GreenBox POS Reports Fourth Quarter and Full Year 2020 Financial Results

SAN DIEGO, CA, March 31, 2021 (GLOBE NEWSWIRE) -- GreenBox POS (NASDAQ: GBOX) ("GreenBox", the "Company"), an emerging financial technology company leveraging proprietary blockchain security to build customized payment solutions, has provided its financial results for the fourth quarter and full year ended December 31, 2020.

Fourth Quarter 2020 and Subsequent Operational Highlights:

• Achieved a company record processing volume of $131 million during the fourth quarter 2020, an increase of 254% sequentially from the third quarter of 2020
• Completed a $50.1 million public offering and uplisting to the NASDAQ National Market
• Joined Visa’s Fintech Fast Track Program, enabling the company to have direct push-to-card payments and co-branded Visa card issuance capabilities
• Announced the development of GBOXT, a new secure smart-contract token technology to accelerate transaction volume in the GreenBox blockchain platform
• Launched the Generation 3 white label bank offering to pave the way for banks to connect and process transactions using GreenBox blockchain infrastructure
• Launched Generation 3 advanced large-scale technology upgrades to rapidly accelerate portfolio onboarding and processing efficiency
• Announced the planned acquisition of ChargeSavvy, a specialty retail payment processing company with $500 million in annual processing volume
• Completed a $2.66 million private placement for development of Generation 3 technology upgrades
• Appointed Vanessa Luna, experienced payments industry executive, as Chief Operating Officer

Management Commentary

“The fourth quarter 2020 marked the end to a breakout year for GreenBox POS as technology upgrades made to our blockchain based payment platform accelerated the pace of merchant portfolio onboarding,” said Fredi Nisan, Chief Executive Officer of GreenBox POS. “The company achieved a record setting quarter for number of clients onboarded and processing volume and continues to see strong momentum in early 2021. The successful deployment of the rapid onboarding module, among other features, in Generation 3 facilitated this surge in growth. Another benchmark achievement for GreenBox was our successful uplist to the Nasdaq Capital Market combined with a $50.1 million public offering which we believe will both raise national awareness of GreenBox in the capital markets while providing ample resources to continue to develop our technology.

“Looking forward, our white label bank offering and new smart-contract token provide exciting opportunities for rapid growth and adoption of our platform. Our recently announced partnership with Visa’s FastTrack program confirms our ongoing efforts to integrate with tier-1 partners. Furthermore, our pending acquisition of ChargeSavvy, expected to close in the second quarter, would provide a significant boost to our annual revenue and earnings while creating opportunities to expand into new verticals and adding new anti-fraud technology for higher-risk, higher fee merchants.

“While proud of our accomplishments during 2020, we are just getting started. We believe we have the technology, resources, and partnerships in place to continue to establish GreenBox as a leader in the financial technology space. I would like to thank our stakeholders for their ongoing support and commitment. We look forward to a successful 2021 as we continue to execute on our strategy to bring secure, instantly settled, blockchain based payment solutions to the world while creating long-term sustainable value for our shareholders,” concluded Nisan.

Fourth Quarter 2020 Financial Summary

• Revenues in the fourth quarter of 2020 were $3.0 million, compared to revenues of $0.4 million in the same quarter a year ago. Sequentially, revenues were flat compared to $3.0 million in the third quarter of 2020. This was primarily due to ChargeSavvy exiting the GreenBox ecosystem.
• Gross profit in the fourth quarter of 2020 was $1.7 million, or 55.8% of total revenue, compared to gross profit of $0.1 million, in the same quarter a year ago. Sequentially, gross profit increased 37.6% from $1.2 million, or 39.6% of total revenue, in the third quarter of 2020. The increase in gross profit was primarily due to increase processing efficiency and reduced cost to scale.
• Total operating expenses in the fourth quarter of 2020 totaled $5.3 million, compared to $2.5 million in the same quarter a year ago, and $1.5 million in the third quarter of 2020. The increase in operating expenses was due to an increase in one-time charges and non-cash stock-based compensation expenses.
• The Company’s net income in the fourth quarter of 2020 was ($4.5) million, or ($0.15) per basic and diluted share, compared to net income of ($3.3) million, or ($0.02) per basic and diluted share, in the same quarter a year ago. Net income in the third quarter of 2020 was ($0.5) million or $0.00 per basic and diluted share. The sequential decline was primarily due to an increase in one-time charges and non-cash stock-based compensation expenses related to the public offering and Nasdaq uplisting that was completed in the first quarter.

