Realloys Inc.: Form 10-Q for the period ended Jun 30, 2025

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, 2024, 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 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 six months ended June 30, 2025, the Company incurred an operating loss of $2,032,119 and a net loss of $2,098,402. In addition, for the year ended December 31, 2024, the Company incurred an operating loss of $3,309,064 and a net loss of $3,471,227. Cash flows used in operations were $1,693,863 for the six months ended June 30, 2025, and $705,725 for the year ended December 31, 2024. The Company had cash of $38,164 as of June 30, 2025.These conditions raise substantial doubt about the Company’s ability to continue as a going concern. On March 10, 2025, the Company entered into a Merger Agreement with RABLBX Merger Sub Inc., a Nevada Corporation, and wholly owned subsidiary of the Company (“Merger Sub”) and REalloys. Upon the terms and subject to the satisfaction of the conditions described in the Merger Agreement, REalloys is expected to merge with and into Merger Sub, at which time Merger Sub will cease to exist and REalloys is expected to become a wholly-owned subsidiary of the Company. At the Closing of the Merger, the holders of capital stock and outstanding instruments convertible into or exercisable for capital stock of REalloys will receive shares of common and preferred stock of the Company, $0.001 par value, based on an Exchange Ratio formula in the Merger Agreement or as otherwise agreed to in the Merger Agreement, which is subject to adjustment in the event the parties raise capital in excess of certain thresholds. Immediately following Closing, based upon the Exchange Ratio, pre-Closing stockholders of the Company are expected to collectively retain approximately 7.3% of the post-Close aggregate Company Common Stock and holders of REalloys capital stock and instruments convertible into or exercisable for capital stock of the REalloys will receive as merger consideration common and convertible preferred stock of Company Common Stock representing approximately 92.7% of the post-Close aggregate as common stock of the Company. The Company believes that REalloys will be able to raise substantial capital and REalloys has completed a financing that will provide $5,000,000 upon completion of the Merger. Closing of the Merger is subject to various customary closing conditions including but not limited to the SEC declaring the registration statement effective, approval of REalloys initial listing application by Nasdaq, and stockholder approval.

In addition, the Company entered into a Securities Purchase Agreement dated with Five Narrow Lane LP (“FNL”), on January 17, 2025 (which was later amended on January 27, 2025 pursuant to which the Company agreed to issue, and FNL agreed to purchase debentures (the “Purchase Agreement”). The Purchase Agreement provides for financing of up to an aggregate principal amount of $2,300,000 of convertible debentures of which $2,050,000 has been received. An additional $250,000 is expected to be funded when the Merger Registration Statement is declared effective by the SEC. There can be no assurance that the Merger with REalloys will be completed and the related financing will be received.

The Company has historically been able to raise capital in order to fund its operations and on January 31, 2025, the Company filed a shelf registration statement on Form S-3 for the sale of up to $50,000,000 of securities. Pursuant to General Instruction I.B.6 of Form S-3, in no event will we sell securities in a primary offering with a value exceeding more than one-third of our public float in any 12-month period so long as our public float remains below $75,000,000. There can be no assurance that the Company will be able to raise any capital or on acceptable terms.

On July 1, 2025 the Company entered into an At-The-Market Issuance Sales Agreement (the “ATM Agreement”) with Alexander Capital, L.P. (“Alexander Capital”). Pursuant to the ATM Agreement, the Company may from time to time issue and sell to or through Alexander Capital, acting as the Company’s sales agent, shares of the Company’s common stock, par value $0.001 per share (the “Shares”), having an aggregate offering price of up to $5,795,000. Sales of the Shares, if any, will be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended (the “Securities Act”). As sales agent, Alexander Capital will offer the Shares at prevailing market prices and will use its commercially reasonable efforts, consistent with its sales and trading practices, to sell on the Company’s behalf all of the Shares requested to be sold by the Company, subject to the terms and conditions of the ATM Agreement. As of August 12, 2025, the Company has raised gross proceeds of $618,829 from the ATM.

