Blackboxstocks Inc. — Q1 2016 Form 10-Q
Period: Three months ended March 31, 2016. The supplied filing is for Blackboxstocks Inc., not the “REALLOYS INC.” named in the request metadata; verify the intended issuer.
Business context
The company was developing an algorithm-driven market analytics platform for traders, intended for monthly or annual subscription sales. The filing describes the platform as still in development and reports no subscription revenue. The company changed its name from SMSA Ballinger Acquisition Corp. to Blackboxstocks Inc. effective March 9, 2016, following its combination with Tiger Trade Technologies.
Financial results and position
| Metric | Q1 2016 | Q1 2015 / comparison |
|---|---|---|
| Revenue | $0 | $0 |
| Operating expenses | $136,995 | $54,373 |
| Net loss | $136,995 | $54,373 |
| Operating cash flow | $(46,297) | $(149,042) |
| Cash at period end | $13,989 | $60,286 at Dec. 31, 2015 |
With no revenue or cost of operations, the company had no gross margin to report. Operating expenses rose $82,622 year over year: software development costs increased to $46,872 from $22,072, and general and administrative expense rose to $90,123 from $32,301. Basic loss per share was $0.01, versus $0.00 in Q1 2015.
At March 31, total assets were $139,593, including $111,014 in prepaid expenses to related parties; current liabilities were $71,657, all accounts payable. Working capital was approximately $53,760, but cash was only $13,989. The company reported no debt at quarter-end. On April 29, it received a $50,000 six-month secured promissory note bearing 10% annual interest, secured by company assets and personal property. Stockholders’ equity was $67,936, and accumulated deficit was $757,506.
Changes, outlook and risks
- Net loss increased by $82,622 compared with Q1 2015, while operating cash used decreased by $102,745. The company received no financing cash in Q1 2016, compared with $360,000 from common stock issuance in Q1 2015.
- Management expected to complete development and make the platform available to subscribers by the end of June 2016. The filing gives no quantified revenue or profit guidance.
- Management estimated a further $1 million to $2 million would be needed over the next 12 months for development and implementation. It anticipated seeking debt or equity financing and warned that financing and subscription success were uncertain.
- The filing states that substantial doubt exists about the company’s ability to continue as a going concern. Financial statements contain no adjustments for a possible inability to continue operations.
- Disclosure controls were judged ineffective. Management identified a material weakness from lack of segregation of duties, attributed to having one director and executive officer handling general administrative and financial matters; it did not plan to add staff to address this in light of cash constraints.
- Related-party matters include $111,014 in prepaid expenses to related parties at quarter-end and a sublease with an entity wholly owned by the CEO; Q1 rent expense was $10,676. No material litigation was reported.
Important facts for investors to verify
- Whether this Blackboxstocks filing is the intended issuer filing, given the REALLOYS INC. request metadata.
- Whether the platform launched as planned, attracted subscribers, and generated revenue after the reporting date.
- How the company funded its stated $1 million–$2 million requirements, including the terms and repayment or collateral status of the subsequent $50,000 note.
- The recoverability and use of related-party prepayments, and the amounts ultimately refunded or expensed.
- Whether disclosure-control weaknesses were remediated and whether the company remained a going concern.