GREENBOX POS, INC. UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
Exhibit 99.3
GREENBOX POS, INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
On July 13, 2021, Greenbox POS, Inc. (“Company” or “Greenbox”) entered into a Membership Purchase Agreement, by and between Greenbox and Charge Savvy, LLC, a private limited liability company organized in the State of Illinois (“Charge Savvy”), and Charge Savvy’s three members (collectively, the “Sellers”). On July 13, 2021 (the “Closing Date”), the Company completed the acquisition of all outstanding membership interests in Charge Savvy, resulting in Charge Savvy becoming a wholly-owned subsidiary of the Company (the “Acquisition”). quid biopsy platform company.
The following unaudited pro forma consolidated financial information, including the notes hereto, is derived from and should be read in conjunction with Greenbox’s historical financial statements, related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the United States Securities and Exchange Commission (the “SEC”) on March 30, 2021, as well as the historical financial statements and related notes of Charge Savvy for the year ended December 31, 2020, included in Exhibit 99.1 of this Current Report on Form 8-K/A. Both Greenbox’s and Charge Savvy’s fiscal years end on December 31.
The unaudited pro forma consolidated statements of operations for the three months ended March 31, 2021 and for the year ended December 31, 2020 combine the historical unaudited consolidated statements of operations of Charge Savvy for the period from January 1, 2021 through March 31, 2021 and for the year ended December 31, 2020 and the historical unaudited consolidated statements of operations of Greenbox for the three months ended March 31, 2021 and the year ended December 31, 2020, giving effect to the Acquisition as if it had occurred on January 1, 2020. The assumptions, estimates and adjustments herein have been made solely for purposes of developing this pro forma consolidated financial information. The Charge Savvy statements of operations have been adjusted to conform to accounting principles generally accepted in the United States (“US GAAP”).
The unaudited pro forma consolidated financial information set out below has been prepared in accordance with Article 11 of Regulation S-X, as amended by the SEC Final Rule Release No. 33 10786, Amendments to Financial Disclosures About Acquired and Disposed Businesses using accounting policies in accordance with US GAAP. The unaudited pro forma consolidated financial information does not include the realization of any future cost savings, restructuring or integration changes that may result from the Acquisition. The unaudited pro forma consolidated statements of operations should be read in conjunction with the accompanying notes to the unaudited pro forma consolidated financial information.
The unaudited pro forma consolidated financial information is presented for illustrative and informative purposes only and is not intended to represent what our results of operations would have been had the Acquisition actually occurred on the dates indicated. The pro forma results presented below are not necessarily indicative of what the Company’s consolidated results of operations may be in the future.
