UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2017
or
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from   to  

 

Commission File No.   0-55108

 

BLACKBOXSTOCKS INC.
(Exact name of registrant as specified in its charter)

 

Nevada   45-3598066
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)

 

5430 LBJ Freeway, Suite 1485, Dallas, Texas                  75240
(Address of principal executive offices) (Zip Code)

 

( 972) 726-9203
(Registrant’s telephone number, including area code)

 

 
(Former name, former address and former fiscal year if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ¨ Accelerated filer ¨

 

Non-accelerated filer ¨ Smaller reporting company x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

 

The number of shares outstanding of the Registrant’s Common Stock as of August 9, 2017 was 23,110,000.

 

 
 

TABLE OF CONTENTS

 

     
    Page
INTRODUCTORY COMMENT 1
CAUTION REGARDING FORWARD LOOKING STATEMENTS 1
   
PART I –FINANCIAL INFORMATION 2
Item 1. financial statements 2
 

Consolidated Balance Sheets as of June 30, 2017 (Unaudited) and

December 31, 2016

 

2

  Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2017 and 2016 (Unaudited)

 

3

  Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2017 and 2016 (Unaudited)

 

4

  Notes to Consolidated Financial Statements    5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

9

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 11
Item 4. Controls and Procedures 11
     
PART II – OTHER INFORMATION 12
Item 1. LEGAL PROCEEDINGS 12
ITEM 1A. RISK FACTORS 12
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 12
Item 3. DEFAULTS UPON SENIOR SECURITIES 12
Item 4. MINE SAFETY DISCLOSURES 12
Item 5. Other Information 12
Item 6. eXHIBITS 13
     
Signatures   13
 
 

INTRODUCTORY COMMENT

 

Throughout this Quarterly Report on Form 10-Q , the terms “we,” “us,” “our,” “Blackboxstocks,” or the “Company” refers to Blackboxstocks Inc., a Nevada corporation.

 

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

 

Our prospects are subject to uncertainties and risks. In this Quarterly Report on Form 10-Q, we make forward-looking statements in this Item 2 and elsewhere that also involve substantial uncertainties and risks. These forward-looking statements are based upon our current expectations, estimates and projections about our business, and reflect our beliefs and assumptions based upon information available to us at the date of this report. In some cases, you can identify these statements by words such as “if,” “may,” “might,” “will, “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” and other similar terms. These forward-looking statements include, among other things, plans for proposed operations, descriptions of our strategies, our product and market development plans, and other objectives, expectations and intentions, the trends we anticipate in our business and the markets in which we operate, and the competitive nature and anticipated growth of those markets.

 

We caution readers that forward-looking statements are predictions based on our current expectations about future events. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Our actual results, performance or achievements could differ materially from those expressed or implied by the forward-looking statements as a result of a number of factors including, but not limited to, the risks and uncertainties discussed in our other filings with the Securities Exchange Commission (“SEC”). We undertake no obligation to revise or update any forward-looking statement for any reason.

 

 

  1  
 

PART I - FINANCIAL INFORMATION

 

ITEM 1.  FINANCIAL STATEMENTS

 

Blackboxstocks Inc. and Subsidiary

Consolidated Balance Sheets

June 30, 2017 (Unaudited) and December 31, 2016

 

    June 30,       December 31,  
      2017       2016  
Assets                
Current assets:                
Cash   $ 386,470     $ 703,638  
Accounts receivable     480       1,567  
Advances, related party (Note 5)     79,678       42,690  
Prepaid expenses     250,257       236,300  
Prepaid expenses, related parties (Note 5)     36,700       36,700  
Total current assets     753,585       1,020,895  
Property:                
Computer and related equipment, net of depreciation of $9,544 and $5,336                
at June 30, 2017 and December 31, 2016, respectively     19,474       16,664  
Software development, net of amortization of $563 and $0                
at June 30, 2017 and December 31, 2016, respectively     8,437       —    
Total property     27,911       16,664  
Total Assets   $ 781,496     $ 1,037,559  
Liabilities and Stockholders' Equity                
Current liabilities:                
Accounts payable   $ 208,683     $ 72,279  
Unearned subscriptions     19,485       17,682  
Unearned licensing fees     150,000       —    
Total current liabilities     378,168       89,961  
Commitments and contingencies (Note 6)                
Stockholders' Equity:                
Preferred stock, $0.001 par value, 5,000,000 shares authorized; no shares                
 issued and outstanding at June 30, 2017 and December 31, 2016, respectively     —         —    
Series A Convertible Preferred Stock, $0.001 par value, 5,000,000                
 shares authorized; 5,000,000 issued and outstanding at June 30, 2017 and                
 December 31, 2016, respectively     5,000       5,000  
Common stock, $0.001 par value, 100,000,000 shares                
authorized: 23,110,000 issued and outstanding at June 30, 2017                
and December 31, 2016, respectively     23,110       23,110  
Additional paid in capital     2,352,332       2,352,332  
Accumulated deficit     (1,977,114 )     (1,432,844 )
Total Stockholders' Equity     403,328       947,598  
Total Liabilities and Stockholders' Equity   $ 781,496     $ 1,037,559  

 

 

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

 

  2  
 

Blackboxstocks Inc. and Subsidiary

Consolidated Statements of Operations

For the Three and Six Months Ended June 30, 2017 and 2016

(Unaudited)

 

 

For the Three Months

Ended June 30,

 

For the Six Months

Ended June 30

             
    2017   2016   2017   2016
Revenue   $ 196,945     $ —     $ 324,558     $ —  
Cost of operations     133,192       —       229,472       —  
Gross margin     63,753       —       95,086       —  
Expenses:                                
Software development costs     204,590       42,449       232,728       89,321  
General and administrative     208,340       123,555       400,891       212,388  
Depreciation and amortization     2,777       1,289       4,771       2,578  
Total operating expenses     415,707       167,293       638,390       304,287  
Operating loss     (351,954 )     (167,293 )     (543,304 )     (304,287 )
Interest expense     518       —       966       —  
Loss before income taxes     (352,472 )     (167,293 )     (544,270 )     (304,287 )
Income taxes     —       —       —       —  
Net loss   $ (352,472 )   $ (167,293 )   $ (544,270 )   $ (304,287 )
Weighted average number of common                                
shares outstanding - basic     23,110,000       20,000,000       23,110,000       20,188,107  
Net loss per share - basic   $ (0.02 )   $ (0.01 )   $ (0.02 )   $ (0.02 )

 

 

 

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

 

 

  3  
 

Blackboxstocks Inc. and Subsidiary

Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2017 and 2016

(Unaudited)

 

    2017   2016
Cash flows from operating activities                
Net loss   $ (544,270 )   $ (304,287 )
Adjustments to reconcile net loss to net cash used in                
  operating activities:                
Depreciation and amortization expense     4,771       2,578  
Changes in operating assets and liabilities:                
Investment, trading     —         414  
Accounts receivable     1,087       —    
Prepaid expenses     (13,957 )     3,414  
Prepaid expenses, related parties     —         130,450  
Accounts payable     136,404       50,671  
Accrued interest     —         861  
Unearned subscriptions     1,803       —    
Unearned licensing fees     150,000       —    
Net cash used in operating activities     (264,162 )     (115,899 )
                 
Cash flows from investing activities                
Purchases of property     (16,018 )     —    
Cash advances from shareholder     20,000       9,960  
Cash repayments to shareholder     (56,988 )     —    
Net cash provided by(used in) investing activities     (53,006 )     9,960  
                 
Cash flows from financing activities                
Proceeds from notes issued     —         50,000  
Net cash provided by financing activities     —         50,000  
                 
Net increase(decrease) in cash     (317,168 )     (55,939 )
                 
Cash - beginning of period     703,638       60,286  
Cash - end of period   $ 386,470     $ 4,347  
                 
Supplemental disclosure-                
Non-cash investing and financing activities:                
  Cancellation of common shares   $ —       $ 835  

 

 

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

 

 

  4  
 

Blackboxstocks Inc. and Subsidiary

Notes to Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2017 and 2016

 

1. ORGANIZATION

 

Blackboxstocks Inc. was incorporated 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.

