GreenBox POS Reports Second Quarter 2022 Financial Results
16 August 2022 - 6:15AM
GreenBox POS (NASDAQ: GBOX) ("GreenBox", the "Company"), an
emerging and rapidly growing Fintech company provided its financial
results for the second quarter ending June 30, 2022.
Management Commentary by CEO
Fredi Nisan:
Second Quarter 2022 was highlighted by:
- Company record Q2
processing volume of over $1 billion, about 50% ahead of internal
projections, a 40% increase when compared to Q1 processing volume
of $754 million and more than double Q2 2021.
- Q2 revenues of $7.0 million versus
$6.4 million in the same year-ago quarter, a 42% increase when
compared to Q1 revenues of $4.9 million.
- Acquiring business including the
recently acquired Sky Financial portfolio Q2 processing volume was
$769 million, which outpaced our expectations by over 38%.
- FX and international payments
business line, including Transact Europe, saw significant momentum
in the quarter with over $184 million in business volume.
- Successfully
deployed v1.0 of the coyni public beta and completed core
development of v2, which is on schedule to roll out with customers
already identified in the pipeline in Q3.
Operational Achievements
- Launched technology platform with
Territorial Bank of American Samoa (TBAS) to provide digital
payment solutions for businesses and consumers in American Samoa
and gained an approximate 13% market share during the second
quarter. TBAS is an ideal model market for the coyni platform to
implement the same offering to other similar closed-loop
geographies.
- During the second quarter, for
recently acquired TEU, we focused on infrastructure and packaging
of our key offerings to maximize the immediately available
business-building opportunities. We also deployed several key
strategic initiatives to drive growth from our acquisition of TEU
which are on track to produce solid revenue growth in the second
half of the year.
- As one of the industry's first, we
announced real-time custodial account attestation via a lengthy
review process of IT, compliance and, specifically, SOC 2
compliance certification from Armanino, a top accounting,
consulting and technology firm in the U.S. This is a critical
differentiator and ensures that our coyni platform has available
existing reserves in a custodial account to secure liquidity -
under any scenario - should anyone want to exit at any time. We
view coyni technology as a significant long-term growth driver for
our business.
- Completed a System and Organization
Controls (SOC) 2 Type 2 certification audit on controls relevant to
the security trust services category to align us with the industry
standards followed by world class organizations.
- Fortified the composition of our
Board of Directors with the addition of 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.
- In
anticipation of our continued growth and evolution as a public
company, and indicative of our continued commitment to strong
governance practices, we have also transitioned our auditor to
Simon & Edward, an alliance member of BDO.
Summary
The second quarter 2022 was highlighted by
excellent financial results, along with steady progress on several
key initiatives that further establish our standing as an emerging
force on the fintech landscape. After achieving yet another company
record quarter processing volume of over $1 billion, we also more
than doubled that volume number versus the same quarter a year
ago.
We strengthened our core business
infrastructures within the sales, marketing, and operational
functions, introducing our products in select territories, such as
America Samoa, and made excellent progress on the development of
coyni, our next generation blockchain ledger-based payments
platform. We additionally integrated material business capabilities
from recent M&As, such as Transact Europe, to launch service
offerings in several business domains including ACH, foreign
exchange, and international payments.
Looking ahead, while there has been a
significant disruption in the cryptocurrency and financial
technology industry this year, GreenBox’s focus remains on building
the infrastructure, partnerships, communications, and technology to
achieve our long-term business objectives. We remain highly
confident in our ability to create differentiated, customized
financial transaction technology and deploy it at scale.
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.
Second Quarter 2022 Financial
Summary
- Net revenue
increased by $0.8M, or 6.6%, to $11.9 million for the six months
ended June 30, 2022 from $11.1 million in the prior year’s same
period. Net revenue increased by $0.6M, or 9.2%, to $7.0 million in
the second quarter of 2022 from $6.4 million in the same quarter
the prior year. The increase in net revenue was due to the increase
in processing volume but offset by higher fees to gateways and
ISOs.
