UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(MARK ONE)
For
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TABLE OF CONTENTS
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RYVYL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value and share data)
| March 31, 2025 | December 31, 2024 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Restricted cash | ||||||||
| Accounts receivable, net of allowance for credit losses of $ | ||||||||
| Cash due from gateways, net of allowance of $ | ||||||||
| Prepaid and other current assets | ||||||||
| Total current assets | ||||||||
| Non-current Assets: | ||||||||
| Property and equipment, net | ||||||||
| Goodwill | ||||||||
| Intangible assets, net | ||||||||
| Operating lease right-of-use assets, net | ||||||||
| Other assets | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Payment processing liabilities, net | ||||||||
| Note payable (Note 7) | ||||||||
| Current portion of operating lease liabilities | ||||||||
| Other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Long term debt, net of debt discount of $ | ||||||||
| Operating lease liabilities, less current portion | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 14) | ||||||||
| Stockholders’ Equity: | ||||||||
| Preferred stock, Series B, par value $ | ||||||||
| Common stock, par value $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive income | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
RYVYL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(In thousands, except share and per share data)
(Unaudited)
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenue | $ | $ | ||||||
| Cost of revenue | ||||||||
| Gross profit | ||||||||
| Operating expenses: | ||||||||
| Advertising and marketing | ||||||||
| Research and development | ||||||||
| General and administrative | ||||||||
| Payroll and payroll taxes | ||||||||
| Professional fees | ||||||||
| Stock compensation expense | ||||||||
| Depreciation and amortization | ||||||||
| Restructuring charges | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense): | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Accretion of debt discount | ( | ) | ( | ) | ||||
| Other income or expense, net | ( | ) | ||||||
| Total other expense, net | ( | ) | ( | ) | ||||
| Loss before provision for income taxes | ( | ) | ( | ) | ||||
| Income tax provision | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Comprehensive income statement: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Foreign currency translation adjustment | ( | ) | ||||||
| Total comprehensive loss | $ | ( | ) | $ | ( | ) | ||
| Net loss per share: | ||||||||
| Basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of common shares outstanding: | ||||||||
| Basic and diluted | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
RYVYL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In thousands, except share data)
(Unaudited)
| Common Stock | Preferred Stock | Additional | Other Accumulated Comprehensive | Total | ||||||||||||||||||||||||||||
| Shares | Amount | Series
B Shares | Amount | Paid
In Capital | Income
(Loss) | Accumulated Deficit | Stockholders’ Equity | |||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Issuance of common stock under equity incentive plans | - | - | - | - | - | |||||||||||||||||||||||||||
| Common stock issued for conversion of Preferred B stock | - | ( | ) | - | - | - | - | |||||||||||||||||||||||||
| Preferred B stock repurchased | - | - | ( | ) | ( | ) | - | - | ||||||||||||||||||||||||
| Capital contributions | - | - | - | - | - | - | ||||||||||||||||||||||||||
| Net loss and comprehensive loss | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance at March 31, 2025 | $ | | $ | | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
RYVYL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In thousands, except share data)
(Unaudited)
| Common Stock | Preferred Stock | Additional | Other Accumulated Comprehensive | Total Stockholders’ | ||||||||||||||||||||||||||||
| Shares | Amount | Series
B Shares | Amount | Paid
In Capital | Income
(Loss) | Accumulated Deficit | Equity (Deficit) | |||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| Issuance of common stock under equity incentive plans | - | - | - | - | - | |||||||||||||||||||||||||||
| Issuance of restricted common stock under equity incentive plans | - | - | - | - | - | |||||||||||||||||||||||||||
| Issuance of common stock upon exercise of stock options | - | - | - | - | - | - | - | |||||||||||||||||||||||||
| Shares cancelled in connection with the net settlement of vested restricted stock awards | ( | ) | - | ( | ) | - | - | ( | ) | |||||||||||||||||||||||
| Net loss and comprehensive loss | - | - | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
RYVYL INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization expense | ||||||||
| Noncash lease expense | ||||||||
| Stock compensation expense | ||||||||
| Accretion of debt discount | ||||||||
| Restructuring charges | ||||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Prepaid and other current assets | ||||||||
| Cash due from gateways | ||||||||
| Other assets | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ||||||
| Accrued and other current liabilities | ( | ) | ( | ) | ||||
| Payment processing liabilities | ( | ) | ||||||
| Net cash (used in) provided by operating activities | ( | ) | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Capitalized software development costs | ( | ) | ||||||
| Purchase of intangibles | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Repayments of convertible debt | ( | ) | ||||||
| Repayments on long-term debt | ( | ) | ( | ) | ||||
| Proceeds from short-term note payable | ||||||||
| Net cash provided by (used in) in financing activities | ( | ) | ||||||
| Effect of exchange rates in cash and restricted cash | ( | ) | ||||||
| Net (decrease) increase in cash and restricted cash | ( | ) | ||||||
| Cash and restricted cash – beginning of period | ||||||||
| Cash and restricted cash – end of period | $ | $ | ||||||
| Supplemental disclosures of cash flow information | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| Non-cash financing and investing activities: | ||||||||
| Interest accrual from note payable | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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RYVYL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Description of the Business and Basis of Presentation
Organization
RYVYL Inc. (“RYVYL”) is a financial technology company that provides cloud-based acquiring and disbursement services. RYVYL’s strategy is rooted in our mission to transform the global payments landscape through technology-driven, customer-centric, and compliance-focused financial solutions. Our first-generation product, QuickCard, was originally developed to facilitate payment processing for predominantly cash-based businesses in certain niche high-risk business verticals. It was a comprehensive physical and virtual payment card processing management system that offered a cloud-based network interface, merchant management, and point-of-sale (POS) connectivity to facilitate noncash payment methods such as credit cards, debit cards and prepaid gift cards, and to subsequently disburse those funds electronically to merchants upon request. In early 2024, in response to evolving changes in the compliance environment and banking regulations, the Company began transitioning QuickCard to a fully virtual, app-based product. In mid-2024, the Company further transitioned its QuickCard product from a direct offering to a licensing model, whereby partners with more suitable compliance capabilities could license the platform from the Company and offer its payments processing capabilities in the same business verticals the Company previously served directly.
As the global fintech industry continues to evolve, it has become evident that there is a need for a fully integrated platform that can seamlessly support multiple types of offerings on a global scale. We believe our second-generation platform, NEMS Core, provides a compelling solution to fill that product void. As a dual-sided platform, NEMS Core is designed to support both acquiring and disbursement services within a unified infrastructure. This end-to-end platform enables businesses to seamlessly accept payments from customers while efficiently distributing funds to vendors, employees, and partners worldwide. Unlike traditional single-function payment systems that often face limitations in adapting to dynamic market demands, RYVYL’s dual-sided platform offers a flexible, agile, and robust architecture. It streamlines the entire transaction lifecycle, from payment initiation to settlement, providing businesses with a competitive advantage in an increasingly interconnected and digital financial environment.
The Company operates through distinct business segments designed to meet the diverse and evolving needs of global markets. Our business is strategically structured around two primary geographic regions - Europe and North America - each offering complementary product and service portfolios that encompass payment processing, treasury management, acquiring, issuing, and Electronic Money Institution (“EMI”) services. Our business segments are interconnected through shared technology platforms, unified compliance frameworks, and collaborative global partnerships. This integration enables us to capitalize on synergies across regions, optimize resource allocation, and drive innovation that resonates across all markets in which we operate.
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. On October 13, 2022, GreenBox POS changed its name to RYVYL Inc. (“RYVYL”). Unless the context otherwise requires, all references to “the Company,” “we,” “our”, “us” and “PubCo” refer to RYVYL Inc. Additionally, unless the context otherwise requires, all references to “PrivCo” or the “Private Company” refer to GreenBox POS LLC, a limited liability company, formed in the state of Washington.
2. Summary of Significant Accounting Policies
Going Concern
In February 2024, the Company stopped processing credit card payments on its QuickCard platform because our processing partner’s bank informed them that they no longer wished to process payments for cannabis merchants. QuickCard was our first-generation product and was designed to address the needs of previously all-cash businesses. Although not limited to the cannabis industry, prior to discontinuing QuickCard, cannabis merchants made up a substantial majority of the platform’s processing volume. In an effort to recover the loss of revenues, during the second quarter of 2024, the Company transitioned its QuickCard product from terminal-based to app-based processing. Subsequently, management determined that the app-based product was not a viable long-term solution for certain niche high-risk business verticals (including cannabis merchants) and made the decision to terminate the rollout of the app-based product in those specific business verticals.
In response to the discontinuation of QuickCard as a direct offering, during the third quarter of 2024, the Company began to offer a license of the platform, which it believes will enable it to serve the same customer base it previously served with the original product offering through a business partner with more suitable banking compliance capabilities. Currently, the Company does not have any active licensing agreements in place and it continues to seek suitable business partners for its licensing product. In addition, during the second half of 2024, management executed a reorganization of the Company’s business to better align with its revised strategy and cost structure. As a result of the changes described above as well as an increasingly uncertain business environment in the U.S., management expects the recovery of the loss of revenues resulting from the discontinuation of its QuickCard product to take longer than originally anticipated.
8
The decline in revenues resulting from the discontinuation of QuickCard has adversely impacted the Company’s liquidity in its North America segment. Also, until recently, the Company had relied on the repatriation of profits from its European subsidiaries to cover some of its critical operating expenses in North America, which it will no longer be able to do once the Purchaser closes on the pre-funded sale of its wholly-owned subsidiary, Transact Europe, which is expected to occur during the second quarter of 2025. See Note 16, Subsequent Events, for additional details. As a result, management has determined that its cash balance in the North America segment as of March 31, 2025, will not be sufficient to fund the segment’s operations and capital needs for the next 12 months from the date of this Report and, unless we are able to raise additional capital, will only be sufficient to fund operations through approximately June 30, 2025. These conditions raise substantial doubt about our ability to continue as a going concern.
The Company’s ability to continue as a going concern is contingent upon the successful execution of management’s intended plan over the next twelve months to improve the liquidity of its North America segment, which includes, without limitation:
| ● | raising capital over the next 30 days through a variety of means, including private and public equity offerings and debt financings. The Company is actively engaged in discussions with multiple banks regarding a capital raise as well as debt financing, and expects to consummate one or more of these fundings in the immediate term; | |
| ● | continued execution of its accelerated business development efforts to drive volumes in diversified business verticals with the Company’s other products, including the recently launched licensing of the Company’s payments processing platform in certain niche high-risk business verticals; and | |
| ● | continued implementation of cost control measures to more effectively manage spending in the North America segment and further right-sizing the organization, where appropriate; |
Management has assessed that its intended plan described above, if successfully implemented, is appropriate and sufficient to address the liquidity shortfall in its North America segment and to provide funds to cover operations for the next 12 months from the date of the issuance of this Report. However, there can be no assurance that we will be successful in implementing our plan, that our projections of our future capital needs will prove accurate, or that any additional funding will be available on a timely manner, on favorable terms, or be sufficient to continue our operations in the North America segment. The condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Basis of Presentation and Consolidation
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany transactions and balances have been eliminated in the accompanying condensed consolidated financial statements.
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 this accompanying interim consolidated financial statements and footnotes. Accordingly, the accompanying interim condensed 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, 2024, filed with the Securities and Exchange Commission (“SEC”) on March 28, 2025 (the “2024 Annual Report”).
In the opinion of management, these unaudited interim condensed 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. The results of the interim periods are not necessarily indicative of the results expected for the full fiscal year or any other interim period or any future year or period.
Use of Estimates
The preparation of the Company’s consolidated financial statements in conformity with 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 condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. To the extent that there are material differences between these estimates and actual results, the Company’s financial condition or operating results will be materially affected. The Company bases its estimates on current and past experience to the extent that historical experience is predictive of future performance, and other assumptions that the Company believes are reasonable under the circumstances. The Company evaluates these estimates on an ongoing basis.
9
Reclassification
Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported financial position, results of operations or cash flows.
Cash and Restricted Cash
Cash consist of cash on hand and cash on deposit with banks. Restricted cash substantially consists of cash received from gateways for merchant transactions processed, which has yet to be distributed to merchants, ISOs and their agents at the end of the period.
Cash Due from Gateways, Net
The Company generates the majority of its revenue from credit card payment processing services provided to its merchant clients. When a merchant makes a sale, the process of receiving the payment card information and engaging the banks for transferring the proceeds to the merchant’s account via digital gateways, are the primary activities for which the Company gets to collect fees. Cash due from gateways represent amounts due to the Company for transactions processed but not yet distributed by the gateways.
The gateways have strict policies pertaining to the scheduling of the release of funds to merchants based on several criteria that include, but are not limited to, return and chargeback history, associated risk for the specific business vertical, average transaction amount, etc. To mitigate potential credit losses associated with these risks, the gateways use these policies to determine reserve requirements and a payment in arrears strategy. While reserve and payment in arrears restrictions are in effect for a merchant payout, the Company records the reserved amounts against cash due from the gateways until the restriction is released.