 

On December 1, 2015, the Company entered into a Share Exchange Agreement (“Exchange Agreement”), by and among the Company, Tiger Trade Technologies, Inc. (“Tiger Trade”), a Texas corporation and the stockholders of Tiger Trade. As a result of the Exchange Agreement transaction, the Tiger Trade stockholders acquired approximately 88.64% of the issued and outstanding capital stock of the Company, and Tiger Trade became a wholly owned subsidiary of the Company. 

 

On February 8, 2016, the Company entered into an Agreement and Plan of Merger (“Merger Agreement”) with Tiger Trade, providing for the merger of Tiger Trade with and into the Company. At the effective time of the merger (February 9, 2016), the shares of Tiger Trade capital stock outstanding immediately before the effective time were canceled, retired and ceased to exist.

 

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.

 

The Company is in the business of developing and marketing a real time analytical platform and subscription based software as a service (the “Blackbox System”) to serve as a tool for day traders and swing traders on various securities exchanges and markets, including the OTC Markets Group, Inc. (“OTC”), the New York Stock Exchange, the NYSE MKT, LLC (formerly the American Stock Exchange), the NASDAQ markets, the Hong Kong Stock Exchange, the Shanghai Stock Exchange and the Shenzhen Stock Exchange.

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The accompanying interim unaudited financial statements and footnotes of Blackboxstocks Inc. have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The financial statements reflect all adjustments that are, in the opinion of management, necessary to fairly present such information. All such adjustments are of a normal recurring nature. Although the Company believes that the disclosures are adequate to make the information presented not misleading, certain information and footnote disclosures, including a description of significant accounting policies normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the audited financial statements and the notes thereto included in the Company’s Annual Report. The accompanying unaudited financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results for any subsequent quarter or the entire year ending December 31, 2017.

 

Basis of Presentation - The accompanying financial statements were prepared in conformity with GAAP.

 

 

  5  
 

Blackboxstocks Inc. and Subsidiary

Notes to Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2017 and 2016

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Use of Estimates - Blackboxstocks’ financial statement preparation requires that management make estimates and assumptions which affect the reporting of assets and liabilities and the related disclosure of contingent assets and liabilities in order to report these financial statements in conformity with GAAP.  Actual results could differ from those estimates.

 

Recently Issued Accounting Pronouncements - During the six months ended June 30, 2017 and 2016, there were several new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”). Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s financial statements.

 

Property and Equipment - Blackboxstocks is engaged in the development of its proprietary Blackbox System technology, an algorithm driven system, through a combination of in house system analysts and outside firms. The Company’s Blackbox System software for use in China was in development and costs expensed until the software reached technological feasibility in April 2017 and capitalized until May 15, 2017 when the Blackbox System for use in China was marketable.

 

The Company’s property and equipment is being depreciated on the straight-line basis over an estimated useful life of three years.

 

Earnings or (Loss) Per Share - Basic earnings per share (or loss per share), is computed by dividing the earnings (loss) for the period by the weighted average number of common stock shares outstanding for the period.  Diluted earnings per share reflects the potential dilution of securities by including other potentially issuable shares of common stock, including shares issuable upon conversion of convertible securities or exercise of outstanding stock options and warrants, in the weighted average number of common shares outstanding for the period.  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. At June 30, 2017 and 2016, the potential dilution would be 5,000,000 shares of common stock in the event the issued and outstanding shares of Series A Convertible Preferred Stock are converted.

 

Revenue Recognition - The Company recognizes revenue from the sale of subscriptions for the use of the Blackbox System web application, when persuasive evidence of an arrangement exists, delivery and collectability is probable. Revenue generally is recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities. The Company launched its Blackbox System web application and began generating subscription sales revenues during the quarter ended September 30, 2016.

 

In addition, the Company earns revenue from the licensing of its Blackbox System application for use in China, whereby a licensee is authorized to sell subscriptions for and sublicense the use of a version of the web application customized for analysis of data from certain Asian exchanges. A monthly licensing fee is charged to the licensee which began effective June 1, 2017.

 

  6  
 

Blackboxstocks Inc. and Subsidiary

Notes to Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2017 and 2016

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Software Development Costs - Blackboxstocks is engaged in the development of its proprietary Blackbox System technology, an algorithm driven system, through a combination of in house system analysts and outside contractors. Under the guidelines of Accounting Standards Codification (“ASC”) Topic 985 the cost of the Company’s Blackbox System was expensed during development and the Blackbox System software for use in the US, reached technical feasibility in August 2016, became marketable and was made available to subscribers beginning September 1, 2016. The Blackbox System for use in China achieved technical feasibility during the quarter and became marketable and available to subscribers effective May 15, 2017. In continued accordance with ASC Topic 985 these costs were expensed until technical feasibility was achieved, costs incurred until May 15, 2017 were capitalized and subsequently amortized.

 

3.   STOCKHOLDERS’ EQUITY

 

The Company has authorized 10,000,000 shares of preferred stock at $0.001 par value, 5,000,000 of which are designated as “Series A Convertible Preferred Stock” at $0.001 par value and 100,000,000 authorized shares of common stock at $0.001 par value (“Common Stock”).

 

Shares of Series A Convertible Preferred Stock do not accumulate dividends and are convertible into shares of Common Stock on a one-for-one basis. Additionally, each share entitles the holder to 100 votes and, with respect to dividend and liquidation rights, the shares rank pari passu with the Company’s Common Stock.

 

On December 1, 2015, the Company entered into an Exchange Agreement with Tiger Trade and its Stockholders (Note 1). Under the terms and conditions of the Exchange Agreement, the Company offered and sold Seventeen Million Nine Hundred Thousand (17,900,000) newly issued shares of Company Common Stock and Five Million (5,000,000) newly issued shares of Company Series A Convertible Preferred Stock in consideration for all the issued and outstanding shares of Tiger Trade capital stock. The effect of the issuance was that Tiger Trade stockholders acquired approximately 85.91% of the issued and outstanding shares of Company Common Stock and 100% of the issued and outstanding shares of Company Series A Convertible Preferred Stock. Tiger Trade became a wholly owned subsidiary of the Company as a result of the Exchange Agreement transaction.

 

Tiger Trade was subsequently merged with and into the Company on February 9, 2016, at which time all of the outstanding shares of capital stock of Tiger Trade outstanding immediately before the effective date were canceled, retired and ceased to exist.

 

On February 10, 2016, the Company entered into a Stock Cancellation Agreement with Gust C. Kepler, a Director, President, Chief Executive Officer, Chief Financial Officer and Secretary of the Company, pursuant to which Mr. Kepler cancelled and forfeited 835,010 shares of the Company’s Common Stock.

 

During the year ended December 31, 2016, the Company issued a total of 3,310,000 shares of Common Stock at a cash price of $0.50 per share for a total of $1,655,000. However, the Company subsequently honored a request by one investor to rescind the purchase of 200,000 of such shares of Common Stock on October 28, 2016.

 

  7  
 

Blackboxstocks Inc. and Subsidiary

Notes to Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2017 and 2016

 

4. STOCK OPTIONS AND WARRANTS

 

Costs attributable to the issuance of stock options and share purchase warrants are measured at fair value at the date of issuance and offset with a corresponding increase in ‘Additional Paid in Capital’ at the time of issuance.  When the options or warrants are exercised, the receipt of consideration is an increase in stockholders’ equity. There was no stock option or warrant activity during the six months ended June 30, 2017 and 2016 and as of August 14, 2017, no options or warrants were outstanding.

 

5.  RELATED PARTY TRANSACTIONS

 

During the six months ended June 30, 2017, Gust C. Kepler, a Director, President, Chief Executive Officer, Chief Financial Officer and Secretary of the Company was advanced $56,988 by the Company and he repaid $20,000. The remaining advance of $79,678 is unsecured and bears no interest.

 

During the six months ended June 30, 2017 and 2016, the Company (and its predecessor, Tiger Trade) engaged the services of Karma Black Box LLC (“Karma”), which became a Company stockholder as a result of the Exchange Agreement (Note 1 and 3), for application development services of the Company’s Blackbox System technology. During the six months ended June 30, 2017 and 2016, Karma was paid $58,500 and $9,500 for services, respectively.

