Blackboxstocks Inc. — FY2021 Form 10-K
Entity note: The supplied filing is for Blackboxstocks Inc. (NASDAQ: BLBX), not REALLOYS INC. It reports the fiscal year ended December 31, 2021; the filing does not provide standalone fourth-quarter results.
Business context and reporting period
Blackboxstocks operates a subscription-based financial technology platform combining real-time stock and options analytics, news, social features, and trader education. It listed on Nasdaq in November 2021 and completed an IPO of 2.4 million shares at $5 per share.
Financial performance and liquidity
| Metric | FY2021 | FY2020 |
|---|---|---|
| Revenue | $6.11 million | $3.37 million |
| Gross margin | $4.26 million; 69.7% | $2.17 million; 64.3% |
| Operating expenses | $6.54 million | $2.58 million |
| Operating loss | $2.28 million | $0.41 million |
| Net loss | $2.62 million; $0.27 per share | $0.35 million; $0.04 per share |
| EBITDA (non-GAAP) | $(0.89) million | $(0.30) million |
| Cash from operations | $(0.67) million* | $0.14 million |
At year-end, cash was $2.43 million and marketable securities were $8.02 million, for combined cash and securities of $10.44 million. Total current assets were $10.70 million and current liabilities $2.93 million. Total assets were $11.15 million and stockholders’ equity $7.82 million.
The senior secured loan had $990,000 of principal outstanding at year-end, bears 12% interest, and was scheduled to mature November 12, 2022; $10,000 monthly principal payments had begun. The balance sheet reports $943,403 net of debt issuance costs as current. The company also reported $96,795 remaining on a 1% PPP loan, amended to mature in 2025. No income tax provision was recorded; approximately $7.04 million of net operating losses were fully offset by a valuation allowance.
Material changes versus FY2020
- Revenue increased 81.5%, primarily from subscriber growth, while subscription prices remained generally unchanged.
- Gross margin rose from 64.3% to 69.7%, which management attributed to fixed-cost leverage.
- Operating expenses increased 153.5%. Software development spending rose substantially, and selling, general and administrative costs included $1.35 million of stock-based compensation, including a one-time $400,000 charge for shares issued to a related party in connection with the Nasdaq listing.
- Net loss widened as expense growth outpaced revenue growth. FY2020 other income included a $1.16 million gain on a derivative liability; FY2021 included $247,522 of debt-discount and issuance-cost amortization.
- FY2021 financing cash flow of $10.19 million was driven primarily by the IPO. The company invested $8.00 million in marketable securities.
Outlook, commentary, and key risks
Management said it expects adequate resources for current operations and debt service and does not expect to need significant new debt or equity financing for existing operations in the near term. It expects capital expenditures to remain near current levels and gross margin percentages to be broadly consistent. Management anticipated continued development spending in 2022, but stated the timing and amount of increases were uncertain.
Planned initiatives included a full-featured iOS and Android app, expected in April 2022; a portfolio-management app, expected in the third or fourth quarter of 2022; a cryptocurrency analytics and trading platform, expected in 2022; and possible expansion to overseas exchanges in late 2022 or 2023. These are plans, not assurances of launch or commercial success.
Key risks include subscriber retention and demand normalization after pandemic-related growth, intense competition, execution and scaling challenges, reliance on third-party market data and SaaS providers, cybersecurity and service interruptions, limited protection of intellectual property, and Nasdaq listing requirements. CEO Gust Kepler controls more than 50% of voting power; the company qualifies as a controlled company. The company reported no material pending litigation and no off-balance-sheet arrangements. Management concluded disclosure controls and internal control over financial reporting were effective, with no material weaknesses; the auditor did not attest to internal-control effectiveness.
Subsequent events: In January 2022 the board authorized up to $2.5 million in share repurchases. By March 28, 2022, 430,171 shares had been repurchased for $837,520. In March 2022, the lender amended the debt-service-coverage-ratio measurement date, curing what otherwise would have been a covenant breach for the quarter ended December 31, 2021.
Important facts for investors to verify
- Confirm the intended issuer: the filing is for Blackboxstocks Inc., not REALLOYS INC.
- Reconcile operating cash flow: MD&A states $(672,845), while the cash flow statement reports $(672,485).
- Review the loan amendment, covenant status, repayment schedule, and the stated November 2022 maturity.
- Assess whether subscriber growth and planned product launches can support revenue and profitability as spending rises.
- Review dilution and control: year-end shares outstanding, equity awards and warrants, the CEO’s voting control, and the subsequent repurchases.
- Consider related-party transactions and stock-based compensation, including the $400,000 Nasdaq-listing-related share award.