Blackboxstocks, Inc. Secures Financing of up to $2,000,000 in Anticipation of Potential Merger

Rhea-AI Summary

Blackboxstocks (NASDAQ: BLBX) has secured financing of up to $2,000,000 through a Securities Purchase Agreement dated January 17, 2025. The deal includes an Initial Debenture of $250,000 and Additional Debentures totaling $2,000,000, both bearing a 7% annual interest rate.

The Additional Debentures will be released in four tranches: $250,000 from Initial Debentures exchange, $500,000 upon Merger Agreement execution, $750,000 upon S-4 registration filing, and $500,000 upon registration effectiveness. The debentures are convertible into common stock at 175% of the prior day's closing price, with a $5.00 floor price.

If repaid in cash at maturity, holders receive a 115% premium. Conversion is to prevent holders from owning more than 9.9% of outstanding common stock, with an option to reduce this limit to 4.9%.

Positive

• Secured up to $2M in financing for operational needs and transaction expenses
• Debentures convertible at 175% premium to market price indicates confidence in higher valuation
• $5.00 floor price protects against excessive dilution
• Structured financing tied to merger milestones provides staged capital access

Negative

• 7% annual interest rate adds to debt burden
• 115% premium required for cash repayment increases potential debt cost
• Potential dilution if debentures are converted to common stock
• Short maturity period of 12 months or merger closing creates time pressure

Insights

Financial Analyst

The recently announced financing deal for Blackboxstocks reveals a strategic approach to funding potential merger activities while protecting shareholder value. The structure breaks down into several key components:

Initial Financing Structure:

• An immediate $250,000 tranche at 7% interest
• Potential expansion to $2 million total, released in stages tied to merger milestones
• Conversion terms set at 175% premium to market price with a $5.00 floor

The deal's structure offers several notable advantages for both the company and investors. The premium conversion price and floor significantly reduce potential dilution risk compared to typical convertible arrangements. This suggests the financing partner has strong confidence in the company's future prospects, particularly regarding the anticipated merger.

The milestone-based release of funds is particularly strategic, as it:

• Minimizes immediate dilution risk
• Aligns financing with specific merger progress points
• Provides built-in due diligence checkpoints
• Maintains cash efficiency by matching capital inflows with actual needs

The 9.9% beneficial ownership limitation, with an option to reduce to 4.9%, serves as a protective mechanism against significant ownership concentration. This suggests careful consideration of existing shareholder interests in the deal's structure.

For a microcap company with a market cap around $6.1 million, securing financing at these terms is notably positive, especially given current market conditions. The 7% interest rate is relatively competitive for a company of this size, while the 115% cash repayment premium provides reasonable protection for the lender without being overly burdensome.

The timing and structure strongly suggest that merger discussions are already at an advanced stage, though specific details remain undisclosed. The S-4 registration statement milestone indicates this could be a significant transaction that might fundamentally transform the company's market position.

Debentures are convertible into common stock priced at 175% premium to market from the prior days’ closing price with a $5.00 floor

DALLAS, Jan. 22, 2025 (GLOBE NEWSWIRE) -- Blackboxstocks Inc. (NASDAQ: BLBX), (“Blackbox” or the “Company”), a financial technology and social media hybrid platform offering real-time proprietary analytics for stock and options traders, announced today that on January 17, 2025 the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) pursuant to which the Purchaser agreed to purchase from the Company senior debentures having an aggregate principal amount of $250,000 (the “Initial Debentures”) and amended and restated senior secured convertible debentures having an aggregate principal amount of $2,000,000 (the “Additional Debentures”, and together with the Initial Debentures, the “Debentures”) upon certain closing conditions applicable to the Initial Debentures and Additional Debentures, respectively.

The Initial Closing of $250,000 was consummated on January 17, 2025. The Initial Debentures bear interest at a rate of 7.00% per annum and will mature on the earlier to occur of the date on which a definitive agreement relating to any “Merger Transaction” (as defined in the Purchase Agreement) or March 15, 2025.

At the Additional Closing, the Initial Debentures will be exchanged for the Additional Debentures as senior indebtedness secured by a first priority security interest on substantially all of the assets of the Company. The aggregate principal amount of the Additional Debentures will be $2,000,000 which will be funded by the Purchaser with (i) $250,000 in principal amount credited from the exchange of Initial Debentures, (ii) $500,000 upon execution and delivery of a Merger Agreement, (iii) $750,000 upon the filing with the Securities and Exchange Commission of a registration statement on Form S-4 in connection with the Merger Transaction, and (iv) $500,000 upon the registration statement being declared effective. The Additional Debentures will bear interest at a rate of 7.00% per annum and will mature on the earlier of the closing of the Merger Transaction (as defined in the Purchase Agreement) or 12 months following the issuance of the Additional Debentures (the “Additional Debenture Maturity Date”).

