What changed in this filing

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Item 1. Financial Statements

2024-11-14 compared with 2024-08-15 · 116 added, 101 removed, 351 unchanged (38% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

As of June 30, 2024 and December 31, 2023

As of September 30, 2024 and December 31, 2023

September 30,

Current assets:

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

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

Marketable securities

Other receivable

Note receivable

Prepaid expenses and other current assets

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Preferred stock, $ 0.001 par value, 5,000,000 shares authorized;

no shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

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 June 30, 2024 and December 31, 2023, respectively

3,269,998 issued and outstanding at September 30, 2024 and December 31, 2023, respectively

Series B Convertible Preferred Stock, $ 0.001 par value, 10,000,000 shares authorized;

no shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

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:

3,215,528 and 3,223,015 issued and outstanding at June 30, 2024 and December 31, 2023, respectively

3,528,028 and 3,223,015 issued and outstanding at September 30, 2024 and December 31, 2023, respectively

Treasury stock

6 unchanged sentences

Condensed Consolidated Statements of Operations

For the Three Months and Six Months Ended June 30, 2024 and 2023

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

For the three months ended

For the six months ended

For the nine months ended

September 30,

Subscriptions

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Loss before income taxes

Weighted average number of common shares outstanding - basic

Net loss per share - basic

Weighted average number of common shares outstanding – basic and diluted

Net loss per share – basic and diluted

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

1 unchanged sentence

Condensed Consolidated Statement of Stockholders ’ Equity

For the Six months Ended June 30, 2024 and 2023

For the Nine months Ended September 30, 2024 and 2023

Preferred Stock

4 unchanged sentences

Retirement of treasury stock

Vesting of warrants for compensation

Vesting of options for compensation

Vesting of stock for compensation

Issuance of warrants for compensation

Issuance of options for compensation

Issuance of stock for compensation

Balances, March 31, 2023

1 unchanged sentence

Purchase of treasury stock

Vesting of warrants for compensation

Vesting of options for compensation

Issuance of warrants for compensation

Issuance of options for compensation

Issuance of stock for compensation

1 unchanged sentence

Balances, June 30, 2023

Issuance of warrants for compensation

Issuance of options for compensation

Issuance of stock for compensation

Balances, September 30, 2023

Balances, December 31, 2023

Vesting of warrants for compensation

Vesting of options for compensation

Issuance of warrants for compensation

Issuance of options for compensation

Issuance of stock for compensation

Balances, March 31, 2024

Vesting of warrants for compensation

Vesting of options for compensation

Vesting of stock for compensation

Issuance of warrants for compensation

Issuance of options for compensation

Issuance of stock for compensation

Retirement of treasury stock

Balances, June 30, 2024

Issuance of warrants for compensation

Issuance of options for compensation

Issuance of stock for compensation

Issuance of stock for cash

Balances, September 30, 2024

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

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2024 and 2023

For the six months ended

For the Nine months Ended September 30, 2024 and 2023

For the nine months ended

September 30,

Cash flows from operating activities:

18 unchanged sentences

Sale of marketable securities

Net cash provided by investing activities

Issuance of note receivable

Net cash (used in) provided by investing activities

Cash flows from financing activities:

Proceeds from other liabilities

Proceeds from issuance of common stock

Proceeds from merchant cash advance

10 unchanged sentences

Non-cash investing and financing activities:

Treasury stock purchased from related party with other assets

Retirement of treasury stock

Treasury stock purchased from related party with other assets

Issuance of stock for investment

28 unchanged sentences

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 six months ended June 30, 2024, the Company incurred an operating loss of $ 1,718,823 and a net loss of $ 1,741,654 .

Cash flows used in operations totaled $ 3,166,067 for the year ended December 31, 2023 and $ 687,198 for the six months ended June 30, 2024.

The Company had cash of $ 1,055,482 as of June 30, 2024.

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.

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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 June 30, 2024, as follows.

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

Series A Convertible Preferred Shares

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As a result, the 2,400,000 Series B Stock shares were valued at $ 8,424,000 which was determined to be the cost of the investment recorded pursuant to ASC 321-10-35.

The investment was reviewed for impairment as of June 30, 2024.

The investment was reviewed for impairment as of September 30, 2024.