Cash due from gateways is only applicable to payment processing services provided in North America, as Ryvyl EU has its own gateway and, therefore, such receivables are not created.
Payment Processing Liabilities
Payment processing liabilities principally represent funds collected from acquiring transactions that are due to merchants and ISOs, net of amounts earned by the Company on those transactions. It also includes net amounts owed to merchants and ISOs in connection with acquiring transactions processed but which have yet to be received from our third-party gateways. These liabilities are secured by funds held in restricted cash accounts and are presented as Restricted cash in the consolidated balance sheets.
Revenue Recognition
Revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.
The Company generates the majority of its revenue from payment processing services. Payment processing services revenue is typically based on a percentage of the value of each transaction processed and/or upon fixed amounts specified for each transaction or service. The Company satisfies its performance obligations and, therefore, recognizes the processing fees as revenue at a point in time, upon the authorization of a merchant sale transaction. The Company also generates revenue from banking services, which primarily include incoming and outgoing ACH and wire transfer transactions. For these transactions, we typically charge specified fees on a per transaction basis, which may vary from customer to customer. The Company satisfies its performance obligation related to these transactions at a point in time, upon the authorization of the transaction in the Company’s payments platform.
Research and Development Costs
Research and development costs primarily consist of salaries and benefits for research and development personnel and outsourced contracted services, as well as associated supplies and materials. These costs are expensed as incurred.
Internal-use Software Development Costs
Internal-use software development costs consist of the costs related to outsourced consultants who are directly associated with and who devote time to creating and enhancing internally developed software for the Company’s platforms. Internal-use software development activities generally consist of three stages: (i) the preliminary project stage, (ii) the application development stage, and (iii) the postimplementation-operation stage. In accordance with ASC 350-40, Internal Use Software, costs incurred in the preliminary and postimplementation-operation stages of software development are expensed as incurred. Costs incurred in the application development stage, including significant enhancements and upgrades, are capitalized. Capitalized internal-use software development costs are included within intangible assets, net on the condensed consolidated balance sheets, and are amortized on a straight-line basis over an estimated useful life of three years upon the software or additional features being ready for their intended use.
10
Accounts Receivable, Net
Accounts receivable primarily consist of amounts recorded in connection with the sale of payment processing terminals and related accessories. Accounts receivable are recorded at invoiced amounts, net of an allowance for credit losses, and do not bear interest. In accordance with Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (ASC 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), the Company measures its allowance for credit losses using an expected credit loss model that reflects the Company’s current estimate of expected credit losses inherent in the enterprise and the accounts receivable balance. In determining the expected credit losses, the Company considers its historical loss experience, the aging of its accounts receivable balance, current economic and business conditions, and anticipated future economic events that may impact collectability. The Company reviews its allowance for credit losses periodically and, as needed, amounts are written-off when determined to be uncollectible. As of March 31, 2025, and December 31, 2024, the allowance for credit losses was immaterial.
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets primarily consist of inventory and deposits made by our European subsidiaries with credit card companies.
Property and Equipment, Net
Property and equipment primarily consist of computer
equipment and furniture and fixtures. Property and equipment are stated at historical cost less accumulated depreciation. Depreciation
is computed using the straight-line method over the estimated useful lives of the assets, which range from
Fair Value Measurements
The Company applies fair value accounting for assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis. Fair value is defined as the price received to sell an asset or paid to transfer a liability in the principal market for the asset or liability in an orderly transaction between market participants on the measurement date.
ASC Topic 820, Fair Value Measurements, establishes a three-level hierarchy priority for disclosure of assets and liabilities recorded at fair value. The ordering of priority reflects the degree to which objective prices in external active markets are available to measure fair value. The classification of assets and liabilities within the hierarchy is based on whether the inputs to the valuation methodology used for measurement are observable or unobservable. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The three levels in the hierarchy are as follows:
| ● | Level 1 – Observable inputs, such as unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. |
| ● | Level 2 – Observable inputs other than Level 1 quoted 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 cannot be directly corroborated by observable market data and that typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. |
The Company measures its convertible note and related derivative liability at fair value. The Company classifies these liabilities as Level 3 of the fair value hierarchy, as fair values are estimated using models that use both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs.
Goodwill and Intangible Assets
ASC 350-20, Intangibles—Goodwill and Other—Goodwill, requires companies to assess goodwill for impairment annually or more frequently if indicators of impairment exist. Testing goodwill for impairment is performed at the reporting unit level, using a two-step test, and requires companies to compare the fair value of a reporting unit with its carrying amount, including goodwill. Goodwill is considered impaired if the carrying value of a reporting unit exceeds its fair value. ASC 350-20 also provides for an optional qualitative assessment for testing goodwill for impairment that enables companies to skip the two-step test if it is determined that it is more likely than not (i.e., a likelihood of greater than 50%) that the fair value of a reporting unit is greater than its carrying amount. The Company performs a goodwill impairment test annually on December 31 or more frequently if events and circumstances indicate that the asset might be impaired. As of March 31, 2025, the Company did not identify any events or circumstances that would indicate the carrying value of its goodwill may be impaired.
Intangible assets consist of acquired customer
relationships and business intellectual properties. In accordance with ASC 350-30, Intangibles—Goodwill and Other—General
Intangibles Other than Goodwill, the Company’s intangible assets are amortized over their estimated useful lives, ranging from
11
Leases
The Company leases office space under non-cancellable operating leases with various expiration dates. The Company determines whether an arrangement is a lease for accounting purposes at contract inception. Operating leases are recorded as right-of-use (“ROU”) assets, which are included within noncurrent assets, and lease liabilities, which are included within current and noncurrent liabilities on our condensed consolidated balance sheets.
Operating lease ROU assets and operating lease liabilities are recognized at the lease commencement date based on the present value of the future lease payments over the lease term. ROU assets are based on the lease liability and are increased by prepaid lease payments and decreased by lease incentives received, where applicable. The interest rate used to determine the present value of the future lease payments is the Company’s incremental borrowing rate because the interest rate implicit in the Company’s leases is not readily determinable. The Company’s incremental borrowing rate is estimated to approximate the interest rate that the Company would pay to borrow on a collateralized basis with similar terms and payments as the lease, and in economic environments where the leased asset is located. Certain leases require the Company to pay taxes, maintenance, and other operating expenses associated with the leased asset. Such amounts are not included in the measurement of the ROU assets and lease liabilities. These lease costs are recognized as lease expenses when incurred.
The Company evaluates ROU assets related to leases for indicators of impairment whenever events or changes in circumstances indicate that the carrying amount of those assets may not be recoverable. When a decision has been made to exit a lease prior to the contractual term or to sublease that space, the Company evaluates the asset for impairment and recognizes the associated impact to the ROU asset and related expense, if applicable. The evaluation is performed at the asset group level initially and when appropriate, at the lowest level of identifiable cash flows, which is at the individual lease level. Undiscounted cash flows expected to be generated by the related ROU asset are estimated over the ROU asset’s useful life. If the evaluation indicates that the carrying amount of the ROU asset may not be recoverable, any potential impairment is measured based upon the fair value of the related ROU asset or asset group as determined by appropriate valuation techniques.
Foreign Currency
Assets and liabilities of our foreign subsidiaries are translated into the reporting currency using the exchange rates in effect on the consolidated balance sheet dates. Equity accounts are translated at historical rates, except for the change in retained earnings during the period, which is the result of the income statement translation process. Revenue and expense accounts are translated using the weighted average exchange rate during the period. The cumulative translation adjustments associated with the net assets of foreign subsidiaries are recorded in accumulated other comprehensive income in the accompanying consolidated statements of stockholders’ equity.
Stock Based Compensation
Stock-based compensation expense relates to restricted stock awards (“RSAs”) and stock options granted to employees and non-employee directors under the Company’s equity incentive plans, which are measured based on the grant-date fair value. The fair value of RSAs is determined by the closing price of the Company’s common stock on the grant date. The fair value of stock options is estimated on the date of grant using the Black-Scholes-Merton option valuation model. Generally, stock-based compensation expense is recorded on a straight-line basis over the requisite service period. The Company accounts for forfeitures as they occur.
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 not more likely than not that some portion of or all the deferred tax assets will not be realized. Judgment is required in determining and evaluating income tax provisions and valuation allowances for deferred income tax assets. We recognize an income tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by tax authorities, based on the technical merits of the position.
Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. As of March 31, 2025, and December 31, 2024, the Company has a full valuation allowance on its deferred tax assets.
12
Net Loss Per Share
The Company’s basic net loss per share is computed by dividing the net loss available to common shareholders by the weighted average number of common shares outstanding during the period without consideration of potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss available to common shareholders by the weighted-average number of shares of common stock outstanding, adjusted for the dilutive effect of all potential shares of common stock. For the three-month periods ended March 31, 2025, and 2024, the Company’s diluted net loss per share is the same as the basic net loss per share, since there are no common stock equivalents outstanding that would have a dilutive effect.
Segment Reporting
The Company reports its segments to reflect the manner in which its CODM reviews and assesses performance. The Company’s CODM is its CEO. The primary financial measures used by the CODM to evaluate the performance of its segments and allocate resources to them are revenue and gross profit.
The Company has
Recently Adopted Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). The amended guidance enhances income tax disclosures primarily related to the effective tax rate reconciliation and income taxes paid information. This guidance requires disclosure of specific categories in the effective tax rate reconciliation and further information on reconciling items meeting a quantitative threshold. In addition, the amended guidance requires disaggregating income taxes paid (net of refunds received) by federal, state, and foreign taxes. It also requires disaggregating individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received). The amended guidance is effective for fiscal years beginning after December 15, 2024. The guidance can be applied either prospectively or retrospectively. The adoption of ASU 2023-09 will impact the Company’s annual disclosures only.
Recently Issued Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-08, Intangibles – Goodwill and Other – Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets. This amended guidance requires fair value measurement of certain crypto assets each reporting period with the changes in fair value reflected in net income. The amendments also require disclosures of the name, fair value, units held, and cost bases for each significant crypto asset held and annual reconciliations of crypto asset holdings. The new guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2024, with early adoption permitted. We are required to apply these amendments as a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year in which the guidance is adopted. The adoption of this guidance is not expected to have an impact on the Company’s consolidated financial statements, as we currently do not hold any crypto assets.
In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024 03”), and in January 2025, the FASB issued ASU No. 2025-01, Clarifying the Effective Date (“ASU 2025-01”). The amendments are intended to enhance disclosures regarding an entity’s costs and expenses by requiring additional disaggregated information disclosures about certain income statement expense line items. The amendments, as clarified by ASU 2025-01, are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the effect of adopting the new disclosure requirements.
In March 2024, the SEC adopted rules that require registrants to provide climate-related information in their registration statements and annual reports, such as disclosure of material climate-related risks, Board of Directors’ oversight and risk management activities, material greenhouse gas emissions, and material climate-related targets and goals. On April 4, 2024, the SEC voluntarily stayed the implementation of the rules pending the judicial review of challenges to the rules in the Eighth Circuit Court of Appeals. In March 2025, the SEC voted to end, and withdraw, its legal defense of its climate disclosure rules. The Company is currently monitoring developments with respect to these rules, including whether they will become effective.
