RYVYL Inc
For the period ended Jun 30, 2024. Filed Aug 13, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 13, 2024
RTB$6.08+2.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-14.
0001185185-24-000500
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-13.
0001185185-24-000791
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 46 previous paragraphs and 57 current paragraphs.
31 unchanged; 15 reworded; 10 added; 0 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 5 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
As previously disclosed, management’s plan to recover the loss of revenues resulting from this product transition included the acceleration of business development efforts to launch the new app-based product in existing and new business verticals. However, due to continuous changes in the regulatory environment and our previous banking relationships, during the second quarter, management determined that the app-based product may not be a viable long-term solution for certain niche high-risk business verticals and made the decision to terminate the rollout of the app-based product in those business verticals. To address this change, the Company recently introduced a licensing product for its payments processing platform, which will enable it to serve the same customer base in such verticals through a business partner with more suitable banking compliance capabilities. Due of this strategy shift as well as a reorganization of the Company’s business to better align with management’s revised strategy, which was executed during the second quarter, the recovery of the loss of revenues resulting from this product transition is now not expected to occur until early 2025.
Current report
Revenue decreased by $2.9 million, or 19.9%, to $11.9 million for the three months ended June 30, 2024, from $14.8 million for the three months ended June 30, 2023. In the North America segment, revenue decreased $8.1 million, or 73.1%, compared to the three months ended June 30, 2023. In the International segment, revenue increased $5.1 million, or 134.3%, compared to the three months ended June 30, 2023. The decrease in revenue was primarily driven by a decrease in processing volume in the North America segment, which decreased from $362 million in the quarter ended June 30, 2023, to $152.6 million in the quarter ended June 30, 2024, and was due to the previously disclosed product transition that began in February 2024. 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 $317 million in the quarter ended June 30, 2023, to $902.1 million in the quarter ended June 30, 2024. The increase in processing volume in the International segment was driven by continued growth across multiple verticals, primarily, our Independent Sales Organizations (“ISO”) and partnership network, our global payments processing businesses, and banking-as-a-service offering.
Current report
Other expense decreased by $7.7 million, or 90.8%, to $0.8 million for the three months ended June 30, 2024, from $8.5 million for the three months ended June 30, 2023. The decrease was primarily due to a decrease in the convertible note interest expense of $1.4 million, a decrease in the accretion of the convertible note discount of $2.0 million, and a decrease in changes in fair value of the derivative liability of $0.5 million, which were all impacted by the restructuring of the Company’s convertible note in the fourth quarter of 2023. Additionally, legal settlement expense decreased $2.1 million and other income or expense decreased $1.5 million, which were both non-recurring items recorded in the second quarter of 2023 with no similar items recorded in the second quarter of 2024.
Current report
(Dollars in thousands)
Current report
Revenue
Current report
Cost of Revenue
Current report
Cost of revenue increased by $2.0 million, or 13.4%, to $16.9 million for the six months ended June 30, 2024, from $14.9 million for the six months ended June 30, 2023. In the North America segment, cost of revenue decreased by $3.7 million, or 33.6%, compared to the six months ended June 30, 2023. In the International segment, cost of revenue increased by $5.7 million, or 150.7%, compared to the six months ended June 30, 2023. 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 increase in cost of revenue was primarily driven by a decrease in processing volumes in North America, as noted above, which were more than offset by an increase in processing volumes in the International segment.
Current report
Operating Expenses
Current report
Operating expenses increased by $6.2 million, or 34.0%, to $24.6 million for the six months ended June 30, 2024, from $18.3 million for the six months ended June 30, 2023. The increase was primarily driven by a $6.7 million non-cash charge related to the write-off of goodwill in North America (see Note 2) and restructuring charges of $1.6 million related to the Company’s reorganization and restructuring of its business in North America, both recorded during the second quarter ended June 30, 2024, and primarily comprised of employee severance and termination benefits and a write-off of assets related to the Coyni brand. These increases were partially offset by a decrease in professional fees of $2.1 million due to lower accounting, consulting, and legal fees incurred in 2023 in connection with the Company’s restatement of prior period consolidated financial statements.
Current report
Other Income (Expense)
Reworded paragraphs (15)
Previous wording
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 and Section 21E of 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 SEC filings. You should not rely upon forward-looking statements as predictions of future events.
Current wording
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.
Previous wording
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 14 of the 2023 Annual Report.
Current wording
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 14 of our Annual Report on Form 10-K filed with the SEC on March 26, 2024 (the “2023 Annual Report”).
Previous wording
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 sustain, manage, or forecast growth; 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; and other risks that might be detailed from time to time in our filings with the SEC.
Current wording
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; and other risks that might be detailed from time to time in our filings with the SEC.
Previous wording
On March 31, 2022, the Company acquired a portfolio of merchant accounts from Sky Financial & Intelligence LLC, a Wyoming limited liability company (“Sky Financial”) for $18,110,000. The Company paid $16,000,000 of cash in March 2022 and issued 500,000 shares of restricted common stock for the transaction on May 12, 2022.
