RTB Digital, Inc 10-K for FY2020

RTB Digital, Inc. (RTB)

10-K 2021-03-30 For: 2020-12-31

Added on April 11, 2026

About this 10-K

RTB Digital, Inc filed this 10-K on March 30, 2021, covering the fiscal year ended December 31, 2020 (FY2020).

Headline figures

Fiscal year ended December 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $8.53M; down 14.8% from $10M a year earlier
Net loss: $5.01M; compared with a net loss of $4.68M a year earlier

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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)

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)

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

		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

	●	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)		213,672
CEO/Director	2019		200,000		—		—		—		—			200,000

Kenneth Haller	2020		202,492		—		—		—		—			202,492
SVP of Payment Systems	2019		150,669		—		—		—		—			150,669

	Option Awards(1)						Stock Awards
Name	Number of Securities Underlying Unexercised Options, Exercisable (#)		Number of Securities Underlying Unexercised Options, Not Exercisable (#)	Option Exercise Price ($)		Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)	Market Value of Shares or Units of Stock That Have Not Vested ($)
Ben Errez		83,333			0.39	6/24/2025
		83,333			6.06	12/2/2025

Fredi Nisan		83,333			0.39	6/24/2025
		83,333			6.06	12/2/2025

Kenneth Haller		83,333			0.39	6/24/2025
		83,333			6.06	12/2/2025

Name and Address of Owner	Shares of Common Stock Owned Beneficially			Percent of Class

5% Holders
GreenBox POS LLC (1)		20,489,208			49.75	%

Officers and Directors
Ben Errez (2)		10,411,271	(3)		25.18	%
Fredi Nisan (4)		10,411,271	(3)		25.18	%
Kenneth Haller (5)		2,941,826	(3)		7.11	%
Vanessa Luna (6)		83,333			*
Genevieve Baer (7)		0			0	%
William J. Caragol (7)		0			0	%
Ezra Laniado (7)		127,566			*
Total of Officers and Directors (7 Persons)		23,9832,601268			57.54	%

	Year Ended December 31,
	2020		2019
Audit Fees (audit for original filings)	$	125,000	$	58,000
Audit Fees (audit for amended filings)		-		-
Tax Fees		-		-
Total	$	125,000	$	58,000

	GreenBox POS

Date: March 30, 2021	By:	/s/ Fredi Nisan
		Fredi Nisan
		Chief Executive Officer

Signature	Title	Date

/s/ Fredi Nisan	Chief Executive Officer and Director	March 30, 2021
Fredi Nisan	(principal executive officer)

/s/ Ben Errez	Executive Vice President and Chairman of the Board of Directors	March 30, 2021
Ben Errez	(principal financial officer and principal accounting officer)

/s/ Genevieve Baer	Director	March 30, 2021
Genevieve Baer

/s/ William J. Caragol	Director	March 30, 2021
William J. Caragol

/s/ Ezra Laniado	Director	March 30, 2021
Ezra Laniado

	Page
Report of Independent Registered Public Accounting Firm	F-1
Audited Consolidated Balance Sheets as of December 31, 2020 and 2019	F-3
Audited Consolidated Statements of Operations for the Years Ended December 31, 2020 and 2019	F-4
Audited Statement of Consolidated Changes in Stockholders’ Equity for the Years Ended December 31, 2020 and 2019	F-5
Audited Statements of Cash Flows for the Years Ended December 31, 2020 and 2019	F-6
Notes to Financial Statements	F-7

*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

*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

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

Balance at December 31, 2018		27,731,727		$	27,732			166,667		$	1,000		$	1,084,598		$	(2,032,595	)	$	(919,265	)

Common stock issuable under convertible debt		-			-			4,167			4,500			-			-			4,500

Warrants issuable under convertible debt		-			-			20,833			-			55,311			-			55,311

Common stock and warrants issuable forfeited		-			-			(25,000	)		(4,500	)		(55,311	)		-			(59,811	)

Share issued to employees and vendor		143,333			143			-			-			86,357			-			86,500

Shares issuable from conversion of convertible debt		-			-			384,615			2,308			147,692			-			150,000

Shares issued from conversion of convertible debt		384,615			385			(384,615	)		(385	)		-			-			-

Shares issued from issuable shares		50,813			51			(50,813	)		(51	)		-			-			-

Net loss		-			-			-			-			-			(4,684,574	)		(4,684,574	)

Balance at December 31, 2019		28,310,488		$	28,311			115,854		$	2,872		$	1,318,647		$	(6,717,169	)	$	(5,367,339	)

Shares issuable adjustment		-			-			(115,854	)		(2,872	)		-			-			(2,872	)

Other adjustments		(299,595	)		(300	)		-			-			300			-			-

Warrant issued under convertible debt		-			-			-			-			3,498,667			-			3,498,667

Common stock issued on conversion of convertible debt accrued interest		854,701			855			-			-			69,145			-			70,000

Common stock issued for warrant conversion		696,907			697			-			-			(697	)		-			-

Common stock issued for services and others		299,536			300			-			-			1,262,341			-			1,262,641

Common stock issued for stock options exercised		297,326			298			-			-			35,212			-			35,510

