BLACKBOXSTOCKS INC

Previous wording

The accompanying 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 Three Months ended March 31, 2024 the Company incurred an operating loss of $863,969 and a net loss of $863,711. In addition, 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. Cash flows used in operations were $353,803 for the three months ended March 31, 2024 and $(3,166,067) for the year ended December 31, 2023. The Company has cash and cash equivalents of $114,968 as of March 31, 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 Ltd (“Evtec”), whereby the Company expects to acquire all of the issued and outstanding share capital of Evtec with the result of Evtec becoming a wholly-owned subsidiary of the Company (the “Exchange”). in the Exchange will be accounted for as a reverse acquisition with Evtec being the accounting acquiror. The Company believes that the merger with Evtec will attract additional capital investment as Evtec 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 merger with Evtec.

Current wording

The accompanying 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 six months ended June 30, 2024, the Company incurred an operating loss of $1,718,823 and a net loss of $1,741,654. In addition, 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. Cash flows used in operations were $687,198 for the six months ended June 30, 2024, and $3,166,067 for the year ended December 31, 2023. The Company has cash of $1,055,482 as of June 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”). in the Exchange will be accounted for as a reverse acquisition with Evtec Aluminium being the accounting acquiror. The Company believes that the merger 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 acquisition of Evtec Aluminium.

Previous wording

At March 31, 2024, we had cash and marketable securities totaling $114,968 as compared to cash and marketable securities totaling $475,652 at December 31, 2023. Our cash flows used in operations were $353,803 for the three months ended March 31, 2024 as compared to $1,250,895 for the same period in the prior year.

Current wording

At June 30, 2024, we had cash and marketable securities totaling $1,055,482 as compared to cash and marketable securities totaling $475,652 at December 31, 2023. Our cash flows used in operations were $687,198 for the six months ended June 30, 2024, as compared to $2,717,168 for the same period in the prior year.

Previous wording

Net cash from investing activities for the three months ended March 31, 2024 was $3,303 as compared to $1,082,291 for the prior year period. The decrease in the cash flow from investing activities was due to the liquidation of marketable securities in order to fund the Company’s operations during the prior year. The volume of marketable securities includes trading activity in a Company account that was used to research and test specific trading techniques although the account held less than $100,000. We do not expect capital expenditures to be significant for the remainder of 2024.

Current wording

Net cash from investing activities for the six months ended June 30, 2024, was $3,303 as compared to $2,593,776 for the prior year period. The decrease in the cash flow from investing activities was due to the liquidation of marketable securities in order to fund the Company’s operations during the prior year. The volume of marketable securities includes trading activity in a Company account that was used to research and test specific trading techniques although the account held less than $100,000. We do not expect capital expenditures to be significant for the remainder of 2024.

Previous wording

Net cash used in financing activities was $7,229 for the three months ended March 31, 2024 as compared to $7,186 for the prior year period.

Current wording

Net cash provided by financing activities was $1,266,680 for the six months ended June 30, 2024, as compared to net cash used in financing activities of $29,622 for the prior year period. The increase in financing activities was the result of additional funding received in 2024 recorded as other liabilities and merchant cash advances.

Previous wording

As noted above, the Company intends to pursue the planned acquisition transaction with Evtec however there can be no assurance that it will be able to complete the transaction or that such a transaction will provide the Company with sufficient liquidity to fund its operations. In addition, the Company may need to raise additional debt or equity capital in order to fund its operations. There can be no assurance that the Company will be able to do so or on acceptable terms.

Current wording

As noted above, the Company intends to pursue the planned acquisition transaction with Evtec Aluminium however there can be no assurance that it will be able to complete the transaction or that such a transaction will provide the Company with sufficient liquidity to fund its operations. In addition, the Company may need to raise additional debt or equity capital in order to fund its operations. There can be no assurance that the Company will be able to do so or on acceptable terms.

Previous wording

For the three months ended March 31, 2024, our revenue was $649,420, as compared to $859,004, for the three months ended March 31, 2023. The decline in revenue of 24.4% was due to a combination of fewer subscribers and lower average revenue per subscriber. Average users for the three months ended March 31, 2024 was 2,944 as compared to 3,555 for the prior year period. Average monthly revenue per user was $71,99 for the three months ended March 31, 2024 as compared to $80,17 in the prior year period. The decline in average revenue per subscriber was due to the sale of a large number of two year subscriptions for $1,198 during the Black Friday Cyber Monday holiday promotions in 2023.

