DEF: RYVYL Seeks Reverse Stock Split, Boosts Authorized Shares

RYVYL Inc. will hold its 2025 Annual Meeting to vote on a reverse stock split, an increase in authorized shares, director elections, and auditor ratification, addressing Nasdaq listing compliance.

Summary

• The 2025 Annual Meeting of Stockholders will be held virtually on October 23, 2025, at 4:00 p.m. Eastern Time.
• Key proposals include the election of four directors, ratification of Simon & Edward, LLP as the independent registered public accounting firm for fiscal year 2025, approval of a reverse stock split at a ratio between one-for-five and one-for-fifteen (Board discretion), and approval to increase authorized common stock from 100,000,000 to 500,000,000 shares.
• The Board of Directors unanimously recommends a vote FOR all proposals.
• The primary reason for the proposed reverse stock split is to increase the per share trading price of common stock to meet Nasdaq's $1.00 minimum bid price requirement, as the closing bid price was $0.29 on September 10, 2025.
• The company received a Nasdaq notice on June 12, 2025, for non-compliance with the minimum bid price rule and has until December 9, 2025, to regain compliance.
• The increase in authorized shares is intended to provide flexibility for future equity financings, potential acquisitions related to an 'Enhanced Plan' (digital assets and Crypto Treasury Allocation policy), and equity incentive awards.
• The Audit Committee is currently non-compliant with Nasdaq's composition requirements and plans to add a third independent director by February 27, 2026.

Sentiment

Score: 3

Explanation: The company is facing significant challenges, including Nasdaq non-compliance, substantial net losses, and governance issues. While management is proposing actions to address these, the underlying financial performance and operational missteps (like the $16M write-off) indicate a precarious situation. The strategic shift to digital assets is forward-looking but carries inherent risks.

Positives

• The Board of Directors unanimously recommends approval for all proposals, indicating internal alignment on strategic direction and governance matters.
• The appointment of new independent directors (Brett Moyer, Gene Jones, Forest Ralph) with strong financial and accounting backgrounds aims to enhance board oversight and expertise.
• The company is actively addressing Nasdaq listing compliance issues through the proposed reverse stock split, demonstrating a commitment to maintaining its public listing.
• Management is pursuing an 'Enhanced Plan' to explore digital asset acquisitions and adopt a Crypto Treasury Allocation policy, signaling a forward-looking strategic direction.
• Efforts are underway to improve Section 16(a) reporting compliance by requesting power of attorney for the legal team and implementing equity software.

Negatives

• The company is non-compliant with Nasdaq's $1.00 minimum bid price requirement, with its common stock trading at $0.29 as of September 10, 2025, necessitating a reverse stock split.
• The Audit Committee is not in compliance with Nasdaq's independence requirements and must add a third independent director by February 27, 2026, to avoid potential delisting.
• The company reported significant net losses of $(26,825,337) for fiscal year 2024 and $(53,101,287) for fiscal year 2023.
• Several officers and directors had delinquent Section 16(a) reports during fiscal year 2024, indicating internal control weaknesses.
• A $16,000,000 asset purchase from Sky Financial & Intelligence, LLC was entirely written off in 2022 due to non-delivery of acquired merchant accounts, representing a substantial financial loss and operational failure.
• A reverse stock split carries potential disadvantages, including a possible reduction in market value, increased transaction costs for stockholders holding 'odd lots,' and an adverse effect on liquidity.
• A provision in the July Warrants could lead to a significant reduction in their adjusted exercise price if the common stock price declines shortly after a reverse split, potentially reducing future capital proceeds.

Risks

• Failure to regain compliance with Nasdaq's minimum bid price requirement by December 9, 2025, could result in the delisting of the company's common stock.
• Inability to secure a qualified third independent director for the Audit Committee by February 27, 2026, could also lead to delisting from Nasdaq.
• The proposed reverse stock split may not achieve the desired effect of increasing the stock price proportionately or maintaining it above the minimum bid price for a sustained period.
• The reverse stock split could lead to a reduction in the company's overall market capitalization.
• The issuance of additional authorized shares, if approved, could dilute the earnings per share, book value per share, and voting power of existing stockholders.
• If the increase in authorized shares is not approved, the company's business development and financing alternatives will be limited, potentially harming stockholder value.
• The company's ability to attract, retain, and motivate highly qualified management could be adversely impacted by a lack of sufficient equity incentive opportunities if authorized shares are not increased.
• There is no assurance that the company will recover its entitlements from the $16,000,000 asset purchase write-off related to Sky Financial & Intelligence, LLC.
• The strategic shift towards digital asset acquisitions and a Crypto Treasury Allocation policy introduces new market and operational risks inherent to the cryptocurrency and blockchain sectors.

Future Outlook

The company plans to enhance its existing business by exploring opportunities for the acquisition of digital assets and adopting a Crypto Treasury Allocation policy (the Enhanced Plan). It anticipates needing to raise cash through future equity financings to fund operations, potential acquisitions related to the Enhanced Plan, and to provide future equity incentive awards. The Board will determine the timing and terms of any future share issuances.

