GreenBox POS Reports Second Quarter 2021 Financial Results

Rhea-AI Summary

GreenBox POS (NASDAQ: GBOX) reported impressive second-quarter 2021 results, with revenue of $6.4 million, a 178% increase year-over-year. The company processed a record $440 million in transaction volume. Major developments include the deployment of a smart contract stablecoin, COYNI, and the acquisition of Transact Europe, pending regulatory approval. Operating expenses rose to $5.1 million, attributed to stock compensation and R&D costs. Net income stood at $0.0 million, compared to $4.9 million in Q2 2020, while adjusted net income reached $2.0 million.

Positive

• Revenue increased by 178% year-over-year, reaching $6.4 million.
• Processed a record $440 million in transaction volume.
• Gross profit rose to $5.1 million, or 79.5% of total revenue.
• Acquired Northeast Merchant Services, expanding merchant accounts.
• Acquisition of ChargeSavvy contributes to processing volume.
• Added to Russell 2000 and Russell Microcap Indexes.

Negative

• Net income dropped to $0.0 million from $4.9 million year-over-year.
• Operating expenses increased significantly to $5.1 million.

SAN DIEGO, CA, Aug. 12, 2021 (GLOBE NEWSWIRE) -- GreenBox POS (NASDAQ: GBOX) ("GreenBox", the "Company"), an emerging financial technology company leveraging proprietary blockchain security and token technology to build customized payment solutions, has provided its financial results for the second quarter ended June 30, 2021.

Second Quarter 2021 and Subsequent Operational Highlights:

• Revenue of $6.4 million in the second quarter of 2021, an increase of 178% as compared to $2.3 million in the same year-ago quarter
• Processed a company quarterly record of $440 million in transaction volume
• Deployed our smart contract technology stablecoin, branded as COYNI, in a pilot launch and deposited $5 million in initial seed capital with Signature Bank
  • Engaged Armanino to provide real-time attestation of the token collateral
• Announced the acquisition of Transact Europe, currently pending regulatory approval. Transact Europe is a Principal Visa and Mastercard Member with key licensing assets and significant processing volume portfolio
• Announced the planned spin off of our Coin Platform, Coyni, and implementation of a special dividend series to be issued in two parts to GreenBox common stockholders
• Acquired Northeast Merchant Services, a provider of comprehensive merchant credit card processing services bringing over 700 potential new retail merchant accounts and a highly coveted BIN
• Closed the accretive acquisition of ChargeSavvy LLC, a financial technology company specializing in retail payment processing and POS systems with an attractive book of processing volume
• Selected by Territorial Bank of American Samoa (TBAS) to provide customized payment solutions software to consumers and businesses throughout American Samoa for financial transactions
• Announced a partnership with isMedia Co. Ltd to jointly develop a blockchain-based NFT (non-fungible token) platform
• GBOX added to Russell 2000^® and Russell Microcap Indexes

Management Commentary

“GreenBox continued to make excellent progress towards execution of its long-term growth strategy during the second quarter 2021. With the deployment of Coyni, a smart contract stablecoin technology, we launched a significant upgrade to our payment solutions capabilities for the second consecutive quarter,” said Fredi Nisan, Chief Executive Officer of GreenBox POS. “Our Generation 3 technology, launched in Q1 2021, continued to reap rewards as we processed a company record $440 million during the second quarter.

We continued to grow our core blockchain processing business organically while also making strategic acquisitions such as the purchase of Northeast Merchant Services, ChargeSavvy, and most recently, the pending purchase of Transact Europe. These acquisitions are part of our strategy to acquire crucial licensing assets and expand our footprint globally while simultaneously opening avenues for us to drive adoption of our Coin platform. Acquisitions will continue to play a vital role in our strategy to quickly become a large player in the financial payments space.

Looking ahead, we look to rapidly drive adoption of Coyni to generate value for our announced spinoff of that business. By continuing to expand our core blockchain business using our extensive ISO and agent network and through selective acquisitions, we believe we are well positioned to do so. In announcing a special dividend series based on the planned spin-off of our stablecoin platform asset, we demonstrate our commitment to rewarding our long-term shareholders. We are encouraged with our progress as we continue to strive towards disrupting the digital payments space globally and look forward to continuing to execute our long-term vision,” concluded Nisan.

