Executive Summary / Key Takeaways

• Strategic Pivot to Rare Earths: Blackboxstocks (NASDAQ:BLBX) is undergoing a profound transformation, shifting its core investment thesis from a niche financial technology platform to a vertically integrated rare earth and magnet materials company through its pending merger with REalloys Inc. This strategic pivot aims to capitalize on the rapidly expanding and geopolitically critical North American rare earth sector.
• Fintech Headwinds & Diversification: The legacy Blackbox System, an AI-driven trading analytics platform, has faced significant headwinds, evidenced by declining subscription revenue and persistent operating losses. This challenging environment for its predominantly options-trading user base underscored the necessity of the company's diversification strategy, leading to the REalloys merger.
• Robust Rare Earth Foundation: REalloys is building a "mine-to-magnet" supply chain, underpinned by the Hoidas Lake rare earth deposit (2.153 million tons of Total Rare Earth Oxides at 1.906% grade), magnet metal production capabilities from PMT Critical Metals Inc., and strategic alliances with entities like the Saskatchewan Research Council (targeting 500 mt/year by 2026, 1,000 mt by 2028), JOGMEC, Critical Metals Corp., and St George Mining.
• Strong Financial Backing & Geopolitical Alignment: The merger is expected to bring substantial capital, including $5.00 million upon completion, and has garnered significant support, such as a $200 million Letter of Interest from the U.S. EXIM Bank, aligning REalloys with national priorities for supply chain independence from China.
• Liquidity and Going Concern Addressed: While the legacy fintech operations have raised "substantial doubt" about the company's ability to continue as a going concern, the REalloys merger and associated financings are positioned as critical solutions to enhance liquidity and fund future operations, fundamentally altering the company's financial trajectory.

A New Horizon: Blackboxstocks' Strategic Metamorphosis

Blackboxstocks Inc. (NASDAQ:BLBX), originally established in 2014, built its foundation as a financial technology and social media hybrid platform. Its flagship offering, the Blackbox System, launched in September 2016, provided real-time proprietary analytics and news for stock and options traders, leveraging predictive technology enhanced by artificial intelligence. This system continuously scans major exchanges, analyzing over 10,000 stocks and 1.5 million options contracts multiple times per second to identify volatility and unusual market activity. The platform's integrated social media dashboard and live audio/video features fostered a community for traders across more than 40 countries, embodying a Software as a Service (SaaS) business model. The company believes its Blackbox System is a "unique and disruptive financial technology platform combining proprietary analytics and broadcast enabled social media to connect traders of all types worldwide on an intuitive, user-friendly system."

However, the macro environment in recent years presented significant headwinds for this core fintech business. Declining GDP, high inflation, and a volatile stock market, particularly in 2022, created challenging conditions for Blackboxstocks' predominantly directional options traders, leading to increased churn. In response, the company proactively initiated a diversification strategy, developing new products like "Stock Nanny" for self-directed investors and "Blackbox Pro" for institutional traders, while also introducing discounted promotions to maintain its user base. This strategic foresight culminated in a pivotal shift in 2025: the definitive merger agreement to acquire REalloys Inc., marking a transformative entry into the critical rare earth sector. This move fundamentally reshapes BLBX's investment narrative, positioning it as a key player in North America's burgeoning mine-to-magnet supply chain, while its legacy fintech operations will continue as a wholly-owned subsidiary, Blackbox.io Inc.

Technological Edge: Powering Both Fintech and Critical Minerals

Blackboxstocks' technological differentiation has historically centered on its AI-driven predictive analytics. The Blackbox System's core strength lies in its ability to process vast amounts of real-time market data, scanning over 10,000 stocks and 1.5 million options contracts multiple times per second across major exchanges. This proprietary technology is designed to detect unusual market activity and volatility, providing traders with an "edge" through real-time alerts and scanners. The platform's social media integration, including live audio/video broadcasting, further enhances its value proposition by fostering a collaborative trading community. This combination of advanced analytics and social interaction aims to deliver superior insights compared to more traditional trading platforms.

The strategic pivot to REalloys introduces a new dimension of technological and operational differentiation. REalloys is actively building a vertically integrated "mine-to-magnet" supply chain in North America, a complex endeavor with significant technological requirements. This includes the upstream Hoidas Lake Rare Earth Deposit in Saskatchewan, Canada, which boasts a Measured and Indicated Mineral Resource Estimate of 2.153 million tons of Total Rare Earth Oxides (TREO) at an average grade of 1.906%. This deposit is notable for its unique combination of both Heavy Rare Earth Elements (HREEs) and Light Rare Earth Elements (LREEs).

