# Realloys Inc.: Form 10-Q for the period ended Sep 30, 2023

- Company: [Realloys Inc.](/companies/aloy.md) (CIK 1567900)
- Form: 10-Q
- Filed: 2023-11-14
- Accepted by EDGAR: Nov 14, 2023, 15:22 ET
- Period: 2023-09-30
- Accession: 0001437749-23-031931
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1567900/000143774923031931/blkbx20230930_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1567900/000143774923031931/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-07-01 to 2023-09-30 | $728.5k | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Revenue | 9 months, 2023-01-01 to 2023-09-30 | $2.3m | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Cost of revenue | 3 months, 2023-07-01 to 2023-09-30 | $327.9k | us-gaap:CostOfRevenue |
| Cost of revenue | 9 months, 2023-01-01 to 2023-09-30 | $1.2m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2023-07-01 to 2023-09-30 | $400.5k | us-gaap:GrossProfit |
| Gross profit | 9 months, 2023-01-01 to 2023-09-30 | $1.1m | us-gaap:GrossProfit |
| Operating income | 3 months, 2023-07-01 to 2023-09-30 | −$869.2k | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-01-01 to 2023-09-30 | −$4.2m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2023-07-01 to 2023-09-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-01-01 to 2023-09-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | −$671.7k | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-01-01 to 2023-09-30 | −$4.0m | us-gaap:NetIncomeLoss |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | −$0.21 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | −$1.24 | us-gaap:EarningsPerShareBasic |
| Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | −$3.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2023-01-01 to 2023-09-30 | $2.6k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2023-09-30 | $463.3k | us-gaap:Cash |
| Current assets | at 2023-09-30 | $810.5k | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-30 | $9.6m | us-gaap:Assets |
| Current liabilities | at 2023-09-30 | $1.5m | us-gaap:LiabilitiesCurrent |
| Shareholders' equity | at 2023-09-30 | $7.9m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 16,162 characters.

We urge you to read the following discussion in conjunction with management’s discussion and analysis contained in our Annual Report on Form 10-K for the year ended December 31, 2022 as well as with our financial statements and the notes thereto included elsewhere herein. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed in the section titled “*Risk Factors”* and elsewhere in this Report.

### Overview

Blackboxstocks, Inc. is a financial technology and social media hybrid platform offering real-time proprietary analytics and news for stock and options traders of all levels. Our web-based software (the “Blackbox System”) 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. We continuously scan the New York Stock Exchange (“NYSE”), NASDAQ, Chicago Board Options Exchange (the “CBOE”) and other options markets, analyzing over 10,000 stocks and over 1,500,000 options contracts multiple times per second. We provide our users with a fully interactive social media platform that is integrated into our dashboard, enabling our users to exchange information and ideas quickly and efficiently through a common network. We have also introduced a live audio/video feature that allows our members to broadcast on their own channels to share trading strategies and market insight within the Blackbox community. We employ a subscription based Software as a Service (“SaaS”) business model and maintain a growing base of users that spans over 40 countries.

We believe the Blackbox System is a unique and disruptive financial technology platform combining proprietary analytics and broadcast enabled social media to connect traders of all types worldwide on an intuitive, user-friendly system. The complexity of our backend analytics is neatly hidden from the end user by our simple and easy to navigate dashboard which includes real-time alerts, scanners, financial news, institutional grade charting and proprietary analytics.

We launched the Blackbox System web application for domestic use and made it available to subscribers in September 2016. Subscriptions for the use of the Blackbox System web application are sold on a monthly and/or annual subscription basis to individual consumers through our website at https://blackboxstocks.com.

Our principal office is located at 5430 LBJ Freeway, Suite 1485, Dallas, Texas 75240 and our telephone number is (972) 726-9203. Our Common Stock is quoted on the Nasdaq Stock Market LLC (the “Nasdaq”) under the symbol “BLBX.” Our corporate website is located at https://blackboxstocks.com. We are not including the information contained in our website as part of, or incorporating it by reference into, this Report on Form 10-Q.

