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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported):  October 14, 2021
 
BLACKBOXSTOCKS INC.
(Exact name of registrant as specified in its charter)
 
Nevada
0-55108
45-3598066
(State or other jurisdiction
of incorporation)
(Commission
File No.)
(IRS Employer
Identification No.)
 
5430 LBJ Freeway, Suite 1485, Dallas, Texas 75240
(Address of Principal Executive Offices) (Zip Code)
 
Registrant’s telephone number, including area code: (972) 726-9203
 
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
None
N/A
N/A
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
 
 
 
Item 1.01 Entry into a Material Definitive Agreement.
 
Blackboxstocks, Inc. (the “Company”) entered into Conversion Rights Agreement (the “Agreement”) dated effective as of October 14, 2021 with Gust Kepler, who serves as a director, Chief Executive Officer and President of the Company. The Agreement limits the rights of the holder(s) of our outstanding shares of Series A Convertible Preferred Stock (the “Series A Stock”) provided under the Certificate of Designation of the Series A Stock to convert such shares into common stock, par value $0.0001 per share (the “Common Stock”) of the Company (the “Designation Conversion Rights”). Mr. Kepler currently holds all 3,269,998 issued and outstanding shares of our Series A Stock. Prior to the effective date of the Agreement, the Designation Conversion Rights permitted the holder of shares of Series A Stock to convert into shares of Common Stock on a 1-for-1 share basis. Pursuant to the terms of the Agreement, the Designation Conversion Rights are limited and exercisable based upon the Company reaching the following Market Capitalization thresholds, measured on the last day of each calendar quarter:
 
 
●
If the Company’s Market Capitalization is less than $150,000,000, the outstanding Series A Stock will be convertible into Common Stock on a 5-for-1 share basis;
 
●
If the Company’s Market Capitalization is equal to or greater than $150,000,000 but less than $200,000,000, the outstanding Series A Stock will be convertible into Common Stock on a 3.3-for-1 share basis;
 
●
If the Company’s Market Capitalization is equal to or greater than $200,000,000 but less than $250,000,000, the outstanding Series A Stock will be convertible into Common Stock on a 2.5-for-1 share basis;
 
●
If the Company’s Market Capitalization is equal to or greater than $250,000,000 but less than $350,000,000 the outstanding Series A Stock will be convertible into Common Stock on a 1.75-for-1 share basis;
 
●
If the Company’s Market Capitalization is equal to or greater than $350,000,000 the outstanding Series A Stock will thereafter convertible into Common Stock pursuant to the Designation Conversion Rights (on a 1-for-1 share basis).
 
The Agreement terminates when the last share of Series A Stock is either converted or the largest Market Capitalization Threshold is met.
 
Item 3.03 Material Modification to Rights of Security Holders.
 
The information included in Item 1.01 of this Current Report is also incorporated by reference into this Item 3.03 of this Current Report to the extent required.
 
Item 9.01 Financial Statements and Exhibits.
 
(d) Exhibits.
 
Exhibit
   
Number
 
Description
     
10.1
 
     
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)
 
 
 
 
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 hereunto duly authorized.
 
Date: October 14, 2021
 
BLACKBOXSTOCKS INC.
 
By: /s/Gust Kepler                                                             
       Gust Kepler, President and Chief Executive Officer
 
 

Exhibit 10.1

 

CONVERSION RIGHTS AGREEMENT

 

This Conversion Rights Agreement (the “Agreement”), dated effective as of October 14, 2021 (the “Effective Date”), is by and between Blackboxstocks, Inc., a Nevada corporation (the “Company”) and Gust Kepler, an individual resident of the State of Texas (along with any transferee of Holder Shares (hereinafter defined) that enters into a Joinder Agreement (hereinafter defined), the/a “Holder”).

