Ryvyl (RVYL) - 2025 Q1 - Quarterly Report

Financial Performance - Revenue for Q1 2025 was $15,133,000, a decrease of 9.8$16,774,000 in Q1 2024[11] - Gross profit for Q1 2025 was $6,715,000, down from$7,031,000 in Q1 2024, reflecting a gross margin of 44.4%[11] - Net loss for Q1 2025 was $2,756,000, compared to a net loss of$2,689,000 in Q1 2024, indicating a slight increase in losses[11] - For the three months ended March 31, 2025, total revenue was $15,133,000, a decrease of 9.6$16,774,000 for the same period in 2024[147] - The gross profit for the same period was $6,715,000, down from$7,031,000, reflecting a decline of 4.5% year-over-year[147] - The company incurred a net loss of $2,273,000 for the three months ended March 31, 2025, compared to a loss of$2,499,000 for the same period in 2024[147] - The company had an accumulated deficit of $182,200,000 as of March 31, 2025, following a net loss of$2,800,000 for the three months ended[163] Operating Expenses and Cash Flow - Total operating expenses decreased to $7,563,000 in Q1 2025 from$8,937,000 in Q1 2024, a reduction of 15.4%[11] - Cash used in operating activities for Q1 2025 was $(15,581,000), compared to cash provided by operating activities of$15,525,000 in Q1 2024[17] - Operating expenses totaled $7.6 million, down 15.4$8.9 million in the previous year, with significant reductions in research and development expenses by 67.8%[181] - The company's consolidated working capital was negative $24.1 million as of March 31, 2025, with cash of$3.0 million and restricted cash of $74.5 million[188] - Net cash used in operating activities was$15.6 million for Q1 2025, compared to $15.5 million provided in Q1 2024, primarily driven by the timing of asset and liability settlements[191] Assets and Liabilities - Cash and restricted cash at the end of Q1 2025 totaled$77,490,000, down from $88,816,000 at the end of Q1 2024[17] - Total current assets decreased to$79,835,000 as of March 31, 2025, from $95,384,000 as of December 31, 2024, a decline of 16.3$111,155,000 as of March 31, 2025, from $123,768,000 as of December 31, 2024, a reduction of 10$4.594 million as of March 31, 2025, compared to $17.363 million as of December 31, 2024[75] - The Company recorded$1.1 million of interest expense related to the note payable for the three months ended March 31, 2025[72] Business Operations and Strategy - RYVYL transitioned its QuickCard product from a terminal-based to an app-based processing model in early 2024, but later determined it was not viable for certain high-risk business verticals, leading to the termination of the app-based rollout[22][23] - The company began offering a licensing model for its QuickCard platform in Q3 2024 to serve its previous customer base through partners with better compliance capabilities, although no active licensing agreements are currently in place[23] - Management expects the recovery of lost revenues from the discontinuation of QuickCard to take longer than initially anticipated due to an uncertain business environment in the U.S.[24] - The discontinuation of QuickCard has negatively impacted the company's liquidity in North America, with management indicating that cash balances will not be sufficient to fund operations beyond June 30, 2025, unless additional capital is raised[25][26] - RYVYL is actively pursuing capital raising through private and public equity offerings and debt financings, with discussions ongoing with multiple banks[31] - The company is focusing on accelerated business development efforts to drive volumes in diversified business verticals, including the recently launched licensing of its payments processing platform[31] Legal Proceedings - The company is involved in ongoing legal proceedings, including a putative class action lawsuit alleging violations of the Securities Act and Exchange Act, with claims spanning from January 29, 2021, to January 20, 2023[142] - The company is cooperating with an SEC investigation regarding possible violations of federal securities laws, particularly concerning disclosures related to its blockchain technology and QuickCard product[143] - The company has reached an agreement in principle to settle claims in a shareholder derivative lawsuit, pending documentation and court approval[144] - The Company faces ongoing shareholder derivative complaints alleging failure to implement adequate internal controls and overpayment misconduct, with a settlement agreement reached in principle on May 8, 2025[206] Stock and Equity - The company issued 15,760 shares of common stock under equity incentive plans, resulting in an increase in additional paid-in capital to $179,222,000[13] - The Company has a full valuation allowance on its deferred tax assets as of March 31, 2025, indicating that it does not expect to realize these assets[57] - The 2023 Equity Incentive Plan allows for the grant of up to 5,098,262 shares of common stock, replacing previous incentive plans[131] - As of March 31, 2025, the outstanding stock options totaled 573,127 shares, with an average exercise price of$4.25[132] - The Company issued 6,000 shares of Series A Preferred Stock for $4.3 million and 55,000 shares of Series B Preferred Stock for$3.0 million, in exchange for $60.3 million of outstanding principal balance[122] Future Outlook - The company expects to incur a loss of at least$6,000,000 upon the closing of the pre-funded sale of its subsidiary, Ryvyl EU, which is expected to occur in Q2 2025[152] - The company has until May 23, 2025, to provide Nasdaq with a plan to regain compliance with listing requirements[148] - The company anticipates that its cash balance will only be sufficient to fund operations through approximately June 30, 2025, unless additional capital is raised[164]