 

G2 International, Inc. (“G2”), which does business as IPA Tech Group (“IPA”), is a company wholly owned by Gust C. Kepler, a Director, President, Chief Executive Officer, Chief Financial Officer and Secretary of the Company, and the Company’s controlling stockholder. In 2016 G2/IPA refunded $117,800 of prepayments for marketing services leaving a prepaid balance of $36,700 as of June 30, 2017. At June 30, 2017 and 2016, there were no accounts payable owed to G2.

 

On August 9, 2017, we entered into a License Agreement (the “BBTR License”) with EIGH8T TECHNOLOGIES INC. (also known as Black Box Traders and referred to herein as “BBTR”), a British Virgin Island registered company, for the development, customization and license to use and sublicense a version of the Blackbox System (known as the “BBTR System”) with data from the HKEX, SSE and SZSE. Stephen Chiang, an individual citizen of Singapore who holds 3,000,000 of Company Common Stock (approximately 13% of the issued and outstanding Common Stock), is a principal of BBTR. On May 15, 2017 BBTR remitted an advance of $250,000 for license fees to be credited under the terms of the BBTR License and the Company has reported $100,000 of licensing revenue as of June 30, 2017.

 

6. COMMITMENTS AND CONTINGENCIES

 

The Company entered into a sublease agreement with G2 effective July 1, 2015 subject to the terms and conditions of the office lease between G2 and Teachers Insurance and Annuity Association of America for approximately 1,502 square feet of office space at 5430 LBJ Freeway, Dallas, Texas. The sublease agreement expires March 31, 2020. During the six months ended June 30, 2017 and 2016 we incurred $23,203 and $21,448, respectively, in office rental expense.

 

The Company is not currently a defendant in any material litigation or any threatened litigation that could have a material effect on the Company’s financial statements.

 

  8  
 

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

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, 2016, as well as with our condensed financial statements and the notes thereto included elsewhere herein.

 

Overview

 

The Company is in the business of developing and marketing a real time analytical web based software as a service platform (the “Blackbox System”) that serves as a tool for day traders and swing traders 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 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 MKT, LLC (formerly the American Stock Exchange), and NASDAQ markets simultaneously as our servers receive live data feeds from such markets. We have also customized our 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 Company launched its 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 http://www.blackboxstocks.com.

 

On August 9, 2017, we entered into a License Agreement (the “BBTR License”) with EIGH8T TECHNOLOGIES INC. (referred to in the agreementas “BBTR”), a British Virgin Island registered company, for the development, customization and license to use and sublicense a version of the Blackbox System (known as the “BBTR System”) solely for use in connection with data from the HKEX, SSE and SZSE. The BBTR System was made available to BBTR on a trial basis beginning May 15, 2017 and launched for use by BBTR customers beginning on June 1, 2017. Stephen Chiang, an individual citizen of Singapore who holds 3,000,000 of Company Common Stock (approximately 13% of the issued and outstanding Common Stock), is a principal of EIGH8T TECHNOLOGIES INC.

 

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 OTC Pink tier of the OTC Markets Group, Inc. (the “OTC Pink”) under the symbol “BLBX.” Prior to March 9, 2016, our Common Stock was quoted under the symbol “SMQA.” Our corporate website is located at http://www.blackboxstocks.com.

 

Basis of Presentation of Financial Information

 

The accompanying financial statements have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going concern, which is dependent upon the Company's ability to establish itself as a profitable business. At June 30, 2017, the Company had an accumulated deficit of $1,977,114 and for the three and six months ended June 30, 2017, incurred net losses of $352,472 and $544,270, respectively. Management expects that the Company may need to raise additional capital to sustain operations until such time as the Company can achieve profitability. However, there can be no assurance that management will be successful in obtaining additional funding or in attaining profitable operations.

 

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.

  9  
 

 

Significant Accounting Policies

 

There have been no changes from the Summary of Significant Accounting Policies described in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 12, 2017.

 

Liquidity and Capital Resources

 

The Company launched its Blackbox System web application for domestic use and made it available to subscribers in September 2016 and we have not yet attained a level of subscription sales revenue that would allow us to meet our current overhead. We do not contemplate attaining profitable operations prior to the end of the third quarter of 2017, nor is there any assurance that such an operating level can ever be achieved. Unless there is a significant change in cash requirements, the Company has sufficient working capital to fund any operating deficiencies and future development costs until the end of 2018.

 

At June 30, 2017, the Company had a cash balance of $386,470 and our working capital was $375,417 as compared to a cash balance of $4,347 and a working capital deficit of $112,243 at June 30, 2016.

 

Results of Operations

 

Comparison of Three Months Ended June 30, 2017 and 2016

 

For the three months ended June 30, 2017 and 2016, the Company’s revenue totaled $196,945 and $0, respectively, for which our respective costs of revenues totaled $133,192 and $0. The increase in revenue and costs of operations are the result of the Company’s launch of our Blackbox System web application for subscription in September 2016. We also generated license fee revenues from the BBTR System which was made available on a trial basis in May 2017. The majority of the costs of operations are data feed expenses for exchange information totaling approximately $81,686 for the three months ended June 30, 2017. Other costs of operations included subscriber referral payments of approximately $4,925 and website design and maintenance costs of approximately $46,581.

 

For the three months ended June 30, 2017, the Company had operating expenses totaling $415,707 compared to $167,293 for the same period in 2016, an increase of $248,414. This change is primarily a result of an increase in general and administrative expenses of approximately $84,785 which includes a decrease in salary and related expenses of approximately $3,430, an increase in other general office expenses of approximately $2,441, increased expenditures for development of marketing materials of approximately $43,809 and increases in travel and entertainment expenses of approximately $40,937. Telecom, internet and related computer expenses also decreased approximately $12,403, and legal and accounting expenses related to audits and regulatory filings increased approximately $13,431. The Company also recorded depreciation and amortization expense of $2,777 for the three months ended June 30, 2017 compared to $1,289 for the three months ended June 30, 2016. Software development costs also increased by approximately $162,141 from $42,449 for the three months ended June 30, 2016 compared to $204,590 for the three months ended June 30, 2017.

 

Comparison of Six Months Ended June 30, 2017 and 2016

 

For the six months ended June 30, 2017 and 2016, the Company’s revenue totaled $324,558 and $0, respectively, for which our respective costs of revenues totaled $229,472 and $0. The increase in revenue and costs of operations are the result of the Company’s launch of our Blackbox System web application for subscription in September 2016. We also generated license fee revenues from the BBTR System which was made available on a trial basis in May 2017. The majority of the costs of operations are data feed expenses for exchange information totaling approximately $148,713 for the six months ended June 30, 2017. Other costs of operations included subscriber referral payments of approximately $13,385 and website design and maintenance costs of approximately $67,374.

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For the six months ended June 30, 2017, the Company had operating expenses totaling $638,390 compared to $304,287 for the same period in 2016, an increase of $334,103. This change is primarily a result of an increase in general and administrative expenses of approximately $188,503 which includes an increase in salary and related expenses of approximately $1,914, an increase in office lease expenses of approximately $2,012, increased other general office expense of approximately $3,095, increased expenditures for development of marketing materials of approximately $59,802 and increases in travel and entertainment expenses of approximately $59,822. Telecom, internet and related computer expenses also increased approximately $42,533, and legal and accounting expenses related to audits and regulatory filings increased approximately $19,325. The Company also recorded depreciation and amortization expense of $4,771 for the six months ended June 30, 2017 compared to $2,578 for the six months ended June 30, 2016. Software development costs increased approximately $143,407 from $89,321 for the six months ended June 30, 2016 compared to $232,728 for the six months ended June 30, 2017.

 

Off Balance Sheet Arrangements

 

We do not have any off balance sheet arrangements.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

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

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Gust Kepler, our principal executive officer and 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, 2017, 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, the Company's principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures as of June 30, 2017 were not 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 June 30, 2017 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.

 

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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.

 

Management is aware that there is a lack of segregation of duties at the Company due to the fact that the Company only has one director and executive officer dealing with general administrative and financial matters. This constitutes a material weakness in the internal controls. Management has decided that considering the officer/director involved, the control procedures in place, and the outsourcing of certain financial functions, the risks associated with such lack of segregation were low and the potential benefits of adding additional employees to clearly segregate duties did not justify the expenses associated with such increases. Management periodically reevaluates this situation. In light of the Company’s current cash flow situation, the Company does not intend to increase staffing to mitigate the current lack of segregation of duties within the general administrative and financial functions.

