10-Q 1 blkbx20240930_10q.htm FORM 10-Q blkbx20240930_10q.htm
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Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

 

 

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended

September 30, 2024

or

 

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from

  

to

  

 

Commission File No.

001-41051

 

BLACKBOXSTOCKS INC.

(Exact name of registrant as specified in its charter)

 

Nevada

45-3598066

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

 

5430 LBJ Freeway, Suite 1485, Dallas, Texas

75240

(Address of principal executive offices)

(Zip Code)

 

(972) 726-9203

(Registrant’s telephone number, including area code)

 

 

(Former name, former address and former fiscal year if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

BLBX

The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐

Accelerated filer ☐
   

Non-accelerated filer ☒

Smaller reporting company ☒
 

Emerging growth company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

The number of shares outstanding of the registrant’s Common Stock as of November 12, 2024 was 3,528,028.

 

 
Table of Contents

 

 

TABLE OF CONTENTS

 

   

Page

INTRODUCTORY COMMENT

1

CAUTION REGARDING FORWARD LOOKING STATEMENTS

1
   

PART I –FINANCIAL INFORMATION

2

Item 1.

Condensed Consolidated Financial Statements

2
 

Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023 (Unaudited)

2
 

Condensed Consolidated Statements of Operations for the Three and Nine months Ended September 30, 2024 and 2023 (Unaudited)

3
 

Condensed Consolidated Statement of Stockholders’ Equity for the Nine months Ended September 30, 2024 and 2023 (Unaudited)

4
 

Condensed Consolidated Statements of Cash Flows for the Nine months Ended September 30, 2024 and 2023 (Unaudited)

5
 

Notes to Condensed Consolidated Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

12

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

16

Item 4.

Controls and Procedures

16
     

PART II – OTHER INFORMATION

17

Item 1.

Legal Proceedings

17

Item 1A.

Risk Factors

17

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

17

Item 3.

Defaults Upon Senior Securities

18

Item 4.

Mine Safety Disclosures

18

Item 5.

Other Information

18

Item 6.

Exhibits

18
     

SIGNATURES

18

 

 
Table of Contents

 

 

INTRODUCTORY COMMENT

 

Throughout this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” “Blackboxstocks,” or the “Company” refers to Blackboxstocks Inc., a Nevada corporation.

 

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

 

Our prospects are subject to uncertainties and risks. In this Quarterly Report on Form 10-Q (the “Report”), we make forward-looking statements that involve substantial uncertainties and risks. When used in this Report, the words “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “intend,” and similar expressions are intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) regarding events, conditions and financial trends which may affect our future plans of operations, business strategy, operating results and financial position. Such statements are not guarantees of future performance and are subject to risks and uncertainties described herein and actual results may differ materially from those included within the forward-looking statements. Additional factors are described in our other public reports and filings with the Securities and Exchange Commission (the “SEC”). Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. We undertake no obligation to publicly release the result of any revision of these forward-looking statements to reflect events or circumstances after the date they are made or to reflect the occurrence of unanticipated events.

 

This Report contains certain estimates and plans related to us and the industry in which we operate, which assume certain events, trends and activities will occur and the projected information based on those assumptions. We do not know that all of our assumptions are accurate. If our assumptions are wrong about any events, trends and activities, then our estimates for future growth for our business may also be wrong. There can be no assurance that any of our estimates as to our business growth will be achieved.

 

The following discussion and analysis should be read in conjunction with our financial statements and the notes associated with them contained elsewhere in this Report. This discussion should not be construed to imply that the results discussed in this Report will necessarily continue into the future or that any conclusion reached in this Report will necessarily be indicative of actual operating results in the future. The discussion represents only the best assessment of management.

 

1
Table of Contents

 

PART I - FINANCIAL INFORMATION

 

Item 1.  Financial Statements

 

 

Blackboxstocks Inc.