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3. Property and Equipment, Net
The following table details property and equipment, less accumulated depreciation (in thousands):
| March 31, 2025 | December 31, 2024 | |||||||
| Computers | $ | $ | ||||||
| Furniture and fixtures | ||||||||
| Improvements | ||||||||
| Vehicles and equipment | ||||||||
| Total property and equipment | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Net property and equipment | $ | $ | ||||||
Depreciation expense was $
4. Goodwill
The following table summarizes goodwill activity by reportable segment (in thousands):
| North America | International | Consolidated | ||||||||||
| Goodwill - December 31, 2024 | $ | $ | $ | |||||||||
| Adjustments (1) | ||||||||||||
| Goodwill – March 31, 2025 | $ | $ | $ | |||||||||
| (1) |
5. Intangible Assets, Net
The following table details acquired intangible assets (in thousands):
| March 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||
| Intangible Assets | Amortization Period | Cost | Accumulated Amortization | Net | Cost | Accumulated Amortization | Net | ||||||||||||||||||||
| Customer relationships | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||
| Business technology/IP | ( | ) | ( | ) | |||||||||||||||||||||||
| Capitalized internal-use software | ( | ) | ( | ) | |||||||||||||||||||||||
| Total intangible assets | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||
Amortization expense was $
The estimated future amortization expense related to intangible assets as of March 31, 2025 is as follows (in thousands):
| Year | Amount | |||
| 2025 (remainder) | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Thereafter | ||||
| Total | $ | |||
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6. Accrued Liabilities
The following table details the balance in accrued liabilities (in thousands):
| March 31, 2025 | December 31, 2024 | |||||||
| Payroll related accruals | $ | $ | ||||||
| Accrued legal and professional fees | ||||||||
| Accrued legal settlement | ||||||||
| Accrued taxes | ||||||||
| Accrued interest | ||||||||
| Other | ||||||||
| Total accrued liabilities | $ | $ | ||||||
7. Note Payable
Stock Purchase Agreement and Financing
On January 23, 2025, in connection with the Company securing financing
(the “Financing”), the Company entered into a stock purchase agreement (the “January 2025 SPA”) with a purchaser
(the “Purchaser”), which provides for the sale to the Purchaser of all of the issued and outstanding shares of capital stock
(the “Ryvyl EU Shares”) of the Company’s indirect subsidiary domiciled in Bulgaria, Ryvyl (EU) EAD (“Ryvyl EU”),
by Transact Europe Holdings EOOD, the Company’s wholly owned subsidiary, also domiciled in Bulgaria (“Transact Europe”)
for an aggregate purchase price of $
On January 23, 2025,
The Company analyzed the terms of the January 2025 SPA and Termination
Agreement and determined that they should be accounted for together as a single transaction, as neither agreement would have been entered
into without the other and the exercise of each party’s rights under each agreement would result in the termination of each party’s
rights under the other agreement (i.e., the January 2025 SPA will be void and of no further effect if the Company exercises its termination
rights under the Termination Agreement, and the Termination Agreement will be void and of no further effect in the event that the January
2025 SPA is not so terminated and the Purchaser closes on its purchase of the Ryvyl EU Shares). Further, the Company determined that the
terms of the agreements, in particular the Company’s unilateral termination right, were such that the Company would not be considered
to have surrendered control of the Ryvyl EU Shares until the termination deadline passes and, therefore, the substance of the transaction
effectively represented short-term secured debt (rather than a true sale), akin to a repurchase agreement in which a seller-borrower of
securities sells those securities to a buyer-lender with an agreement to repurchase them at a stated price plus interest at a specified
date or in specified circumstances, which would be accounted for as a collateralized borrowing, in accordance with ASC 860-30, Transfers
and Servicing – Secured Borrowing and Collateral. As such, the Company has accounted for the transaction as a secured borrowing
by recognizing the Financing Purchase Price as cash in the accompanying condensed consolidated balance sheets, recording an obligation
(liability) to return the cash to the Purchaser, and recognizing the difference between the Financing Purchase Price and $
Based on the same facts and circumstances, the Company also determined that the pre-funded sale of Ryvyl EU did not meet the held-for-sale criteria as of March 31, 2025, in accordance with ASC 360, Property, Plant, and Equipment. As such, Ryvyl EU’s assets and liabilities as of March 31, 2025, and results of operations for all periods presented are classified as held and used in the condensed consolidated financial statements. Subsequent to March 31, 2025, the Company and the Purchaser entered into a modification of the January 2025 SPA and, on May 14, 2025, the Purchaser notified the Company that it would proceed with the acquisition of the Ryvyl EU Shares. See Note 16, Subsequent Events, for additional information.
15
8. Long-Term Debt, Net
The following table summarizes the Company’s debt (in thousands):
| March 31, 2025 | December 31, 2024 | |||||||
| $ | $ | $ | ||||||
| Less: Unamortized debt discount | ( | ) | ( | ) | ||||
| Net carrying value | ||||||||
| $ | ||||||||
| $ | ||||||||
| Note payable (Note 7) | ||||||||
| Total debt | ||||||||
| Less: current portion | ( | ) | ( | ) | ||||
| Long-term debt, net | $ | $ | ||||||
Senior Convertible Note
On November 8, 2021, the Company sold and issued,
in a registered direct offering, an 8% Senior convertible note, originally due November 3, 2023, and subsequently extended to
The Note was issued on November 8, 2021, pursuant to an indenture dated November 2, 2021 between us 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 Note (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.
First Exchange Agreement
On July 25, 2023, the Company entered into an
Exchange Agreement (the “First Exchange Agreement”) under which the Company and the Investor agreed to exchange (the “Series
A Exchanges”), in two separate exchanges, an aggregate of $
On July 31, 2023, pursuant to the terms of the
First Exchange Agreement, the Company closed the initial exchange (the “Initial Series A Exchange”) and issued
The Company analyzed the changes made to the Note
under the First Exchange Agreement under ASC 470-50 to determine if extinguishment accounting was applicable. Under ASC 470-50-40-10,
a modification or an exchange that adds or eliminates a substantive conversion option as of the conversion date is always considered substantial
and requires extinguishment accounting. Since the First Exchange Agreement added a substantive conversion option, the Company determined
that extinguishment accounting was applicable. In accordance with the extinguishment accounting guidance, the Company recorded a loss
on extinguishment of $
16
Second Exchange Agreement
Under the terms of the First Exchange Agreement,
a final closing was to be held upon which the Investor was to exchange an additional $
On November 27, 2023, the Company entered into
an Exchange Agreement (the “Second Exchange Agreement”) with the Investor under which the Company and the Investor agreed
to exchange (the “Series B Exchange”), (i) all of the existing shares of Series A Preferred Stock issued to the Investor in
the Initial Series A Exchange, (ii) the right to exchange the shares of Unissued Series A Preferred Stock for an additional $
The Company analyzed the changes made to the Note
under the Second Exchange Agreement under ASC 470-50 to determine if extinguishment accounting was applicable. Under ASC 470-50-40-10,
a modification or an exchange that adds or eliminates a substantive conversion option as of the conversion date is always considered substantial
and requires extinguishment accounting. Since the Second Exchange Agreement eliminated a substantive conversion option (the parties’
obligation to exchange the remaining $16.7 million of outstanding principal balance subject to the Series A Exchange for
On November 29, 2023, the Company closed the Series
B Exchange, pursuant to which the Company issued to the Investor
17
Forbearance Agreement
On May 17, 2024, the Company entered into a Forbearance
Agreement (the “Forbearance Agreement”) with the Investor pursuant to which the Investor, in consideration for the Company’s
cash payment in the amount of $
Preferred Stock Repurchase and Note Repayment Agreement
On January 23, 2025, the Company entered into
a Preferred Stock Repurchase and Note Repayment Agreement (the “Repurchase Agreement”) with the Investor, which provides for
repayment of the outstanding balance of the Note. Pursuant to terms of the Repurchase Agreement, in consideration for an aggregate payment
of $
The Repurchase Agreement further provides that, during the period from the payment of the First Installment until the Second Installment Date, no interest will accrue on the remaining balance of the Note and certain restrictive covenants under the Note will be temporarily waived. If the Company fails to make the Second Installment on or before the Second Installment Date, then interest will continue to accrue again on the outstanding balance of the Note and all other terms of the Note will also be restored as they were prior to the date the First Installment was paid.
The Company analyzed the changes made to the Note under the Repurchase Agreement under ASC 470-60 to determine if the transaction qualified as a troubled debt restructuring. For a debt restructuring to be considered troubled, the debtor must be experiencing financial difficulties and the creditor must have granted a concession. The Company considered the indicators of financial difficulties provided in ASC 470-60 and determined that one or more indicators were present at the time the Repurchase Agreement was entered into, such as the existence of substantial doubt about the Company’s ability to continue as a going concern. Furthermore, the Company determined that the effective borrowing rate on the Note decreased as a result of the changes made to the Note under the Repurchase Agreement and, as such, the Investor granted a concession on the debt. As a result, the changes made to the Note under the Repurchase Agreement were accounted for as a troubled debt restructuring. However, no restructuring gain or corresponding adjustment to the carrying amount of the Note was recorded because the net carrying amount of the Note after giving effect to the payment of the First Installment was less than the total undiscounted future principal and interest payments of the restructured Note.
18
During the year ended December 31, 2022, the Investor
converted $
Ranking
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 Investor 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 “Restructuring Agreement”), the Company obtained a forbearance of the Maturity Date from November 5, 2023 to November 5, 2024. As part of the Second Exchange Agreement entered into with the Investor on November 27, 2023, the Company obtained a further forbearance of the Maturity Date from November 5, 2024 to April 5, 2025. As part of the Forbearance Agreement entered into with the Investor on May 17, 2024, the Company obtained a further forbearance of the Maturity Date from April 5, 2025 to April 5, 2026. Pursuant to the terms of the Repurchase Agreement entered into with the Investor on January 23, 2025, the Maturity Date was advanced to April 30, 2025 upon the payment of the First Installment on January 27, 2025.
19
Interest
The Note bears interest at the rate of
As part of the First Exchange Agreement, the Investor agreed to waive any interest that would otherwise accrue on the Note during the period commencing on April 1, 2023 through, and including, December 31, 2023. As part of the Second Exchange Agreement, the Investor agreed to extend the waiver of payment of interest under the Note through July 1, 2024. Pursuant to the terms of the Repurchase Agreement, no interest will accrue on the remaining balance of the Note during the period from the payment of the First Installment until the Second Installment Date.
Late Charges
The Company is required to pay a late charge of
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 with a subsequent offering at a per share price less than the fixed conversion price then in effect. |
Pursuant to the original terms of the Note, since
during the fiscal quarter ending March 31, 2022,
As part of the Restructuring Agreement,
As part of the First Exchange Agreement,
1-Year Alternate Optional Conversion
20
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
| ● | 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
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 Note, and the equity value of the change of control consideration payable to the holder of our Common Stock underlying the Note.
The equity value of our Common Stock underlying the Note 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 Note 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.
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 Note. Rather, the Note contains standard and customary events of default including but not limited to: (i) the suspension from trading or the failure to list the Company’s 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 Note (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 the Company’s common stock underlying the Note.
The equity value of the Company’s common stock underlying the Note is calculated using the greatest closing sale price of the Company’s common stock on any trading day immediately preceding such event of default and the date the Company makes the entire payment required.
Company Optional Redemption Rights
21
The equity value of the Company’s common stock underlying the Note is calculated using the greatest closing sale price of the Company’s common stock on any trading day during the period commencing on the date immediately preceding such date the Company notifies the applicable holder of such redemption election and the date the Company makes the entire payment required.
The following is a rollforward of the senior convertible note balance (in thousands):
| Balance, December 31, 2020 | $ | |||
| Convertible debentures issued | ||||
| Derivative liability | ( | ) | ||
| Original issue discount of | ( | ) | ||
| Placement fees and issuance costs | ( | ) | ||
| Amortization and write-off of debt discount | ||||
| Balance, net of unamortized debt discount of $ | ||||
| Repayments and conversion | ( | ) | ||
| Amortization and write-off of debt discount | ||||
| Balance, net of unamortized debt discount of $ | ||||
| Repayments and conversion | ( | ) | ||
| Amortization and write-off of debt discount | ||||
| Balance, net of unamortized debt discount of $ | ||||
| Conversion | ||||
| Amortization and write-off of debt discount | ||||
| Balance, net of unamortized debt discount of $1,556 December 31, 2024 | ||||
| Repayments | ( | ) | ||
| Amortization and write-off of debt discount | ||||
| Balance, net of unamortized debt discount of $ | $ |
The Company recorded debt discount accretion expense of $
The Company incurred interest expense related to its convertible note
of $
Derivative Liability
The senior convertible note contains embedded derivatives representing certain conversion features, redemption rights, and contingent payments upon the occurrence of certain events of default. The Company determined that these embedded derivatives required bifurcation and separate valuation.
The Company utilizes a binomial lattice model to value its bifurcated derivatives included in the note. 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 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 note. 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 note requiring bifurcation, other than the conversion features, which had no value at March 31, 2025 and December 31, 2024, due to management’s estimates of the likelihood of certain events, but that may have value in the future should those estimates change.
The following is a rollforward of the derivative liability balance (in thousands):
| Balance, December 31, 2021 | $ | |||
| Change in fair value 2022 | ( | ) | ||
| Balance, December 31, 2022 | ||||
| Increase in derivative liability upon extinguishment of debt | ||||
| Change in fair value 2023 | ( | ) | ||
| Balance, December 31, 2023 | ||||
| Change in fair value 2024 | ( | ) | ||
| Balance, December 31, 2024 | ||||
| Change in fair value 2025 | ||||
| Balance, March 31, 2025 | $ |
22
Small Business Association CARES Act Loans
On June 9, 2020, the Company entered into a
On May 8, 2020, Charge Savvy, a wholly-owned subsidiary
of the Company, entered into a
9. Convertible Preferred Stock
On July 31, 2023, the Company issued
As of March 31, 2025, and December 31, 2024, preferred stock consisted of the following (in thousands):
| March 31, 2025 | ||||||||||||||||||||
| Preferred Shares Authorized | Preferred Shares Issued and Outstanding | Carrying Value | Liquidation Preference | Common Stock Issuable Upon Conversion | ||||||||||||||||
| Series A | $ | $ | $ | |||||||||||||||||
| Series B | ||||||||||||||||||||
| Undesignated preferred shares | ||||||||||||||||||||
| Total Preferred Stock | $ | $ | $ | |||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||
| Preferred Shares Authorized | Preferred Shares Issued and Outstanding | Carrying Value | Liquidation Preference | Common Stock Issuable Upon Conversion | ||||||||||||||||
| Series A | $ | $ | $ | |||||||||||||||||
| Series B | ||||||||||||||||||||
| Undesignated preferred shares | ||||||||||||||||||||
| Total Preferred Stock | $ | $ | $ | |||||||||||||||||
The holders of the Preferred Stock have the following rights and preferences:
Voting – The Preferred Stock has no voting power and the holders of Preferred Stock have no right to vote on any matter at any time, either as a separate series or class or together with any other series or class of share of capital stock.
