ryvyl20230331

ryvyl20230331_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

☒	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

For the transition period from to

Commission file number: 001-34294

RYVYL INC.

(Exact name of small business issuer as specified in its charter)

Nevada	22-3962936
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)

3131 Camino Del Rio North, Suite 1400
San Diego, CA	92108
(Address of principal executive offices)	(Zip Code)

(619)-631-8261

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	RVYL	The Nasdaq Stock Market LLC (Nasdaq Capital Market)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 19, 2023, the Registrant had 51,343,821 shares of common stock, $0.001 par value per share, outstanding.

TABLE OF CONTENTS

PART I Consolidated Financial Information		Page
Item 1.	Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022	3
	Condensed Consolidated Statements of Operations and Comprehensive Income for the Three Months Ended March 31, 2023 and 2022	4
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2023 and 2022	5
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
Item 4.	Controls and Procedures	32

PART II Other Information
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	33
Signatures		34

PART I - FINANCIAL INFORMATION

ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

RYVYL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31, 2023 (Unaudited)			December 31, 2022
ASSETS	*(dollars in thousands)*
Current Assets:
Cash and cash equivalents	$	17,742		$	13,961
Restricted cash		39,396			26,873
Accounts receivable, net of allowance for bad debt of $28 and $82, respectively		859			1,156
Cash due from gateways, net of allowance of $9,326 and $9,326, respectively		7,309			7,427
Prepaid and other current assets		4,061			9,798
Total current assets		69,367			59,215
Non-current Assets:
Property and equipment, net		1,676			1,696
Other assets		2,214			197
Goodwill		26,753			26,753
Intangible assets, net		6,156			6,739
Operating lease right-of-use assets, net		1,363			1,533
Investments - assets		687			1,524
Total non-current assets		38,849			38,442
Total Assets		108,216			97,657
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	9,775			1,630
Other current liabilities		2,852			3,662
Accrued interest		2,437			1,728
Payment processing liabilities, net		37,013			28,912
Short-term notes payable		15			14
Derivative liability		87			255
Current portion of operating lease liabilities		353			534
Total current liabilities		52,532			36,735
Long term debt, net of debt discount		64,353			61,735
Operating lease liabilities, less current portion		965			1,109
Total liabilities		117,850			99,579
Commitments and contingencies
Stockholders' Equity:
Common stock, par value $0.001, 82,500,000 shares authorized, shares issued and outstanding of 51,335,650 and 49,727,355, respectively		51			49
Common stock issuable, par value $0.001		-			2
Additional paid-in capital		96,234			96,271
Accumulated other comprehensive income		1,538			1,596
Accumulated deficit		(107,457	)		(99,772	)
Less: Shares to be returned		-			(68	)
Total stockholders' equity		(9,634	)		(1,922	)
Total liabilities and stockholders’ equity	$	108,216		$	97,657

The accompanying notes are an integral part of these condensed unaudited financial statements.

Table of Contents

RYVYL INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED)

	Three Months Ended March 31,
	2023			2022 (as restated)
	*(dollars in thousands, except per share data)*
Revenue	$	11,291		$	4,210
Cost of revenue		6,178			2,780
Gross profit		5,113			1,430
Operating expenses:
Advertising and marketing		75			141
Research and development		1,936			1,938
General and administrative		1,452			1,792
Payroll and payroll taxes		2,714			2,384
Professional fees		1,803			1,505
Stock compensation expense		193			293
Depreciation and amortization		620			454
Total operating expenses		8,793			8,507
Loss from operations		(3,680	)		(7,077	)
Other income (expense):
Interest expense		(1,729	)		(3,830	)
Interest expense - debt discount		(2,622	)		(5,521	)
Loss on settlement of debt		-			(900	)
Changes in fair value of derivative liability		168			(7,700	)
Merchant fines and penalty income		-			45
Other income or expense		(111	)		(4,364	)
Total other expense, net		(4,294	)		(22,270	)
Loss before provision for income taxes		(7,974	)		(29,347	)
Income tax provision		5			80
Net loss	$	(7,979	)	$	(29,427	)
Comprehensive income statement:
Net loss	$	(7,979	)	$	(29,427	)
Foreign currency translation loss		(58	)		-
Total comprehensive loss	$	(8,037	)	$	(29,427	)
Net loss per share:
Basic and diluted	$	(0.15	)	$	(0.72	)
Weighted average number of common shares outstanding:
Basic and diluted		52,210,597			40,708,304

The accompanying notes are an integral part of these condensed unaudited financial statements.