On November 24, 2023, the Company entered into a Binding Amendment to Amended Letter of Intent (the “LOI Amendment”) with Evtec Group, Evtec Automotive Limited, and Evtec Aluminium (collectively the “Evtec Companies), which amended a non-binding Amended Letter of Intent (the “LOI”) dated April 14, 2023.

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As a condition to the Company’s continued good faith negotiations regarding the Proposed Transaction, the Evtec Companies agreed to (i) pay the Company aggregate extension fees totaling $ 400,000 which were guaranteed by a credit worthy affiliate of the Evtec Companies, (ii) provide extension loans of up to $ 400,000 to the Company if the Proposed Transaction has not closed on or before April 1, 2024, (iii) pay the Company amounts in cash equal to any documented legal fees and third-party expenses incurred or payable by the Company in connection with the Proposed Transaction up to $ 175,000 , including any such expenses incurred prior to the date of the LOI Amendment, (iv) forfeit and return the 2,400,000 shares of the Series B Stock acquired by Evtec Group under the terms of the Securities Exchange Agreement, and (v) permit the Company to convert each of the 4,086 preferred shares of Evtec Group issued to the Company pursuant to the Securities Exchange Agreement into one ordinary share of Evtec Group.

$ 475,000 and $ 0 was outstanding and classified as other receivables on the balance sheet as of December 31, 2023 and June 30, 2024, respectively.

As a result of the transaction not closing by April 1, 2024, Evtec Aluminium has provided $400,000 of financial support to the Company that has been classified as other liabilities as of June 30, 2024.

As a result of the transaction not closing, Evtec Aluminium has provided $ 1,043,000 of financial support to the Company that has been classified as other liabilities as of September 30, 2024.

As provided for in the LOI Amendment, Evtec Group entered into a Forfeiture Agreement with the Company dated November 28, 2023 pursuant to which Evtec Group forfeited all of its right, title and interest in and to the 2,400,000 shares of Series B Stock acquired by Evtec Group pursuant to the Securities Exchange Agreement in order to further induce the Company to continue to negotiate in good faith to consummate the Proposed Transaction.

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The shares of Series B Stock forfeited by Evtec Group were cancelled as of the date of the Forfeiture Agreement.

In addition, Evtec Group converted the Evtec Group preferred shares held by the Company into 4,086 common shares.

In addition, Evtec Group converted the Evtec Group preferred shares held by the Company into 4,086 ordinary shares.

On December 12, 2023, the Company entered into a Share Exchange Agreement (the “Share Exchange Agreement") with Evtec Aluminium, and the shareholders of Evtec Aluminium (“Sellers”).

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Immediately following Closing, based upon the Exchange Ratio, the Sellers are expected to collectively own 70.4 % of the aggregate common stock of the Company.

On May 13, 2024 the Company filed a Registration Statement on Form 4 including an information statement/prospectus and a notice of action taken by written consent pursuant to section 14(C) of the Securities Exchange Act of 1934 as required under the terms of the Securities Exchange Agreement with Evtec Aluminium.

On July 1, 2024, the Company entered into a Convertible Loan Agreement with Evtec Aluminium pursuant to which the Company loaned Evtec Aluminum $ 1,150,000 (the “Evtec Loan”).

The Evtec Loan is unsecured, bears interest at 12 % per annum and has a maturity date of one year from the date of issuance.

The Evtec Loan is convertible into Evtec Aluminum ordinary shares at the rate of $ 1,197.92 per share at any time at the option of Blackboxstocks and converts automatically upon the closing of the Share Exchange Agreement (as defined below).

If converted, the Evtec Loan converts into approximately 3.2 % of the outstanding ordinary shares of Evtec Aluminum inferring a post money valuation of approximately $ 48,136,000 .

On July 3, 2024, the Company and Evtec entered into a First Amendment to Share Exchange Agreement (the “Amendment”) in order to reflect the effects of a Stock Purchase Agreement transaction consummated July 1, 2024 (Note 4) and the proposed issuance of Evtec warrants in connection with its pre-closing financing efforts.

Specifically, the Amendment provides:

That the Company will issue replacement warrants to holders of any outstanding warrants to acquire Evtec Aluminium ordinary shares which will permit holders to acquire shares of the Company’s Common Stock on substantially the same terms after adjusting the number of shares issuable and exercise price based upon the Exchange value of Evtec Aluminium ordinary shares and the Exchange Ratio.

Evtec Aluminium’s issuance of warrants is subject to approval by the Company in its reasonable discretion.