Second Quarter 2021 Financial Summary

• Revenues in the second quarter of 2021 were $6.4 million, an increase of 178% compared to revenues of $2.3 million in the same quarter a year ago. Sequentially, revenues increased by 36% when compared to $4.7 million in the first quarter of 2021. The increase in revenue was primarily due to increased processing volume.
• Gross profit in the second quarter of 2021 was $5.1 million, or 79.5% of total revenue, compared to gross profit of $0.9 million, or 38.4% of total revenue, in the same quarter a year ago. Sequentially, gross profit increased 59% from $3.2 million, or 66.4% of total revenue, in the first quarter of 2021. The increase in gross profit was primarily due to increase processing volume efficiency from Generation 3 technology
• Total operating expenses in the second quarter of 2021 totaled $5.1 million, compared to $1.1 million in the same quarter a year ago, and $12.5 million in the first quarter of 2021. The year over year increase was due primarily to an increase in stock compensation for services and employees as well as increases in research and development and payroll.
• The Company’s net income in the second quarter of 2021 was $0.0 million, or $0.00 per basic and diluted share, compared to net income of $4.9 million, or $0.03 per basic and diluted share, in the same quarter a year ago. Net income in the first quarter of 2021 was ($13.3) million or ($0.38) per basic and diluted share. The sequential increase was primarily due to an increase in processing volume and revenue and decrease in non-cash stock-based compensation expenses related to the public offering and Nasdaq uplisting.
• Adjusted Net Income, a non-GAAP financial measure, for the second quarter 2021 was $2.0 million.

Second Quarter 2021 Results Conference Call

Management will host a conference call on Thursday, August 12, 2021 at 4:30 p.m. Eastern time to discuss GreenBox’s second quarter 2021 financial results. The call will conclude with Q&A from participants. To participate, please use the following information:

Q2 2021 Conference Call and Webcast
Date: Thursday, August 12, 2021
Time: 4:30 p.m. Eastern time
US Dial In: 1-800-945-8198
International Dial In: 1-212-231-2900
Conference ID: 21996558
Webcast: http://public.viavid.com/index.php?id=146243

Please dial in at least 10 minutes before the start of the call to ensure timely participation.

A playback of the call will be available through November 12, 2021. To listen, call 1-844-512-2921 within the United States or 1-412-317-6671 when calling internationally and enter replay pin number 21996558 A webcast will also be available for 30 days on the IR section of the GreenBox POS website or by clicking the webcast link above.

About GreenBox POS

GreenBox POS (NASDAQ: GBOX) is an emerging financial technology company leveraging proprietary blockchain security to build customized payment solutions. The Company's applications enable an end-to-end suite of turnkey financial products with fraud detection technology, improving the efficiency of handling large-scale commercial processing volumes for its merchant clients. For more information, please visit the Company's website at www.greenboxpos.com

Use of Non-GAAP Financial Information

This earnings release discusses Adjusted Net Income which is not a financial measure as defined by GAAP. This financial measure is presented as a supplemental measure of operating performance because we believe it can aid in, and enhance, the understanding of our financial results. In addition, we use Adjusted Net Income as a measure internally for budgeting purposes.

We define Adjusted Net Income as net income (loss) before (1) interest expense (income), net, (2) income tax expense (benefit), (3) depreciation, (4) amortization of intangible assets, (5) stock-based compensation expense, plus (6) from time to time, certain other items which are specific transaction-related items. Other companies may define or calculate this measure differently, limiting the usefulness as a comparative measure. Because of this limitation, this non-GAAP financial measure should not be considered in isolation or as substitute for or superior to performance measures calculated in accordance with GAAP and should be read in conjunction with the financial statement tables. See also Reconciliation of Net Income (Loss) attributable to GreenBox POS, Inc., to Adjusted Net Income in the table below.^*

Forward-Looking Statements Disclaimer

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. In evaluating such statements, prospective investors should review carefully various risks and uncertainties identified in this release and matters set out in the Company's SEC filings. These risks and uncertainties could cause the Company's actual results to differ materially from those indicated in the forward-looking statements.