Midstream processing capabilities are being advanced through a Memorandum of Understanding (MOU) with the Saskatchewan Research Council (SRC). This collaboration aims to establish domestic midstream processing, leveraging SRC's Rare Earth Separation Processing Facility, which achieved commercial production of rare earth oxides and metals in September 2024. The combined production capacity for high-performance magnet materials is targeted to expand to 500 metric tonnes (mt) per year in 2026 and 1,000 mt by 2028. Downstream, REalloys acquired PMT Critical Metals Inc. in March 2025, gaining magnet metal production equipment, intellectual property, and existing contracts with key clients like the U.S. Defense Logistics Agency and the U.S. Department of Energy’s AMES National Laboratory. This facility in Euclid, Ohio, is capable of metalizing rare earth oxides into magnet metals, supporting the production of high-performance magnets critical for U.S. protected markets, including defense and advanced technologies.

The "so what" for investors is clear: Blackboxstocks is transitioning from a company whose technological moat was in software analytics to one that combines that with a tangible, strategically vital, and technologically advanced physical supply chain. The quantitative targets for rare earth production and the established resource base at Hoidas Lake provide concrete metrics for evaluating the potential impact of this new technological direction on future revenue and market positioning. This dual technological focus, particularly the rare earth vertical integration, aims to create a robust competitive advantage in a market driven by national security and industrial independence.

Competitive Landscape: From Crowded Fintech to Strategic Minerals

In the fintech space, Blackboxstocks has operated in a competitive environment characterized by a "plethora of new services for traders," as noted by CEO Gust Kepler in Q2 2022. Direct competitors include established players like Interactive Brokers (IBKR) and Charles Schwab (SCHW), which offer comprehensive trading platforms and tools, and newer entrants like Robinhood (HOOD) focusing on commission-free trading and user-friendly interfaces. Blackboxstocks differentiates itself through its proprietary AI-driven analytics and integrated social media platform, fostering a community aspect that some larger, more traditional brokers may lack. However, its smaller scale compared to IBKR and SCHW, which benefit from diversified revenue streams and extensive infrastructure, has historically meant higher operating costs and potentially slower market penetration. While Blackboxstocks leads in community-focused innovation, it has lagged in overall financial health and market share capture compared to these larger, more diversified competitors.

The merger with REalloys dramatically alters Blackboxstocks' competitive positioning, moving it into the strategically critical rare earth and magnet materials sector. This market is characterized by geopolitical importance, supply chain security concerns, and high barriers to entry due including significant capital investment and specialized technological expertise. REalloys is positioning itself as a cornerstone of the U.S. defense and industrial magnet materials supply chain, a market driven by national priorities to reduce dependency on Chinese rare earth sources.

REalloys' competitive advantages in this new arena are multifaceted. The company has secured strategic alliances, including a Memorandum of Understanding with the Japan Organization for Metals and Energy Security (JOGMEC), marking JOGMEC’s first engagement with a U.S.-based rare earth company to strengthen the U.S.-Japan rare earth supply chain. Furthermore, REalloys has inked a Letter of Intent for a 10-year offtake agreement with Critical Metals Corp. (NASDAQ:CRML) for 15% of its projected rare earth concentrate production from the Tanbreez Project in Greenland, one of the world's largest heavy rare earth deposits. Another strategic alliance with St George Mining Limited secures access to up to 40% of rare earth production from the Araxá Project in Brazil. These partnerships provide REalloys with diversified, high-grade rare earth feedstock, a critical component in building a resilient supply chain. The company's efforts are also bolstered by a $200 million Letter of Interest from the U.S. Export-Import Bank (EXIM Bank), underscoring U.S. commitment to allied critical-minerals supply chain independence. This robust network of upstream resources, midstream processing capabilities, and downstream production, coupled with governmental and international support, provides REalloys with a formidable competitive moat in a sector vital for national defense and advanced industries.

Financial Performance and Liquidity: A Pivotal Transition

Blackboxstocks' financial performance in its legacy fintech business has reflected the challenging market conditions and the ongoing investment in diversification. For the nine months ended September 30, 2025, total revenue declined by 9% to $1.80 million, compared to $1.98 million in the prior year period. This decrease was primarily attributed to fewer subscribers and a slightly lower average revenue per subscriber, which fell to $69.48 from $73.93, influenced by promotional offerings earlier in 2025. Gross margins for the nine-month period also saw a decline to 43.60% from 49.20% in 2024, driven by lower absorption of fixed costs and reduced average revenue per subscriber.
Despite a 4.20% decrease in operating expenses to $3.26 million for the nine months ended September 30, 2025, the company reported an operating loss of $2.47 million, an increase from $2.42 million in the prior year. The net loss for the same period was $2.82 million.

