GlobeNewswire Inc | Nov 11, 2021 04:33PM EST

November 11, 2021

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 30th, 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.

ThirdQuarter 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 Companys 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 Companys 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 GreenBoxs 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 WebcastDate: Thursday, November 11, 2021Time: 4:30 p.m. Eastern timeUS Dial In1-800-430-8332International Dial In1-323-289-6576Conference ID: 7785831Webcast: 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 ContactMark SchwalenbergMZ Group - MZ North America312-261-6430GBOX@mzgroup.uswww.mzgroup.us

GreenBox POSConsolidated Balance SheetsSeptember 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 229,346 10,000 bad debt of $288,764 and $0, respectivelyAccounts receivable from fines andpenalties from merchants, net of allowance 2,789,231 2,789,230 for bad debt of $6,665,031Inventory 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 3,448 - discount of?Convertible debt, net of debt discount of - 856,592 $0 and $2,993,408, respectivelyCurrent portion of operating lease 375,488 120,110 liabilities Total current liabilities 11,671,660 11,727,603 Long term liabilities 645,131 149,900 Operating lease liabilities, less current 294,490 - portion Total liabilities 12,611,281 11,877,503 Commitments and contingencies Stockholders? Equity: Common stock, par value $0.001, 82,500,000shares authorized, shares issued and 42,865 30,711 outstanding of 42,865,022 and 30,710,645,respectivelyAdditional 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 (2,679,633 ) - 0 shares, respectivelyTotal stockholders? equity 56,510,762 385,236 Total liabilities and stockholder?s equity $ 69,122,043 $ 12,262,739

GreenBox POSConsolidated Statements of OperationsFor the Three Monthsand 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 2,420,748 1,845,295 5,337,999 3,504,283 revenue Gross profit 5,624,721 1,210,976 13,836,090 2,032,052 Operating expenses:Advertising 37,179 59,099 84,509 86,368 and marketingResearch and 1,043,385 243,923 2,504,976 798,157 developmentGeneral and 784,158 366,734 1,648,383 613,156 administrativePayroll and 1,250,451 436,216 2,871,581 1,279,174 payroll taxesProfessional 789,772 344,641 2,114,996 852,234 feesStockcompensation 3,777,572 - 5,867,072 - for employeesStockcompensation 238,238 - 10,418,996 - for servicesDepreciationand 457,633 5,764 477,886 16,856 amortizationTotaloperating 8,378,388 1,456,377 25,988,399 3,645,945 expenses Income (Loss)from (2,753,667 ) (245,401 ) (12,152,309 ) (1,613,893 )operations Other income (expense):Interest (4,736 ) (48,931 ) (598,994 ) (372,553 )expenseInterestexpense - debt - (83,500 ) (2,993,408 ) (121,918 )discountDerivative - (925,576 ) - (925,576 )expenseChanges infair value of - 819,366 - (383,769 )derivativeliabilityGain fromextinguishment - - - 2,630,795 of convertibledebtMerchantliability - - (364,124 ) - settlementOther income (37,497 ) (5,768 ) (56,057 ) (2,434 )or expenseTotal other (42,233 ) (244,409 ) (4,012,583 ) 824,545 expense, net Income (Loss)before (2,795,900 ) (489,810 ) (16,164,892 ) (789,348 )provision forincome taxes Income tax 3,253,855 - 3,253,855 - provision Net income $ (6,049,755 ) $ (489,810 ) $ (19,418,747 ) $ (789,348 )(loss) Earnings(loss) per share:Basic and $ (0.14 ) $ (0.02 ) $ (0.49 ) $ (0.03 )diluted Weightedaverage numberof common sharesoutstanding:Basic and 42,065,842 29,488,393 39,949,732 29,488,393 diluted

GreenBox POSConsolidated Statements of Cash FlowsFor 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 netcash 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 - 383,769 liabilityChanges 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 (14,034,039 ) (130,505 )activities 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 43,015,308 (495,439 )activities Cash acquired from acquisition of Northeast 1,491,068 - and ChargeSavvy Net increase in cash, cash equivalents, and 27,874,519 (638,276 )restricted cash Cash, cash equivalents, and restricted cash 1,832,735 763,110 ? beginning of period Cash, cash equivalents, and restricted cash $ 29,707,254 $ 124,834 ? end of period Supplemental disclosures of cash flow informationCash 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 $ 12,140,000 $ - ChargeSavvyInterest accrual from convertible debt $ 594,355 $ 78,050 converted to common stockShort-term notes payable converted to common $ - $ 810,000 stock

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

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

* 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.