 

PART II - OTHER INFORMATION

 

ITEM 1.  LEGAL PROCEEDINGS

 

None.

 

ITEM 1A.  RISK FACTORS

 

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

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEEDS

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

 

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ITEM 6. EXHIBITS

 

The following exhibits are filed with this Quarterly Report on Form 10-Q or are incorporated by reference as described below.

 

Exhibit Description
10.1 License Agreement dated August 9, 2017 between Blackboxstocks Inc. and EIGH8T TECHNOLOGIES INC.*
31.1 Certification of Principal Executive Officer pursuant to Rule 13a-14a/Rule 14d-14(a)*
31.2 Certification of Principal Financial Officer pursuant to Rule 13a-14a/Rule 14d-14(a)*
32.1 Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350**
32.2 Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350**
101.1 Interactive data files pursuant to Rule 405 of Regulation S-T*

  *        Filed herewith.

**        Furnished herewith

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

     
August 14, 2017 BLACKBOXSTOCKS INC.
     
   By:       /s/ Gust Kepler
  Gust Kepler
  President, Chief Executive Officer and Secretary (Principal Executive Officer and Principal Financial and Accounting Officer)

 

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EXHIBIT INDEX

 

 

Exhibit Description
10.1 License Agreement dated August 9, 2017 between Blackboxstocks Inc. and EIGH8T TECHNOLOGIES INC.*
31.1 Certification of Principal Executive Officer pursuant to Rule 13a-14a/Rule 14d-14(a)*
31.2 Certification of Principal Financial Officer pursuant to Rule 13a-14a/Rule 14d-14(a)*
32.1 Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350**
32.2 Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350**
101.1 Interactive data files pursuant to Rule 405 of Regulation S-T*

  *        Filed herewith.

**        Furnished herewith

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LICENSE AGREEMENT

 

This License Agreement (this “ Agreement ”) is made and entered into on August 9, 2017, by and between Blackboxstocks Inc. (“ Blackbox ”), a Nevada corporation and EIGH8T TECHNOLOGIES INC also known as Black Box Traders (referred to herein as “ BBTR ”), a British Virgin Island registered company. Blackbox and BBTR are each hereinafter referred to individually as a “ Party ” and collectively as the “ Parties .”

 

WHEREAS, Blackbox has developed and owns the rights to a software as a service (SaaS) web application platform (the " Blackbox System ") that serves as a tool for day traders and swing traders on securities exchange markets that works in real time, measuring market trends and data while utilizing a multitude of specific criteria, both live and historical derived from live feeds from securities exchange markets (the “ Services ”); and

 

WHEREAS, Blackbox has customized and agreed to grant BBTR a license to market and sell sublicense rights to utilize a customized version of the Blackbox System to be known as the “ BBTR System ” solely for providing Services relating to data from certain securities exchange markets in Asia (designated herein as the BBTR Exchanges), on the terms and conditions set forth herein;

 

NOW, THEREFORE, in consideration of the promises contained herein and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

1.                    D efinitions . Capitalized terms used herein and not defined elsewhere in this Agreement shall have the following meanings.

 

1.1                 “ Affiliate ” shall mean any corporation, partnership, tenancy-in-common or any other business entity or individual that, directly or indirectly, Controls, is Controlled by or is under common Control with a Party. “ Control ” means the ownership or control (directly or indirectly) of more than fifty percent (50%) of the voting capital or voting rights of an entity or other right (through securities, contract, or otherwise) to direct or cause the direction of the management and policies of that entity and “ Controlling ” and “ Controlled ” shall be construed accordingly.

 

1.2                 “ Blackbox Technology ” shall mean (a) any of the proprietary technology owned or licensed by Blackbox that is used in the BBTR System and (b) any other tools, software, technology and/or generic code used or included in the BBTR System.

 

1.3                 “ Customer ” shall mean a user of the BBTR System in the Territory that has obtained rights to the Services from BBTR or a BBTR Sublicensee.

 

1.4                 “ Exchange Fees ” shall mean any and all fees charged by the BBTR Exchanges or service providers collecting and/or providing BBTR Exchange Data, including but not limited to, any initial fees charged by the BBTR Exchanges (or service providers) for the initial access and/or continued access to the BBTR Exchange Data for use in connection with the BBTR System and Services.

 

1.5                 “ Intellectual Property Rights ” shall mean all intellectual and industrial property rights, whether registered or unregistered, including trade and service marks, patents, utility models, designs and design rights, trade and business names, domain names, rights in domain names, topography rights, copyrights, object/source code rights, algorithms, database rights, and all other similar proprietary rights which may subsist in any part of the world and all applications and registrations relating to any of the foregoing rights.

 

 

1.6                 “ BBTR Exchange Data ” shall mean data collected and/or derived from the BBTR Exchanges or activities carried out thereon necessary for the BBTR System to operate and provide Services to Customers.

 

1.7                 “ BBTR Exchanges ” shall mean the Hong Kong Stock Exchange (“ HKEX ”), Shanghai Stock Exchange (“ SSE ”) and Shenzhen Stock Exchange (“ SZSE ”).

 

1.8                 “ BBTR Sublicense ” shall mean a sublicense agreement pursuant to which BBTR may license the BBTR SYSTEM to a BBTR Licensee for use and/or resale of the Services through the BBTR System on a SaaS basis in a form specifically approved in advance and in writing by Blackbox containing, among other things, an express reservation of Blackbox’s rights to the Blackbox Technology in accordance with this Agreement. BBTR’s right to sublicense shall be limited to the use of the Blackbox Technology in connection with the processing of BBTR Exchange Data only.

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1.9                 “ BBTR Sublicensee ” shall mean a BBTR System sublicensee that has obtained sublicense rights from BBTR to provide access to and Services through the BBTR System pursuant to a BBTR Sublicense.

 

1.10              “ Launch Date ” shall mean June 1, 2017, the date that the BBTR System was made available to BBTR for use by Customers.

 

1.11              “ Territory ” shall mean worldwide.

 

1.12              “ Marks ” shall mean those trademarks, tradenames, service marks, logos, domain names, and styling provided by one Party to the other or otherwise approved in writing by a Party solely in connection with Parties’ exercise of the rights granted under this Agreement.

 

2.                    Development and Availability of BBTR System.

 

2.1                 BBTR System Development . Blackbox has customized and branded the BBTR System for providing Services to Customers utilizing BBTR Exchange Data, as mutually agreed by the Parties for marketing and sublicensing by BBTR. Except as mutually agreed by the Parties, BBTR shall be responsible for all costs associated with any further customization and branding of the BBTR System. Unless otherwise agreed by the Parties, BBTR shall pay within 30 calendar days of receipt of the invoice all additional customization costs which shall be negotiated in advance of any such customization services and invoiced by Blackbox via wire transfer per the instructions attached hereto as Exhibit A .

 

2.2                 Right to Disable/Deny Access to BBTR System . Blackbox shall retain the absolute right AND ABILITY to DISABLE AND/OR deny access to OR THE use of the BBTR System by BBTR, ITS AFFILIATES, ANY BBTR SUBLICENSEE(S) AND/OR ANY Customer(S) in the event that BBTR IS IN BREACH OF ANY MATERIAL OBLIGATIONS TO BLACKBOX, INCLUDING SPECIFICALLY (BUT NOT LIMITED TO) TIMELY PAYMENT OF LICENSE FEES . NEITHER BBTR NOR ANY OF ITS BBTR SUBLICENSEES SHALL MAKE ANY MODIFICATIONS TO THE BBTR SYSTEM OR BLACKBOX’S ACCESS TO THE BBTR SYSTEM IN ANY WAY THAT WOULD LIMIT BLACKBOX’S ABILITY TO DISABLE OR DENY ACCESS TO USE THE BBTR SYSTEM. ALL BBTR SUBLICENSES GRANTED HEREUNDER SHALL EXPRESSLY RESERVE SUCH RIGHTS TO BLACKBOX AND EACH BBTR SUBLICENSE PARTY SHALL AGREE TO HOLD BLACKBOX HARMLESS FOR ANY DAMAGES RESULTING FROM BLACKBOX’S EXERCISE OF ITS RIGHT TO DISABLE OR DENY ACCESS TO USE THE BBTR SYSTEM.