GREENBOX POS, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2021
|
As of March 31, 2021 |
Transaction Accounting Adjustments |
||||||||||||||||||||||||||||
|
Reclassification |
Pro Forma |
Total |
Pro Forma |
||||||||||||||||||||||||||
|
Charge Savvy |
Combining |
Adjustments |
Adjustments |
Adjustments |
Combined |
||||||||||||||||||||||||
|
ASSETS |
|||||||||||||||||||||||||||||
|
Current Assets: |
|||||||||||||||||||||||||||||
|
Cash and cash equivalents |
$ | 35,696,589 | $ | 39,903 | $ | 35,736,492 | $ | - | $ | - | $ | - | $ | 35,736,492 | |||||||||||||||
|
Accounts receivable, net |
10,000 | 9,275,766 | 9,285,766 | - | - | - | 9,285,766 | ||||||||||||||||||||||
|
Accounts receivables from fines and fees from merchant, net |
2,789,230 | - | 2,789,230 | - | - | - | 2,789,230 | ||||||||||||||||||||||
|
Inventory |
- | 108,315 | 108,315 | - | - | - | 108,315 | ||||||||||||||||||||||
|
Cash due from gateways, net |
11,848,709 | - | 11,848,709 | - | - | - | 11,848,709 | ||||||||||||||||||||||
|
Prepaid and other current assets |
2,452,753 | 77,908 | 2,530,661 | - | - | - | 2,530,661 | ||||||||||||||||||||||
|
Loans to shareholders |
- | 1,110,000 | 1,110,000 | - | - | - | 1,110,000 | ||||||||||||||||||||||
|
Due from related party |
- | 760,266 | 760,266 | - | - | - | 760,266 | ||||||||||||||||||||||
|
Total current assets |
52,797,281 | 11,372,158 | 64,169,439 | - | - | - | 64,169,439 | ||||||||||||||||||||||
|
Non-current Assets: |
|||||||||||||||||||||||||||||
|
Property and equipment, net |
62,362 | 147,585 | 209,947 | - | 1,327,051 |
(a) |
1,327,051 | 1,536,998 | |||||||||||||||||||||
| - | - | - | (8,237 | ) |
(b) |
(8,237 | ) | (8,237 | ) | ||||||||||||||||||||
|
Operating lease right-of-use assets, net |
87,837 | - | 87,837 | - | - | - | 87,837 | ||||||||||||||||||||||
|
Intangible assets |
- | - | - | - | 6,523,760 |
(c) |
6,116,025 | 6,116,025 | |||||||||||||||||||||
| - | - | - | (407,735 | ) |
(d) |
||||||||||||||||||||||||
|
Goodwill |
- | - | - | - | 3,653,409 |
(e) |
3,653,409 | 3,653,409 | |||||||||||||||||||||
|
Deposit - gateway reserve |
- | 750,977 | 750,977 | - | - | - | 750,977 | ||||||||||||||||||||||
|
Other assets |
81,636 | - | 81,636 | - | - | - | 81,636 | ||||||||||||||||||||||
|
Total non-current assets |
231,835 | 898,562 | 1,130,397 | - | 11,088,248 | 11,088,248 | 12,218,645 | ||||||||||||||||||||||
|
Total assets |
$ | 53,029,116 | $ | 12,270,720 | $ | 65,299,836 | $ | - | $ | 11,088,248 | $ | 11,088,248 | $ | 76,388,084 | |||||||||||||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||||||||||||||||||||||||||
|
Current Liabilities: |
|||||||||||||||||||||||||||||
|
Accounts payable |
$ | 178,038 | $ | 4,592,831 | $ | 4,770,869 | $ | - | $ | - | $ | - | $ | 4,770,869 | |||||||||||||||
|
Other current liabilities |
98,995 | - | 98,995 | - | - | - | 98,995 | ||||||||||||||||||||||
|
Payment processing liabilities, net |
5,355,115 | 1,200,000 | 6,555,115 | - | - | - | 6,555,115 | ||||||||||||||||||||||
|
Current - Notes payable |
- | 4,741 | 4,741 | - | - | - | 4,741 | ||||||||||||||||||||||
|
Loan payable to shareholders |
- | 135,479 | 135,479 | - | - | - | 135,479 | ||||||||||||||||||||||
|
Note payable, payroll protection plan loan |
272,713 | 127,998 | 400,711 | - | - | - | 400,711 | ||||||||||||||||||||||
|
