What changed in this filing

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Item 1. Business

2021-03-31 compared with 2020-04-16 · 32 added, 59 removed, 41 unchanged (69% of the section changed)

Our Corporate History and Background

The Company was organized 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.

Reverse Acquisition of Tiger Trade

On December 1, 2015, the Company entered into a Share Exchange Agreement (the “Exchange Agreement”), by and among the Company, Tiger Trade Technologies, Inc.

(“Tiger Trade”), a Texas corporation and the stockholders of Tiger Trade.

Under the terms and conditions of the Exchange Agreement, the Company offered and sold 17,900,000 newly issued shares of Company Common Stock, par value $0.001 ("Common Stock") and 5,000,000 newly issued shares of Series A Convertible Preferred Stock, par value $0.001 per share (the “Company Preferred Stock”) in consideration for all the issued and outstanding shares of Tiger Trade capital stock.

The effect of the issuance was that, upon closing of the Exchange Agreement transaction, former Tiger Trade stockholders held approximately 85.91% of the issued and outstanding shares of Company Common Stock and 100% of the issued and outstanding shares of Company Preferred Stock.

As a condition precedent to consummation of the Exchange Agreement, Orsolya Peresztegi, the Company’s sole officer and director on the closing date of the transaction, effected the cancellation of 7,095,602 shares of Company Common Stock pursuant to a Cancellation Agreement effective as of the Exchange Agreement closing date.

Under the terms of the Cancellation Agreement, Tiger Trade paid Ms.

Peresztegi a cancellation fee of Two Hundred Forty-Five Thousand Dollars ($245,000).

As a result of the Exchange Agreement and Cancellation Agreement transactions described above, the Tiger Trade stockholders acquired as of the date the transaction closed, in the aggregate, approximately 88.64% of the issued and outstanding capital stock of the Company on a fully-diluted basis, and Tiger Trade became a wholly owned subsidiary of the Company.

Under the Exchange Agreement, (1) Orsolya Peresztegi, the Company’s sole officer on the closing date, resigned as an officer of the Company and Gust Kepler was appointed as the President, Chief Executive Officer, Chief Financial Officer and Secretary of the Company, and (2) Mr.

Kepler was appointed to serve as a director of the Company.

Peresztegi subsequently resigned as a director of the Company effective January 4, 2016.

Merger of Tiger Trade into the Company

On February 8, 2016, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Tiger Trade providing for the merger of Tiger Trade with and into the Company.

At the effective time of the merger, the shares of Tiger Trade capital stock outstanding immediately before the effective time were canceled, retired and ceased to exist.

The merger became effective February 9, 2016.

The Company filed a Certificate of Amendment to its Articles of Incorporation effective as of March 9, 2016 changing the name of the Company to Blackboxstocks Inc.

Overview of Business

The Company is in the business of developing and marketing web and mobile based analytical software tools as a subscription-based software as a service (the “Blackbox System”) that serves as tool for stock and option traders to evaluate prospective investments on various securities exchanges and markets.

Our proprietary Blackbox System technology is an algorithm driven system that works in real time, measuring market trends and data while utilizing a multitude of specific criteria, both live and historical.

Our servers, located in close proximity to the NYSE, NASDAQ and OTC exchanges drive our proprietary algorithms at near light speed.

Our Blackbox System platform employs predictive technology enhanced by artificial intelligence to find volatility and unusual market activity that can result in the rapid change in a stock’s price.

The Blackbox System was initially designed to monitor and analyze over 13,000 stocks on the OTC Markets Group, Inc.

(“OTC”), New York Stock Exchange (“NYSE”), the NYSE American (formerly the American Stock Exchange) and NASDAQ markets simultaneously as our servers receive live data feeds from such markets.

We have also customized a separate Blackbox System platform (“Asian Blackbox System”) to analyze data from the Hong Kong Stock Exchange (“HKEX”), Shanghai Stock Exchange (“SSE”) and Shenzhen Stock Exchange (“SZSE”) for license and use primarily in Asia.

We consider the Blackbox System technology to be among the most user-friendly of its kind.

The Blackbox System employs predictive technology enhanced by artificial intelligence to identify volatility and unusual market activity that may result in rapid change in the price of a stock.

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, scans, news and institutional grade analytics.

Additionally, our users are provided a fully interactive chat and social media platform, integrated in our dashboard.

This allows users to exchange information and ideas quickly and efficiently.

We have also added a live audio-video feature which allows our subscribers the ability to broadcast and share trade strategies and market insight, on their own channels within the Blackbox community.

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 in our ultimate user-friendly system,

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 8,000 stocks and over 1,000,000 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 recently 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 42 countries.

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.

Development of the Blackbox System

Blackbox System was made available for use to subscribing customers in the United States in September 2016 and the Asian Blackbox System was made available for use by under a license arrangement to subscribers in May 2017.

The Blackbox System was made available for use to subscribing customers worldwide in September 2016.

In December 2017, we launched our first Options Flow Scanner as a new feature on our platform.

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This has proven to be a very popular feature for our users.

We are also currently developing a Dark Pool Scanner.

We also added a Dark Pool Scanner in 2020.

The Dark Pool Scanner feature monitors, tracks and displays large blocks of stock that are often purchased in dark pools and not on the regular exchanges.

