United States securities and exchange commission logo
June 16, 2020
Fredi Nisan
Chief Executive Officer
GreenBox POS
8880 Rio San Diego Drive, Suite 102
San Diego, California 92108
Re: GreenBox POS
Form 10-K for the
Fiscal Year Ended December 31, 2019
Filed May 15, 2020
Form 10-Q for the
Quarterly Period Ended March 31, 2010
Filed May 28, 2020
File No. 1-34294
Dear Mr. Nisan:
We have reviewed your May 29, 2020 response to our comment letter
and have the
following comments. In some of our comments, we may ask you to provide
us with information
so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your response to these comments, we may have
additional
comments. Unless we note otherwise, our references to prior comments are
to comments in our
April 7, 2020 letter.
Form 10-K for the Fiscal Year Ended December 31, 2019
Item 7 - Management's discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations, page 13
1. Please revise to
describe any unusual or infrequent events or transactions or any
significant economic
changes that materially affected the amount of reported income or
loss from continuing
operations and, in each case, indicate the extent to which income or
loss was so affected.
In addition, please describe any other significant components of
revenues or expenses
that in your judgment, should be described in order to understand
your results of
operations. Please also describe any known trends or uncertainties that
have had or that you
reasonably expect will have a material favorable or unfavorable
Fredi Nisan
FirstName POS
GreenBox LastNameFredi Nisan
Comapany NameGreenBox POS
June 16, 2020
Page 2
June 16, 2020 Page 2
FirstName LastName
impact on net sales or revenues or income or loss from continuing
operations. If you
know of events that will cause a material change in the relationship
between costs and
revenues (such as known future increases in costs of labor or
materials or price increases),
disclose the change in the relationship. Finally, to the extent that
the financial statements
disclose material increases in revenues, provide a narrative
discussion of the extent to
which such increases are attributable to increases in prices or to
increases in the volume or
amount of goods or services being sold or to the introduction of new
products or services.
Your discussion and analysis of results of operations should be
presented through the eyes
of management, describe the factors causing material changes in
revenues and expenses
and provide such other information that you believe is necessary to an
understanding of
your results of operations.
Liquidity and Capital Resources, page 14
2. Please revise to identify any known trends or any known demands,
commitments, events
or uncertainties that will result in or that are reasonably likely to
result in your liquidity
increasing or decreasing in any material way. When a material
deficiency is identified,
indicate the course of action that you have taken or propose to take
to remedy the
deficiency. Also, please identify and separately describe internal and
external sources of
liquidity, and briefly discuss any material unused sources of liquid
assets. In addition,
please describe material commitments for capital expenditures as of
the end of the latest
year, and indicate the general purpose of such commitments and the
anticipated source of
funds needed to fulfill such commitments.
Finally, describe any known material trends, favorable or unfavorable,
in your capital
resources and indicate any expected material changes in the mix and
relative cost of such
resources.
Consolidated Statements of Operations, page F-3
3. Please separately disclose net revenues from the sale of tangible
products and revenues
from services. Please refer to Rule 5-03.1 of Regulation S-X.
4. Please separately disclose cost of tangible products sold and costs of
services as required
by Rule 5-03.2 of Regulation S-X. In addition, please disclose the
nature of the specific
cost items classified as cost of revenues in the notes to the
financial statements.
Notes to Consolidated Financial Statements
1. Description of Business and Basis of Presentation
Restatement, page F-7
5. We reviewed your response to comment 4. Since you did not provide the
disclosures
required by ASC 250-10-50-7 in your financial statements included in
the Amended Form
10-K for the year ended December 31, 2018 and labeled the 2018 balance
sheet included
in the 2019 Form 10-K as "Restated," please revise to provide the
required disclosures.
Fredi Nisan
FirstName POS
GreenBox LastNameFredi Nisan
Comapany NameGreenBox POS
June 16, 2020
June 16, 2020 Page 3
Page 3
FirstName LastName
Please refer to ASC 250-10-50-7.
2. Summary of Significant Accounting Policies
Revenue Recognition, page F-9
6. We reviewed the revisions to your disclosure in response to comment 3.
Please revise
to disaggregate revenues recognized from contracts with customers into
categories that
depict how the nature, amount, timing and uncertainty of revenues and
cash flows are
affected by economic factors. Please refer to ASC 606-10-50-5.
Accounts Receivable and Allowance for Doubtful Accounts, page F-10
7. Please explain to us the factors accounting for the significant
allowance for bad debts at
December 31, 2019. If the significant allowance is attributable to
your decision to absorb
all chargebacks, please disclose that fact and the primary reasons for
the chargebacks.
Accounts Receivable from Fines and Fees from Merchants, page F-10
8. You disclose that fines and penalties charged to merchants is a normal
course of business.
As such, please tell us your basis for classifying merchant fines and
penalty income as
other (income) expense.
4. Settlement Processing, page F-14
9. Please explain to us what the allowance for uncollectable - hold and
fees represents and
why the allowance differs from the amounts disclosed in the
consolidated balance sheets.
5. Cash Due from Gateways, page F-15
10. The allowance for uncollectable - hold and fees is less that the
amount of the allowance
disclosed in note 4 and the difference appears to represent the amount
of restricted cash at
the end of the year. Please revise so the tabular presentation at
December 31, 2019 is
comparable to the presentation at December 31, 2018.
10. Derivative Liability, page F-19
11. Please disclose the inputs used to arrive at the fair value of the
embedded conversion
option and the warrants, including judgments and assumptions made as
required by ASC
820-10-50-1Ca. In addition, please include a reconciliation from the
opening balances to
the closing balances, disclosing separately changes during the periods
attributable to
(1) total gains or losses for the periods recognized in earnings, and
the line item(s) in the
statement of operations in which those gains or losses are recognized
and (2) issues and
settlements. Please refer to ASC 820-10-50-1Ec1.
Note 14. Exclusive Licensing Agreement - MTrac, page F-24
12. We read your response to prior comment 10 and note that you earned
$360,000 in
Fredi Nisan
GreenBox POS
June 16, 2020
Page 4
Licensing Revenue in 2018. Please reconcile this amount to the
$450,000 presented in the
Statements of Consolidated Operations in the 2018 10-K/A filed
February 7, 2020. In
addition, please explain how you accounted for the $90,000 payment
that was subject to
reimbursement.
15. Commitments and Contingencies
Operating Leases, page F-26
13. Please tell us your consideration of the disclosures in ASC
842-20-50-8 and 9.
Form 10-Q for the Quarterly Period Ended March 31, 2010
Notes to Unaudited Condensed Consolidated Financial Statements
2. Summary of Significant Accounting Policies
Recently Issued Accounting Updates, page 12
14. It appears that you should have adopted ASU 2018-03 and ASU 2018-15 as
of January 1,
2020. Please advise.
General
15. Please address the above comments on Form 10-K to the extent
applicable.
You may contact Ta Tanisha Meadows at (202) 551-3322 or Bill Thompson
at (202) 551-
3344 if you have any questions.
FirstName LastNameFredi Nisan Sincerely,
Comapany NameGreenBox POS
Division of
Corporation Finance
June 16, 2020 Page 4 Office of Trade &
Services
FirstName LastName