Current portion of operating lease liabilities |
89,017 | - | 89,017 | - | - | - | 89,017 | ||||||||||||||||||||||
|
Total current liabilities |
5,993,878 | 6,061,049 | 12,054,927 | - | - | - | 12,054,927 | ||||||||||||||||||||||
|
Long-term debt |
149,900 | 145,259 | 295,159 | - | - | - | 295,159 | ||||||||||||||||||||||
|
Total liabilities |
6,143,778 | 6,206,308 | 12,350,086 | - | - | - | 12,350,086 | ||||||||||||||||||||||
|
Commitments and contingencies |
|||||||||||||||||||||||||||||
|
Stockholders' Equity (Deficit): |
|||||||||||||||||||||||||||||
|
Common stock |
40,918 | - | 40,918 | - | 1,000 |
(f) |
1,000 | 41,918 | |||||||||||||||||||||
|
Additional paid-in capital |
71,898,401 | - | 71,898,401 | - | 12,139,000 |
(f) |
12,139,000 | 84,037,401 | |||||||||||||||||||||
| (711,926 | ) |
(h) |
(711,926 | ) | (711,926 | ) | |||||||||||||||||||||||
|
Accumulated deficit |
(25,053,981 | ) | - | (25,053,981 | ) | - | - | - | (25,053,981 | ) | |||||||||||||||||||
|
Members' equity |
- | 6,064,412 | 6,064,412 | - | 1,740,035 |
(g) |
(339,826 | ) | 5,724,586 | ||||||||||||||||||||
| (415,972 | ) |
(b) (c) |
|||||||||||||||||||||||||||
| (1,663,889 | ) |
(j) |
|||||||||||||||||||||||||||
|
Total stockholders' equity (deficit) |
46,885,338 | 6,064,412 | 52,949,750 | - | 11,088,248 | 11,088,248 | 64,037,998 | ||||||||||||||||||||||
|
Total liabilities and stockholder's equity |
$ | 53,029,116 | $ | 12,270,720 | $ | 65,299,836 | $ | - | $ | 11,088,248 | $ | 11,088,248 | $ | 76,388,084 | |||||||||||||||
See accompanying notes to the unaudited pro forma condensed consolidated financial information
GREENBOX POS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2021
|
Three Months Ended March 31, 2021 |
Transaction Accounting Adjustments |
||||||||||||||||||||||||||||
|
Reclassification |
Pro Forma |
Total |
Pro Forma |
||||||||||||||||||||||||||
|
Charge Savvy |
Combining |
Adjustments |
Adjustments |
Adjustments |
Combined |
||||||||||||||||||||||||
|
Net revenue |
$ | 4,749,441 | $ | 458,413 | $ | 5,207,854 | $ | - | $ | - | $ | - | $ | 5,207,854 | |||||||||||||||
|
Cost of revenue |
1,593,771 | 192,069 | 1,785,840 | - | - | - | 1,785,840 | ||||||||||||||||||||||
|
Gross profit |
3,155,670 | 266,344 | 3,422,014 | - | - | - | 3,422,014 | ||||||||||||||||||||||
|
Operating expenses: |
|||||||||||||||||||||||||||||
|
Advertising and marketing |
24,725 | 252,545 | 277,270 | - | - | - | 277,270 | ||||||||||||||||||||||
|
Research and development |
653,381 | 140,080 | 793,461 | - | - | - | 793,461 | ||||||||||||||||||||||
|
Payroll and payroll taxes |
559,201 | 278,079 | 837,280 | - | - | - | 837,280 | ||||||||||||||||||||||
|
Professional fees |
457,752 | 42,940 | 500,692 | - | - | - | 500,692 | ||||||||||||||||||||||
|
Stock compensation for employees |
797,613 | - | 797,613 | - | - | - | 797,613 | ||||||||||||||||||||||
|
Stock compensation for services |
9,453,825 | - | 9,453,825 | - | - | - | 9,453,825 | ||||||||||||||||||||||
|
General and administrative |
566,195 | 139,195 | 705,390 | - | - | - | 705,390 | ||||||||||||||||||||||
|
Depreciation and amortization |
6,009 | 5,420 | 11,429 | - | 415,972 |
(b) (c) |
415,972 | 427,401 | |||||||||||||||||||||
|
Total operating expenses |
12,518,701 | 858,259 | 13,376,960 | - | 415,972 | 415,972 | 13,792,932 | ||||||||||||||||||||||