In addition to the above described proprietary scanners and features, we provide our users with a full set of internal social media functions within our dashboard.

In October of 2020 we completed a system integration with the online brokerage platform TradeStation.

This integration allows Blackbox users that have an account with TradeStation to trade directly through the Blackbox platform without leaving our dashboard.

We also provide our users with a full set of internal social media functions within our dashboard.

These features include chat rooms, direct messaging, follow/block capability, custom user profiles, and most importantly broadcast enabled audio channels.

We believe that combining these social media features with our analytics, within a single dashboard provides a unique user experience allowing for the rapid exchange of information throughout our user community.

We are in the process of developing and anticipate adding many new features and functions to the Blackbox System, including but not limited to, native iOS and Android applications, a watchlist feature and enhanced filters for our Options Flow and Dark Pool Scanners.

We also plan to upgrade our current “many to many” audio broadcast feature.

Development of planned features and functions are expected to cost approximately $220,000 and will be dependent upon resources available from anticipated financing.

The resulting dynamic is what we describe as “the best of man and machine”.

We are in the process of developing and anticipate adding many new features and functions to the Blackbox System, including but not limited to, native iOS and Android mobile applications, a crypto currency analytics and trading platform, as well as a comprehensive watchlist and portfolio management system.

In January of 2021 we deployed an intermediate native application for iOS an Android phones to send push notifications to our users which allowed us to cease using a third-party solution that was inefficient and cumbersome.

We are also in the process of upgrading our current chat and audio broadcast feature.

Development of planned features and functions are expected to cost approximately $250,000.

Marketing of the Blackbox System

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We believe our Blackbox System subscriptions are priced competitively with similar web-based trading tools.

Since launch, we have marketed our system to potential subscribers primarily via online and referral-based marketing.

We utilize three channels for customer acquisition.

We promote our subscriptions on social media, as well as encouraging customer referrals through an established customer referral program.

We primarily use a combination of digital marketing campaigns and customer referral compensation plans in our advertising program.

Our digital advertising efforts utilize banner and similar marketing on social media platforms as well as targeted email.

We believe that this form of advertising has been and will continue to be effective in attracting subscribers.

We continuously monitor and evaluate the effectiveness of specific social media platforms and allocate marketing funds accordingly.

We also promote our subscriptions through an established compensated customer referral program.

We offer certain subscribers the right to promote the Blackbox System and receive referral fees for subscribers generated from such subscribers’ effort.

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We incurred $272,908 and $121,227 in customer referral expenditures in each of the years ended December 31, 2020 and 2019, respectively.

These equal approximately 12% of our subscription sales revenues generated in both the years ended December 31, 2019 and 2018, respectively.

We continue to expand the customer referral sales program as it has proven to be an extremely efficient form of advertising.

We expanded our marketing efforts to include, online affiliate marketing, banner advertising, social media, and targeted email campaigns.

Future plans are to utilize television and radio advertising.

We have run multiple small digital ad campaigns targeting social media platforms such Facebook and Instagram.

We also deployed marketing budgets on StockTwits.

We continuously test alternative marketing on Google and other social media platforms.

We intend to deploy a significant amount of marketing funds on these and other digital platforms including YouTube, Twitter and LinkedIn.

Our test marketing has proven very effective and we believe we have the ability to scale our advertising efforts using these platforms.

Our largest campaigns to date have been through StockTwits, Facebook and Google and we identified that these grew our subscriber base 17%.

The implementation in September of 2018 of the “Blackbox Bootcamp,” a comprehensive 3-hour educational course continues to increase user retention.

We also offer other webinar courses that are scheduled and announced on our calendar and in email and direct messages via our platform to our users.

We expect to continue utilizing the customer referral sales program as it has proven to be an extremely efficient form of advertising.

Our advertising and marketing expense was $705,706 and $261,470 for the years ended December 31, 2020 and 2019, respectively.

We intend to continue to deploy a significant amount of marketing funds on both digital campaigns and customer referral programs in the future.

In addition, we may also utilize television and radio advertising.

Intellectual Property

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Many of these competitors have financial and other resources substantially greater than ours.

Our current operating and financial resources are not adequate to preclude any significant disruption of our operations.

We consider our platform unique and do not consider any trading tools or trading analytics software direct competitors of our Company.

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However, we believe that our Blackbox System is the only platform that has successfully merged a comprehensive analytics system or “scanner” and a social media platform within the same “dashboard” allowing users to view the same real-time data in parallel.

Our Blackbox System creates a unique community for traders that can all share the same information and analyze this information on identical analytics in real-time.

Our Blackbox System creates a unique community for traders that can all share the same information and analyze this information on an identical analytics in real-time.

We also consider our system unique because our predictive algorithms automatically populate alerts for active stocks with high probability of short-term gains.

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Trade Ideas, Flow Algo, Trade Alert and Wall Street Jesus.

As of the date hereof, the Company has three full-time employees, including Gust Kepler who serves as our sole director and our President, Chief Executive Officer, Chief Financial Officer and Secretary, Jeff Sharrock, who serves as Vice President of Operations and an administrative employee.

As of March 30, 2021, the Company has 7 full-time employees and one part-time employee.

We consider our relationship with our employees to be good.

Additional Information

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business