Filing overview
The supplied filing is a Form 10-Q for the quarter ended June 30, 2016. Entity discrepancy: the filing identifies the registrant as Blackboxstocks Inc. (formerly SMSA Ballinger Acquisition Corp.), not REALLOYS INC.; verify that this is the intended filing. Blackboxstocks was developing a real-time analytics platform for traders and had not yet launched its subscription service.
Financial performance and position
Amounts are in U.S. dollars. The company reported no revenue for the three or six months ended June 30, 2016, or for the comparable 2015 periods.
| Metric | Q2 2016 | Q2 2015 | Six months 2016 | Six months 2015 |
|---|---|---|---|---|
| Operating expenses | $167,293 | $66,024 | $304,287 | $120,397 |
| Operating loss and net loss | $(167,293) | $(66,024) | $(304,287) | $(120,397) |
| Basic loss per share | $(0.01) | $(0.00) | $(0.02) | $(0.01) |
With no revenue or cost of operations, gross profit and gross margin were zero. For the six months, operating cash used was $115,899, compared with $252,853 in 2015. Investing cash flow was zero (versus $13,472 used in 2015); financing provided $59,960 (versus $560,000 in 2015). Cash fell by $55,939 to $4,347.
At June 30, 2016, total assets were $41,284, including $4,347 cash; current liabilities were $140,640, resulting in a $112,243 working-capital deficit. Liabilities included $79,819 accounts payable, a $50,000 secured note, $9,960 in unsecured, non-interest-bearing related-party advances, and $861 accrued interest. Stockholders’ equity was negative $99,356; accumulated deficit was $924,798. The company reported no off-balance-sheet arrangements.
Changes, outlook, and risks
- Q2 operating expenses rose $101,269 year over year; first-half expenses increased $183,890. The filing attributes the increases mainly to payroll, consulting, rent, insurance, marketing, professional and transfer-agent costs, and software development and data-feed costs.
- The planned product launch was pushed back from June to the end of September 2016 after additional features were added. Management estimated $1 million to $2 million of additional costs over the following 12 months for development, marketing, implementation, and maintenance.
- Management said the company would need additional financing and could not assure that funding or adequate subscription revenue would be obtained. The filing states that these conditions raise substantial doubt about the company’s ability to continue as a going concern; the financial statements contain no adjustments for a possible failure to continue.
- Subsequent to quarter-end, the company entered into agreements to sell 220,000 common shares for $110,000 at $0.50 per share; 200,000 shares had been issued as of August 15, 2016. The filing also reports a six-month, 10% note for $50,000, secured by company assets.
- The company reported no material litigation. Disclosure controls were deemed ineffective, with lack of segregation of duties identified as a material weakness; management said it did not plan to add staff to address it given cash constraints. No material changes in internal control over financial reporting were reported during the quarter.
Important facts for investors to verify
- Confirm the registrant’s identity: the filing is for Blackboxstocks Inc., despite the request identifying REALLOYS INC.
- Verify progress toward the September 2016 launch, actual subscription uptake, and the company’s ability to fund the stated $1 million to $2 million needs.
- Review the secured note’s terms and collateral, related-party transactions, and the status of the post-quarter share sale, including the difference between 220,000 shares agreed and 200,000 reported issued.
- Assess the going-concern warning, very low reported cash, working-capital deficit, and disclosed material weakness in disclosure controls.