|
Income (Loss) from operations |
(9,363,031 | ) | (591,915 | ) | (9,954,946 | ) | - | (415,972 | ) | (415,972 | ) | (10,370,918 | ) | ||||||||||||||||
|
Other income (expense): |
|||||||||||||||||||||||||||||
|
Interest expense - debt discount |
(2,993,408 | ) | - | (2,993,408 | ) | - | - | - | (2,993,408 | ) | |||||||||||||||||||
|
Interest income or (expense) |
(594,258 | ) | 14,834 | (579,424 | ) | - | - | - | (579,424 | ) | |||||||||||||||||||
|
Derivative expense |
- | - | - | - | - | - | - | ||||||||||||||||||||||
|
Changes in fair value of derivative liability |
- | - | - | - | - | - | - | ||||||||||||||||||||||
|
Merchant fines and penalty income |
- | - | - | - | - | - | - | ||||||||||||||||||||||
|
Merchant liability settlement |
(364,124 | ) | - | (364,124 | ) | - | - | - | (364,124 | ) | |||||||||||||||||||
|
Other income or expense |
(14,611 | ) | - | (14,611 | ) | - | - | - | (14,611 | ) | |||||||||||||||||||
|
Total other expense, net |
(3,966,401 | ) | 14,834 | (3,951,567 | ) | - | - | - | (3,951,567 | ) | |||||||||||||||||||
|
Loss before provision for income taxes |
(13,329,432 | ) | (577,081 | ) | (13,906,513 | ) | - | (415,972 | ) | (415,972 | ) | (14,322,485 | ) | ||||||||||||||||
|
Provision for income taxes |
- | - | - | - | - | - | |||||||||||||||||||||||
|
Net income (loss) |
$ | (13,329,432 | ) | $ | (577,081 | ) | $ | (13,906,513 | ) | $ | - | $ | (415,972 | ) | $ | (415,972 | ) | $ | (14,322,485 | ) | |||||||||
See accompanying notes to the unaudited pro forma condensed consolidated financial information
GREENBOX POS, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 2020
|
As of December 31, 2021 |
Transaction Accounting Adjustments |
||||||||||||||||||||||||||||
|
Reclassification |
Pro Forma |
Total |
Pro Forma |
||||||||||||||||||||||||||
|
Charge Savvy |
Combining |
Adjustments |
Adjustments |
Adjustments |
Combined |
||||||||||||||||||||||||
|
ASSETS |
|||||||||||||||||||||||||||||
|
Current Assets: |
|||||||||||||||||||||||||||||
|
Cash and cash equivalents |
$ | - | $ | 50,256 | $ | 50,256 | $ | - | $ | - | $ | - | $ | 50,256 | |||||||||||||||
|
Restricted cash |
1,832,735 | - | 1,832,735 | - | - | - | 1,832,735 | ||||||||||||||||||||||
|
Accounts receivable, net |
10,000 | 9,298,202 | 9,308,202 | - | - | - | 9,308,202 | ||||||||||||||||||||||
|
Accounts receivables from fines and fees from merchant, net |
2,789,230 | - | 2,789,230 | - | - | - | 2,789,230 | ||||||||||||||||||||||
|
Inventory |
- | 131,412 | 131,412 | - | - | - | 131,412 | ||||||||||||||||||||||
|
Cash due from gateways, net |
7,303,949 | - | 7,303,949 | - | - | - | 7,303,949 | ||||||||||||||||||||||
|
Prepaid and other current assets |
70,130 | 63,572 | 133,702 | - | - | - | 133,702 | ||||||||||||||||||||||
|
Loans to shareholders |
- | 1,110,000 | 1,110,000 | - | - | - | 1,110,000 | ||||||||||||||||||||||
|
Due from related party |
- | 763,393 | 763,393 | - | (763,393 | ) | (763,393 | ) | - | ||||||||||||||||||||
|
Total current assets |
12,006,044 | 11,416,835 | 23,422,879 | - | (763,393 | ) | (763,393 | ) | 22,659,486 | ||||||||||||||||||||
|
Non-current Assets: |
|||||||||||||||||||||||||||||
|
Property and equipment, net |
57,264 | 153,006 | 210,270 | - | 1,360,000 |
(a) |
$ | 1,327,051 | 1,537,321 | ||||||||||||||||||||