Current wording
On March 31, 2022, the Company acquired a portfolio of merchant accounts from Sky Financial for $18,110,000. The Company paid $16,000,000 of cash in March 2022 and issued 500,000 shares of restricted common stock for the transaction on May 12, 2022.
Previous wording
In February 2024, the Company transitioned its QuickCard product in North America away from terminal-based to app-based processing. This transition coincided with a change in our banking partner that was prompted by recent changes in the compliance environment and banking regulations. The unforeseen abrupt nature of the transition and slow initial adoption of the app-based product has led to a significant decline in processing volume in North America, which in turn has adversely affected revenue in the North America segment.
Current wording
In February 2024, the Company transitioned its QuickCard product in North America away from terminal-based to app-based processing. This transition was driven by a change in our banking partner that was prompted by recent changes in the compliance environment and banking regulations impacting certain niche high-risk business verticals, which were the predominant revenue driver for QuickCard.
Previous wording
This temporary decline in revenue has adversely impacted the Company’s liquidity in its North America segment in the short term. As a result, management has determined that its cash and cash equivalents in the North America segment as of March 31, 2024, will not be sufficient to fund the segment’s operations and capital needs for the next 12 months from the issuance of this Report. Management’s intended plan over the next twelve months to address the temporary liquidity shortfall in the North America segment includes, but is not limited to, the following:
Current wording
The decline in revenues resulting from this product transition has adversely impacted the Company’s liquidity in its North America segment in the short term. As a result, management has determined that its cash and cash equivalents in the North America segment as of June 30, 2024, will not be sufficient to fund the segment’s operations and capital needs for the next 12 months from the issuance of this Report. Management’s intended plan over the next twelve months to address the liquidity shortfall in the North America segment includes, but is not limited to, the following:
Previous wording
Cost of revenue increased by $3.6 million, or 57.7%, to $9.7 million for the three months ended March 31, 2024, from $6.2 million for the three months ended March 31, 2023. In the North America segment, cost of revenue increased $0.8 million, or 16.4%, compared to the three months ended March 31, 2023. In the International segment, cost of revenue increased $2.8 million, or 193.9%, compared to the three months ended March 31, 2023. Cost of revenue consists of various processing fees paid to gateways, as well as commission payments to the ISOs responsible for establishing and maintaining merchant relationships. The increase in cost of revenue is primarily attributable to the increase in processing volume, which resulted in higher processing fees paid to gateways and commission payments to ISOs, primarily in the International segment.
Current wording
Cost of revenue decreased by $1.6 million, or 18.0%, to $7.2 million for the three months ended June 30, 2024, from $8.7 million for the three months ended June 30, 2023. In the North America segment, cost of revenue decreased $4.5 million, or 71.0%, compared to the three months ended June 30, 2023. In the International segment, cost of revenue increased $2.9 million, or 124.5%, compared to the three months ended June 30, 2023. 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 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.
Previous wording
Operating expenses increased by $0.1 million, or 1.7%, to $8.9 million for the three months ended March 31, 2024, from $8.8 million for the three months ended March 31, 2023. The increase was due primarily to an increase in general and administrative expenses of $0.6 million due to higher bad debt expense and an increase in payroll and payroll taxes of $0.9 million primarily related to employee bonuses and commissions during the period. These increases were partially offset by a decrease in research and development expense of $0.5 million and a decrease in professional fees of $0.8 million due to lower accounting, consulting, and legal fees incurred in 2023 in connection with the Company’s restatement of prior period consolidated financial statements.
Current wording
Operating expenses increased by $6.0 million, or 62.0%, to $15.6 million for the three months ended June 30, 2024, from $9.6 million for the three months ended June 30, 2023. The increase was primarily driven by a $6.7 million non-cash charge related to the write-off of goodwill in North America (see Note 2) and restructuring charges of $1.6 million related to the Company’s reorganization and restructuring of its business in North America, both recorded during the second quarter ended June 30, 2024 and primarily comprised of employee severance and termination benefits and a write-off of assets related to the Coyni brand. These increases were partially offset by a decrease in research and development expenses of $0.4 million, a decrease in general and administrative expenses of $0.7 million, and a decrease in professional fees of $1.4 million due to lower accounting, consulting, and legal fees incurred in 2023 in connection with the Company’s restatement of prior period consolidated financial statements.
Previous wording
Revenue increased by $5.5 million, or 48.6%, to $16.8 million for the three months ended March 31, 2024, from $11.3 million for the three months ended March 31, 2023. In the North America segment, revenue increased $0.9 million, or 9.9%, compared to the three months ended March 31, 2023. In the International segment, revenue increased $4.6 million, or 185.4%, compared to the three months ended March 31, 2023. The increase in revenue was primarily attributable to continued growth in processing volume, which increased from $566 million for the three months ended March 31, 2023, to $994 million for the three months ended March 31, 2024. The increase in processing volume was driven by the continued expansion in multiple verticals within our International segment, primarily, our ISO and partnership network, our global payments processing businesses, and banking-as-a-service offering, and business growth in American Samoa.
