GlobeNewswire Inc | May 13, 2021 04:05PM EDT

May 13, 2021

SAN DIEGO, CA, May 13, 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 first quarter ended March 31, 2021.

First Quarter 2021 and Subsequent Operational Highlights:

-- Revenue grew 2,437% to $4.7 million in the first quarter of 2021, as compared to $0.2 million in the same year-ago quarter. -- Launched Generation3 software which propelled processing volume to a company quarterly record of $315 million, an increase of 141% sequentially from the fourth quarter of 2020. -- Announced the development of new smart-contract token technology to accelerate processing volume growth and open new possible revenue streams in money service business -- Selected Signature Bank as a banking solutions partner for the smart-contract token technology infrastructure -- Appointed two new independent Directors to the Board Carl Williams, a veteran global payments executiveDennis James, an accomplished financial professional in banking, accounting and M&A -- Announced the appointment of Benjamin Chung as Chief Financial Officer -- Announced the planned acquisition and agreed to final terms with ChargeSavvy, a specialty retail payment solutions company -- Completed a $50.1 million public offering and uplisted to the NASDAQ Capital Market -- Joined Visas Fintech Fast Track Program, enabling the company to have direct push-to-card payments and co-branded Visa card issuance capabilities

Management Commentary

The first quarter 2021 built on top of the strong momentum generated towards the end of the fourth quarter 2020. Following the launch of Gen3 in January, the rapid pace of client onboardings drove record processing volume in Q1, said Fredi Nisan, Chief Executive Officer of GreenBox POS. We made significant strides towards the launch of the smart contract token technology in announcing our partnership with Signature Bank for banking solutions. We also demonstrated our commitment to improving our internal controls and governance by announcing a new Chief Financial Officer and two new Board appointees. Additionally, we completed an uplist to the Nasdaq along with a $50.1 million public offering significantly enhancing our financial position while raising our profile in the capital markets.

As we look to the second quarter, we are focused on completing the deployment of our token technology and beginning to realize revenues and believe we are well positioned to do so. Furthermore, by successfully onboarding a considerable amount of low-risk merchant portfolios in the first quarter, we are now able to ramp up the onboarding of higher margin, higher risk portfolios. The land-grab for market share in the digital financial payments space is underway and we are well positioned to gain traction through our superior technology.

We expect to see robust year-over-year growth throughout the remainder of 2021, empowering our drive to improve the speed and security of digital transactions globally. I look forward to providing our shareholders with further updates in the near-term as we launch our token technology and successfully execute upon our business plan, concluded Nisan.

First Quarter 2021 Financial Summary

-- Revenues in the first quarter of 2021 were $4.7 million, an increase of 2,437% compared to revenues of $0.2 million in the same quarter a year ago. Sequentially, revenues increased by 59% when compared to $3.0 million in the fourth quarter of 2020. The increase in revenue was primarily due to increased processing volume -- Gross profit in the first quarter of 2021 was $3.2 million, or 66.4% of total revenue, compared to gross profit of ($0.1) million, in the same quarter a year ago. Sequentially, gross profit increased 89% from $1.7 million, or 55.8% of total revenue, in the fourth quarter of 2020. The increase in gross profit was primarily due to increase processing volume and efficiency to scale. -- Total operating expenses in the first quarter of 2021 totaled $12.5 million, compared to $1.1 million in the same quarter a year ago, and $5.3 million in the fourth quarter of 2020. The increase in operating expenses was due to an increase in one-time charges and non-cash stock-based compensation expenses as well as an increase in interest expense -- The Companys net income in the first quarter of 2021 was ($13.3) million, or ($0.38) per basic and diluted share, compared to net income of ($5.2) million, or ($0.18) per basic and diluted share, in the same quarter a year ago. Net income in the fourth quarter of 2020 was ($4.5) million or ($0.15) per basic and diluted share. The sequential decrease 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 quarter. -- Adjusted Net Income, a non-GAAP financial measure, for the first quarter 2021 was $0.5 million.

First Quarter 2021 Results Conference Call

Management will host a conference call on Thursday, May 13, 2021 at 4:30 p.m. Eastern time to discuss GreenBoxs first quarter 2021 financial results. The call will conclude with Q&A from participants. To participate, please use the following information:

Q1 2021 Conference Call and WebcastDate: Thursday, May 13, 2021Time: 4:30 p.m. Eastern timeU.S. Dial-in: 1-888-394-8218International Dial-in: 1-323-794-2588Conference ID: 6367518Webcast: http://public.viavid.com/player/index.php?id=144886

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 13, 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 6367518 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, 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 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 ContactMark SchwalenbergMZ Group - MZ North America312-261-6430GBOX@mzgroup.uswww.mzgroup.us

GreenBox POSConsolidated Balance SheetsMarch 31, 2021 and December 31, 2020(unaudited)