- Gross profit for the six months
ended June 30, 2022, was $5.2 million, or 43.5% of total net
revenue, compared to gross profit of $8.2 million, or 73.8% of
total net revenue, in the prior year’s same period. Gross profit in
the second quarter of 2022 was $2.8 million, or 40.5% of total net
revenue, compared to gross profit of $5.1 million, or 79.3% of
total net revenue, in the same quarter a year ago. The decrease in
gross profit was primarily due to the increased cost of revenue
resulting from higher processing fees paid to gateways and
commission payments to ISOs.
- Ordinary operating expenses were
$15.4 million and $5.3 million for the six months ended June 30,
2022, and 2021, respectively, an increase of $10.1 million.
Ordinary operating expenses were $7.7 million and $3.1 million for
Q2 2022 and 2021, respectively, an increase of $4.6 million. The
overall increase was primarily due to an increase in general and
administrative expenses related to increased headcount to support
operations and sales growth, as well as heavy investment in R&D
to improve technology.
- Other expenses decreased by $8
million to a net other income of $4 million for the six months
ended June 30, 2022, from a net other expense of $4 million in the
same period the prior year. Interest expense increased
significantly for the six months ended June 30, 2022, as compared
to the same period in the prior year due to the $100 million
convertible note issued in November 2021. Furthermore, income from
changes in fair value of derivative liability in the amount of
$18.7 million for the six months ended June 30, 2022, and none in
the same period the prior year.
- The Company sustained a net loss
for the six months ended June 30, 2022, of $10.9 million, or a
negative twenty-six ($0.26) cents per basic and diluted share,
compared to a net loss of $13.4 million, or a negative forty-three
($0.43) cents per basic and diluted share, in the same period the
prior year. The Company recorded a net income in the second quarter
of 2022 of $10.4 million, or $0.24 per basic and diluted share,
compared to a flat net income, or $0.00 per basic and diluted
share, in the same quarter a year ago. The increase in net income
for the six months ended June 30, 2022, and decrease in net loss
for Q2 2022 was primarily due to a decrease in the change in fair
value of the derivative liability and off-set by increases in
research and development, general and administrative, payroll and
payroll taxes and professional fees as the Company continues to add
staff and infrastructure related to growth.
- Cash position as of June 30, 2022
was cash and cash equivalents balance of $29.1 million and
restricted cash balance of $26.5 million.
Management will host a conference call on
Monday, August 15, 2022 at 4:30 p.m. Eastern time to discuss
GreenBox’s second quarter 2022 financial results. The call will
conclude with Q&A from participants. To participate, please use
the following information:
Q2 2022 Conference Call and WebcastDate:
Monday, August 15, 2022Time: 4:30 p.m. Eastern timeUS Dial In:
1-844-407-4018International Dial In: 1-201-689-8471Conference ID:
13732037Webcast:
https://viavid.webcasts.com/starthere.jsp?ei=1562241&tp_key=46e98fe508
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 15, 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 13732037. 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.