 

3.                    Marketing, Promotion and Sublicense of the BBTR System .

 

3.1                 Marketing. Promotion and Sublicense of BBTR System . Throughout the Term, BBTR shall use its commercially reasonable best efforts to market, promote and sublicense the BBTR System and use thereof by Customers. The BBTR System shall be sublicensed only pursuant to a BBTR Sublicense agreement in a form approved by Blackbox in advance and in writing.

 

3.2                 Compliance with Law . Throughout the Term, BBTR represents, warrants, covenants and agrees, that, at all times, at its sole cost and expense: (a) BBTR, its Affiliates and BBTR Sublicensees engaged in the performance of any activity or obligation as contemplated by this Agreement shall conform in all respects to and conduct itself in accordance with any and all applicable laws and regulations, (b) all licenses, permits, consents, authorizations and approvals as may be required by any authority, agency, body or other person for or in connection with any offering, promoting, marketing, sublicense and use of the BBTR System, BBTR sublicenses to use the BBTR System or the Services in any given country or territory, have been (or will be timely) obtained and maintained as required under applicable law in such country or territory (collectively, “ Regulatory Approvals ”), and (c) all performance and other activities of BBTR, its Affiliates and BBTR Sublicensees shall comply with all applicable law and the terms and conditions of this Agreement.

 

3.3                 Costs and Expenses . BBTR shall bear all cost and expense of its performance and activities under this Agreement, and those of any of BBTR Affiliate, without any right of reimbursement, compensation, or recovery therefor from Blackbox or any Blackbox Affiliate. Neither Blackbox nor any Blackbox Affiliate shall be liable or responsible for, or have any liability or obligation for, any cost or expenses of or incurred by BBTR or any BBTR Affiliate in the operation of their respective businesses. Nothing in this paragraph shall be construed to require BBTR to be responsible for the cost or expense of enforcing this Agreement as a result of a material breach by Blackbox.

 

4.                    Licenses and Intellectual Property Rights .

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4.1                 License to BBTR . Subject to the terms and conditions of this Agreement, Blackbox grants to BBTR during the Term, an exclusive, non-transferable, right and license to market, offer, sell and sublicense (subject to a BBTR Sublicense) the BBTR System and Services for use by Customers within the Territory. Except as specifically set forth herein, as between Blackbox and BBTR, all right, title and interest in and to the BBTR System, the Blackbox Technology and all Intellectual Property Rights therein, are reserved and shall be retained by Blackbox.

 

4.2                 License to BBTR . Subject to the terms and conditions of this Agreement, Blackbox hereby grants to BBTR during the Term a non-exclusive and worldwide, fully transferable, sublicensable license to use the BBTR Marks in connection with Blackbox’s development, advertisement, marketing, promotion, use and sale of the BBTR System during the Term in all media now known or hereafter devised. BBTR will use a standard form of sublicense agreement (the form of which has been pre-approved by Blackbox in compliance with the definition in section 1.9, above) to sublicense the BBTR System and Services to its Customers. In addition, BBTR will provide, on a monthly basis, a list of all new Customers to which BBTR has sublicensed the BBTR System and Services.

 

4.3                 Source Code Escrow . Concurrently with this Agreement, the parties shall execute a source code escrow agreement with Iron Mountain as escrow agent.  By August 10, 2017, Blackbox shall deposit a copy of the source code for the Blackbox Technology as implemented in the BBTR System into a source code escrow established with Iron Mountain.  Blackbox shall update the source materials escrowed thereby each time that it makes repairs, bug fixes, patches or upgrades to the Blackbox Technology.   Pursuant to the escrow agreement entered into by and among the Parties and Iron Mountain, (i) BBTR shall be named as beneficiary, and (ii) provided that BBTR is in compliance with the terms and conditions of this Agreement, the escrow agent shall release the Source Materials directly to BBTR if Blackbox: (1) files a voluntary petition of bankruptcy, (2) suffers or permits the appointment of a receiver for its business or assets, (3) becomes subject to any proceeding under, or case in, any bankruptcy or insolvency law, or (4) (vi) Blackbox announces that it has entered into an agreement to be acquired by a then named competitor of BBTR. BBTR shall be responsible for all charges incurred in establishing and maintaining such escrow account, and any annual charges of the escrow agent for the maintenance of BBTR as a beneficiary, which shall be made as a direct payment from BBTR to the escrow agent, as applicable. In the event of a release of Blackbox Technology source code pursuant to this section, said source code shall continue to be the exclusive property and Confidential Information of Blackbox or its successor in interest. In the event of a release of Blackbox Technology source code to BBTR from escrow, BBTR may only use, copy and/or modify the source code consistent with the purposes of this Agreement (or have a contractor who has agreed in writing to confidentiality provisions as restrictive as those set forth in this Agreement do so on its behalf).

 

5.                    Hosting, Support, Upgrades and BBTR Exchange Data .

 

5.1                 Hosting . The Parties agree that BBTR will make arrangements to host and operate the BBTR System. Notwithstanding the foregoing, BBTR shall grant Blackbox any necessary access to the hosted BBTR System to facilitate exercise of rights to disable the system as provided herein.

 

5.2                 Support . Throughout the Initial Term, Blackbox shall promptly provide all repairs, bug fixes, patches, and other routine maintenance for the BBTR System (Tier 3 Support), which shall be undertaken in accordance with the terms in Exhibit B (Support Terms) at the sole expense of Blackbox. Blackbox shall have no obligation to provide technical or use support for the BBTR system of any kind directly to BBTR Sublicensees or Customers.

 

5.3                 Upgrades . Throughout the Term, Blackbox and BBTR shall mutually agree upon whether or not the BBTR System should be enhanced in any respect(s) (all non-maintenance enhancements shall be considered “ Upgrades ”), and what Upgrades shall be made, if any. Upon mutual agreement of the Parties, Blackbox shall provide agreed Upgrades for the BBTR System on mutually agreed terms, including the Parties’ respective responsibilities for costs and expenses associated with development and implementation of any such Upgrades.

 

5.4                 BBTR Exchange Data . BBTR shall be solely responsible for making arrangements for the acquisition of and continued access to all necessary BBTR Exchange Data necessary for utilization of the BBTR System and the timely payment of all applicable Exchange Fees required for the operation, maintenance and use of the BBTR System. BBTR Exchange Data shall be made available for utilization by the BBTR System in the format and meeting the specifications prescribed by Blackbox. All such Exchange Fees shall be paid upon the terms and as required by the provider of the data for each of the BBTR Exchanges.

 

6.                    License Fees . The following license fees (“ License Fees ”) shall be payable via wire transfer per the instructions attached hereto as Exhibit A:

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6.1                 Initial Term License Fees . BBTR shall pay (or has prepaid) Blackbox the following amounts (“ Initial Term License Fees ”) during the Initial Term:

 

6.1.1               Upon the execution of this Agreement, the parties acknowledge that BBTR has advanced Blackbox the amount of US$250,000 as License Fees covering license rights to the BBTR System during the months of June, July and the first half of August 2017 and BBTR shall pay Blackbox an additional US$50,000 on or before the 15 th day of August, 2017;

 

6.1.2               BBTR shall pay Blackbox a monthly license fee of US$100,000 on or before the 1 st day of each of September 2017, October 2017, November 2017, December 2017, January 2018 and February 2018;

 

6.1.3               BBTR shall pay Blackbox a monthly license fee of US$125,000 on or before the 1 st day of each of March 2018, April 2018, May 2018 and June 2018; and

 

6.1.4               Beginning on July 1, 2018, BBTR shall pay Blackbox a monthly license fee of US$300,000 on or before the 1 st day of each month for the period beginning on July 1, 2018 and ending June 30, 2019.

6.2                 Renewal Term License Fees . No fewer than thirty (30) calendar days prior to the last day of the Initial Term and any Renewal Term subsequent to the Initial Term, the parties shall negotiate the license fee payable for the upcoming Renewal Term.  The new license fee shall be no more than 110% of the most recent flat monthly license fee in effect (the “ Renewal License Fee ”).  Unless the parties agree otherwise, the Renewal License Fee shall be payable in advance on or before the first day of each month.