### Basis of Presentation

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 nine months ended September 30, 2023 the Company incurred an operating loss of $4,247,332 and a net loss of $3,996,607. In addition, for the year ended December 31, 2022, the Company incurred an operating loss of $4,546,026 and a net loss of $5,019,882. Cash flows used in operations were $3,199,362 for the nine months ended September 30, 2023 and $4,285,039 for the year ended December 31, 2022. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management has implemented a number of initiatives aimed at improving operating cash flow including new product development, revised marketing strategies and expense reductions. In addition to the operating initiatives, the Company has executed a binding letter of intent to undertake an acquisition of Evtec Group Limited and Evtec Aluminium Limited (collectively “Evtec”). Evtec is a supplier of proprietary parts for leading luxury, performance, and electric vehicle “EV” brands including Jaguar Land Rover, Aston Martin, and Ford, among many others. The Company intends to acquire Evtec by issuing common shares sufficient to give Evtec approximately 91.6% of the total post-acquisition common shares outstanding via a reverse merger. Evtec has substantially larger operations than the Company. In addition, the Company has historically been able to raise debt or equity financing to meet its capital needs. There can be no assurance that the Company’s operational changes will impact its cash flow or, whether or not the Company will be able to complete the proposed transaction or if that transaction will provide sufficient cash flow or capital to meet the Company’s needs or if it will be able to raise additional capital or on acceptable terms.

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.

### Significant Accounting Policies

There have been no changes from the Summary of Significant Accounting Policies described in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission on April 14. 2023.

### Liquidity and Capital Resources

At September 30, 2023, we had cash and marketable securities totaling $465,564 as compared to cash and marketable securities totaling $3,641,858 at December 31, 2022. Our cash flows used in operations were $3,199,362 for the nine months ended September 30, 2023 as compared to $3,493,223 for the same period in the prior year.

Net cash from investing activities for the nine months ended September 30, 2023 was $3,273,886 as compared to 2,886,780 for the prior year period. The increase in the cash flow from investing activities was due to the liquidation of marketable securities in order to fund the Company’s operations. The volume of marketable securities includes trading activity in a Company account that is used to research and test specific trading techniques although the account holds less than $100,000. We do not expect capital expenditures to be significant for the remainder of 2023.

Net cash used in financing activities was $36,814 for the nine months ended September 30, 2023 as compared to $1,176,526 for the prior year period. The repayment of $21,523 in debt was the primary component of the use of cash in the nine months ended September 30, 2023. During the nine months ended September 30, 2022, the Company made treasury stock purchases totaling $1,065,216 which accounted for the majority of the higher use of cash.

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.

### Results of Operations

### Comparison of Three Months Ended September 30, 2023 and 2022

For the three months ended September 30, 2023, our revenue was $728,468, as compared to $1,219,150, for the three months ended September 30, 2022. We believe 2023 revenues continue to be adversely impacted by sluggish macro-economic issues compounded by a significant increase in the number of competitors. Average users for the three months ended September 30, 2023 was 3,174 as compared to 5,197 for the prior year period. Average monthly revenue per user was $76.37 for the three months ended September 30, 2023 as compared to $78.19 in the prior year period.

Cost of revenues for the three months ended September 30, 2023 and 2022 were $327,928 and $492,991, resulting in gross margins of 55% and 60%, 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.

For the three months ended September 30, 2023, operating expenses were $1,269,769 as compared to $1,924,460 for the same period in 2022, a decrease of $654,691 or 34%. We significantly reduced expenditures in software development costs, advertising and marketing and selling general and administrative expenses for the 2023 period. Selling, general and administrative expenses decreased from $1,199,233 for the three months ended September 30, 2022 to $957,372 for the three months ended September 30, 2023, a decrease of $241,861 or 20%. The decrease was primarily driven by lower compensation expense. Advertising and marketing expenses decreased by $289,801 or 69% from $417,433 for the three months ended September 30, 2022 to $127,623 for the three months ended September 30, 2023 as the Company continues to reposition its marketing strategy. Software development costs decreased by $128,608 or 43% from $302,273 in the three months ended September 30, 2022 to $173,665 for the three months ended September 30, 2023. The decreased software development costs reflected lower development costs for our new product Stock Nanny as it nears release.