Management Comments

• "Your vote is important to us. Whether you own a few shares or many, and whether or not you plan to attend the Annual Meeting, we urge you to promptly submit your vote via the Internet, telephone, or mail." Fredi Nisan, CEO.
• "On behalf of the board of directors and management, I would like to express our appreciation for your continued support." Fredi Nisan, CEO.
• "The Board of Directors unanimously recommends a vote FOR the approval of each of the Director Nominees in Proposal 1, and a vote FOR each of Proposal 2, Proposal 3, and Proposal 4."
• "The Board believes that regardless as to whether the stockholders approval the Reverse Split and the Reverse Split is consummated reducing the number of issued and outstanding shares of common stock, the amendment is necessary to maintain flexibility to issue shares of common stock to raise cash in one or more equity financings to fund our operations, to effect future awards under stockholder-approved equity incentive plans or for other general corporate purposes."

Industry Context

The company operates in the payments industry and is seeking to transform it, leveraging experience with early-stage companies. Its strategic shift towards digital asset acquisitions and a Crypto Treasury Allocation policy indicates an intent to capitalize on emerging trends in the fintech and blockchain sectors. The need for a reverse stock split and increased authorized shares reflects common challenges faced by smaller public companies in maintaining Nasdaq listing requirements and securing capital for growth and strategic initiatives in competitive markets.

Comparison to Industry Standards

• The company's need for a reverse stock split to meet Nasdaq's minimum bid price requirement is a common issue for smaller, underperforming companies, contrasting with established industry leaders that typically maintain higher stock valuations.
• The significant net losses of $(26.8) million in 2024 and $(53.1) million in 2023 are indicative of a company in a challenging growth phase or facing operational difficulties, which is below the profitability standards of mature, successful payment processing or fintech companies.
• The write-off of a $16 million asset purchase from Sky Financial & Intelligence, LLC due to non-delivery of acquired assets suggests significant operational or due diligence failures, which is not typical for well-managed companies in the industry.
• The Audit Committee's non-compliance with Nasdaq's independence requirements and the history of delinquent Section 16(a) reports for executives and directors point to corporate governance practices that fall short of best-in-class industry standards.

Management Changes

Corporate Governance

Legal Proceedings

• The company is actively pursuing its entitlements under the purchase agreement with Sky Financial & Intelligence, LLC, following a $16,000,000 write-off of the asset purchase price due to non-delivery of acquired merchant list and ISO management portal access.

Related Party Transactions

• The company repurchased 200,000 shares of common stock from PrivCo (an entity controlled by Messrs. Errez and Nisan) in two separate transactions in 2022 for a total of $6,410,000.
• Dan Nusinovich, brother of CEO Fredi Nisan, was employed as VP of Development, earning approximately $260,000 per year, and resigned on August 31, 2025.
• Liron Nusinovich, brother of CEO Fredi Nisan, was employed as Junior Product Owner, earning approximately $131,000 per year, and resigned on August 18, 2025.
• The company entered into an asset purchase agreement with Sky Financial & Intelligence, LLC (100% owned by Kenneth Haller, a former employee) in March 2022 for $16,000,000 cash and 500,000 restricted shares. The entire purchase price was written off in 2022 due to non-delivery of acquired assets, and the company is actively pursuing its entitlements.

Stakeholder Impact

• Shareholders will experience a reduction in the number of shares held due to the reverse stock split, potentially increasing per-share price but also increasing transaction costs for odd lots and potentially reducing market value. Their percentage ownership may be diluted by future issuance of increased authorized shares.
• Employees are eligible for equity incentive awards, which could be impacted if the increase in authorized shares is not approved, affecting the company's ability to attract and retain talent.
• Management is undergoing changes in board composition and executive roles, with the CEO not continuing as a director after the annual meeting.
• Nasdaq's listing status is critical for investor confidence and market access; the company's efforts to regain compliance directly impact its standing with the exchange.
• Creditors and investors are impacted by the company's ability to raise capital through equity financings, which is crucial for its operations, strategic growth, and overall financial stability.

Next Steps

• Stockholders are to vote on director elections, auditor ratification, reverse stock split, and increase in authorized shares at the 2025 Annual Meeting on October 23, 2025.
• The company must regain compliance with Nasdaq's $1.00 minimum bid price requirement by December 9, 2025.
• The company intends to add a third independent director to its Audit Committee by February 27, 2026, to comply with Nasdaq rules.
• Management is actively pursuing an 'Enhanced Plan' involving the acquisition of digital assets and the adoption of a Crypto Treasury Allocation policy.
• The company anticipates needing to conduct future equity financings to fund operations and strategic initiatives.
• Final voting results will be published in a Current Report on Form 8-K within four business days after the meeting.

Key Dates

Recommendation

The company is at a critical juncture, facing delisting risk from Nasdaq due to a low share price and non-compliance with audit committee composition rules. The proposed reverse stock split and increase in authorized shares are necessary steps to address these issues and enable future capital raises for strategic initiatives, including digital asset acquisitions. However, significant past net losses and a substantial write-off from a related-party transaction highlight operational and governance weaknesses. While the board is taking corrective actions and new independent directors have been appointed, the execution risk remains high. A seasoned investor would likely hold to observe the outcome of the annual meeting proposals and the company's ability to execute its 'Enhanced Plan' and regain full Nasdaq compliance, rather than buying into a highly uncertain situation or selling at a potentially depressed price if the reverse split is successful.

Keywords

RYVYL Inc., RVYL, SEC Filing, Proxy Statement, Annual Meeting, Reverse Stock Split, Authorized Shares, Nasdaq Compliance, Corporate Governance, Director Election, Auditor Ratification, Financial Reporting, Equity Incentive Plan, Digital Assets, Crypto Treasury Allocation, Executive Compensation, Related Party Transactions