The definition of “Exchange Ratio” was changed to mean initially 294.17 shares of the Company’s Common Stock for each Evtec Aluminum share, which is subject to further adjustment, so that the consideration shares issuable to Evtec Sellers would equal 70.6 % of the total outstanding shares of the Company post-Closing

On May 13, 2024, the Company filed a Registration Statement on Form S-4 including an information statement/prospectus and a notice of action taken by written consent pursuant to section 14(C) of the Securities Exchange Act of 1934 as required under the terms of the Securities Exchange Agreement with Evtec Aluminium.

The registration statement is subject to review and approval by the Securities and Exchange Commission and has not yet been declared effective.

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All previously outstanding shares of Series B Stock were forfeited in December 2023.

On July 1, 2024, the Company entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) pursuant to which the Company sold 312,500 shares of its common stock, par value $ 0.001 (“Common Stock”), at a price per share of $ 4.00 for gross proceeds of $ 1,250,000 .

Gust Kepler, a director, our President and Chief Executive Officer, purchased $ 100,000 of the Common Stock under the terms of the Stock Purchase Agreement.

Quadrofoglio Holdings LLC, a Florida limited liability company, purchased the remaining $ 1,150,000 of Common Stock.

The Stock Purchase Agreement contains standard representations and warranties from the Company and the purchasers.

Warrants to Purchase Common Stock

The following table presents the Company’s warrants as of June 30, 2024:

The following table presents the Company’s warrants as of September 30, 2024:

Exercise Price

1 unchanged sentence

Warrants as of December 31, 2023

Warrants as of June 30, 2024

At June 30, 2024, warrants for the purchase of 91,849 shares were vested and warrants for the purchase of 1,389 shares remained unvested.

The Company expects to incur expenses for the unvested warrants totaling $ 21,256 as they vest.

Warrants as of September 30, 2024

At September 30, 2024, all warrants were vested.

Incentive Stock Plan

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The 2021 Plan allows the Company, under the direction of the Board of Directors or a committee thereof, to make grants of stock options, restricted and unrestricted stock and other stock-based awards to employees, including our executive officers, consultants and directors.

The following table presents the Company’s options as of June 30, 2024:

The following table presents the Company’s options as of September 30, 2024:

Options as of December 31, 2023

Options as of June 30, 2024

At June 30, 2024, options to purchase 190,174 shares were vested and options to purchase 10,701 shares remained unvested.

Options as of September 30, 2024

At September 30, 2024, options to purchase 198,877 shares were vested and options to purchase 1,998 shares remained unvested.

The Company expects to incur expenses for the unvested options totaling $ 15,276 as they vest.

6 unchanged sentences

Kepler were subsequently retired and added back to authorized but unissued shares.

As noted in Note 4, on July 1, 2024 Mr.

Kepler purchased 25,000 shares of common stock at a price of $ 4.00 per share pursuant to the Stock Purchase Agreement.

On May 1, 2020, pursuant to the Paycheck Protection Program under the Coronavirus Aid Relief and Economic Security Act (“CARES Act”), the Company received a loan of $ 130,200 .

2 unchanged sentences

During December 2021, the terms of the note were amended to carry an interest rate of 1 % and mature on May 4, 2025.

As of June 30, 2024, the unpaid balance of the note totaled $ 25,139 .

As of September 30, 2024, the unpaid balance of the note totaled $ 17,874 .

Merchant Cash Advance

On May 28, 2024, the Company entered into a merchant cash advance agreement with proceeds totaling $ 198,500 and total future receivables purchased totaling $ 272,000 .

The merchant cash advance is to be repaid through 28 weekly payments equal of $ 9,714 .

The finance expense for the advance has been calculated using the effective interest rate method.

As of June 30, 2024, the unpaid balance of the merchant cash advance totaled $ 182,655 .

On September 27, 2024, the Company entered into a merchant cash advance agreement with proceeds totaling $ 99,250 and total future receivables purchased totaling $ 136,000 .

The merchant cash advances are to be repaid through 28 weekly payments of $ 9,714 and $ 4,857 , respectively.

The finance expense for the advances have been calculated using the effective interest rate method.

As of September 30, 2024, the unpaid balance of the merchant cash advances totaled $ 190,264 .

Commitments and Contingencies

The Company leases approximately 2,685 square feet of office space in Dallas Texas pursuant to an office lease with Teachers Insurance and Annuity Association of America that expires on September 30, 2028.