 

WHEREAS, Holder is the registered beneficial owner of 3,269,998 shares (the “Holder Shares”) of Series A Convertible Preferred Stock (the “Series A Stock”) of the Company as of the Effective Date;

 

WHEREAS, the Company has requested that Holder agree to limit its right under the Certificate of Designation of the Series A Stock (the “Series A Designation”) to convert the Holder Shares (the “Designation Conversion Rights”) into common stock, par value $0.0001 per share (the “Common Stock”) of the Company as provided in this Agreement; and

 

WHEREAS, the Holder is willing to forego and limit conversion rights with respect to the Holder Shares, subject to the terms and conditions more particularly described in this Agreement;

 

NOW THEREFORE, in consideration of the foregoing recitals, the covenants and agreements contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and confessed, the parties hereto agree as follows:

 

1.        Limits on Conversion of Holder Shares. Notwithstanding the Designation Conversion Rights and/or anything to the contrary in the Series A Designation, the Holder Shares may only be converted into Common Stock of the Company upon the following terms:

 

(a)          In the event that Company’s Market Capitalization is less than $150,000,000 on the last trading day of any calendar quarter, the outstanding Holder Shares shall be convertible into Common Stock on a 5-for-1 share basis;

 

(b)          In the event that Company’s Market Capitalization is equal to or greater than $150,000,000 but less than $200,000,000 on the last trading day of any calendar quarter, the outstanding Holder Shares shall be convertible into Common Stock on a 3.3-for-1 share basis;

 

(c)          In the event that Company’s Market Capitalization is equal to or greater than $200,000,000 but less than $250,000,000 on the last trading day of any calendar quarter, the outstanding Holder Shares shall be convertible into Common Stock on a 2.5-for-1 share basis;

 

(d)          In the event that Company’s Market Capitalization is equal to or greater than $250,000,000 but less than $350,000,000 on the last trading day of any calendar quarter, the outstanding Holder Shares shall be convertible into Common Stock on a 1.75-for-1 share basis; and

 

(e)          In the event that Company’s Market Capitalization is equal to or greater than $350,000,000 on the last trading day of any calendar quarter, the outstanding Holder Shares shall be thereafter convertible into Common Stock pursuant to the Designation Conversion Rights (on a 1-for-1 share basis) as provided for in the Certificate of Designation.

 

(f)         In the event that the conversion ratio for the Holder Shares increases as a result of meeting the Market Capitalization thresholds stated in section 1(b), (c), (d) or (e) above the conversion ratio shall not be reduced at a later date regardless of the Company’s Market Capitalization.

 

 
 

 

For purposes of this Agreement, “Market Capitalization” shall be calculated by multiplying the total number of issued and outstanding shares of Common Stock plus the total number of common stock equivalent shares (as calculated using the treasury stock method in the same manner as calculating earnings per share in accordance with generally accepted accounting principles) by the Current Market Price on the applicable calculation date. The “Current Market Price” shall be the volume-weighted average price of the Company’s Common Stock on each trading day during the thirty (30) consecutive days immediately preceding the price calculation date. Notwithstanding anything to the contrary in the Series A Designation, conversion of Holder Shares by the Company as provided in this Agreement shall be considered full performance of any and all Company obligations with respect to any Holder Shares tendered for conversion and the Company shall have no further obligation to Holder with respect to such Holder Shares.

 

2. Joinder of Holder Share Transferees. Prior notice shall be given to the Company by the Holder of any transfer of the Holder Shares. Prior to consummation of any transfer by the Holder of any of the Holder Shares, Holder shall cause: (i) any transferee who is not already a party to this Agreement to execute and deliver to the Company a Joinder Agreement in the form of Exhibit A hereto (a “Joinder Agreement”) and in which such transferee agrees to be bound by the terms and conditions of this Agreement; and (ii) if the transferee is an individual, any spouse of such transferee to execute and deliver to the Company a Spousal Consent. Upon any transfer of Holder Shares by any holder thereof, in accordance with this Section 2 and the other terms of this Agreement, the transferee thereof shall be substituted for, and shall assume all the rights and obligations under this Agreement of, the transferor thereof.

 

3.         Termination. This Agreement shall terminate upon the earlier of (a) the date on which all of the Holder Shares have been converted to Common Stock and (b) the date the Market Capitalization threshold stated in section 1(e) above is met.

 

4.            Miscellaneous.

 

(a)       Further Assurances. In connection with this Agreement and the transactions contemplated hereby, the Company and each holder hereby agrees, at the request of the Company, to execute and deliver such additional documents, certificates, instruments, conveyances, and assurances and to take such further actions as may be required to carry out the provisions hereof and give effect to the transactions contemplated hereby.

