S-1/A: RYVYL Inc. Faces Going Concern Doubts Amidst Major Revenue Decline and Strategic Pivot to Digital Assets

RYVYL Inc. is offering up to $8 million in securities to address severe liquidity issues and Nasdaq non-compliance, following a significant 70-80% revenue reduction from the sale of its European subsidiary and challenges with its core North American product.

Summary

• RYVYL Inc. is a financial technology company specializing in global payment acceptance and disbursement, operating through its dual-sided NEMS Core platform.
• The company faces substantial doubt about its ability to continue as a going concern, with North America segment cash sufficient only until approximately June 30, 2025, unless additional capital is raised.
• RYVYL completed the sale of its European subsidiary, Ryvyl EU, on June 1, 2025, resulting in an immediate 70-80% reduction in current revenue and eliminating a source of repatriated profits for North American operations.
• The first-generation QuickCard product, which primarily served cannabis merchants, was discontinued in Q1 2024 due to banking partner changes and regulatory environment shifts; a transition to an app-based product was terminated, and a licensing model is now being pursued with no active agreements yet.
• The company reported a net loss of $26.8 million for the year ended December 31, 2024, and an accumulated deficit of $179.4 million.
• For the three months ended March 31, 2025, the net loss was $2.8 million, with an accumulated deficit of $182.2 million.
• Total revenue decreased by 15% to $55.998 million in 2024 compared to 2023, driven by a 62.9% decrease in North America revenue, partially offset by a 123.5% increase in International segment revenue.
• Consolidated revenue for Q1 2025 decreased by 9.8% to $15.133 million compared to Q1 2024, with North America revenue down 71.4% and International revenue up 74.1%.
• The company is out of compliance with Nasdaq's minimum stockholders' equity requirement ($1.492 million negative equity as of Dec 31, 2024 vs. $2.5 million minimum) and minimum bid price requirement (below $1.00 for 30 consecutive days as of June 12, 2025).
• RYVYL is seeking to raise up to $8 million through a best-efforts offering of Common Units (common stock + common warrant) and Pre-Funded Units (pre-funded warrant + common warrant) at an assumed price of $0.81 per unit.
• Net proceeds from the offering are estimated at approximately $7.1 million (if maximum is sold), intended for directors and officers liability policy premium ($300,000) and working capital/general corporate purposes.
• The company is pursuing an enhanced business plan, including a non-binding letter of intent to acquire a complementary blockchain technology entity and considering a Crypto Treasury Allocation policy, contingent on raising a minimum of $100 million.

Sentiment

Score: 2

Explanation: The company is in a precarious financial position, explicitly stating 'substantial doubt about our ability to continue as a going concern.' It has experienced a massive revenue decline due to the sale of a major subsidiary and issues with its core product. While there's a strategic pivot and capital raise attempt, the success of these initiatives is uncertain and critical for survival. Multiple ongoing legal issues and Nasdaq non-compliance further compound the negative outlook.

Positives

• The International segment demonstrated strong growth, with revenue increasing by 123.5% in 2024 and 74.1% in Q1 2025, driven by expanded ISO and partnership networks and growth in payment processing and banking-as-a-service.
• The company is actively implementing cost control measures and reorganizing its North America business to align with a revised strategy, expecting to reduce expenses by approximately $1.2 million per quarter starting in H2 2025.
• Management believes there is strong demand for cannabis payments and that other processors continue to face banking and compliance issues, presenting a potential opportunity for RYVYL's new licensing model.
• The company's second-generation platform, NEMS Core, is designed as a dual-sided platform for acquiring and disbursement services, aiming to provide a flexible, agile, and robust architecture for the evolving fintech industry.
• Several significant legal proceedings, including the former COO's lawsuit and shareholder class action/derivative complaints, have reached agreements in principle to settle, potentially reducing future legal costs and distractions.

Negatives

• The company's financial situation creates substantial doubt about its ability to continue as a going concern, with current cash in the North America segment only sufficient to fund operations through approximately June 30, 2025, without additional capital.
• The sale of Ryvyl EU resulted in an immediate 70-80% reduction in current revenue, significantly impacting the company's overall financial performance.
• The QuickCard product, a primary revenue driver, was discontinued as a direct offering due to banking partner issues related to cannabis merchants, and the subsequent app-based product rollout was terminated for high-risk verticals.
• The company currently has no active licensing agreements for its QuickCard platform, and revenue from this new licensing product is not expected to materialize until late 2025.
• RYVYL is not in compliance with Nasdaq's minimum stockholders' equity requirement ($1.492 million negative equity as of Dec 31, 2024) and minimum bid price requirement (below $1.00 for 30 consecutive days as of June 12, 2025), risking delisting.
• The company had a negative working capital of $24.1 million as of March 31, 2025.
• The company recorded significant impairment charges in 2024: $6.7 million for goodwill and $3.0 million for intangible assets in North America.
• The recovery of lost revenues from the QuickCard discontinuation is expected to take longer than originally anticipated due to an increasingly uncertain U.S. business environment.
• The enhanced business plan, including a potential acquisition and crypto treasury allocation, is contingent on raising a minimum of $100 million, which is not assured and would require shareholder approval for potential stock increases and reverse splits.

