Ryvyl Inc. (RVYL) Earnings Call Transcript & Summary

Good day, and welcome to the Second Annual Winter Wonderland Best Ideas Conference. The next presenting company is GreenBox POS. [Operator Instructions] I'd now like to turn the floor over to today's host, Ben Errez, Chairman of GreenBox POS. Sir, the floor is yours.

Thank you very much. Hello, everybody. Thanks for spending the minutes with us here today. I'm going to try and run through the presentation a little bit quicker than normal to allow for some Q&A. By -- I'm looking at the attendees' list, and I recognize some of the names as folks who I spoke with before. So I'm going to -- I encourage all of you to bring up any questions that you may have. So let's begin with this presentation. So as per usual, during this presentation, you will hear forward-looking statements within the meaning of Section 27A to the SEC Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. And as per usual, I'm going to allow for the rest of this to be consumed by you following this presentation. We will make this presentation available on our website in the Investor Portal immediately after this presentation. So you will notice that this slide is a little bit -- or this presentation is a little bit different than those that we have done before. This is part of the work that our new Chief Marketing Officer and her team put together. I'm going to use this minute to do a quick shout out to Jacqueline Reynolds, who is responsible for this presentation. Nice job. Mission statement has not changed for GreenBox. We are out to build a compliant, cutting-edge blockchain ledger tokenized payment solutions for the diverse, evolving and dynamic global market. GreenBox is known for having a robust technology suite, recurring high-margin revenues, strategic partnerships, and we'll talk about those a little bit later, and highest accountability available on blockchain today and an experienced and tenured management team. And as we all know, governments and large corporations all around the world are moving in the same direction as GreenBox, into blockchain, stable coin, responsible ledger set of technologies. Here are some of the milestones that brought the company to where it is today. GreenBox, as you all know, was founded in June of 2017. Although since we became a public company in April of 2018 by way of reverse acquisition, our official starting day is 10 years prior. However, the actual start-up day for GreenBox is 6/13/2017. Some of the highlighted milestones on this slide include not only our initial launch into the public arena, into the OTCQB in April of '18, moving forward to an uplisting to NASDAQ in February of '21, and then ending with our largest and most strategic acquisition of Transact Europe that is scheduled to complete in the next few weeks. Also, we should note out the technology releases along this time line. Generation 1 of our technology was released in the first quarter of 2019; Generation 2 in April of '20; Generation 3 in January of '21; and our stable coin technology, which ends the stabilized version of Generation 3, was completed and fully integrated into the ecosystem by mid-2021. So the global digital payment market is growing very, very quickly. And if I include into that, the potential growth already in store with the largest economies, we noticed that the U.S. alone has a bank of over $200 trillion of cashless transactions that happen within the U.S. every year. We know that. These are numbers that are tracked by a report that is published by the Federal Reserve every December. And that's a quote from that paper. Most of that belongs to ACH-type transactions, but several other methods of cashless transactions are included in this number. Here are some elements that I point to national scale as part of the global trends to blockchain. We know that the -- and we have a link on this presentation, to a letter that was published by the Office of the Comptroller of Currency, the OCC, that happened in January 4 of last year, that national banks now can hold deposits as stablecoins and, in general, are now allowed to utilize blockchain provenance, just in the same fashion that ACH, wires and Swift were done before. And we see governments around the world shifting towards digital currency. Some of them using altcoin technologies and some of them into stable scenarios. So why GreenBox? GreenBox is a brand that prides itself on as being trusted and secure. There has been no breach of our technology and very, very few companies and different technology providers can say that. GreenBox proprietary blockchain ledger technology has been serving payment infrastructure, as I said, since the release of Generation 1, that's in the beginning of 2019. And since, we never had any loss of data and any loss of payments or money, any loss of the ledger security, et cetera. I'm very proud of this brand. The blockchain infrastructure is composed of the following: compliant tokenized blockchain payment solution. By compliant, we mean not only the current set of requirements, but also those that are expected along 2022 in terms of government oversight over the space. One interesting example of that is the ability to provide an ecosystem that can be audited, and is right now audited, in real time. No other system in the space can provide that. More about that a little bit later. This is one of my favorite slides of this presentation, demonstrates the GreenBox coverage of an end-to-end scenario along the payment space. And not only on the front end, which includes the payment methods and the gateway and gateway for those of you remote on the technology means the system that verifies or authorizes payments and then settles these same payments, all the way to the back ends, to the acquiring elements, the payment processing, the networks and even through the issuance, everything is covered by the GreenBox technology. So what is a legacy payment system? So legacy payment system includes a back-end foundation built on mostly manual activity. For example, foreign exchange may still be utilizing a pen and a notebook today. Trying to take a legacy infrastructure and build an entirely new system, which includes blockchain around it is very, very costly. I equate that to almost financial suicide, primarily because you can't really plan for a system to be launched in this space under high-moving technology and targets in a time frame of 3 years. There's