RTB Digital, Inc 10-Q for FY2019 Q2

RTB Digital, Inc. (RTB)

10-Q 2020-04-09 For: 2019-06-30

Added on April 11, 2026

About this 10-Q

RTB Digital, Inc filed this 10-Q on April 9, 2020, covering the quarter ended June 30, 2019 (FY2019 Q2).

Headline figures

Quarter ended June 30, 2019, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $3.31M; up 2779.9% from $114.93K a year earlier
Net loss: $1.34M; compared with a net loss of $489.96K a year earlier

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(MARK ONE)
☒	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 30, 2019

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
	For the transition period from ______________ to ______________

Nevada	22-3962936
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)

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

		Page
PART I Consolidated Financial Information

Item 1.	Condensed Consolidated Financial Statements	3
	Condensed Consolidated Balance Sheets as of June 30, 2019 (unaudited) and December 31, 2018 (restated)	3
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2019 and 2018 (unaudited)	4
	Condensed Consolidated Statements of Stockholders’ Deficit for the Six Months Ended June 30, 2019 and 2018 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2019 and 2018 (unaudited)	7
	Notes to (unaudited) Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis or Plan of Operation	29
Item 3.	Controls and Procedures	35

PART II Other Information

Item 1.	Legal Proceedings	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	36
Item 4.	Mine Safety Disclosures	36
Item 5.	Other Information	36
Item 6.	Exhibits	36
Signatures		37

	(Unaudited)			(Restated)
	June 30,			December 31,
	2019			2018

ASSETS

Current Assets:
Cash and cash equivalents	$	-		$	45,854
Restricted cash		1,995,949			239,124
Accounts receivable, net of allowance for bad debt of $0 and $0, respectively		49,998			49,998
Cash due from gateways, net		3,815,060			630,699
Prepaid and other current assets		2,122			37,232
Total current assets		5,863,129			1,002,907

Non-current Assets:
Property and equipment, net		65,893			30,715
Operating lease right-of-use assets, net		282,198			-
Total non-current assets		348,091			30,715

Total assets	$	6,211,220		$	1,033,622



Current Liabilities:
Accounts payable	$	110,388		$	127,029
Other current liabilities		24,757			9,401
Accrued interest		79,313			29,871
Payment processing liabilities, net		7,230,013			865,086
Convertible debt		807,500			846,500
Derivative liability		1,000,136			-
Current portion of operating lease liabilities		51,372			-

Total current liabilities		9,303,479			1,877,887
Operating lease liabilities, less current portion		234,045			-
Long-term debt		-			75,000

Total liabilities		9,537,524			1,952,887

Commitments and contingencies

Stockholders' Equity:
Common stock, par value $0.001, 495,000,000 shares authorized, shares issued and outstanding of 167,250,363 and 166,390,363, respectively		167,250			166,390
Common stock - issuable		3,308			1,000
Additional paid-in capital		1,179,272			945,940
Accumulated deficit		(4,676,134	)		(2,032,595	)
Total stockholders' equity		(3,326,304	)		(919,265	)

Total liabilities and stockholder's equity	$	6,211,220		$	1,033,622

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018

Revenue	$	3,309,747		$	114,925		$	4,277,745		$	114,925

Cost of revenue		3,042,022			17,922			3,768,355			17,922

Gross profit		267,725			97,003			509,390			97,003

Operating expenses:
Advertising and marketing		12,603			91,873			25,609			105,105
Research and development		600,264			105,202			704,186			163,022
Payroll and payroll taxes		309,719			32,381			547,047			37,979
Professional fees		127,473			142,014			307,018			347,352
General and administrative		119,699			129,593			199,252			179,557
Depreciation and amortization		3,615			1,631			6,455			2,494
Total operating expenses		1,173,373			502,694			1,789,567			835,509

Loss from operations		(905,648	)		(405,691	)		(1,280,177	)		(738,506	)

Other income (expense):
Interest expense		(24,738	)		(84,270	)		(174,953	)		(85,848	)
Interest expense - debt discount		-			-			(188,273	)		-
Derivative expense		-			-			(634,766	)		-
Changes in fair value of derivative liability		(412,158	)		-			(365,370	)		-
Asset impairment		-			-			-			(75,000	)
Total other expense, net		(436,896	)		(84,270	)		(1,363,362	)		(160,848	)