Dividends – The holders of Preferred Stock are entitled to receive dividends when and as declared by the Board of Directors, from time to time, in its sole discretion. Such dividends are not cumulative. No such dividends have been declared to date.
23
Liquidation – In the event of the voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of Series B Preferred Stock shall be entitled to receive in cash out of the assets of the Company, prior and in preference to any distribution of the proceeds of such liquidation event to the holders of Series A Preferred Stock or common stock, an amount per share of Series B Preferred Stock equal to the greater of (A) 115% of the stated value of such share of Series B Preferred Stock plus all declared and unpaid dividends on such share of Series B Preferred Stock and (B) the amount per share such holder would receive if it converted such share of Series B Preferred Stock into common stock (at the Series B Alternate Conversion Price, as defined below, then in effect) immediately prior to the date of such payment. If at any time, there is more than one holder of the Series B Preferred Stock, and the proceeds thus distributed among the holders of the Series B Preferred Stock shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then the entire proceeds legally available for distribution shall be distributed ratably among the holders in proportion to the full preferential amount that each such holder is otherwise entitled to receive.
Redemption – Upon a change of control of the Company (as defined in the Company’s “Series B Certificate of Designations”), the holders of Series B Preferred Stock may require the Company to exchange their shares of Series B Preferred Stock for consideration, in the form of the securities or other assets to which holders of shares of common stock are entitled to receive with respect to or in exchange for their shares of common stock in such change of control, equal to the greatest of (i) 115% of the stated value of such share of Series B Preferred Stock plus all declared and unpaid dividends on such share of Series B Preferred Stock, (ii) 115% of the greatest closing sale price of the number of shares of common stock into which such share of Series B Preferred Stock could be converted (at the Series B Alternate Conversion Price, as defined below, then in effect) during the period beginning on the date immediately preceding the earlier to occur of (a) the consummation of the applicable change of control and (b) the public announcement of such change of control and ending on the date such holder delivers notice to the Company of its election, and (iii) the aggregate cash consideration and the aggregate cash value of any non-cash consideration per share of common stock that would be paid to the holder upon consummation of such change of control if it converted all of its shares of Series B Preferred Stock into common stock at the conversion price then in effect.
Conversion –
10. Income Taxes
The Company recorded income tax expense of approximately
$
As of March 31, 2025, we have no material unrecognized tax benefits and we expect no material unrecognized tax benefits for the next 12 months.
24
11. Stock-Based Compensation
Equity Incentive Plans
The Company adopted the 2023 Equity Incentive
Plan (“2023 Plan”) on November 2, 2023, which provides employees, directors, and consultants with opportunities to acquire
the Company’s shares, or to receive monetary payments based on the value of such shares. Management has determined that it is in
the best interests of the Company to replace the 2020 Incentive and Nonstatutory Stock Option Plan, the 2021 Incentive and Nonstatutory
Stock Option Plan, and the 2021 Restricted Stock Plan, with one plan, the 2023 Plan, pursuant to which the Company will be able to grant
stock option awards, stock appreciation rights, restricted stock awards, restricted stock units, and other stock-based awards. The 2023
Plan provides for up to
Stock Option Activity
A summary of stock option activity for the three months ended March 31, 2025, is as follows (in thousands):
| Shares | Weighted Average Exercise Price | |||||||
| Outstanding at December 31, 2024 | $ | |||||||
| Granted | ||||||||
| Exercised | ||||||||
| Cancelled/forfeited/expired | ( | ) | ||||||
| Outstanding at March 31, 2025 | $ | |||||||
| Exercisable at March 31, 2025 | $ | |||||||
There were
Restricted Stock Activity
A summary of RSA activity for the three-month periods ended March 31, 2025 is as follows (in thousands):
| Number of Shares | Weighted Average Grant Date Fair Value | |||||||
| Unvested at December 31, 2024 | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Forfeited | ||||||||
| Unvested at March 31, 2025 | $ | |||||||
The total fair value of restricted shares that
vested was $
12. Operating Leases
The Company leases office space under operating
leases at
The Company’s operating lease expense totaled
$
25
Future minimum lease payments under our operating leases and reconciliation to the operating lease liability as of March 31, 2025, are as follows (in thousands):
| Year Ending December 31, | Total | |||
| 2025 (remainder) | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Thereafter | ||||
| Total lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Present value of total lease payments | ||||
| Less: current portion | ( | ) | ||
| Long-term lease liabilities | $ | |||
13. Related Party Transactions
PrivCo
The Company repurchased, in two separate repurchase
transactions each consisting of
Family Relationships
The Company employs two of our CEO’s brothers,
Dan and Liron Nusinovich, who are paid approximately $
The Company did not pay any commissions to the related parties mentioned above for the three months ended March 31, 2025 and 2024, respectively.
14. Commitments and Contingencies
From time-to-time, the Company is involved in legal proceedings. The Company records a liability for those legal proceedings when it determines it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. The Company also discloses when it is reasonably possible that a material loss may be incurred, however, the amount cannot be reasonably estimated. From time to time, the Company may enter into discussions regarding settlement of these matters, and may enter into settlement agreements, if it believes settlement is in the best interest of the Company and its shareholders.
The following is a summary of our current outstanding litigation. Note that references to GreenBox POS are for historical purposes. GreenBox POS changed its name to RYVYL Inc. on October 13, 2022.
| ● | On November 8, 2022, the Company filed a complaint against its former Chief Operating Officer Vanessa Luna, Luna Consultant Group, LLC and Does 1 through 50 in San Diego Superior Court (the “Company Filing”). The Company alleged that Ms. Luna abused her position for additional compensation, failed to follow proper protocols and breached her fiduciary duties and duty of loyalty by secretly maintaining alternative employment. The action sought damages, including interest and costs of suit incurred. On November 10, 2022, Ms. Luna filed her own complaint against the Company and Fredi Nisan in San Diego Superior Court (the “Luna Filing”). Ms. Luna alleged that Mr. Nisan used contract negotiations to coerce her, that the Company improperly coded transactions and misled investors, and that when her concerns were reported to management, she was wrongfully terminated, resulting in a number of claims. Ms. Luna also alleged sexual misconduct on the part of Mr. Nisan. Ms. Luna sought damages including compensatory damages, unpaid wages (past and future), loss of wages and benefits (past and future), and other damages to be proven at trial. The Company and Mr. Nisan deny all allegations of the Luna Filing. In April 2023, Ms. Luna sought and was granted permission to add Coyni, Inc. as a defendant with regard to her claims. In addition, in August 2024, the Company and Mr. Nisan were granted leave to file a Second Amended Complaint to add additional claims against Ms. Luna, including securities fraud. After vigorously defending against all claims asserted by Ms. Luna and vigorously prosecuting its own claims against Ms. Luna, on October 17, 2024, the parties entered into a confidential settlement agreement. On February 4, 2025, the parties filed with the San Diego Superior Court Requests for Dismissal, dismissing their respective cases with prejudice. The request was rejected and resubmitted on April 29, 2025. |
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| ● | On December 12, 2022, Jacqueline Dollar (aka Jacqueline Reynolds), former Chief Marketing Officer of the Company, filed a complaint against the Company, Fredi Nisan, and Does 1-20 in San Diego Superior Court. Ms. Dollar is alleging she was undercompensated compared to her male counterparts and retaliated against after raising concerns to management resulting in sex discrimination in violation of the California Fair Employment and Housing Act (“FEHA”) and failure to prevent discrimination in violation of FEHA. Ms. Dollar is also claiming intentional infliction of emotional distress. Ms. Dollar is seeking an unspecified amount of damages related to, among other things, payment of past and future lost wages, stock issuances, bonuses and benefits, compensatory damages, and general, economic, non-economic, and special damages. As the Company cannot predict the outcome of the matter, the probability of an outcome cannot be determined. The Company intends to vigorously defend against all claims. The parties are currently in the discovery phase. |
| ● |
Since December 2022, the Company has been cooperating with an ongoing investigation by the SEC regarding possible violations of the federal securities laws, which in its course has included a review of the Company’s blockchain technology and first-generation product, known as QuickCard. During the investigation, the Staff of the SEC shared its concerns regarding certain disclosures in the Company’s Form S-1 filed on December 23, 2020 (“2020 S-1”), as well as subsequent periodic reports. The disclosures at issue primarily concerned the Company’s description of its use of blockchain technology and QuickCard processing for cannabis merchants. None of the disclosures impacted our previously reported revenues, expenses, earnings, cash balances, or other financial measures. Based on our review of the facts and circumstances, the Company has determined to provide the following additional disclosures.
The Company has been discussing with the Staff of the SEC the possibility of reaching a settlement of potential charges arising from the investigation. We have been informed that, provided the Company makes a sufficient disclosure addressing the concerns regarding the Company’s 2020 S-1 and subsequent reporting, the Staff will recommend that no civil monetary penalties be imposed on the Company. See Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations – Recent Developments, of this Report for management’s disclosures in response to the SEC’s concerns. |
| ● | On February 1, 2023, a putative class action lawsuit titled Cullen v. RYVYL Inc. fka GreenBox POS, Inc., et al., Case No. 3:23-cv-00185-GPC-AGS, was filed in the United States District Court for the Southern District of California against several defendants, including the Company and certain of our current and former directors and officers (the “Cullen Defendants”). The complaint was filed on behalf of persons who purchased or otherwise acquired the Company’s publicly traded securities between January 29, 2021 and January 20, 2023. The complaint alleged that the Cullen Defendants violated Sections 11, 12(a)(2), and 15 of the Securities Act and Sections 10(b) and 20(a) of the Exchange Act by making false and/or misleading statements regarding the Company’s financial controls, performance and prospects. On June 30, 2023, the plaintiff filed an amended complaint. On March 1, 2024, the Court issued an order granting in part and denying in part defendants’ motions to dismiss, which included dismissing all Securities Act claims and narrowing the potential class period. The plaintiff filed a second amended complaint on April 30, 2024, which alleges claims against the Cullen Defendants under Exchange Act Sections 10(b) and 20(a) only and a class period of May 13, 2021 through January 20, 2023. The Company filed its motion to dismiss the second amended complaint on July 1, 2024. On October 21, 2024, the Court issued an order granting in part and denying in part defendants’ motions to dismiss. The scope of the remaining claims is consistent with the Court’s last motion to dismiss decision dated March 1, 2024. On November 12, 2024, Plaintiff filed a Third Amended Complaint, which asserts the same legal causes of action and proposed class period as the previous complaint. On February 28, 2025, the Parties executed a Memorandum of Understanding (“MOU”) that reflects their agreement in principle to settle the claims asserted in this class action. Lead Plaintiff has begun the process of drafting the Stipulation and Agreement of Settlement and exhibits thereto, which, after negotiation and execution by the Parties, will be filed with the Court in connection with Motion for Preliminary Approval of Class Action Settlement. The Parties intend to move for preliminary approval of the proposed settlement as soon as practicable after the final settlement agreement is executed. There is no assurance, however, that the settlement will be completed and/or that the Court will approve it. The Cullen Defendants continue to deny any and all liability and allegations set forth in the pending Third Amended Complaint. |
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| ● |
On June 22, 2023, a shareholder derivative complaint was filed in the United States District Court for the Southern District of California against certain of the Company’s current and/or former officers and directors (the “Hertel Defendants”), Christy Hertel, derivatively on behalf of RYVYL Inc., f/k/a GreenBox POS v. Ben Errez et al., Case No. 3:23-CV-01165-GPC-SBC. On August 4, 2023, a second shareholder derivative complaint was filed in the United States District Court for the Southern District of California against the Hertel Defendants, Marcus Gazaway, derivatively on behalf of RYVYL Inc., f/k/a GreenBox POS v. Ben Errez et al., Case No. 3:23-CV-01425-LAB-BLM. Both derivative complaints generally allege that the Hertel Defendants failed to implement adequate internal controls that would prevent false and misleading financial information from being published by the Company and that controlling shareholders participated in overpayment misconduct resulting in violations of Sections 10(b), 14(a) and 20 of the Exchange Act and breached their fiduciary duties and, purportedly on behalf of the Company. On April 2, 2024, the Court granted the parties’ joint motion for an order consolidating the Hertel and Gazaway cases under the caption In re RYVYL Inc. Derivative Litigation, Lead Case No. 3:23-CV-01165-GPC-SBC (S.D. Cal.). On May 6, 2024, the Court issued an order staying the action until after the final resolution of any motion to dismiss the securities class action detailed above. On May 1, 2024, a third nearly identical shareholder derivative complaint was filed in Clark County, Nevada by plaintiff Christina Brown, derivatively on behalf of RYVYL, Inc., v. Ben Errez et al., Case No. A-24-892382-C.
