RTB Digital, Inc 10-Q for FY2020 Q1

RTB Digital, Inc. (RTB)

10-Q 2020-05-28 For: 2020-03-31

Added on April 11, 2026

About this 10-Q

RTB Digital, Inc filed this 10-Q on May 28, 2020, covering the quarter ended March 31, 2020 (FY2020 Q1).

Headline figures

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

Revenue: $187.21K; down 80.7% from $968K a year earlier
Net loss: $5.24M; compared with a net loss of $1.3M 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 March 31, 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	3
	Condensed Consolidated Balance Sheets as of March 31, 2020 (unaudited) and December 31, 2019	3
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2020 and 2019 (unaudited)	4
	Condensed Consolidated Statements of Stockholders’ Deficit for the Three Months Ended March 31, 2020 and 2019 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019 (unaudited)	6
	Notes to (unaudited) Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis or Plan of Operation	26
Item 3.	Controls and Procedures	31

PART II Other Information

Item 1.	Legal Proceedings	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3.	Defaults Upon Senior Securities	32
Item 4.	Mine Safety Disclosures	32
Item 5.	Other Information	32
Item 6.	Exhibits	32
Signatures		33

	(Unaudited)
	March 31,			December 31,
	2020			2019

ASSETS

Current Assets:
Cash and cash equivalents	$	-			-
Restricted cash		306,479			763,110
Accounts receivable, net of allowance for bad debt of $0 and $0, respectively		33,052			70,257
Accounts receivables from fines and penalties from merchants, net of allowance for bad debt of $6,665,031		2,776,687			2,776,687
Cash due from gateways, net		3,402,324			8,426,844
Prepaid and other current assets		84,676			42,062
Total current assets		6,603,218			12,078,960

Non-current Assets:
Property and equipment, net		73,679			66,491
Operating lease right-of-use assets, net		198,063			229,639
Total non-current assets		271,742			296,130

Total assets	$	6,874,960			12,375,090

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:
Accounts payable	$	498,234			504,505
Other current liabilities		-			15,100
Accrued interest		317,156			368,071
Payment processing liabilities, net		10,660,328			14,021,892
Short-term notes payable, net of debt discount of $32,418 and $2,342, respectively		329,418			741,253
Convertible debt		480,000			807,500
Derivative liability		4,872,448			1,050,063
Current portion of operating lease liabilities		86,766			113,935

Total current liabilities		17,244,350			17,622,319
Operating lease liabilities, less current portion		120,109			120,110

Total liabilities		17,364,459			17,742,429

Commitments and contingencies

Stockholders' Equity:
Common stock, par value $0.001, 495,000,000 shares authorized and 175,921,993 and 169,862,933 shares issued and outstanding, respectively		175,922			169,863
Common stock - issuable		-			695
Additional paid-in capital		1,293,588			1,179,272
Accumulated deficit		(11,959,009	)		(6,717,169	)
Total stockholders' deficit		(10,489,499	)		(5,367,339	)

Total liabilities and stockholder's deficit	$	6,874,960			12,375,090

	Three Months Ended March 31,
	2020			2019

Revenue	$	187,205		$	967,998

Cost of revenue		247,305			727,291

Gross profit (loss)		(60,100	)		240,707

Operating expenses:
Advertising & Marketing		11,885			13,006
Research and development		286,548			103,922
General and administrative		760,940			495,301
Depreciation and amortization		5,376			2,840
Total operating expenses		1,064,749			615,069

Loss from operations		(1,124,849	)		(374,362	)

Other income (expense):
Interest expense		(288,590	)		(150,215	)
Interest expense - debt discount		(30,076	)		(188,273	)
Derivative expense		-			(634,766	)
Changes in fair value of derivative liability		(3,822,385	)		46,788
Other income or expense		24,060			(167	)
Total other expense, net		(4,116,991	)		(926,633	)

Loss before provision for income taxes		(5,241,840	)		(1,300,995	)

Income tax provision		-			-

Net loss	$	(5,241,840	)		(1,300,995	)


Earnings (loss) per share:
Basic and diluted	$	(0.03	)		(0.01	)

Weighted average number of common shares outstanding:
Basic and diluted		173,960,411			166,390,363

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

Balance at December 31, 2019		169,862,933	$	169,863		695,122		$	695		$	1,179,272	$	(6,717,169	)	$	(5,367,339	)

Shares issuable adjustment		-		-		(695,122	)		(695	)		695		-			-

Common stocks issued from settlement of convertible notes		6,000,000		6,000		-			-			109,550		-			115,550

Common stocks issued for professional fees		59,000		59		-			-			4,071		-			4,130

Net loss		-		-		-			-			-		(5,241,840	)		(5,241,840	)

Balance at March 31, 2020		175,921,933	$	175,922		-		$	-		$	1,293,588	$	(11,959,009	)	$	(10,489,499	)

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

Balance at December 31, 2018		166,390,363	$	166,390		1,000,000	$	1,000	$	945,940	$	(2,032,595	)	$	(919,265	)

Common stock issuable under convertible debt		-		-		25,000		4,500		-		-			4,500

Warrants issuable under convertible debt		-		-		125,000		-		55,311		-			55,311

Net loss		-		-		-		-		-		(1,300,995	)		(1,300,995	)

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

	March 31, 2020		December 31, 2019

Cash and cash equivalents	$	-	$	-
Restricted cash		306,479		763,110

Total cash, cash equivalents, and restricted cash shown in the statements of cash flows	$	306,479	$	763,110