just no way to predict where this technology will be. And the only way to do that is to do it incrementally. This industry as a whole is ready for disruption and evolution into the new realities. So how's GreenBox plugging into this? So GreenBox is positioned vertically, with an end-to-end coverage in order to capture a significant share of this anticipated volume. GreenBox is much faster and much more secure platform for payment transactions. GreenBox provides white-label banking solutions and a blockchain provenance to create a tokenized ecosystem. And GreenBox Generation 3 technology platform has no barriers to scalability, but is very important as the company moves year-over-year to a more advanced and encapsulating exposure into the market. We just announced, I believe it was 2 weeks ago, in a press release that we passed the $2 billion mark in volume of processing for 2021. On its own, it's a big number, but it doesn't really tell the story until you look at it from the perspective of year-over-year growth. 2020 only saw about $200 million in volume of processing. So growing 10x year-over-year is something that very few technology platforms can do without a hitch, and GreenBox was able to do that. From the investment perspective, where does GreenBox fit into the picture? Over here is an interesting graph. So we are now in the beginning of 2022 and look at the bottom ledger to see where we are in this graph. But look at what we see as upcoming '23 and '24 looking like, right? Going to $2 billion in volume of processing is a big jump for GreenBox. But that's not the goal. This is a stepping stone on the 3-year view of the company. In that perspective, you can see that we are looking at volumes that perhaps by the end of '23 or in '24 reach approximately $1 billion per month. $12 billion is $1 billion per month. And revenue grows together with this, right? We finished 2021 with approximately $26 million in gross revenues. We're looking to almost triple that number into '23 and '24. And this is a view that does not yet encapsulate future acquisitions, which we have slated for '22, '23 and '24. This is what the GreenBox looks like on NASDAQ today. We have a stock that is unfairly valued in our view. And addressing that issue, we have been approved share buyback by our Board of Directors that right now is in excess of $10 million. And we think this is an amazing opportunity for us to recapture some of the shares that we're previously participating in, maybe uplifting our capital raises for the company. In fact, it's a huge net gain for the company. However, that reduced share price also translate to reduced market cap, and we are at about $160 million at the moment. Trailing 12 revenues are at about $22 million. Shares outstanding remain fixed at about 43 million. The float is about 20 million, and insiders still control over 50% of the company, with Fredi Nisan, company's CEO, and myself as the 2 largest shareholders. Including individual contributors, 1099 consultants and full-time employees, the company stands today at about 210 employees altogether. We're still headquartered in San Diego, but we have offices in other locations, as you all know. So again, what are the investment benefits that we see in GreenBox? First and foremost, robust technology suite, the most advanced of its kind currently available around the world. Smart contract token technology, absolutely market leader. There is no match for this technology today. Fiscal year 2022 looks to about triple the volume that we had in 2021, and we see a goal of the -- or we budgeted a goal of about $5 billion for the year in volume of processes. We budgeted and modeled a continued recurring and high-margin revenues, especially using Generation 3 in association with stablecoin. And we continue to build on the independent sales organization sales model. It's the fastest way in most budget conscious way to increase the size of the business. And then lastly, I mentioned here, the Board approved share buyback program, where more of the details pertaining to this program are coming in the 10-K or the annual for 2021. But we have also already filed an 8-K pertaining to this with some further details. As I said before, the size of this program is about $10 million. This is the next big thing for GreenBox, in particular, and for the market in general, launching a stablecoin. Coyni is the name of our stablecoin technology, and it is the best of both worlds for instant transactions with blockchain security without the price volatility of cryptocurrencies. Smart Contract technology on which Coyni is built is a very advanced set of properties that make Coyni the best suited stablecoin currently available as a digital representation of minted currency. It is the best transactional digital media, and it's the best custodial digital media. And the combination of both is why Coyni is, so far, ahead of the game. Coyni has the ability to settle transaction instantly, anywhere around the world and in any currency. Huge advantage over the peers in the space. Coyni solves for inherent problems in digital payment infrastructure and is removed from volatility and, at the same time, decreased costs and settlement time for every transaction. Part of the security of Coyni includes its ability to perform on a centralized node and not a decentralized node. It is, at the same time, visible on a decentralized node. And that's very important because it has the same visibility and as any other token or coin, but at the same time, it is near impossible to hack into. Also, Coyni is currently the only reversible, meaning having the ability to be deissued stablecoin out there. And Coyni is extremely streamlined. Very, very robust, it's simple. Very few issues were involved in launching it, primarily because this is a technology that began slice by slice from 2019 and only in 2021 became a part of a set-aside technology. So how is Coyni planning on being deployed. And key to the success of Coyni in terms of deployment includes adoption and utilization of this technology in a large scale. So first to do that, we have to use dedicated tools. Coyni has a stand-alone application that has been internally used for, I guess, about 6 months now, very similar to Venmo. And it is a peer-to-peer application. Also, Coyni has a regulated custodial and reserve account architecture. It is similar to USDC, but far exquisite in terms of the ability to audit it. I'll