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, 2024, filed with the Securities and Exchange Commission on March 21, 2025.

Liquidity and Capital Resources

At June 30, 2025, we had cash totaling $38,164 as compared to cash totaling $17,036 at December 31, 2024. Our cash flows used in operations were $1,693,863 for the six months ended June 30, 2025, as compared to $687,198 for the six months ended June 30, 2024. 2024 cash flows from operations included $875,000 in cash flows from financial support provided by Evtec Aluminium Limited (“Evtec”) in connection with the transaction contemplated by our Share Exchange Agreement which was terminated in January 2025.

Net cash used in investing activities was $0 and $3,303 for the six months ended June 30, 2025 and 2024 respectively. We do not expect investing activities to require significant capital in the next twelve months.

Net cash provided by financing activities was $1,714,991 for the six months ended June 30, 2025, as compared to $1,266,680 for the prior year period. The 2025 financing activity cash flow was primarily due to proceeds from the sale issuance of our debenture to FNL in the amount of $2,050,000 which was partially offset by issuance costs and payments made on merchant cash advances. As noted above, the Company expects one additional funding from FNL remaining in the amount of $250,000 which is due upon the SEC declaring the Merger consideration registration statement on form S-4 effective. In addition, the Company has filed a shelf registration statement on form S-3 for the offering and sale of up to $50,000,000 in Company securities. Under the terms of the Purchase Agreement, we may have to utilize up to 50% of the proceeds from any sale of securities under the S-3 to repay the outstanding debentures held by FNL.

On July 1, 2025 the Company entered into an At-The-Market Issuance Sales Agreement (the “ATM Agreement”) with Alexander Capital, L.P. (“Alexander Capital”). Pursuant to the ATM Agreement, the Company may from time to time issue and sell to or through Alexander Capital, acting as the Company’s sales agent, shares of the Company’s common stock, par value $0.001 per share (the “Shares”), having an aggregate offering price of up to $5,795,000. Sales of the Shares, if any, will be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended (the “Securities Act”). As sales agent, Alexander Capital will offer the Shares at prevailing market prices and will use its commercially reasonable efforts, consistent with its sales and trading practices, to sell on the Company’s behalf all of the Shares requested to be sold by the Company, subject to the terms and conditions of the ATM Agreement. As of August 12, 2025, the Company has raised gross proceeds of $618,829 from the ATM from the sale of 85,000 shares of its common stock.

As noted above, the Company intends to pursue the planned Merger with REalloys, however there can be no assurance that it will be able to complete the Merger or that such Merger 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 June 30, 2025 and 2024

For the three months ended June 30, 2025, our revenue was $518,783, as compared to $684,712, for the three months ended June 30, 2024. The decline in revenue of 24.2% was due to fewer subscribers in the current year as well as slightly lower revenue per subscriber. Average subscribers for the three months ended June 30, 2025, was 2,707 as compared to 2,996 for the prior year period. Average monthly revenue per subscriber was $63.88 for the three months ended June 30, 2025, as compared to $76.11 in the prior year period. The lower average revenue per subscriber was driven by promotional offerings of $29.97 per month.

Cost of revenues for the three months ended June 30, 2025, and 2024 were $351,559 and $356,017, resulting in gross margins of 32.2% and 48.0%, 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 decrease in the gross profit margin was driven by lower absorption of fixed costs and lower average revenue per subscriber.

For the three months ended June 30, 2025, operating expenses were $1,310,677 as compared to $1,153,612 for the same period in 2024, an increase of $158,065 or 13.7%. Software development costs increased only slightly in the current period to $102,910. Selling, general and administrative expenses increased from $938,269 for the three months ended June 30, 2024, to $1,130,270 for the three months ended June 30, 2025. The increase of $192,001 was primarily driven by $96,916 in higher professional fees associated with the pending Merger with REalloys and $79,301 of higher stock-based compensation during the 2025 period. Advertising and marketing expenses decreased by $35,757 or 32.0% from $111,663 for the three months ended June 30, 2024, to $75,906 for the three months ended June 30, 2025, as the Company continues to reposition its marketing strategy. The Company may incur additional marketing expense in connection with its educational products the during the balance of 2025.