March 31, 2020	Level 1		Level 2		Level 3

Derivative liability	$	-	$	-	$	4,872,448

	March 31, 2020			December 31, 2019
Settlement Processing Assets:
Cash held for settlements	$	306,479		$	763,110
Cash due from gateways		398,654			3,073,183
Amount due from gateways and merchants – hold and fees		6,951,824			4,824,223
Reserves (1)		3,003,370			5,353,661
Total before allowance for uncollectable		10,660,327			14,014,177
Allowance for uncollectable – hold and fees		(7,258,003	)		(5,587,333	)
Total – settlement processing assets	$	3,402,324		$	8,426,844

Settlement Processing Liabilities:
Settlement liabilities to merchants		10,660,328			14,021,892
Settlement liabilities to ISOs		-			-
Refund allowances		-			-
Totals	$	10,660,328		$	14,021,892

	March 31, 2020			December 31, 2019

Computers	$	47,322		$	38,938
Furniture		40,320			37,339
Kiosks		7,671			12,750
Vehicles		4,578			4,578

Total property and equipment		99,891			93,605
Less: Accumulated depreciation		(26,212	)		(27,114	)

Total property and equipment, net	$	73,679		$	66,491

	March 31, 2020		December 31, 2019

March 11, 2019 ($500,000) – 8% one-time interest charge with outstanding principal and interest due October 6, 2019.	$	480,000	$	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 convertible notes payable	$	480,000	$	807,500

	March 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.	$	25,892		$	213,671
December 9, 2019 ($200,000) – Total interest charge of $40,000 with 15 weekly installments of $16,000 totaling $240,000.		181,867			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.		124,000			400,000

Total short-term notes payable	$	331,760			773,671

Debt discount		(2,342	)		(32,418	)

Total short-term notes payable, net of debt discount	$	329,418		$	741,253

	March 31, 2020		December 31, 2019

Beneficial conversion feature – convertible debt	$	4,872,448	$	1,050,063

Total derivative liability	$	4,872,448	$	1,050,063

	March 31, 2020			December 31, 2019

Deferred tax assets (liabilities):
Charitable contributions	$	-		$	-
Unearned revenue		-			-
Depreciation		-			-
Net operating loss carryforward		725,000			498,888

Total deferred tax assets, net		725,000			498,888
Valuation allowance		(725,000	)		(498,888	)

Net deferred tax assets (liabilities)	$	-		$	-

KPI	Description
Annual Transactional Processing Volume (ATPV)	The Company plans on processing an amount around $1B in FY2020, however the full impact of Covid-19 on this figure is yet to be appreciated. 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 $12-14M for FY2020.
Annual EBITDA	The Company objective is to stay at around 3% of Total Transactional Volume. At the targeted Annual Transactional Processing Volume goal, the Annual EBITDA equals $12-14M.

KPI	Description
Average Monthly Transaction Count (AMTC)	The Company projects an AMTC of around 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%.

	Three Months Ended
	March 31, 2020						March 31, 2019						Changes
				% of						% of
	Amount			Revenue			Amount			Revenue			Amount			%

Revenue	$	187,205			100.00	%	$	967,998			100.00	%	$	(780,793	)		-417.08	%
Cost of revenue		247,305			132.10	%		727,291			75.13	%		(479,986	)		-194.09	%

Gross profit (loss)		(60,100	)		-32.10	%		240,707			24.87	%		(300,807	)		500.51	%

Operating expenses:
Advertising & Marketing		11,885			6.35	%		13,006			1.34	%		(1,121	)		-9.43	%
Research and development		286,548			153.07	%		103,922			10.74	%		182,626			63.73	%
General and administrative		760,940			406.47	%		495,301			51.17	%		265,639			34.91	%
Depreciation and amortization		5,376			2.87	%		2,840			0.29	%		2,536			47.17	%
Total operating expenses		1,064,749			568.76	%		615,069			63.54	%		449,680			136.38	%

Loss from operations		(1,124,849	)		-600.86	%		(374,362	)		-38.67	%		(750,487	)		364.13	%

Other income (expense):
Interest expense		(288,590	)		-154.16	%		(150,215	)		-15.52	%		(138,375	)		47.95	%
Interest expense - debt discount		(30,076	)		-16.07	%		(188,273	)		-19.45	%		158,197			-525.99	%
Derivative expense		-			0.00	%		(634,766	)		-65.58	%		634,766			100.00	%
Changes in fair value of derivative liability		(3,822,385	)		-2041.82	%		46,788			4.83	%		(3,869,173	)		0.00	%
Other income or expense		24,060			12.85	%		(167	)		-0.02	%		24,227			0.00	%
Total other expense, net		(4,116,991	)		-170.22	%		(926,633	)		-95.73	%		(3,190,358	)		-378.04	%

Loss before income tax provision		(5,241,840	)		-430.64	%		(1,300,995	)		-134.40	%		(3,940,845	)		75.18	%

Income tax provision		-			-			-			-			-			-

Net loss	$	(5,241,840	)		-430.64	%	$	(1,300,995	)		-134.40	%	$	(3,940,845	)		75.18	%

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: May 27, 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 March 31, 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/ Fredi Nisan
Name:	Fredi Nisan
Title:	Chief Executive Officer (Principal Executive Officer)


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