UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)
☒	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, ~~2021~~2022

OR

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

Commission file number: 001-34294

~~GREENBOX POS~~RYVYL Inc.

(Exact name of small business issuer as specified in its charter)

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

3131 Camino Del Rio North, Suite 1400

SanDiego, CA

92108

(Address of principal executive offices)

(Zip Code)

(619)~~-631-8261~~ 631-8261

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	~~GBOX~~RVYL	The Nasdaq Stock Market LLC (Nasdaq Capital Market)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares outstanding of the issuer’s classes of common equity, as of November ~~9, 2021~~15, 2022 was ~~43,179,241~~49,647,531 Shares of Common Stock (One Class)

TABLE OF CONTENTS

		Page
PART I Consolidated Financial Information

Item 1.	~~Unaudited Condensed Consolidated~~ Financial Statements (unaudited)	3
	~~Unaudited~~ Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021	3
	~~Unaudited~~ Condensed Consolidated Statements of Operations and Comprehensive Income for the Three and Nine Months Ended September 30, 2022 and 2021	4
	~~Unaudited~~ Condensed Consolidated Statements of Stockholders’ ~~Deficit~~Equity for the Three and Nine Months Ended September 30, 2022 and 2021	5
	~~Unaudited~~ Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021	7
	Notes to ~~Unaudited~~ Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis ~~or Plan~~of Financial Condition and Results of Operations	2126
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
Item 4.	Controls and Procedures	2832

PART II Other Information

Item 1.	Legal Proceedings	2933
Item 1A.	Risk Factors
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2933
Item 3.	Defaults Upon Senior Securities	2933
Item 4.	Mine Safety Disclosures	2933
Item 5.	Other Information	2933
Item 6.	Exhibits	3034
Signatures		3135

PART I - FINANCIAL INFORMATION

ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~GREENBOX POS~~RYVYL Inc.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(Unaudited)

September 30,

December 31,

2021

2020

ASSETS

Current Assets:

Cash and cash equivalents
$ 29,707,254 $ -
Restricted cash
- 1,832,735
Accounts receivable, net of allowance for bad debt of $288,764 and $0, respectively
229,346 10,000
Accounts receivable from fines and penalties from merchants, net of allowance for
bad debt of $6,665,031
2,789,231 2,789,230
Inventory
177,779 -
Cash due from gateways, net
19,418,353 7,303,949
Prepaid and other current assets
260,963 70,130
Total current assets
52,582,926 12,006,044

Non-current Assets:

Property and equipment, net
1,630,379 57,264
Other assets
197,954 81,636
Goodwill
6,049,487 -
Intangible Assets, net
7,992,432 -
Operating lease right-of-use assets, net
668,865 117,795
Total non-current assets
16,539,117 256,695

Total assets
$ 69,122,043 $ 12,262,739

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Accounts payable
$ 801,598 $ 210,094
Other current liabilities
3,583,956 68,138
Payment processing liabilities, net
6,634,457 10,199,956
Note payable, payroll protection plan loan
272,713 272,713
Short-term notes payable, net of debt discount of…
3,448 -
Convertible debt, net of debt discount of $0 and $2,993,408, respectively
- 856,592
Current portion of operating lease liabilities
375,488 120,110

Total current liabilities
11,671,660 11,727,603
Long term liabilities
645,131 149,900
Operating lease liabilities, less current portion
294,490 -

Total liabilities
12,611,281 11,877,503

Commitments and contingencies

Stockholders' Equity:

Common stock, par value $0.001, 82,500,000 shares authorized, shares issued and
outstanding of 42,865,022 and 30,275,023, respectively.
42,865 30,711
Additional paid-in capital
90,290,826 12,079,074
Accumulated deficit
(31,143,296 ) (11,724,549 )
Less: Treasury stock, at cost; 300,000 and 0 shares, respectively
(2,679,633 ) -
Total stockholders' equity
56,510,762 385,236

Total liabilities and stockholder's equity
$ 69,122,043 $ 12,262,739

	*September 30,*			*December 31,*
	*2022*			*2021*
ASSETS

Current Assets:
Cash and cash equivalents	$	11,020,840		$	89,559,695
Restricted cash		26,606,827			-
Accounts receivable, net of allowance for bad debt of $54,795 and $54,795, respectively		790,069			481,668
Inventory, net of inventory reserve of $3,127 and $3,127, respectively		273,684			286,360
Cash due from gateways, net of allowance of $3,904,952 and $3,904,952, respectively		15,125,184			18,941,761
Prepaid and other current assets		14,567,792			6,420,696
Total current assets		68,384,396			115,690,180

Non-current Assets:
Property and equipment, net		1,702,172			1,674,884
Other assets		186,038			190,636
Goodwill		26,625,946			6,048,034
Intangible Assets, net		22,394,833			7,578,935
Operating lease right-of-use assets, net		1,656,448			1,490,159
Investments -assets		1,451,247			-
Total non-current assets		54,016,684			16,982,648

Total assets	$	122,401,080		$	132,672,828

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Accounts payable	$	97,183		$	871,037
Other current liabilities		1,408,410			501,167
Accrued interest		8,022			1,226,287
Payment processing liabilities, net		22,593,376			4,997,807
Short-term notes payable, net of debt discount		12,870			-
Derivative liability		2,520,127			18,735,000
Current portion of operating lease liabilities		632,038			495,134

Total current liabilities		27,272,026			26,826,432
Long-term debt		637,030			649,900
Convertible debt, net of debt discount of $30,241,836 and $41,344,822, respectively		58,661,454			58,655,178
Operating lease liabilities, less current portion		1,124,624			1,035,895

Total liabilities		87,695,134			87,167,405

Commitments and contingencies

Stockholders' Equity:
Common stock, par value $0.001, 82,500,000 shares authorized, shares issued and outstanding of 48,499,026 and 42,831,816, respectively		48,155			42,831
Common stock issuable, par value $0.001, 2,516,189 and 0 shares issuable, respectively		2,412			-
Additional paid-in capital		99,618,045			88,574,469
Accumulated other comprehensive income (loss)		(708,424	)		-
Accumulated deficit		(64,254,242	)		(38,178,061	)
Less: Treasury stock, at cost; 0 and 714,831, respectively		-			(4,933,816	)
Total stockholders' equity		34,705,946			45,505,423

Total liabilities and stockholder's equity	$	122,401,080		$	132,672,828

The accompanying notes are an integral part of these condensed unaudited financial statements.

Table of Contents

~~GREENBOX POS~~RYVYL Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED)

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020			2022			2021			2022			2021

Revenue	$	8,045,469		$	3,056,271		$	19,174,089		$	5,536,335
Net revenue													$	10,629,691		$	8,045,469		$	22,490,824		$	19,174,089
Cost of revenue		2,420,748			1,845,295			5,337,999			3,504,283			4,269,529			2,420,748			10,976,255			5,337,999

Gross profit		5,624,721			1,210,976			13,836,090			2,032,052			6,360,162			5,624,721			11,514,569			13,836,090

Operating expenses:
Advertising and marketing		37,179			59,099			84,509			86,368			438,523			37,179			1,106,341			84,509
Research and development		1,043,385			243,923			2,504,976			798,157			1,442,038			1,043,385			5,300,115			2,504,976
General and administrative		784,158			366,734			1,648,383			613,156			1,186,123			784,158			4,331,918			1,648,383
Payroll and payroll taxes		1,250,451			436,216			2,871,581			1,279,174			2,384,544			1,250,451			7,480,377			2,871,581
Professional fees		789,772			344,641			2,114,996			852,234			1,031,867			789,772			3,704,226			2,114,996
Stock compensation for employees		3,777,572			-			5,867,072			-			-			3,777,572			166,800			5,867,072
Stock grant expense														508,313			-			2,223,611			-
Stock compensation for services		238,238			-			10,418,996			-			132,696			238,238			338,348			10,418,996
Depreciation and amortization		457,633			5,764			477,886			16,856			2,298,849			457,633			4,879,798			477,886
Total operating expenses		8,378,388			1,456,377			25,988,399			3,645,945			9,422,953			8,378,388			29,531,534			25,988,399

Income (Loss) from operations		(2,753,667	)		(245,401	)		(12,152,309	)		(1,613,893	)		(3,062,791	)		(2,753,667	)		(18,016,965	)		(12,152,309	)

Other income (expense):
Interest expense		(4,736	)		(48,931	)		(598,994	)		(372,553	)		(1,906,962	)		(4,736	)		(5,662,463	)		(598,994	)
Interest expense - debt discount		-			(83,500	)		(2,993,408	)		(121,918	)		(436,817	)		-			(11,539,803	)		(2,993,408	)
Derivative expense		-			(925,576	)		-			(925,576	)
Changes in fair value of derivative liability		-			819,366			-			(383,769	)		(4,082,056	)		-			14,591,938			-
Gain from extinguishment of convertible debt		-			-			-			2,630,795
Derecognition expense on conversion of convertible debt														(5,709,672	)		-			(5,709,672	)		-
Merchant liability settlement		-			-			(364,124	)		-			-			-			-			(364,124	)
Other income or expense		(37,497	)		(5,768	)		(56,057	)		(2,434	)		62,806			(37,497	)		298,021			(56,057	)
Total other expense, net		(42,233	)		(244,409	)		(4,012,583	)		824,545
Total other income (expense), net														(12,072,701	)		(42,233	)		(8,021,979	)		(4,012,583	)

Income (Loss) before provision for income taxes		(2,795,900	)		(489,810	)		(16,164,892	)		(789,348	)
Income (loss) before provision for income taxes														(15,135,492	)		(2,795,900	)		(26,038,944	)		(16,164,892	)

Income tax provision		3,253,855			-			3,253,855			-			34,785			3,253,855			37,237			3,253,855

Net income (loss)	$	(6,049,755	)	$	(489,810	)	$	(19,418,747	)	$	(789,348	)	$	(15,170,277	)	$	(6,049,755	)	$	(26,076,181	)	$	(19,418,747	)

Comprehensive income statement:
Net income (loss)													$	(15,170,277	)	$	(6,049,755	)	$	(26,076,181	)	$	(19,418,747	)
Foreign currency translation loss														(310,585	)		-			(708,424	)		-
Total comprehensive income (loss)													$	(15,480,862	)	$	(6,049,755	)	$	(26,784,605	)	$	(19,418,747	)

Earnings (loss) per share:
Net loss per share:
Basic and diluted	$	(0.14	)	$	(0.02	)	$	(0.49	)	$	(0.03	)	$	(0.32	)	$	(0.14	)	$	(0.59	)	$	(0.49	)

Weighted average number of common shares outstanding:
Basic and diluted		42,065,842			29,488,393			39,949,732			29,488,393			47,104,952			42,065,842			44,072,798			39,949,732

The accompanying notes are an integral part of these condensed unaudited financial statements.

Table of Contents

~~GREENBOX POS~~

RYVYL Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ ~~DEFICIT~~EQUITY

(UNAUDITED)

Common Stock

Treasury
Stock

Additional
Paid-In

Accumulated

Total
Stockholders'
Equity

Shares

Amount

To be Issued

Amount

at Cost

Capital

Deficit

(Deficit)

Balance at June 30, 2021
42,236,219 $ 42,327 - $ - $ (933,343 ) $ 73,916,018 $ (25,093,541 ) $ 47,931,461

Exercise of warrants - common stocks issued from issuable
106,667 107 - - - 211,094 - $ 211,201

Issuances of stock for services
251,998 252 - - - 164,660 - $ 164,912

Issuances of stock for stock option exercises
13,217 13 - - - (13 ) - $ -

Issuances of stock to board members for services
8,935 9 - - - 82,495 - $ 82,504

Issuances of common stock for acquisition of ChargeSavvy
1,000,000 1,000 - - - 12,139,000 - $ 12,140,000

Stock option expense
- - - - - 3,777,572 - $ 3,777,572

Correction of number of shares issued and outstanding due to incorrect common stock split
(542,014 ) (843 ) - - - - - $ (843 )

Treasury Stock
(210,000 ) - - - (1,746,290 ) - - $ (1,746,290 )

Net loss
- - - - - - (6,049,755 ) $ (6,049,755 )

Balance at September 30, 2021
42,865,022 $ 42,865 - $ - $ (2,679,633 ) $ 90,290,826 $ (31,143,296 ) $ 56,510,762

	Common Stock												Treasury Stock				Additional Paid-In		Other Accumulated Comprehensive			Accumulated			Total Stockholders' Equity
	Shares			Amount			Issuable			Amount			Shares		At Cost		Capital		Loss			Deficit			(Deficit)

Balance at June 30, 2022		44,600,527		$	43,884			754,423		$	754			-	$	-	$	89,386,501	$	(397,839	)	$	(49,083,965	)	$	39,949,335

Common stock issued for services		150,191			150			-			-			-		-		132,546		-			-			132,696

Common stock issued to employees as stock compensation		586,954			587			(208,334	)		(208	)		-		-		458,970		-			-			459,349

Common stock shares contributed by shareholder		(412,500	)		(48	)		-			-			-		-		-		-			-			(48	)

Common stock issued for conversion of convertible debt		3,542,912			3,551			-			-			-		-		7,822,584		-			-			7,826,135

Common stock issued for interest on convertible debt		30,532			31			-			-			-		-		110,301		-			-			110,332

Common stock issuable for interest on convertible debt		-			-			1,865,934			1,866			-		-		1,707,143		-			-			1,709,009

Other comprehensive loss		-			-			-			-			-		-		-		(310,585	)		-			(310,585	)

Net loss		-			-			-			-			-		-		-		-			(15,170,277	)		(15,170,277	)

Balance at September 30, 2022		48,499,026		$	48,155			2,412,023		$	2,412			-	$	-	$	99,618,045	$	(708,424	)	$	(64,254,242	)	$	34,705,946

Common Stock

Treasury
Stock

Additional
Paid-In

Accumulated

Total
Stockholders'
Equity

Shares

Amount

To be Issued

Amount

at Cost

Capital

Deficit

(Deficit)

Balance at June 30, 2020
30,191,690 $ 30,192 - $ - $ - $ 1,547,318 $ (7,016,707 ) $ (5,439,197 )

Common stock issued for stock options exercised
83,333 83 - - - 32,417 - 32,500

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

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

Common stock issued upon conversion of note payable
1,000,000 1,000 - - - 809,000 - 810,000

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

Balance at September 30, 2020
30,275,023 $ 30,275 - $ - $ - $ 1,742,368 $ (7,506,517 ) $ (5,733,874 )

	Common Stock										Treasury Stock						Additional Paid-In			Other Accumulated Comprehensive			Accumulated			Total Stockholders' Equity
	Shares			Amount			Issuable		Amount		Shares			At Cost			Capital			Loss			Deficit			(Deficit)

Balance at December 31, 2021		43,546,647		$	42,831			-	$	-		(714,831	)	$	(4,933,816	)		88,574,469		$	-		$	(38,178,061	)	$	45,505,423

Common stock issued for services		204,883			205			-		-		-			-			338,143			-			-			338,348

Common stock issued to shareholder		33,333			33			-		-		-			-			(33	)		-			-			-

Common stock issued to employees as stock compensation		859,211			859			12,756		13		-			-			1,955,188			-			-			1,956,060

Common stock issued for stock options exercised		12,417			12			-		-		-			-			5,203			-			-			5,215

Common stock contributed and cancelled from shareholder		(745,833	)		(381	)		-		-		-			-			333			-			-			(48	)

Common stock issuable - Acquisition of Sky assets		500,000			500			-		-		-			-			2,109,500			-			-			2,110,000

Common stock shares contributed by shareholder		(500,000	)		(500	)		-		-		-			-			500			-			-			-

Common stock shares issuable to shareholder		-			-			533,333		533		-			-			(533	)		-			-			-

Common stock issued for conversion of convertible debt		5,956,912			5,964			-		-		-			-			12,820,171			-			-			12,826,135

Common stock issued for interest on convertible debt		30,942			31			-		-		-			-			110,301			-			-			110,332

Common stock issuable for interest on convertible debt		-			-			1,865,934		1,866		-			-			1,707,143			-			-			1,709,009

Treasury Stock		(1,398,586	)		(1,399	)		-		-		714,831			4,933,816			(8,169,140	)		-			-			(3,236,723	)

Stock compensation expense		-			-			-		-		-			-			166,800			-			-			166,800

Other comprehensive loss		-			-			-		-		-			-			-			(708,424	)		-			(708,424	)

Net loss		-			-			-		-		-			-			-			-			(26,076,181	)		(26,076,181	)

Balance at September 30, 2022		48,499,026		$	48,155			2,412,023	$	2,412		-		$	-			99,618,045		$	(708,424	)	$	(64,254,242	)	$	34,705,946

Table of Contents

RYVYL Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

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

Balance at June 30, 2021		42,236,219		$	42,327			-	$	-	$	(933,343	)	$	73,916,018		$	(25,093,541	)	$	47,931,461

Exercise of warrants - common stocks issued from issuable		106,667			107			-		-		-			211,094			-		$	211,201

Issuances of stock for services		251,998			252			-		-		-			164,660			-		$	164,912

Issuances of stock for stock option exercises		13,217			13			-		-		-			(13	)		-		$	-

Issuances of stock to board members for services		8,935			9			-		-		-			82,495			-		$	82,504

Issuances of common stock for acquisition of ChargeSavvy		1,000,000			1,000			-		-		-			12,139,000			-		$	12,140,000

Stock option expense		-			-			-		-		-			3,777,572			-		$	3,777,572

Correction of number of shares issued and outstanding due to incorrect common stock split		(542,014	)		(843	)		-		-		-			-			-		$	(843	)

Treasury Stock		(210,000	)		-			-		-		(1,746,290	)		-			-		$	(1,746,290	)

Net loss		-			-			-		-		-			-			(6,049,755	)	$	(6,049,755	)

Balance at September 30, 2021		42,865,022		$	42,865			-	$	-	$	(2,679,633	)	$	90,290,826		$	(31,143,296	)	$	56,510,762

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

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

Common stock issued for exercise of warrant		1,884,445			1,884			-		-		-			3,729,316			-			3,731,200

Common stock issued for conversion of convertible debt		1,944,444			1,944			-		-		-			3,848,056			-			3,850,000

Common shares issued for restricted shares to executive		83,333			83			-		-		-			(83	)		-			-

Common stock issued for services		709,037			709			-		-		-			10,427,127			-			10,427,836

Common stock issued for interest for convertible debt		96,664			97			-		-		-			594,258			-			594,355

Common stock issued for non-cash stock option exercise		70,112			70			-		-		-			(70	)		-			-

Common stock issued for stock options exercised		18,717			19			-		-		-			2,231			-			2,250

Issuances of common stock, net of issuance costs of $4,305,758		4,772,500			4,773			-		-		-			45,800,718			-			45,805,491

Issuance of common stock		1,171,849			1,172			-		-		-			(1,172	)		-			-

Issuances of common stock from previous unregistered shares		703,276			703			-		-		-			(703	)		-			-

Stock compensation expense		-			-			-		-		-			5,867,073			-			5,867,073

Payment for previous common stock repurchased under treasury method		-			-			-		-		-			(4,194,000	)		-			(4,194,000	)

Purchases of treasury stock		(300,000	)		(300	)		-		-		(2,679,633	)		-			-			(2,679,933	)

Issuances of common stock for acquisition of ChargeSavvy		1,000,000			1,000			-		-					12,139,000			-			12,140,000

Net loss		-			-			-		-		-			-			(19,418,747	)		(19,418,747	)

Balance at September 30, 2021		42,865,022			42,865			-		-		(2,679,633	)		90,290,826			(31,143,296	)		56,510,762

The accompanying notes are an integral part of these condensed unaudited financial statements.

