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GreenBox POS Reports First Quarter 2022 Financial Results

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GreenBox POS
GreenBox POS

Achieves a Company Record Processing Volume of $754 million

First Quarter 2022 Accentuated by Transact Europe Acquisition, Cross River Bank Partnership to Maximize Banking-As-A Service Solution and Successful Pre-Launch of coyni

SAN DIEGO, CA, May 16, 2022 (GLOBE NEWSWIRE) -- GreenBox POS (NASDAQ: GBOX) ("GreenBox", the "Company"), an emerging and rapidly growing Fintech company provided its financial results for the first quarter ending March 31, 2022.

First Quarter 2022 and Subsequent Operational Highlights:

  • Q1 revenues of $4.9 million versus $4.7 million in the same year-ago quarter.

  • Q1 processing volume growth of $754 million versus $315 million in the same year-ago quarter.

  • Completed Transact Europe acquisition, its largest acquisition to date, expanding the Company’s global footprint among the vast European payments landscape.

  • Closed a key licensing partnership with Cross River Bank, a respected tech-driven infrastructure provider, to launch banking as a service offering and expand the universe of new customers while creating incremental channels for revenue growth.

  • Acquired Sky Financial securing a $1 billion+ annual merchant processing portfolio.

  • Launched the coyni v1 platform successfully, in preparation for a public beta pilot with external users in April.

  • Strengthened the Board of Directors and executive management team with key appointments:

    • Adele Hogan, an experienced transactional lawyer with demonstrated success with over $200 billion in securities, mergers, contracts and deals closed, to the Board of Directors.

    • Min Wei, an accomplished operations executive with extensive experience in managing global technology company processes, as Chief Operating Officer.

  • Introduced a new ACH bulk processing channel with client commitments surpassing $50 million per month.

  • Accelerated the Company’s share repurchase program with an additional $10 million being approved for repurchase.

  • Appointed global marketing agency, INNOCEAN, as advertising and branding agency of record, to lead its worldwide branding and communications

  • Completed a System and Organization Controls (SOC) 2 Type 2 certification audit on controls relevant to the security trust services category to align the Company with the industry standards followed by world class organizations.

Management Commentary

“The first quarter 2022 was punctuated by record processing, the incredibly successful completion of two critical acquisitions, a new strategic partnership, and the successful pre-launch of coyni,” said Fredi Nisan, Chief Executive Officer of GreenBox POS. “The purchase of Transact Europe, our most significant procurement to date, ushers us into the enormous European payments landscape creating an important segue for further global expansion. And, by establishing a significant strategic licensing partnership with leading technology infrastructure bank, Cross River, we made substantial strides towards the launch of our banking-as-a-service solution.

“Obtaining Sky Financial additionally allows us to secure a lucrative processing volume portfolio that was already integrated with our technology. Sky represented a sizeable portion of our 2021 growth, contributing significantly to our revenue during the year. Bringing this portfolio in-house eliminates some of the costly commissions, while also enabling us to nurture customer relationships for additional revenue opportunities.

“Operationally, we continued to fortify the composition of our Board and executive management team. Welcoming Min Wei as our new Chief Operating Officer, whose background in operational efficiencies at global technology companies, has been indispensable for us given our rigorous growth plans. Joining our Board of Directors is Adele Hogan, a seasoned transactional lawyer, who has been material to recent acquisitions and securities compliance successes. Adele will be a prominent contributor to any M&A’s as well future dividend plans.

“Despite the recent uncertainty in the global markets, the digital transformation of the financial payments industry continues at a tremendously vigorous pace. We believe that GreenBox is more poised than ever before to lead within this landscape by leveraging our pioneering technology and customized digital payment offerings, with speed, transparency, security and integrity to customers globally. We remain very confident in our 2022 outlook of processing $4-6 billion in transaction volume with sequential company record processing levels each quarter. We look forward to over-delivering results which support our long-term strategic growth trajectory,” concluded Nisan.

First Quarter 2022 Financial Summary

  • Increased revenue to $4.9 the three months ended March 31, 2022 versus $4.7 million for the three months ended March 31, 2021. The change in net revenue reflected the increase in processing volume in the three months ended March 31, 2022 compared to the three months ended March 31, 2021.

  • Gross profit in the first quarter of 2022 was $2.3 million, or 47.6% of total revenue, compared to gross profit of $3.2 million, or 66.4% of total revenue, in the same quarter a year ago. The decrease was primarily due to increased cost of revenue resulting from higher processing fees paid to gateways and commission payments to ISOs.

  • Operating expenses decreased by $4.0, or 32.0%, to $8.5 million for the three months ended March 31, 2022, from $12.5 for the three months ended March 31, 2021. The decrease was due primarily to lower stock compensation expense for services and employees for the three months ended March 31, 2022, offset by increases in research and development, general and administrative, marketing, payroll related expenses, professional fees as we continue to add staff and infrastructure related to our growth and being a publicly traded company and readying the coyni platform for a public introduction.