During the period ended June 30, 2024, the Company’s related rent expenses totaled approximately $ 46,000 .

During the period ended September 30, 2024, the Company’s related rent expenses totaled approximately $ 70,000 .

The table below shows the future lease payment obligations:

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In addition, the Company is party to threatened or actual litigation occurring in the normal course of business but does not believe that the outcome of these matters could have a material effect on the Company’s financial statements.

Subsequent Events

Gust Kepler, a director, our President and Chief Executive Officer, purchased $ 100,000 of the Common Stock under the terms of the Stock Purchase Agreement.

Quadrofoglio Holdings LLC, a Florida limited liability company, purchased the remaining $ 1,150,000 of Common Stock.

The Stock Purchase Agreement contains standard representations and warranties from the Company and the purchasers.

The Company had received $ 1,100,000 of these proceeds prior as of June 30, 2024 and prior to the execution of any definitive agreements with the purchasers.

As a result the $ 1,100,000 was classified as other liabilities on the accompany consolidated condensed balance sheet.

On July 1, 2024, the Company entered into a Convertible Loan Agreement with Evtec Aluminium pursuant to which the Company loaned Evtec Aluminum $ 1,150,000 (the “Evtec Loan”).

The Evtec Loan is unsecured, bears interest at 12 % per annum and has a maturity date of one year from the date of issuance.

If converted, the Evtec Loan converts into approximately 3.2 % of the outstanding ordinary shares of Evtec Aluminum inferring a post money valuation of approximately $ 48,136,000 .

On July 3, 2024, the Company and Evtec entered into a First Amendment to Share Exchange Agreement (the “Amendment”) in order to reflect the effects of the Stock Purchase Agreement transaction and the proposed issuance of Evtec warrants in connection with its pre-closing financing efforts.

Specifically, the Amendment provides:

Evtec Aluminium’s issuance of warrants is subject to approval by the Company in its reasonable discretion.

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

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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 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.

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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.

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.

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.

Cash flows used in operations were $681,353 for the nine months ended September 30, 2024, and $3,166,067 for the year ended December 31, 2023.

The Company has 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”).

in the Exchange will be accounted for as a reverse acquisition with Evtec Aluminium being the accounting acquiror.

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.

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Liquidity and Capital Resources

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.

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.

At September 30, 2024, we had cash and marketable securities totaling $60,921 as compared to cash and marketable securities totaling $475,652 at December 31, 2023.

Our cash flows used in operations were $681,353 for the nine months ended September 30, 2024, as compared to $3,199,362 for the same period in the prior year.

Net cash used in investing activities for the nine months ended September 30, 2024, was $1,096,697 as compared to cash provided by investing activities of $3,273,886 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, combined with the issuance of a note receivable in the current 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.

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.

Net cash provided by financing activities was $1,366,274 for the nine months ended September 30, 2024, as compared to net cash used in financing activities of $36,814 for the prior year period.

The increase in financing activities was the result of proceeds from the sale of common stock and funding from merchant cash advances.

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.

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There can be no assurance that the Company will be able to do so or on acceptable terms.

For the nine months ended September 30, 2024, Evtec Aluminium advanced the Company $1,043,000 in financial support.

Evtec Aluminium is not contractually required to provide any additional support and there can be no assurance that they may do so.

Results of Operations

Comparison of Three Months Ended June 30, 2024 and 2023

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.

Comparison of Three Months Ended September 30, 2024 and 2023

For the three months ended September 30, 2024, our revenue was $646,792, as compared to $727,218, for the three months ended September 30, 2023.

The decline in revenue of 11% 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.

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.

Average subscribers for the three months ended September 30, 2024, was 2,972 as compared to 3,174 for the prior year period.

Average monthly revenue per subscriber was $72.55 for the three months ended September 30, 2024, as compared to $76.37 in the prior year period.

Cost of revenues for the three months ended September 30, 2024, and 2023 were $293,842 and $327,928, resulting in gross margins of 55% for both periods.

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 55%.

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%.

For the three months ended September 30, 2024, operating expenses were $1,088,582 as compared to $1,269,769 for the same period in 2023, a decrease of $181,187 or 14%.

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%.

Selling, general and administrative expenses decreased from $957,372 for the three months ended September 30, 2023, to $891,282 for the three months ended September 30, 2024, a decrease of $66,090 or 7%.