~~Table of Contents~~

~~GREENBOX POS~~

~~UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS~~’ ~~DEFICIT~~

Common Stock

Treasury
Stock

Additional
Paid-In

Accumulated

Total
Stockholders'
Equity

Shares

Amount

To be Issued

Amount

at cost

Capital

Deficit

(Deficit)

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

Common stock issued for exercise of warrant
1,884,445 1,884 - - - 3,729,316 - 3,731,200

Common stock issued for conversion of convertible debt
1,944,444 1,944 - - - 3,848,056 - 3,850,000

Common shares issued for restricted shares to executive
83,333 83 - - - (83 ) - -

Common stock issued for services
709,037 709 - - - 10,427,127 - 10,427,836

Common stock issued for interest for convertible debt
96,664 97 - - - 594,258 - 594,355

Common stock issued for non-cash stock option exercise
70,112 70 - - - (70 ) - -

Common stock issued for stock options exercised
18,717 19 - - - 2,231 - 2,250

Issuances of common stock, net of issuance costs of $4,305,758
4,772,500 4,773 - - - 45,800,718 - 45,805,491

Issuance of common stock
1,171,849 1,172 - - - (1,172 ) - -

Issuances of common stock from previous unregistered shares
703,276 703 - - - (703 ) - -

Stock compensation expense
- - - - - 5,867,073 - 5,867,073

Payment for previous common stock repurchased under treasury method
- - - - - (4,194,000 ) - (4,194,000 )

Purchases of treasury stock
(300,000 ) (300 ) - - (2,679,633 ) - - (2,679,933 )

Issuances of common stock for acquisition of ChargeSavvy
1,000,000 1,000 - - 12,139,000 - 12,140,000

Net loss
- - - - - - (19,418,747 ) (19,418,747 )

Balance at September 30, 2021
42,865,022 42,865 - - (2,679,633 ) 90,290,826 (31,143,296 ) 56,510,762

Common Stock

Treasury
Stock

Additional
Paid-In

Accumulated

Total
Stockholders'
Equity

Shares

Amount

To be Issued

Amount

at cost

Capital

Deficit

(Deficit)

Balance at December 31, 2019
28,310,489 $ 28,310 115,854 $ 116 $ - $ 1,321,404 $ (6,717,169 ) $ (5,367,339 )

Shares issuable adjustment
- - (115,854 ) (116 ) - 116 - -

Common stocks issued from conversion of convertible debt
1,854,701 1,855 - - - 213,695 - 215,550

Common stocks issued for professional fees
9,833 10 - - - 4,120 - 4,130

Common stocks - issued donation
16,667 17 - - - 7,983 - 8,000

Common stock issued for stock options exercised
83,333 83 - - - 32,417 - 32,500

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

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

Common stock issued upon conversion of note payable
1,000,000 1,000 - - - 809,000 - 810,000

Net loss
- - - - - - (789,348 ) (789,348 )

Balance at September 30, 2020
30,275,023 $ 30,275 - $ - $ - $ 1,742,368 $ (7,506,517 ) $ (5,733,874 )

~~The accompanying notes are an integral part of these condensed unaudited financial statements.~~

Table of Contents

~~GREENBOX POS~~RYVYL Inc.

UNAUDITED CONDENSED CONSOLIDATED ~~STATEMENTS~~STATEMENT OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended September 30,						*Nine Months Ended September 30,*
	2021			2020			2022			2021

Cash flows from operating activities:
Net loss	$	(19,418,747	)	$	(789,348	)	$	(26,076,181	)	$	(19,418,747	)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation expense		477,886			16,856
Depreciation and amortization								4,718,262			477,886
Noncash lease expense		(1,202	)		(966	)		54,117			(1,202	)
Stock compensation expense		5,867,072			162,633			166,800			5,867,072
Common stocks issued for professional fees		10,418,996			4,130			338,348			10,418,996
Common stocks - issued donation		-			8,000
Proceeds from exercise of stock options		-			32,500
Stock compensation issued for interest		598,994			-			1,819,341			598,994
Common stock issued to employees as stock compensation								2,223,611			-
Interest expense - debt discount		2,993,408			121,918			11,539,803			2,993,408
Derivative expense		-			925,576
Gain (loss) on extinguishment of debt		-			(2,630,795	)
Changes in fair value of derivative liability		-			383,769			(14,591,938	)		-
Derecognition expense on conversion of convertible debt								5,709,672
Changes in assets and liabilities:
Guarantee deposits								25,906			-
Other receivable, net		(154,556	)		47,714			(308,401	)		(154,556	)
Inventory		(53,278	)		-			12,676			(53,278	)
Prepaid and other current assets		(184,172	)		(34,878	)		(1,903,359	)		(184,172	)
Cash due from gateways, net		(12,114,404	)		3,124,085			3,816,577			(12,114,404	)
Other assets		679,558			(70,000	)		47,644			679,558
Accounts payable		370,487			220,465			(728,041	)		370,487
Other current liabilities		3,384,258			32,107			347,718			3,384,258
Accrued interest		-			(286,461	)		(1,218,265	)		-
Payment processing liabilities, net		(6,898,339	)		(1,397,810	)		2,561,645			(6,898,339	)
Net cash provided by (used in) operating activities		(14,034,039	)		(130,505	)		(11,444,065	)		(14,034,039	)

Cash flows from investing activities:
Purchases of property and equipment		(97,818	)		(12,332	)		(101,798	)		(97,818	)
Acquisition of Northeast		(2,500,000	)		-
Deposit on acquisitions								(1,451,247	)		-
Purchase of intangibles								(500,000	)		(2,500,000	)
Cash provided for Transact Europe Acquisition								(28,810,600	)		-
Cash provided for Sky asset acquisition								(16,000,000	)		-
Net cash used in investing activities		(2,597,818	)		(12,332	)		(46,863,645	)		(2,597,818	)

Cash flows from financing activities:
Treasury stock repurchase		(2,679,633	)		-			(3,236,723	)		(2,679,633	)
Proceeds from stock option exercises		2,250			-			5,215			2,250
Borrowings from convertible debt		-			178,000
Repayments on convertible debt		-			(670,000	)		(6,000,000	)		-
Borrowings from notes payable		350,000			1,954,480
Principal payments on notes payable		-			(1,147,919	)
Borrowing form notes payable											350,000
Proceeds from exercise of warrant		3,731,200			-			-			3,731,200
Repurchase of common stock from stockholder		(4,194,000	)		(810,000	)		-			(4,194,000	)
Proceeds from issuance of common stock		45,805,491			-			-			45,805,491
Net cash provided by (used in) financing activities		43,015,308			(495,439	)		(9,231,508	)		43,015,308

Cash acquired from acquisition of Northeast and ChargeSavvy		1,491,068			-
Cash acquired from acquisition of Northeast and Charge Savvy											1,491,068
Restricted cash acquired from Transact Europe								18,676,860			-

Net increase in cash, cash equivalents, and restricted cash		27,874,519			(638,276	)
Net increase (decrease) in cash, cash equivalents, and restricted cash								(48,862,358	)		27,874,519

Foreign currency translation adjustment								(3,069,670	)		-

Cash, cash equivalents, and restricted cash – beginning of period		1,832,735			763,110			89,559,695			1,832,735

Cash, cash equivalents, and restricted cash – end of period	$	29,707,254		$	124,834		$	37,627,667		$	29,707,254

Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest	$	4,639		$	575,014		$	4,907,111		$	4,639
Income taxes	$	800		$	800		$	-		$	800


Non-cash financing and investing activities:
Convertible debt conversion to common stock	$	3,850,000		$	137,500		$	12,826,135		$	3,850,000
Common stock issued for acquisition of ChargeSavvy	$	12,140,000		$	-
Common stock issued for acquisition of Charge Savvy								-		$	12,140,000
Interest accrual from convertible debt converted to common stock	$	594,355		$	78,050		$	-		$	594,355
Short-term notes payable converted to common stock	$	-		$	810,000

The accompanying notes are an integral part of these condensed unaudited financial statements.

Table of Contents

~~GREENBOX POS~~RYVYL Inc.

NOTES TO UNAUDITEDCONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.	DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Organization

~~GreenBox POS (the “Company” or “PubCo”)~~RYVYL Inc. is a ~~tech~~financial technology company ~~formed with the intent of developing, marketing~~that develops, markets, and ~~selling~~sells innovative blockchain-based payment solutions, which ~~the Company believes will cause favorable disruption in~~we believe offer significant improvements for the payment solutions marketplace. The Company’s core focus is to develop and monetize disruptive blockchain-based applications, integrated within an end-to-end suite of financial products, capable of supporting a multitude of industries. The Company’s proprietary, blockchain-based systems are designed to facilitate, record and store a virtually limitless volume of tokenized assets, representing cash or data, on a secured, immutable blockchain-based ledger.

The Company was formerly known as ASAP Expo, Inc (“("ASAP”), and was incorporated in the state of Nevada on April 10, 2007. On January 4, 2020, ~~PubCo~~the Company and GreenBox POS LLC, a Washington limited liability company (“("PrivCo”), entered into an Asset Purchase Agreement (the ~~“Agreement”~~"Agreement”), to memorialize a verbal agreement (the ~~“Verbal~~"Verbal Agreement”) entered into on April 12, 2018, by and among ~~PubCo~~the Company (the Buyer) and PrivCo (the Seller). On April 12, 2018, pursuant to the Verbal Agreement, ~~PubCo~~the Company acquired PrivCo’s blockchain gateway and payment system business, point of sale system business, delivery business and kiosk business, bank and merchant accounts, as well as all intellectual property related thereto (the ~~“GreenBox~~"GreenBox Business”). As consideration for the GreenBox Business, on April 12, 2018, ~~PubCo~~the Company assumed PrivCo’s liabilities that had been incurred in the normal course of the GreenBox ~~Business (the “GreenBox Acquisition”).~~Business.

~~For accounting and reporting purposes, PubCo deemed~~On May 3, 2018, the Company formally changed its name to GreenBox ~~Acquisition a “Reverse Acquisition” with PrivCo designated the “accounting acquirer” and PubCo designated the “accounting acquiree.”~~POS LLC, then subsequently changed its name to GreenBox POS on December 13, 2018. On October 13, 2022 GreenBox POS changed its name to RYVYL Inc. (“RYVYL”).

On May 21, 2021, the Company acquired all of the outstanding stock of Northeast Merchant Systems, Inc. (“("Northeast”) in a transaction treated as a business combination. Northeast is a merchant services company providing merchant credit card processing through their own Bank Identification Number (BIN) with the acquiring bank Merrick. This involves inside operations for new merchants that include sales assistance and applications processing, underwriting, and onboarding; inside operations for existing merchants include risk monitoring and customer service. Outside operations include: equipment service or replacement; sales calls and applications, site inspections and identity verification; security verification; and on-site customer service and technical support.

On July 13, 2021 (the ~~“Closing~~"Closing Date”), GreenBox POS ~~(the “Company”)~~ entered into and closed on a Membership Interest Purchase Agreement (the ~~“Purchase~~"Purchase Agreement”) with Charge Savvy LLC, an Illinois limited liability company (“("Charge Savvy”), and Charge Savvy’s three members (collectively, the ~~“Sellers”~~"Sellers”). One of the Sellers, Ken Haller, was an employee of the Company on the Closing Date. 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~~all- stock transaction consisted of 1,000,000 shares of the Company’s common stock, par value $0.001 per share (the ~~“Common~~"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~~64,000 square foot office building located in Chicago, Illinois where it is headquartered.

~~Name Change~~

On ~~May 3, 2018, PubCo formally changed its name to GreenBox POS LLC, then subsequently changed its name to GreenBox POS on December 13, 2018. Unless~~April 1, 2022, the ~~context otherwise requires, all references to “the~~ Company~~” “we,” “our”, “us”~~ completed the acquisition of Transact Europe Holdings OOD. Transact Europe EAD (TEU) is an EU regulated electronic money institution headquartered in Sofia Bulgaria. TEU is a Principal Level Member of Visa, a Worldwide Member of MasterCard, and ~~“PubCo” refer to GreenBox POS. Unless~~a Principal Member of China UnionPay. In addition, TEU is part of the ~~context otherwise requires, all references to “PrivCo” or~~direct SEPA program. With a global footprint, proprietary payment gateway and technology platforms, TEU offers a comprehensive portfolio of services, and decades of industry experience. TEU provides complete payment solutions by offering acquiring, issuing of prepaid cards and agent banking, serving hundreds of clients. The Company paid approximately $28.8 million (€26.0 million) in total consideration for the ~~“Private Company” refer to GreenBox POS LLC, a limited liability company, formed in the state of Washington.~~purchase.

Basis of Presentation and Consolidation

The accompanying interim consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. The consolidated financial statements include the accounts of RYVYL Inc., Northeast Merchant Systems, Inc., Charge Savvy LLC, and Transact Europe Holdings. All intercompany accounts, transactions, and ~~balances~~profits have been eliminated ~~in the accompanying consolidated financial statements.~~upon consolidation.

Table of Contents

1.	~~DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (continued)~~

Unaudited Interim Financial Information

Certain information and footnote disclosures normally included in the Company’s annual audited financial statements and accompanying notes have been condensed or omitted in these accompanying interim consolidated financial statements and footnotes. Accordingly, the accompanying interim consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s annual report on Form 10-K for the year ended December 31, ~~2020.~~2021.

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The results of operations presented in this quarterly report on Form 10-Q are not necessarily indicative of the results of operations that may be expected for any future periods. In the opinion of management, these unaudited consolidated financial statements include all adjustments and accruals, consisting only of normal, recurring adjustments that are necessary for a fair statement of the results of all interim periods reported herein.

~~COVID-19 considerations~~Segment Reporting

~~In December 2019, a novel strain of coronavirus~~Accounting Standards Codification (“~~COVID-19”~~ASC”) was identified and the disease has since spread across the world. In March 2020, the World Health Organization declared COVID-19 a pandemic. The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains, and created significant volatility and disruption in the280, “Segment Reporting,” requires public companies to report financial and ~~capital markets. The full extent to which~~descriptive information about their reportable operating segments. We identify our operating segments based on how our chief operating decision maker internally evaluates separate financial information, business activities and management responsibility. We have one reportable segment, consisting of the ~~COVID-19 outbreak will impact the Company’s business, results~~sale of operations, financial condition and cash flows will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning COVID-19 and the actions to contain or treat its impact and the economic impact and the economic impact on local, regional, national and international markets. As the COVID-19 pandemic continues, the Company’s results of operations, financial condition and cash flows may be materially adversely affected, particularly if the pandemic persists for a significant period of time.wireless access products.

~~On March 27, 2020~~, We generate revenues from two geographic areas, consisting of North America and Europe. The following enterprise-wide disclosure is prepared on a basis consistent with the ~~Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law. The Act includes provisions relating to refundable payroll tax credits, deferment~~preparation of the employer portion of certain payroll taxes, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. These provisions are not expected to have a material effect on the Company’s unaudited consolidated financial statements. The following table contains certain financial information by geographic area:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
Net revenue:	2022		2021		2022		2021
North America	$	9,493,453	$	8,045,469	$	20,323,166	$	19,174,089
Europe		1,136,238		-		2,167,658		-
Totals	$	10,629,691	$	8,045,469	$	22,490,824	$	19,174,089

	September 30,		December 31,
Long-lived assets, net (property and equipment and intangible assets):	2022		2021
North America	$	23,080,255	$	9,253,819
Europe		1,016,750		-
Totals	$	24,097,005	$	9,253,819

Use of Estimates

The preparation of financial statements in conformity with the GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.