Fiscal Year Ended December 31, 2020 Summary

• Revenues for the year ended December 31, 2020 decreased 14.8% to $8.5 million, compared to revenue of $10.0 million in the previous year. The decline in revenue was primarily due to ChargeSavvy exiting the GreenBox ecosystem in August 2020.
• Gross profit for 2020 increased to $3.7 million, or 43% of revenues, compared to gross profit of ($1.1) million in the previous year. The increase in gross profit was primarily attributable to lower cost of revenue in 2020 as a result of increased processing efficiency and decreased cost to scale.
• Total operating expenses for the full year 2020 were $8.8 million, compared to $4.5 million in the previous year. This increase was primarily due to an increase in non-cash stock-based compensation expense, professional fees and payroll costs.
• The Company’s net income for the year ended December 31, 2020 was ($5.0) million, or ($0.17) per basic and diluted share outstanding, compared to net income of ($4.7) million, or ($0.17) per basic and diluted share outstanding, in the prior year. The decline in net income was primarily due to one-time charges and non-cash stock-based compensation expenses. 
• Adjusted EBITDA, a non-GAAP financial measure, was $0.3 million for the year ended 2020.

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, reducing fraud 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 EBITDA and Adjusted EBITDA. These measurements are not recognized in accordance with generally accepted accounting principles (GAAP) and should not be viewed as an alternative to GAAP measures of performance. EBITDA represents net income before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before stock-based compensation expense and gain (loss) in equity investment. EBITDA and Adjusted EBITDA are presented because we believe they provide additional useful information to investors due to the various noncash items during the period. EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations are: EBITDA and Adjusted EBITDA do not reflect cash expenditures, future requirements for capital expenditures, or contractual commitments; EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, working capital needs; and EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt or cash income tax payments. Although depreciation and amortization are noncash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements. See also Reconciliation of Net Income (Loss) attributable to GreenBox POS, Inc., to Adjusted EBITDA 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
[e-mail]
www.mzgroup.us

GreenBox POS
Consolidated Balance Sheets
December 31, 2020 and December 31, 2019
(unaudited)

December 31,		2020				2019
ASSETS
Current Assets:
Cash and cash equivalents		$	-			$	-
Restricted cash			1,832,735				763,110
Accounts receivable, net			10,000				70,257
Accounts receivables from fines and fees from merchant, net of allowance for bad debt of $6,665,031 and $6,665,031, respectively.			2,789,230				2,776,687
Cash due from gateways, net			7,303,949				8,426,844
Prepaid and other current assets			70,130				42,062
Total current assets			12,006,044				12,078,960
Non-current Assets:
Property and equipment, net			57,264				66,491
Operating lease right-of-use assets, net			117,795				229,639
Other assets			81,636				-
Total non-current assets			256,695				296,130
Total assets		$	12,262,739			$	12,375,090
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable		$	210,094			$	504,505
Other current liabilities			68,138				15,100
Accrued interest			-				368,071
Payment processing liabilities, net			10,199,956				14,021,892
Short-term notes payable, net of debt discount of $0 and $32,418, respectively			-				741,253
Note payable, payroll protection plan loan			272,713				-
Convertible debt, net of debt discount of $2,993,408 and $0, respectively			856,592				807,500
Derivative liability			-				1,050,063
Current portion of operating lease liabilities			120,110				113,935
Total current liabilities			11,727,603				17,622,319
Operating lease liabilities, less current portion			-				120,110
Long-term debt			149,900				-
Total liabilities			11,877,503				17,742,429
Commitments and contingencies
Stockholders' Equity (Deficit):
Common stock, par value $0.001, 82,500,000 shares authorized, shares issued and outstanding of 30,710,646 and 28,310,489, respectively			30,711				28,311
Common stock - issuable			-				2,872
Additional paid-in capital			12,079,074				1,318,647
Accumulated deficit			(11,724,549	)			(6,717,169	)
Total stockholders' equity (deficit)			385,236				(5,367,339	)
Total liabilities and stockholder's equity		$	12,262,739			$	12,375,090

GreenBox POS
Consolidated Statements of Operations
For the Twelve Months Ended December 31, 2020 and 2019
(unaudited)

