RTB Digital, Inc 10-Q for FY2020 Q3

RTB Digital, Inc. (RTB)

10-Q 2020-11-16 For: 2020-09-30

Added on April 11, 2026

About this 10-Q

RTB Digital, Inc filed this 10-Q on November 16, 2020, covering the quarter ended September 30, 2020 (FY2020 Q3).

Headline figures

Quarter ended September 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $3.06M; down 79.3% from $14.79M a year earlier
Net loss: $489.81K; compared with net income of $1.26M 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 September 30, 2020

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 (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Stockholders’ Deficit	5
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis or Plan of Operation	28
Item 3.	Controls and Procedures	34

PART II Other Information

Item 1.	Legal Proceedings	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	35
Signatures		36

	(Unaudited)
	September 30,			December 31,
	2020			2019

ASSETS

Current Assets:
Cash and cash equivalents	$	-		$	-
Restricted cash		124,834			763,110
Accounts receivable, net of allowance for bad debt of $0 and $0, respectively		10,000			70,257
Accounts receivables from fines and penalties from merchants, net of allowance for bad debt of $6,665,031		2,789,230			2,776,687
Cash due from gateways, net		5,680,356			8,426,844
Prepaid and other current assets		59,766			24,888
Total current assets		8,664,186			12,061,786

Non-current Assets:
Property and equipment, net		62,555			66,491
Other assets		87,174			17,174
Operating lease right-of-use assets, net		146,984			229,639
Total non-current assets		296,713			313,304

Total assets	$	8,960,899		$	12,375,090



Current Liabilities:
Accounts payable	$	725,558		$	504,505
Other current liabilities		47,207			15,100
Accrued interest		87,560			368,071
Payment processing liabilities, net		12,624,082			14,021,892
Short-term notes payable, net of debt discount of $39,000 and $32,418, respectively		731,232			741,253
Convertible debt, net of debt discount of $133,500 and $0, respectively		44,500			807,500
Derivative liability		284,210			1,050,063
Current portion of operating lease liabilities		30,314			113,935
Total current liabilities		14,574,663			17,622,319
Operating lease liabilities, less current portion		120,110			120,110

Total liabilities		14,694,773			17,742,429

Commitments and contingencies

Stockholders' Equity:
Common stock, par value $0.001, 495,000,000 shares authorized, shares issued and outstanding of 181,6550,138 and 169,862,933, respectively		181,650			169,863
Common stock - issuable		-			695
Additional paid-in capital		1,590,993			1,179,272
Accumulated deficit		(7,506,517	)		(6,717,169	)
Total stockholders' equity		(5,733,874	)		(5,367,339	)

Total liabilities and stockholder's equity	$	8,960,899		$	12,375,090

	Three Months Ended September 30,					Nine Months Ended September 30,
	2020			2019		2020			2019

Revenue	$	3,056,271		$	14,793,117	$	5,536,335		$	19,070,861

Cost of revenue		1,845,295			6,834,198		3,504,283			10,602,555

Gross profit		1,210,976			7,958,919		2,032,052			8,468,306

Operating expenses:
Advertising and marketing		59,099			10,319		86,368			35,928
Research and development		243,923			381,112		798,157			1,085,298
Cash due from gateway reserve expense		-			5,665,031		-			5,665,031
General and administrative		366,734			176,120		613,156			375,373
Payroll and payroll taxes		436,216			420,074		1,279,174			967,121
Professional fees		344,641			281,659		852,234			588,677
Depreciation and amortization		5,764			4,897		16,856			11,352
Total operating expenses		1,456,377			6,939,212		3,645,945			8,728,780

Loss from operations		(245,401	)		1,019,707		(1,613,893	)		(260,474	)

Other income (expense):
Interest expense		(48,931	)		3,837		(372,553	)		(171,193	)
Interest expense - debt discount		(83,500	)		-		(121,918	)		(188,273	)
Derivative expense		(925,576	)		-		(925,576	)		(634,689	)
Changes in fair value of derivative liability		819,366			236,184		(383,769	)		(129,186	)
Gain from extinguishment of convertible debt		-			-		2,630,795			-
Other income or expense		(5,768	)		-		(2,434	)		-
Total other expense, net		(244,409	)		240,021		824,545			(1,123,341	)

Loss before provision for income taxes		(489,810	)		1,259,728		(789,348	)		(1,383,815	)

Income tax provision		-			-		-			-

Net loss	$	(489,810	)	$	1,259,728	$	(789,348	)	$	(1,383,815	)


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

Weighted average number of common shares outstanding:
Basic and diluted		176,930,358			168,492,966		176,930,358			167,136,344

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

Balance at June 30, 2020		181,150,138		$	181,150			-	$	-	$	1,396,360		$	(7,016,707	)	$	(5,439,197	)

Common stock issued for stock options exercised		500,000			500			-		-		32,000			-			32,500

Stock compensation expense		-			-			-		-		162,633			-			162,633

Common stock repurchased from common stock issued		(6,000,000	)		(6,000	)		-		-		(804,000	)		-			(810,000	)