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.

Advertising and marketing expenses decreased by $34,741 or 27% from $127,632 for the three months ended September 30, 2023, to $92,891 for the three months ended September 30, 2024, as the Company continues to reposition its marketing strategy.

Software development costs decreased by $71,792 or 41% from $173,665 in the three months ended September 30, 2023, to $101,873 for the three months ended September 30, 2024.

The decreased software development costs reflected lower development costs for our new product, Stock Nanny.

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.

Our loss from operations for the three months ended September 30, 2024, was $734,166 as compared to a loss from operations of $869,229 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.

Comparison of Six Months Ended June 30, 2024 and 2023

For the six months ended June 30, 2024, our revenue was $1,332,722, as compared to $1,589,638, for the six months ended June 30, 2023.

Comparison of Nine months Ended September 30, 2024 and 2023

For the nine months ended September 30, 2024, our revenue was $1,981,974, as compared to $2,324,870, for the nine months ended September 30, 2023.

The decline in revenue of 15% was due to fewer subscribers in the current year that was partially offset by higher average revenue per subscriber.

Average subscribers for the six months ended June 30, 2024, was 2,989 as compared to 3,756 for the prior year period.

Average monthly revenue per subscriber was $74.30 for the six months ended June 30, 2024, as compared to $70.53 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.

Cost of revenues for the six months ended June 30, 2024, and 2023 were $713,975 and $874,606, resulting in gross margins of 46% and 45%, respectively.

Average subscribers for the nine months ended September 30, 2024, was 2,986 as compared to 3,564 for the prior year period.

Average monthly revenue per subscriber was $73.66 for the nine months ended September 30, 2024, as compared to $72.24 in the prior year period.

Cost of revenues for the nine months ended September 30, 2024, and 2023 were $1,007,401 and $1,202,534, resulting in gross margins of 49% and 48%, respectively.

The gross margin percentage is expected to remain between 45% and 55%.

For the six months ended June 30, 2024, operating expenses were $2,338,980 as compared to $4,099,899 for the same period in 2023, a decrease of $1,760,919 or 43%.

For the nine months ended September 30, 2024, operating expenses were $3,429,812 as compared to $5,369,668 for the same period in 2023, a decrease of $1,939,856 or 36%.

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 $3,128,012 for the six months ended June 30, 2023, to $1,844,178 for the six months ended June 30, 2024, a decrease of $1,283,834 or 41%.

Selling, general and administrative expenses decreased from $4,085,384 for the nine months ended September 30, 2023, to $2,735,480 for the nine months ended September 30, 2024, a decrease of $1,349,904 or 33%.

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 $124,010 or 34% from $368,396 for the six months ended June 30, 2023, to $244,386 for the six months ended June 30, 2024, as the Company continues to reposition its marketing strategy.

Software development costs decreased by $373,249 or 64% from $582,294 in the six months ended June 30, 2023, to $209,045 for the six months ended June 30, 2024.

Advertising and marketing expenses decreased by $158,751 or 32% from $496,028 for the nine months ended September 30, 2023, to $337,277 for the nine months ended September 30, 2024, as the Company continues to reposition its marketing strategy.

Software development costs decreased by $445,041 or 59% from $755,959 in the nine months ended September 30, 2023, to $310,918 for the nine months ended September 30, 2024.

The decreased software development costs reflected lower development costs for our new product Stock Nanny.

Our loss from operations for the six months ended June 30, 2024, was $1,718,823 as compared to a loss from operations of $3,378,103 for the prior year period.

Our loss from operations for the nine months ended September 30, 2024, was $2,452,989 as compared to a loss from operations of $4,247,332 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.

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

Three Months Ended June 30,

Three Months Ended September 30,

Net income (loss)

Interest expense

Investment income

Investment (income) loss

Depreciation and amortization expense

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Total adjustments

Six Months Ended June 30,

Nine Months Ended September 30,

Net income (loss)

Interest expense

Investment income

Investment (income) loss

Depreciation and amortization expense

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Off Balance Sheet Arrangements

As of June 30, 2024, we did not have any material off-balance sheet arrangements.

As of September 30, 2024, we did not have any material off-balance sheet arrangements.

Quantitative and Qualitative Disclosures About Market Risk

1 unchanged sentence

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-Q

Item 1. Financial Statements