Table of Contents

Foreign Currency Translation

The financial position and results of operations of the Company are determined using the local currency, US Dollar (“$”), as the functional currency. The financial position and results of operations of Transact Europe Holdings, the Bulgaria subsidiary of the Company, are initially recorded using its local currency, Bulgarian Lev (“BGN”). Assets and liabilities denominated in foreign currency are translated to the functional currency at the functional currency rate of exchange at the balance sheet date. The results of operations denominated in foreign currency are translated at the average rate of exchange during the reporting period. The registered equity capital denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. All translation adjustments resulting from the translation of the financial statements into the reporting currency, US Dollar, are recorded as a comprehensive income or loss as a component of accumulated other comprehensive income. As of September30, 2022, the exchange rate was BGN 2.0002 to one US Dollar. The average exchange rate for the three months ended September 30, 2022 was BGN 1.9411 per US Dollar. The Company acquired Transact Europe Holdings on April 1, 2022 and Transact Europe Holdings was consolidated from the date of acquisition which is April 1, 2022.

Cash, Cash Equivalents and Restricted Cash

The Company’s Cash and cash equivalent and Restricted cash represents the following:

●

Cash and cash equivalents consist of cash on hand, cash on deposit with banks, and highly liquid debt investments with a maturity of three months or less when purchased.

●

Restricted Cash – The Company’s technology enables transactional blockchain ledger to instantly reflect all transactions details. The final cash settlement of each transaction is subject to the gateway policies. This final disposition takes days to weeks to complete in accordance with these policies. Each policy is an integral part of the transactional contracts between the Company, its Independent Sales Organizations (ISOs), its agents, and the merchant clients. While the ledger reflects a held balance for the merchant, in reserve or payment in arears, the Company holds funds in a trust account as cash deemed restricted. The Company’s books reflect such restricted cash as a restricted cash and trust accounts, and the sum balance due to merchants and ISOs as settlement liabilities.

The following table provides a reconciliation of Cash and cash equivalents, and Restricted cash reported within the statement of financial position that sum to the total of the same such amounts shown in the statement of cash flows.

	September 30, 2022		December 31, 2021

Cash and cash equivalents	$	11,020,840	$	89,559,695
Restricted cash		26,606,827		-

Total cash, cash equivalents and restricted cash	$	37,627,667	$	89,559,695

Cash Due from Gateways and Payment Processing Liabilities

The Company’s primary source of revenues is payment processing services for its merchant clients. When such merchant makes a sale, the process of receiving the payment card information, engaging the banks for transferring the proceeds to the merchant’s account via digital gateways, and recording the transaction on a blockchain ledger are the activities for which the Company gets to collect fees.

In ~~2021~~2022 and ~~2020~~2021 the Company utilized several gateways. The gateways have strict guidelines pertaining to scheduling of the release of funds to merchants based on several criteria, such as return and chargeback history, associated risk for the specific business vertical, average transaction amount and so on. In order to mitigate processing risks, these policies determine reserve requirements and payment in arrears strategy. While reserve and payment in arrears restrictions are in effect for a merchant payout, the Company records gateway debt against these amounts until released.

Therefore, the total Cash due from gateways on the unaudited consolidated balance sheets represents the amount owed to the Company for processing.

910

Table of Contents

~~GREENBOX POS~~

~~NOTES TO UNAUDITED~~~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(continued)~~

2.	~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)~~

Research and Development Costs

Research and development costs, which are expensed as incurred, are primarily comprised of costs and expenses for salaries and benefits for research and development personnel, outsourced contract services, and supplies and materials costs.

Revenue Recognition

Revenue is recognized upon transfer of control of promised goods or services to the Company’s customers or when the Company satisfies any performance obligations under contract. The amount of revenue reflects the consideration the Company expects to be entitled to in exchange for the respective goods or services provided. Further, under Accounting Standards Codification 606, “Revenue from Contracts with Customers”, (“ASC 606”), contract assets or contract liabilities that arise from past performance but require a further performance before the obligation can be fully satisfied must be identified and recorded on the balance sheet until respective settlements have been met.

The Company’s primary revenue source is generated from payment processing services. Payment processing services 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, at a point in time.

Fair Value of Financial Instruments

The Company assesses the fair value of financial instruments based on the provisions of ASC 820, Fair Value Measurements. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability between market participants on the measurement date. ASC 820 also establishes a hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The standard describes three levels of inputs that may be used to measure fair value:

Level 1- Quoted prices in active markets for identical assets or liabilities.

Level 2- Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3- Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The ~~following table describes the valuation techniques used to calculate the~~Company did not have any Level 1 and Level 2 fair value ~~for assets in~~measurement. The Company had the following Level ~~3. The significant unobservable input used in the fair value measurement of the Company’s identifiable intangible assets is discount rate. The change in this input could result in a change of~~3 fair value measurement:

Fair Value at May 21, 2021

Valuation Technique

Unobservable Input

Range

Customer Relationship
$ 276,583
Multiple-period excess earnings method

Discount rate
15.90
%

	Fair Value at September 30, 2022

Customer Relationship	$	25,196,976
Business intellectual properties	$	2,674,851
Derivative Liability	$	2,520,127

	Fair Value at July 13, 2021		Valuation Technique	Unobservable Input	Range			Fair Value at December 31, 2021

Customer Relationship	$	5,543,612	Multiple-period excess earnings method	Discount rate		55.70	%	$	5,820,195
Business Technology/IP	$	2,611,088	Royalty relief method	Discount rate		53.70	%	$	2,611,088
Derivative liability								$	18,735,000

1011

Table of Contents

~~GREENBOX POS~~

~~NOTES TO UNAUDITED~~~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~Prepaid and other current assets

~~(continued)~~

2.	~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)~~

Prepaid expenses include the prepayment of various operating expenses such as insurance and income and property taxes which are expensed when the operating cost is realized.

Other current assets include the income receivable, loan receivable, security deposit and other assets.

Goodwill and Other Intangible Assets

The Company accounts for acquisitions of businesses in accordance with the acquisition method. Goodwill represents the excess of the purchase price of acquired businesses over the fair value of the identifiable assets acquired and liabilities assumed. Acquisition costs are expensed as incurred.

Goodwill and other intangible assets acquired in a business combination determined to have an indefinite useful life are generally not amortized, but instead are tested for impairment at least annually and more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value.

Other intangible assets with estimable useful lives are amortized over their respective estimated useful lives to their estimated residual values.

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever management believes that events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. To the extent that the carrying value is determined to be unrecoverable, an impairment loss is recognized through a charge to expense. As of ~~December 31, 2020,~~September 30, 2022, the Company does not believe that impairment indicators are present, and accordingly, based on this assessment, no further impairment analysis was performed.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred income taxes are recognized for temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, net of operating loss carry forwards and credits, by applying enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. As of September 30, ~~2021,~~2022, we have no material unrecognized tax benefits, and we expect no material unrecognized tax benefits for the next 12 months.

Earnings Per Share

A basic earnings per share is computed by dividing net income to common stockholders by the weighted average number of shares outstanding for the year. Dilutive earnings per share include the effect of any potentially dilutive debt or equity under the treasury stock method, if including such instruments is dilutive. The Company’s diluted earnings/loss per share is the same as the basic earnings/loss per share for the three and ~~nine~~six months ended September 30, ~~2021~~2022 and ~~2020,~~2021, as there are no potential shares outstanding other than options that would have a dilutive effect.

~~Reverse Common Stock Split (1 for 6)~~

On February 17, 2021, the Company effected a reverse stock split of the Company’s shares of common stock outstanding and a proportional decrease of the Company’s authorized shares of common stock at a ratio of one-for-six (the “Stock Split”). Following the Stock Split, the Company has 82,500,000 shares of common stock authorized (the number of authorized shares of Preferred Stock remains 5,000,000). As a result, common shares information has been retrospectively restated accordingly in the financial statements as of and for the three and nine months ended September 30, 2020.

~~Table of Contents~~

~~GREENBOX POS~~

~~NOTES TO UNAUDITED~~~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(continued)~~

2.	~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)~~

Recently Adopted Accounting Updates

In ~~August 2018,~~November 2021, the ~~Financial~~FASB issued ASU 2021-10 “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance,” which created FASB ASC Topic 832, Government Assistance (ASC 832). ASC 832 requires business entities to disclose information about certain government assistance they receive. The Company adopted this standard on January 1, 2022 and determined there was no material impact on the Company's condensed consolidated financial statements.

Recent Accounting ~~Standards Board (“FASB”)~~Pronouncements Not Yet Adopted

In October 2021, the FASB issued ASU 2021-08, "Business Combinations (Topic 805): Accounting ~~Standards Update (“ASU”) No. 2018-13, Fair Value Measurements (Topic 820): Disclosure Framework—Changes~~for Contract Assets and Contract Liabilities from Contracts with Customers," which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the ~~Disclosure Requirements for Fair Value Measurement. This standard removes, modifies, and adds certain disclosure requirements for fair value measurements, and~~acquirer on the acquisition date in accordance with ASC 606, "Revenue from Contracts with Customers," as if the acquirer had originated the contracts. ASU 2021-08 is effective for fiscal years and ~~for~~ interim reporting periods within those fiscal years beginning after December 15, 2019, with early adoption permitted. The Company adopted ASU No. 2018-13 in the first quarter of fiscal 2020, coinciding with the standard’s effective date, and the adoption did not have any impact to the Company’s financial statements.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The Company’s accounting for the service element of a hosting arrangement that is a service contract is not affected by the proposed amendments and will continue to be expensed as incurred in accordance with existing guidance. This standard does not expand on existing disclosure requirements except to require a description of the nature of hosting arrangements that are service contracts. This standard is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019, and can be adopted either prospectively or retrospectively. Accordingly, the Company adopted the updated disclosure requirements of ASU No. 2018-15 prospectively in the first quarter of fiscal 2020, coinciding with the standard’s effective date, and the adoption did not have any impact to the Company’s financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes. This standard simplifies the accounting for income taxes by removing certain exceptions to the general principles in ASC 740, Income Taxes, while also clarifying and amending existing guidance, including interim-period accounting for enacted changes in tax law. This standard is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company adopted ASU No. 2019-12 in the first quarter of fiscal 2020 and the adoption did not have any impact to the Company’s financial statements.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848)—Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This standard provides optional guidance for a limited time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in this standard apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. ~~The amendments in this standard are elective and are effective upon issuance for all entities.~~ The Company is currently evaluating the ~~expedients~~effect, if any, the adoption of this guidance will have on our financial condition, results of operations, cash flows and ~~exceptions provided by the amendments in this standard to determine their impact.~~

~~Other recently issued accounting updates are not expected to have a material impact on the Company’s Interim Financial Statements.~~

3.	~~ACQUISITIONS~~

On May 21, 2021, the Company acquired all the outstanding stock of Northeast Merchant Systems, Inc. (“Northeast”). Northeast is a merchant services company providing merchant credit card processing through their own Bank Identification Number (BIN) with the acquiring bank Merrick. This involves inside operations for new merchants that include sales assistance and applications processing, underwriting, and onboarding; inside operations for existing merchants include risk monitoring and customer service. Outside operations include: equipment service or replacement; sales calls and applications; site inspections and identity verification; security verification; and on-site customer service and technical support.

~~Preliminary Purchase Price Allocation~~

The acquisition qualified as a business combination and was accounted for using the acquisition method. Accordingly, the total fair value of consideration transferred of $2,500,000 for the acquisition was allocated to the net tangible, intangible and liabilities acquired using fair value estimates at the date of acquisition. The excess of the purchase price over the fair value of the net tangible and intangible assets acquired was allocated to goodwill, which is taxable.disclosures.

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~~GREENBOX POS~~The FASB issued ASU 2020-06 (“Update”) to simplify the accounting for convertible instruments by eliminating large sections of the existing guidance in this area. It also eliminates several triggers for derivative accounting, including a requirement to settle certain contracts by delivering registered shares. These changes are intended to make GAAP easier to apply and, therefore, reduce the frequency of errors in this part of the literature. Early adoption is permitted for fiscal years beginning after December 15, 2020. For SEC filers, excluding smaller reporting companies, this Update is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, this Update is effective for fiscal years beginning after December 15, 2023, including interim periods therein. The Company is evaluating the impact of this guidance on its consolidated financial statements.

~~NOTES TO UNAUDITED~~~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(continued)~~In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses”. The standard, including subsequently issued amendments (ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-10 and ASU 2019-11), requires a financial asset measured at amortized cost basis, such as accounts receivable and certain other financial assets, to be presented at the net amount expected to be collected based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. In November 2019, the FASB issued ASU No. 2019-10 to postpone the effective date of ASU No. 2016-13 for public business entities eligible to be smaller reporting companies defined by the SEC to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is evaluating the impact of this guidance on its consolidated financial statements.

3.	~~ACQUISITIONS (continued)~~COVID-19 UPDATE

In December 2019, a novel strain of coronavirus (“COVID-19”) was identified and the disease has since spread across the world. In March 2020, the World Health Organization declared COVID-19 a pandemic. The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains, and created significant volatility and disruption in the financial and capital markets. The full extent to which the COVID-19 outbreak will impact the Company’s business, results of operations, financial condition and cash flows will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning COVID-19 and the actions to contain or treat its impact and the economic impact and the economic impact on local, regional, national and international markets. As the COVID-19 pandemic continues, the Company’s results of operations, financial condition and cash flows may be materially adversely affected, particularly if the pandemic persists for a significant period of time.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law. The Act includes provisions relating to refundable payroll tax credits, deferment of the employer portion of certain payroll taxes, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. These provisions are not expected to have a material effect on the Company’s unaudited consolidated financial statements.

On April 29, 2020, the Company entered into a loan agreement with Preferred Bank under Paycheck Protection Program administered by SBA in the amount of $272,713. Under this loan program, the loan may be forgiven if utilized for specific purpose specified under the CARES Act and PPP guideline. The loan bears interest of 1.00% per annum and matures on April 29, 2022. The loan was forgiven on November 8, 2021.

4.	ACQUISITIONS

On April 1, 2022, the Company acquired Transact Europe Holdings for approximately $28.8 million (€26.0 million) in cash. Transact Europe EAD (TEU), an EU regulated electronic money institution headquartered in Sofia, Bulgaria, boasts an array of licenses such as principal level membership of Visa, worldwide membership of MasterCard, and principal membership of China UnionPay. TEU is also part of the direct SEPA (Single Euro Payments Area), a payment system enabling cashless payments across continental Europe. The Company paid approximately $28.8 million as on April 1, 2022. The $28.8 million paid as of June 30, 2022.

The following summarizes the estimated fair values of the net assets acquired which is recorded as of April 1, 2022:

Tangible assets (liabilities):
Net assets and liabilities	$	7,465,907


Intangible assets:
Customer relationships		1,266,781
Goodwill		20,077,912
		21,344,693

Total net assets acquired	$	28,810,600

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The following summarizes the estimated fair values of the net assets acquired:

Tangible assets (liabilities):

Net assets and liabilities
$ (70,057
)

Intangible assets:

Customer relationships
276,583
Goodwill
2,293,474
2,570,057

Total net assets acquired
$ 2,500,000

The acquisition was funded through cash on hand, and there were no costs associated with the acquisition. The agreement also provides for a future additional contingent purchase price payment (earn-out) of $500,000, which is derived using the performance of Northeast and is based on a predetermined formula. The Company believes that is unlikely that the targets will be achieved and, accordingly, has not adjusted the purchase price or provided an accrual for this contingency.

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.

~~Preliminary Purchase Price Allocation~~

The acquisition qualified as a business combination and was accounted for using the acquisition method. Accordingly, the total fair value of consideration transferred of $12,140,000 for the acquisition was allocated to the net tangible, intangible and liabilities acquired using fair value estimates at the date of acquisition. The excess of the purchase price over the fair value of the net tangible and intangible assets acquired was allocated to goodwill, which is taxable.

~~The following summarizes the estimated fair values of the net assets acquired:~~

Tangible assets (liabilities):

Net assets and liabilities
$ (375,681
)
Land/Building
604,968
229,287

Intangible assets:

Customer relationships
5,543,612
Business Technology/IP
2,611,088
Goodwill
3,756,013
11,910,713

Total net assets acquired
$ 12,140,000

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~~GREENBOX POS~~

~~NOTES TO UNAUDITED~~~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(continued)~~

Intangible assets:
Customer relationships		$	18,110,000

4.5.	SETTLEMENT PROCESSING

The Company’s proprietary blockchain-based technology serves as the settlement engine for all transactions within the Company’s ecosystem. The blockchain ledger provides a robust and secure platform to log immense volumes of immutable transactional records in real time. Generally speaking, blockchain is a distributed ledger that uses digitally encrypted keys to verify, secure and record details of each transaction conducted within an ecosystem. Unlike general blockchain-based systems, ~~GreenBox~~RYVYL Inc. uses proprietary, private ledger technology to verify every transaction conducted within the ~~GreenBox~~RYVYL Inc. ecosystem. The verification of transaction data comes from trusted partners, all of whom have been extensively vetted by us. ~~GreenBox~~RYVYL Inc. facilitates all financial elements of our closed-loop ecosystem and we act as the administrator for all related accounts. Using our TrustGateway technology, we seek authorization and settlement for each transaction from Gateways to the issuing bank responsible for the credit/debit card used in the transaction. When the Gateway settles the transaction, our TrustGateway technology composes a chain of blockchain instructions to our ledger manager system.

When consumers use credit/debit cards to pay for transactions with merchants who use our ecosystem, the transaction starts with the consumer purchasing tokens from us. The issuance of tokens is accomplished when we load a virtual wallet with a token, which then transfers credits to the merchant’s wallet on a ~~dollar for dollar~~dollar-for-dollar basis, after which the merchant releases its goods or services to the consumer. These transfers take place instantaneously and seamlessly, allowing the transaction experience to seem like any other ordinary credit/debit card transaction to the consumer and merchant. While our blockchain ledger records transaction details instantaneously, the final cash settlement of each transaction can take days to weeks, depending upon contract terms between us and the gateways we use, between us and our ISOs, and between us and/or our ISOs and merchants who use our services. In the case where we have received transaction funds, but not yet paid a merchant or an ISO, we hold funds in either a trust account or as cash deemed restricted within our operating accounts. We record the total of such funds as Cash due from gateways, net – a Current Asset. Of these funds, we record the sum balance due to Merchants and ISOs as Payment processing liabilities, net – a Current Liability.