Risks

• The company's financial situation creates substantial doubt about its ability to continue as a going concern, with current cash in the North America segment only sufficient until approximately June 30, 2025, without additional capital.
• The sale of Ryvyl EU, a material subsidiary, represents a substantial portion of the company's current business, and the company may be required to pay significant liquidated damages if the prospective purchaser is unable to close the acquisition for reasons other than the company's breach.
• There is no assurance the company will be able to successfully enter the digital asset space or enhance its current business plan, as it is dependent on raising a minimum of $100 million and obtaining shareholder approval for related actions.
• The loss of key personnel or the inability of replacements to quickly and successfully perform in their new roles could adversely affect the business, especially given the ongoing SEC investigation that may impact senior management.
• Low demand for new products and the inability to develop and introduce new products at favorable margins could adversely impact performance and future growth.
• The payments technology industry is highly competitive and innovative, with some competitors having greater financial and operational resources, potentially giving them an advantage in pricing and technology development.
• Ongoing litigation may adversely affect the business, financial condition, and results of operations, incurring significant defense costs and potential liabilities.
• Fluctuations in exchange rates could have a material and adverse effect on results of operations and investment value.
• Changes to U.S. tariff and import/export regulations may negatively impact the business, results of operations, or financial condition.
• Revenue projections from new licensing arrangements with payment services providers may not materialize due to customer acquisition and banking compliance issues outside the company's control.
• Financial statements may be materially affected by inaccurate estimates due to limited experience in making critical accounting estimates, increasing the risk of future charges to income.
• Material weaknesses in internal accounting controls could adversely affect the accuracy and timeliness of financial reporting and investor confidence.
• The company will require additional financing to sustain or grow operations, and raising additional capital may cause dilution to existing stockholders, restrict operations, or require relinquishing rights on unfavorable terms.
• Increased dependence on information technology and potential cyberattacks, security problems, or other disruptions present new risks, potentially leading to significant liability and deterring users.
• Evolving privacy regulations and compliance requirements may increase operating costs or adversely impact the ability to service clients and market products.
• If the company is not able to comply with Nasdaq's continued listing requirements or standards (stockholders' equity, minimum bid price), its common stock could be delisted, reducing liquidity and potentially making it a 'penny stock'.

Future Outlook

RYVYL's management is actively pursuing an enhanced business plan focused on entering the digital asset space, including a non-binding letter of intent to acquire a complementary blockchain technology entity and considering a Crypto Treasury Allocation policy. This strategic pivot is contingent on raising a minimum of $100 million, which would require shareholder approval for potential increases in authorized common stock and a reverse stock split. The company expects the recovery of lost revenues from the QuickCard discontinuation to take longer than originally anticipated, not materializing until late 2025.

Management Comments

• Management expects the recovery of the loss of revenues resulting from the discontinuation of its QuickCard product to take longer than originally anticipated.
• Management believes that the demand for processing cannabis payments is very strong and other payment processors continue to have difficulty with banking and compliance issues.
• Management has assessed that its intended plan (capital raise, business development, cost control), 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.
• Management believes that the strategic pivot to digital assets leverages our blockchain tokenization infrastructure and aligns with evolving market demands, potentially leading to asset appreciation, enhanced investor visibility, and strategic differentiation.

Industry Context

The document highlights the evolving global fintech industry, emphasizing the need for fully integrated platforms that support multiple offerings. RYVYL's NEMS Core platform is positioned to address this need by providing dual-sided acquiring and disbursement services. The company operates in a highly competitive and innovative payments technology industry, facing larger competitors with greater resources and new entrants offering disruptive technologies. The regulatory environment, particularly concerning high-risk business verticals like cannabis, is dynamic and impacts banking relationships, as evidenced by the QuickCard discontinuation. The company's pivot towards digital assets and potential crypto treasury allocation reflects a broader industry trend towards integrating blockchain and digital currencies into financial services.