Current wording
Revenue increased by $2.5 million, or 9.7%, to $28.7 million for the six months ended June 30, 2024, from $26.1 million for the six months ended June 30, 2023. In the North America segment, revenue decreased by $7.2 million, or 36.3%, compared to the six months ended June 30, 2023. In the International segment, revenue increased by $9.7 million, or 155.5%, compared to the six months ended June 30, 2023. The increase in revenue was due to the continued growth in processing volume in the International segment, which increased from $582 million in the six months ended June 30, 2023, to $1.7 billion in the six months ended June 30, 2024, and was driven by continued growth across multiple verticals, primarily, our ISO and partnership network, our global payments processing businesses, and banking-as-a-service offering. The increase in processing volume in the International segment was partially offset by a decrease in processing volume in the North America segment, which decreased from $663 million in the six months ended June 30, 2023, to $391.6 million in the six months ended June 30, 2024, and was due to the previously disclosed product transition that began in February 2024.
Previous wording
Other expense decreased by $3.7 million, or 86.2%, to $0.6 million for the three months ended March 31, 2024, from $4.3 million for the three months ended March 31, 2023. The decrease was primarily due to lower interest expense of $1.7 million due to the accrued interest waiver on the convertible note through June 2024 and the decrease in the convertible note discount, which were both due to the restructuring of the Company’s convertible note in the fourth quarter of 2023.
Current wording
Other expense decreased by $11.5 million, or 89.3%, to $1.4 million for the six months ended June 30, 2024, from $12.9 million for the six months ended June 30, 2023. The decrease was primarily due to a decrease in the convertible note interest expense of $3.1 million, a decrease in the accretion of the convertible note discount of $3.7 million, and a decrease in changes in fair value of the derivative liability of $0.3 million, which were all due to the restructuring of the Company’s convertible note in the fourth quarter of 2023. Additionally, legal settlement expense decreased $2.2 million and other income or expense decreased $1.5 million, which were both non-recurring items recorded in the six months ended June 30, 2023 with no similar items recorded in the six months ended June 30, 2024.
Previous wording
The Company’s consolidated working capital at December 31, 2023 was $3.2 million, which included cash and cash equivalents of $10.5 million and restricted cash of $78.3 million. Historically, the Company has financed its operations with proceeds from cash from operations, the sales of equity securities, and its $100 million convertible note. Our material liquidity needs principally relate to working capital requirements and research and development expenditures.
Current wording
The Company’s consolidated working capital at June 30, 2024 was negative $0.2 million, which included cash and cash equivalents of $6.4 million and restricted cash of $68.8 million. Historically, the Company has financed its operations with proceeds from cash from operations, the sales of equity securities, and its $100 million convertible note. Our material liquidity needs principally relate to working capital requirements and research and development expenditures.
Previous wording
Due to the product transition described under theRecent Developments section above, we believe that our cash and cash equivalents as of March 31, 2024 are not sufficient to fund the North America segment’s operations and capital needs for the next 12 months from the issuance of this Report. Our ability to fund working capital and other expenditures in the North America segment will depend on our ability to generate cash from operating activities from our two operating segments, which is subject to our future operating success, further repatriation of offshore profits from our European subsidiaries, short-term borrowings in the U.S., and a capital raise, which the Company intends to consummate in the near term. The Company is actively engaged in discussions with multiple investment banks regarding a capital raise. However, there can be no guarantee that a capital raise will be available on a timely basis or on favorable terms and is subject to factors beyond our control, including general economic, political, and financial market conditions.
Current wording
Due to the product transition described under theRecent Developments section above, we believe that our cash and cash equivalents as of June 30, 2024 are not sufficient to fund the North America segment’s operations and capital needs for the next 12 months from the issuance of this Report. Our ability to fund working capital and other expenditures in the North America segment will depend on our ability to generate cash from operating activities from our two operating segments, which is subject to our future operating success, further repatriation of offshore profits from our European subsidiaries, and short-term borrowings in the U.S.
Previous wording
Operating Activities*** – For the three months ended March 30, 2024 and 2023, net cash provided by operating activities was $15.5 million and $16.4 million, ***respectively. The cash provided by operating activities was primarily due to timing of settlement of assets and liabilities.
Current wording
Operating Activities*** – For the six months ended June 30, 2024 and 2023, net cash provided by operating activities was $2.7 million and $23.1 million, ***respectively. The cash provided by operating activities was primarily due to timing of settlement of assets and liabilities.
Previous wording
Investing Activities*** ***– Net cash used in investing activities in the three-month period ended March 31, 2024 and 2023 were negligible.
Current wording
Investing Activities*** ***– Net cash used in investing activities in the six-month period ended June 30, 2024 was $0.6 million. Net cash used in investing activities in the six-month period ended June 30, 2023 was negligible.
Previous wording
Financing Activities*** ***– Net cash used by financing activities in the three-month period ended March 31, 2024 and 2023 were negligible.
Current wording
Financing Activities*** ***– Net cash used by financing activities in the six-month period ended June 30, 2024 was $0.2 million. Net cash used in financing activities in the six-month period ended June 30, 2023 was negligible.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Six Months Ended June 30, 2024 (Unaudited) Compared to Six Months June 30, 2023 (Unaudited):