5.	~~GOODWILL~~

~~As of September 30, 2021 goodwill and intangible assets consists of the following:~~

September 30, 2021

Acquisition of Northeast
$ 2,293,474
Acquisition of ChargeSavvy
$ 3,756, 013
Total
$ 6,049,487

6.	~~INTANGIBLE~~PREPAIDS AND OTHER CURRENT ASSETS

As of September 30, ~~2021 goodwill~~2022, prepaids and ~~intangible~~other current assets consists of the following:

September 30, 2021

Amortization Period

Cost

Accumulated Amortization

Net

Customer relationships
5 years
$ 5,820,195 $ (308,297 ) $ 5,511,898
Business Technology/IP
5 years
$ 2,611,088 $ (130,554 ) $ 2,480,534

Total goodwill and intangibles
$ 7,992,432

	September 30, 2022		December 31, 2021

Prepaid expenses	$	450,251	$	76,127
Income receivable		685,332		-
Loan receivable		6,410,000		5,590,000
Gateway deposit		6,148,756		-
Security deposit		18,316		18,316
Other current assets		855,137		736,253

Total prepaids and other current assets	$	14,567,792	$	6,420,696

7.	PROPERTY AND EQUIPMENT, NET

Property and equipment consisted of the following:

	September 30, 2022			December 31, 2021
Land and building	$	1,360,000		$	1,360,000
Computers		222,156			134,982
Furniture and fixtures		149,367			108,715
Vehicles, machinery and equipment		15,315			13,519
Improvements		140,300			140,300
Total property and equipment		1,887,138			1,757,516
Less: accumulated depreciation		(184,966	)		(82,632	)
Net property and equipment	$	1,702,172		$	1,674,884

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~~GREENBOX POS~~

~~NOTES TO UNAUDITED~~~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(continued)~~

6.	~~INTANGIBLE ASSETS (continued)~~

~~Intangible assets with finite lives are amortized over the estimated periods benefitted on a straight- line basis. Amortization~~Depreciation expense ~~on intangible assets with finite lives~~was $35,217 and $79,873 for the ~~period from May 21,~~three months ended September 30, 2022 and 2021, ~~(the acquisition date of Northeast) to~~respectively. Depreciation expense was $102,334 and $93,211 for the nine months ended September 30, 2021, was $846,586 and is included in depreciation and amortization expense in the unaudited condensed consolidated statement of operations and comprehensive loss. Amortization expense related to intangible assets for each of the next five fiscal years and thereafter is expected as follows:

Years Ending

December 31,

2021

$
421,564

2022

1,686,257

2023

1,686,257

2024

1,686,257

2025

1,686,257

Thereafter

825,840

$
7,992,432

7.	~~CONVERTIBLE NOTES PAYABLE~~

~~Convertible notes payable consisted of the following:~~

September 30,
2021

December 31,
2020

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

Total convertible notes payable
- 3,850,000
Debt discount
- (2,993,408
)

Total convertible notes payable, net of debt discount
$ - $ 856,592

~~Kingswood Capital (Syndicate Convertible Note) - $3,850,000~~

On October 27, 2020, the Company issued a convertible promissory note for $3,850,000 to various lenders through its placement agent, Kingswood Capital (“Kingswood Note”), due July 27, 2021 (the “Maturity Date”) with conversion price to common stock of $1.98 per share. The Kingswood Note included an original issue discount of $350,000, netting the balance received by the Company from Kingswood Note at $3,500,000. The Company also provided warrant of 1,944,444 with a fixed exercise price to common stock of $1.98 per share under the Kingswood Note. The Company valued its warrant of 1,944,444 with fixed exercise price of $1.98 using Black-Scholes valuation method which amounted to $3,498,667 and recorded as a debt discount at the time of issuance of warrant. The convertible debt was converted in February 2021.respectively.

8.	~~PAYROLL PROTECTION PROGRAM LOAN~~GOODWILL

~~On April 29, 2020,~~The Company tests goodwill during the fourth quarter of each year or more often if events or circumstances indicate there may be impairment. The Company only has one reporting unit. The Company performs its analysis in accordance with the provisions of FASB ASC Topic 350, Intangibles—Goodwill and Other (ASC 350). This guidance provides the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If, based on a review of qualitative factors, it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company ~~obtained~~performs a ~~$272,713, 2-year loan from~~goodwill impairment test by comparing the carrying value of its reporting unit to its fair value. The Company determines the estimated fair value of the reporting unit using a ~~regional bank (the “Lender”) pursuant~~discounted cash flow analysis. The fair value of the reporting unit is the implied fair value of goodwill. In the event the reporting unit's carrying value exceeds its fair value, an impairment loss will be recognized. An impairment loss is measured by the difference between the carrying value of the reporting unit and its fair value.

As of September 30, 2022, goodwill assets consisted of the following:

	September 30, 2022		December 31, 2021
Acquisition of Northeast	$	2,793,474	$	2,293,474
Acquisition of ChargeSavvy		3,754,560		3,754,560
Acquisition of Transact Europe		20,077,912		-

Total goodwill	$	26,625,946	$	6,048,034

The Company recorded $500,000 as a good-will adjustment related to the ~~U.S. Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) under Title 1~~earn-out provided during the nine months ended September 30, 2022 related to the acquisition of Northeast.

9.	INTANGIBLE ASSETS

As of September 30, 2022 intangible assets consists of the ~~CARES Act. The loan bears interest of 1.00% per annum~~following:

		As of September 30, 2022							As of December 31, 2021
Intangible Assets	Amortization Period	Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net

Customer relationships	2 to 5 years	$	25,196,976	$	(4,817,847	)	$	20,397,129	$	5,820,195	$	(591,239	)	$	5,228,956
Business technology/IP	5 years		2,674,851		(659,147	)		2,015,704		2,611,088		(261,109	)		2,349,979

Total intangible assets		$	27,871,827	$	(5,458,444	)	$	22,394,833	$	8,431,283	$	(852,348	)	$	7,578,935

Amortization expense was $2,110,815 and ~~no payments were due~~$431,936 for the ~~first six months. The Company certified in~~three months ended September 30, 2022 and 2021, respectively. Amortization expense was $464,646 and $438,851 for the ~~Application that 100%~~nine months ended September 30, 2022 and 2021, respectively.

Estimated amortization expense for each of the ~~loaned funds were utilized during the 24-week covered period commencing April 29, 2020 to pay for qualified payroll and payroll related costs, and~~years ending December 31 is as ~~such, requested that the entire principal balance be forgiven. The Company expects the entire PPP loan to be forgiven and the Company is awaiting SBA approval to extinguish the loan.~~follows:

Year	Amount
2022 (remainder)	$	2,092,267
2023		8,369,068
2024		7,894,024
2025		3,208,176
2026		831,298
Total	$	22,394,833

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~~GREENBOX POS~~

~~NOTES TO UNAUDITED~~~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(continued)~~

9.10.

LONG-TERM ~~DEBT~~DEBTS

Long-term debt consisted of the following:

	As of September 30, 2022		As of December 31, 2021

$149,900 Economic Injury Disaster Loan (EIDL), interest rate of 3.75%, due June 1, 2050	$	149,900	$	149,900
$500,000 EIDL, interest rate of 3.75%, due May 8, 2050		500,000		500,000

Total long-term debts		649,900		649,900
Less: current portion		12,870		-

Net long-term debts	$	637,030	$	649,900

SBA CARES Act Loans - $649,900

On June 9, 2020, the Company entered into a 30 year loan agreement with the SBA under the CARES Act in the amount of $149,900. The loan bears interest at 3.75% per annum and requires monthly principal and interest payments of $731 beginning June 9, 2021. Both the Chief Executive Officer and Chairman of the Company signed personal guarantees under this loan.

On May 8, 2020, Charge Savvy executed the standard loan documents required for securing a loan (the “EIDL Loan”) from the SBA under its Economic Injury Disaster Loan (“EIDL”) assistance program in light of the impact of the COVID-19 pandemic on the TNB’s business. As of December 31, 2020, the loan payable, Emergency Injury Disaster Loan noted above is not in default.

Pursuant to that certain Loan Authorization and Agreement (the “SBA Loan Agreement”), Charge Savvy borrowed an aggregate principal amount of the EIDL Loan of $150,000, with proceeds to be used for working capital purposes. Interest accrues at the rate of 3.75% per annum and will accrue only on funds actually advanced from the date of each advance. Installment payments, including principal and interest, are due monthly beginning May 8, 2021 (twelve months from the date of the SBA Loan) in the amount of $731. The balance of principal and interest is payable thirty years from the date of the SBA Loan. In connection therewith, the Company also received a $10,000 grant, which does not have to be repaid. During the year ended December 31, 2020, $10,000 was recorded in Economy injury disaster loan (EIDL) grant income in the Statements of Operations. On Aug 24, 2021, Charge Savvy was granted an increase in loan principal in the amount of $350,000 on identical terms.

In connection therewith, Charge Savvy executed (i) loans for the benefit of the SBA (the “SBA Loan”), which contains customary events of default and (ii) Security Agreements, granting the SBA a security interest in all tangible and intangible personal property of Charge Savvy, which also contains customary events of default (the “SBA Security Agreement”).

Due to the continued adverse effects of the COVID-19 emergency, on March 15, 2022 the SBA extended the previously deferments granted to COVID EDIL Borrowers to provide an additional 6-month deferment of principal and interest payments on the COVID EDILs. The 6-month deferment extension is effective for all COVID EDILs approved in calendar years 2020, 2021 and 2022. Payments on the $149,900 EDIL are scheduled to begin on December 3, 2022 and payments on the $500,000 EDIL are scheduled to begin on November 8, 2022.

~~10.~~11.

~~STOCK OPTION AWARDS~~CONVERTIBLE DEBT

~~The~~On November 3, 2021, the Company ~~adopted~~entered into convertible debt with the 2020 Incentive and Non-statutory Stock Option Plan (“2020 Plan”) in June 2020, which provided for the grant of incentive stock options and nonqualified stock options to our employees and directors. The 2020 Plan provides for up to 3.3 million shares of Common Stock. Options granted under the 2020 Plan generally have a term of ten years and generally vest and become exercisable at various times from the option grant dates. The 2020 Plan provide for the grant of incentive stock options, non-qualified stock options and restricted stock to our employees, directors and independent contractors. These options will have such vesting or other provisions as may be established by the Board of Directors at the time of each grant.following terms:

The Company applies the provisions of ASC 718, “Compensation - Stock Compensation,” using a modified prospective application, and the Black-Scholes model to value stock options. Under this application, the Company records compensation expense for all awards granted. Compensation costs will be recognized over the period that an employee provides service in exchange for the award.

~~The fair value of each share option award on the date of grant was estimated using the Black-Scholes method based on the following weighted-average assumptions:~~

September 30, 2021

December 31, 2020

Risk-free interest rate
0.29
%
0.29
%
Expected term

5 years

5 years

Expected volatility
396.64
%
289.33% to 279.18
%
Expected dividend yield
- -

The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected term of the option award; the expected term represents the weighted-average period of time that option awards granted are expected to be outstanding giving consideration to vesting schedules and historical participant exercise behavior; the expected volatility is based upon historical volatility of the Company’s common stock; and the expected dividend yield is based upon the Company’s dividend rate at the time fair value is measured and future expectations.

The Company recorded stock compensation expense for employees of $5,867,072 and $0 for the nine months ended September 30, 2021 and 2020, respectively, and $3,777,572 and $0 for the three months ended September 30, 2021 and 2020, respectively. The Company recorded stock compensation expense for services of $10,418,996 and $4,130 for the nine months ended September 30, 2021 and 2020, respectively, and $238,238 and $0 for the three months ended September 30, 2021 and 2020, respectively.

●

Face value of the convertible debt of $100,000,000

●

Original issue discount of 16% of the face value of the debt which amounted to $16,000,000

●

Interest at the rate of 8% per annum payable in cash quarterly in arrears on the first trading day of each calendar quarter on the outstanding balance. The interest rate of the Notes will automatically increase to 15% per annum upon the occurrence and continuance of an event of default.

●

Maturity date of November 202, which was extended to November 2024 as part of the Restructuring Agreement entered into between the Company and the Investor on August 16, 2022.

●

Certain conversion features.

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~~GREENBOX POS~~Convertible debt consisted of the following:

	As of September 30, 2022			As of December 31, 2021

Convertible debt balance	$	85,450,000		$	100,000,000

Debt discount:
Derivative liability		(21,580,000	)		(21,580,000	)
Original issue discount of 16%		(16,000,000	)		(16,000,000	)
Placement fees and issuance costs		(7,240,000	)		(7,200,000	)
Total debt discount		(44,820,000	)		(44,780,000	)
Accumulated accretion		14,974,982			3,435,178
Derecognition upon conversion		3,056,472			-
Net debt discount after accretion		(26,788,546	)		(41,344,822	)

Convertible debt balance, net of debt discount	$	58,661,454		$	58,655,178

The Company recorded accretion expense as interest expense in the amount of $436,817 and $0 for the three months ended September 30, 2022 and 2021, respectively. The Company recorded accretion expense as interest expense in the amount of $11,539,803 and $0 for the nine months ended September 30, 2022 and 2021, respectively. The Company incurred interest expense of $906,962 and $0 for the three months ended September 30, 2022 and 2021, respectively. The Company incurred interest expense of $662,463 and $0 for the nine months ended September 30, 2022 and 2021, respectively.

The Company sold and issued, in a registered direct offering, an 8% senior convertible note due November 3, 2023 in the aggregate original principal amount of $100 million (the “Note”). The Note had an original issue discount of sixteen percent (16%) resulting in gross proceeds of $84 million. The Note was sold pursuant to the terms of a Securities Purchase Agreement, dated November 2, 2021 (the “SPA”), between The Company and the investor in the Note (the “Investor”).

The Note was issued on November 8, 2021, pursuant to an indenture dated November 2, 2021 between the Company and Wilmington Savings Fund Society, FSB, as trustee (the “Base Indenture”), as supplemented by a first supplemental indenture thereto, dated November 2, 2021, relating to the Notes (the “First Supplemental Indenture” and, the Base Indenture as supplemented by the First Supplemental Indenture, the “First Indenture”). The terms of the Note include those provided in the First Indenture and those made part of the First Indenture by reference to the Trust Indenture Act.

On January 28, 2022, we and the Investor, entered into an Agreement and Waiver (the “Waiver”) with regard to the Note that had the following major provisions:

	a)	the Investor agreed to extend the “90 Day Eligibility Date” from February 3, 2022 to May 2, 2022 such that the Investor could no longer, if the closing price of the stock was less than $5.50, convert up to $30 million of the Note into shares of the Company’s common stock (with the conversion price being the lower of (i) the then in effect conversion price and (ii) the greater of (x) the Note’s $1.67 floor price or (y) 98% of the market price on the conversion date) (the “Alternate Optional Conversion Price”) prior to May 2, 2022;

	b)	allowed us to acquire, for cancellation, $6 million in in aggregate principal amount of the Note for a purchase price of $6.9 million such that the new principal amount of the Note was $94 million;

	c)	lowered the initial fixed conversion price of the Note from $15 to $12; and

	d)	if the trading volume of our common stock on any individual trading day was over $5 million (the “Alternate Conversion Company Waiver Measuring Date”), allowed the Investor an opportunity to convert up to $5 million of the Note into shares of our common stock from the Alternate Conversion Company Waiver Measuring Date through and including 7:00 PM ET on the immediately following trading day. The conversion price would be the lower of (i) the then in effect conversion price and (ii) the greater of (x) the Note’s $1.67 floor price or (y) 98% of the market price on the conversion date.

The Company paid the investor $6.0 million on January 31, 2022 and $900,000 fee associated with the Waiver.

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~~NOTES TO UNAUDITED~~~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~The foregoing description of the Waiver does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Waiver, a copy of which was attached as Exhibit 10.1 to the Current Report on Form 8-K filed on January 31, 2022.

On August 16, 2022, we and the Investor entered into a Restructuring Agreement (the “Restructuring Agreement”) that had the following major provisions:

the Investor agreed to forbear from requiring the repayment of the Note (to the extent such repayment obligation arises solely as a result of the occurrence of the maturity date and not with respect to any event of default or redemption right in the Note or pursuant to the First Indenture) during the period commencing on November 5, 2023 through, and including, November 5, 2024;

with respect to interest dates on and after October 3, 2022, subject to the satisfaction of certain equity conditions, unless the Company delivers a written notice to the Investor specifying that the interest due on such interest date shall be paid in cash, on the applicable interest date, the Company shall issue shares of its common stock, solely with respect to such applicable interest due on such interest date, at a conversion price equal to 95% of the lower of (i) the then in effect conversion price and (ii) the lowest volume weighted average price of our common stock during the five trading days immediately prior to such conversion;

the Company and the Investor agreed that, effective as of August 16, 2022, the Investor would convert $500,000 of principal (together with any accrued and unpaid interest thereon) of the Note into shares of the Company’s common stock at a conversion price equal to the lower of (i) the then in effect conversion price and (ii) the lowest volume weighted average price of our common stock during the five trading days immediately prior to such conversion. The Investor received 495,099 shares of common stock as a result of the conversion price equaling $1.02.

the Company and the Investor agreed that, with respect to each conversion after August 16, 2022, but not in excess of $4.5 million of principal (together with any accrued and unpaid interest thereon) of the Note, in the aggregate (excluding any interest converted in accordance with the Restructuring Agreement), on each applicable conversion date, the conversion price will equal the lesser of (i) $2.40 and (ii) 97.5% of the lower of (x) the then in effect conversion price and (y) the lowest volume weighted average price of our common stock during the five trading days immediately prior to such conversion; and

with respect to the Company’s proposed amendment of its Amended and Restated Articles of Incorporation and Amended and Restated By-laws with respect to and in connection with the Company’s proposed name change and increase in the number of authorized shares of the Company (the “Voting Proposal”), the Investor agreed to vote any shares of common stock held by it on the record date of the Voting Proposal in favor of the Voting Proposal.