Loss before provision for income taxes		(1,342,544	)		(489,961	)		(2,643,539	)		(899,354	)

Income tax provision		-			-			-			-

Net loss	$	(1,342,544	)	$	(489,961	)	$	(2,643,539	)	$	(899,354	)


Earnings (loss) per share:
Basic and diluted	$	(0.01	)	$	(0.00	)	$	(0.02	)	$	(0.01	)

Weighted average number of common shares outstanding:
Basic and diluted		166,509,363			158,890,363			166,449,863			88,662,960

	Common Stock										Additional Paid-In			Accumulated			Total Stockholders' Equity
	Shares		Amount		To be Issued			Amount			Capital			Deficit			(Deficit)

Balance at March 31, 2019		166,390,363	$	166,390		1,150,000		$	5,500		$	1,001,251		$	(3,333,590	)		(2,160,449	)

Common stock and warrants issuable forfeited		-		-		(150,000	)		(4,500	)		(55,311	)		-			(59,811	)
		-		-		-			-			-			-
Share issued to employees and vendor		860,000		860		-			-			85,640			-			86,500
		-		-		-			-			-			-
Shares issuable from conversion of convertible debt		-		-		2,307,692			2,308			147,692			-			150,000

Net loss		-		-		-			-			-			(1,342,544	)		(1,342,544	)

Balance at June 30, 2019		167,250,363	$	167,250		3,307,692		$	3,308		$	1,179,272		$	(4,676,134	)	$	(3,326,304	)

	June 30, 2019		June 30, 2018

Cash and cash equivalents	$	-	$	364,728
Restricted cash		1,995,949		-

Total cash, cash equivalents, and restricted cash shown in the statements of cash flows	$	1,995,949	$	364,728

June 30, 2019	Level 1		Level 2		Level 3

Derivative liability	$	-	$	-	$	1,000,136

	April 12, 2018

Cash and Cash Equivalents	$	752,393
Customer Accounts		83
Inventory		56,988
Security Deposits		3,990
Fixed Assets, net		17,697
Prepaid Expense		12,543

Assets Acquired		843,694

Total Consideration – Liabilities Assumed		589,078

Gain on Bargain Purchase	$	254,616

	June 30, 2019			December 31, 2018
Settlement Processing Assets:
Cash held for settlements	$	1,995,949		$	239,124
Cash due from gateways		460,882			291,112
Amount due from gateways and merchants – hold and fees		1,419,004			-
Chargeback allowances (1)		-			(134,638	)
Reserves (2)		3,354,178			474,224
Total before allowance for uncollectable		7,230,013			869,822
Allowance for uncollectable – hold and fees		(1,419,004	)		-
Total – settlement processing assets	$	5,811,009		$	869,822

Settlement Processing Liabilities:
Settlement liabilities to merchants		7,230,013			786,425
Settlement liabilities to ISOs		-			107,342
Refund allowances (3)		-			(28,681	)
Totals	$	7,230,013		$	865,086

	June 30, 2019			December 31, 2018

Computers and equipment	$	32,047		$	15,285
Furniture		29,791			4,919
Kiosks		12,750			12,750
Vehicles		4,578			4,578

Total property and equipment		79,166			37,532
Less: Accumulated depreciation		(13,273	)		(6,817	)

Total property and equipment, net	$	65,893		$	30,715

	June 30, 2019		December 31, 2018

Settlement liabilities to merchants	$	7,230,013	$	786,425
Settlement liabilities to ISOs		-		107,342

Total processing liabilities		7,230,013		893,767
Refund allowances		-		(28,681	)