We continue to pursue reductions in our operating expenses. With the exception of the unusually high stock compensation expense incurred in the first two quarters this year we expect our selling general and administrative expenses to remain stable or decrease. Our software development costs should decline as we finalize the release of Stock Nanny. Advertising and Marketing expenses will stay at or near their current level until we launch Stock Nanny.

Our loss from operations for the three months ended September 30, 2023, was $869,229 as compared to a loss from operations of $1,198,301 for the prior year period. Lower sales combined with operating expenses driven by stock-based compensation resulted in the loss from operations. Non-operating income for the three months ended September 30, 2023, was $197,484 as compared to non-operating expense of $110,141 for the prior year period. Other income for the three months ended September 30, 2023 included $188,760 for expected tax credits from the Care’s Act Employee Retention Credit less estimated expenses.

### Comparison of Nine Months Ended September 30, 2023 and 2022

Revenues for nine months ended September 30, 2023 were $2,324,870 as compared to $3,890,951 for the nine months ended September 30, 2023. We believe the decline of $1,566,081 or 40% was due to the macro-economic conditions discussed above as well as an increase in the number of competitors for the Company’s product. Average member count for the nine months ended September 30, 2023 was 3,564 as compared to 5,695 for the prior year period. Average monthly revenue per user was $72.23 for the nine months ended September 30, 2023 as compared to $75.64 for the prior year

Cost of revenues for the nine months ended September 30, 2023 was 1,202,534 as compared to $1,572,380 for the nine months ended September 30, 2022. Gross margin was $1,122,336 or 48% for the nine months ended September 30, 2023 as compared to $2,318,571 or 60% for the prior year period.

Operating expenses for the nine months ended September 30, 2023 were $5,369,668 or $337,124 less than the same period in 2022. Software development costs of $755,959 for the nine months ended September 30, 2023 were $76,184 or 9% lower than the same period in 2022 due to higher development costs incurred in the first quarter of 2023 for Stock Nanny, offset by decreased costs in the second and third quarters. Selling, general and administrative costs of $4,085,384 for the nine months ended September 30, 2023 were $469,954 higher than the same period in 2022. This increase was caused by stock compensation expense of $1,330,104 for the nine months ended September 30, 2023 which was $964,802 higher than the same period in 2022. Advertising and marketing expenses were $496,028 for the nine months ended September 30, 2023 or 60% lower than the same period in 2022.

Loss from operations was $4,247,332 as compared to $3,388,221 for the nine months ended September 30 2023 and 2022 respectively. The higher loss in the 2023 period was caused by lower revenues and gross margin as well as higher stock compensation expense which was only partially offset by lower software development costs and advertising and marking expenses.

Other income was $250,725 for the nine months ended September 30, 2023 as compared to other expense of $478,763 for the prior year period. The 2022 period included investment losses on the companies fixed income portfolio of $352,601 as well as higher interest expense on the Company’s senior debt which was repaid in 2022. As discussed above, the 2023 amounts include expected tax credits of $188,760.

### EBITDA (Non-GAAP Financial Measure)

We report our financial results in accordance with accounting principles generally accepted in the United States of America (“GAAP”). However, management believes the presentation of certain non-GAAP financial measures provides useful information to management and investors regarding financial and business trends relating to the Company’s financial condition and results of operations, and that when GAAP financial measures are viewed in conjunction with the non-GAAP financial measures, investors are provided with a more meaningful understanding of the Company’s ongoing operating performance. In addition, these non-GAAP financial measures are among the primary indicators management uses (i) to compare operating performance on a consistent basis, (ii) for planning purposes including the preparation of its internal annual operating budget and (iii) as a basis for evaluating performance. For all non-GAAP financial measures in this release, we have provided corresponding GAAP financial measures for comparative purposes in the report.