7.                    Term and Termination .

 

7.1                 Term . The term of this Agreement commenced effective as of the Launch Date and, unless terminated earlier pursuant to any of this Agreement's express provisions, will continue through and including June 30, 2019 (the " Initial Term "). Unless terminated earlier pursuant to any of this Agreement's express provisions, the Agreement shall thereafter automatically renew for successive one (1) year terms (each, a “ Renewal Term ,“ and together with the Initial Term, the “ Term ”) until such time as a Party provides the other Party with written notice of termination; provided, however, that: (a) such notice must be given no fewer than fifteen (15) calendar days prior to the last day of the then-current Initial or Renewal Term; and, (b) any such termination shall be effective as of the date that would have been the first day of the next Renewal Term.

 

7.2                 Termination . In addition to any other express termination right set forth elsewhere in this Agreement:

 

7.2.1         Blackbox may terminate this Agreement, effective on written notice to BBTR, if BBTR fails to pay any License Fee when due hereunder if the failure to pay such License Fee has not been cured within four (4) business days of when BBTR receives notice that Blackbox has not received such payment.

 

7.2.2         Either party may terminate this Agreement, effective on written notice to the other party, if the other party materially breaches this Agreement (including without limitation the payment and support provisions in sections 5 and 6, above), and such breach: (i) is incapable of cure; or (ii) being capable of cure, remains uncured 10 days after the non-breaching party provides the breaching party with written notice of such breach.

 

7.2.3         Either party may terminate this Agreement, effective immediately, if the other party: (i) becomes insolvent or is generally unable to pay, or fails to pay, its debts as they become due; (ii) files or has filed against it a petition for voluntary or involuntary bankruptcy or otherwise becomes subject, voluntarily or involuntarily, to any proceeding under any domestic or foreign bankruptcy or insolvency law; (iii) makes or seeks to make a general assignment for the benefit of its creditors; or (iv) applies for or has appointed a receiver, trustee, custodian or similar agent appointed by order of any court of competent jurisdiction to take charge of or sell any material portion of its property or business.

 

7.3                 Effect of Termination . Upon any termination of this Agreement:

 

7.3.1            All licenses granted by either Party to the other Party under this Agreement will also expire or terminate, except to the extent that any license has an express term that continues for a longer period or is perpetual.

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7.3.2            The rights granted to BBTR to sublicense the BBTR System shall immediately terminate and BBTR shall discontinue all promotion, marketing, sublicensing, sales or other activities hereunder, except that BBTR shall continue to provide licensing with respect to BBTR System that have been ordered, and/or have been purchased by BBTR Sublicensees pursuant to the BBTR Sublicenses prior to the effective date of termination until such time as such BBTR Sublicenses terminate.

 

7.3.3            After termination of this Agreement for any reason, BBTR shall continue to pay to Blackbox the License Fees in accordance with this Agreement for any BBTR Sublicensee or Customer use of the BBTR System pursuant to a BBTR Sublicense entered into prior to the time of termination until such time as such BBTR Sublicenses terminate.

 

8.                    Representations and Warranties .

 

8.1                 Mutual Representations and Warranties . Each Party represents and warrants to the other Party that as of the date of this Agreement: (a) it is duly organized, validly existing and in good standing as a corporation or other entity as represented herein under the laws and regulations of its jurisdiction of incorporation, organization or chartering; (b) it has the full right, power and authority to enter into this Agreement and to perform its obligations hereunder; (c) the execution of this Agreement by its representative whose signature is set forth at the end hereof has been duly authorized by all necessary organizational action of the party; (d) when executed and delivered by such party, this Agreement shall constitute the legal, valid and binding obligation of that party, enforceable against that party in accordance with its terms; and (e) the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby does not and will not result in the breach of any term or provision of any contract or agreement to which the party is a party or by which it or its assets or properties are bound, and does not and will not constitute an event which with the lapse of time or action by a third party could result in any default under any of the foregoing.

 

8.2                 Intellectual Property Rights . Blackbox warrants and represents that the Blackbox Technology does not infringe any third party’s Intellectual Property Rights.

 

8.3                 Disclaimer . EACH PARTY DISCLAIMS ALL WARRANTIES AND REPRESENTATIONS BOTH IMPLIED AND EXPRESSED WHICH SUCH PARTY DOES NOT EXPRESSLY PROVIDE IN WRITING IN THIS AGREEMENT INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF FITNESS FOR PARTICULAR PURPOSE, TITLE, NON-INFRINGEMENT AND MERCHANTABILITY. This Section shall survive the expiration, cancellation or termination of this Agreement.

 

9.                    Indemnification .

 

9.1                 Blackbox . Blackbox shall indemnify, defend and hold harmless BBTR and its officers, directors, employees, agents, successors, and assigns from and against all third party claims, actions, losses, liability, costs, expenses, damages, judgments, and settlements including reasonable outside attorneys’ fees and court costs, which may be suffered, made or incurred by such parties arising out of or in connection with any material breach by Blackbox of Blackbox’s representations, warranties, undertakings or agreements of any nature whatsoever made or entered into by Blackbox contained in this Agreement, to the extent that such claims do not arise out of a breach by BBTR of this Agreement.

 

9.2                 BBTR . BBTR shall indemnify, defend and hold harmless Blackbox, and its Affiliates, and their respective officers, directors, employees, agents, successors, assigns from and against all third party claims, actions, losses, liability, costs, expenses, damages, judgments, and settlements including reasonable outside attorneys’ fees and court costs, which may be suffered, made or incurred by such parties arising out of or in connection with any material breach by BBTR of any of BBTR’s representations, warranties, undertakings or agreements of any nature whatsoever made or entered into by BBTR in connection with this Agreement, to the extent that such claims do not arise out of the breach by Blackbox of this Agreement.

 

9.3                 Procedure . Either party seeking indemnification under this Agreement (the “ Indemnified Party ”) shall promptly notify the party required to provide indemnification hereunder (the “ Indemnifying Party ”) of the existence of a claim or action (or threatened claim or action) and shall afford the Indemnifying Party the opportunity to participate in any compromise, settlement, litigation or other resolution of such claim, or action, or, at the election of the Indemnified Party, shall require the Indemnifying Party to assume the defense of any such claim or action; provided, however, that in the event the Indemnified Party elects to require Indemnifying Party to assume such defense, Indemnifying Party shall afford Indemnified Party the opportunity to participate fully in such defense at Indemnified Party’s expense. Indemnified Party shall have the right to retain its own counsel, at its own expense. Neither party shall compromise, settle or otherwise resolve such claim or litigation without the other party’s prior written consent, which shall not be unreasonably withheld or delayed; provided, however, that failure to respond within fifteen (15) business days following receipt of written notice at the address set forth in this Agreement shall constitute consent to the proposed compromise, settlement or resolution.

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9.4                 Settlement . The Indemnifying Party shall not, except with the consent of the Indemnified Party, consent to entry of any judgment or administrative order or enter into any settlement that (a) could affect the intellectual property rights or other business interest of the Indemnified Party; or (b) does not include as an unconditional term thereof the giving by the claimant or plaintiff to the Indemnified party of a release from all liability with respect to such claim or litigation; or (c) requires any consideration other than the payment of money by the Indemnified Party.

 

9.5                 Right to Defend . In the event that the Indemnifying Party does not accept the defense of any matter as above provided, the Indemnified Party shall have the full right to defend against any such claim or action, and shall be entitled to settle or agree to pay in full such claim or action, in its sole discretion without releasing any obligation or liability of the Indemnifying Party for the costs of defense, judgment or settlement.

 

10.                 LIMITATION OF DAMAGES . WITH THE EXCEPTION OF A PARTY’S INDEMNIFICATION OBLIGATIONS OR CONFIDENTIALITY OBLIGATIONS, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR HAVE A RIGHT AS AGAINST THE OTHER PARTY FOR CONSEQUENTIAL, SPECIAL, INDIRECT, INCIDENTAL, EXEMPLARY OR PUNITIVE DAMAGES HOWEVER CAUSED AND UNDER ANY THEORY OF LIABILITY AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE; PROVIDED, HOWEVER, LOST PROFITS SHALL BE RECOVERABLE. This Section shall survive the expiration, cancellation or termination of this Agreement.