Condensed Consolidated Balance Sheets

As of September 30, 2024 and December 31, 2023

(Unaudited)

 

   

September 30,

    

December 31,

  
   

2024

    

2023

  
                 

Assets

  

Current assets:

                

Cash

   $ 60,921     $ 472,697  

Accounts receivable, net of allowance for doubtful accounts of $-0- and $68,589 at September 30, 2024 and December 31, 2023, respectively

     3,799       18,212  

Inventory

     3,464       3,464  

Marketable securities

     -       2,955  

Other receivable

     -       475,000  

Note receivable

     1,100,000       -  

Prepaid expenses and other current assets

     51,248       35,161  

Total current assets

     1,219,432       1,007,489  
                 

Property and equipment:

                

Property and equipment, net

     8,394       52,281  

Right of use lease

     303,397       344,370  

Total property and equipment

     311,791       396,651  
                 

Investments

     8,424,000       8,424,000  
                 

Total assets

   $ 9,955,223     $ 9,828,140  
                 

Liabilities and Stockholders' Equity

  
                 

Current liabilities:

                

Accounts payable

   $ 1,378,668     $ 842,404  

Accrued interest

     1,613       1,613  

Unearned subscriptions

     739,054       1,295,514  

Lease liability right of use, current

     63,281       64,818  

Note payable, current portion

     17,874       28,064  

Merchant cash advance

     190,264       -  

Other liabilities

     1,043,000       -  

Total current liabilities

     3,433,754       2,232,413  
                 

Long term liabilities:

                

Note payable

     -       11,550  

Lease liability right of use, long term

     246,127       287,417  

Total long term liabilities

     246,127       298,967  
                 

Commitments and contingencies

            
                 

Stockholders' equity

                

Preferred stock, $0.001 par value, 5,000,000 shares authorized; no shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

     -       -  

Series A Convertible Preferred Stock, $0.001 par value, 5,000,000 shares authorized; 3,269,998 issued and outstanding at September 30, 2024 and December 31, 2023, respectively

     3,270       3,270  

Series B Convertible Preferred Stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

     -       -  

Common stock, $0.001 par value, 100,000,000 shares authorized: 3,528,028 and 3,223,015 issued and outstanding at September 30, 2024 and December 31, 2023, respectively

     3,528       3,223  

Treasury stock

     -       (27,650 )

Additional paid in capital

     28,275,922       26,802,808  

Accumulated deficit

     (22,007,378 )     (19,484,891 )

Total stockholders' equity

     6,275,342       7,296,760  
                 

Total liabilities and stockholders' equity

   $ 9,955,223     $ 9,828,140  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

2
Table of Contents

 

 

Blackboxstocks Inc.

Condensed Consolidated Statements of Operations

For the Three Months and Nine months Ended September 30, 2024 and 2023

(Unaudited)

 

   

For the three months ended

    

For the nine months ended

  
   

September 30,

    

September 30,

  
   

2024

    

2023

    

2024

    

2023

  

Revenue:

                                

Subscriptions

   $ 646,792     $ 727,218     $ 1,979,514     $ 2,316,856  

Other revenues

     1,050       1,250       2,460       8,014  

Total revenues

     647,842       728,468       1,981,974       2,324,870  
                                 

Cost of revenues

     293,426       327,928       1,007,401       1,202,534  
                                 

Gross margin

     354,416       400,540       974,573       1,122,336  
                                 

Operating expenses:

                                

Software development costs

     101,873       173,665       310,918       755,959  

Selling, general and administrative

     891,282       957,372       2,735,480       4,085,384  

Advertising and marketing

     92,891       127,632       337,277       496,028  

Loss on disposition of fixed assets

     -       -       29,940       -  

Depreciation and amortization

     2,536       11,100       13,947       32,297  

Total operating expenses

     1,088,582       1,269,769       3,427,562       5,369,668  
                                 

Operating loss

     (734,166 )     (869,229 )     (2,452,989 )     (4,247,332 )
                                 

Other (income) expense:

                                

Interest expense

     58       210       225       522  

Financing costs

     46,509       -       69,621       -  

Investment (income) loss

     -       (8,934 )     (348 )     (62,487 )

Other income

     -       (188,760 )             (188,760 )

Total other (income) expense

     46,667       (197,484 )     69,498       (250,725 )
                                 

Loss before income taxes

     (780,833 )     (671,745 )     (2,522,487 )     (3,996,607 )
                                 

Income Taxes

     -       -       -       -  
                                 

Net loss

     (780,833 )     (671,745 )     (2,522,487 )     (3,996,607 )
                                 
Weighted average number of common shares outstanding – basic and diluted     3,517,838       3,196,230       3,323,806       3,222,361  
                                 
Net loss per share – basic and diluted   $ (0.22 )   $ (0.21 )   $ (0.76 )   $ (1.24 )

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

3
Table of Contents

 

 

Blackboxstocks Inc.