The foregoing description of the Restructuring Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Restructuring Agreement, a copy of which was attached as Exhibit 10.1 to the Current Report on Form 8-K filed on August 16, 2022.

Both the Waiver and Restructuring Agreement were accounted for as debt modifications, as the before and after cash flows were not significantly different.

During the nine months ended September 30, 2022, the lender converted $8,635,333 of the outstanding balance (including accrued and unpaid interest) into 5,986,954 shares of common stock for an average conversion price of $1.44. During the three and nine months ended September 30, 2022, the lender converted $3,585,978 and $5,067,355 of the outstanding balance (including accrued and unpaid interest) into 3,573,854 and 5,986,854 shares of common stock for an average conversion price of $1.00, respectively. These conversions were accounted for as partial extinguishments of the debt because the conversion features were separately recognized as a derivative liability. As a result, the Company recorded extinguishment losses in the amount of $5,709,672 during the three and nine months ended September 30, 2022. Pursuant to the terms of the Restructuring Agreement, the investor can convert up to another $1,450,000 of the Note at a conversion price that is the lower of (i) $2.40 and (ii) 97.5% of the lower of (x) the then in effect conversion price and (y) the lowest volume weighted average price of our common stock during the five trading days immediately prior to such conversion.

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~~(continued)~~Thereafter, if the Company’s common stock closing price remains under $5.50 (prior to November 8, 2022) or $6.50 (on and after November 8, 2022), the investor can convert up to another $20,000,000 of the note at a conversion price that is the lower of (i) the then in effect conversion price and (ii) the greater of (x) the Note’s $1.67 floor price or (y) 98% of the market price on the conversion date.

Ranking

The Note is the senior unsecured obligations of the Company and not the financial obligations of our subsidiaries. Until such date as the principal amount of the Note is $5 million or less, all payments due under the Note will be senior to all other indebtedness of the Company and/or any of our subsidiaries.

Maturity Date

Under its original terms, unless earlier converted, or redeemed, the Note was to mature on November 3, 2023, the second anniversary of the issuance date, which we refer to herein as the “Maturity Date”, subject to the right of the Investors to extend the date:

(i) if an event of default under the Note has occurred and is continuing (or any event shall have occurred and be continuing that with the passage of time and the failure to cure would result in an event of default under the Note) and

(ii) for a period of 20 business days after the consummation of a fundamental transaction if certain events occur.

We are required to pay, on the Maturity Date, all outstanding principal, accrued and unpaid interest and accrued and unpaid late charges on such principal and interest, if any.

As part of the Restructuring Agreement entered into with the Investor on August 16, 2022, the Company obtained a forbearance of the Maturity Date from November 5, 2023 to November 5, 2024.

Interest

The Note bears interest at the rate of 8% per annum which (a) shall commence accruing on the date of issuance, (b) shall be computed on the basis of a 360-day year and twelve 30-day months and (c) shall be payable in cash quarterly in arrears on the first trading day of each calendar quarter or otherwise in accordance with the terms of the Note. If the holder elects to convert or redeem all or any portion of the Note prior to the Maturity Date, all accrued and unpaid interest on the amount being converted or redeemed will also be payable. If we elect to redeem all or any portion of the Note prior to the Maturity Date, all accrued and unpaid interest on the amount being redeemed will also be payable. The interest rate of the Note will automatically increase to 15% per annum upon the occurrence and continuance of an event of default (See “-- Events of Default” below).

Subject to the satisfaction of certain equity conditions, the terms of the Restructuring Agreement require the holder to voluntarily convert certain interest payments when due under the Note at 95% if the lower of (i) the then in effect conversion price and (ii) the lowest volume weighted average price of our common stock during the five trading days immediately prior to such conversion.

Late Charges

We are required to pay a late charge of 15% on any amount of principal or other amounts that are not paid when due.

Conversion

Fixed Conversions at Option of Holder

The holder of the Note may convert all, or any part, of the outstanding principal and interest of the Note, at any time at such holder’s option, into shares of our common stock at an initial fixed conversion price, which is subject to:

●

proportional adjustment upon the occurrence of any stock split, stock dividend, stock combination and/or similar transactions; and

●

full-ratchet adjustment in connection a subsequent offering at a per share price less than the fixed conversion price then in effect.

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First Quarter Adjustment to Fixed Conversion Price

Pursuant to the original terms of the Note, since during the fiscal quarter ending March 31, 2022, the Company (i) failed to process at least $750 million in transaction volume or (ii) had revenue that was less than $12 million, and the Note’s fixed conversion price then in effect was greater than the greater of (x) the Note's $1.67 floor and (y) 140% of the market price as of April 1, 2022 (the “Adjustment Measuring Price”) on April 1, 2022, the fixed conversion price automatically adjusted to the Adjustment Measuring Price.

As part of the Restructuring Agreement entered into with the Investor on August 16, 2022, the Company agreed to allow for the conversion of up to $4.5 million of principal (together with any accrued and unpaid interest thereon) of the Note a conversion price equal to the lesser of (i) $2.40 and (ii) 97.5% of the lower of (x) the then in effect conversion price and (y) the lowest volume weighted average price of our common stock during the five trading days immediately prior to such conversion.

1-Year Alternate Optional Conversion

At any time following the first anniversary of the issuance date of the Note, but only if the closing bid price of our common stock on the immediately prior trading day is less than $6.50, the holder of the Note shall have the option to convert, at such holder’s option, pro rata, up to $30 million of the principal amount of the Note (in $250,000 increments) at the Alternate Optional Conversion Price.

Alternate Event of Default Optional Conversion

If an event of default has occurred under the Note, the holder may alternatively elect to convert the Note (subject to an additional 15% redemption premium) at the “Alternate Event of Default Conversion Price” equal to the lesser of:

●

the fixed conversion price then in effect; and

the greater of:

●

the floor price; and

●

80% of the lowest volume weighted average price of our common stock during the five trading days immediately prior to such conversion.

Beneficial Ownership Limitation

The Note may not be converted and shares of common stock may not be issued under the Note if, after giving effect to the conversion or issuance, the applicable holder of the Note (together with its affiliates, if any) would beneficially own in excess of 4.99% of the Company’s outstanding shares of common stock, which is referred to herein as the “Note Blocker”. The Note Blocker may be raised or lowered to any other percentage not in excess of 9.99% at the option of the applicable holder of Notes, except that any raise will only be effective upon 61-days’ prior notice to us.

Change of Control Redemption Right

In connection with a change of control of the Company, the holder may require us to redeem in cash all, or any portion, of the Notes at a 15% redemption premium to the greater of the face value, the equity value of our common stock underlying the Notes and the equity value of the change of control consideration payable to the holder of our common stock underlying the Notes.

The equity value of our common stock underlying the Notes is calculated using the greatest closing sale price of our common stock during the period immediately preceding the consummation or the public announcement of the change of control and ending the date the holder gives notice of such redemption.

The equity value of the change of control consideration payable to the holder of our common stock underlying the Notes is calculated using the aggregate cash consideration and aggregate cash value of any non-cash consideration per share of our common stock to be paid to the holders of our common stock upon the change of control.

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Events of Default

Under the terms of the First Supplemental Indenture, the events of default contained in the Base Indenture shall not apply to the Notes. Rather, the Notes contain standard and customary events of default including but not limited: (i) the suspension from trading or the failure to list our common stock within certain time periods; (ii) failure to make payments when due under the Notes; and (iii) bankruptcy or insolvency of the Company.

If an event of default occurs, the holder may require us to redeem all or any portion of the Notes (including all accrued and unpaid interest and late charges thereon), in cash, at a 15% redemption premium to the greater of the face value and the equity value of our common stock underlying the Notes.

The equity value of our common stock underlying the Notes is calculated using the greatest closing sale price of our common stock on any trading day immediately preceding such event of default and the date we make the entire payment required.

Company Optional Redemption Rights

At any time no event of default exits, we may redeem all, but not less than all, the Notes outstanding in cash all, or any portion, of the Notes at a 5% redemption premium to the greater of the face value and the equity value of our common stock underlying the Notes.

The equity value of the Company’s common stock underlying the Notes is calculated using the greatest closing sale price of our common stock on any trading day during the period commencing on the date immediately preceding such date we notify the applicable holder of such redemption election and the date we make the entire payment required.

The foregoing description of the Note does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Note, a copy of which is attached hereto as Exhibit 4.1, and incorporated herein by reference.

Derivative liability

The Notes contain embedded derivatives representing the conversion features, redemption rights, and certain events of default. The Company determined that these embedded derivative required bifurcation and separate valuation.

The Company utilizes a binomial lattice model to value its bifurcated derivatives included in the Notes. ASC 815 does not permit an issuer to account separately for individual derivative terms and features embedded in hybrid financial instruments that require bifurcation and liability classification as derivative financial instruments. Rather, such terms and features must be combined together and fair valued as a single, compound embedded derivative. The Company selected a binomial lattice model to value the compound embedded derivative because it believes this technique is reflective of all significant assumptions that market participants would likely consider in negotiating the transfer of the Notes. Such assumptions include, among other inputs, stock price volatility, risk-free rates, credit risk assumptions, early redemption and conversion assumptions, and the potential for future adjustment of the conversion price due to triggering events. Additionally, there are other embedded features of the Notes requiring bifurcation, other than the conversion features, which had no value at December 31, 2021 due to management’s estimates of the likelihood of certain events, but that may have value in the future should those estimates change.

A continuity of derivative liability for the nine months ended September 30, 2022 is summarized as follows:

	Total
Balance, December 31, 2021	$	18,735,000
Change in fair value		(14,591,938	)
Derecognition upon conversion		(1,622,935	)
Balance, September 30, 2022	$	2,520,127

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~~10.~~12.

STOCK OPTION AWARDS ~~(continued)~~

~~A summary of~~The following table represents the ~~status of our~~employee stock ~~options is presented below as of~~option activity during the nine months ended September 30, ~~2021:~~2022 and 2021.

										Shares			Weighted Average Exercise Price		Aggregate Intrinsic Value
	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (In Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2020		514,607		$	2.30		0.001	$	3,365,527		477,430		$	3.53

Granted		232,286			10.59						230,122			10.59
Exercised		(146,278	)		0.46						(100,802	)		0.46
Forfeited or expired		-			2.50
Forfeited or Expired											(31,251	)		2.50
Outstanding at September 30, 2021											575,499		$	7.06	$	6,865,703
Exercisable at September30, 2021											446,295		$	5.37	$	5,324,299
Vested and Expected to Vest at September 30, 2021											547,834		$	6.80	$	6,535,660

Outstanding at September 30, 2021		600,615			6.72		0.014		6,146,166

Exercisable as of September 30, 2021		491,711			4.91		-		5,969,376
Vested and expected to Vest as of September 30, 2021		593,250			6.31		-		7,202,059
Outstanding at December 31, 2021											391,562		$	5.07
Granted											-			-
Exercised											(12,417	)		0.07
Forfeited or Expired											(9,702	)		9.24
Outstanding at September 30, 2022											369,443		$	1.47	$	-
Exercisable at September 30, 2022											369,443		$	1.47	$	-
Vested and Expected to Vest at September 30, 2022											369,443		$	1.47	$	-

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based upon the Company’s closing stock price of ~~$12.14~~$1.05 and $11.93 as of September 30, 2022 and 2021, respectively, which would have been received by the option holders had all option holders exercised their options as of that date. As of September 30, ~~2021,~~2022, there was no unrecognized compensation cost related to non-vested stock ~~options granted~~options.

The Company adopted the 2021 Restricted Stock Plan (“2021 Plan”) in November 2021, which provides for the grant of restricted stock awards and performance stock awards to executive officers, non-employee directors and other key employees of the Company. The 2021 Plan provides for up to 5.0 million shares of common stock. The 2021 Plan awards generally has a term of five years and generally vest and become exercisable at various times from the award grant dates. These awards will have such vesting or other provisions as may be established by the Board of Directors at the time of each award.

The following table represents the restricted stock award activity during the nine months ended September 30, 2022 and 2021.

	Non-vested Restricted Stock Awards			Weighted Average Grant Date Fair Value

Non-vested at January 1, 2021		-		$	-
Granted		-			-
Vested		-			-
Forfeited		-			-
Non-vested at September 30, 2021		-		$	-

Non-vested at January 1, 2022		-		$	-
Granted		39,413			3.24
Vested		(39,413	)		(3.24	)
Forfeited		-			-
Non-vested at September 30, 2022		-		$	-

Total stock-based compensation expense recognized for the Company’s 2021 Plan was $0 and $1,291,887 for the three months ended September 30, 2022 and 2021, respectively, and $166,800 and $2,089,500 for the nine months ended September 30, 2022 and 2021, respectively.

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13.	STOCK GRANT EXPENSE

The Company issues stock with no exercise price to its employees, outside service providers, and board members. These stock grants typically do not have a vesting period and vest immediately upon issuances.

The Company issued the following stock during the nine months ended September 30, 2022:

	Number of shares
	Nine months ended		Three months ended
	September 30, 2022		September 30, 2022
Employees		50,000		-
Services		650,833		222,500

Total stock grants		700,833		222,500

The Company recorded stock grant compensation expense for employees and board members in the amount of ~~$2,128,990.~~$1,496,711 and $1,496,711 for the nine and three months ended September 30, 2022, respectively, and stock grant compensation expense for services in the amount of $205,652 and $79,238 for the nine and three months ended September 30, 2022, respectively. As of September 30, 2022, common stock issuable is 221,090.

~~11.~~14.

COMMON STOCK ~~REPURCHASE PROGRAM~~

~~On May 13, 2021,~~ GreenBox POS ~~(the “Company”~~LLC (“PrivCo”) ~~announced that~~, a privately held company owned by Ben Errez, Chairman and Executive Vice President of the ~~Company’s~~Company, and Fredi Nisan, Chief Executive of the Company and a member of its Board of Directors, ~~approved a share repurchase program (the “Share Repurchase Program”), providing for the repurchase of a portion~~owns approximately 18,489,207 shares of the Company’s ~~outstanding~~ common stock. ~~From May 13,~~In November 2021, pursuant to a verbal agreement, which was later memorialized in writing, PrivCo agreed to sell to the Company 1,000,000 shares of common stock in exchange for $5.59 million (based on the $5.59 closing price of the common stock on November 24, 2021). The purpose is to allow the Company, if necessary, to issue shares to new shareholders without increasing the Company’s shares outstanding. On July 31, 2022, pursuant to a verbal agreement that was later memorialized in writing, PrivCo agreed to sell an additional 1,000,000 shares of common stock in exchange for $820,000 (based on the $0.82 closing price of the common stock on July 29, 2022). The purpose of this transaction is the same as November 2021 referenced above. In the nine months ended September 30, ~~2021,~~2022, the Company ~~has repurchased a total~~cancelled 1,245,833 of ~~300,000 shares at an aggregate cost of $2,679,633.~~PrivCo’s shares.

15.

LEASES

The Company leases office space at three locations in California, Florida and Massachusetts. The Company had operating lease expense of $193,151 and $171,883 for the three months ended September 30, 2022 and 2021, respectively. The Company had operating lease expense of $586,607 and $272,672 for the nine months ended September 30, 2022 and 2021, respectively.

Future minimum lease payments for all leases as of September 30, 2022 are as follows:
Year	Amount
2022 (Remainder)	$	232,892
2023		671,630
2024		462,452
2025		350,422
2026		248,605
Thereafter		42,464
Total lease payments		2,008,465
Less: present value adjustment		(251,803	)
Present value of total lease liabilities		1,756,662
Less: current lease liabilities		(632,038	)
Long-term lease liabilities	$	1,124,624

1723

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~~GREENBOX POS~~

~~NOTES TO UNAUDITED~~~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(continued)~~Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company used its incremental borrowing rate based on the information available at the lease commencement date. As of September 30, 2022, the weighted average remaining lease term is 2.5 years and the weighted average discount rate used to determine the operating lease liabilities is 10.0%.

~~12.~~16.

RELATED PARTY TRANSACTIONS

~~The Company had~~● Kenneth Haller and the ~~following related party transactions:~~Haller Companies

●

~~Kenneth Haller and the Haller Companies~~

Kenneth Haller (“Haller”) became the Company’s Senior Vice President of Payment Systems in November 2018. The Company began working indirectly with Haller earlier in 2018, both individually and through our relationship with MTrac Tech Corporation (“MTrac”), which in turn has business relationships with Haller. Haller brings considerable advantages to the Company’s platform development and business development efforts and capabilities, including transactional business relations and a large network of agents (the “Haller Network”). The Haller Network is an amalgamation of the collective networks of Haller and two companies owned or majority-owned by Haller, which are Sky Financial & Intelligence, LLC (“Sky”), and Charge Savvy, LLC (collectively, the “Haller Companies”), each of which has formalized business relationships with the Company, as well as with some of the Company’s partners, which the Company believes allows the Company to maximize and diversity the Company’s market penetration capabilities. Haller, through Sky, owns controlling interests in Charge Savvy, LLC with whom the Company does business through their respective business relationship with MTrac.