 

11.                 Notices . Except as otherwise expressly set forth in this Agreement, all notices, requests, consents, claims, demands, waivers and other communications under this Agreement have binding legal effect only if in writing and addressed to a party as follows (or to such other address or such other person that such party may designate from time to time in accordance with this Section):

 

If to Blackbox:

 

Blackboxstocks Inc.

Lincoln Centre Three

5430 LBJ Freeway, Suite 1485

Dallas, Texas 75240

Attn: Gust C. Kepler, President

Email: Gust@blackboxstocks.com

Fax: (972) 726-7749

 

If to BBTR:

BBTR TECHNOLOGIES INC

600 North Bridge Road

#23-01 Parkview Square

Singapore 188778

Attn: Stephen Chiang

Email: mansapost@gmail.com

Fax: (To be provided when available)

 

Notices sent in accordance with this Section will be deemed effectively given: (a) when received, if delivered by hand, with signed confirmation of receipt; (b) when received, if sent by a nationally recognized overnight courier, signature required; (c) when sent, if by facsimile or e-mail, (in each case, with confirmation of transmission), if sent during the addressee's normal business hours, and on the next business day, if sent after the addressee's normal business hours; and (d) on the second day after the date mailed by certified or registered mail, return receipt requested, postage prepaid.

 

12.                 Confidentiality . “ Confidential Information ” shall mean any information or material that (a) is considered proprietary by the disclosing party; (b) not generally known other than by the disclosing party; and (c) any information which the disclosing party obtains from any third party that the disclosing party treats as proprietary or designates as confidential information, whether or not owned by the disclosing party. The receiving party agrees to hold in confidence and not to reveal to any person or entity any Confidential Information obtained during the course of performance under this Agreement without the prior written consent of the disclosing party. Notwithstanding the foregoing, either Party may disclose such information to its Affiliates on a need to know basis and subject to the confidentiality obligations contained herein. The foregoing restrictions do not apply to Confidential Information that (d) becomes publicly known other than by unauthorized disclosure by a Party in breach of this Agreement; (e) was in a Party’s lawful possession prior to disclosure and had not been obtained directly or indirectly from the other Party; or (f) is required by any court of competent jurisdiction or by governmental or regulatory authority to be disclosed, provided, however, the Party ordered to disclose any portion of any Confidential Information of the other Party shall immediately notify the other Party both orally and in writing. This Section shall survive the expiration or termination of this Agreement for a period of two (2) years.

  6  

 

 

13.                 Miscellaneous .

 

13.1              Independent Contractor Status . Each Party is an independent contractor under this Agreement, and nothing herein shall be construed to create a partnership, joint venture, or agency relationship between the Parties hereto. Neither Party shall have the authority to enter into agreements of any kind on behalf of the other Party and shall not have the power or authority to bind or obligate the other Party in any manner to any third party.

 

13.2              Further Acts . Each Party hereto agrees to perform any and all such further and additional acts and execute and deliver any and all such further and additional instruments and documents as may be reasonably necessary in order to carry out the provisions and effectuate the intent of this Agreement.

 

13.3              Assignment . This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. BBTR may not assign either this Agreement nor any of its rights, interests or obligations hereunder without the prior written approval of Blackbox.

 

13.4              No Third Party Beneficiaries . This Agreement is for the benefit of, and will be enforceable by, the Parties only. This Agreement is not intended to confer any right or benefit on any third party. No action may be commenced or prosecuted against a Party by any third party claiming as a third party beneficiary of this Agreement or any of the transactions contemplated by this Agreement.

 

13.5              Severability . If any term, provision, covenant, or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remainder of the terms, provisions, covenants, or restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired, or invalidated.

 

13.6              Rights and Remedies Cumulative . Any right or remedy afforded to either Party under any provision of this Agreement on account of any breach or default by the other Party is in addition to, and not in lieu of, any and all other rights and remedies afforded to such Party under any other provision of this Agreement, by law or otherwise on account of such breach or default.

 

13.7              Attorneys’ Fees . In any action to enforce any right or remedy under this Agreement, to recover any damages or other relief on account of any breach of or default under this Agreement, or to interpret any provision of this Agreement, the prevailing Party will be entitled to recover its costs and expenses (including reasonable attorneys’ fees) reasonably incurred in connection with such action or any appeal thereof.

 

13.8              Force Majeure . If fulfillment of any obligation under this Agreement (except for financial obligations) is prevented, restricted, or interfered with by causes beyond either Party’s reasonable control (“ Force Majeure ”), and if the Party unable to carry out its obligations gives the other Party prompt written notice of such event, then the obligations of the Party invoking this provision shall be suspended to the extent necessary by such event. As used in this Agreement, the term “Force Majeure” shall include acts of God, strikes or other labor disturbances, shortages of labor or materials, war (whether declared or undeclared), sabotage, terrorism, civil strife or commotion, governmental laws, regulations or restrictions or changes to governmental laws, regulations or restrictions, acts by governmental authorities, and any other cause or causes, whether or not similar to those specified herein, which cannot reasonably be controlled by such Party. If any such Force Majeure continues for a period in excess of 90 days, then any Party has the right to terminate this Agreement upon written notice to the other Party.

 

13.9              Governing Law and Forum .

 

13.9.1         THE VALIDITY, ENFORCEABILITY AND PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY UNITED STATES FEDERAL LAWS, TO THE EXTENT APPLICABLE, AND THE LAWS OF TEXAS, UNITED STATES OF AMERICA, WITHOUT REGARD OF ANY CONFLICT OF LAWS PROVISION THAT WOULD RESULT IN THE APPLICATION OF THE LAW OF ANY OTHER JURISDICTION, AND THE TERMS OF THIS AGREEMENT SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH SUCH LAWS. THE PARTIES HEREBY EXCLUDE THE APPLICATION OF THE U.N. CONVENTION FOR THE INTERNATIONAL SALE OF GOODS TO THIS AGREEMENT AND ANY ORDER, PURCHASE, AND SALE UNDER THIS AGREEMENT OR ANY OTHER TRANSACTION OR PERFORMANCE HEREUNDER.

  7  

 

 

13.9.2         Any controversy, dispute or claim arising out of or in connection with this Agreement may be resolved exclusively by binding arbitration in Texas, in accordance with the American Arbitration Association Commercial Arbitration Rules (which rules are deemed to be incorporated by reference in this clause). The language of the arbitration proceeding shall be English. Each Party shall pay its pro rata share of the costs and expenses of such arbitration, and each Party shall separately pay its own attorney's fees and expenses. The award rendered by the arbitrator(s) shall be final and binding upon and non-appealable by the Parties hereto. All such controversies, disputes or claims shall be settled in this manner in lieu of an action at law or equity; provided however, that nothing in this Section shall be construed as precluding the bringing of an action in U.S. District Court for the Northern District of Texas for injunctive relief or other equitable relief.

 

13.10          Amendments . This Agreement cannot be amended, modified or changed in any way except by a written instrument executed by all Parties.

 

13.11          No Waiver . The waiver by the Parties of any breach or default, or series of breaches or defaults, of any term, covenant, or condition herein shall not be deemed a waiver of any subsequent or continuing breach or default of the same or any other term, covenant, or condition contained in this Agreement. No such waiver shall be effective unless set forth in a writing signed by the Party being charged with the waiver.

 

13.12          Captions . The captions herein are inserted for reference and convenience only and in no way define, limit or describe the scope of this Agreement or intent of the provisions.

 

13.13          Exhibits . All Exhibits referred to in this Agreement shall be considered as part of this Agreement as fully as if and with the same force and effect as if such Exhibit had been included herein in full.

 

13.14          Entire Agreement . This Agreement, including all Exhibits attached hereto, contains the entire understanding and supersedes all prior and contemporaneous oral and written understandings of the parties hereto relating to the subject matter herein.

 

13.15          Counterparts . This Agreement may be executed in one or more counterparts, including those executed by facsimile, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. This Agreement shall be binding when one or more counterparts, individually or taken together, bear the signatures of each of the Parties reflected herein as signatories.