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 ContactMark SchwalenbergMZ
Group - MZ North
America312-261-6430GBOX@mzgroup.uswww.mzgroup.us
GreenBox
POSConsolidated Balance
SheetsJune 30, 2022 and December 31,
2021(unaudited)
|
June 30, |
|
December 31, |
|
|
2022 |
|
|
|
2021 |
|
ASSETS |
|
|
|
|
|
|
|
Current
Assets: |
|
|
|
Cash and cash equivalents |
$ |
29,098,753 |
|
|
$ |
89,559,695 |
|
Restricted cash |
|
26,526,234 |
|
|
|
- |
|
Accounts receivable, net of allowance for bad debt of $54,795 and
$54,795, respectively |
|
619,920 |
|
|
|
481,668 |
|
Inventory, net of inventory reserve of $3,127 and $3,127,
respectively |
|
259,924 |
|
|
|
286,360 |
|
Cash due from gateways, net of allowance of $3,904,952 and
$3,904,952, respectively |
|
14,270,698 |
|
|
|
18,941,761 |
|
Prepaid and other current assets |
|
14,104,587 |
|
|
|
6,420,696 |
|
Total current assets |
|
84,880,116 |
|
|
|
115,690,180 |
|
|
|
|
|
Non-current
Assets: |
|
|
|
Property and equipment, net |
|
1,714,914 |
|
|
|
1,674,884 |
|
Other assets |
|
186,038 |
|
|
|
190,636 |
|
Goodwill |
|
26,625,946 |
|
|
|
6,048,034 |
|
Intangible Assets, net |
|
24,505,648 |
|
|
|
7,578,935 |
|
Operating lease right-of-use assets, net |
|
1,868,633 |
|
|
|
1,490,159 |
|
Total non-current assets |
|
54,901,179 |
|
|
|
16,982,648 |
|
|
|
|
|
Total
assets |
$ |
139,781,295 |
|
|
$ |
132,672,828 |
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
Current
Liabilities: |
|
|
|
Accounts payable |
$ |
1,347,629 |
|
|
$ |
871,037 |
|
Other current liabilities |
|
1,869,049 |
|
|
|
501,167 |
|
Accrued interest |
|
1,717,398 |
|
|
|
1,226,287 |
|
Payment processing liabilities, net |
|
33,467,867 |
|
|
|
4,997,807 |
|
Derivative liability |
|
61,006 |
|
|
|
18,735,000 |
|
Current portion of operating lease liabilities |
|
728,076 |
|
|
|
495,134 |
|
|
|
|
|
Total current liabilities |
|
39,191,025 |
|
|
|
26,826,432 |
|
Long-term debt |
|
649,900 |
|
|
|
649,900 |
|
Convertible debt, net of debt discount of $30,241,836 and
$41,344,822, respectively |
|
58,758,165 |
|
|
|
58,655,178 |
|
Operating lease liabilities, less current portion |
|
1,232,868 |
|
|
|
1,035,895 |
|
|
|
|
|
Total liabilities |
|
99,831,958 |
|
|
|
87,167,405 |
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
Stockholders'
Equity: |
|
|
|
Common stock, par value $0.001, 82,500,000 shares authorized,
shares issued and outstanding of 44,600,527 and 43,546,647,
respectively |
|
43,884 |
|
|
|
42,831 |
|
Common stock issuable, par value $0.001, 754,423 and 0 shares
issuable, respectively |
|
754 |
|
|
|
- |
|
Additional paid-in capital |
|
89,386,501 |
|
|
|
88,574,469 |
|
Accumulated other comprehensive income (loss) |
|
(397,839 |
) |
|
|
- |
|
Accumulated deficit |
|
(49,083,963 |
) |
|
|
(38,178,061 |
) |
Less: Treasury stock, at cost; 0 and 714,831, respectively |
|
- |
|
|
|
(4,933,816 |
) |
Total stockholders'
equity |
|
39,949,337 |
|
|
|
45,505,423 |
|
|
|
|
|
Total liabilities and
stockholder's equity |
$ |
139,781,295 |
|
|
$ |
132,672,828 |
|
GreenBox
POSConsolidated Statements of
OperationsFor the Three and Six
Months Ended June 30, 2022 and
2021(unaudited)
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue |
|
$ |
6,965,578 |
|
|
$ |
6,379,179 |
|
|