Our loss from operations for the three months ended June 30, 2025, was $1,144,453 as compared to a loss from operations of $824,917 for the prior year period.

Other income and expense included $37,896 in interest expense primarily related to the debenture issued in 2025 as well as amortization of financing costs of $77,168 related to the FNL debentures. Financing costs related to the merchant cash advances were $10,752 for the quarter ended June 30, 2025 and will terminate in the third quarter. Other income and expense for the quarter ended June 30, 2024 included financing expenses of $23,012 related to merchant cash advances and $29,940 on the loss on disposition of assets.

Comparison of Six Months Ended June 30, 2025 and 2024

For the six months ended June 30, 2025, our revenue was $1,105,861, as compared to $1,334,132, for the six months ended June 30, 2024. The decline in revenue of 17.1% was due to fewer subscribers in the current year as well as slightly lower revenue per subscriber. Average subscribers for the six months ended June 30, 2025, was 2,709 as compared to 2,989 for the prior year period. Average monthly revenue per subscriber was $66.50 for the six months ended June 30, 2025, as compared to $74.31 in the prior year period. The lower average revenue per subscriber was driven by promotional offerings of $29.97 per month.

Cost of revenues for the six months ended June 30, 2025, and 2024 were $694,562 and $713,975, resulting in gross margins of 37.2% and 46.5%, 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 decrease in the gross profit margin was driven by lower absorption of fixed costs and lower average revenue per subscriber.

For the six months ended June 30, 2025, operating expenses were $2,442,418 as compared to $2,309,040 for the same period in 2024, an increase of $133,378 or 5.87%. Software development costs of $208,892 for the six months ended June 30, 2025 were approximately the same as the prior year. Selling, general and administrative expenses increased from $1,844,198 for the six months ended June 30, 2024, to $2,088,791 for the six months ended June 30, 2025. The increase of $244,593 was primarily driven by $217,372 in higher professional fees associated with the pending Merger with REalloys. Advertising and marketing expenses decreased by $103,151 or 42.2% from $244,386 for the six months ended June 30, 2024, to $141,235 for the six months ended June 30, 2025, as the Company continues to reposition its marketing strategy. The Company may incur additional marketing expense in connection with its educational products the during the balance of 2025.

Our loss from operations for the six months ended June 30, 2025, was $2,031,119 as compared to a loss from operations of $1,688,883 for the prior year period. The increase in the loss from operations of $342,236 was due to lower gross profits and higher operating expenses as discussed above.

Other income and expense for the six months ended June 30, 2025 was $67,283 consisting primarily of interest and amortization of debt issuance costs relate to the dentures totaling $132,104 and other financing costs of $92,725 which were partially offset by other income relating to employee retention credits.

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. 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:

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Off Balance Sheet Arrangements

As of June 30, 2025, we did not have any material off-balance sheet arrangements.

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.

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 June 30, 2025, pursuant to Exchange Act Rule 13a-15. Such disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Based upon that evaluation, our principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures as of June 30, 2025, were effective as of the end of the period covered by this Quarterly Report.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal controls over financial reporting during the quarter ended June 30, 2025, 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.

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 March 21, 2025 for the year ended December 31, 2024, as supplemented by the "Risk Factors" sections in our registration statement on Form S-4 filed with the SEC on April 14, 2025, as amended on June 3, 2025 and July 2, 2025, our registration statements on Form S-3 filed with the SEC on January 31, 2025 and April 15, 2025 (as amended on May 1, 2025), and the information contained elsewhere in this Report. The risks and uncertainties described within our Form 10-K for the year ended December 31, 2024 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.