The Complaints seeks damages and contribution from the Hertel Defendants and a direction that the Company and the Hertel Defendants take actions to reform and improve corporate governance and internal procedures to comply with applicable laws. The Hertel Defendants deny all allegations of liability and intend to vigorously defend against all claims. On May 8, 2025, all parties reached an agreement in principle to fully resolve and settle all claims alleged in the lawsuits. The pending settlement is subject to documentation by the parties and approval by the District Court. However, unless and until the settlement is approved, and given the uncertainty of litigation and the legal standards that must be met for success on the merits, the Company cannot predict the outcome of the cases at this time. |
| ● | On October 1, 2023, the Company filed a demand for arbitration against Sky Financial with the American Arbitration Association in San Diego, California (the “Arbitration”). In the Arbitration, the Company seeks to recover for breach of contract and Sky Financial’s failure to perform its obligations On October 2, 2023, the Company filed a complaint against Sky Financial in San Diego Superior Court asserting the same claims asserted in the Arbitration, solely to toll any applicable statutes of limitations pending the Arbitration and, if necessary, provide jurisdiction for the court to compel arbitration. The action seeks damages, including interest and costs of suit incurred. The parties agreed to proceed in the Arbitration and to implement the steps needed to extend the current stay of the San Diego Superior Court action pending the Arbitration. Subsequently, the parties agreed to stay the Arbitration and attend mediation. A mediation was scheduled but then vacated by stipulation of the parties. The stay of the Arbitration has been lifted. A new third arbitrator was recently selected to the panel to replace an arbitrator who withdrew for personal reasons. The parties await the scheduling of a status conference to set dates. |
| ● | On June 25, 2024, J. Drew Byelick, a former Chief Financial Officer of the Company, filed a complaint against the Company in the United States District Court for the Southern District of California, Case No. ’24CV1096 JLS MSB. Mr. Byelick alleged breach of contract, fraudulent inducement of employment, along with intentional misrepresentation and concealment. The Company moved to dismiss the complaint for failure to state a claim and for other violations of the federal rules of civil procedure. The Court granted that motion on December 20, 2024, but permitted Mr. Byelick to file an amended complaint. Mr. Byelick filed his first amended complaint on January 19, 2025, asserting the same core claims. The Company moved to dismiss the first amended complaint for similar reasons as its motion to dismiss the original complaint. The Court granted that motion, in part, on April 18, 2025, ruling that Mr. Byelick was incapable of pleading certain claims (and dismissing those claims) but adequately pled others for purposes of a motion to dismiss only. The Company denies all allegations of liability and intends to vigorously defend against all claims. However, given the preliminary stage of the lawsuit, the uncertainty of litigation, and the legal standards that must be met for success on the merits, the Company cannot predict the outcome at this time or estimate a reasonably possible loss or range of loss that may result from this action. |
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15. Segment Reporting
The Company reports its segments to reflect the manner in which its CODM reviews and assesses performance. The Company’s CODM is its CEO. The primary financial measures used by the CODM to evaluate the performance of its segments and allocate resources to them are revenue and gross profit.
The Company has
The following tables present revenue and gross profit information for each of our reportable segments (in thousands):
| Three Months Ended March 31, 2025 | ||||||||||||
| North America | International | Total | ||||||||||
| Revenue | $ | $ | $ | |||||||||
| Cost of revenue | ||||||||||||
| Segment gross profit | $ | $ | $ | |||||||||
| Depreciation and amortization | $ | $ | $ | |||||||||
| Three Months Ended March 31, 2024 | ||||||||||||
| North America | International | Total | ||||||||||
| Revenue | $ | $ | $ | |||||||||
| Cost of revenue | ||||||||||||
| Segment gross profit | $ | $ | $ | |||||||||
| Depreciation and amortization | $ | $ | $ | |||||||||
The following table provides a reconciliation of total segment gross profit to the Company’s loss before provision for income taxes (in thousands):
| Three
Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Total segment gross profit | $ | $ | ||||||
| Less: Advertising and marketing | ||||||||
| Less: Research and development | ||||||||
| Less: General and administrative | ||||||||
| Less: Payroll and payroll taxes | ||||||||
| Less: Professional fees | ||||||||
| Less: Stock compensation expense | ||||||||
| Less: Depreciation and amortization | ||||||||
| Less: Restructuring charges | ||||||||
| Less: Other expense, net | ( | ) | ( | ) | ||||
| Loss before provision for income taxes | $ | ( | ) | $ | ( | ) | ||
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16. Subsequent Events
Nasdaq Stockholder’s Equity Deficiency Notice
On April 8, 2025, the Company received written
notice (the “Notice”) from Nasdaq notifying the Company that, based on the Company’s negative stockholders’ equity
balance of $
The Notice has no immediate effect on the listing or trading of the Company’s common stock and the common stock will continue to trade on the Nasdaq Capital Market under the symbol “RVYL.” The Company intends to submit a plan to Nasdaq to regain compliance with the Nasdaq Listing Rules. In determining whether to accept the plan, Nasdaq will consider such things as the likelihood that the plan will result in compliance with Nasdaq’s continued listing criteria, the Company’s past compliance history, the reasons for the Company’s current non-compliance, other corporate events that may occur within Nasdaq’s review period, the Company’s overall financial condition, and its public disclosures. If Nasdaq does not accept the Company’s plan, the Company may request a hearing at which it would present its plan to a Nasdaq Hearings Panel.
January 2025 SPA
On April 23, 2025,
On May 7, 2025, the Purchaser provided a letter of
notice to the Company and Transact Europe, stating that due to the Company not exercising its right to terminate the SPA by payment to
the Purchaser of $
As further described in our 2024 Annual Report, Ryvyl
EU provides comprehensive EMI services, including global IBAN issuance, foreign exchange solutions, and payment processing capabilities
to individuals and businesses across Europe. Ryvyl EU represents a majority of the Company’s current business and substantially
all of the business reported under the Company’s International reporting segment (see Note 15, Segment Reporting, for more
information). Based on management’s assessment of the facts and circumstances surrounding the January 2025 SPA and Termination Agreement,
it determined that the pre-funded sale of Ryvyl EU met the held-for-sale criteria, in accordance with ASC 360, Property, Plant, and
Equipment, as of the second quarter of 2025. Based on total consideration received of $
Non-Payment of Second Installment for Note Repayment Agreement
As disclosed in Note 8, Long-Term Debt, Net,
the Second Installment of the Note in the amount of $
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain information included in this Quarterly Report on Form 10Q (this “Report”) and other materials we have filed or may filed, as well as information included in our oral or written statements, contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (“the Exchange Act”). These statements are often identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “will,” “would” or the negative or plural of these words, or similar expressions or variations. Such forward-looking statements are subject to a number of risks, uncertainties, assumptions, and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified herein and in our other filings with the Securities and Exchange Commission (the “SEC”). You should not rely upon forward-looking statements as predictions of future events.
You should not place undue reliance on forward-looking statements. The cautionary statements set forth in this Report identify important matters or factors which you should consider in evaluating our forward-looking statements. These matters or factors include, among other things:
| ● | Our ability to continue operating as a going concern; | |
| ● | Our ability to effectively execute our business plan; | |
| ● | Our ability to manage our expansion, growth and operating expenses both domestically and internationally; | |
| ● | Our ability to comply with new regulations and compliance requirements that affect our business; | |
| ● | Our ability to evaluate and measure our business, prospects and performance metrics; | |
| ● | Our ability to compete and succeed in an evolving industry; | |
| ● | Our ability to respond and adapt to rapid changes in technology; | |
| ● | Our ability to manage our expansion, growth and operating expenses both domestically and internationally; | |
| ● | Risks in connection with completed or potential acquisitions, post-acquisition integrations, dispositions and other strategic growth opportunities and initiatives; | |
| ● | Our need for, and ability to raise, additional capital; | |
| ● | Our ability to maintain operations in the event our financial condition is negatively impacted as the result of litigation or actions of any governmental agencies against us or against any of our officers or directors; | |
| ● | Our dependence on our proprietary technology, which we may not be able to protect; and | |
| ● | Risks related to our sale of our subsidiary, Ryvyl EU, representing a substantial portion of our business, if we are unable to pay the prospective purchaser $16.5 million by May 6, 2025 (or May 27, 2025, if we pay such prospective purchaser $0.75 million for such extension). |
The foregoing list of important factors does not include all such factors, nor necessarily present them in order of importance. In addition, you should consult other disclosures made by us (such as in our other filings with the SEC or in our press releases) for other factors that may cause actual results to differ materially from those projected by us. For additional information regarding risk factors that could affect our results, see “Risk Factors” beginning on page 18 of our 2024 Annual Report and “Risk Factors” on page 42 of this Report.
We intend the forward-looking statements to speak only as of the time of such statements and do not undertake or plan to update or revise such forward-looking statements as more information becomes available or to reflect changes in expectations, assumptions or results. We can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of, or any material adverse change in, one or more of the risk factors or risks and uncertainties referred to in this Report, could materially and adversely affect our results of operations, financial condition, liquidity, and future performance.
In this Report, unless the context otherwise requires, all references to “the Company,” “we,” “our,” “us” and “PubCo” refer collectively to RYVYL Inc., a Nevada corporation, and its subsidiaries.
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Unless the context otherwise requires, all references to “PrivCo” refer to GreenBox POS LLC, a limited liability company, formed in the state of Washington.
Our Management’s Discussion and Analysis and Results 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 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; our ability to continue operating as a going concern; our ability to pay our outstanding debt arrangements; and other risks that might be detailed from time to time in our filings with the SEC.
Although the forward-looking statements in this 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, results of operations and prospects.
Going Concern
Substantial doubt exists as to our ability to continue as a going concern based on the fact that we do not have adequate working capital to finance our day-to-day operations. As described in the Notes to the Financial Statements included in our 2024 Form 10-K and in this Report, respectively, for the years ended December 31, 2024, and 2023, and the three month periods ended March 31, 2025 and 2024, there is a substantial doubt about our ability to continue as a going concern. For the year ended December 31, 2024, we had a net loss of $26.8 million, and as of December 31, 2024, we had an accumulated deficit of $179.4 million. For the three months ended March 31, 2025, we had a net loss of $2.8 million, and as of March 31, 2025, we had an accumulated deficit of $182.2 million.
In February 2024, the Company stopped processing credit card payments on its QuickCard platform because our processing partner’s bank informed them that they no longer wished to process payments for cannabis merchants. QuickCard was our first-generation product and was designed to address the needs of previously all-cash businesses. Although not limited to the cannabis industry, prior to discontinuing QuickCard, cannabis merchants made up a substantial majority of the platform’s processing volume. The decline in revenues resulting from the discontinuation of QuickCard has adversely impacted the Company’s liquidity in its North America segment. Also, until recently, the Company had relied on the repatriation of profits from its European subsidiaries to cover some of its critical operating expenses in North America, which it will no longer be able to do once the Purchaser closes on the pre-funded sale of its wholly-owned subsidiary, Transact Europe, which is expected to occur during the second quarter of 2025 (see Note 16, Subsequent Events). As a result, management has determined that its cash balance in the North America segment as of March 31, 2025, will not be sufficient to fund the segment’s operations and capital needs for the next 12 months from the date of this Report and, unless we are able to raise additional capital, will only be sufficient to fund operations through approximately June 30, 2025. These conditions raise substantial doubt about our ability to continue as a going concern. See “Risk Factors - Our financial situation creates doubt whether we will continue as a going concern”. The condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Recent Developments
Preferred Stock Repurchase and Note Repayment Agreement and Non-Payment of Second Installment for Note Repayment Agreement
On January 23, 2025, the Company entered into a Preferred Stock Repurchase and Note Repayment Agreement (the “Repurchase Agreement”) with a securityholder of the Company (the “Securityholder”), which provides for repayment of the outstanding balance of an 8% Senior Convertible Note issued to the Securityholder on November 8, 2021 (the “Note”), which Note was originally due on November 5, 2023, and which maturity date was extended through April 5, 2026, pursuant to subsequent extensions provided by the Securityholder. Additionally, pursuant to two Exchange Agreements between the Company and the Securityholder entered into on July 25, 2023, and November 27, 2023, respectively, a portion of the outstanding balance of the Note was exchanged for 55,000 shares of the Company’s Series B Convertible Preferred Stock, par value $0.01 per share (the “Series B Preferred Shares”).
Pursuant to terms of the Repurchase Agreement, in consideration for an aggregate payment of $17.0 million by the Company to the Securityholder (the “Repurchase Price”), (i) the entire outstanding principal balance of the Note, including all accrued and unpaid interest, shall be deemed to have been paid and (ii) all outstanding Series B Preferred Shares held by the Securityholder will be repurchased by the Company.