| - | - | - | (32,949 | ) |
(b) |
||||||||||||||||||||||||
|
Operating lease right-of-use assets, net |
117,795 | - | 117,795 | - | - | - | 117,795 | ||||||||||||||||||||||
|
Intangible assets |
- | - | - | - | 8,154,700 |
(c) |
8,154,700 | 8,154,700 | |||||||||||||||||||||
| (1,630,940 | ) |
(d) |
(1,630,940 | ) | (1,630,940 | ) | |||||||||||||||||||||||
|
Goodwill |
- | - | - | 3,653,409 |
(e) |
3,653,409 | 3,653,409 | ||||||||||||||||||||||
|
Deposit - gateway reserve |
- | 750,977 | 750,977 | - | - | - | 750,977 | ||||||||||||||||||||||
|
Other assets |
81,636 | - | 81,636 | - | - | - | 81,636 | ||||||||||||||||||||||
|
Total non-current assets |
256,695 | 903,983 | 1,160,678 | - | 11,504,220 | 11,504,220 | 12,664,898 | ||||||||||||||||||||||
|
Total assets |
$ | 12,262,739 | $ | 12,320,818 | $ | 24,583,557 | $ | - | $ | 10,740,827 | $ | 10,740,827 | $ | 35,324,384 | |||||||||||||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||||||||||||||||||||||||||
|
Current Liabilities: |
|||||||||||||||||||||||||||||
|
Accounts payable |
$ | 210,094 | $ | 4,200,827 | $ | 4,410,921 | $ | - | $ | - | $ | - | $ | 4,410,921 | |||||||||||||||
|
Other current liabilities |
68,138 | - | 68,138 | - | - | - | 68,138 | ||||||||||||||||||||||
|
Payment processing liabilities, net |
10,199,956 | 1,200,000 | 11,399,956 | - | - | - | 11,399,956 | ||||||||||||||||||||||
|
Current - Notes payable |
- | 110,113 | 110,113 | - | - | - | 110,113 | ||||||||||||||||||||||
|
Note payable, payroll protection plan loan |
272,713 | - | 272,713 | - | - | - | 272,713 | ||||||||||||||||||||||
|
Convertible debt, net of debt discount |
856,592 | - | 856,592 | - | - | - | 856,592 | ||||||||||||||||||||||
|
Derivative liability |
- | - | - | - | - | - | - | ||||||||||||||||||||||
|
Current portion of operating lease liabilities |
120,110 | - | 120,110 | - | - | - | 120,110 | ||||||||||||||||||||||
|
Total current liabilities |
11,727,603 | 5,510,940 | 17,238,543 | - | - | - | 17,238,543 | ||||||||||||||||||||||
|
Operating lease liabilities, less current portion |
- | - | - | - | - | - | - | ||||||||||||||||||||||
|
Long-term debt |
149,900 | 167,885 | 317,785 | - | - | - | 317,785 | ||||||||||||||||||||||
|
Total liabilities |
11,877,503 | 5,678,825 | 17,556,328 | - | - | - | 17,556,328 | ||||||||||||||||||||||
|
Stockholders' Equity (Deficit): |
|||||||||||||||||||||||||||||
|
Common stock |
30,711 | - | 30,711 | - | 1,000 |
(f) |
1,000 | 31,711 | |||||||||||||||||||||
|
Additional paid-in capital |
12,079,074 | - | 12,079,074 | - | 12,139,000 |
(f) |
12,139,000 | 24,218,074 | |||||||||||||||||||||
| - | - | - | - | (1,475,319 | ) |
(i) |
(1,475,319 | ) | (1,475,319 | ) | |||||||||||||||||||
|
Accumulated deficit |
(11,724,549 | ) | - | (11,724,549 | ) | - | - | - | (11,724,549 | ) | |||||||||||||||||||
|
Members' equity |
- | 6,641,993 | 6,641,993 | - | 1,740,035 |
(g) |
76,146 | 6,718,139 | |||||||||||||||||||||
| (1,663,889 | ) |
(b) (d) |
|||||||||||||||||||||||||||
|
Total stockholders' equity (deficit) |
385,236 | 6,641,993 | 7,027,229 | - | 10,740,827 | 10,740,827 | 17,768,056 | ||||||||||||||||||||||
|
Total liabilities and stockholder's equity |
$ | 12,262,739 | $ | 12,320,818 | $ | 24,583,557 | $ | - | $ | 10,740,827 | $ | 10,740,827 | $ | 35,324,384 | |||||||||||||||