~~The following are certain transactions between the Company and the Haller Companies:~~

■

Kenneth Haller (“Haller”) became the Company’s Senior Vice President of Payment Systems in November 2018. The Company began working indirectly with Haller earlier in 2018, both individually and through our relationship with MTrac Tech Corporation (“MTrac”), which in turn has business relationships with Haller. Haller brought considerable advantages to the Company’s platform development and business development efforts and capabilities, including transactional business relations and a large network of agents (the “Haller Network”). The Haller Network is an amalgamation of the collective networks of Haller and two companies that wer or are owned or majority-owned by Haller, which were Sky Financial & Intelligence, LLC (“Sky”)(still owned by Haller), and Charge Savvy, LLC (no longer owned by Haller) (collectively, the “Haller Companies”), each of which hadformalized business relationships with the Company, as well as with some of the Company’s partners, which the Company believed allowed the Company to maximize and diversity the Company’s market penetration capabilities.

~~Sky Financial & Intelligence, LLC~~ – Haller owns 100% of Sky Financial & Intelligence LLC (“Sky”), a Wyoming limited liability company, and serves as its sole Managing Member. Sky is a strategic merchant services company that focuses on high risk merchants and international credit card processing solutions. In 2018, Sky was using GreenBox’s QuickCard payment system as its main payment processing infrastructure, through Sky’s relationship with MTrac. It was through this successful relationship, that we came to know Haller and the Haller Network. Realizing that the Haller Network and Haller’s unique skill set was highly complementary to our business objectives, we commenced discussions to retain Haller through his consulting firm, Sky, for a senior role, directly responsible for growing GreenBox’s operations. Subsequently, in November 2018, Haller was appointed as our Senior Vice President of Payment Systems, for a monthly consulting fee of $10,000, paid to Sky (“Haller Consulting Fee”).

The following are certain transactions between the Company and the Haller Companies:

Sky Financial & Intelligence, LLC – Haller owns 100% of Sky Financial & Intelligence LLC (“Sky”), a Wyoming limited liability company, and serves as its sole Managing Member. Sky is a strategic merchant services company that focuses on high-risk merchants and international credit card processing solutions. In 2018, Sky was using RYVYL Inc.’s QuickCard payment system as its main payment processing infrastructure, through Sky’s relationship with MTrac. It was through this successful relationship, that we came to know Haller and the Haller Network. Realizing that the Haller Network and Haller’s unique skill set was highly complementary to our business objectives, we commenced discussions to retain Haller through his consulting firm, Sky, for a senior role, directly responsible for growing RYVYL Inc.’s operations. Subsequently, in November 2018, Haller was appointed as our Senior Vice President of Payment Systems, for a monthly consulting fee of $10,000, paid to Sky (“Haller Consulting Fee”).

On March 31, 2022, the Company acquired a portfolio of merchant accounts from Sky Financial & Intelligence for $18,110,000. The Company paid $16,000,000 of cash in March 2022 and issued 500,000 shares of restricted common stock for the transaction in May 2022. As of September 30, 2022, the portfolio of merchant accounts purchased form Sky Financial & Intelligence was still under migration into the Company’s platform.

Mr. Haller, became an independent contractor to the Company (and no longer an employee) through his company FINTECH CONSULTING in March 2022. On or around September 2022, the Company terminated the independent contracting agreement with FINTECH Consulting.

On July 13, 2021 (the “Closing Date”), GreenBox POS entered into and closed o a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Charge Savvy, LLC – Sky owned 68.4% of Charge Savvy, LLC. Higher Ground Capital, LLC (owned 14%), and Jeff Nickel (owned 17.4%).

■

Charge Savvy, LLC – Sky owns 68.4% of Charge Savvy, LLC (“Charge Savvy”), an Illinois limited liability company. Haller serves as one of three Managing Members of Charge Savvy, along with Higher Ground Capital, LLC (owns 14%), and Jeff Nickel (owns 17.4%). As a result of the Purchase Agreement, the Company purchased all of Charge Savvy’s issued and outstanding membership interests and Charge Savvy became a wholly owned subsidiary of the Company. The purchase price under the Purchase Agreement for the all-stock transaction consisted of 1,000,000 shares of Common Stock being issued and delivered to the Sellers in proportion to the Sellers’ share of their membership interests in Charge Savvy. The share price at issuance was $12.14.

The Company did not pay any commissions to the related parties mentioned above for the ~~three and~~ nine months ended September 30, ~~2021~~2022 and ~~2020.~~

~~Table of Contents~~

~~GREENBOX POS~~

~~NOTES TO UNAUDITED~~~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(continued)~~2021.

~~13.~~17.

COMMITMENTS AND CONTINGENCIES

Legal Proceedings

~~The Company has the following legal proceedings:~~

●

Corporate Performance Consulting, LLC (CPC) v. ~~GreenBox POS~~RYVYL Inc. – On April 7, 2021, CPC filed a complaint against ~~GreenBox~~RYVYL Inc. in San Diego Superior Court. Plaintiff CPC alleges breach of contract, breach of implied covenant of good faith and fair dealing, goods and services rendered, negligent misrepresentation, violation of CA Business and Professions Code Section 17200, and unjust enrichment. The crux of CPC’s claim is that ~~GreenBox~~RYVYL Inc. failed to compensate for certain consulting and corporate advisory services. ~~GreenBox~~RYVYL Inc. believes the claims are without merit and intends to defend itself vigorously. On June 17, 2021, ~~GreenBox~~RYVYL Inc. filed a Cross-Complaint for breach of contract, breach of implied covenant of good faith and fair dealing, negligent misrepresentation, unjust enrichment, and rescission. The parties are now in the discovery ~~phase. The Case Management Conference is~~phase and have scheduled ~~for April 29,~~mediation on December 15, 2022.

Table of Contents


	●	*~~GreenBox POS v. A.M.P of Florida, Inc. (AMP)~~* – On March 9, 2021, GreenBox POS (mistakenly identified as “GreenBox POS, LLC”) filed suit against AMP in U.S.D.C for the middle district of Florida alleging breach of oral contract, conversion, and civil theft. GreenBox filed suit in order to recover processed funds unlawfully withheld by AMP. The parties are in the discovery phase and discussing settlement. Although it is premature to provide a predicted outcome at this time, GreenBox is confident that this matter will be resolved well in advance of the 2022 trial date.

	●	*~~America 2030 Capital Limited and Bentley Rothschild Capital Limited~~* – On or about October 31, 2018, Nisan and Errez received constitutive notice, regarding arbitration against Nisan, Errez, PrivCo and possibly PubCo, from Bentley Rothschild Capital Limited ("Bentley") and America 2030 Capital Limited (“America 2030”), both located in Nevis, West Indies, and both claiming breach of contract by Nisan and Errez of Nisan and Errez’s respective individual Master Loan Agreements and seeking forfeiture of 266,667 PubCo shares that PrivCo had transferred, on or about August 1, 2018, from PrivCo’s Control Shares under the terms of the MLAs. As of June 30, 2020, both parties have abandoned the matter and no further action was required by either party.

	●	*The Good People Farms, LLC (TGPF)* – - TGPF initiated an arbitration in AAA on or about April 20, 2020 against ~~Greenbox POS,~~RYVYL Inc., Fredi Nisan, Ben Errez, MTrac Tech., Vanessa Luna, and Jason LeBlanc. The matter was placed in abeyance for some time. On January 15, 2021, ~~GreenBox~~RYVYL Inc. filed a ~~counter-claim~~counterclaim for fraud –- intentional misrepresentation, breach of contract, breach of covenant of good faith and fair dealing, violation of California Business and Professions Code Section 17200, and accounting. ~~An arbitrator has been selected and the parties are awaiting the scheduling of the preliminary conference.~~ The arbitration iswas stayed pending further proceedings in the separate but related action filed by MTrac and Ms. Luna in San Diego Superior Court. ~~In that related action, Plaintiffs~~The arbitration has now commenced again upon the state court's January 14, 2022 order denying MTrac's and Ms. Luna's motion for summary judgment and granting of TGPF 's motion to compel arbitration as to MTrac only. TGPF submitted a new complaint on June 21, 2022. There was a preliminary arbitration hearing held the first week of July 2022 and final hearings have ~~objected to participating~~been provisionally set for April 18-21, 2023. The parties are now in the ~~Arbitration as Plaintiffs have never consented to or executed any contracts with TGPF whereby Plaintiffs agreed to arbitration.~~

~~Operating Leases~~

~~The Company entered into the following operating facility leases:~~

●

Hyundai Rio Vista – On October 4, 2018, the Company entered into an operating facility lease for its corporate office located in San Diego with 38 months term and with option to renew. The lease started on October 4, 2018 and expires on October 3, 2021.discovery phase.

●

~~Camino Del Rio –~~Pure Health, et al. v. Worldpay LLC et al - On February 18, 2022, forty-three online marketer Plaintiffs filed suit in the Court of Common Pleas, Hamilton County, Ohio against Worldpay LLC (formerly Vantiv LLC), Fifth Third Bank, ChargeSavvy LLC, a wholly owned subsidiary of RYVYL Inc., RYVYL Inc., and ~~effective~~John Does 1 (Defendants) through 10, alleging breach of contract, breach of implied covenant of good faith and fair dealing, conversion, and money had and received (constructive trust). Defendant RYVYL Inc. believes that Plaintiffs’ claims against it are without merit and plans to pursue all judicial remedies necessary to resolve this matter. On April ~~2021,~~22, 2022 Worldpay and Fifth Third filed a motion to stay proceedings and compel arbitration. The parties thereafter stipulated to arbitration, and the ~~Company entered into~~Court granted the parties’ stipulation to submit the dispute to binding arbitration on June 1, 2022. On June 9, 2022, the same forty-three online marketers (“Claimants”) filed their demand in AAA Arbitration. RYVYL Inc. submitted an ~~operating facility lease~~answering to the Claimants’ demand on June 24, 2022. The parties are in the process of selecting an arbitrator. Arbitration is scheduled for ~~its corporate office located in San Diego with monthly lease payments of $33,135 per month.~~July 18, 2023.

For operating leases, we calculated right of use assets and lease liabilities based on the present value of the remaining lease payments as of the date of adoption using the incremental borrowing rate. The Company has recorded operating lease right of use assets and operating lease liabilities of $668,865 and $669,978 respectively, as of September 30, 2021. The difference between the operating lease ROU asset and operating lease liabilities represents differences in the cash paid and straight-line lease expense recognized. The adoption of ASC 842 did not materially impact our results of operations, cash flows, or presentation thereof.

~~Table of Contents~~

~~GREENBOX POS~~

~~NOTES TO UNAUDITED~~~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(continued)~~

●

Paul Levine – On April 27, 2022, Paul Levine (“Levine”), former Chief Executive Officer of Coyni, Inc., wholly-owned subsidiary of RYVYL Inc., filed a charge with The Occupational Safety and Health Administration (“OSHA”) against respondents Coyni and RYVYL Inc.. Levine alleges retaliation in violation of the Sarbanes-Oxley Act of 2002, as amended, 18 U.S.C. §1514A (“SOX”). RYVYL Inc. believes the claims are without merit and intends to defend itself vigorously. This matter is currently pending in the investigation phase with OSHA.

~~14.~~18.

SUBSEQUENT EVENTS

The Company follows the guidance in FASB ASC Topic 855, Subsequent Events (“ASC 855”), which provides guidance to establish general standards of accounting for and disclosures of events that occur after the balance sheet date but before the consolidated financial statements are issued or are available to be issued. ASC 855 sets forth (i) the period after the balance sheet date during which management of a reporting entity evaluates events or transactions that may occur for potential recognition or disclosure in the consolidated financial statements, (ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its consolidated financial statements, and (iii) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. Accordingly, the Company did not have any subsequent events that require disclosure other than the following:

	●	~~November 2, 2021 (Convertible Note Offering):~~ On ~~November 2,~~June 30, 2022, Transact Europe EAD, a subsidiary of the Company entered into a stock purchase agreement to acquire 100% of the outstanding shares of Roark Holdings Ltd., dba Paysos, a UK Limited company. The Company is awaiting final approval by the UK FCA expects to finalize the transaction during Q4 2022.

	●	In December 2021, the Company entered into a ~~placement agency~~letter of intent to acquire the portfolio of merchants from Merchant Payment Solutions, LLC. A draft purchase agreement ~~(the “Placement Agency Agreement”) with EF Hutton, division~~was issued in October 2022. The Company expects to finalize the purchase in Q4 2022.

	●	On November 8, 2022 RYVYL Inc. filed a complaint against its former COO, Luna Consultant Group, LLC and John Does 1 through 50 in San Diego Superior Court. RYVYL is alleging misappropriation of ~~Benchmark Investments, LLC (“EF Hutton”)~~trade secrets, breach of fiduciary duty, and conversion among other causes of action. On November 10, 2022, Vanessa Luna, former COO of RYVYL, filed a complaint against RYVYL and Fredi Nisan. Luna alleges breach of contact, unjust enrichment, promissory estoppel, retaliation and wrong termination, fraud among other claims. Luna is seeking damages including compensatory damages, unpaid wages (past and future), ~~as the exclusive placement agent relating~~loss of wages and benefits (past and future), expectation damages, and other damages to the sale and issuance to selected institutional investors (the “Investors”) in a registered direct offering of 8% senior convertible notes due 2023 in the aggregate original principal amount of $100 million (the “Notes”).be proven at trial. The ~~Notes have an original issue discount of sixteen percent (16%) resulting in gross proceeds to~~Company denies all allegations. Investigation is ongoing. As the Company ~~of $84 million. The Notes and Shares are being offered pursuant to a prospectus supplement to~~cannot predict the ~~Company's effective shelf registration statement Form S-3 (Registration No. 333-257798). EF Hutton served as the sole placement agent for the transaction pursuant to the terms~~outcome of the ~~Placement Agency Agreement. Under~~matter the ~~terms~~probability of ~~the Placement Agency Agreement, the~~an outcome cannot be determined. The Company ~~will pay our placement agent a fee of $6,720,000 in connection with the Offering. The Convertible Note Offering closed and was funded on November 9, 2021.~~intents to vigorously defend against all claims.

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ITEM2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

Disclaimer Regarding Forward Looking Statements

Our Management’s Discussion and Analysis or Plan of Operations contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national and local general economic and market conditions; demographic changes; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.

Although the forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

Overview – Organization and Name Changes

Organization ~~– GreenBox POS (the “Company”~~

RYVYL Inc. is a financial technology company that develops, markets, and sells innovative blockchain-based payment solutions, which we believe offer significant improvements for the payment solutions marketplace. The Company’s core focus is to develop and monetize disruptive blockchain-based applications, integrated within an end-to-end suite of financial products, capable of supporting a multitude of industries. The Company’s proprietary, blockchain-based systems are designed to facilitate, record and store a virtually limitless volume of tokenized assets, representing cash or ~~“PubCo”)~~data, on a secured, immutable blockchain-based ledger.

The Company was formerly known as ASAP Expo, Inc (“ASAP”), ~~which~~and was incorporated in the state of Nevada on April 10, ~~2007 under the laws of the State of Nevada.~~2007. On January 4, 2020, ~~PrivCo~~the Company and GreenBox POS LLC, a ~~Nevada corporation~~Washington limited liability company (“~~PubCo”~~PrivCo”), entered into an Asset Purchase Agreement (the "Agreement”), to memorialize a verbal agreement (the “Verbal Agreement”) entered into ~~the Agreement to memorialize the Verbal Agreement with~~on April 12, 2018, by and amongthe Company (the Buyer) and PrivCo ~~which was formed on August 10, 2017~~ (the ~~seller)~~Seller). On April 12, 2018, pursuant to the Verbal Agreement, ~~PubCo~~the Company acquired PrivCo’s blockchain gateway and payment system business, point of sale system business, delivery business and kiosk business, ~~and~~ bank and merchant accounts, as well as all intellectual property related thereto (the ~~“GreenBox~~"GreenBox Business”). As consideration for the GreenBox Business, on April 12, 2018, ~~PubCo~~the Company assumed PrivCo’s liabilities that had been incurred in the normal course of the GreenBox Business (collectively, the “GreenBox Acquisition”). For accounting and reporting purposes, PubCo deemed the GreenBox Acquisition a “Reverse Acquisition” with PrivCo designated the “accounting acquirer” and PubCo designated the “accounting acquiree.”

~~Name Changes~~Business.

On May 3, 2018, ~~PubCo~~the Company formally changed its name to GreenBox POS LLC, then subsequently changed its name to GreenBox POS on December 13, 2018.

~~Underwritten Public Offering and Nasdaq Listing~~

On February 16, 2021, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with EF Hutton, formerly known as Kingswood Capital Markets, division of Benchmark Investments, LLC (“Hutton”), as representative of the underwriters listed therein (the “Underwriters”), pursuantOctober 10, 2022 GreenBox POS changed its name to which the Company agreed to sell to the Underwriters in a firm commitment underwritten public offering (the “Offering”) an aggregate of 4,150,000 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at a public offering price of $10.50 per share. In addition, the Underwriters were granted an over-allotment option (the “Over-allotment Option”) for a period of 45 days to purchase up to an additional 622,500 shares of Common Stock. The Common Stock began trading on the Nasdaq Capital Market under the symbol GBOX on February 17, 2021. The gross proceeds from the Offering were approximately $50.11 million as the representative of the Underwriters exercised in full its over-allotment option, before deducting underwriting discounts and commissions and other offering expenses. Pursuant to the Underwriting Agreement, the Company also granted Hutton a right of first refusal, for a period of 12 months from the commencement of the Offering, to act as sole investment banker, sole book-runner, and/or sole placement agent, at Hutton’s sole discretion, for each and every future public and private equity, equity-linked or debt offering, including all equity linked financings undertaken during such period by the Company, or any of the Company’s successors or subsidiaries.RYVYL Inc.