Common stock repurchased from common stock issued		(1,000,000	)		(1,000	)		-			-			(809,000	)		-			(810,000	)

Common stock issued for settlement of note payable		1,000,000			1,000			-			-			809,000			-			810,000

Issuances of common stock		551,282			550			-			-			2,859,450			-			2,860,000

Stock compensation expense		-			-			-			-			3,036,009			-			3,036,009

Net loss		-			-			-			-			-			(5,007,380	)		(5,007,380	)

Balance at December 31, 2020		30,710,645		$	30,711			-		$	-		$	12,079,074		$	(11,724,549	)	$	385,236

	December 31, 2020		December 31, 2019

Cash and cash equivalents	$	-	$	-
Restricted cash		1,832,735		763,110

Total cash, cash equivalents, and restricted cash shown in the statements of cash flows	$	1,832,735	$	763,110

Description	Level 1		Level 2		Level 3

Derivative liability – December 31, 2020	$	-	$	-	$	-
Derivative liability – December 31, 2019	$	-	$	-	$	1,050,063

	December 31, 2020			December 31, 2019
Settlement Processing Assets:
Cash held for settlements	$	1,832,735		$	763,110
Cash due from gateways		1,922,669			3,073,183
Amount due from gateways and merchants – hold and fees		1,063,272			4,824,223
Reserves (1)		5,381,281			5,353,661
Total before allowance for uncollectable		10,199,957			14,014,177
Allowance for uncollectable – hold and fees		(2,896,008	)		(5,587,333	)
Total – settlement processing assets	$	7,303,949		$	8,426,844

Settlement Processing Liabilities:
Settlement liabilities to merchants		10,199,956			14,021,892
Settlement liabilities to ISOs		-			-
Totals	$	10,199,956		$	14,021,892

	December 31, 2020			December 31, 2019

Computers	$	48,883		$	38,938
Furniture		40,320			37,339
Kiosks		6,473			12,750
Vehicles		4,578			4,578

Total property and equipment		100,254			93,605
Less: Accumulated depreciation		(42,990	)		(27,114	)

Total property and equipment, net	$	57,264		$	66,491

	December 31, 2020			December 31, 2019

*October 27, 2020 ($3,850,000)* – 10% one-time interest charge with outstanding principal and interest due July 27, 2021.	$	3,850,000		$	-

*March 11, 2019 ($500,000)* – 8% one-time interest charge with outstanding principal and interest due October 6, 2019.		-			500,000

*November 26, 2018 ($200,000)* – 12% interest per annum with outstanding principal and interest due November 26, 2019.		-			200,000

*March 15, 2018 ($300,00)* – 12% interest per annum with outstanding principal and interest due March 15, 2019.		-			107,500

Total		3,850,000			846,500
Debt discount		(2,993,408	)		-

Total convertible notes payable	$	856,592		$	846,500

	December 31, 2020		December 31, 2019

*December 10, 2019 ($260,000)* – Total interest charge of $106,000 with daily installments (5 days per week) of $4,073 for four months totaling $366,000.	$	-	$	213,671
*December 9, 2019 ($200,000)* – Total interest charge of $40,000 with 15 weekly installments of $16,000 totaling $240,000.		-		160,000
*November 12, 2019 ($400,000)* – Total interest charge of $196,000 with daily installments (5 days per week) of $5,960 for four months totaling $596,000.		-		400,000

Total short-term notes payable	$	-		773,671

Debt discount		-		(32,418	)

Total short-term notes payable, net of debt discount	$	-	$	741,253

	December 31, 2020		December 31, 2019

Beneficial conversion feature – convertible debt	$	-	$	1,050,063

Total derivative liability	$	-	$	1,050,063

	December 31, 2020			December 31, 2019

Deferred tax assets (liabilities):
Net operating loss carryforward	$	1,066,726		$	498,888
Others		-			-

Total deferred tax assets, net		1,066,726			498,888
Valuation allowance		(1,066,726	)		(498,888	)

Net deferred tax assets (liabilities)	$	-		$	-

	December 31, 2020
Risk-free interest rate		0.29	%
Expected term	5 years
Expected volatility		289.33% to 279.18	%
Expected dividend yield		—

	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (In Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2020		-		$	-
Granted		785,737			2.30
Exercised		(271,130	)		0.67
Forfeited or Expired		-			-
Outstanding at December 31, 2020		514,607		$	2.30		0.00	$	3,365,527
Exercisable at December 31, 2020		494,081		$	3.21		0.00	$	3,231,292
Vested and Expected to Vest at December 31, 2020		506,924		$	3.26		0.00	$	3,315,285

	December 31,
	2020		2019

Amortization of right-of-use assets	$	241	$	210
Operating lease expense		32,904		31,945

Total lease expense	$	33,145	$	32,155

*Years ended December 31,*	*Amounts*

2021	$	95,026
2022		-
2023		-
Thereafter		-
Total undiscounted cash flows		95,026

Discounted (present value):
Lease liabilities – current		120,110
Lease liabilities – long-term
Total lease liabilities		120,110

Difference between undiscounted and discounted cash flows	$	(25,084	)


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;