See accompanying notes to the unaudited pro forma condensed consolidated financial information
GREENBOX POS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2020
(in thousands, except per share data and in United States dollars, except where noted)
|
Year Ended December 31, 2020 |
Transaction Accounting Adjustments |
||||||||||||||||||||||||||||
|
Reclassification |
Pro Forma |
Total |
Pro Forma |
||||||||||||||||||||||||||
|
Charge Savvy |
Combining |
Adjustments |
Adjustments |
Adjustments |
Combined |
||||||||||||||||||||||||
|
Net revenue |
$ | 8,525,015 | $ | 43,485,295 | $ | 52,010,310 | $ | - | $ | (303,974 | ) |
(h) |
$ | (303,974 | ) | $ | 51,706,336 | ||||||||||||
|
Cost of revenue |
4,825,587 | 27,403,121 | 32,228,708 | - | (303,974 | ) |
(h) |
(303,974 | ) | 31,924,734 | |||||||||||||||||||
|
Gross profit |
3,699,428 | 16,082,174 | 19,781,602 | - | - | - | 19,781,602 | ||||||||||||||||||||||
|
Operating expenses: |
|||||||||||||||||||||||||||||
|
Advertising and marketing |
93,868 | 20,856 | 114,724 | - | - | - | 114,724 | ||||||||||||||||||||||
|
Research and development |
1,363,757 | 422,849 | 1,786,606 | - | - | - | 1,786,606 | ||||||||||||||||||||||
|
Payroll and payroll taxes |
1,796,160 | 980,418 | 2,776,578 | - | - | - | 2,776,578 | ||||||||||||||||||||||
|
Professional fees |
1,691,107 | 209,865 | 1,900,972 | - | - | - | 1,900,972 | ||||||||||||||||||||||
|
General and administrative |
3,836,120 | 5,918,232 | 9,754,352 | - | - | - | 9,754,352 | ||||||||||||||||||||||
|
Depreciation and amortization |
22,742 | 21,333 | 44,075 | - | 1,663,889 |
(b) (c) |
1,663,889 | 1,707,964 | |||||||||||||||||||||
|
Total operating expenses |
8,803,754 | 7,573,553 | 16,377,307 | - | 1,663,889 | 1,663,889 | 18,041,196 | ||||||||||||||||||||||
|
Income (Loss) from operations |
(5,104,326 | ) | 8,508,621 | 3,404,295 | - | (1,663,889 | ) | (1,663,889 | ) | 1,740,406 | |||||||||||||||||||
|
Other income (expense): |
|||||||||||||||||||||||||||||
|
Interest expense - debt discount |
(359,493 | ) | - | (359,493 | ) | - | - | - | (359,493 | ) | |||||||||||||||||||
|
Interest income or (expense) |
(1,149,677 | ) | (162,259 | ) | (1,311,936 | ) | - | - | - | (1,311,936 | ) | ||||||||||||||||||
|
Derivative expense |
(641,366 | ) | - | (641,366 | ) | - | - | - | (641,366 | ) | |||||||||||||||||||
|
Changes in fair value of derivative liability |
(383,769 | ) | - | (383,769 | ) | - | - | - | (383,769 | ) | |||||||||||||||||||
|
Merchant fines and penalty income |
2,630,796 | - | 2,630,796 | - | - | - | 2,630,796 | ||||||||||||||||||||||
|
Other income or expense |
455 | 35,666 | 36,121 | - | - | - | 36,121 | ||||||||||||||||||||||
|
Total other expense, net |
96,946 | (126,593 | ) | (29,647 | ) | - | - | - | (29,647 | ) | |||||||||||||||||||
|
Income (Loss) before provision for income taxes |
(5,007,380 | ) | 8,382,028 | 3,374,648 | - | (1,663,889 | ) | (1,663,889 | ) | 1,710,759 | |||||||||||||||||||
|
Provision for income taxes |
- | - | - | - | - | - | - | ||||||||||||||||||||||
|
Net income (loss) |
$ | (5,007,380 | ) | $ | 8,382,028 | $ | 3,374,648 | $ | - | $ | (1,663,889 | ) | $ | (1,663,889 | ) | $ | 1,710,759 | ||||||||||||
See accompanying notes to the unaudited pro forma condensed consolidated financial information
Greenbox POS, Inc.