Condensed Consolidated Statement of Stockholders’ Equity

For the Nine months Ended September 30, 2024 and 2023

(Unaudited)

 

   

Preferred Stock

    

Series A
Preferred Stock

    

Series B
Preferred Stock

    

Common Stock

    

Common

Stock

    

Treasury

    

Additional

Paid in

   

Accumulated

          
   

Shares

    

Amount

    

Shares

    

Amount

    

Shares

    

Amount

    

Shares

    

Amount

    

Payable

    

Stock

    

Capital

    

Deficit

    

Total

  
                                                                                                         

Balances, December 31, 2022

     -     $ -       3,269,998     $ 3,270       -     $ -       3,298,033     $ 3,298     $ 23,340     $ (1,102,375 )   $ 18,070,556     $ (14,820,436 )   $ 2,177,653  
                                                                                                         

Purchase of treasury stock

     -       -       -       -       -       -       -       -       -       (79,100 )     -       -       (79,100 )
                                                                                                         

Retirement of treasury stock

     -       -       -       -       -       -       (454,441 )     (454 )     -       1,181,475       (1,181,021 )     -       -  
                                                                                                         

Issuance of warrants for compensation

     -       -       -       -       -       -       -       -       -       -       31,880       -       31,880  
                                                                                                         

Issuance of options for compensation

     -       -       -       -       -       -       -       -       -       -       61,464       -       61,464  
                                                                                                         

Issuance of stock for compensation

     -       -       -       -       -       -       282,501       282       19,380       -       655,120       -       674,782  
                                                                                                         

Net loss

     -       -       -       -       -       -       -       -       -       -       -       (1,900,368 )     (1,900,368 )
                                                                                                         

Balances, March 31, 2023

     -     $ -       3,269,998     $ 3,270       -     $ -       3,126,093     $ 3,126     $ 42,720     $ -     $ 17,637,999     $ (16,720,804 )   $ 966,311  
                                                                                                         

Issuance of stock for fractional shares resulting from reverse split

     -       -       -       -       -       -       8,838       9       -       -       (9 )     -       -  
                                                                                                         

Purchase of treasury stock

     -       -       -       -       -       -       -       -       -       (15,291 )     -       -       (15,291 )
                                                                                                         

Issuance of warrants for compensation

     -       -       -       -       -       -       -       -       -       -       31,880       -       31,880  
                                                                                                         

Issuance of options for compensation

     -       -       -       -       -       -       -       -       -       -       245,810       -       245,810  
                                                                                                         

Issuance of stock for compensation

     -       -       -       -       -       -       49,754       50       (42,720 )     -       182,865       -       140,195  
                                                                                                         

Issuance of stock for investment

     -       -       -       -       2,400,000       2,400       -       -       -       -       8,421,600       -       8,424,000  
                                                                                                         

Net loss

     -       -       -       -       -       -       -       -       -       -       -       (1,424,494 )     (1,424,494 )
                                                                                                         

Balances, June 30, 2023

     -     $ -       3,269,998     $ 3,270       2,400,000     $ 2,400       3,184,685     $ 3,185     $ -     $ (15,291 )   $ 26,520,145     $ (18,145,298 )   $ 8,368,411  
                                                                                                         

Issuance of warrants for compensation

     -       -       -       -       -       -       -       -       -       -       31,880       -       31,880  
                                                                                                         

Issuance of options for compensation

     -       -       -       -       -       -       -       -       -       -       69,270       -       69,270  
                                                                                                         

Issuance of stock for compensation

     -       -       -       -       -       -       13,236       13       -       -       55,180       -       55,193  
                                                                                                         

Net loss

     -       -       -       -       -       -       -       -       -       -       -       (671,745 )     (671,745 )
                                                                                                         

Balances, September 30, 2023

     -     $ -       3,269,998     $ 3,270       2,400,000     $ 2,400       3,197,921     $ 3,198     $ -     $ (15,291 )   $ 26,676,475     $ (18,817,043 )   $ 7,853,009  
                                                                                                         

Balances, December 31, 2023

     -     $ -       3,269,998     $ 3,270       -     $ -       3,223,015     $ 3,223     $ -     $ (27,650 )   $ 26,802,808     $ (19,484,891 )   $ 7,296,760  
                                                                                                         

Issuance of warrants for compensation

     -       -       -       -       -       -       -       -       -       -       31,880       -       31,880  
                                                                                                         

Issuance of options for compensation

     -       -       -       -       -       -       -       -       -       -       65,286       -       65,286  
                                                                                                         

