GreenBox POS Reports Third Quarter 2021 Financial Results

Rhea-AI Summary

GreenBox POS (GBOX) reported strong Q3 2021 results, with revenues of $8.0 million, a 163% increase year-over-year, and a transaction volume of $540 million, up 1,400% from last year. Year-to-date processing volume reached $1.4 billion. The company secured a $100 million convertible note financing to support acquisitions and technology development. However, net income fell to ($6.0) million due to increased operating expenses. Looking ahead, GreenBox expects to exceed its 2021 guidance with an estimated $4.9 billion in processing volume for 2022.

Positive

• Revenues increased by 163% year-over-year to $8.0 million.
• Quarterly transaction volume reached a record $540 million, a 1,400% growth year-over-year.
• Secured $100 million in convertible note financing to fund acquisition strategies.

Negative

• Net income decreased to ($6.0) million, impacted by rising operating expenses.
• Total operating expenses increased to $8.4 million, up from $1.5 million year-over-year.

SAN DIEGO, CA, Nov. 11, 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 third quarter ended September 30, 2021.

Management Commentary

GreenBox POS Chief Executive Officer Fredi Nisan commented: “Our third quarter of 2021 was instrumental in building the foundation for 2022 and beyond. We continued to successfully execute on our long-term growth strategy of quickly scaling our processing volume while accumulating key licensing assets through select acquisitions and partnerships. The success is evident from our year-to-date processing volume of $1.4 billion as of September 30^th, only 8 short months after the launch of our Gen 3 platform. This is a testimony to both our technology and our talented team securing key ISO relationships and expanding our network. While much work is left to be done to accomplish our goals, our achievements and the trajectory of our growth is undeniable.

“The ability to finance our growth strategy is a key requirement as we look to become the premier blockchain based financial solutions company. In successfully closing on a $100 million convertible note financing, we demonstrated our ability to secure capital which we can deploy on accretive transactions. Now backed by a fortified balance sheet, we can continue to aggressively pursue our acquisition strategy, while investing in our core technology and adding funds to the Coyni custodian revolver to increase it up to $25 million.

“We continued to make great strides towards the spin-off and eventual public offering of Coyni, our stablecoin technology. We selected Miami as Coyni headquarters and appointed highly accomplished financial payments executive, Paul Levine, as the Chief Executive Officer. We opened up Coyni to early adopters and continued to work with Signature Bank and Armanino to ensure proper transaction and attestation functioning as we look to scale.

“Despite all GreenBox has accomplished in the last 18 months, we are in still just in the early innings of scaling our technology. We remain confident in our long-term strategy and are well positioned to capitalize on the opportunity at hand. Looking ahead, we expect to continue to grow our processing volumes and exceed our initial 2021 guidance of $1.85 billion. However, due to the timing and margin profile of customer onboarding and acquisitions closing we now expect 2021 reported revenue of at least $28 million and adjusted net income of at least $8 million. As we look out at 2022, we expect processing volume to be at least $4.9 billion for the year assuming completion of acquisitions. We look forward to bringing GreenBox to the forefront of financial payments technology and delivering long-term sustainable value for our shareholders.” concluded Nisan.

Third Quarter 2021 and Subsequent Operational Highlights:

• Processed a quarterly record $540 million in transaction volume, growth of approximately 1,400% when compared to the same period a year ago.
  • Year to date processing volume to $1.4 billion as of September 30, 2021
• Revenues in the third quarter of $8.0 million, representing an increase of 163% when compared to the same period a year ago.
• Fortified balance sheet with a $100 million convertible note financing to facilitate the Company’s acquisition strategy, fund our Coyni stablecoin revolver and additional technology development
• Appointed Paul Levine, a technology innovator and the former President of Planet Payment, as Chief Executive Officer and Co-Founder of Coyni stablecoin spinoff company
  • Selected Miami as corporate headquarters for Coyni
• Strengthened our technology leadership with the hiring of Robert Houghton as Chief Technology Officer to lead GreenBox payment technology roadmap and ensure efficient integration of acquisitions
• Engaged in revenue sharing and licensing cooperation with Transact Europe enabling GreenBox to leverage key licensing assets and recognize processing volume. The TEU acquisition is currently pending regulatory bank approval.

Third Quarter 2021 Financial Summary

• Revenues in the third quarter of 2021 were $8.0 million, an increase of 163% compared to revenues of $3.0 million in the same quarter a year ago. Sequentially, revenues increased by 26% when compared to $6.4 million in the second quarter of 2021.
• Gross profit in the third quarter of 2021 was $5.6 million, or 69.5% of total revenue, compared to gross profit of $1.2 million, or 39.6% of total revenue, in the same quarter a year ago. Sequentially, gross profit increased from $5.5 million, or 79.3% of total revenue, in the second quarter of 2021.
• Total operating expenses in the third quarter of 2021 totaled $8.4 million, compared to $1.5 million in the same quarter a year ago, and $5.1 million in the second quarter of 2021. The year over year increase was due primarily to an increase in stock compensation for employees as well as increases in research and development and payroll.
• The Company’s net income in the third quarter of 2021 was ($6.0) million, or ($0.14) per basic and diluted share, compared to net income of ($0.5) million, or ($0.02) per basic and diluted share, in the same quarter a year ago. Net income in the second quarter of 2021 was ($0.4) million or ($0.02) per basic and diluted share. The decrease was primarily due to increases in stock-based compensation expenses related to employees and services, research and development and professional fees
• Adjusted Net Income, a non-GAAP financial measure, for the third quarter 2021 was $1.7 million.
  