Current wording

For the three months ended June 30, 2024, our revenue was $684,712, as compared to $737,398, for the three months ended June 30, 2023. The decline in revenue of 7% was due to fewer subscribers in the current year that was partially offset by higher average revenue per subscriber. Average subscribers for the three months ended June 30, 2024, was 2,983 as compared to 3,987 for the prior year period. Average monthly revenue per subscriber was $72.18 for the three months ended June 30, 2024, as compared to $61.42 in the prior year period. The increase in average revenue per subscriber was due to a large promotion with heavily discounted memberships in the second quarter of 2023.

Previous wording

Cost of revenues for the three months ended March 31, 2024 and 2023 were $357,958 and $447,641, resulting in gross margins of 45% and 48%, respectively. The primary components of cost of revenues include costs related to data and news feed expenses for exchange information which comprise the majority of the costs, as well as the costs for program moderators. The gross margin percentage declined due to lower revenues and a higher percentage of fixed versus variable costs.

Current wording

Cost of revenues for the three months ended June 30, 2024, and 2023 were $356,017 and $426,975, resulting in gross margins of 48% and 42%, respectively. The primary components of cost of revenues include costs related to data and news feed expenses for exchange information which comprise the majority of the costs, as well as the costs for program moderators. The gross margin percentage is expected to remain between 45% and 50%.

Previous wording

For the three months ended March 31, 2024, operating expenses were $1,155,428 as compared to $2,358,177 for the same period in 2022, a decrease of $1,202,749 or 51%. We significantly reduced expenditures in software development costs, advertising and marketing and selling general and administrative expenses for the 2024 period. Selling, general and administrative expenses decreased from $1,777,634 for the three months ended March 31, 2023 to $905,929 for the three months ended March 31, 2024, a decrease of $871,705 or 49%. The decrease was primarily driven by lower stock-based compensation expense which was partially offset by higher professional fees associated with the pending Exchange with Evtec Aluminum. Advertising and marketing expenses decreased by $82,258 or 38% from $214,981 for the three months ended March 31, 2023 to $132,723 for the three months ended March 31, 2024 as the Company continues to reposition its marketing strategy. Software development costs decreased by $246,641 or 70% from $355,044 in the three months ended March 31, 2023 to $108,403 for the three months ended March 31, 20243. The decreased software development costs reflected lower development costs for our new product Stock Nanny as it nears release.

Current wording

For the three months ended June 30, 2024, operating expenses were $1,183,552 as compared to $1,741,722 for the same period in 2023, a decrease of $558,170 or 32%. We significantly reduced expenditures in software development costs, advertising and marketing and selling general and administrative expenses for the 2024 period. Selling, general and administrative expenses decreased from $1,350,378 for the three months ended June 30, 2023, to $938,249 for the three months ended June 30, 2024, a decrease of $412,129 or 31%. The decrease was primarily driven by lower stock-based compensation expense which was partially offset by higher professional fees associated with the pending Exchange with Evtec Aluminum. Advertising and marketing expenses decreased by $41,752 or 27% from $153,415 for the three months ended June 30, 2023, to $111,663 for the three months ended June 30, 2024, as the Company continues to reposition its marketing strategy. Software development costs decreased by $126,608 or 56% from $227,250 in the three months ended June 30, 2023, to $100,642 for the three months ended June 30, 2024. The decreased software development costs reflected lower development costs for our new product Stock Nanny.

Previous wording

Our loss from operations for the three months ended March 31, 2024, was $863,966 as compared to a loss from operations of $1,946,804 for the prior year period. The improvement in the loss from operations was driven by lower operating expenses and was partially offset by the lower sales and gross profits.

Current wording

Our loss from operations for the three months ended June 30, 2024, was $854,857 as compared to a loss from operations of $1,431,299 for the prior year period. The improvement in the loss from operations was driven by lower operating expenses and was partially offset by the lower sales.