Issuance of stock for compensation

     -       -       -       -       -       -       3,120       3       -       -       17,497       -       17,500  
                                                                                                         

Net loss

     -       -       -       -       -       -       -       -       -       -       -       (863,711 )     (863,711 )
                                                                                                         

Balances, March 31, 2024

     -     $ -       3,269,998     $ 3,270       -     $ -       3,226,135     $ 3,226     $ -     $ (27,650 )   $ 26,917,471     $ (20,348,602 )   $ 6,547,715  
                                                                                                         

Issuance of warrants for compensation

     -       -       -       -       -       -       -       -       -       -       31,880       -       31,880  
                                                                                                         

Issuance of options for compensation

     -       -       -       -       -       -       -       -       -       -       65,286       -       65,286  
                                                                                                         

Issuance of stock for compensation

     -       -       -       -       -       -       -       -       -       -       7,500       -       7,500  
                                                                                                         

Retirement of treasury stock

     -       -       -       -       -       -       (10,607 )     (11 )     -       27,650       (27,639 )     -       -  
                                                                                                         

Net loss

     -       -       -       -       -       -       -       -       -       -       -       (877,943 )     (877,943 )
                                                                                                         

Balances, June 30, 2024

     -     $ -       3,269,998     $ 3,270       -     $ -       3,215,528     $ 3,215     $ -     $ -     $ 26,994,498     $ (21,226,545 )   $ 5,774,438  
                                                                                                         

Issuance of warrants for compensation

     -       -       -       -       -       -       -       -       -       -       21,256       -       21,256  
                                                                                                         

Issuance of options for compensation

     -       -       -       -       -       -       -       -       -       -       52,981       -       52,981  
                                                                                                         

Issuance of stock for compensation

     -       -       -       -       -       -       -       -       -       -       7,500       -       7,500  
                                                                                                         

Issuance of stock for cash

     -       -       -       -       -       -       312,500       313       -       -       1,199,687       -       1,200,000  
                                                                                                         

Net loss

     -       -       -       -       -       -       -       -       -       -       -       (780,833 )     (780,833 )
                                                                                                         

Balances, September 30, 2024

     -     $ -       3,269,998     $ 3,270       -     $ -       3,528,028     $ 3,528     $ -     $ -     $ 28,275,922     $ (22,007,378 )   $ 6,275,342  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4
Table of Contents

 

 

Blackboxstocks Inc.

Condensed Consolidated Statements of Cash Flows

For the Nine months Ended September 30, 2024 and 2023

(Unaudited)

 

   

For the nine months ended

  
   

September 30,

  
   

2024

    

2023

  

Cash flows from operating activities:

                

Net loss

   $ (2,522,487 )   $ (3,996,607 )

Adjustments to reconcile net loss to net cash used in operating activities:

                

Depreciation and amortization expense

     13,947       32,297  

Financing costs

     69,621       -  

Stock based compensation

     301,069       1,330,104  

Loss on disposition of assets

     29,940       -  

Right of use lease

     (1,854 )     -  

Investment (income) loss

     (348 )     (62,487 )

Changes in operating assets and liabilities:

                

Accounts receivable

     14,413       (22,485 )

Other receivable

     475,000       -  

Inventory

     -       12,000  

Prepaid expenses and other current assets

     (16,087 )     (148,373 )

Accounts payable

     468,893       107,238  

Other liabilities

     1,043,000       -  

Unearned subscriptions

     (556,460 )     (451,049 )

Net cash used in operating activities

     (681,353 )     (3,199,362 )
                 

Cash flows from investing activities:

                

Purchase of property and equipment

     -       (2,605 )

Purchase of marketable securities

     (9,273 )     (6,418,134 )

Sale of marketable securities

     12,576       9,694,625  

Issuance of note receivable

     (1,100,000 )     -  

Net cash (used in) provided by investing activities

     (1,096,697 )     3,273,886  
                 

Cash flows from financing activities:

                

Proceeds from issuance of common stock

     1,200,000       -  

Proceeds from merchant cash advance

     297,750       -  

Principal payments on notes payable

     (21,740 )     (21,523 )

Payments on merchant cash advance

     (109,736 )     -  

Purchase of treasury stock

     -       (15,291 )

Net cash provided by (used in) financing activities

     1,366,274       (36,814 )
                 

Net increase (decrease) in cash

   $ (411,776 )   $ 37,710  

Cash - beginning of period

     472,697       425,578  

Cash - end of period

   $ 60,921     $ 463,288  
                 

Supplemental disclosures:

                

Interest paid

   $ 224     $ 441  

Income taxes paid

   $ -     $ -  
                 

Non-cash investing and financing activities:

                

Retirement of treasury stock

   $ 27,650     $ 1,181,475  

Treasury stock purchased from related party with other assets

   $ -     $ 79,100  

Issuance of stock for investment

   $ -     $ 8,424,000  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

5
Table of Contents

 

Blackboxstocks Inc.