Total payment processing liabilities	$	7,230,013	$	865,086

	June 30, 2019		December 31, 2018

March 11, 2019 ($500,000) – 8% one-time interest charge with outstanding principal and interest due October 6, 2019.	$	500,000	$	-
December 27, 2018 ($150,000) – 12% interest per annum paid quarterly with outstanding principal and remaining interest due December 12, 2019.		-		150,000
December 13, 2018 ($83,000) – 10% interest per annum with outstanding principal and interest due December 13, 2019.		-		83,000
November 26, 2018 ($200,000) – 12% interest per annum with outstanding principal and interest due November 26, 2019.		200,000		200,000
September 27, 2018 ($53,000) – 10% interest per annum with outstanding principal and interest due September 27, 2019.		-		53,000
August 6, 2018 ($253,000) – 10% interest per annum with outstanding principal and interest due August 6, 2019.		-		253,000
March 15, 2018 ($300,00) – 12% interest per annum with outstanding principal and interest due March 15, 2019.		107,500		107,500

Total convertible notes payable, net of debt discount	$	807,500	$	846,500

	June 30, 2019		December 31, 2018

Beneficial conversion feature – convertible debt	$	1,000,136	$	-

Total derivative liability	$	1,000,136	$	-

	Three Months Ended June 30,
	2019			2018

Book income at statutory rate		21.00	%		21.00	%
Others		0	%		-0.80	%
Change in Valuation Allowance		-21.00	%		-20.14	%

Effective income tax rate		0	%		0.06	%

	June 30, 2019			December 31, 2018

Deferred tax assets (liabilities):
Charitable contributions	$	-		$	(3,700	)
Unearned revenue		-			(75,600	)
Depreciation		-			(26,300	)
Net operating loss carryforward		763,430			612,800

Total deferred tax assets, net		763,430			507,200
Valuation allowance		(763,430	)		(507,300	)

Net deferred tax assets (liabilities)	$	0		$	(100	)

Year ending	Hyundai Rio Vista, Inc.

Undiscounted cash flows:
2019	$	48,770
2020		110,948
2021		95,026
2022		-
2023		-
2024		-
Thereafter		-
Total undiscounted cash flows		254,744

Discounted cash flows:
Lease liabilities - current		51,372
Lease liabilities - long-term		234,045
Total discounted cash flows		285,417

Difference between undiscounted and discounted cash flows	$	30,673

For the year ended	Hyundai Rio Vista, Inc.

2019	$	53,881
2020		132,601
2021		124,944
2022		-
2023		-
Thereafter		-

Total	$	311,426

KPI	Description
Annual Transactional Processing Volume (ATPV)	The Company plans on processing an amount greater than $1B in FY2020. The Company’s Book of Business exceeds the processing goals for the year. By Q4/2020, the Company projects daily volumes to reach multimillion USD.
Annual Gross Profit Margin (AGPM)	This index matches the Company goals and remains at levels supporting the Company’s financial projections.
Annual Gross Profit (AGP)	At the targeted Annual Transactional Processing Volume goal and targeted Annual Gross Profit Margin, projected Annual Gross Profit is $18-20M for FY2020.
Annual EBITDA	The Company objective is to stay at or above 3% of Total Transactional Volume. At the targeted Annual Transactional Processing Volume goal, the Annual EBITDA equals $18-20M.

KPI	Description
Average Monthly Transaction Count (AMTC)	The Company projects an AMTC of more than 500,000
New Clients Backlog (NCB)	The Company will continue to invest in on-boarding technologies in order to expedite the process and reduce backlog. There are five client statuses: application, KYC, on-boarding, integration, processing. Current backlog of clients at application stage is greater than 2,000. Our goal is to bring the NCB down to 200.
Client Attrition	Current attrition rates are under 5%. Company goal is to reduce it further and keep it under 3%.

31.1	Certification by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).
31.2	Certification by the Principal Financial Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).
32.1*	Certification by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification by the Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

	GREENBOX POS (Registrant)

Date: April 9, 2020	By:	/s/ Fredi Nisan
		Fredi Nisan Chief Executive Officer (Principal Executive Officer)


1.	I have reviewed this Quarterly Report on Form 10-Q for the period ended June 30, 2019 of GreenBox POS;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



By:	/s/ Fredi Nisan
	Fredi Nisan
	Chief Executive Officer (Principal Executive Officer)



By:	/s/ Ben Errez
	Ben Errez
	Executive Vice President (Principal Financial Officer)


2.	The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.



By:	/s/ Fredi Nisan
Name:	Fredi Nisan
Title:	Chief Executive Officer (Principal Executive Officer)