On the Maturity Date, the Company will repay the aggregate accrued interest and principal amount of the Additional Debentures, and the Additional Debentures may not be prepaid without the written consent of the holders thereof. In the event the Additional Debentures are repaid in cash, the holders shall receive a premium equal to 115% of the outstanding principal and accrued interest balance due on such date. In the event the Additional Debentures are not repaid on the Maturity Date, subject to certain limitations and absence of an event of default, the holders may convert the aggregate principal amount and accrued interest of the Additional Debentures into Company common stock at the conversion price, which will be 175% of the closing price of the Company’s common stock on the trading day immediately prior to the execution of the Additional Debentures with a minimum price of $5.00 per share of common stock. Notwithstanding the foregoing, the Additional Debentures will not be convertible into Company common stock if, after such conversion, the holders would beneficially own more than 9.9% of the Company common stock outstanding. The holders may elect to reduce such 9.9% beneficial ownership limitation to 4.9%, effective immediately upon such election.

Gust Kepler, Chief Executive Officer of Blackbox, commented: “We are excited to have completed this transaction as we work towards securing a merger transaction that will create significant stockholder value. This financing will help provide the interim capital we need for our operations as well as anticipated transaction expenses in the near future.”

About Blackboxstocks, Inc.

Blackboxstocks, Inc. is a financial technology and social media hybrid platform offering real-time proprietary analytics and news for stock and options traders of all levels. Our web-based software employs "predictive technology" enhanced by artificial intelligence to find volatility and unusual market activity that may result in the rapid change in the price of a stock or option. Blackbox continuously scans the NASDAQ, New York Stock Exchange, CBOE, and all other options markets, analyzing over 10,000 stocks and up to 1,500,000 options contracts multiple times per second. We provide our users with a fully interactive social media platform that is integrated into our dashboard, enabling our users to exchange information and ideas quickly and efficiently through a common network. We recently introduced a live audio/screenshare feature that allows our members to broadcast on their own channels to share trade strategies and market insight within the Blackbox community. Blackbox is a SaaS company with a growing base of users that spans over 40 countries; current subscription fees are $99.97 per month or $959.00 annually.

For more information, go to: https://blackboxstocks.com/

Safe Harbor Clause and Forward-Looking Statements

This press release includes forward-looking statements. All statements other than statements of historical facts contained in this press release, including statements regarding our future results of operations and financial position, business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “expose,” “intend,” “may,” “might,” “opportunity,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements contained in this press release are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors” in our filings with the Securities and Exchange Commission (the “SEC”), including our reports on Forms 10-K, 10-Q, 8-K and other filings that we make with the SEC from time to time. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. These risks and others described under “Risk Factors” in our SEC filings may not be exhaustive.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this press release. In addition, even if our results or operations, financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in this press release, those results or developments may not be indicative of results or developments in subsequent periods.

Disclosure Information

Blackboxstocks uses and intends to continue to use its Investors website at https://blackboxstocks.com/company-overview as a means of disclosing material nonpublic information and for complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor the Company’s Investors website, in addition to following the Company’s press releases, SEC filings, public conference calls, presentations and webcasts.

Contacts

Investors@blackboxstocks.com

PCG Advisory
Jeff Ramson
(646) 863-6893
jramson@pcgadvisory.com

FAQ

What are the key terms of BLBX's $2M convertible debenture financing announced on January 17, 2025?

The financing includes Initial Debentures of $250,000 and Additional Debentures of $2M, both at 7% interest. Debentures are convertible at 175% of prior day's closing price with a $5.00 floor, and include a 115% premium if repaid in cash.

How will the $2M financing be disbursed to BLBX?

The financing will be released in four tranches: $250,000 from Initial Debentures exchange, $500,000 upon Merger Agreement execution, $750,000 upon S-4 registration filing, and $500,000 upon registration effectiveness.

What is the conversion price structure for BLBX's 2025 debentures?

The debentures are convertible at 175% of the closing price from the prior trading day, with a minimum price of $5.00 per share, subject to a 9.9% beneficial ownership limitation.

When do BLBX's 2025 convertible debentures mature?

The Initial Debentures mature by March 15, 2025, while the Additional Debentures mature at the earlier of merger closing or 12 months after issuance.