Notes to Condensed Consolidated Financial Statements

 

 

 

1. Organization

 

Blackboxstocks Inc. (the “Company”) was incorporated on October 4, 2011, under the laws of the State of Nevada under the name SMSA Ballinger Acquisition Corp. to effect the reincorporation of Senior Management Services of Heritage Oaks at Ballinger, Inc., a Texas corporation, mandated by a Plan of Reorganization confirmed by the United States Bankruptcy Court for the Northern District of Texas for reorganization under Chapter 11 of the United States Bankruptcy Code.

 

The Company changed its name to Blackboxstocks, Inc. and began operating as a financial technology and social media platform in March 2016. The platform offers real-time proprietary analytics and news for stock and options traders of all levels. The Company believes its web-based software employs “predictive technology” enhanced by artificial intelligence to find volatility and unusual market activity that may result in the rapid change in the price of a stock or option. The software continuously scans the NASDAQ, New York Stock Exchange, CBOE, and other options markets, analyzing over 10,000 stocks and up to 1,500,000 options contracts multiple times per second. The Company also provides users with a fully interactive social media platform that is integrated into our dashboard, enabling users to exchange information and ideas quickly and efficiently through a common network. Recently, the Company also introduced a live audio/video feature that allows members to broadcast on their own channels to share trade strategies and market insight within the community. The platform was initially made available to subscribers in September 2016. Subscriptions for the use of the platform are sold on a monthly and/or annual subscription basis to individual consumers through the Company website at http://blackboxstocks.com.

 

On April 1, 2024, the Company formed Blackbox.io Inc., a Delaware corporation, and on April 18, 2024, the Company and Blackbox.io Inc entered into a contribution agreement (the “Contribution Agreement”) pursuant to which the Company transferred certain specified business assets (the “Contributed Assets”) to Blackbox.io Inc. In consideration for the Contributed Assets, Blackbox.io Inc issued to the Company 3,226,145 shares of common stock, par value $0.001 per share and 3,369,998 shares of Series A convertible preferred stock, $0.001 par value per share, of Blackbox.io Inc, free and clear of all liens (the “Blackbox.io Operating Equity”), and assumed certain specified liabilities of the business of the Company (the “Assumed Liabilities”).

 

Simultaneously with the execution of the Contribution Agreement, the Company delivered fully executed documents of conveyance to effect the contribution of the Contributed Assets and the assignment of the Assumed Liabilities to Blackbox.io Inc, including (i) a bill of sale, (ii) an assignment and assumption agreement and (iii) an intellectual property assignment and Blackbox.io Inc delivered certificates and notices of issuance of stock transferable on the books of Blackbox.io Inc evidencing the issuance of the Blackbox.io Operating Equity.

 

As a result of the Contribution Agreement, Blackbox.io Inc. is a wholly-owned corporate subsidiary of the Company that now holds the Company’s legacy assets and continues its legacy business operations.

 

The Company is listed on the Nasdaq Capital Market (“Nasdaq”) under the symbol “BLBX”.

 

 

 

2. Summary of Significant Accounting Policies

 

Basis of Presentation The accompanying interim unaudited condensed consolidated financial statements and footnotes of Blackboxstocks Inc. have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and the instructions to Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, these unaudited condensed consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the results of the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2024. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

 

