shares.
- Track subscriber counts, revenue per member, gross margin, and whether the Stock Nanny launch and expense reductions improve operating performance.
- Review dilution and control implications of Series A and Series B preferred shares, options, warrants, and the reverse-merger share issuance.