Common stock issued upon conversion of note payable		6,000,000			6,000			-		-		804,000			-			810,000

Net loss		-			-			-		-		-			(489,810	)		(489,810	)

Balance at September 30, 2020		181,650,138		$	181,650			-	$	-	$	1,590,993		$	(7,506,517	)	$	(5,733,874	)

	September 30, 2020		December 31, 2019

Cash and cash equivalents	$	-	$	-
Restricted cash		124,834		763,110

Total cash, cash equivalents, and restricted cash shown in the statements of cash flows	$	124,834	$	763,110

September 30, 2020	Level 1		Level 2		Level 3

Derivative liability	$	-	$	-	$	284,210

	September 30, 2020			December 31, 2019
Settlement Processing Assets:
Cash held for settlements	$	124,834		$	763,110
Cash due from gateways		2,377,909			3,073,183
Amount due from gateways and merchants – hold and fees		6,818,892			4,831,938
Reserves (2)		3,302,447			5,353,661
Total before allowance for uncollectable		12,624,082			14,021,892
Allowance for uncollectable – hold and fees		(6,818,892	)		(4,831,938	)
Cash held for settlement		(124,834	)		(763,110	)
Total – settlement processing assets	$	5,680,356		$	8,426,844

Settlement Processing Liabilities:
Settlement liabilities to merchants		12,624,082			14,021,892
Totals	$	12,624,082		$	14,021,892

	September 30, 2020			December 31, 2019

Computers	$	48,289		$	38,938
Furniture		40,320			37,339
Kiosks		6,472			12,750
Vehicles		4,578			4,578

Total property and equipment		99,659			93,605
Less: Accumulated depreciation		(37,104	)		(27,114	)

Total property and equipment, net	$	62,555		$	66,491

	September 30, 2020			December 31, 2019

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
June 22, 2020 ($178,000) – 8% interest per annum with outstanding principal and interest due June 22, 2021		178,000			-

Total convertible notes payable		178,000			807,500
Debt discount		(133,500	)		-

Total convertible notes payable	$	44,500		$	807,500

	September 30, 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

June 3, 2020 ($300,000) – Total weekly payment of $13,714 for total of 28 payments.		94,286			-
June 9, 2020 ($150,000) – Monthly payment of $731 after 12 months with maturity date of June 1, 2050 with interest rate at 3.75% per annum.		149,900			-
April 29, 2020 ($272,713) – Paycheck protection program (“PPP”) loan provided by SBA under CARES Act with interest rate at 1.00% per annum with maturity date of April 29, 2022.		272,713			-

July 10, 2020 ($400,000) – Total weekly payment of $17,867 (includes principal and interest) for total of 30 payments with imputed interest of 25%.		253,333			-

Total short-term notes payable	$	770,232			773,671

Debt discount		(39,000	)		(32,418	)

Total short-term notes payable, net of debt discount	$	731,232		$	741,253

	September 30, 2020		December 31, 2019

Beneficial conversion feature – convertible debt	$	284,210	$	1,050,063

Total derivative liability	$	284,210	$	1,050,063

	Three and Nine Months Ended September 30,
	2020			2019

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	%

	September 30, 2020			December 31, 2019

Deferred tax assets (liabilities):
Charitable contributions	$	-		$	-
Unearned revenue		-			-
Depreciation		-			-
Net operating loss carryforward		777,000			498,888

Total deferred tax assets, net		777,000			498,888
Valuation allowance		(777,000	)		(498,888	)

Net deferred tax assets (liabilities)	$	-		$	-

	Three months ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019

Amortization of right-of-use assets, net of liability amortization	$	115	$	1,073	$	344	$	(3,219	)
Operating lease expense		32,904		31,945		98,711		102,273

Total lease expense	$	33,018	$	33,018	$	99,054	$	99,054

	Nine Months Ended September 30,
	2020			2019

Net cash provided by (used in) operating activities	$	(130,505	)	$	1,841,605
Net cash provided by (used in) investing activities		(12,332	)		(41,634	)
Net cash provided by (used in) financing activities		(495,439	)		(89,000	)

Net increase (decrease) in cash, cash equivalents, and restricted cash	$	(638,276	)	$	1,710,971

10.1	Paycheck Protection Program Note, dated April 29, 2020, issued to Preferred Bank.
10.2	U.S. Small Business Administration Note (Secured Disaster Loans), dated June 2, 2020 issued to the Small Business Administration.
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: November 16, 2020	By:	/s/ Fredi Nisan
		Fredi Nisan Chief Executive Officer (Principal Executive Officer)

	1.	PROMISE TO PAY: In return for a loan, Borrower promises to pay to the order of SBA the amount of one hundred and fifty thousand and 00/100 Dollars ($150,000.00), interest on the unpaid principal balance, and all other amounts required by this Note.

	2.	DEFINITIONS: A) “Collateral” means any property taken as security for payment of this Note or any guarantee of this Note. B) “Guarantor” means each person or entity that signs a guarantee of payment of this Note. C) “Loan Documents” means the documents related to this loan signed by Borrower, any Guarantor, or anyone who pledges collateral.