The accompanying condensed consolidated financial statements have been prepared in assumption of the continuation of the Company as a going concern, which is dependent upon the Company's ability to obtain sufficient financing or establish itself as a profitable business. For the year ended December 31, 2023, the Company incurred an operating loss of $5,297,671 and a net loss of $4,664,455. In addition, for the nine months ended September 30, 2024, the Company incurred an operating loss of $2,452,989 and a net loss of $2,522,487. Cash flows used in operations totaled $3,166,067 for the year ended December 31, 2023, and $681,353 for the nine months ended September 30, 2024. The Company had cash of $60,921 as of September 30, 2024. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company has executed a share exchange agreement with Evtec Aluminium Limited (“Evtec Aluminium”), whereby the Company expects to acquire all of the issued and outstanding share capital of Evtec Aluminium with the result of Evtec Aluminium becoming a wholly-owned subsidiary of the Company (the “Exchange”). The Exchange will be accounted for as a reverse acquisition with Evtec Aluminium being the accounting acquiror. The Company believes that the Exchange with Evtec Aluminium will attract additional capital investment as Evtec Aluminium is substantially larger than Blackbox and has a strong acquisition pipeline. Management has also implemented a number of initiatives aimed at improving operating cash flow including, new product development, revised marketing strategies and expense reductions. In addition, the Company has historically been able to raise debt or equity financing to meet its capital needs and is also evaluating strategic alternatives with respect to possible mergers or acquisitions. There can be no assurance that the Company’s operational changes will impact its cash flow or if it will be able to raise additional capital or on what terms or if it will be able to execute the planned Exchange with Evtec Aluminium.

 

The financial statements do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should the Company be unable to continue in operation.

 

Principles of Consolidation. The condensed consolidated financial statements include the accounts of Blackboxstocks Inc and its wholly owned subsidiary Blackbox.io Inc., a Delaware corporation. All intercompany transactions and account balances between the Company and its subsidiary have been eliminated in consolidation. Transactions with its consolidated subsidiary are generally settled in cash.

 

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Use of Estimates. The Company’s financial statement preparation requires that management make estimates and assumptions which affect the reporting of assets and liabilities and the related disclosure of contingent assets and liabilities in order to report these financial statements in conformity with GAAP. Actual results could differ from those estimates.

 

Segments. The Company operates as a single segment.

 

Cash. Cash includes all highly liquid investments that are readily convertible to known amounts of cash and have original maturities at the date of purchase of three months or less.

 

Investments in Marketable Securities. The Company has invested in marketable securities which primarily consist of investments in mutual funds that hold commercial and government debt securities. These investments are recorded at fair value based on quoted prices at the end of the Company’s reporting period. Any realized or unrealized gains or losses are recognized in the accompanying statements of operations.

 

Recently Issued Accounting Pronouncements. 

Recently Issued Accounting Pronouncements. In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2023-09 (“ASU 2023-09”), Income Taxes, which enhances the transparency of income tax disclosures by expanding annual disclosure requirements related to the rate reconciliation and income taxes paid. The amendments are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied on a prospective basis. Retrospective application is permitted. The Company is currently evaluating this ASU to determine its impact on the Company’s disclosures.

 

In November 2023, the FASB issued Accounting Standards Update 2023-07 (“ASU 2023-07”), Segment Reporting, which improves reportable segment disclosure requirements. ASU 2023-07 primarily enhances disclosures about significant segment expenses by requiring that a public entity disclosure significant segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of segment profit or loss. This ASU also (i) requires that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment, and a description of its composition; (ii) requires that all annual disclosures are provided in the interim periods; (iii) clarifies that if the CODM uses more than one measure of profitability in assessing segment performance and deciding how to allocate resources, that one or more of those measures may be reported; (iv) requires disclosure of the title and position of the CODM and a description of how the reported measures are used by the CODM in assessing segment performance and in deciding how to allocate resources; (v) requires that an entity with a single segment provide all new required disclosures. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 and requires retrospective application. Early adoption is permitted. The amendments under ASU 2023-07 relate to financial disclosures and its adoption will not have an impact on the Company’s results of operations, financial position or cash flows. The Company will adopt ASU 2023-07 for the annual reporting period ending December 31, 2024 and for interim reporting periods thereafter. Adoption is not expected to have any impact on the Company’s disclosures.

 

Earnings or (Loss) Per Share. Basic earnings per share (or loss per share), is computed by dividing the earnings (loss) for the period by the weighted average number of common stock shares outstanding for the period. Diluted earnings per share reflects the potential dilution of securities by including other potentially issuable shares of common stock, including shares issuable upon conversion of convertible securities or exercise of outstanding stock options and warrants, in the weighted average number of common shares outstanding for the period. Therefore, because including shares issuable upon conversion of convertible securities and/or exercise of outstanding options and warrants would have an anti-dilutive effect on the loss per share, only the basic earnings (loss) per share is reported in the accompanying financial statements for periods of loss.

 

The Company had total potential additional dilutive securities outstanding at September 30, 2024, as follows.

 

Series A Convertible Preferred Sha