Notes to the Unaudited Pro Forma Consolidated Financial Information
(in thousands of United States Dollars, unless otherwise stated)
Note 1. Description of the Transaction
On July 13, 2021 (the “Closing Date”), GreenBox POS (the “Company”) entered into and closed on a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Charge Savvy LLC, an Illinois limited liability company (“Charge Savvy”), and Charge Savvy’s three members (collectively, the “Sellers”). As a result of the Purchase Agreement, the Company purchased all of Charge Savvy’s issued and outstanding membership interests from the Sellers and Charge Savvy became a wholly owned subsidiary of the Company. Although the Purchase Agreement is dated July 9th, it was entered into and closed on July 13th.The purchase price under the Purchase Agreement for the all-stock transaction consisted of 1,000,000 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”) being issued and delivered to Sellers in proportion to the Sellers’ share of their membership interests in Charge Savvy. The share price at issuance was $12.14.Charge Savvy is a global Fintech company that specializes on developing software and providing payment processing and point of sale services to the merchant services industry. Charge Savvy also owns an approximately 61,000 square foot office building located in Chicago, Illinois where it is headquartered.
Note 2. Basis of Pro Forma Presentation
The Acquisition was accounted for under the acquisition method of accounting. The Company accounts for acquisitions of entities that include inputs and processes and have the ability to create outputs as business combinations. The tangible and identifiable intangible assets acquired and liabilities assumed in a business combination are recorded based on their estimated fair values as of the business combination date, including identifiable intangible assets which either arise from a contractual or legal right or are separable from goodwill. The Company bases the estimated fair value of identifiable intangible assets acquired in a business combination on independent third-party valuations that use information and assumptions provided by its management, which consider estimates of inputs and assumptions that a market participant would use. Any excess purchase price over the estimated fair value assigned to the net tangible and identifiable intangible assets acquired and liabilities assumed is recorded to goodwill. The use of alternative valuation assumptions, including estimated revenue projections, growth rates, estimated cost savings, cash flows, discount rates, estimated useful lives and probabilities surrounding the achievement of contingent milestones could result in different purchase price allocations and amortization expense in current and future periods. Transaction costs associated with acquisitions are expensed as incurred in general and administrative expenses. Results of operations and cash flows of acquired companies are included in the Company’s operating results from the date of acquisition.
The pro forma adjustments and allocations of the preliminary business combination fair value have been presented in Note 4. Business Combination Fair Value and Allocation and are based in part on estimates of the fair value of assets acquired and liabilities assumed. Any change to the preliminary business combination fair value and allocation could materially affect the allocation of the purchase price to the assets and liabilities presented in the unaudited pro forma consolidated financial information.
The unaudited pro forma consolidated financial information included herein has been prepared by the Company pursuant to the rules and regulations of the SEC for the purposes of inclusion in Greenbox’s amended Current Report on Form 8-K/A prepared in connection with the acquisition of Charge Savvy. Certain information and disclosures normally included in financial statements prepared in accordance with US GAAP have been or omitted pursuant to such rules and regulations. The significant accounting policies used in preparing the unaudited pro forma consolidated financial information are set out in the Company’s consolidated financial statements included in the Company’s annual report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on March 30, 2021.
Note 3. Pro Forma Adjustments
The unaudited pro forma consolidated balance sheet and statement of operations for the year ended December 31, 2020 have been adjusted to give effect to the Acquisition as if it had occurred on January 1, 2020 and include pro forma adjustments to:
(a) Record land and building under purchase accounting under ASC 805. The land and building were valued at $75,000 and $1,285,000, respectively.
(b) Recording of depreciation of building that was recorded under ASC 805 for the current year.
(c) Record intangible assets under purchase accounting under ASC 805.