March 31, December 31, 2021 2020 ASSETS Current Assets: Cash and cash equivalents $ 35,696,589 $ - Restricted cash - 1,832,735 Accounts receivable, net 10,000 10,000 Accounts receivables from fines andfees from merchant, net of allowance 2,789,230 2,789,230 for bad debt of $6,665,031 and$6,665,031, respectively.Cash due from gateways, net 11,848,709 7,303,949 Prepaid and other current assets 2,452,753 70,130 Total current assets 52,797,281 12,006,044 Non-current Assets: Property and equipment, net 62,362 57,264 Operating lease right-of-use assets, 87,837 117,795 netOther assets 81,636 81,636 Total non-current assets 231,835 256,695 Total assets $ 53,029,116 $ 12,262,739 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 178,038 $ 210,094 Other current liabilities 98,995 68,138 Payment processing liabilities, net 5,355,115 10,199,956 Note payable, payroll protection plan 272,713 272,713 loanConvertible debt, net of debtdiscount of $0 and $2,993,408, - 856,592 respectivelyCurrent portion of operating lease 89,017 120,110 liabilities Total current liabilities 5,993,878 11,727,603 Long-term debt 149,900 149,900 Total liabilities 6,143,778 11,877,503 Commitments and contingencies Stockholders' Equity: Common stock, par value $0.001,82,500,000 shares authorized, sharesissued and 40,918 30,711 outstanding of 40,917,331 and30,710,646, respectivelyAdditional paid-in capital 71,898,401 12,079,074 Accumulated deficit (25,053,981 ) (11,724,549 )Total stockholders' equity 46,885,338 385,236 Total liabilities and stockholder's $ 53,029,116 $ 12,262,739 equity

GreenBox POSConsolidated Statements of OperationsFor the Three Months Ended March 31, 2021 and 2020(unaudited)

Three Months Ended March 31, 2021 2020 Net revenue $ 4,749,441 $ 187,205 Cost of revenue 1,593,771 247,305 Gross profit (loss) 3,155,670 (60,100 ) Operating expenses: Advertising and marketing 24,725 11,885 Research and development 653,381 286,548 Payroll and payroll taxes 559,201 402,462 Professional fees 457,752 212,298 General and administrative 566,195 142,050 Stock compensation for employees 797,613 4,130 Stock compensation for services 9,453,825 - Depreciation and amortization 6,009 5,376 Total operating expenses 12,518,701 1,064,749 Loss from operations (9,363,031 ) (1,124,849 ) Other income (expense): Interest expense - debt discount (2,993,408 ) (30,076 )Interest expense (594,258 ) (288,590 )Changes in fair value of derivative - (3,822,385 )liabilityMerchant liability settlement (364,124 ) - Merchant fines and penalty income - 24,060 Other income or expense (14,611 ) - Total other expense, net (3,966,401 ) (4,116,991 ) Loss before provision for income taxes (13,329,432 ) (5,241,840 ) Income tax provision - - Net loss $ (13,329,432 ) $ (5,241,840 ) Earnings (loss) per share: Basic and diluted $ (0.38 ) $ (0.18 ) Weighted average number of common shares outstanding:Basic and diluted 34,917,106 28,993,402

GreenBox POSConsolidated Statements of Cash FlowsFor the Three months ended March 31, 2021 and 2020(unaudited)

Three Months Ended March 31, 2021 2020 Cash flows from operating activities: Net loss $ (13,329,432 ) $ (5,241,840 ) Adjustments to reconcile net loss to netcash provided by (used in) operating activities:Depreciation expense 6,010 5,376 Interest expense - debt discount 2,993,408 30,076 Stock compensation expense for employees 797,613 4,130 Stock compensation expense for services 9,453,825 - Shares issued for interest 594,355 - Changes in fair value of derivative - 3,822,385 liabilityNoncash lease expense (1,135 ) 4,406 Changes in assets and liabilities: Accounts receivable - 37,205 Prepaid and other current assets (2,382,623 ) (42,614 )Cash due from gateways, net (4,544,760 ) 5,024,520 Accounts payable (32,056 ) (6,271 )Other current liabilities 30,857 (15,100 )Accrued interest - 7,135 Payment processing liabilities, net (4,844,841 ) (3,361,564 )Net cash provided by (used in) operating (11,258,779 ) 267,844 activities Cash flows from investing activities: Purchases of property and equipment (11,108 ) (12,564 )Net cash used in investing activities (11,108 ) (12,564 ) Cash flows from financing activities: Repayments on convertible debt - (270,000 )Borrowings from short-term notes payable - (441,911 )Proceeds from stock option exercises 2,250 - Proceeds from exercise of warrant 3,520,000 - Repurchase of common stock from stockholder (4,194,000 ) - Proceeds from issuances of common stock 45,805,491 - Net cash provided by financing activities 45,133,741 (711,911 ) Net increase (decrease) in cash, cash 33,863,854 (456,631 )equivalents, and restricted cash Cash, cash equivalents, and restricted cash 1,832,735 763,110 ?beginning of period Cash, cash equivalents, and restricted cash $ 35,696,589 $ 306,479 ?end of period Supplemental disclosures of cash flow informationCash paid during the period for: Interest' $ - $ 339,505 Income taxes $ - $ 800 Disclosures of non-cash activities under investing activities:Convertible debt converted to common stock $ 3,850,000 $ 57,500 Interest accrual from convertible debt $ - $ 58,050 converted to common stock

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

Three months ended March 31, 2021 Net loss $ (13,329,432 ) Adjustments to net loss: Non-cash adjustments - income (loss): Stock compensation expense for employees 797,613 Stock compensation expense 9,453,825 Interest expense - debt discount 2,993,408 Interest expense - common stock issued for 594,258 interest on convertible debtTotal non-cash adjustments 13,839,104 EBIDTA Adjustment: Depreciation 6,009 Total EBIDTA adjustments 6,009 Total adjustments to net loss: $ 13,845,113 Adjusted net income $ 515,681

* 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.