Third Quarter 2021 Results Conference Call

Management will host a conference call on Thursday, November 11, 2021 at 4:30 p.m. Eastern time to discuss GreenBox’s third quarter 2021 financial results. The call will conclude with Q&A from participants. To participate, please use the following information:

Q3 2021 Conference Call and Webcast
Date: Thursday, November 11, 2021
Time: 4:30 p.m. Eastern time
US Dial In: 1-800-430-8332
International Dial In: 1-323-289-6576
Conference ID: 7785831
Webcast: Link

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 February 11, 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 7785831 A webcast will also be available for 90 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 and token technology 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
September 30, 2021 and December 31, 2020
(unaudited)

		(Unaudited)
		September 30,				December 31,
		2021				2020
ASSETS
Current Assets:
Cash and cash equivalents		$	29,707,254			$	-
Restricted cash			-				1,832,735
Accounts receivable, net of allowance for bad debt of $288,764 and $0, respectively			229,346				10,000
Accounts receivable from fines and penalties from merchants, net of allowance for bad debt of $6,665,031			2,789,231				2,789,230
Inventory			177,779				-
Cash due from gateways, net			19,418,353				7,303,949
Prepaid and other current assets			260,963				70,130
Total current assets			52,582,926				12,006,044
Non-current Assets:
Property and equipment, net			1,630,379				57,264
Other assets			197,954				81,636
Goodwill			6,049,487				-
Intangible Assets, net			7,992,432				-
Operating lease right-of-use assets, net			668,865				117,795
Total non-current assets			16,539,117				256,695
Total assets		$	69,122,043			$	12,262,739
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$	801,598			$	210,094
Other current liabilities			3,583,956				68,138
Payment processing liabilities, net			6,634,457				10,199,956
Note payable, payroll protection plan loan			272,713				272,713
Short-term notes payable, net of debt discount of…			3,448				-
Convertible debt, net of debt discount of $0 and $2,993,408, respectively			-				856,592
Current portion of operating lease liabilities			375,488				120,110
Total current liabilities			11,671,660				11,727,603
Long term liabilities			645,131				149,900
Operating lease liabilities, less current portion			294,490				-
Total liabilities			12,611,281				11,877,503
Commitments and contingencies
Stockholders’ Equity:
Common stock, par value $0.001, 82,500,000 shares authorized, shares issued and outstanding of 42,865,022 and 30,710,645, respectively			42,865				30,711
Additional paid-in capital			90,290,826				12,079,074
Accumulated deficit			(31,143,296	)			(11,724,549	)
Less: Treasury stock, at cost; 300,000 and 0 shares, respectively			(2,679,633	)			-
Total stockholders’ equity			56,510,762				385,236
Total liabilities and stockholder’s equity		$	69,122,043			$	12,262,739

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

		Three Months Ended September 30,								Nine Months Ended September 30,
		2021				2020				2021				2020
Revenue		$	8,045,469			$	3,056,271			$	19,174,089			$	5,536,335
Cost of revenue			2,420,748				1,845,295				5,337,999				3,504,283
Gross profit			5,624,721				1,210,976				13,836,090				2,032,052
Operating expenses:
Advertising and marketing			37,179				59,099				84,509				86,368
Research and development			1,043,385				243,923				2,504,976				798,157
General and administrative			784,158				366,734				1,648,383				613,156
Payroll and payroll taxes			1,250,451				436,216				2,871,581				1,279,174
Professional fees			789,772				344,641				2,114,996				852,234
Stock compensation for employees			3,777,572				-				5,867,072				-
Stock compensation for services			238,238				-				10,418,996				-
Depreciation and amortization			457,633				5,764				477,886				16,856
Total operating expenses			8,378,388				1,456,377				25,988,399				3,645,945
Income (Loss) from operations			(2,753,667	)			(245,401	)			(12,152,309	)			(1,613,893	)
Other income (expense):
Interest expense			(4,736	)			(48,931	)			(598,994	)			(372,553	)
Interest expense - debt discount			-				(83,500	)			(2,993,408	)			(121,918	)
Derivative expense			-				(925,576	)			-				(925,576	)
Changes in fair value of derivative liability			-				819,366				-				(383,769	)
Gain from extinguishment of convertible debt			-				-				-				2,630,795
Merchant liability settlement			-				-				(364,124	)			-
Other income or expense			(37,497	)			(5,768	)			(56,057	)			(2,434	)
Total other expense, net			(42,233	)			(244,409	)			(4,012,583	)			824,545
Income (Loss) before provision for income taxes			(2,795,900	)			(489,810	)			(16,164,892	)			(789,348	)
Income tax provision			3,253,855				-				3,253,855				-
Net income (loss)		$	(6,049,755	)		$	(489,810	)		$	(19,418,747	)		$	(789,348	)
Earnings (loss) per share:
Basic and diluted		$	(0.14	)		$	(0.02	)		$	(0.49	)		$	(0.03	)
Weighted average number of common shares outstanding:
Basic and diluted			42,065,842				29,488,393				39,949,732				29,488,393