$ |
11,861,104 |
|
|
$ |
11,128,620 |
|
|
Cost of revenue |
|
|
4,142,878 |
|
|
|
1,323,480 |
|
|
|
6,706,708 |
|
|
|
2,917,251 |
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
2,822,700 |
|
|
|
5,055,699 |
|
|
|
5,154,396 |
|
|
|
8,211,369 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
Advertising and marketing |
|
|
526,852 |
|
|
|
22,605 |
|
|
|
667,818 |
|
|
|
47,330 |
|
|
Research and development |
|
|
1,919,944 |
|
|
|
808,210 |
|
|
|
3,858,077 |
|
|
|
1,461,591 |
|
|
General and administrative |
|
|
1,353,604 |
|
|
|
298,030 |
|
|
|
3,145,788 |
|
|
|
864,225 |
|
|
Payroll and payroll taxes |
|
|
2,712,424 |
|
|
|
1,061,929 |
|
|
|
5,095,821 |
|
|
|
1,621,130 |
|
|
Professional fees |
|
|
1,167,798 |
|
|
|
867,472 |
|
|
|
2,672,359 |
|
|
|
1,325,224 |
|
|
Stock compensation for employees |
|
|
- |
|
|
|
1,291,887 |
|
|
|
166,800 |
|
|
|
2,089,500 |
|
|
Stock grant expense |
|
|
1,715,298 |
|
|
|
- |
|
|
|
1,715,298 |
|
|
|
- |
|
|
Stock compensation for services |
|
|
79,238 |
|
|
|
726,933 |
|
|
|
205,652 |
|
|
|
10,180,758 |
|
|
Depreciation and amortization |
|
|
2,126,607 |
|
|
|
14,244 |
|
|
|
2,580,948 |
|
|
|
20,253 |
|
|
Total operating expenses |
|
|
11,601,765 |
|
|
|
5,091,310 |
|
|
|
20,108,561 |
|
|
|
17,610,011 |
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from
operations |
|
|
(8,779,065 |
) |
|
|
(35,611 |
) |
|
|
(14,954,165 |
) |
|
|
(9,398,642 |
) |
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(1,866,016 |
) |
|
|
- |
|
|
|
(3,755,501 |
) |
|
|
(594,258 |
) |
|
Interest expense - debt discount |
|
|
(5,582,164 |
) |
|
|
- |
|
|
|
(11,102,986 |
) |
|
|
(2,993,408 |
) |
|
Changes in fair value of derivative liability |
|
|
26,373,994 |
|
|
|
- |
|
|
|
18,673,994 |
|
|
|
- |
|
|
Merchant liability settlement |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(364,124 |
) |
|
Other income or expense |
|
|
185,893 |
|
|
|
(3,949 |
) |
|
|
235,209 |
|
|
|
(18,560 |
) |
|
Total other income (expense),
net |
|
|
19,111,707 |
|
|
|
(3,949 |
) |
|
|
4,050,716 |
|
|
|
(3,970,350 |
) |
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before provision
for income taxes |
|
|
10,332,642 |
|
|
|
(39,560 |
) |
|
|
(10,903,449 |
) |
|
|
(13,368,992 |
) |
|
|
|
|
|
|
|
|
|
|
|
Income tax provision |
|
|
(77,443 |
) |
|
|
- |
|
|
|
2,453 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) |
|
$ |
10,410,085 |
|
|
$ |
(39,560 |
) |
|
$ |
(10,905,902 |
) |
|
$ |
(13,368,992 |
) |
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
statement: |
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
10,410,085 |
|
|
$ |
(39,560 |
) |
|
$ |
(10,905,902 |
) |
|
$ |
(13,368,992 |
) |
|
Foreign currency translation
loss |
|
|
(397,839 |
) |
|
|
- |
|
|
|
(397,839 |
) |
|
|
- |
|
|
Total comprehensive income
(loss) |
|
$ |
10,012,246 |
|
|
$ |
(39,560 |
) |
|
$ |
(11,303,741 |
) |
|
$ |
(13,368,992 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net loss per
share: |
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
0.24 |
|
|
$ |
(0.00 |
) |
|
$ |
(0.26 |
) |
|
$ |
(0.43 |
) |
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
42,977,461 |
|
|
|
31,078,605 |
|
|
|
42,541,262 |
|
|
|
31,208,102 |
|
|
|
|
|
|
|
|
|
|
|
|
GreenBox
POSConsolidated Statements of Cash