Management Changes

Corporate Governance

Legal Proceedings

• A complaint filed by the company against former COO Vanessa Luna and her counter-complaint were settled confidentially on October 17, 2024, and dismissed with prejudice on February 4, 2025 (resubmitted April 29, 2025).
• A lawsuit filed by former CMO Jacqueline Dollar alleging sex discrimination, retaliation, and intentional infliction of emotional distress is ongoing and in the discovery phase.
• The company is cooperating with an ongoing SEC investigation regarding possible violations of federal securities laws, specifically concerning disclosures about blockchain technology and QuickCard's use by cannabis merchants. The SEC will not seek civil monetary penalties if sufficient disclosure is made, but potential SEC actions may impact senior management's ability to serve.
• A putative class action lawsuit (Cullen v. RYVYL Inc.) alleging false/misleading statements regarding financial controls, performance, and prospects has reached an agreement in principle to settle on February 28, 2025, pending court approval.
• Shareholder derivative complaints (Hertel, Gazaway, Brown) alleging failure to implement adequate internal controls and overpayment misconduct have reached an agreement in principle to settle on May 8, 2025, pending court approval.
• An arbitration proceeding against Sky Financial for breach of contract and failure to deliver acquired merchant accounts (for which $18.11 million was paid and written off) is ongoing, with the stay lifted and parties awaiting a status conference.
• A claim by Satya Consulting PTE Limited in Bulgaria for nonpayment of a EUR 900,000 fee was settled confidentially on October 18, 2024, and the case was dismissed on November 23, 2024.
• A lawsuit filed by former CFO J. Drew Byelick alleging breach of contract and fraudulent inducement is ongoing, with the company's motion to dismiss the amended complaint granted in part on April 18, 2025.

Related Party Transactions

• The company repurchased an aggregate of 200,000 shares of common stock owned by PrivCo (an entity controlled by CEO Fredi Nisan and Chairman Ben Errez) for $5.59 million and $0.82 million in 2022.
• Dan Nusinovich, brother of CEO Fredi Nisan, is employed as Vice President of Development with an annual salary of approximately $260,000.
• Liron Nusinovich, another brother of CEO Fredi Nisan, is employed as Junior Product Owner with an annual salary of approximately $131,000.
• The company acquired a portfolio of merchant accounts from Sky Financial & Intelligence LLC, 100% owned by former employee Kenneth Haller, for $18.11 million. The entire purchase price was written off as of December 31, 2022, due to non-delivery of the acquired merchant list and ISO management portal access, and arbitration is ongoing.

Stakeholder Impact

• **Shareholders**: Face significant dilution from the current offering and potential future capital raises. Risk of substantial loss of investment due to the company's going concern doubts and potential delisting from Nasdaq. Share price volatility is high.
• **Employees**: The company has reduced its North America headcount by approximately 17.9% since March 28, 2025, and overall by 73.7% following the Ryvyl EU sale, indicating job insecurity and restructuring impacts.
• **Customers**: The discontinuation of the QuickCard product and transition to a licensing model may cause disruption for existing customers, particularly cannabis merchants. The success of new product offerings and licensing agreements is uncertain.
• **Creditors**: The company's liquidity issues and going concern doubts raise concerns about its ability to meet debt obligations, as evidenced by the missed $4 million installment payment on the convertible note.
• **Management**: Key executives are subject to ongoing SEC investigation, which 'may impact the ability of certain senior members of management to continue to serve in their current capacity,' creating leadership uncertainty.

Next Steps

• RYVYL needs to successfully raise additional capital (up to $8 million from current offering, minimum $100 million for enhanced plan) to address liquidity shortfalls and fund operations.
• The company must regain compliance with Nasdaq's minimum stockholders' equity requirement by October 6, 2025, and the minimum bid price requirement by December 9, 2025, to avoid delisting.
• Management plans continued execution of accelerated business development efforts to drive volumes in diversified business verticals, including the recently launched licensing of its payments processing platform.
• Continued implementation of cost control measures to more effectively manage spending in the North America segment and right-sizing the organization.
• The company is pursuing a non-binding letter of intent to acquire an entity with complementary blockchain technology and is considering adopting a Crypto Treasury Allocation policy, contingent on significant capital raise and shareholder approvals.
• Finalization and court approval of the settlement agreements for the Cullen class action and shareholder derivative lawsuits.

Key Dates

Recommendation

Keywords

Fintech, Payment Processing, SEC Filing, S-1/A, RYVYL Inc., RVYL, Going Concern, Liquidity, Capital Raise, Nasdaq Compliance, Ryvyl EU Sale, QuickCard, NEMS Core, Blockchain Technology, Digital Assets, Warrants, Common Stock, Pre-Funded Warrants, Financial Results, Litigation, Risk Factors, Corporate Governance, Shareholder Dilution