 

13.16          Construction . The following rules of construction apply to this Agreement: (i) any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be applied in the construction or interpretation of this Agreement; (ii) all references in this Agreement to a Section, Schedule, or Exhibit are intended to refer to a Section, Schedule, or Exhibit of this Agreement; (iii) the words “herein,” “hereof,” “hereunder,” and other words of similar import refer to this Agreement as a whole and not to any particular Section or other subdivision; (iv) the words “include” and “including,” and variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words “without limitation” if such words or the equivalent thereof are not present; (v) the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or;” (vi) whenever the context requires, the singular number shall include the plural, and vice versa, the masculine gender shall include the feminine and neuter genders, the feminine gender shall include the masculine and neuter genders, and the neuter gender shall include the masculine and feminine genders; (vii) captions and headings are only for reference; and (viii) unless the context requires otherwise, all references to “years,” “quarters,” “months,” or “days” shall mean “calendar years,” “calendar quarters,” “calendar months,” and “calendar days.”

 

[SIGNATURE PAGE TO FOLLOW]

 

 

  8  

 

 

IN WITNESS WHEREOF, the duly authorized officers of the parties have executed this Agreement on behalf of the respective parties as of the first date set forth above in this Agreement.

 

Blackboxstocks, Inc.

 

By: /s/Gust Kepler

Name: _ Gust Kepler _________________

Title: _______ CEO __________________

 

 

EIGH8T TECHNOLOGIES, INC.

 

 

By: /s/ Stephen Chiang

Name: _ Stephen Chiang ______________

Title: _______ CEO __________________

 

 

  9  

 

Exhibit A

 

Blackboxstocks, Inc.

Bank of America

 

Domestic Incoming Wire Transfer Routing Instructions:

· Receiver – Bank of America
· ABA # 026009593
· Beneficiary Account Number – 488052527580
· Beneficiary Account Name – Blackboxstocks Inc

 

Beneficiary Bank Info.

Bank of America

Preston Beltline Branch

14999 Preston Road

Building E

Dallas, Texas 75254

Phone 972-419-6100

 

International Incoming Wire Transfer Routing Instructions:

· Receiver - Bank of America
· SWIFT Code – BOFAUS3N
· Beneficiary Bank - Bank of America
· Beneficiary Account Number – 488052527580
· Beneficiary Account Name – Blackboxstocks, Inc.

 

Beneficiary Bank Info.

Bank of America

Preston Beltline Branch

14999 Preston Road

Building E

Dallas, Texas 75254

Phone 972-419-6100

 

 

 

  Exhibit A  

 

Exhibit B

 

SUPPORT TERMS

 

Blackbox agrees to provide the following Tier 3 support services (the “Support Services”) to BBTR in connection with the License Agreement (the “Agreement”) to which these terms are attached.

 

 

I.       Definitions

(a) “Error” means a replicable, material failure of the Blackbox Technology to conform to the specifications. Errors do not include, and Blackbox will have no responsibility for, any of the following circumstances which adversely impact the operation of the Blackbox Technology or the ability of Blackbox to provide Support Services: (i) the Blackbox Technology software has been modified or damaged in any manner by any person or entity other than Blackbox; (ii) the Blackbox Technology has been used outside the scope contemplated by this Agreement; (iii) any failure of the computer hardware, the computer operating system and/or other software utilized by BBTR, or use of such hardware, operating system or other software in versions or with specifications other than those specified by Blackbox; (iv) the Blackbox Technology has been installed or operated other than in accordance with instructions provided by Blackbox, including without limitation, on computer hardware, or operating systems other than for which that Blackbox Technology was designed; or (v) BBTR has failed to install the most recent Blackbox Technology made available to BBTR.

 

(b) “Support” means any bug fix, patch, repair or update required to enable the Blackbox Technology or BBTR System to operate according to their specifications.

 

(c) “Outage” means a failure caused by an Error of the Blackbox Technology as implemented in the LINQQ System to operate according to its specifications. The Severity Levels and Response and Repair Times for each level of Outage are defined in the table below.

 

(d) “Response Time” means the timeframe in which Blackbox will respond by telephone or email to any report by BBTR of an Outage, and will gather sufficient data to understand the nature and scope of the Outage.

 

(e) “Repair Time” means the timeframe in which Blackbox will provide the Support service necessary to restore the operation of the Blackbox Technology.

 

Severity Level Outage Criteria Response Time Repair Time
Minor Outage lasting up to 30 minutes in any business day. One hour 10 Days
Major Outage lasting more than 30 minutes but no more than two hours in any business day. Thirty minutes 5 Days
Critical Outage lasting more than two hours in any business day Fifteen minutes 2 Days

 

 

II.       Blackbox’s Obligations

 

Subject to payment of monthly license fee, Blackbox shall provide the following Support services:

 

(a) Telephone, and email or other electronic communication support as may be agreed to by the Parties during BBTR’s business hours within the time-frame provided above for problem determination, verification and resolution on a call-back or email response basis;

 

(b)           Repairs within the specified timeframe for each level of severity.

 

(c) Periodic software updates which Blackbox may make available to similarly situated licensees, provided that Blackbox may, but shall have no obligation under these Support terms, to provide enhancements that add functionality to Software; and

 

  Exhibit B  

 

 

(d)          Work diligently to resolve reproducible defects and errors in Software reported by Licensee.

 

 

III.       BBTR’s Obligations

 

BBTR agrees to provide:

 

(a)       Designated English speaking contact persons (not more than two) identified in Schedule A (or such other replacement individuals as BBTR may designate) as sole contacts for coordination and receipt of Support services, which persons shall be knowledgeable and trained on the BBTR System;

 

(b)       Reasonable supporting data to and aid in identification of reported problems;

 

and treat:

 

(c)       All updates delivered under this Support Agreement as Software in accordance with the terms of the License Agreement.

 

IV.       Service Credits

 

Blackbox shall issue a credit to BBTR, not to exceed 5% of the license fee paid by BBTR during the month for which a credit shall be applied, for any failure to deliver the Support services within the applicable Response or Repair Times, in accordance with the following formula:

 

Number of Users Affected * Time in Excess of Specified Response/Repair Time x Monthly License Fee

Number of Total Users * Total Number of Trading Hours During the Affected Month

 

 

  Exhibit B  

 

 

SCHEDULE A

TO

SUPPORT AGREEMENT

 

Licensee Designated Contacts:

 

 

Primary Contact:

 

Phone number:

 

E-Mail address:

 

 

 

Secondary Contact:

 

Phone number:

 

E-Mail address:

 

 

  Exhibit B  

 

 

Exhibit 31.1

 

CERTIFICATION PURSUANT TO

SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

 

I, Gust Kepler, certify that:

 

(1) I have reviewed this quarterly report on Form 10-Q of Blackboxstocks Inc.;

 

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

(4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
  (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
  (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
  (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

 

  (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

August 14, 2017   /s/ Gust Kepler
    Gust Kepler
    Principal Executive Officer

 

Exhibit 31.2

 

CERTIFICATION PURSUANT TO

SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

 

I, Gust Kepler, certify that:

 

(1) I have reviewed this quarterly report on Form 10-Q of Blackboxstocks Inc.;

 

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

(4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
  (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
  (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
  (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

 

  (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

August 14, 2017   /s/ Gust Kepler
    Gust Kepler
    Principal Financial Officer

 

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the quarterly report of Blackboxstocks Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2017 (the “Report”), I, Gust Kepler, Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

 

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

/s/ Gust Kepler

Gust Kepler

Principal Executive Officer

August 14, 2017

 

This certification accompanies the Report pursuant to §906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company or purposes of §18 of the Securities Exchange Act of 1934, as amended.

 

A signed original of this certification has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

EXHIBIT 32.2

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the quarterly report of Blackboxstocks Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2017 (the “Report”), I, Gust Kepler, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

 

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

/s/ Gust Kepler

Gust Kepler

Principal Financial Officer

August 14, 2017

 

This certification accompanies the Report pursuant to §906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company or purposes of §18 of the Securities Exchange Act of 1934, as amended.

 

A signed original of this certification has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.