These figures, coupled with cash flows used in operations totaling $2.82 million for the nine months ended September 30, 2025, have raised "substantial doubt about the Company’s ability to continue as a going concern."

Liquidity has been a critical focus. As of September 30, 2025, cash and cash equivalents stood at $93,186, an increase from $17,036 at December 31, 2024. This improvement was largely driven by financing activities, which provided $2.73 million for the nine months ended September 30, 2025. Key components included $2.05 million from a senior secured convertible debenture with Five Narrow Lane LP (FNL) and $1.04 million in gross proceeds from an At-The-Market (ATM) Issuance Sales Agreement. An additional $250,000 funding from FNL is anticipated upon the SEC declaring the Merger Registration Statement effective.

The REalloys merger is central to addressing these liquidity concerns and transforming the financial outlook. REalloys has already completed financing that is expected to provide $5.00 million upon the merger's completion. This capital infusion, combined with the strategic value of the rare earth assets and partnerships, is intended to provide the necessary funding for future operations and growth, fundamentally altering the company's financial stability and trajectory.

Outlook and Risks: A Transformative Path Forward

The outlook for Blackboxstocks is overwhelmingly dominated by the transformative REalloys merger. Management views this acquisition as a significant enhancement to stockholder value, providing access to the "lucrative and rapidly expanding domestic rare earth and magnet materials sector." The legacy Blackbox fintech operations will continue as a wholly-owned subsidiary, Blackbox.io Inc., and shareholders of record upon closing of the merger will receive pro-rata proceeds from any future divestitures of the Blackbox technology portfolio.

Specific guidance and targets for the rare earth segment are compelling. REalloys aims to expand its combined production capacity for high-performance magnet materials to 500 metric tonnes per year in 2026 and 1,000 metric tonnes by 2028, leveraging its collaboration with the Saskatchewan Research Council. The strategic alliances with JOGMEC, Critical Metals Corp., and St George Mining are expected to secure long-term, diversified feedstock, underpinning these production targets. The $200 million Letter of Interest from the U.S. EXIM Bank further solidifies the financial and strategic support for REalloys' mission to build a North American mine-to-magnet supply chain.

For the legacy fintech business, advertising expenses are expected to increase in Q4 2025 due to holiday promotions, with additional marketing for educational products. Investing activities for this segment are not expected to require significant capital in the next twelve months. The development costs for new fintech products like Stock Nanny (expected Q1 2023 release) and Blackbox Pro (expected Q2 2023 release) are largely incurred, with management anticipating these new offerings to generate additional revenue streams.

However, significant risks remain. The "going concern" warning highlights the company's historical operating losses and dependence on external financing. There is "no assurance that the merger with REalloys will be completed and the related financing will be received," or that the company will be able to raise additional capital on acceptable terms. The success of REalloys' rare earth initiatives depends on complex operational execution, market demand for critical minerals, and continued geopolitical support. Furthermore, the legacy fintech business remains susceptible to market volatility, which has historically impacted subscriber retention. The potential sale of up to 250,000 shares by CEO Gust Kepler under a Rule 10b5-1 trading arrangement also represents a potential source of dilution.

Conclusion

Blackboxstocks Inc. stands at a critical juncture, pivoting from a fintech company grappling with market headwinds to an emerging player in the strategically vital rare earth and magnet materials sector. The core investment thesis now hinges on the successful integration and execution of the REalloys merger, which promises to transform the company's financial profile and market positioning. While the legacy Blackbox System, with its AI-driven analytics and social trading features, continues to serve a niche market, the future growth narrative is firmly anchored in REalloys' ambition to establish North America's first fully integrated mine-to-magnet supply chain.

This ambitious transformation is underpinned by REalloys' substantial rare earth resources, advanced production capabilities, and a network of strategic alliances that align with national security interests. The anticipated capital infusion and strong governmental backing for the rare earth initiatives are crucial for addressing the historical liquidity challenges and the "going concern" warning. Investors should closely monitor the completion of the merger, the execution of REalloys' production targets, and the continued development of its strategic partnerships. The success of this bold strategic shift, leveraging technological leadership in critical minerals, will ultimately determine Blackboxstocks' long-term value creation in a rapidly evolving global landscape.