Table of Contents

RYVYL INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)

(dollars in thousands)

	Common Stock											Treasury Stock										Additional			Other Accumulated Comprehensive						Total Stockholders'
	Shares			Amount		To be Issued			Amount			To be returned			Amount			Shares		at Cost		Paid-In Capital			Income (Loss)			Accumulated Deficit			Equity (Deficit)
Balance at December 31, 2022		49,727,355		$	49		1,753,916		$	2			(136,888	)	$	(68	)		-		-	$	96,271		$	1,596		$	(99,772	)	$	(1,922	)

Common stock issued to employees as stock compensation		(8,906	)		-		-			-			-			-			-		-		31			-			-			31

Common stock issued for interest on convertible debt		1,753,916			2		(1,753,916	)		(2	)		-			-			-		-		-			-			-			-

Carryover effects of financial statement restatements in prior periods		-			-		-			-			-			-			-		-		-			-			294			294

Share repurchase		(136,715	)		-		-			-			136,888			68			-		-		(68	)		-			-			-

Net loss and comprehensive loss		-			-		-			-			-			-			-		-		-			(58	)		(7,979	)		(8,037	)

Balance at March 31, 2023		51,335,650		$	51		-		$	-			-		$	-			-		-	$	96,234		$	1,538		$	(107,457	)	$	(9,634	)

Table of Contents

	Common Stock											Treasury Stock												Additional			Other Accumulated					Total Stockholders'
	Shares			Amount		To be Issued			Amount			To be returned			Amount			Shares			at Cost			Paid-In Capital			Comprehensive Loss		Accumulated Deficit			Equity (Deficit)
Balance at December 31, 2021		43,546,647		$	43		-			-			(1,436,888	)	$	(9,852	)		(714,631	)	$	(4,934	)	$	94,748			-	$	(50,537	)	$	29,468

Common stock issued for services		30,508			-		9			-									-			-			126			-		-			126

Common stock issued for shareholder		33,333			-		-			-									-			-			-			-		-			-

Common stock issued for stock options exercised		12,417			-		-			-									-			-			5			-		-			5

Common stock contributed and cancelled from shareholder		(333,333	)		-		-			-			800,000			6,989			(1,483,755	)		(3,539	)		(6,686	)		-		-			(3,237	)

Common stock issuable - Acquisition of Sky assets		-			-		500			1									-			-			2,110			-		-			2,110

Common stock issued for conversion of convertible debt		-			-		-			-			-			-			-			-			-			-		-			-

Common stock shares contributed by shareholder		-			-		(500	)		(1	)								-			-			1			-		-			-

Common stock shares issuable to shareholder		-			-		533			1									-			-			(1	)		-		-			-

Treasury Stock		-			-		-			-			-			-			-			-			-			-		-			-

Stock compensation expense		-			-		-			-									-			-			167			-		-			167

Net loss		-			-		-			-									-			-			-			-		(29,427	)		(29,427	)

Balance at March 31, 2022		43,289,572		$	43		542,238		$	1			(636,888	)	$	(2,863	)		(2,198,386	)	$	(8,473	)	$	90,470			-	$	(79,963	)	$	(786	)

The accompanying notes are an integral part of these condensed unaudited financial statements.

Table of Contents

RYVYL INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

	Three Months Ended March 31
	2023			2022
Cash flows from operating activities:	*(dollars in thousands)*
Net loss	$	(7,979	)	$	(29,427	)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization expense		620			454
Noncash lease expense		913			-
Stock compensation expense		193			167
Restricted stock issued for services		-			126
Interest expense - debt discount		2,622			4,262
Derivative expense (benefit)		(168	)		7,700
Changes in assets and liabilities:
Accounts receivable		296			13
Prepaid and other current assets		5,741			(80