	3.	PAYMENT TERMS: Borrower must make all payments at the place SBA designates. Borrower may prepay this Note in part or in full at any time, without notice or penalty. Borrower must pay principal and interest payments of $731.00 every month beginning Twelve (12) months from the date of the Note. SBA will apply each installment payment first to pay interest accrued to the day SBA receives the payment and will then apply any remaining balance to reduce principal. All remaining principal and accrued interest is due and payable Thirty (30) years from the date of the Note.

	4.	DEFAULT: Borrower is in default under this Note if Borrower does not make a payment when due under this Note, or if Borrower: A) Fails to comply with any provision of this Note, the Loan Authorization and Agreement, or other Loan Documents; B) Defaults on any other SBA loan; C) Sells or otherwise transfers, or does not preserve or account to SBA’s satisfaction for, any of the Collateral or its proceeds; D) Does not disclose, or anyone acting on their behalf does not disclose, any material fact to SBA; E) Makes, or anyone acting on their behalf makes, a materially false or misleading representation to SBA; F) Defaults on any loan or agreement with another creditor, if SBA believes the default may materially affect Borrower’s ability to pay this Note; G) Fails to pay any taxes when due; H) Becomes the subject of a proceeding under any bankruptcy or insolvency law; I) Has a receiver or liquidator appointed for any part of their business or property; J) Makes an assignment for the benefit of creditors; K) Has any adverse change in financial condition or business operation that SBA believes may materially affect Borrower’s ability to pay this Note; L) Dies; M) Reorganizes, merges, consolidates, or otherwise changes ownership or business structure without SBA’s prior written consent; or, N) Becomes the subject of a civil or criminal action that SBA believes may materially affect Borrower’s ability to pay this Note.

	5.	SBA’S RIGHTS IF THERE IS A DEFAULT: Without notice or demand and without giving up any of its rights, SBA may: A) Require immediate payment of all amounts owing under this Note; B) Have recourse to collect all amounts owing from any Borrower or Guarantor (if any); C) File suit and obtain judgment; D) Take possession of any Collateral; or E) Sell, lease, or otherwise dispose of, any Collateral at public or private sale, with or without advertisement.

	6.	SBA’S GENERAL POWERS: Without notice and without Borrower’s consent, SBA may: A) Bid on or buy the Collateral at its sale or the sale of another lienholder, at any price it chooses; B) Collect amounts due under this Note, enforce the terms of this Note or any other Loan Document, and preserve or dispose of the Collateral. Among other things, the expenses may include payments for property taxes, prior liens, insurance, appraisals, environmental remediation costs, and reasonable attorney’s fees and costs. If SBA incurs such expenses, it may demand immediate reimbursement from Borrower or add the expenses to the principal balance; C) Release anyone obligated to pay this Note; D) Compromise, release, renew, extend or substitute any of the Collateral; and E) Take any action necessary to protect the Collateral or collect amounts owing on this Note.

	7.	FEDERAL LAW APPLIES: When SBA is the holder, this Note will be interpreted and enforced under federal law, including SBA regulations. SBA may use state or local procedures for filing papers, recording documents, giving notice, foreclosing liens, and other purposes. By using such procedures, SBA does not waive any federal immunity from state or local control, penalty, tax, or liability. As to this Note, Borrower may not claim or assert against SBA any local or state law to deny any obligation, defeat any claim of SBA, or preempt federal law.

	8.	GENERAL PROVISIONS: A) All individuals and entities signing this Note are jointly and severally liable. B) Borrower waives all suretyship defenses. C) Borrower must sign all documents required at any time to comply with the Loan Documents and to enable SBA to acquire, perfect, or maintain SBA’s liens on Collateral. D) SBA may exercise any of its rights separately or together, as many times and in any order it chooses. SBA may delay or forgo enforcing any of its rights without giving up any of them. E) Borrower may not use an oral statement of SBA to contradict or alter the written terms of this Note. F) If any part of this Note is unenforceable, all other parts remain in effect. G) To the extent allowed by law, Borrower waives all demands and notices in connection with this Note, including presentment, demand, protest, and notice of dishonor. Borrower also waives any defenses based upon any claim that SBA did not obtain any guarantee; did not obtain, perfect, or maintain a lien upon Collateral; impaired Collateral; or did not obtain the fair market value of Collateral at a sale. H) SBA may sell or otherwise transfer this Note.

	9.	MISUSE OF LOAN FUNDS: Anyone who wrongfully misapplies any proceeds of the loan will be civilly liable to SBA for one and one- half times the proceeds disbursed, in addition to other remedies allowed by law.

	10.	BORROWER’S NAME(S) AND SIGNATURE(S): By signing below, each individual or entity acknowledges and accepts personal obligation and full liability under the Note as Borrower.


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)

1.	I have reviewed this Quarterly Report on Form 10-Q for the period ended September 30, 2020 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;



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.