remind you that USDC is only audited once a month, where Coyni is audited in real time. And there is a possibility for USDC to be sort of review the [ mid-swap ] between issuance and retirement of coin, where there's no such possibility for Coyni. The next strategy towards widespread adoption for Coyni includes accretive acquisitions. We have announced a few already as completed, including ChargeSavvy and Northeast Merchant. And we are likely to complete the Transact Europe acquisition later in the month. Strategic partnerships for Coyni and for GreenBox include the Territorial Bank of American Samoa. This is a huge win for GreenBox due to the fact that it's currently the only closed-loop and dominant technology being deployed without peers within a country or a closed-loop system. GreenBox is the exclusive provider of banking and payment technology for the Island of American Samoa through its territorial bank or its Central Bank. Another partnership is with isMedia. That's an NFT platform that GreenBox and Coyni are the exclusive provider for. And that will be the first launch of Coyni and GreenBox technology into the NFT and Metaverse platforms. And then lastly, as I said before, we will continue to deploy the independent sales organization network for driving additional adoption and utilization of this technology. So who we are? Here is a quick view of the executive team at GreenBox. I'm -- Fredi and I are the original co-Founder of the company. You can see Chief Operating Officer, Vanessa; President of Payment, Ken; Chief Legal, Lindsey; Chief Business Developer, Pouya; Chief Marketing Officer, Jacqueline; and Chief Financial Officer, Ben Chung. And should you need a further information, here are some contact information for myself and for Mark Schwalenberg, who is our Investor Relations Manager and as part of the MZ Group. And with this, we can go to some Q&A, if we have any.

And we do. So let's take them one at a time. I understand that my time is limited. So let's start and get through as many of these as we can in the time that we have left. So question number one, what have you learned during the integration process of prior acquisition? So that's a good question. So when a public company buys a public or a private company, it has to go through certain regulated process. That process includes independent valuation. In the professional lingo, it is called filing an ASC 805 schedule. It has to go through certain reviews. It has to go through an audit and such additional steps. We have learned that this type of activities can go very deep and not always do they cover everything that is necessary to complete a successful acquisition. So one solution that we have utilized before was just to take our time, ChargeSavvy acquisition took almost 7 months to complete and that's okay. At the end of the day, we got the deal that we needed. Also, we are beginning to integrate [ Rexon Royalty Insurance ] into acquisitions that we're doing now and we'll do in the future. Next question. A few pending acquisitions announced in the second half of '21 and have not yet closed. That's true, the major one of which is the acquisition of Transact Europe. That acquisition is 100% controlled by the European regulator. And just recently, and by recently, I mean, in the past couple of days, we have been informed that they have no further request for information when they are satisfied with the information provided towards this acquisition. That makes me very comfortable anticipating a quick closing. Still very interested in this acquisition. We have the capital to complete it, waiting an escrow, and we're looking forward to executing on this very, very quickly. Next question. Can you comment on the level of management confidence that GreenBox will meet required processing volume and revenue commitments to prevent conversion of debt into stock at $1.67 per share price. Another good question. And as the largest shareholder of GreenBox, I make sure that this is something that will not happen for the company. Obviously, I don't control 100% of the event. But as we demonstrated just last week, we are capable of negotiating and working together with our financing partners on extensions and revisions to the financing agreements that we have in place in a way that is very accretive to the company and provides value to it and its shareholders and prevent conversion. Obviously, I don't control, again, 100% of the cases, but should there be any material deficiency in this strategy, I'm placing myself in the very strong line. So management is confident in its ability to manage the company moving forward, and just like myself pegs our future into the future of the company without hesitation. So next question. What are the reasons [ Milton ] shift from other payment processors to your processing platform? So many reasons, and some of them include things like the ability to pay instantly. This is something that doesn't exist in legacy system, but it's a commonplace for GreenBox. And the security of working with the blockchain ecosystem, the privacy, the reliability, the extendability, the ability to handle unlimited volumes, all of those are advantages that are unique to GreenBox into blockchain in general. And on top of that, the ability of our stablecoin to transact without borders and without business schedule or other limitations, and you get to a system that is amazingly effective for the space. Can you walk through the details of the stock buyback? Are you able to buy stock at this level? How much is left in the buyback, I guess, budget. So thanks for that question as well. GreenBox has been committed to recognize, watch for and recognize unfair trends in terms of pricing of our security. We're very minded to this shift, and we'll continue to repurchase shares as we are allowed to do so by the regulator, by our governing body, the Board of Directors and as decided by the executive staff. Because we are -- we have the intention of continuing to buy back shares into this pricing, we decided to add a specialized program. For those of you in the space, it's called the 10b5-1, which we will include in our 10-K, where you can read how and how much we intend to continue this buyback or repurchase program. We have added a few additional brokers that will help us do it and intending to continue and actively on this one. With this, we return the baton back to Nadia.

Do you wish to conclude the presentation?