Investor Relations Contact
Mark Schwalenberg
MZ Group - MZ North America
312-261-6430
GBOX@mzgroup.us
www.mzgroup.us

GreenBox POS
Consolidated Balance Sheets
June 30, 2021 and December 31, 2020
(unaudited)

		June 30,				December 31,
		2021				2020
ASSETS
Current Assets:
Cash and cash equivalents		$	29,796,748			$	-
Restricted cash			-				1,832,735
Accounts receivable, net of allowance for bad debt of $0 and $0, respectively			75,444				10,000
Accounts receivable from fines and penalties from merchants, net of allowance for bad debt of $6,665,031 and $6,665,031, respectively			2,789,230				2,789,230
Cash due from gateways, net			15,759,069				7,303,949
Prepaid and other current assets			2,028,552				70,130
Total current assets			50,449,043				12,006,044
Non-current Assets:
Property and equipment, net			113,836				57,264
Other assets			180,636				81,636
Goodwill			2,305,394				-
Intangible Assets, net			257,748				-
Operating lease right-of-use assets, net			832,636				117,795
Total non-current assets			3,690,250				256,695
Total assets		$	54,139,293			$	12,262,739
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable		$	520,478			$	210,094
Other current liabilities			135,991				68,138
Payment processing liabilities, net			4,295,519				10,199,956
Note payable, payroll protection plan loan			272,713				272,713
Convertible debt, net of debt discount of $0 and $2,993,408, respectively			-				856,592
Current portion of operating lease liabilities			431,487				120,110
Total current liabilities			5,656,188				11,727,603
Long term liabilities			149,900				149,900
Operating lease liabilities, less current portion			401,744				-
Total liabilities			6,207,832				11,877,503
Commitments and contingencies
Stockholders' Equity:
Common stock, par value $0.001, 82,500,000 shares authorized, shares issued and outstanding of 42,236,219 and 30,710,646, respectively			42,327				30,711
Additional paid-in capital			73,916,018				12,079,074
Accumulated deficit			(25,093,541	)			(11,724,549	)
Less: Treasury stock, at cost; 90,000 and 0 shares, respectively			(933,343	)			-
Total stockholders' equity			47,931,461				385,236
Total liabilities and stockholder's equity		$	54,139,293			$	12,262,739

GreenBox POS
Consolidated Statements of Operations
For the Three Months and Six Months Ended June 30, 2021 and 2020
(unaudited)

		Three Months Ended June 30,								Six Months Ended June 30,
		2021				2020				2021				2020
Revenue		$	6,379,179			$	2,292,859			$	11,128,620			$	2,480,064
Cost of revenue			1,323,480				1,411,683				2,917,251				1,658,988
Gross profit			5,055,699				881,176				8,211,369				821,076
Operating expenses:
Advertising and marketing			22,605				15,384				47,330				27,269
Research and development			808,210				267,686				1,461,591				554,234
General and administrative			298,030				101,523				864,225				234,292
Payroll and payroll taxes			1,061,929				428,758				1,621,130				842,958
Professional fees			867,472				293,622				1,325,224				507,593
Stock compensation for employees			1,291,887				12,130				2,089,500				12,130
Stock compensation for services			726,933				-				10,180,758				-
Depreciation and amortization			14,244				5,716				20,253				11,092
Total operating expenses			5,091,310				1,124,819				17,610,011				2,189,568
Income (Loss) from operations			(35,611	)			(243,643	)			(9,398,642	)			(1,368,492	)
Other income (expense):
Interest expense			-				(30,659	)			(594,258	)			(319,249	)
Interest expense - debt discount			-				(8,342	)			(2,993,408	)			(38,418	)
Derivative expense			-				(4,373	)			-				(4,373	)
Changes in fair value of derivative liability			-				2,619,250				-				(1,203,135	)
Gain from extinguishment of convertible debt			-				2,612,246				-				2,630,795
Merchant liability settlement			-				-				(364,124	)			-
Other income or expense			(3,949	)			(2,177	)			(18,560	)			3,334
Total other expense, net			(3,949	)			5,185,945				(3,970,350	)			1,068,954
Income (Loss) before provision for income taxes			(39,560	)			4,942,302				(13,368,992	)			(299,538	)
Income tax provision			-				-				-				-
Net income (loss)		$	(39,560	)		$	4,942,302			$	(13,368,992	)		$	(299,538	)
Earnings (loss) per share:
Basic and diluted		$	(0.00	)		$	0.17			$	(0.43	)		$	(0.01	)
Weighted average number of common shares outstanding:
Basic and diluted			31,078,605				28,983,034				31,208,102				29,492,180