EBITDA is defined by us as net income (loss) before interest expense, income tax, depreciation and amortization expense and certain non-cash transactions. EBITDA is not a measure of operating performance under GAAP and therefore should not be considered in isolation nor construed as an alternative to operating profit, net income (loss) or cash flows from operating, investing or financing activities, each as determined in accordance with GAAP. Also, EBITDA should not be considered as a measure of liquidity. Moreover, since EBITDA is not a measurement determined in accordance with GAAP, and thus is susceptible to varying interpretations and calculations, EBITDA, as presented, may not be comparable to similarly titled measures presented by other companies.

The following table sets forth a reconciliation of net loss to EBITDA:

|  | Three Months Ended September 30, 2023 | 2022 | Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| Net income (loss) | $(671,745) | $(1,308,442) | $(3,996,607) | $(3,866,984) |
| Adjustments: |  |  |  |  |
| Interest expense | 210 | 28,025 | 522 | 86,220 |
| Investment (income) loss | (8,934) | 68,802 | (62,487) | 352,601 |
| Depreciation and amortization | 11,100 | 5,521 | 32,297 | 16,646 |
| Amortization of debt discount | - | 13,314 | - | 39,942 |
| Stock based compensation | 156,343 | 117,090 | 1,330,104 | 365,302 |
| Total adjustments | $158,719 | $232,752 | $1,300,436 | $860,711 |
| EBITDA | $(513,026) | $(1,075,690) | $(2,696,171) | $(3,006,273) |

15

### Off Balance Sheet Arrangements

As of September 30, 2023, we did not have any material off-balance sheet arrangements.

## Market risk

As filed, 168 characters.

We are a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act, and as such, we are not required to provide the information required under this Item.

## Controls and procedures

As filed, 2,960 characters.

### Evaluation of Disclosure Controls and Procedures

Gust Kepler, our principal executive officer and Robert Winspear, our principal financial officer, conducted an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) as of September 30, 2023, pursuant to Exchange Act Rule 13a-15. Such disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company is accumulated and communicated to the appropriate management on a basis that permits timely decisions regarding disclosure. Based upon that evaluation, our principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures as of September 30, 2023, were effective to provide reasonable assurance that information required to be disclosed in the Company’s periodic filings under the Exchange Act is accumulated and communicated to our management to allow timely decisions regarding required disclosure.

### Changes in Internal Control Over Financial Reporting

There were no changes in our internal controls over financial reporting during the quarter ended September 30, 2023, that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.

### Limitations on the Effectiveness of Controls

Our disclosure controls and procedures provide our principal executive officer and principal financial officer with reasonable assurances that our disclosure controls and procedures will achieve their objectives. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting can or will prevent all human error. A control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Furthermore, the design of a control system must reflect the fact that there are internal resource constraints, and the benefit of controls must be weighed relative to their corresponding costs. Because of the limitations in all control systems, no evaluation of controls can provide complete assurance that all control issues and instances of error, if any, within our company are detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur due to human error or mistake. Additionally, controls, no matter how well designed, could be circumvented by the individual acts of specific persons within the organization. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated objectives under all potential future conditions.

## Risk factors

As filed, 907 characters.

Important risk factors that could affect our operations and financial performance, or that could cause results or events to differ from current expectations, are described in Part I, Item 1A, "*Risk Factors”* of our Annual Report on Form 10-K filed with the SEC on April 14, 2023 for the year ended December 31, 2022, as supplemented by the "*Risk Factors*" sections in our registration statement on Form S-1 filed with the SEC on October 5, 2021, as amended on November 5, 2021 and the information contained elsewhere in this Report. The risks and uncertainties described within our Form 10-K for the year ended December 31, 2022 and the registration statement, as amended, are not the only risks we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business or results of operations.

Filed Nov 14, 2023.
Source: SEC EDGAR, the filing index for accession 0001437749-23-031931. Last ingested by Listed: Nov 12, 2026, 21:55 ET. No prices; not investment advice.