BLBX

• Macro environment headwinds: Stock market decline, inflation, sluggish GDP, and higher interest rates affected the business. Most members are directional options traders, and market volatility made it hard for them to be profitable.
• Sales promotions: Spring breakout sale and Labor Day sale attracted new users but impacted short-term revenue.
• Product upgrades: Created new features for core and Pro products, added futures, new charting programs, proprietary alerts. Augmented education program with live webinars and comprehensive initiatives.
• New products: Stock Nanny for self-directed investors, expected Q1 2023 release; Blackbox Pro for professional traders, expected Q2 2023. Delayed crypto initiative due to market disarray.
• Buyback program: Still in place, with $1 million spent on repurchasing 728,000 shares in the quarter, with $2.5 million authorized.

• Stock Nanny is on track for release in Q1 2023, and Blackbox Pro is expected in Q2 2023.
• Continues to invest in product upgrades and new market launches.
• Stock buyback program remains in place with the company still seeing undervalued stock and being a buyer.
• Expect cash position to improve with revenue from new product launches.

For the third quarter of 2022, revenue was approximately $1.2 million, a decrease of about 17% ($253,000) compared to Q3 2021. $90,000 of the decline was due to a lower subscriber count, while the majority ($163,000) was from a lower average monthly revenue per subscriber driven by promotions. For the nine months ended September 30, 2022, revenue was $3.9 million, down 12% from 2021. Subscriber count was up about 3.5% YTD, but average revenue per subscriber was lower. Gross profit margins were 60% for Q3 and the nine months ended September 30, compared to 72% and 73% in 2021. The main impact on margins was the lower average revenue per subscriber from promotions.

• Macro environment risks: Stock market decline, inflation, sluggish GDP, and higher interest rates creating headwinds.
• Market volatility impacting directional options traders, affecting user profitability.
• Crypto market disarray leading to delay of crypto initiative.
• Higher advertising costs, including political ads, impacting CPA and cost effectiveness.

Q: On Stock Nanny and Blackbox Pro, are they still on track for early 2023 release and how will they be marketed?

A: Stock Nanny is on track for Q1 2023 release, marketed digitally. Blackbox Pro has R&D pilot programs with broker-dealers and financial institutions, with a hybrid marketing approach including digital marketing.

Q: Is the cash position comfortable and any plans for additional funding?

A: Have a strong cash position, and no current plans for additional capital raise as expenditures are in development of new products with expected revenue growth from launches.

Q: How is retention in current clients and impact of market conditions?

A: Market affects member base, but have maintained stable base. More experienced traders stay and upgrade. New products not entirely reliant on day traders.

Q: Focus on products for down markets and international opportunities?

A: Marketing message includes making money against market, but majority of user base is directional options traders facing difficulty. Currently in ~32 countries, no large concentration of new users in specific region, but plan to add exchanges and features for international traders.

Q: Details on futures addition?

A: Will announce top 16 futures first, with more to be added later but specifics not available yet