GreenBox POS
Consolidated Statements of Cash Flows
For the Six months ended June 30, 2021 and 2020
(unaudited)

		Six Months Ended June 30,
		2021				2020
Cash flows from operating activities:
Net loss		$	(13,368,992	)		$	(299,538	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation expense			13,338				11,092
Amortization expense			6,915				-
Noncash lease expense			(1,720	)			(839	)
Stock compensation expense			2,089,500				12,130
Common stocks issued for professional fees			10,180,758				-
Stock compensation issued for interest			594,258				-
Interest expense - debt discount			2,993,408				38,418
Derivative expense			-				4,373
Gain (loss) on extinguishment of debt			-				(2,630,795	)
Changes in fair value of derivative liability			-				1,203,135
Changes in assets and liabilities:
Other receivable, net			(65,444	)			47,714
Prepaid and other current assets			(1,958,422	)			(33,341	)
Cash due from gateways, net			(8,455,120	)			3,502,426
Other assets			(99,000	)			-
Accounts payable			239,131				(33,597	)
Other current liabilities			67,853				14,354
Accrued interest			-				(290,021	)
Payment processing liabilities, net			(5,904,437	)			(1,077,551	)
Net cash provided by (used in) operating activities			(13,667,974	)			467,960
Cash flows from investing activities:
Purchases of property and equipment			(68,411	)			(10,244	)
Cash provided for acquisition			(2,500,000	)			-
Net cash used in investing activities			(2,568,411	)			(10,244	)
Cash flows from financing activities:
Treasury stock repurchase			(933,343	)			-
Proceeds from stock option exercises			2,250				-
Repayments on convertible debt			-				(445,000	)
Borrowings from notes payable			-				744,480
Principal payments on notes payable			-				(823,074	)
Proceeds from exercise of warrant			3,520,000				-
Repurchase of common stock from stockholder			(4,194,000	)			-
Proceeds from issuance of common stock			45,805,491				-
Net cash provided by (used in) financing activities			44,200,398				(523,594	)
Net increase in cash, cash equivalents, and restricted cash			27,964,013				(65,878	)
Cash, cash equivalents, and restricted cash – beginning of period			1,832,735				763,110
Cash, cash equivalents, and restricted cash – end of period		$	29,796,748			$	697,232
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest		$	-			$	525,270
Income taxes		$	800			$	800
Non-cash financing activities:
Convertible debt conversion to common stock		$	3,850,000			$	137,500
Interest accrual from convertible debt converted to common stock		$	-			$	78,050
Short-term notes payable converted to common stock		$	-			$	-

Reconciliation of Net Income (Loss) attributable to GreenBox POS, Inc., to Adjusted Net Income* for the Three Months Ended June 30, 2021

Three months ended June 30, 2021
Net loss			$	(39,560	)
Adjustments to net loss:
Non-cash adjustments - income (loss):
Stock compensation expense for employees	1,291,887
Stock compensation expense for services	726,993
Total non-cash adjustments	2,018,820
EBIDTA Adjustment:
Depreciation	14,244
Total EBIDTA adjustments	14,244
Total adjustments to net loss:			$	2,033,064
Adjusted net income			$	1,993,504

^* Adjusted Net Income is a non-GAAP financial measure. This measurement is not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance.

FAQ

What were GreenBox POS's Q2 2021 financial results?

GreenBox POS reported $6.4 million in revenue for Q2 2021, a 178% increase from Q2 2020.

How much transaction volume did GreenBox POS process in Q2 2021?

GreenBox POS processed a record $440 million in transaction volume during Q2 2021.

What was the net income for GreenBox POS in Q2 2021?

Net income for GreenBox POS in Q2 2021 was $0.0 million.

What acquisitions did GreenBox POS announce in Q2 2021?

GreenBox POS announced the acquisition of Northeast Merchant Services and ChargeSavvy, and a pending acquisition of Transact Europe.

What impact did GreenBox POS's operating expenses have in Q2 2021?

Total operating expenses reached $5.1 million in Q2 2021, significantly higher than $1.1 million in Q2 2020.