greenbox20201231

10-K 1 greenbox20201231_10k.htm FORM 10-K greenbox20201231_10k.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2020

Commission File Number: 001-34294

GREENBOX POS

(Exact name of registrant as specified in its charter)

Nevada		22-3962936
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

8880 Rio San Diego Drive, Suite 102 San Diego, CA		92108
(Address of principal executive office)		(Zip Code)

Registrant’s telephone number, including area code: (619) 631-8261

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	GBOX	The Nasdaq Stock Market LLC (Nasdaq Capital Market)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b–2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The aggregate market value of the 6,672,503 voting common stock held by non-affiliates of the registrant as of June 30, 2020 was $2,802,451 based on the closing price of $0.42 per share of the registrant’s common stock as quoted on the OTCQB marketplace on that date.

As of March 22, 2021, there were 41,185,131 shares of registrant's common stock outstanding.

Documents Incorporated by Reference: None.

TABLE OF CONTENTS

		PAGE
PART I

Item 1.	Business	6
Item 1A.	Risk Factors	10
Item 1B.	Unresolved Staff Comments	16
Item 2.	Properties	16
Item 3.	Legal Proceedings	16
Item 4.	Mine Safety Disclosures	16

PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	17
Item 6.	Selected Financial Data
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	20
Item 8.	Financial Statements and Supplementary Data	21
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	21
Item 9A.	Controls and Procedures	21
Item 9B.	Other Information	21

PART III

Item 10.	Directors, Executive Officers and Corporate Governance	22
Item 11.	Executive Compensation	25
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	27
Item 13.	Certain Relationships and Related Transactions, and Director Independence	28
Item 14.	Principal Accounting Fees and Services	28

PART IV

Item 15.	Exhibits and Financial Statement Schedules	29

Signatures		30

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements are often identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “will,” “would” or the negative or plural of these words or similar expressions or variations. Such forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified herein and in our other SEC filings. You should not rely upon forward-looking statements as predictions of future events.

You should not place undue reliance on forward looking statements. The cautionary statements set forth in this Annual Report on Form 10-K identify important factors which you should consider in evaluating our forward-looking statements. These factors include, among other things:

●

Our ability to effectively execute our business plan;

●

Our ability to manage our expansion, growth and operating expenses;

●

Our ability to comply with new regulations that affect our business;

●

Our ability to evaluate and measure our business, prospects and performance metrics;

●

Our ability to compete and succeed in a evolving industry;

●

Our ability to respond and adapt to changes in technology;

●

Risks in connection with completed or potential acquisitions, dispositions and other strategic growth opportunities and initiatives;

●

Risks related to the anticipated timing of the closing of any potential acquisitions;

●

Risks related to the integration with regards to potential or completed acquisitions;

●

Various risks related to health epidemics, pandemics and similar outbreaks, such as the coronavirus disease 2019 (“COVID-19”) pandemic, which may have material adverse effects on our business, financial position, results of operations and/or cash flows;

●

Risks related to the introduction and adoption of new technologies;

●

Risks related to the blockchain and cryptocurrency industry; and

●

Risks related to our dependence on our proprietary technology which we may not be able to protect.

The foregoing list of important factors does not include all such factors, nor necessarily present them in order of importance. In addition, you should consult other disclosures made by the Company (such as in our other filings with the Securities and Exchange Commission (the “SEC”) or in our press releases) for other factors that may cause actual results to differ materially from those projected by the Company. For additional information regarding risk factors that could affect the Company’s results, see “Risk Factors” beginning on page 9 of this Annual Report on Form 10-K, and as may be included from time-to-time in our reports filed with the SEC.

	●	the diversion of management’s attention to integration matters;
	●	difficulties in achieving anticipated cost savings, synergies, business opportunities, and growth prospects from the combination;
	●	difficulties in the integration of operations and systems; and
	●	conforming standards, controls, procedures, accounting and other policies, business cultures, and compensation structures between the two companies.