Years Ended December 31,		2020				2019
Net revenue		$	8,525,015			$	10,002,857
Cost of revenue			4,825,587				11,091,140
Gross profit			3,699,428				(1,088,283	)
Operating expenses:
Advertising and marketing			93,868				45,928
Research and development			1,363,757				1,255,296
Payroll and payroll taxes			1,796,160				1,429,136
Professional fees			1,691,107				1,026,556
General and administrative			3,836,120				750,078
Depreciation and amortization			22,742				16,216
Total operating expenses			8,803,754				4,523,210
Loss from operations			(5,104,326	)			(5,611,493	)
Other income (expense):
Interest expense - debt discount			(1,149,677	)			(195,201	)
Interest (expense) income			(359,493	)			(604,504	)
Derivative expense			(641,366	)			(634,766	)
Changes in fair value of derivative liability			(383,769	)			(415,297	)
Merchant fines and penalty income			2,630,796				2,776,687
Other income or expense			455				-
Total other expense, net			96,946				926,919
Loss before provision for income taxes			(5,007,380	)			(4,684,574	)
Income tax provision			-				-
Net loss		$	(5,007,380	)		$	(4,684,574	)
Earnings (loss) per share:
Basic and diluted		$	(0.17	)		$	(0.17	)
Weighted average number of common shares outstanding:
Basic and diluted			29,868,955				27,969,702

GreenBox POS
Consolidated Statements of Cash Flows
For the Twelve months ended December 31, 2020 and 2019
(unaudited)

Years Ended December 31,		2020				2019
Cash flows from operating activities:
Net loss		$	(5,007,380	)		$	(4,684,574	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation expense			15,876				14,019
Interest expense - debt discount			1,102,706				195,201
Stock compensation expense			3,036,009				86,500
Stock issued for services and others			1,262,641				-
Changes in fair value of derivative liability			(1,050,063	)			1,050,063
Noncash lease expense			-				(4,406	)
Changes in assets and liabilities:
Accounts receivable			60,257				(20,259	)
Accounts receivables from fines and fees from merchant, net			(12,543	)			(2,776,687	)
Cash due from gateways, net			1,122,895				(7,796,145	)
Prepaid and other current assets			(28,068	)			(4,830	)
Other assets			(81,636	)			-
Accounts payable			(295,181	)			386,288
Other current liabilities			53,038				5,699
Accrued interest			(515,202	)			235,581
Payment processing liabilities, net			(3,821,936	)			13,156,806
Lease liability, net of asset			(2,091	)			-
Net cash provided by (used in) operating activities			(4,160,678	)			(156,744	)
Cash flows from investing activities:
Purchases of property and equipment			(6,649	)			(49,795	)
Net cash used in investing activities			(6,649	)			(49,795	)
Cash flows from financing activities:
Borrowings from convertible debt			3,678,000				482,500
Repayments on convertible debt			(985,500	)			(496,500	)
Repayment on long-term debt			149,900				(75,000	)
Borrowings from short-term notes payable			1,531,867				1,132,975
Repayments on short-term notes payable			(2,305,538	)			(359,304	)
Borrowings under note payable, payroll protection plan loan			272,713				-
Proceeds from issuances of common stock			2,860,000
Proceeds from stock option exercises			35,510				-
Net cash provided by financing activities			5,236,952				684,671
Net increase in cash, cash equivalents, and restricted cash			1,069,625				478,132
Cash, cash equivalents, and restricted cash – beginning of year			763,110				284,978
Cash, cash equivalents, and restricted cash – end of year		$	1,832,735			$	763,110
Supplemental disclosures of cash flow information
Cash paid during the years for:
Interest		$	727,564			$	988,751
Income taxes		$	800			$	800

FY 2020 Reconciliation of Net Income (Loss) attributable to GreenBox POS, Inc., to Adjusted EBITDA*

Year Ended December 31,					2020
Net loss				$	(5,007,380	)
Adjustments to net loss:
Non-cash adjustments - income (loss):
Interest expense - debt discount	1,149,677
Stock compensation expense	3,036,009
Common stocks issued for services and others	1,262,641
Derivative expense	641,366
Changes in fair value of derivative liability	383,769
Merchant fines and penalty income	(2,630,796	)
Total non-cash adjustments	3,842,666
Non-recurring expenses - income (loss):
Transaction fees paid to investment bank and lawyers	612,800
Outside consultant	202,492
Finance costs	245,128
Total non-recurring expenses	1,060,420
EBIDTA Adjustment:
Interest expense	359,493
Depreciation	22,742
Total EBIDTA adjustments	382,235
Total adjustments to net loss:					5,285,321
Adjusted net income				$	277,941

* Adjusted EBITDA 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.