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The Repurchase Agreement provided for the payment of the Repurchase Price in two installments, the first in the amount of $13.0 million (the “First Installment”), which was paid on January 27, 2025. The second installment, in the amount of $4.0 million (the “Second Installment”), was due and payable on or before April 30, 2025 (the “Second Installment Date”), and the maturity date of the Note was advanced to such date. Upon the payment of the First Installment, all Series B Preferred Shares held by the Securityholder were repurchased.
The Repurchase Agreement further provides that, during the period from the payment of the First Installment until the Second Installment Date, no interest accrued on the remaining balance of the Note and certain restrictive covenants under the Note were temporarily waived. The Second Installment of the Note in the amount of $4.0 million was due and payable on or before April 30, 2025, which payment was not made on the Second Installment Date and has not been made as of the date of this Report. The Repurchase Agreement provides that, if the Second Installment was not paid by the Second Installment Date, previously waived interest will begin to accrue retroactive to the First Installment Date on the remaining balance of the Note and all other terms of the Note will also be restored as they were prior to the date the First Installment was paid. Since the terms of the Note prior to the Repurchase Agreement have been reinstated, which includes a Note maturity date of April 5, 2026, the Note has been classified as a long-term liability in the condensed consolidated balance sheet as of March 31, 2025.
Stock Purchase Agreement, Financing, and Modification Agreement
On January 23, 2025, in connection with the Company’s securing financing (the “Financing”), the Company entered into a stock purchase agreement (the “January 2025 SPA”) with a purchaser (the “Purchaser”), which provides for the sale to the Purchaser of all of the issued and outstanding shares of capital stock (the “Ryvyl EU Shares”) of the Company’s indirect subsidiary domiciled in Bulgaria, Ryvyl (EU) EAD (“Ryvyl EU”), by Transact Europe Holdings EOOD, the Company’s wholly owned subsidiary, also domiciled in Bulgaria (“Transact Europe”) for an aggregate purchase price of $15.0 million (the “Financing Purchase Price”). Under the terms of the January 2025 SPA, the Company was required to use $13.0 million of the net proceeds raised in the Financing to pay the First Installment of the Repurchase Price.
On January 23, 2025, the Company, Transact Europe and the Purchaser also entered into a Termination Agreement (the “Termination Agreement”). Among other things, the Termination Agreement provided the Company with the right to terminate the January 2025 SPA and all of the transactions contemplated therein, by paying the Purchaser $16.5 million on or before 90 days after the date of execution of the January 2025 SPA (April 23, 2025). If the January 2025 SPA was terminated as a result of such payment by the Company, the Ryvyl EU Shares would not be sold to the Purchaser and would be returned to Transact Europe and the January 2025 SPA would be void and of no further effect, except for some provisions that survive termination. In the event that the January 2025 SPA was not so terminated, then the Purchaser would close on its purchase of the Ryvyl EU Shares; provided, however, if the Purchaser is unable to close for any reason other than the Company’s breach, including the inability to obtain any regulatory clearances required for such transfer, then the Company is liable for damages in the amount of $16.5 million. In the event that the Purchaser is unable to close on the transfer of the Ryvyl EU Shares, as a result of the Company’s breach, then the Company is liable for damages in an amount equal to the appraised value of the Ryvyl EU Shares.
On April 23, 2025, the Company, Transact Europe, and the Purchaser executed and entered into a modification agreement (the “Modification Agreement”) which provides that, notwithstanding the terms of the Termination Agreement or the January 2025 SPA, the Purchaser would not take any actions to close on the purchase of the Ryvyl EU Shares before May 6, 2025, so that the Company and the Purchaser could attempt to enter into an alternative transaction in lieu of the securities purchase transaction under the January 2025 SPA. The Company had the right, at any time, on or before May 6, 2025, to extend this period, so that the Purchaser would not exercise such right to purchase the Ryvyl EU Shares, until May 27, 2025, in consideration for the Company’s payment to the Purchaser of $0.75 million. All other terms of the January 2025 SPA and the Termination Agreement remained unchanged and in full force and effect.
On May 7, 2025, the Purchaser provided a letter of notice to the Company and Transact Europe, stating that due to the Company not exercising its right to terminate the SPA by payment to the Purchaser of $16.5 million within the time so prescribed by the Termination Agreement, and as the Company had not exercised its right to extend the period during which time the Purchaser agreed not to exercise its rights to close on the transaction per the Modification Agreement (the “Standstill Period”), the Company no longer had the right to terminate the SPA pursuant to the Termination Agreement, and the Standstill Period had expired. The Purchaser also notified the Company that notwithstanding the foregoing, they did not intend to take the final steps to close on the purchase of the Ryvyl EU Shares for a period of ten calendar days from and including the date of the letter, or until May 16, 2025. The parties continued to be in conversation during this period. All other terms of the SPA and the Termination Agreement remained unchanged and in full force and effect. On May 14, 2025, the Purchaser notified the Company that it would proceed to take steps to acquire the Ryvyl EU Shares, and the Company issued a press release stating that the parties had ceased discussions to restructure the terms of the pre-funded asset sale of its RYVYL EU subsidiary. The Company expects the buyer will now take the final steps to close the pre-funded asset sale.
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Blockchain Technology and QuickCard – Updated Disclosures
Refer to Note 16, Commitments and Contingencies, for additional information concerning an ongoing investigation by the SEC regarding possible violations of the federal securities laws, which in its course has included a review of the Company’s blockchain technology and its first-generation product, known as QuickCard. In response to the SEC’s concerns and based on our review of the facts and circumstances, the Company has determined to provide the following updated disclosures concerning its blockchain technology and its QuickCard product. The SEC’s concerns primarily pertain to disclosures in two areas: our description of our use of blockchain technology in our business and the lack of specific disclosure that the main vertical market being processed through QuickCard was cannabis merchants.
Our QuickCard product was designed to address the needs of previously all-cash businesses. Although not limited to cannabis, before QuickCard was discontinued, cannabis merchants made up a substantial majority of QuickCard processing volume. The Company stopped processing credit card payments on the QuickCard platform during the first quarter of 2024 because our processing partner’s bank informed them that they no longer wished to process payments for cannabis merchants. The turnover in acquiring banks of processing partners as well as the turnover in compliance officers within banks or changes in bank policies from time to time are examples of what we have historically referred to in public filings as “banking industry turmoil.”
When the Company stopped processing credit card payments on the QuickCard platform, we transitioned the QuickCard product from terminal-based processing to app-based processing. Our app-based processing platform would have required consumers to download an application and fund their app wallets via ACH bank transfers allowing them to purchase a prepaid virtual card. We have since determined that the app-based product may not be a viable long-term solution for certain niche high-risk business verticals (including cannabis merchants) and made the decision to terminate the rollout of the app-based product in those specific business verticals. In lieu of the app-based product, the Company began to offer a license of its QuickCard platform during the third quarter of 2024. Currently, the Company is not actively licensing any products.
QuickCard is a cloud-based digital payment platform that employs a private blockchain ledger database. While QuickCard payments are processed and settled through traditional payment processing gateways and not on the blockchain, once a transaction is complete, a record of the transaction is recorded on the blockchain ledger, and this record is therefore immutable. Once recorded on the blockchain ledger, the record of the transaction cannot be deleted or altered.
Our 2020 S-1 and subsequent periodic filings described a payment processing transaction as beginning with the consumer purchasing tokens from us, accomplished when we load a virtual wallet with a token, which then transfers credits to the merchant’s wallet on a dollar-for-dollar basis, after which the merchant releases its goods or services to the consumer. To clarify and more precisely describe the process, when a consumer presents a credit or debit card to our customer (the merchant), the process begins with the merchant creating and funding a digital wallet with the consumer’s payment, at which point the funds are converted to a digital representation of their deposit on a dollar-for-dollar basis, which we refer to as digital units or asset-based tokens. These are not cryptocurrency tokens and this is distinct and separate from the tokenization that occurs when a transaction is recorded on the blockchain. Merchants can request a withdrawal of their digital funds from us based on their wallet balances independent from the Company receiving cash at a later time from the acquiring bank in the network.
Until this year, QuickCard was our only product that employed the use of blockchain. QuickCard utilizes an open-source blockchain as its transaction ledger system. Transaction data is captured from payment endpoints, the data is encrypted and validated on Amazon Web Services (AWS) servers, validated transactions are formatted for blockchain compatibility, transaction blocks are created and added to the blockchain, and confirmation receipts are generated and stored.
While the blockchain is open-source and not created by or proprietary to the Company, we believe its implementation represents a proprietary technological advancement through, among other things:
| ● | Our custom integration architecture developed specifically for QuickCard’s unique payment processing requirements; | |
| ● | Our proprietary middleware solutions that bridge our payment systems with the blockchain infrastructure; | |
| ● | Our custom-built APIs and smart contracts designed exclusively for QuickCard’s transaction patterns; | |
| ● | Our unique security protocols and validation mechanisms developed in-house; |
Our proprietary elements include:
| 1. | Custom transaction validation algorithms specific to our payment processing needs; | |
| 2. | Data formatting and encryption protocols; | |
| 3. | Unique system architecture that optimizes blockchain integration with our existing infrastructure; and | |
| 4. | Custom-developed monitoring and audit tools. |
Our 2020 S-1 and subsequent periodic filings referred to transactions being verified by trusted partners. Transactions can be verified by merchants, but our blockchain ledger is not viewable by third parties. To ensure data integrity, the Company previously engaged a third-party vendor to perform an Information Technology General Controls (ITGC) audit of the system to ensure that transactions were accurately recorded. The ITGC audit did not result in any findings.
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RESULTS OF OPERATIONS
Three Months Ended March 31, 2025 (Unaudited) Compared to Three Months March 31, 2024 (Unaudited):
(in thousands)
| Three Months Ended March 31, | ||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||
| % of | % of | Change | ||||||||||||||||||||||
| Amount | Revenue | Amount | Revenue | Amount | % | |||||||||||||||||||
| Revenue | $ | 15,133 | 100.0 | % | $ | 16,774 | 100.0 | % | $ | (1,642 | ) | (9.8 | )% | |||||||||||
| Cost of revenue | 8,418 | 55.6 | % | 9,743 | 58.1 | % | (1,325 | ) | (13.6 | )% | ||||||||||||||
| Gross profit | 6,715 | 44.4 | % | 7,031 | 41.9 | % | (317 | ) | (4.5 | )% | ||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||
| Advertising and marketing | 33 | 0.2 | % | 17 | 0.1 | % | 16 | 94.1 | % | |||||||||||||||
| Research and development | 449 | 3.0 | % | 1,393 | 8.3 | % | (944 | ) | (67.8 | )% | ||||||||||||||
| General and administrative | 1,541 | 10.2 | % | 2,042 | 12.2 | % | (501 | ) | (24.5 | )% | ||||||||||||||
| Payroll and payroll taxes | 3,883 | 25.7 | % | 3,569 | 21.3 | % | 314 | 8.8 | % | |||||||||||||||
| Professional fees | 1,066 | 7.0 | % | 1,035 | 6.2 | % | 31 | 3.0 | % | |||||||||||||||
| Stock compensation expense | 55 | 0.4 | % | 224 | 1.3 | % | (169 | ) | (75.4 | )% | ||||||||||||||
| Depreciation and amortization | 133 | 0.9 | % | 657 | 3.9 | % | (524 | ) | (79.8 | )% | ||||||||||||||
| Restructuring charges | 403 | 2.7 | % | - | N/A | 403 | N/A | |||||||||||||||||
| Total operating expenses | 7,563 | 50.0 | % | 8,937 | 53.3 | % | (1,374 | ) | (15.4 | )% | ||||||||||||||
| Loss from operations | (848 | ) | (5.6 | )% | (1,906 | ) | (11.4 | )% | 1,058 | (55.5 | )% | |||||||||||||
| Other income (expense): | ||||||||||||||||||||||||
| Interest expense | (1,229 | ) | (8.1 | )% | (28 | ) | (0.2 | )% | (1,201 | ) | 4,289.3 | % | ||||||||||||
| Accretion of debt discount | (128 | ) | (0.8 | )% | (908 | ) | (5.4 | )% | 780 | (85.9 | )% | |||||||||||||
| Other income (expense) | (68 | ) | (0.4 | )% | 343 | 2.0 | % | (411 | ) | (119.8 | )% | |||||||||||||
| Total other expense, net | (1,425 | ) | (9.4 | )% | (593 | ) | (3.5 | )% | (832 | ) | 140.3 | % | ||||||||||||
| Loss before provision for income taxes | (2,273 | ) | (15.0 | )% | (2,499 | ) | (14.9 | )% | 227 | (9.0 | )% | |||||||||||||
| Income tax provision | 483 | 3.2 | % | 190 | 1.1 | % | 293 | 154.2 | % | |||||||||||||||
| Net loss | $ | (2,756 | ) | (18.2 | )% | $ | (2,689 | ) | (16.0 | )% | $ | (67 | ) | 2.5 | % | |||||||||
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Revenue
| Three Months Ended March 31, | ||||||||||||||||
| North America segment | 2025 | 2024 | $ Change | % Change | ||||||||||||
| Revenue | $ | 2,769 | $ | 9,674 | $ | (6,905 | ) | (71.4 | )% | |||||||
| Cost of revenue | 1,400 | 5,521 | (4,121 | ) | (74.6 | )% | ||||||||||
| Segment gross profit | $ | 1,369 | $ | 4,153 | $ | (2,784 | ) | (67.0 | )% | |||||||
| Three Months Ended March 31, | ||||||||||||||||
| International segment | 2025 | 2024 | $ Change | % Change | ||||||||||||
| Revenue | $ | 12,364 | $ | 7,100 | $ | 5,263 | 74.1 | % | ||||||||
| Cost of revenue | 7,018 | 4,222 | 2,796 | 66.2 | % | |||||||||||
| Segment gross profit | $ | 5,346 | $ | 2,878 | $ | 2,467 | 85.7 | % | ||||||||
Consolidated revenue decreased $1.6 million, or 9.8%, to $15.1 million for the three months ended March 31, 2025, from $16.8 million for the three months ended March 31, 2024. In the North America segment, revenue decreased $6.9 million, or 71.4%, compared to the three months ended March 31, 2024. In the International segment, revenue increased $5.3 million, or 74.1%, compared to the three months ended March 31, 2024. The decrease in consolidated revenue was primarily driven by a decrease in processing volume in the North America segment, which decreased from $239.0 million in the quarter ended March 31, 2024, to $177.5 million in the quarter ended March 31, 2025, and is attributable to the previously disclosed impact associated with the Company’s QuickCard product transition. The decrease in revenue in North America was partially offset by an increase in revenue in the International segment that was primarily attributable to continued growth in processing volume, which increased from $755.0 million in the quarter ended March 31, 2024, to $859.6 million in the quarter ended March 31, 2025. The increase in processing volume in the International segment was driven by continued strong growth across multiple verticals, primarily, our Independent Sales Organizations (“ISO”) and partnership network, our global payments processing businesses, and banking-as-a-service offering.