FlowsFor the Six Months Ended June 30, 2022 and
2021(unaudited)
|
Six Months Ended June 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
Cash flows from
operating activities: |
|
|
|
Net loss |
$ |
(10,905,902 |
) |
|
$ |
(13,368,992 |
) |
|
|
|
|
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities: |
|
|
|
Depreciation and amortization |
|
2,580,948 |
|
|
|
20,253 |
|
Noncash lease expense |
|
79,034 |
|
|
|
(1,720 |
) |
Stock compensation expense |
|
166,800 |
|
|
|
2,089,500 |
|
Common stocks issued for professional fees |
|
205,652 |
|
|
|
10,180,758 |
|
Stock compensation issued for interest |
|
- |
|
|
|
594,258 |
|
Common stock issued to employees as stock compensation |
|
1,715,298 |
|
|
|
- |
|
Interest expense - debt discount |
|
11,102,986 |
|
|
|
2,993,408 |
|
Changes in fair value of derivative liability |
|
(18,673,994 |
) |
|
|
- |
|
Changes in assets and liabilities: |
|
|
|
Guarantee deposits |
|
48,077 |
|
|
|
- |
|
Other receivable, net |
|
(138,252 |
) |
|
|
(65,444 |
) |
Inventory |
|
26,436 |
|
|
|
- |
|
Prepaid and other current assets |
|
(1,011,321 |
) |
|
|
(1,958,422 |
) |
Cash due from gateways, net |
|
4,671,063 |
|
|
|
(8,455,120 |
) |
Other assets |
|
35,348 |
|
|
|
(99,000 |
) |
Deferred tax asset |
|
- |
|
|
|
239,131 |
|
Accounts payable |
|
(2,186,733 |
) |
|
|
67,853 |
|
Other current liabilities |
|
732,221 |
|
|
|
- |
|
Accrued interest |
|
491,111 |
|
|
|
- |
|
Payment processing liabilities, net |
|
14,156,166 |
|
|
|
(5,904,437 |
) |
Net cash provided by (used in)
operating activities |
|
3,094,938 |
|
|
|
(13,667,974 |
) |
|
|
|
|
Cash flows from
investing activities: |
|
|
|
Purchases of property and equipment |
|
(86,952 |
) |
|
|
(68,411 |
) |
Purchase of intangibles |
|
(661,536 |
) |
|
|
(2,500,000 |
) |
Cash provided for Transact Europe Acquisition |
|
(28,810,600 |
) |
|
|
- |
|
Cash provided for Sky asset acquisition |
|
(16,000,000 |
) |
|
|
- |
|
Net cash used in investing
activities |
|
(45,559,088 |
) |
|
|
(2,568,411 |
) |
|
|
|
|
Cash flows from
financing activities: |
|
|
|
Treasury stock repurchase |
|
(3,236,723 |
) |
|
|
(933,343 |
) |
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 |
) |
|
|
44,200,398 |
|
|
|
|
|
Restricted cash acquired from
Transact Europe |
|
18,676,860 |
|
|
|
- |
|
|
|
|
|
Net increase (decrease) in
cash, cash equivalents, and restricted cash |
|
(33,018,798 |
) |
|
|
27,964,013 |
|
|
|
|
|
Foreign currency translation
adjustment |
|
(915,910 |
) |
|
|
- |
|
|
|
|
|
Cash, cash equivalents, and
restricted cash – beginning of period |
|
89,559,695 |
|
|
|
1,832,735 |
|
|
|
|
|
Cash, cash
equivalents, and restricted cash – end of period |
$ |
55,624,987 |
|
|
$ |
29,796,748 |
|
|
|
|
|
Supplemental
disclosures of cash flow information |
|
|
|
Cash paid during the period for: |
|
|
|
Interest |
$ |
3,127,111 |
|
|
$ |
- |
|
Income taxes |
$ |
- |
|
|
$ |
800 |
|
|
|
|
|
|
|
|
|
Non-cash financing and
investing activities: |
|
|
|
Convertible debt conversion to common stock |
$ |
5,000,000 |
|
|
$ |
3,850,000 |
|
Interest accrual from convertible debt converted to common
stock |
$ |
- |
|
|
$ |
58,050 |
|
GreenBox POS (NASDAQ:GBOX)
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