  • Other expense increased by $11.1 million to $15.1 million for the three months ended March 31, 2022 as compared to $4.0 million for the three months ended March 31, 2021. Interest expense increased significantly due to the $100 million convertible note issued in November 2021. Amortization of the discount, fees and the fair value of the derivative liability associated with the note were also contributing factors. Furthermore, the Company changes in fair value of derivative liability expense of $7.7 million for the three months ended March 31, 2022.

  • The company sustained a net loss in the first quarter of 2022 of $21.3 million, or $0.51 per basic and diluted share, compared to a net loss of $13.3 million, or $0.38 per basic and diluted share, in the same quarter a year ago. The increase in net loss was primarily due to an increase in change in fair value of derivative liability and increases in research and development, general and administrative, payroll and payroll taxes and professional fees as we continue to add staff and infrastructure related to our growth and being a publicly traded company.

  • Adjusted Net loss, a non-GAAP financial measure, for the first quarter 2022 was $5.4 million.

Management will host a conference call on Monday, May 16, 2022 at 4:30 p.m. Eastern time to discuss GreenBox’s first quarter 2022 financial results. The call will conclude with Q&A from participants. To participate, please use the following information:

Q1 2022 Conference Call and Webcast
Date: Monday, May 16, 2022
Time: 4:30 p.m. Eastern time
US Dial In: 1-844-825-9789
International Dial In: 1-412-317-5180
Conference ID: 10166964
Webcast: https://viavid.webcasts.com/starthere.jsp?ei=1547877&tp_key=417a871a3b

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 August 16, 2022. To listen, call 1-844-512-2921 within the United States or 1-412-317-6671 when calling internationally and enter replay pin number 10166964. 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 to build customized payment solutions. The Company's applications enable an end-to-end suite of turnkey financial products, fraud detection and improving the efficiency of handling large-scale commercial processing volumes for its merchant clients globally. 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
March 31, 2022 and December 31, 2021
(unaudited)

March 31,

December 31,

2022

2021

ASSETS

Current Assets:

Cash and cash equivalents

$

27,594,032

$

89,559,695

Restricted cash

462

-

Accounts receivable, net of allowance for bad debt of $54,795 and $54,795, respectively

468,591

481,668

Inventory, net of inventory reserve of $3,127 and $3,127, respectively

217,107

286,360

Cash due from gateways, net of allowance of $3,904,952 and $3,904,952, respectively

20,807,373

18,941,761

Prepaid and other current assets

35,263,038

6,420,696

Total current assets

84,350,603

115,690,180

Non-current Assets:

Property and equipment, net

1,708,194

1,674,884

Other assets

172,350

190,636

Goodwill

6,048,034

6,048,034

Intangible Assets, net

25,267,371

7,578,935

Operating lease right-of-use assets, net

1,361,730

1,490,159

Total non-current assets

34,557,679

16,982,648

Total assets

$

118,908,282

$

132,672,828

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Accounts payable

$

1,069,136

$

871,037

Other current liabilities

609,723

501,167

Accrued interest

1,775,620

1,226,287

Payment processing liabilities, net

5,390,413

4,997,807

Derivative liability

26,435,000

18,735,000

Current portion of operating lease liabilities

549,668

495,134

Total current liabilities

35,829,560

26,826,432

Long-term debt

649,900

649,900

Convertible debt, net of debt discount of $35,824,000 and $41,344,822, respectively

58,176,000

58,655,178

Operating lease liabilities, less current portion

891,680

1,035,895

Total liabilities

95,547,140

87,167,405

Commitments and contingencies

Stockholders' Equity:

Common stock, par value $0.001, 82,500,000 shares authorized, shares issued and
outstanding of 43,289,572 and 43,546,647, respectively

42,574

42,831

Common stock issuable, par value $0.001, 500,000 and 0 shares issuable, respectively

541

-

Additional paid-in capital

90,982,614

88,574,469

Accumulated deficit

(59,494,048

)

(38,178,061

)

Less: Treasury stock, at cost; 1,398,586 and 714,831, respectively

(8,170,539

)

(4,933,816

)

Total stockholders' equity

23,361,142

45,505,423

Total liabilities and stockholders' equity

$

118,908,282

$

132,672,828


GreenBox POS
Consolidated Statements of Operations
For the Three Months Ended March 31, 2022 and 2021
(unaudited)

Three Months Ended March 31,

2022

2021

Net revenue

$

4,895,526

$

4,749,441

Cost of revenue

2,563,830

1,593,771

Gross profit

2,331,696

3,155,670

Operating expenses:

Advertising and marketing

140,966

24,725

Research and development

1,938,133

653,381

General and administrative

1,792,184

566,195

Payroll and payroll taxes

2,383,397

559,201

Professional fees

1,504,561

457,752

Stock compensation for employees

166,800

797,613

Stock compensation for services

126,414

9,453,825

Depreciation and amortization

454,341

6,009

Total operating expenses

8,506,796

12,518,701

Income (Loss) from operations

(6,175,100

)

(9,363,031

)

Other income (expense):

Interest expense

(1,889,485

)

(594,258

)

Interest expense - debt discount

(5,520,822

)

(2,993,408

)

Changes in fair value of derivative liability

(7,700,000

)

-

Merchant liability settlement

-

(364,124

)

Other income or expense

49,316

(14,611

)

Total other income (expense), net

(15,060,991

)

(3,966,401

)

Loss before provision for income taxes

(21,236,091

)

(13,329,432

)

Income tax provision

79,896

-

Net loss

$

(21,315,987

)

$

(13,329,432

)

Net loss per share:

Basic and diluted

$

(0.51

)

$

(0.38

)

Weighted average number of common shares outstanding:

Basic and diluted

42,110,890

34,917,106


GreenBox POS
Consolidated Statements of Cash Flows
For the Three months ended March 31, 2022 and 2021
(unaudited)

Three Months Ended March 31,

2022

2021

Cash flows from operating activities:

Net loss

$

(21,315,987

)

$

(13,329,432

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation expense

454,341

6,010

Noncash lease expense

38,748

(1,135

)

Stock compensation expense

166,800

797,613

Common stocks issued for professional fees

126,414

9,453,825

Stock compensation issued for interest

-

594,355

Interest expense - debt discount

5,520,822

2,993,408

Changes in fair value of derivative liability

7,700,000

-

Changes in assets and liabilities:

-

Other receivable, net

13,077

-

Inventory

69,253

-

Prepaid and other current assets

(31,742

)

(2,382,623

)

Cash due from gateways, net

(1,865,612

)

(4,544,760

)

Other assets

18,286

-

Accounts payable

198,100

(32,056

)

Other current liabilities

108,556

30,857

Accrued interest

549,333

-

Payment processing liabilities, net

392,606

(4,844,841

)

Net cash provided by (used in) operating activities

(7,857,005

)

(11,258,779

)

Cash flows from investing activities:

Purchases of property and equipment

(66,088

)

(11,108

)

Cash provided for Transact Europe Acquisition

(28,810,600

)

-

Cash provided for Sky asset acquisition

(16,000,000

)

-

Net cash used in investing activities

(44,876,688

)

(11,108

)

Cash flows from financing activities:

Treasury stock repurchase

(3,236,723

)

-

Proceeds from stock option exercises

5,215

2,250

Repayments on convertible debt

(6,000,000

)

-

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

(9,231,508

)

45,133,741

Net increase in cash, cash equivalents, and restricted cash

(61,965,201

)

33,863,854

Cash, cash equivalents, and restricted cash – beginning of period

89,559,695

1,832,735

Cash, cash equivalents, and restricted cash end of period

$

27,594,494

$

35,696,589

Supplemental disclosures of cash flow information

Cash paid during the period for:

Interest

$

4,891,392

$

-

Income taxes

$

-

$

-

Non-cash financing and investing activities:

Convertible debt conversion to common stock

$

-

$

3,850,000

Interest accrual from convertible debt converted to common stock

$

-

$

58,050


Reconciliation of Net Income (Loss) attributable to GreenBox POS, Inc., to Adjusted Net Income* for the Three Months Ended March 31, 2021, FY 2021, and March 31, 2022


Q1 2021

FY 2021

Q1 2022

Net revenue

$

4,749,441

$

26,304,502

$

4,895,526

Net loss

$

(13,329,432

)

$

(26,453,512

)

$

(21,315,987

)

Adjustments to net loss:

Non-cash adjustments - income (loss):

Stock compensation expense for employees

797,613

3,704,008

166,800

Stock compensation expense for services

9,453,825

12,306,365

126,414

Bad debt expense

-

6,707,228

-

Total non-cash adjustments

10,251,438

22,717,601

293,214

EBIDTA Adjustment:

Depreciation

6,009

912,677

454,341

Income taxes

-

4,906

79,896

Interest expense - debt discount and other interest

3,587,666

4,925,121

7,410,307

Derivative expense

-

3,435,178

-

Changes in derivative

-

(2,845,000

)

7,700,000

Merchant liability settlement

364,124

364,124

-

Total EBIDTA adjustments

3,957,799

6,797,006

15,644,544

Total adjustments to net loss:

14,209,237

29,514,607

15,937,758

Adjusted net income

$

879,805

$

3,061,095

$

(5,378,229

)

Research and development expense

$

653,381

$

3,870,050

$

1,938,133

* 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.


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