GreenBox POS (GBOX) Letter to Shareholders

July 29, 2021 8:37 AM EDT

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GreenBox POS (NASDAQ: GBOX) ("GreenBox" or the "Company"), an emerging financial technology company leveraging proprietary blockchain security and token technology to build customized payment solutions, today issued a letter to shareholders from the Company’s Chairman, Ben Errez.

Dear Valued Shareholders,

It has been a productive year for GreenBox POS thus far and we are grateful for your ongoing support. We continue to make great strides in advancing our blockchain ledger-based payment solutions and more recently, the deployment of our new smart contract technology, branded as Coyni, that we view as a type of stablecoin since they are settled in US dollars. As the world steadily shifts towards cashless payments, smart contracts and stablecoin based payments, we believe GreenBox is at the forefront of these trends and well positioned to be a key player in the financial payments space. We are constantly challenging ourselves to be an innovative and forward-thinking industry leader in today’s competitive financial payments market.

Our core business remains on track with previous estimates of approximately $1.65 billion in transaction volume for FY2021, which is projected to drive an estimated $58 million FY2021 in gross revenues. These values include the expected contribution from our acquisition of ChargeSavvy, LLC but does not include estimated contributions from Coyni. We are proud of our work and progress so far this year. We look forward to updating shareholders at our second quarter earnings announcement.

Recently, we made several major announcements that we believe demonstrate our progress towards continued execution of our global strategy. To ensure proper understanding of these milestones, we felt it appropriate to issue this shareholder letter in addition to hosting a corporate update webinar on Tuesday August 3rd, at 4:30 p.m. ET. Details for the webinar are provided below:

Date: Tuesday, August 3rd, 2021Time: 4:30 p.m. Eastern timeDial-in: 1-877-407-4018International Dial-in: 1-201-689-8471Conference Code: 13722012Webcast: http://public.viavid.com/index.php?id=146102

Current volume and revenue guidance is due to expected increased volume and revenues from the scalability achieved with our Generation 3 launch, the growing agent network being cultivated by the GreenBox team, and in large part, strategic acquisitions. Partnerships are essential for successful payment processing businesses, and based on our technological advancements with Generation 3, an eye towards enhanced customer support, renewed integration strategies, and evolving compliance, we continue to build our ISO and agent network, resulting in expected high volume books of business brought into our processing ecosystem.

While our ISO and agent network is vital to our growth, acquisitions will play a primary and an integral role in our strategy. As such, we successfully completed two accretive acquisitions this year - Northeast Merchant Services, which added banking capabilities through a BIN, and ChargeSavvy, LLC, which carried over a substantial and attractive book of processing volume. Both will contribute to increased processing volume in what we believe are higher margin business verticals while expanding our banking capabilities and bandwidth.

Most recently, we announced we entered into a binding MOU for the acquisition of Transact Europe, for which we expect regulatory approval in approximately 60 days. This strategic acquisition, if completed, is expected to allow an aggressive expansion into the European market by leveraging Transact Europe’s principal level membership of Visa, worldwide membership of Mastercard, and as a principal member of China UnionPay. Given Europe’s large void in the payment processing space due to the departure of Wirecard, we believe that our technology paired with the right licensing assets will position GreenBox as a key player in that region. Additionally, our robust agent and ISO network will help us bring together more strategic partnerships with the goal of creating what we believe will be our own significant processing footprint in the EU, all while driving adoption of Coyni. Global expansion remains a core objective of GreenBox and will be key to the adoption and growth of our payment and smart contract token technologies.

The recently announced partnership with the Territorial Bank of American Samoa, whereby we expect to launch a fully customized financial solution to support the entire island of American Samoa, is an opportunity to showcase the impact of an adoption of our technologies in closed loop systems. The initial proof of concept will be fully dependent on the GreenBox ecosystem which supports merchant services, peer-to-peer payments, electronic bank transfer (EBT), ATM, blockchain ledger financial backing, card issuing, and banking related services. The possibility for GreenBox through a proof of concept to ultimately be the recognized provider for the island’s financial services would be an important demonstration of our ecosystem.

We are most excited about our smart-contract US dollar denominated token technology, recently branded as Coyni. As previously discussed, Coyni has features unlike many other stablecoins, cryptocurrencies or tokens in existence such as instant settlement on our proprietary blockchain ledger, reversibility and the ability to be deleted. The instant settlement feature on our proprietary blockchain ledger gives our customers faster access to funds in many locations and currencies, crypto or fiat, all at lower fees and on a tokenized secure ecosystem. We anticipate that the combination of our payment acquiring division with Coyni will help solve two very important problems for global or multinational companies: the first is accurate and centralized monthly reporting; and the second is access to the underlying capital, quickly, in the parent company location.

We expect Coyni to be a major growth driver for the company, and ultimately function in a similar fashion to financial transaction leaders like Circle with its USDC, and PayPal with Venmo,

As part of our long-term strategy to unlock shareholder value, we have explored a number of strategic options and currently believe that Coyni is best structured as a spinoff company (a “SpinCo”). We are continuing, however, to evaluate different strategies and alternatives. The assets of the SpinCo are expected at this time to include the smart contract token technology, Coyni branding, and associated revenue, although we will continue to evaluate and assess other possible strategies. We believe the SpinCo strategy is advantageous to GreenBox and its shareholders in several ways. First, both GreenBox and the SpinCo may be valued as pure-play financial technology and financial services companies, respectively. Second, it allows for the SpinCo, and its new management team, to focus wholly and entirely on growing and enriching the Coyni business model, positioning it as a focused competitor with clear differentiated technology advantages relative to traditional payment systems. Third, it allows both GreenBox and the SpinCo to potentially maximize the utility of their respective capital structures, without diluting either investment thesis. We spent countless hours evaluating the best strategy for maximizing shareholder value of both assets – the core GreenBox technology platform and the Coyni smart contract US dollar denominated tokenized platform – and we believe we are making the right decision for stockholders in spinning off Coyni.

For these reasons, we announced our intent to implement a special dividend series to reward long-term, loyal shareholders of GreenBox. While our analysis of the strategies and record dates are still under considerations, there are two possible opportunities we expect to be awarded representation of shares in the SpinCo IPO. First, every shareholder of record of GreenBox on or about August 16, 2021, will receive 0.30 shares representation in the SpinCo for each share of GreenBox common stock held. Second, approximately 45 days prior to the SpinCo IPO, which is expected to occur in the fourth quarter of 2021— shareholders of record of GreenBox may be awarded 0.15 shares representation in the SpinCo for each share of GreenBox held. GreenBox shareholders of record on both dates, under our current thinking, can therefore receive up to 0.45 shares representation in the SpinCo for each share of GreenBox common stock held. It is our anticipation that SpinCo shares will be listed at the time of the IPO on the NASDAQ or a similar major exchange. GreenBox currently intends to maintain majority equity ownership stake in the SpinCo after IPO and dividend.

We hope this summary provides additional clarity to our corporate vision and objectives on how we are building GreenBox to be, we believe, the newest, most agile, and robust payment software technology to compete in the digital payment space. Thank you for being a part of the GreenBox family. We are grateful for your ongoing support and attention to our story. Please continue to follow along in our journey. Your success is our success!

Sincerely,

Ben ErrezGreenBox, Chairman



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