(d) Recording of amortization of intangible assets recorded under ASC 805 for the current year.
(e) Recording of goodwill under purchase accounting under ASC 805.
(f) Issuances of 1,000,000 shares of Greenbox POS common stock to ChargeSavvy Members for the purchases of all members' interest of ChargeSavvy LLC.
(g) Reflects the elimination of ChargeSavvy's historical members' equity balance.
(h) Reflects the intercompany elimination of the impact of revenue and cost transactions between GreenBox and ChargeSavvy.
(i) Reflects pro forma adjustments related to differences in net assets and liabilities between closing date of the acquisition and historical balance sheet date.
The unaudited pro forma consolidated balance sheet and statement of operations for the period ended March 31, 2021 have been adjusted to give effect to the Acquisition as if it had occurred on January 1, 2020 and include pro forma adjustments to:
(a) Record land and building under purchase accounting under ASC 805. The land and building were valued at $75,000 and $1,285,000, respectively.
(b) Recording of depreciation of building that was recorded under ASC 805 for the current period.
(c) Record intangible assets under purchase accounting under ASC 805.
(d) Recording of amortization of intangible assets recorded under ASC 805 for the current period.
(e) Recording of goodwill under purchase accounting under ASC 805.
(f) Issuances of 1,000,000 shares of Greenbox POS common stock valued at $12.14 per share at the date of acquisition to ChargeSavvy Members for the purchases of all members' interest of ChargeSavvy LLC.
(g) Reflects the elimination of ChargeSavvy's historical members' equity balance.
(h) Reflects pro forma adjustments related to differences in net assets and liabilities between closing date of the acquisition and historical balance sheet date.
(i) Reflects the accrual of the transaction costs related to the Acquisition to record transaction costs related to the Acquisition of $51 million from other current liabilities as of March 31, 2021.
(j) Reflects prior period pro forma adjustments related to depreciation and amortization expense.
Note 4. Preliminary Acquisition Accounting
The following table presents the purchase price consideration:
|
Common stock issued to Members(1) |
$ | 12,140,000 | ||
|
Purchase price consideration |
$ | 12,140,000 |
(1) The common stock component of the purchase price consideration is determined based on the following:
|
Shares |
Per Share |
Total |
||||||||||
|
(1)Greenbox POS shares issued to Members |
1,000,000 | $ | 12.14 | $ | 12,140,000 | |||||||
The following table presents the preliminary purchase price allocation of the assets acquired and the liabilities assumed in the Acquisition as of March 31, 2021, using currently available information:
|
Assets acquired |
||||
|
Cash and cash equivalents |
$ | 1,485,006 | ||
|
Accounts receivable |
24,655 | |||
|
Inventory |
116,874 | |||
|
Property and equipment |
141,717 | |||
|
Land and building |
755,032 | |||
|
Other Assets |
881,260 | |||
|
Total assets acquired |
3,404,544 | |||
|
Liabilities assumed |
||||
|
Accounts payable and accrued expenses |
229,352 | |||
|
Merchant payables |
3,302,243 | |||
|
Loan payable - EIDL |
146,026 | |||
|
Total liabilities assumed |
3,677,621 | |||
|
Net Assets Acquired |
(273,077 | ) | ||
|
Total purchase price |
$ | 12,140,000 | ||
|
Total purchase price to be allocated |
$ | 12,413,077 | ||
|
Purchase price allocation: |
||||
|
Goodwill |
$ | 3,653,409 | ||
|
Business intellectual properties |
2,611,088 | |||
|
Customer relationship |
5,543,612 | |||
|
Land and building |
604,968 | |||
|
Total purchase price allocated |
$ | 12,413,077 |
Preliminary identifiable intangible assets in the unaudited pro forma combined financial information consist of the following:
| Fair Value |
Estimated Weighted Average Amortization Period |
|||||||
|
|
||||||||
|
Customer relationships |
5,543,612 | 5 | ||||||
|
Technology |
2,611,088 | 5 | ||||||
|
Total estimated acquired intangible assets |
8,154,700 | |||||||
