10 Feb GRBX Research Update
Here is a new 10 minute interview done recently with Ben Errez of Greenbox, make sure to watch. My notes from my phone call with him yesterday and my new target of $6 and details is below:
Yesterday after the market closed, I had a 30 minute phone call with Chairman Ben Errez of Greenbox. He and his partners together control 78% of the shares, reminds me of Terren Peizer of BIVI, OTRK, YAYO and how he works. I asked him several questions to get more “Color” on the story and make sure I have my numbers and assumptions right.
After the phone call and some modeling I did, I am changing my price target to $6 in 12 months from $3.50 and I will be aggressively buying more shares on Thursday. (These are pre split so it would be $36 post split assuming a $9.60 post split price if they were public NASDAQ listed today)
Here are some quick bullets:
This is essentially an IPO/Uplist all in one onto the NASDAQ. This will go off with a 1 for 6 reverse split (Common, same thing more or less BIVI did and others), they will raise 40 million to meet NASDAQ capital requirements, that is already over-subscribed by investors, and in fact underwriters can buy another 6 million on top of that in a Greenshoe option. (Underwriters can buy 15% more shares to hold or sell)
Based on todays 1.60 pre split area price, I figure we go public loosely at $10 per share post split, we will have about 40 million total shares after reverse split, and the IPO and offering, and the closing of the Chart Savvy acquisition as well.
I can model right now about 33 million in profits/cash flow for 2021 after the Chart Savvy acquisition is folded in which is imminent. As of today at 1.60 per share pre split, we are trading at 11.6 x 2021 earnings model. CHEAP!!!
Per the Chairman, he believes after the IPO/Up list and considering the 40 million in the bank, that warrants a PE ratio in time of 40, which would put the stock at a fair value today of $5.50 per pre split share, and if we add back the cash per share then we are at $6.50, hence my target is $6 and I think that is safe ($36 post split)
My advice is to make sure you have a full position ahead of the IPO/Up list which could come next week or in 2 weeks max if all goes well. If we get to $6 in 12 months (Pre-split), that is 3.75x your money possibly.
If this helps, imagine a stock that today is at $16 per share, my target would be $60 equivalent math wise… this is 1.60, my target is $6… its all math, what we care about is the percentage upside to downside risk. The downside risk here is minimal, the upside is much higher than $6 because I am not adding in any other likely agreements or business developments at all. This $6 number could be conservative.
This is now also suddenly as of last night on the Stocktwits Boards which I was not expecting pre-IPO listing, so now the cat is out of the bag. I hope you bought the last 2 days when I urged it, and again I will be adding today to my large position making this one 2nd behind BIVI in my personal portfolio just fwiw.
Here are some notes from the call that woke me up: These are edited and paraphrased by me…
Q: Tell me a bit more about Chart Savvy and how it adds to your bottom line? The structure looks great at $2 per share
A: Chart savvy is not included in current projections, assumes 240m pre split shares post IPO/Raise, and this adds $2 per share of value on its own on 40x earnings model.
Chart Savvy was purchased at 4x net earnings multiple instead of 10x normally. Essentially buying a 2x earnings due to the $2 share value given by Chart Savvy board for the agreement of GRBX shares as the currency for the acquisition. Add to 2021 estimates of Greenbox… 25-30mm ebitda for year range. GRBX paid 30m for 200m of shareholder accretive value essentially. A great acquisition that falls to bottom line with a higher PE ratio out of the gate.
Q: Tell me about reverse split plans and the 40 million equity you mentioned?
A: S-1 Filing is now being amended, but the same information. Kingswood Capital is the sole underwriter for up listing. a 40m raise, 15% greenshoe, subject to NASDAQ approval. The listing process all companies must go through, SEC, FINRA , NASDAQ. FINRA dealing with the Reverse split, that is approved. SEC handles up listing and S-1 filing approval etc. NASDAQ is involved in creating the pricing mechanism, due diligence on executives etc,and protecting retail investors. If approved prior to the audited year end numbers, they get conditional approval first, then 2nd level of due diligence, lock up agreement, underwriting agreements etc. 40m must be in bank account before the up listing to NASDAQ, then a reverse split, then we trade under GBOX symbol. Pricing this Thursday, close Friday, funds Tuesday, Listed Wednesday. 1 for 6 reverse split if all goes well.
Fredi, Kent, and Ben control 78% ownership of the shares.
Q: Will you add to your Board of Directors?
A: Have to do it as part of up listing process. 3 additional director nominees for total of 5, 2 from company and 3 outside.
Banks will soon adopt Gen3 as their payment infrastructure, per Ben.
Q: Explain the Stable Coin that GBOX is developing and what it means for your business?
A: End results is the eco system will result in token technology being superior to existing technologies. There are many Cryptocurrency issues today, a noble idea but not very functional for commerce. Bitcoin is the most successful today, amazing in the acceptance and adoption of this currency into financial systems. However, not really transactional, more of a cold storage of value. Supply and Demand determines value, 21m total bitcoins total etc. A de-centralized eco system for Bitcoin, if you steal one you can steal the other. Bitcoin susceptible to hacking on systems that manipulate the environment, like exchanges etc. Volatile currency, too dangerous for economic use really.
The other approach is centralized, and controlled by an owner. The value is more protected, or what we call a Stable Coin. Secure token technology essentially creates a currency with unlimited supply, stable, and can be deleted following a transaction that is completed, can’t be hacked. Can be both centralized and de-centralized at the same time. Smart Contracts control the exchange of currency if you will, once completed its over, deleted if you will. Not attached to a minted currency per se. The Greenbox token is attached to the Etherium network, which creates a stable business entity that is stable but not controlled by government.
How do the new OCC changes on January 4th open up opportunities for you?
A: Mainstream token blockchain technology now approved for payment processing. Banks can utiltize these new capabilities, like ACH, Wire, SWFT etc into Blockchain security… massive migration into this new technology by banks of all sizes. Greenbox is now trying to be first to market to capitalize. This is opening up a floodgate of opportunities and they are in talks with major banks, we may hear about very soon in fact.
Q:Tell me about curbside checkout opportunity:
A: Corona Virus contributes quite a bit to delivery change in consumer behaviors. Very little cost in maintenance and developments. Can be easily deployed. Greenbox can provide back end processing engine.