Plan Category	Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights		Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a))
	(a)		(b)		(c)
Equity compensation plans approved by security holders:
2020 Incentive and Nonstatutory Stock Option Plan		446,179	$	3.75		2,887,154
Equity compensation plans not approved by security holders		-		-		-
Total		446,179	$	3.75		2,887,154

	Years Ended December 31,
	2020						2019						Changes
				% of						% of
	Amount			Revenue			Amount			Revenue			Amount			%

Net revenue	$	8,525,015			100.0	%	$	10,002,857			100.0	%	$	(1,477,842	)		-14.8	%
Cost of revenue		4,825,587			56.6	%		11,091,140			110.9	%		(6,265,553	)		-56.5	%
Gross profit		3,699,428			43.4	%		(1,088,283	)		-10.9	%		4,787,711			-439.9	%

Operating expenses:
Advertising and marketing		93,868			1.1	%		45,928			0.5	%		47,940			104.4	%
Research and development		1,363,757			16.0	%		1,255,296			12.5	%		108,461			8.6	%
Payroll and payroll taxes		1,796,160			21.1	%		1,429,136			14.3	%		367,024			25.7	%
Professional fees		1,691,107			19.8	%		1,026,556			10.3	%		664,551			64.7	%
General and administrative		3,836,120			45.0	%		750,078			7.5	%		3,086,042			411.4	%
Depreciation and amortization		22,742			0.3	%		16,216			0.2	%		6,526			40.2	%
Total operating expenses		8,803,754			103.3	%		4,523,210			45.2	%		4,280,544			94.6	%

Loss from operations		(5,104,326	)		-59.9	%		(5,611,493	)		-56.1	%		507,167			-9.0	%

Other Income (Expense):
Interest (expense) income		(1,149,677	)		-4.2	%		(604,504	)		-6.0	%		245,011			-40.5	%
Interest expense - debt discount		(359,493	)		-13.5	%		(195,201	)		-2.0	%		(954,476	)		0.0	%
Derivative expense		(641,366	)		-7.5	%		(634,766	)		-6.3	%		(6,600	)		0.0	%
Changes in fair value of derivative liability		(383,769	)		-4.5	%		(415,297	)		-4.2	%		31,528			-100.0	%
Merchant fines and penalty income		2,630,796			30.9	%		2,776,687			27.8	%		(145,891	)		-100.0	%
Other income or expense		455			0.0	%		-			0.0	%		455			0.0	%
Total other income (expense)		96,946			1.1	%		926,919			9.3	%		829,973			89..5	%

Loss before provision for income taxes		(5,007,380	)		-58.7	%		(4,684,574	)		-46.8	%		322,806			-6.9	%

Provision for income taxes		-			0.0	%		-			0.0	%		-			0.0	%

Net loss	$	(5,007,380	)		-58.7	%	$	(4,684,574	)		-46.8	%	$	322,806			-6.9	%

	●	Payment processing revenue is based on a percentage of each transaction’s value and/or upon fixed amounts specified per each transaction or service and is recognized as such transactions or services are performed.
	●	Licensing revenue is paid in advance and is recorded as unearned income, which is amortized monthly over the period of the licensing agreement.
	●	Equipment revenue is generated from the sale of POS products, which is recognized when goods are shipped. The equipment revenue was not material.

Name	Age	Position(s)
*Executive Officers*
Ben Errez	59	Chairman of the Board of Directors and Executive Vice President (Principal Financial Officer and Principal Accounting Officer)
Fredi Nisan	38	Director and Chief Executive Officer

*Directors*
Genevieve Baer	43	Director
William J. Caragol	53	Director
Ezra Laniado	37	Director

Name and Principal Position	Year	Salary ($)		Bonus ($)		Stock Awards ($)(1)		Options Awards ($)		All Other Compensation ($)			Total ($)
Ben Errez	2020		200,100		—		—		—		26,176	(1)		226,276
Chairman/EVP	2019		200,000		—		—		—		—			200,000

Fredi Nisan	2020		200,100		—		—		—		13,572	(2)

SEC Form 10-K filed by Greenbox POS