Cost of Revenue
Consolidated cost of revenue decreased $1.3 million, or 13.6%, to $8.4 million for the three months ended March 31, 2025, from $9.7 million for the three months ended March 31, 2024. In the North America segment, cost of revenue decreased $4.1 million, or 74.6%, compared to the three months ended March 31, 2024. In the International segment, cost of revenue increased $2.8 million, or 66.2%, compared to the three months ended March 31, 2024. Cost of revenue primarily consists of various processing fees paid to gateways, as well as commission payments to the ISOs responsible for establishing and maintaining merchant relationships. The decrease in consolidated cost of revenue was primarily driven by the decrease in processing volumes in North America, as noted above, partially offset by an increase in processing volumes in the International segment.
Operating Expenses
Operating expenses decreased $1.4 million, or 15.4%, to $7.6 million for the three months ended March 31, 2025, from $8.9 million for the three months ended March 31, 2024. The decrease was primarily driven by a decrease in research and development expenses of $0.9 million, as the Company did not begin capitalizing a portion of these costs until the second quarter of 2024, a decrease in general and administrative expenses of $0.5 million, primarily due to lower bad debt expense, and a decrease in depreciation and amortization of $0.5 million, primarily due to no amortization of intangible assets in North America, as these assets were written-off during the fourth quarter of 2024. These decreases were partially offset by an increase in restructuring charges of $0.4 million related to the impairment of previously acquired Logicquest Technology, Inc. assets during the first quarter of 2025.
Other Expense
Other expense increased by $0.8 million, or 140.1%, to $1.4 million for the three months ended March 31, 2025, from $0.6 million for the three months ended March 31, 2024. The increase was primarily driven by an increase in interest expense of $1.2 million related to a secured note payable, which the Company obtained in January 2025.
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Liquidity and Capital Resources
The Company’s consolidated working capital at March 31, 2025 was negative $24.1 million, which included cash of $3.0 million and restricted cash of $74.5 million. Historically, the Company has financed its operations with proceeds from cash from operations, the sales of equity securities, and proceeds from its $100 million convertible note issued in November 2021. Our material liquidity needs principally relate to working capital requirements, research and development expenditures, and the repayment of short-term debt.
As further described in Note 2, Summary of Significant Accounting Policies – Going Concern, in the unaudited condensed consolidated financial statements included in this Report, since the first quarter of 2024, the Company’s liquidity in its North America segment has been adversely impacted by the decline in revenues related to the discontinuation of its QuickCard product. As also noted in Note 2 of such financial statements, until recently, the Company had relied on the repatriation of profits from its European subsidiaries to cover some of its critical operating expenses in North America, which it will no longer be able to do once the Purchaser closes on the pre-funded sale of its wholly-owned subsidiary, Transact Europe, which is expected to occur during the second quarter of 2025 (see Note 16, Subsequent Events). As a result, management has determined that its cash in the North America segment as of March 31, 2025, will not be sufficient to fund the segment’s operations and capital needs for the next 12 months from the date of this Report and, unless the Company is able to raise additional capital, will only be sufficient to fund operations through approximately June 30, 2025. The Company’s ability to successfully address this liquidity shortfall is contingent upon the successful execution of management’s intended plan over the next twelve months, which includes, but is not limited to, the following:
| ● | raising capital over the next 30 days through a variety of means, including private and public equity offerings and debt financings. The Company is actively engaged in discussions with multiple banks regarding a capital raise as well as debt financing, and expects to consummate one or more of these fundings in the near term; | |
| ● | continued execution of its accelerated business development efforts to drive volumes in diversified business verticals with the Company’s other products, including the recently launched licensing of the Company’s payments processing platform in certain niche high-risk business verticals; and | |
| ● | continued implementation of cost control measures to more effectively manage spending in the North America segment and further right-sizing the organization, where appropriate; |
Management has assessed that its intended plan described above, if successfully implemented, is appropriate and sufficient to address the liquidity shortfall in its North America segment and to provide funds to cover operations for the next 12 months from the date of the issuance of this Report. However, there can be no assurance that we will be successful in implementing our plan, that our projections of our future capital needs will prove accurate, or that any additional funding will be sufficient to continue our operations in the North America segment.
Cash Flow Activities
The following table shows cash flows for the periods presented (in thousands):
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash (used in) provided by operating activities | $ | (15,581 | ) | $ | 15,525 | |||
| Cash used in investing activities | (1,269 | ) | (22 | ) | ||||
| Cash provided by (used in) financing activities | 1,998 | (4 | ) | |||||
| Effects of exchange rates on cash, cash equivalents, and restricted cash | 312 | (1 | ) | |||||
| Net (decrease) increase in cash and restricted cash | $ | (14,540 | ) | $ | 15,498 | |||
Operating Activities – For the three months ended March 31, 2025 and 2024, net cash used and net cash provided by operating activities was $15.6 million and $15.5 million, respectively. The net cash used and provided by operating activities was primarily driven by the timing of settlement of assets and liabilities.
Investing Activities – Net cash used in investing activities for the three months ended March 31, 2025 was $1.3 million. The net cash used in investing activities for the three months ended March 31, 2025 primarily relates to internal-use capitalized software development costs. Net cash used in investing activities for the three months ended March 31, 2024 was negligible.
Financing Activities – Net cash provided by financing activities during the three months ended March 31, 2025 was $2.0 million and was primarily driven by proceeds from a short-term note payable obtained by the Company in January 2025, partially offset by the partial repayment of the 8% Senior convertible note during the quarter. Net cash used in financing activities during the three months ended March 31, 2024 was negligible.
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Critical Accounting Estimates
We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the U.S. (“GAAP”). GAAP requires us 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experience, anticipated future trends, and other assumptions we believe to be reasonable under the circumstances. Because these estimates require significant judgment, our actual results may differ materially from our estimates.
Cash Due from Gateways
The Company generates the majority of its revenue from payment processing services provided to its merchant clients. When a merchant makes a sale, the process of receiving the payment card information and engaging the banks for transferring the proceeds to the merchant’s account via digital gateways, are the activities for which the Company gets to collect fees.
The gateways have strict guidelines pertaining to the scheduling of the release of funds to merchants based on several criteria that include, but are not limited to, return and chargeback history, associated risk for the specific business vertical, average transaction amount, etc. To mitigate potential credit losses associated with these risks, these gateway policies determine reserve requirements and a payment in arrears strategy. While reserve and payment in arrears restrictions are in effect for a merchant payout, the Company records the reserved amounts against cash due from the gateways until released.
Cash due from gateways is only applicable to payment processing services provided in North America, as. Ryvyl EU has its own gateway and, therefore, similar receivables are not created.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this Item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Regulations under the Exchange Act require public companies to maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Disclosure controls and procedures include, without limitation, controls and other procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and timely communicated to management, including our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer), to allow timely decisions regarding required disclosure. Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Report. Based on their evaluation as of March 31, 2025, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of such date.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(e) and 15d-15(e) of the Exchange Act that occurred during the period covered by this Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time-to-time, the Company is involved in legal proceedings. The following is a summary of our current outstanding litigation. Note that references to GreenBox POS are for historical purposes. GreenBox POS changed its name to RYVYL Inc. on October 13, 2022.
| ● |
On November 8, 2022, the Company filed a complaint against its former Chief Operating Officer Vanessa Luna, Luna Consultant Group, LLC and Does 1 through 50 in San Diego Superior Court (the “Company Filing”). The Company alleged that Ms. Luna abused her position for additional compensation, failed to follow proper protocols and breached her fiduciary duties and duty of loyalty by secretly maintaining alternative employment. The action sought damages, including interest and costs of suit incurred. On November 10, 2022, Ms. Luna filed her own complaint against the Company and Fredi Nisan in San Diego Superior Court (the “Luna Filing”). Ms. Luna alleged that Mr. Nisan used contract negotiations to coerce her, that the Company improperly coded transactions and misled investors, and that when her concerns were reported to management, she was wrongfully terminated, resulting in a number of claims. Ms. Luna also alleged sexual misconduct on the part of Mr. Nisan. Ms. Luna sought damages including compensatory damages, unpaid wages (past and future), loss of wages and benefits (past and future), and other damages to be proven at trial. The Company and Mr. Nisan deny all allegations of the Luna Filing. In April 2023, Ms. Luna sought and was granted permission to add Coyni, Inc. as a defendant with regard to her claims. In addition, in August 2024, the Company and Mr. Nisan were granted leave to file a Second Amended Complaint to add additional claims against Ms. Luna, including securities fraud. After vigorously defending against all claims asserted by Ms. Luna and vigorously prosecuting its own claims against Ms. Luna, on October 17, 2024, the parties entered into a confidential settlement agreement. On February 4, 2025, the parties filed with the San Diego Superior Court Requests for Dismissal, dismissing their respective cases with prejudice. The request was rejected and resubmitted on April 29, 2025. |
| ● | On December 12, 2022, Jacqueline Dollar (aka Jacqueline Reynolds), former Chief Marketing Officer of the Company, filed a complaint against the Company, Fredi Nisan, and Does 1-20 in San Diego Superior Court. Ms. Dollar is alleging she was undercompensated compared to her male counterparts and retaliated against after raising concerns to management resulting in sex discrimination in violation of the California Fair Employment and Housing Act (“FEHA”) and failure to prevent discrimination in violation of FEHA. Ms. Dollar is also claiming intentional infliction of emotional distress. Ms. Dollar is seeking an unspecified amount of damages related to, among other things, payment of past and future lost wages, stock issuances, bonuses and benefits, compensatory damages, and general, economic, non-economic, and special damages. As the Company cannot predict the outcome of the matter, the probability of an outcome cannot be determined. The Company intends to vigorously defend against all claims. The parties are currently in the discovery phase. |
| ● |
Since December 2022, the Company has been cooperating with an ongoing investigation by the SEC regarding possible violations of the federal securities laws, which in its course has included a review of the Company’s blockchain technology and first-generation product, known as QuickCard. During the investigation, the Staff of the SEC shared its concerns regarding certain disclosures in the Company’s Form S-1 filed on December 23, 2020 (“2020 S-1”), as well as subsequent periodic reports. The disclosures at issue primarily concerned the Company’s description of its use of blockchain technology and QuickCard processing for cannabis merchants. None of the disclosures impacted our previously reported revenues, expenses, earnings, cash balances, or other financial measures. Based on our review of the facts and circumstances, the Company has determined to provide the following additional disclosures. |
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| The Company has been discussing with the Staff of the SEC the possibility of reaching a settlement of potential charges arising from the investigation. We have been informed that, provided the Company makes a sufficient disclosure addressing the concerns regarding the Company’s 2020 S-1 and subsequent reporting, the Staff will recommend that no civil monetary penalties be imposed on the Company. See Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations – Recent Developments, of this Report for management’s disclosures in response to the SEC’s concerns. | ||
| ● |
On February 1, 2023, a putative class action lawsuit titled Cullen v. RYVYL Inc. fka GreenBox POS, Inc., et al., Case No. 3:23-cv-00185-GPC-AGS, was filed in the United States District Court for the Southern District of California against several defendants, including the Company and certain of our current and former directors and officers (the “Cullen Defendants”). The complaint was filed on behalf of persons who purchased or otherwise acquired the Company’s publicly traded securities between January 29, 2021 and January 20, 2023. The complaint alleged that the Cullen Defendants violated Sections 11, 12(a)(2), and 15 of the Securities Act and Sections 10(b) and 20(a) of the Exchange Act by making false and/or misleading statements regarding the Company’s financial controls, performance and prospects. On June 30, 2023, the plaintiff filed an amended complaint. On March 1, 2024, the Court issued an order granting in part and denying in part defendants’ motions to dismiss, which included dismissing all Securities Act claims and narrowing the potential class period. The plaintiff filed a second amended complaint on April 30, 2024, which alleges claims against the Cullen Defendants under Exchange Act Sections 10(b) and 20(a) only and a class period of May 13, 2021 through January 20, 2023. The Company filed its motion to dismiss the second amended complaint on July 1, 2024. On October 21, 2024, the Court issued an order granting in part and denying in part defendants’ motions to dismiss. The scope of the remaining claims is consistent with the Court’s last motion to dismiss decision dated March 1, 2024. On November 12, 2024, Plaintiff filed a Third Amended Complaint, which asserts the same legal causes of action and proposed class period as the previous complaint. On February 28, 2025, the Parties executed a Memorandum of Understanding (“MOU”) that reflects their agreement in principle to settle the claims asserted in this class action. Lead Plaintiff has begun the process of drafting the Stipulation and Agreement of Settlement and exhibits thereto, which, after negotiation and execution by the Parties, will be filed with the Court in connection with Motion for Preliminary Approval of Class Action Settlement. The Parties intend to move for preliminary approval of the proposed settlement as soon as practicable after the final settlement agreement is executed. There is no assurance, however, that the settlement will be completed and/or that the Court will approve it. The Cullen Defendants continue to deny any and all liability and allegations set forth in the pending Third Amended Complaint. |
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| ● |
On June 22, 2023, a shareholder derivative complaint was filed in the United States District Court for the Southern District of California against certain of the Company’s current and/or former officers and directors (the “Hertel Defendants”), Christy Hertel, derivatively on behalf of RYVYL Inc., f/k/a GreenBox POS v. Ben Errez et al., Case No. 3:23-CV-01165-GPC-SBC. On August 4, 2023, a second shareholder derivative complaint was filed in the United States District Court for the Southern District of California against the Hertel Defendants, Marcus Gazaway, derivatively on behalf of RYVYL Inc., f/k/a GreenBox POS v. Ben Errez et al., Case No. 3:23-CV-01425-LAB-BLM. Both derivative complaints generally allege that the Hertel Defendants failed to implement adequate internal controls that would prevent false and misleading financial information from being published by the Company and that controlling shareholders participated in overpayment misconduct resulting in violations of Sections 10(b), 14(a) and 20 of the Exchange Act and breached their fiduciary duties and, purportedly on behalf of the Company. On April 2, 2024, the Court granted the parties’ joint motion for an order consolidating the Hertel and Gazaway cases under the caption In re RYVYL Inc. Derivative Litigation, Lead Case No. 3:23-CV-01165-GPC-SBC (S.D. Cal.). On May 6, 2024, the Court issued an order staying the action until after the final resolution of any motion to dismiss the securities class action detailed above. On May 1, 2024, a third nearly identical shareholder derivative complaint was filed in Clark County, Nevada by plaintiff Christina Brown, derivatively on behalf of RYVYL, Inc., v. Ben Errez et al., Case No. A-24-892382-C.