 

(b)         Amendment and Modification. This Agreement may only be amended, modified, or supplemented by an instrument in writing executed by the Company and the Holder (or holders) holding all of the issued and outstanding Holder Shares.

 

(c)         Waiver. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach, or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power, or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege.

 

(d)       Spousal Consent. Each holder of Holder Shares who has a spouse on the date of this Agreement or a Joinder Agreement shall cause such holder’s spouse to execute and deliver to the Company a spousal consent in the form of Exhibit B hereto (a “Spousal Consent”), pursuant to which the spouse acknowledges that he or she has read and understood the Agreement and agrees to be bound by its terms and conditions. If any holder of Holder Shares should marry or engage in a marital relationship following the date of this Agreement or a Joinder Agreement, such holder of Holder Shares shall cause his or her spouse to execute and deliver to the Company a Spousal Consent within five business days thereof.

 

[The remainder of this page has intentionally been left blank]

 

 
 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.

 

 

Company:

   
 

Blackboxstocks, Inc., a Nevada corporation

 

 

By: ____________________________
    Robert Winspear, Chief Financial Officer

   
 

Holder:

   
  _______________________________
Gust Kepler

 

 
 

 

 

Exhibit A

 

JOINDER AGREEMENT

 

Reference is hereby made to the Conversion Rights Agreement dated effective as of October 14, 2021 (as amended from time to time, the “Agreement”), by and by and between Blackboxstocks, Inc., a Nevada corporation (the “Company”) and Gust Kepler, an individual resident of the State of Texas (along with any transferee of Holder Shares (hereinafter defined) that enters into a Joinder Agreement (hereinafter defined), the/a “Holder”). Pursuant to and in accordance with Section 2 of the Agreement, the undersigned hereby agrees that upon the execution of this Joinder Agreement, it shall become a party to the Agreement and shall be fully bound by, and subject to, all of the covenants, terms and conditions of the Agreement as though an original party thereto and shall be deemed to be a Holder of Holder Shares of the Company for all purposes thereof.

 

Capitalized terms used herein without definition shall have the meanings ascribed thereto in the Stockholders Agreement.

 

IN WITNESS WHEREOF, the parties hereto have executed this Joinder Agreement as of ________________________.

 

 

[TRANSFEREE STOCKHOLDER]

 

 

By_____________________

 

Name:

Title:

 

 
 

 

Exhibit B

 

CONSENT OF SPOUSE

 

I, _______________, spouse _______________, acknowledge that I have read the Conversion Rights Agreement Conversion Rights Agreement dated effective as of October 14, 2021, by and by and between Blackboxstocks, Inc., a Nevada corporation (the “Company”) and Gust Kepler, an individual resident of the State of Texas (along with any transferee of Holder Shares (hereinafter defined) that enters into a Joinder Agreement (hereinafter defined), the/a “Holder”), to which this form of Consent is attached as Exhibit B (as amended from time to time, the “Agreement”), and that I understand the contents of the Agreement. I am aware that my spouse is a party to the Agreement and the Agreement contains provisions regarding and limiting the conversion of shares of Series A Convertible Preferred Stock (the “Series A Stock”) of the Company of the Company which my spouse may own, including any interest I might have therein.

 

I hereby agree that I and any interest, including any community property interest, that I may have in any shares of Series A Stock of the Company subject to the Agreement shall be irrevocably bound by the Agreement, including any limitations on conversion, transfer or other obligations as set forth in the Agreement. I hereby appoint __________________ as my attorney-in-fact with respect to the exercise of any rights and obligations under the Agreement.

 

This Consent shall be binding on my executors, administrators, heirs and assigns. I agree to execute and deliver such documents as may be necessary to carry out the intent of the Agreement and this Consent.

 

I am aware that the legal, financial and related matters contained in the Agreement are complex and that I am free to seek independent professional guidance or counsel with respect to this Consent. I have either sought such guidance or counsel or determined after reviewing the Agreement carefully that I will waive such right. I am under no disability or impairment that affects my decision to sign this Consent and I knowingly and voluntarily intend to be legally bound by this Consent.

 

Dated as of __________

 

 

___________________________

(Signature)

 

___________________________

(Print Name)