ALOY

Business Context and Reporting Period

Company: Blackboxstocks Inc. (trading symbol: BLBX), a financial technology and social media hybrid platform providing real-time proprietary analytics for stock and options traders.

Reporting Period: Fiscal year ended December 31, 2025.

Business Model: Subscription-based Software as a Service (SaaS) offering tiered monthly and annual plans ranging from $59 to $1,430. The company also generates revenue from educational courses ("Blackbox Academy") and referral fees.

Key Development: The company entered into a definitive Merger Agreement with REalloys Inc. in March 2025. Upon closing, the company is expected to be renamed "REalloys Inc." and current Blackboxstocks shareholders are expected to retain approximately 7.3% of the post-merger equity.

Key Financial Metrics

Note: Debt figures exclude lease liabilities and accrued interest. Current liabilities include a Senior Secured Convertible Debenture of $252,030 (net of issuance costs) and a Convertible Note Payable of $164,000.

Material Changes vs. Prior Period

• Revenue Decline: Total revenue decreased by 5.3% ($135,713) primarily due to a 3.4% decrease in average subscriber count (2,897 in 2025 vs. 2,998 in 2024). This was partially offset by new revenue streams from educational seminars.
• Margin Expansion: Gross margin percentage improved from 44.0% to 48.0% due to lower costs on certain data feeds.
• Expense Increase: Operating expenses increased by 17.0% ($755,687). This was driven largely by a $1.365 million increase in stock-based compensation and higher professional fees related to the merger. Advertising and marketing expenses decreased by $164,298.
• Debt Financing: The company significantly increased leverage in 2025, issuing Senior Secured Convertible Debentures totaling approximately $2.3 million (with $2.05 million received in 2025) to fund operations and the merger.

Guidance, Outlook, Risks, and Unusual Items

Outlook and Merger Status:

• The company is in the final stages of the merger with REalloys Inc. The SEC declared the Form S-4 registration statement effective on January 16, 2026, and stockholders approved the merger on January 30, 2026.
• Management expects the combined entity to have greater access to capital markets.
• The company has an At-The-Market (ATM) equity offering agreement allowing for the sale of up to $5.795 million of common stock; $2.146 million had been sold as of February 19, 2026.

Risks and Contingencies:

• Going Concern: The company incurred recurring losses and negative cash flows, raising substantial doubt about its ability to continue as a going concern absent the merger or additional financing.
• Dilution: Current shareholders face significant dilution, retaining only ~7.3% of the post-merger company.
• Debt Covenants: The Senior Secured Convertible Debenture is secured by substantially all company assets and matures upon the earlier of March 10, 2026, or the merger closing.

Unusual Items:

• Investment Loss: Recorded a $30,000 loss on the revaluation of an investment in Evtec Group Holdings Limited due to a discount for lack of marketability.
• Gain on Settlement: Recognized a $93,000 gain on the settlement of advances from Evtec Aluminium Limited.

Investor Verification Checklist

• Merger Closing Conditions: Verify the final closing date of the REalloys merger and confirm the exchange ratio applied to existing shareholders.
• Debt Conversion: Confirm the terms of the conversion of the Senior Secured Convertible Debenture and Convertible Note Payable into equity or Series C Preferred Stock post-merger.
• Liquidity Position: Monitor cash burn rates and the utilization of the remaining ATM offering capacity ($3.65 million remaining).
• Subscriber Trends: Track subscriber retention and churn rates following the 2025 pricing model changes to a tiered structure.
• Going Concern Status: Review the auditor's report and subsequent filings to confirm the resolution of the "substantial doubt" regarding the company's ability to continue operations.