The Complaints seeks damages and contribution from the Hertel Defendants and a direction that the Company and the Hertel Defendants take actions to reform and improve corporate governance and internal procedures to comply with applicable laws. The Hertel Defendants deny all allegations of liability and intend to vigorously defend against all claims. On May 8, 2025, all parties reached an agreement in principle to fully resolve and settle all claims alleged in the lawsuits. The pending settlement is subject to documentation by the parties and approval by the District Court. However, unless and until the settlement is approved, and given the uncertainty of litigation and the legal standards that must be met for success on the merits, the Company cannot predict the outcome of the cases at this time. |
| ● | On October 1, 2023, the Company filed a demand for arbitration against Sky Financial with the American Arbitration Association in San Diego, California (the “Arbitration”). In the Arbitration, the Company seeks to recover for breach of contract and Sky Financial’s failure to perform its obligations On October 2, 2023, the Company filed a complaint against Sky Financial in San Diego Superior Court asserting the same claims asserted in the Arbitration, solely to toll any applicable statutes of limitations pending the Arbitration and, if necessary, provide jurisdiction for the court to compel arbitration. The action seeks damages, including interest and costs of suit incurred. The parties agreed to proceed in the Arbitration and to implement the steps needed to extend the current stay of the San Diego Superior Court action pending the Arbitration. Subsequently, the parties agreed to stay the Arbitration and attend mediation. A mediation was scheduled but then vacated by stipulation of the parties. The stay of the Arbitration has been lifted. A new third arbitrator was recently selected to the panel to replace an arbitrator who withdrew for personal reasons. The parties await the scheduling of a status conference to set dates. |
| ● | On June 25, 2024, J. Drew Byelick, a former Chief Financial Officer of the Company, filed a complaint against the Company in the United States District Court for the Southern District of California, Case No. ’24CV1096 JLS MSB. Mr. Byelick alleged breach of contract, fraudulent inducement of employment, along with intentional misrepresentation and concealment. The Company moved to dismiss the complaint for failure to state a claim and for other violations of the federal rules of civil procedure. The Court granted that motion on December 20, 2024, but permitted Mr. Byelick to file an amended complaint. Mr. Byelick filed his first amended complaint on January 19, 2025, asserting the same core claims. The Company moved to dismiss the first amended complaint for similar reasons as its motion to dismiss the original complaint. The Court granted that motion, in part, on April 18, 2025, ruling that Mr. Byelick was incapable of pleading certain claims (and dismissing those claims) but adequately pled others for purposes of a motion to dismiss only. The Company denies all allegations of liability and intends to vigorously defend against all claims. However, given the preliminary stage of the lawsuit, the uncertainty of litigation, and the legal standards that must be met for success on the merits, the Company cannot predict the outcome at this time or estimate a reasonably possible loss or range of loss that may result from this action. |
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ITEM 1A. RISK FACTORS
Other than the newly identified risk factors described below, there have been no material changes with respect to risk factors previously disclosed in the Company’s 2024 Annual Report.
We have entered into a Securities Purchase Agreement to sell a material subsidiary, which represents a substantial portion of our current business and which we expect to close by June 30, 2025. Additionally, we may be required to pay significant liquidated damages if the prospective purchaser is unable to close the acquisition
As described elsewhere in this Report, we entered into a Securities Purchase Agreement (“SPA”) with a Purchaser, which provides for the sale to the Purchaser of all of the issued and outstanding shares of capital stock of our indirect subsidiary, Ryvyl EU (the “Ryvyl EU Shares”), which represents a materially significant portion of the Company’s current business and substantially all the business classified under the Company’s International reporting segment as described in the Notes to the unaudited condensed financial statements for the period ended March 31, 2025 and 2024. We also entered into a Termination Agreement with the Purchaser, providing us with the right to terminate the Securities Purchase Agreement and the Purchaser’s right to purchase our Ryvyl EU business, if we paid such Purchaser $16.5 million on or before April 23, 2025. We have not made such payment to the Purchaser and we were notified by the Purchaser on May 14, 2025, that it will proceed with its acquisition of the Ryvyl EU Shares.
The Purchaser’s acquisition of the Ryvyl EU Shares will result in the loss of such business, which would have a material adverse effect on our business and financial condition and could result in the termination of our business. Additionally, if the Purchaser is unable to acquire the Ryvyl EU Shares for any reason other than our breach, including the inability to obtain any regulatory clearances required for such transfer from the applicable Bulgarian governmental authorities, then we are required to pay the Purchaser liquidated damages in the amount of $16.5 million. In the event that the Purchaser is unable to acquire the Ryvyl EU Shares, as a result of our breach, then we are required to pay the Purchaser liquidated damages in an amount equal to the appraised value of the Ryvyl EU Shares. Our payment of either of such liquidated damages amounts to the Purchaser would have a material adverse impact on our business and financial condition and, in the event of our obligation to pay $16.5 million, such could result in the termination of our business, and in the event of our obligation to pay the appraised value of the Ryvyl EU Shares, such would substantially likely result in the termination of our business.
Our financial situation creates doubt whether we will continue as a going concern
As described in the Notes to the Financial Statements included in our 2024 Form 10-K and in this Report, respectively, for the years ended December 31, 2024, and 2023, and the three month periods ended March 31, 2025 and 2024, there is a substantial doubt about our ability to continue as a going concern. For the year ended December 31, 2024, we had a net loss of $26.8 million, and as of December 31, 2024, we had an accumulated deficit of $179.4 million. For the three months ended March 31, 2025, we had a net loss of $2.8 million, and as of March 31, 2025, we had an accumulated deficit of $182.2 million. Also, until recently, we had relied on the repatriation of profits from our European subsidiaries to cover some of our critical operating expenses in North America, which we will no longer be able to do once the Purchaser closes on the pre-funded sale of our wholly-owned subsidiary, Transact Europe, which is expected to occur during the second quarter of 2025 (see Note 16, Subsequent Events). As a result, management has determined that our cash balance in the North America segment as of March 31, 2025, will not be sufficient to fund the segment’s operations and capital needs for the next 12 months from the date of this Report and, unless we are able to raise additional capital, will only be sufficient to fund operations through approximately June 30, 2025. These conditions raise substantial doubt about our ability to continue as a going concern. There can be no assurances that we will be able to achieve a level of revenues adequate to generate sufficient cash flow from operations or additional financing through private placements, public offerings and/or bank financing necessary to support our working capital requirements. To the extent that funds generated from any private placements, public offerings and/or bank financing are insufficient, we will need to raise additional working capital. No assurance can be given that additional financing will be available, or if available, that we will be able to secure any such financing on acceptable terms. These conditions raise substantial doubt about our ability to continue as a going concern. If adequate working capital is not available, we may be forced to discontinue operations.
If we are not able to comply with the applicable continued listing requirements or standards of Nasdaq, our common stock could be delisted from Nasdaq
Our common stock is currently listed on Nasdaq. In order to maintain that listing, we must satisfy minimum financial and other continued listing requirements and standards, including those regarding director independence and independent committee requirements, minimum stockholders’ equity, minimum share price, and certain corporate governance requirements. There can be no assurances that we will be able to comply with the applicable listing standards of Nasdaq.
As disclosed in our Current Report on Form 8-K filed with the SEC on April 11, 2025, we received a written notification from the Staff on April 8, 2025 notifying us that we were not in compliance with the minimum stockholders’ equity requirement of $2.5 million for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(1). The Company has until May 23, 2025 to provide Nasdaq with a plan to regain compliance with the foregoing listing requirement. If the Company’s plan to regain compliance is accepted, Nasdaq may grant an extension of up to 180 calendar days from the date of the Notice (October 5, 2025) for the Company to evidence compliance.
The Company intends to submit a plan to Nasdaq to regain compliance with the Nasdaq Listing Rules. In determining whether to accept the plan, Nasdaq will consider such things as the likelihood that the plan will result in compliance with Nasdaq’s continued listing criteria, the Company’s past compliance history, the reasons for the Company’s current non-compliance, other corporate events that may occur within Nasdaq’s review period, the Company’s overall financial condition and its public disclosures. If Nasdaq does not accept the Company’s plan, the Company may request a hearing at which it would present its plan to a Nasdaq Hearings Panel.
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There can be no assurances that Nasdaq will accept our plan to regain compliance with the Nasdaq Listing Rules, and, assuming that they do accept our plan, that we will be able to regain compliance or continue to comply with all applicable Nasdaq listing requirements now or in the future, including the Stockholders’ Equity Requirement. If we fail to meet to regain compliance, our common stock may be delisted from the Nasdaq Capital Market.
In the event that our common stock is delisted from Nasdaq and is not eligible for quotation on another market or exchange, trading of our common stock could be conducted in the over-the-counter market established for unlisted securities, such as the OTC Markets. In such event, it could become more difficult to dispose of, or obtain accurate price quotations for, our common stock, and there would likely also be a reduction in our coverage by securities analysts and the news media, which could cause the price of our common stock to decline further. Also, it may be difficult for us to raise additional capital if we are not listed on a major exchange.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Trading Arrangements
During the quarterly period ended March 31, 2025,
none of our directors or officers (as defined in Rule 16a-1(f) promulgated under the Exchange Act)
ITEM 6. EXHIBITS
| * | 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.
| RYVYL INC. | ||
| (Registrant) | ||
| Date: May 20, 2025 | By: | /s/ Fredi Nisan |
| Fredi Nisan | ||
| Chief Executive Officer (Principal Executive Officer) | ||
| Date: May 20, 2025 | By: | /s/ George Oliva |
| George Oliva | ||
| Chief Financial Officer (Principal Financial Officer) |
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