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

		Nine Months Ended September 30,
		2021				2020
Cash flows from operating activities:
Net loss		$	(19,418,747	)		$	(789,348	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation expense			477,886				16,856
Noncash lease expense			(1,202	)			(966	)
Stock compensation expense			5,867,072				162,633
Common stocks issued for professional fees			10,418,996				4,130
Common stocks - issued donation			-				8,000
Proceeds from exercise of stock options			-				32,500
Stock compensation issued for interest			598,994				-
Interest expense - debt discount			2,993,408				121,918
Derivative expense			-				925,576
Gain (loss) on extinguishment of debt			-				(2,630,795	)
Changes in fair value of derivative liability			-				383,769
Changes in assets and liabilities:
Other receivable, net			(154,556	)			47,714
Inventory			(53,278	)			-
Prepaid and other current assets			(184,172	)			(34,878	)
Cash due from gateways, net			(12,114,404	)			3,124,085
Other assets			679,558				(70,000	)
Accounts payable			370,487				220,465
Other current liabilities			3,384,258				32,107
Accrued interest			-				(286,461	)
Payment processing liabilities, net			(6,898,339	)			(1,397,810	)
Net cash provided by (used in) operating activities			(14,034,039	)			(130,505	)
Cash flows from investing activities:
Purchases of property and equipment			(97,818	)			(12,332	)
Acquisition of Northeast			(2,500,000	)			-
Net cash used in investing activities			(2,597,818	)			(12,332	)
Cash flows from financing activities:
Treasury stock repurchase			(2,679,633	)			-
Proceeds from stock option exercises			2,250				-
Borrowings from convertible debt			-				178,000
Repayments on convertible debt			-				(670,000	)
Borrowings from notes payable			350,000				1,954,480
Principal payments on notes payable			-				(1,147,919	)
Proceeds from exercise of warrant			3,731,200				-
Repurchase of common stock from stockholder			(4,194,000	)			(810,000	)
Proceeds from issuance of common stock			45,805,491				-
Net cash provided by (used in) financing activities			43,015,308				(495,439	)
Cash acquired from acquisition of Northeast and ChargeSavvy			1,491,068				-
Net increase in cash, cash equivalents, and restricted cash			27,874,519				(638,276	)
Cash, cash equivalents, and restricted cash – beginning of period			1,832,735				763,110
Cash, cash equivalents, and restricted cash – end of period		$	29,707,254			$	124,834
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest		$	4,639			$	575,014
Income taxes		$	800			$	800
Non-cash financing and investing activities:
Convertible debt conversion to common stock		$	3,850,000			$	137,500
Common stock issued for acquisition of ChargeSavvy		$	12,140,000			$	-
Interest accrual from convertible debt converted to common stock		$	594,355			$	78,050
Short-term notes payable converted to common stock		$	-			$	810,000

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

		Q2 2021				Q3 2021				Nine Months Ended September 30, 2021
Net loss		$	(39,560	)		$	(6,049,755	)		$	(19,418,747	)
Adjustments to net loss:
Non-cash adjustments - income (loss):
Stock compensation expense for employees			1,291,887				3,777,572				5,867,072
Stock compensation expense for services			726,933				238,238				10,418,996
Merchant settlement liability			-				-				364,124
Total non-cash adjustments			2,018,820				4,015,810				16,650,192
EBIDTA Adjustment:
Depreciation			14,244				457,633				477,886
Income taxes			-				3,253,855				3,253,855
Interest expense - debt discount and other interest			-				4,736				2,993,408
Interest expense - interest on convertible debt			-				-				598,994
Total EBIDTA adjustments			14,244				3,716,224				7,324,143
Total adjustments to net loss:			2,033,064				7,732,034				23,974,335
Adjusted net income		$	1,993,504			$	1,682,279			$	4,555,588
Adjusted cash flows from operations:
Cash flows used in operations per financial statements										$	(14,034,039	)
Adjustments:
Increase in cash due from gateways - receivables											12,114,404
Decrease in payment processing liabilities - payables											6,898,339
Total adjustments											19,012,743
Cash flows provided by operating activities - Adjusted										$	4,978,704

* 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 the financial results for GreenBox POS (GBOX) in Q3 2021?

GreenBox POS reported revenues of $8.0 million in Q3 2021, representing a 163% increase year-over-year.

What is the expected processing volume for GreenBox in 2022?

GreenBox expects processing volume to reach at least $4.9 billion in 2022, assuming acquisition completion.

How much transaction volume did GreenBox process in Q3 2021?

GreenBox processed a record transaction volume of $540 million in Q3 2021.

What was the net income for GreenBox POS (GBOX) in Q3 2021?

GreenBox reported a net income of ($6.0) million in Q3 2021.