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Management Discussion and Analysis

Q4/2020 signified the return of operations in full scale for the Company, with processing volumes in December of 2020 increasing to $84M. The trend continues into Q3/2021, with monthly average processing volumes increasing to over $100M. During Q4/2020 the Company completed two capital raises – in October and in December of 2020, primarily directed towards the acceleration of the development and deployment of the Company’s newest technology, code name Gen3 (Generation 3, following its initial technology release in January 2019 – Gen1, and in April 2020 - Gen2). Two of the Company’s top executives, Chairman Mr. Errez and CEO Mr. Nisan, personally participated in the December 2020 raise. Gen3 technology is material to the Company plans and business performance and is projected to impact the industry as a whole, in particular with the launch of the GreenBox Smart Contract Token technology, which was initially released in end of Q2/2021. Throughout 2020 the Company continued to increase its investment in research and development, improving its acquiring platform and enabling safer, faster and significantly more scalable services. These technology improvements allow for major new capabilities, including Real Time Payments (RTP), a very sought-after payment feature. This change also reduces the Company COGS, trend that continues to be observed in Gen3 increased business efficiencies. Gen3 is an improved platform is performing better than its predecessor platform and increase total volumes while increasing profit margins and operating sustainability is observed and expected to persist through 2021. The Company returned to ramping up commercial large-scale operations, on-boarding large number of clients, and increasing the Company operational bandwidth to accommodate the needs of its clients. Q3/2021 continued to execute on these management directives. Covid-19 pandemic appears to have little impact on the Company’s business, and the rate of increase in operational figures observed is expected to remain unimpacted for rest of 2021.

~~Management is focused on the following KPI (Key Performance Indices):~~

~~KPI~~	~~Description~~
~~Annual Transactional Processing Volume (ATPV)~~	The Company plans to process $1.85B in FY 2021, including previously increased processing volumes projections from $600M to $1.85B, and including the expected processing of the acquired ChargeSavvy portfolio, projected to add another $450M. The Company’s Book of Business exceeds the processing goals for the year.
~~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 $16-20M for FY2021.~~

In order to process the targeted ATPV goal, $1.85B, the Company must be able to process over $100M/month in a consistent fashion, as business performance in Q2 and Q3 2021 demonstrated. The Company estimates the deployment for its Smart Contract Token technology in Q4/2021 will further improving on volumes and efficiencies.

~~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%.~~

Based on the above and the current traction in Q2 and Q3/21, the Company is comfortable with its volume and gross revenues projections. The Company owns all the IP rights for operations in its space: tokenizer, gateway, ledger manager and blockchain substrate. Other, supporting patents, such as fraud proofing, on-boarding accelerators, and an all new blockchain implementation, are pending.

With the visibility that management has into the Company’s operations in Q3/2021 and the Company’s uplisting to NASDAQ in Feb/2021, the current plan is to grow the Company organically to the size and value afforded by the senior exchange.

The ATPV, Profitability and other major KPIs remain sensitive to regulatory changes and global and national economic trends. These will impact and influence the Company’s product line, its potential mergers and acquisitions targets, its joint ventures and the Company’s technology emphasis.

~~Table of Contents~~

RESULTS OF OPERATIONS

Three Months Ended September 30, ~~2021~~2022 (Unaudited) Compared to Three Months September 30, ~~2020~~2021 (Unaudited):

	Three Months Ended September 30,																		Three Months Ended September 30,
	2021						2020						Changes						2022						2021						Change
				% of						% of												% of						% of
	Amount			Revenue			Amount			Revenue			Amount			%			Amount			Revenue			Amount			Revenue			Amount			%

Revenue	$	8,045,469			100.0	%	$	3,056,271			100.0	%	$	4,989,198			163.2	%
Net revenue																			$	10,629,691			100.0	%	$	8,045,469			100.0	%	$	2,584,222			32.1	%
Cost of revenue		2,420,748			30.1	%		1,845,295			60.4	%		575,453			31.2	%		4,269,529			40.2	%		2.420.748			30.1	%		1,848,781			76.4	%
Gross profit		5,624,721			69.9	%		1,210,976			39.6	%		4,413,745			364.5	%		6,360,162			59.8	%		5,624,721			69.9	%		735,441			13.1	%

Operating expenses:
Advertising and marketing		37,179			0.5	%		59,099			1.9	%		(21,920	)		-37.1	%		438,523			4.1	%		37,179			0.5	%		401,344			1079.5	%
Research and development		1,043,385			13.0	%		243,923			8.0	%		799,462			327.8	%		1,442,038			13.6	%		1,043,385			13.0	%		398,653			38,2	%
General and administrative		784,158			9.7	%		366,734			12.0	%		417,424			113.8	%		1,186,123			11.2	%		784,158			9.7	%		401,965			51.3	%
Payroll and payroll taxes		1,250,451			15.5	%		436,216			14.3	%		814,235			186.7	%		2,384,544			22.4	%		1,250,451			15.5	%		1,134,093			90.7	%
Professional fees		789,772			9.8	%		344,641			11.3	%		445,131			129.2	%		1,031,867			9.7	%		789,772			9.8	%		242,095			30.7	%
Stock compensation for employees		3,777,572			47.0	%		-			0.0	%		3,777,572			n/a			-			0.0	%		3,777,572			47.0	%		(3,777,572	)		-100.0	%
Stock grant expense																				508,313			4.8	%		-			0.0	%		508,313			n/a
Stock compensation for services		238,238			3.0	%		-			0.0	%		238,238			n/a			132,696			1.2	%		238,238			3.0	%		(105,542	)		-44.3	%
Depreciation and amortization		457,633			5.7	%		5,764			0.2	%		451,869			7839.5	%		2,298,849			21.5	%		457,633			5.7	%		1,841,216			400.2	%
Total operating expenses		8,378,388			104.1	%		1,456,377			47.7	%		6,922,011			475.3	%		9,422,953			88.6	%		8,378,388			104.1	%		1,044,565			12.4	%

Income (Loss) from operations		(2,753,667	)		-34.2	%		(245,401	)		-8.0	%		(2,508,266	)		1022.1	%
Loss from operations																				(3,062,791	)		-28.7	%		(2,753,667	)		-34.2	%		(309,124	)		10.9	%

Other Income (Expense):
Interest expense		(4,736	)		-0.1	%		(48,931	)		-1.6	%		44,195			-90.3	%		(1,906,962	)		-17.9	%		(4,736	)		-0.1	%		(1,902,226	)		n/a
Interest expense - debt discount		-			0.0	%		(83,500	)		-2.7	%		83,500			-100.0	%		(436,817	)		-4.1	%		-			0.0	%		(436,817	)		n/a
Derivative expense		-			0.0	%		(925,576	)		-30.3	%		925,576			-100.0	%
Changes in fair value of derivative liability		-			0.0	%		819,366			26.8	%		(819,366	)		-100.0	%		(4,082,056	)		-38.4	%		-			0.0	%		(4,082,056	)		n/a
Gain from extinguishment of convertible debt		-			0.0	%		-			0.0	%		-			n/a
Derecognition expense on conversion of convertible debt																				(5,709,672	)		-53.7	%		-			0.0	%		(5,709,672	)		n/a
Merchant liability settlement		-			0.0	%		-			0.0	%		-			n/a			-			0.0	%		-			0.0	%		-			n/a
Other income or expense		(37,497	)		-0.5	%		(5,768	)		-0.2	%		(31,729	)		550.1	%		62,806			0.6	%		(37,497	)		-0.5	%		100,303			-267.5	%
Total other income (expense)		(42,233	)		-0.5	%		(244,409	)		-8.0	%		202,176			-82.7	%		(12,072,701	)		-113.6	%		(42,233	)		-0.5	%		(12,030,468	)		28485.9	%

Income (Loss) before provision for income taxes		(2,795,900	)		-34.8	%		(489,810	)		-16.0	%		(2,306,090	)		470.8	%		(15,135,492	)		-142.4	%		(2,795,900	)		-34.8	%		(12,339,592	)		441.3	%

Provision for income taxes		3,253,855			40.4	%		-			0.0	%		3,253,855			0.0	%		34,785			0.3	%		3,253,855			40.4	%		(3,219,070	)		-98.9	%

Net income (loss)	$	(6,049,755	)		-75.2	%	$	(489,810	)		-16.0	%	$	(5,559,945	)		1135.1	%	$	(15,170,277	)		-142.7	%	$	(6,049,755	)		-75.2	%	$	(9,120,522	)		150.8	%

Table of Contents

~~Gross~~Net Revenue

~~Gross~~Net revenue increased by ~~$4,989,198~~$2,584,222, or ~~163.2%~~32.1%, to $10,629,691 for the three months ended September 30, 2022 from $8,045,469 for the three months ended September 30, ~~2021, from $3,056,271 for the three months ended September 30, 2020.~~2021. The change in net revenue ~~reflected~~includes $2.9 million of penalties and fees charged to merchant in accordance with our standard service agreement for transaction fraud and minimum activity fees along with an increase in processing volume compared to the ~~following:~~same three month period in 2021offset by lower commissions from a processing partner.

●

~~Continued work on technology launch of new platforms in late 2020 which was fully effective in the three months ended September 30, 2021.~~

●

~~Increase in processing volume in the three months ended September 30, 2021 compared to the three months ended September 30, 2020.~~

~~Table of Contents~~

Cost of Revenue

Cost of revenue increased by ~~$575,453~~$1,848,781, or ~~31.2%~~76.4%, to $4,269,529 for the three months ended September 30, 2022, from $2,420,748 for the three months ended September 30, ~~2021, from $1,845,295 for the three months ended September 30, 2020.~~2021. Payment processing consists of various processing fees paid to Gateways, as well as commission payments to the Independent Sales Organizations (“ISO”) responsible for establishing and maintaining merchant relationships, from which the processing transactions ensue. Cost of revenues increased due to the following:

●

Increased volume, resulting in higher processing fees paid to Gateways and commission payments to ~~ISOs~~ISOs. The gross margin decreased due to an increase in fees for ISOs.

Operating Expenses

Operating expenses increased by ~~$6,922,011,~~$1,044,565, or ~~475.3%~~12.5%, to $9,422,953 for the three months ended September 30, 2022, from $8,378,388 for the three months ended September 30, ~~2021, from $1,456,377~~2021. The increase was due primarily to higher depreciation and amortization, and payroll and payroll taxes for the three months ended September 30, ~~2020. The increase was due primarily to~~2022, offset by decreases in stock ~~comp expense in Q3 2021 as well as higher general administrative expenses and the following:~~

●

~~Increased R&D investment towards the completion and launch of the new technologies (Crypto and FOREX platforms, and advanced transactional routing technology).~~

	●	~~Stock compensation expense for employees and services~~
	●	~~Increased payroll expense from workforce expansion and hiring~~

●

~~Professional fees related to legal and audits.~~

~~Non-Operating Income, net~~compensation for employees.

~~Non-operating income~~Other Income (Expense)

Other expense increased by ~~$202,176, or -82.7%,~~$12,030,468 to ~~($42,233)~~$12,072,701 for the three months ended September 30, ~~2021,~~2022, from ~~($244,409)~~$42,233 for the three months ended September 30, ~~2020. We incurred a gain from~~2021. Interest expense increased significantly in the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 due to the $100,000,000 convertible note issued in November 2021. Amortization of the discount and the fair value of the derivative liability associated with the note were also contributing factors. Furthermore, the Company had changes in fair value of derivative liability ~~of $819,366 and incurred derivative~~ expense of ~~$925,576~~$4,082,056 for the three months ended September 30, ~~2020.~~

~~Provision for Income Taxes~~

~~We estimate our annual effective income tax rate to be -27.47% for calendar 2021, which is different from~~2022 and none in the ~~U.S. federal statutory rate, primarily due to a significant amount~~previous year same quarter. The Company recorded derecognition expense on conversion of ~~non-deductible stock compensation. The effective tax rate~~debt of ~~-20.25% for~~$5,709,67 in the ~~third~~ quarter ~~of calendar 2021 was different from the estimate annual effective tax rate of -24.47% primarily due to change in valuation allowance.~~ended September 30, 2022.

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Nine Months Ended September 30, ~~2021~~2022 (Unaudited) Compared to Nine Months September 30, ~~2020~~2021 (Unaudited):

	Nine Months Ended September 30,																		Nine Months Ended September 30,
	2021						2020						Changes						2022						2021						Change
				% of						% of												% of						% of
	Amount			Revenue			Amount			Revenue			Amount			%			Amount			Revenue			Amount			Revenue			Amount			%

Revenue	$	19,174,089			100.0	%	$	5,536,335			100.0	%	$	13,637,754			246.3	%
Net revenue																			$	22,490,824			100.0	%	$	19,174,089			100.0	%	$	3,316,735			17.3	%
Cost of revenue		5,337,999			27.8	%		3,504,283			63.3	%		1,833,716			52.3	%		10,976,255			48.8	%		5,337,999			27.8	%		5,638,256			105.6	%
Gross profit		13,836,090			72.2	%		2,032,052			36.7	%		11,804,038			580.9	%		11,514,569			51.2	%		13,836,090			72.2	%		(2,321,521	)		-16.8	%

Operating expenses:
Advertising and marketing		84,509			0.4	%		86,368			1.6	%		(1,859	)		-2.2	%		1,106,341			4.9	%		84,509			0.4	%		1,021,832			1209.1	%
Research and development		2,504,976			13.1	%		798,157			14.4	%		1,706,819			213.8	%		5,300,115			23.6	%		2,504,976			13.1	%		2,795,139			111.6	%
General and administrative																				4,331,918			19.3	%		1,648,383			8.6	%		2,683,535			162.8	%
Payroll and payroll taxes		2,871,581			15.0	%		1,279,174			23.1	%		1,592,407			124.5	%		7,480,377			33.3	%		2,871,581			15.0	%		4,608,796			160.5	%
Professional fees		2,114,996			11.0	%		852,234			15.4	%		1,262,762			148.2	%		3,704,226			16.5	%		2,114,996			11.0	%		1,589,230			75.1	%
General and administrative		1,648,383			8.6	%		613,156			11.1	%		1,035,227			168.8	%
Stock compensation for employees		5,867,072			30.6	%		-			0.0	%		5,867,072			n/a			166,800			0.7	%		5,867,072			30.6	%		(5,700,272	)		-97.2	%
Stock grant expense																				2,223,611			9.9	%		-			0.0	%		2,223,611			n/a
Stock compensation for services		10,418,996			54.3	%		-			0.0	%		10,418,996			n/a			338,348			1.5	%		10,418,996			54.3	%		(10,080,648	)		-96.8	%
Depreciation and amortization		477,886			2.5	%		16,856			0.3	%		461,030			2735.1	%		4,879,798			21.7	%		477,886			2.5	%		4,401,912			919.1	%
Total operating expenses		25,988,399			135.5	%		3,645,945			65.9	%		22,342,454			612.8	%		29,531,534			131.3	%		25,988,399			135.5	%		3,543,135			13.6	%

Loss from operations		(12,152,309	)		-63.4	%		(1,613,893	)		-29.2	%		(10,538,416	)		653.0	%		(18,016,965	)		-80.1	%		(12,152,309	)		-63.4	%		(5,864,656	)		48.3	%

Other Income (Expense):
Interest expense		(598,994	)		-3.1	%		(372,553	)		-6.7	%		(226,441	)		60.8	%		(5,662,463	)		-25.2	%		(598,994	)		-3.1	%		(5,063,469	)		845.3	%
Interest expense - debt discount		(2,993,408	)		-15.6	%		(121,918	)		-2.2	%		(2,871,490	)		2355.3	%		(11,539,803	)		-62.3	%		(2,993,408	)		-15.6	%		(8,546,395	)		285.5	%
Derivative expense		-			0.0	%		(925,576	)		-16.7	%		925,576			-100.0	%
Changes in fair value of derivative liability		-			0.0	%		(383,769	)		-6.9	%		383,769			-100.0	%		14,591,938			64.9	%		-			0.0	%		14,591,938			n/a
Gain from extinguishment of convertible debt		-			0.0	%		2,630,795			47.5	%		(2,630,795	)		-100.0	%
Derecognition expense on conversion of convertible debt																				(5,709,672	)		-25.4	%		-			0.0	%		(5,709,672	)		n/a
Merchant liability settlement		(364,124	)		-1.9	%		-			0.0	%		(364,124	)		n/a			-			0.0	%		(364,124	)		-1.9	%		364,124			-100.0	%
Other income or expense		(56,057	)		-0.3	%		(2,434	)		0.0	%		(53,623	)		2203.1	%		298,021			1.3	%		(56,057	)		-0.3	%		354,078			-631.6	%
Total other income (expense)		(4,012,583	)		-20.9	%		824,545			14.9	%		(4,837,128	)		-586.6	%		(8,021,979	)		-35.7	%		(4,012,583	)		-20.9	%		(4,009,396	)		-631.6	%

Loss before provision for income taxes		(16,164,892	)		-84.3	%		(789,348	)		-14.3	%		(15,375,544	)		1947.9	%		(26,038,944	)		-115.8	%		(16,164,892	)		-84.3	%		(9,874,052	)		61.1	%

Provision for income taxes		3,253,855			17.0	%		-			0.0	%		3,253,855			0.0	%		37,237			0.2	%		3,253,855			17.0	%		(3,216,618	)		-98.9	%

Net loss	$	(19,418,747	)		-101.3	%	$	(789,348	)		-14.3	%	$	(18,629,399	)		2360.1	%	$	(26,6076,181	)		-115.9	%	$	(19,418,747	)		-101.3	%	$	(6,657,434	)		34.3	%

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~~Gross~~Net Revenue

~~Gross~~Net revenue increased by ~~$13,637,754,~~$3,316,735, or ~~246.3%~~17.3%, to $22,490,824 for the nine months ended September 30, 2022, from $19,174,089 for the nine months ended September 30, ~~2021, from $5,536,335 for the nine months ended September 30, 2020.~~2021. The change in net ~~sales~~revenue reflected the following:

●

Continued work on technology launch of new platforms, including Crypto, FOREX and transactional routing. Onboarding of existing merchants and new clients resumed in March 2020, with volume of revenues in April 2020 exceeding the first three months combined.

	●	Increase in processing ~~volume.~~volume in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

	●	$2.9 million revenue in penalties and fees charged to merchants, in accordance with the company’s standard service agreement for transaction fraud and minimum activity fees.

Cost of Revenue

Cost of revenue increased by ~~$1,833,716,~~$5,638,256 or ~~52.3%~~105.6%, to $10,976,255 for the nine months ended September 30, 2022, from $5,337,999 for the nine months ended September 30, ~~2021, from $3,504,283 for the nine months ended September 30, 2020.~~2021. Payment processing consists of various processing fees paid to Gateways, as well as commission payments to the Independent Sales Organizations (“ISO”) responsible for establishing and maintaining merchant relationships, from which the processing transactions ensue. Cost of revenues increased due to the following:

●

Increased volume, resulting in higher processing fees paid to Gateways and commission payments to ~~ISOs~~ISOs. The gross margin percentage decreased due to an increase in fees in ISO.

Operating Expenses

Operating expenses increased by ~~$22,342,454,~~$3,543,135 or ~~612.8%~~13.6%, to $29,531,534 for the nine months ended September 30, 2022, from $25,988,399 for the nine months ended September 30, ~~2021, from $3,645,945~~2021. The increase was due primarily to depreciation and amortization, marketing expenses related to re-branding, software development, and payroll and payroll taxes for the nine months ended September 30, ~~2020. The increase was due primarily to~~2022, offset by decreases in stock ~~comp expense in 2021 as well as higher general administrative expenses~~compensation for employees and ~~the following:~~

●

~~Increased R&D investment towards the completion and launch of the new technologies (Crypto and FOREX platforms, and advanced transactional routing technology).~~

●

~~Settlement of legal disputes and associated payments.~~

	●	~~Stock compensation expense for employees and services~~
	●	~~Increased payroll expense from workforce expansion and hiring~~

●

~~Professional fees related to legal and audits.~~

~~Non-Operating Expenses~~services.

~~We incurred interest~~Other Income (Expense)

Other expense ~~related~~increased by $4,009,396 or 99.9%, to ~~various debt in~~$8,021,979 for the ~~amount of $598,994 and debt discount of $2,993,408~~nine months ended September 30, 2022, from $4,012,583 for the nine months ended September 30, 2021. ~~We incurred a loss from changes~~Interest expense increased significantly in the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 due to the $100,000,000 convertible note issued in November 2021. Amortization of the discount associated with the note and derecognition expense on the conversion of convertible debt were contributing factors offset by the change in fair value of derivative liability of ~~$383,769, a loss from derivative expense of $925,576, and gain from extinguishment of convertible debt of $2,630,795~~$14,591,938 for the nine months ended September 30, ~~2020.~~2022 and none in the previous year same quarter.

Provision for Income Taxes

~~We estimate~~The Company estimates our annual effective income tax rate to be ~~-27.47%~~0.2% for calendar ~~2021,~~2022, which is different from the U.S. federal statutory rate, primarily due to ~~a significant amount~~its full valuation position. The Company recorded approximately $37,237 of ~~non-deductible stock compensation. The effective~~ tax ~~rate~~expense. As of ~~-20.25% for~~September 30, 2022, we have no material unrecognized tax benefits, and the ~~third quarter of calendar 2021 was different from the estimate annual effective~~Company expects no change to unrecognized tax ~~rate of -24.47% primarily due to change in valuation allowance.~~benefits within next 12 months.

LIQUIDITY AND CAPITAL RESOURCES

The primary sources of liquidity have historically been derived from raising capital by issuing debt or common stock. Our ~~principal liquidity requirements~~cash flow from operations is not yet able to cover cash needs. The Company believes current cash balances will be sufficient to cover our operating needs for the next twelve months. Our $85.5 million convertible note matures in November 2024. There are ~~for working~~covenants associated with the note that accelerates the conversion of tranches of the note should certain targets be met.

The Company may, in the future, seek to raise additional capital to fund growth, operations and other business activities, but such additional capital ~~expenditures. We fund our liquidity requirements primarily through cash~~may not be available to us on ~~hand and cash flows from operations. We ended September 30, 2021 with $29,707,254 of cash, cash equivalents, and restricted cash compared with $1,832,735 as of December 31, 2020.~~acceptable terms, on a timely basis, or at all.

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The following table summarizes our cash flows from operating, investing and financing activities (unaudited):

	Nine Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2022			2021

Net cash provided by (used in) operating activities	$	(14,034,039	)	$	(130,505	)	$	(11,444,065	)	$	(14,034,039	)
Net cash provided by (used in) investing activities		(2,597,818	)		(12,332	)		(46,863,645	)		(2,597,818	)
Net cash provided by (used in) financing activities		43,015,308			(495,439	)		(9,231,508	)		43,015,308

Cash acquired from acquisition of Northeast & ChargeSavvy		1,491,068			-						1,491,068
Cash acquired from acquisition of Transact Europe								18,676,860			-
Net increase (decrease) in cash, cash equivalents, and restricted cash	$	27,874,519		$	(638,276	)	$	(48,862,358	)	$	27,874,519

Operating Activities – For the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, net cash provided by ~~(used in)~~and used in operating activities was ($~~14,034,039)~~11,444,065) and ($~~130,505)~~14,034,039), respectively. The cash used in operating activities was primarily due to net loss and timing of settlement of assets and liabilities including stock compensation expenses.

Investing Activities – ~~Cash~~Net cash used in investing activities primarily consisted of the acquisition ~~purchase~~ of ~~Northeast~~Transact Europe and Sky Financials for the nine months ended September 30, ~~2021.~~2022.

Financing Activities – Net cash provided by financing activities primarily consisted of proceeds from ~~the Offering~~our underwritten offering of $45,805,491 for the nine months ended September 30, ~~2021.~~2021 and net cash used in by financing activities primarily consisted of repurchases of common stock under treasury method of $3,236,723 and repayment of convertible debt of $6,000,000 for the nine months ended September 30, 2022.

CRITICAL ACCOUNTING ~~POLICIES~~ESTIMATES

~~Our critical accounting estimates are included in our significant accounting policies as described in Note 2 of~~Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers outlines the ~~consolidated financial statements of this Form 10-Q. Those consolidated financial statements were prepared in accordance with GAAP. Critical accounting estimates are those~~basic criteria that ~~we believe are most important~~must be met to the portrayal of our financial condition and results of operations. The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities,recognize revenue and ~~expense. Our estimates are evaluated on~~provide guidance for presentation of revenue and for disclosure related to revenue recognition policies.

The Company recognizes revenue when 1) it is realized or realizable and earned, 2) there is persuasive evidence of an ~~ongoing basis~~arrangement, 3) delivery and ~~drawn from historical experience, current trends~~performance has occurred, 4) there is a fixed or determinable sales price, and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. Actual results may differ from our estimates. Management believes that the following accounting policies reflect the more significant judgments and estimates we use in preparing our consolidated financial statements.5) collection is reasonably assured.

~~Revenue Recognition~~The Company generates revenue from payment processing services, licensing fees and equipment sales.

	●	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 over the period of the licensing agreement.
	●	Equipment sales revenue is generated from the sale of POS products, which is recognized when goods are shipped. Revenue recognized from the sale of equipment was not material.

~~Revenue~~Cash Due from ~~Contracts with Customers~~”, ~~(“ASC 606”), contract assets or contract liabilities that arise from past performance but require a further performance before the obligation can be fully satisfied must be identified~~Gateways and ~~recorded on the balance sheet until respective settlements have been met.~~Payment Processing Liabilities

The Company’s primary ~~revenue~~ source ~~is generated from~~of revenues continues to be payment processing ~~services. Payment processing~~ services ~~revenue is~~for its merchant clients. When such merchant makes a sale, the process of receiving the payment card information, engaging the banks for transferring the proceeds to the merchant’s account via digital gateways, and recording the transaction on a blockchain ledger are the activities for which the Company gets to collect fees.

In 2022 and 2021 the Company utilized several gateways. The gateways have strict guidelines pertaining to scheduling of the release of funds to merchants based on several criteria, such as return and chargeback history, associated risk for the specific business vertical, average transaction amount and so on. In order to mitigate processing risks, these policies determine reserve requirements and payment in arear strategy. While reserve and payment in arrears restrictions are in effect for a ~~percentage of each transaction’s value and/or upon fixed~~merchant payout, the Company records gateway debt against these amounts ~~specified per each transaction or service~~until released.

Therefore, the total gateway balances reflected in the Company’s books represent the amount owed to the Company for processing – these are funds from transactions processed and ~~is recognized as such transactions or services are performed, at a point in time.~~not yet distributed.

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ITEM 4. CONTROLS AND PROCEDURES

Our management has evaluated, under the supervision and with the participation of our Chief Executive Officer and ~~Executive Vice President, evaluated~~Chief Financial Officer, the effectiveness of our disclosure controls and procedures ~~pursuant to~~(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange ~~Act. In designing and evaluating~~Act of 1934) as of the ~~disclosure controls and procedures, management recognizes~~end of the period covered by this Quarterly Report on Form 10-Q. Based upon that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

~~Based on management's~~ evaluation, our Chief Executive Officer and ~~Executive Vice President~~Chief Financial Officer has concluded that, ~~as a result of the material weaknesses described below,~~ as of September 30, ~~2021,~~2022, our disclosure controls and procedures ~~are not designed at a reasonable assurance level and are ineffective to provide reasonable assurance~~were effective in ensuring that information ~~we are~~ required to ~~disclose~~be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized, and reported within the time periods specified in ~~SEC~~the rules and forms of the SEC and ~~that such information is~~(ii) accumulated and communicated to our management, including our ~~Chief Executive Officer~~principal executive and ~~Executive Vice President,~~principal accounting officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. ~~The material weaknesses, which relate to~~

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that ~~were identified are:~~

We did not have enough personnel in our accounting and financial reporting functions. As a result, we were not able to achieve adequate segregation of duties and were not able to provide for adequate reviewing of the financial statements. This control deficiency, which is pervasive in nature, results in a reasonable possibility that material misstatements of the financial statements will not be prevented or detected on a timely basis.

~~Management believes~~occurred during the three and nine months ended September 30, 2022, that ~~the hiring of additional personnel who~~ have ~~the technical expertise and knowledge with the non-routine~~materially affected, or ~~technical issues we have encountered in the past will result in both proper recording of these transactions and a much more knowledgeable finance department as a whole. Due~~are reasonably likely to ~~the fact that~~materially affect, our accounting staff consists of a Principal Financial Officer, a bookkeeper and external accounting consultants, additional personnel will also ensure the proper segregation of duties and provide more checks and balances within the department. Additional personnel will also provide the cross training needed to support us if personnel turnover issues within the department occur. We believe this will eliminate or greatly decrease anyinternal control ~~and procedure issues we may encounter in the future.~~over financial reporting.

We will continue to monitor and evaluate the effectiveness of our disclosure controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information called for by this item is incorporated herein by reference to Note 1317 Commitments and Contingencies under the heading “Legal Proceedings” included in Part I, Item 1, Financial Statements (unaudited) — Notes to Unaudited Condensed Consolidated Financial Statements.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~Issuances~~

~~During the nine-month period ended September 30, 2021, the Company issued the following~~We have had no sales of unregistered ~~shares~~securities in 2022 that have not been previously ~~reported~~disclosed in a Current Report on Form 8-K or ~~a quarterly report~~Quarterly Report on Form ~~10-Q. The~~10-Q other than those disclosed below. All of these shares of common stock were issued ~~in reliance on~~pursuant to the ~~exemptions~~exemption from the registration ~~under the Securities Act in Section 4(a)(2)~~requirements of the Securities Act ~~and/or Regulation D thereunder.~~of 1933, as amended, afforded by Section 4(a)(2) thereof for the sale of securities not involving a public offering.

~~The~~In the three months ended March 31, 2022, the Company issued ~~2,125,665~~33,333 shares ~~in total. Of this amount, 999,996 shares were issued for~~of common stock owed to an investor pursuant to a ~~total investment of approximately $135,000, 932,732 were issued for services, 136,688 shares were issued as part of an asset~~securities purchase ~~where the counterparty was a family member of an employee of the Company, and 56,429 shares were issued as payment of interest.~~agreement signed December 31, 2020.

~~Share Repurchases~~In the three months ended June 30, 2022, the Company issued 45,000 shares of common stock to one independent contractor who provides infrastructure and strategic planning services to the Company.

~~On May 13, 2021, GreenBox POS (the “Company”) announced that~~In the Company’s Board of Directors approved a share repurchase program (the “Share Repurchase Program”), providing for the repurchase of a portion of the Company’s outstanding common stock. From May 13, 2021 tothree months ended September 30, ~~2021,~~2022, the Company ~~has repurchased~~issued a total of ~~300,000~~222,500 shares ~~at an aggregate cost~~ of ~~$2,679,633.~~common stock to three independent contractors who provide infrastructure planning, business development strategy, consulting and broadcast services to the Company.

~~Under the~~ Share Repurchase Program, the Company is authorized to repurchase shares through open market purchases, privately-negotiated transactions, accelerated share repurchases or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The repurchases have no time limit and may be suspended or discontinued completely at any time. The specific timing and amount of repurchases will vary based on available capital resources and other financial and operational performance, market conditions, securities law limitations, and other factors. The repurchases will be made using the Company’s cash resources.Repurchases

~~The Company made~~There were no share repurchases in the ~~following purchases of its equity securities during May 2021 through~~three months ended September ~~2021, inclusive.~~30, 2022.

Period

Total Number of Shares Purchased

Average Price Paid per Share

Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs

Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs
May 13, 2021 to May 31, 2021

            70,000

           $9.89

                             70,000

June 1, 2021 to June 30, 2021

            20,000

         $11.62

                             20,000

July 1, 2021 to July 31, 2021

              2,500

         $10.55

                               2,500

August 1, 2021 to August 31, 2021

167,500

           $8.06

                           167,500

September 1, 2021 to September 30, 2021

            40,000

           $9.50

                             40,000

Total

         300,000

                           300,000
$

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

~~10.1~~3.1	~~Membership Interest Purchase~~Certificate of Amendment to Articles of Incorporation of GreenBox POS filed with the Secretary of State of Nevada on August 26, 2022 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed by the Company on September 1, 2022).
10.1	Restructuring Agreement, ~~by and~~dated August 16, 2022 between GreenBox POS ~~Sky Financial~~ and ~~Intelligence LLC, HigherGround Capital LLC, Jeff Nickel and Charge Savvy LLC, dated July 9, 2021~~the Investor (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Company on ~~July 19, 2021)~~
~~10.2~~	Share Purchase Agreement by and between GreenBox POS, and certain individuals named therein, dated September 3, 2021 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Company on September 20, 2021)
~~10.3~~	~~April 2021 Sublease Agreement with regard to 3131 Camino del Rio North, Suite 1400, San Diego, CA 92108~~August 16, 2022).
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	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	~~GREENBOX POS~~RYVYL Inc. (Registrant)

Date: November ~~15, 2021~~21, 2022	By:	/s/ Fredi Nisan
		Fredi Nisan Chief Executive Officer (Principal Executive Officer)

Date: November ~~15, 2021~~21, 2022

By:

/s/ ~~Benjamin Chung~~J Drew Byelick

~~Benjamin Chung~~

J Drew Byelick

Chief Financial Officer (Principal Financial Officer)

3135

~~iso4217:USD xbrli:shares~~

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

Balance at June 30, 2021		42,236,219		$	42,327			-	$	-	$	(933,343	)	$	73,916,018		$	(25,093,541	)	$	47,931,461

Exercise of warrants - common stocks issued from issuable		106,667			107			-		-		-			211,094			-		$	211,201

Issuances of stock for services		251,998			252			-		-		-			164,660			-		$	164,912

Issuances of stock for stock option exercises		13,217			13			-		-		-			(13	)		-		$	-

Issuances of stock to board members for services		8,935			9			-		-		-			82,495			-		$	82,504

Issuances of common stock for acquisition of ChargeSavvy		1,000,000			1,000			-		-		-			12,139,000			-		$	12,140,000

Stock option expense		-			-			-		-		-			3,777,572			-		$	3,777,572

Correction of number of shares issued and outstanding due to incorrect common stock split		(542,014	)		(843	)		-		-		-			-			-		$	(843	)

Treasury Stock		(210,000	)		-			-		-		(1,746,290	)		-			-		$	(1,746,290	)

Net loss		-			-			-		-		-			-			(6,049,755	)	$	(6,049,755	)

Balance at September 30, 2021		42,865,022		$	42,865			-	$	-	$	(2,679,633	)	$	90,290,826		$	(31,143,296	)	$	56,510,762

	Fair Value at May 21, 2021		Valuation Technique	Unobservable Input	Range

Customer Relationship	$	276,583	Multiple-period excess earnings method	Discount rate		15.90	%

Tangible assets (liabilities):
Net assets and liabilities	$	(70,057	)


Intangible assets:
Customer relationships		276,583
Goodwill		2,293,474
		2,570,057

Total net assets acquired	$	2,500,000

Tangible assets (liabilities):
Net assets and liabilities	$	(375,681	)
Land/Building		604,968
		229,287

Intangible assets:
Customer relationships		5,543,612
Business Technology/IP		2,611,088
Goodwill		3,756,013
		11,910,713

Total net assets acquired	$	12,140,000

	September 30, 2021
Acquisition of Northeast	$	2,293,474
Acquisition of ChargeSavvy	$	3,756, 013
Total	$	6,049,487

Years Ending
December 31,
2021	$	421,564
2022		1,686,257
2023		1,686,257
2024		1,686,257
2025		1,686,257
Thereafter		825,840
	$	7,992,432

	September 30, 2021		December 31, 2020

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

Total convertible notes payable		-		3,850,000
Debt discount		-		(2,993,408	)

Total convertible notes payable, net of debt discount	$	-	$	856,592