UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

~~(MARK ONE)~~
☒	QUARTERLYREPORTUNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	~~For the quarterly period~~~~ended March 31, 2022~~

OR

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

~~GREENBOX POS~~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
SanDiego, CA	92108
(Address of principal executive offices)	(Zip Code)

~~(619)-631-8261~~

(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	~~GBOX~~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 ☒

~~Number~~As of ~~shares outstanding of~~May 19, 2023, the ~~issuer’s classes~~Registrant had 51,343,821 shares of common ~~equity, as of May 9, 2022 was 41,418,402 Shares of Common Stock (One Class)~~stock, $0.001 par value per share, outstanding.

TABLE OF CONTENTS

		PART I Consolidated Financial Information	Page
~~PART I~~~~Consolidated Financial Information~~

Item 1.	Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets as of March 31, ~~2022~~2023 and December 31, ~~2021~~2022	3
	Condensed Consolidated Statements of Operations and Comprehensive Income for the Three Months Ended March 31, ~~2022~~2023 and ~~2021~~2022	4
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, ~~2022~~2023 and ~~2021~~2022	5
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, ~~2022~~2023 and ~~2021~~2022	7
	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2326
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
Item 4.	Controls and Procedures	2732

PART IIOther Information
Item 1.	Legal Proceedings	2833
Item 1A.	Risk Factors
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2833
Item 3.	Defaults Upon Senior Securities	2833
Item 4.	Mine Safety Disclosures	2833
Item 5.	Other Information	2833
Item 6.	Exhibits	2933
Signatures	30	34

~~Table of Contents~~

PART I - FINANCIAL INFORMATION

ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~GREENBOX POS~~RYVYL INC.

~~UNAUDITED~~ CONDENSED CONSOLIDATED BALANCE SHEETS

~~(UNAUDITED)~~

	*March 31,*			*December 31,*
	*2022*			*2021*			March 31, 2023 (Unaudited)			December 31, 2022
ASSETS							*(dollars in thousands)*

Current Assets:
Cash and cash equivalents	$	27,594,032		$	89,559,695		$	17,742		$	13,961
Restricted cash		462			-			39,396			26,873
Accounts receivable, net of allowance for bad debt of $54,795 and $54,795, respectively		468,591			481,668
Inventory, net of inventory reserve of $3,127 and $3,127, respectively		217,107			286,360
Cash due from gateways, net of allowance of $3,904,952 and $3,904,952, respectively		20,807,373			18,941,761
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		35,263,038			6,420,696			4,061			9,798
Total current assets		84,350,603			115,690,180			69,367			59,215

Non-current Assets:
Property and equipment, net		1,708,194			1,674,884			1,676			1,696
Other assets		172,350			190,636			2,214			197
Goodwill		6,048,034			6,048,034			26,753			26,753
Intangible Assets, net		25,267,371			7,578,935
Intangible assets, net								6,156			6,739
Operating lease right-of-use assets, net		1,361,730			1,490,159			1,363			1,533
Investments - assets								687			1,524
Total non-current assets		34,557,679			16,982,648			38,849			38,442

Total assets	$	118,908,282		$	132,672,828

Total Assets								108,216			97,657
LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Accounts payable	$	1,069,136		$	871,037		$	9,775			1,630
Other current liabilities		609,723			501,167			2,852			3,662
Accrued interest		1,775,620			1,226,287			2,437			1,728
Payment processing liabilities, net		5,390,413			4,997,807			37,013			28,912
Short-term notes payable								15			14
Derivative liability		26,435,000			18,735,000			87			255
Current portion of operating lease liabilities		549,668			495,134			353			534

Total current liabilities		35,829,560			26,826,432			52,532			36,735
Long-term debt		649,900			649,900
Convertible debt, net of debt discount of $35,824,000 and $41,344,822, respectively		58,176,000			58,655,178
Long term debt, net of debt discount								64,353			61,735
Operating lease liabilities, less current portion		891,680			1,035,895			965			1,109

Total liabilities		95,547,140			87,167,405			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 43,289,572 and 43,546,647, respectively		42,574			42,831
Common stock issuable, par value $0.001, 500,000 and 0 shares issuable, respectively		541			-
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		90,982,614			88,574,469			96,234			96,271
Accumulated other comprehensive income								1,538			1,596
Accumulated deficit		(59,494,048	)		(38,178,061	)		(107,457	)		(99,772	)
Less: Treasury stock, at cost; 1,398,586 and 714,831, respectively		(8,170,539	)		(4,933,816	)
Less: Shares to be returned								-			(68	)
Total stockholders' equity		23,361,142			45,505,423			(9,634	)		(1,922	)

Total liabilities and stockholders' equity	$	118,908,282		$	132,672,828
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

~~GREENBOX POS~~RYVYL INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED)

	Three Months Ended March 31,						Three Months Ended March 31,
	2022			2021			2023			2022 (as restated)
							*(dollars in thousands, except per share data)*
Net revenue	$	4,895,526		$	4,749,441
Revenue							$	11,291		$	4,210
Cost of revenue		2,563,830			1,593,771			6,178			2,780

Gross profit		2,331,696			3,155,670			5,113			1,430

Operating expenses:
Advertising and marketing		140,966			24,725			75			141
Research and development		1,938,133			653,381			1,936			1,938
General and administrative		1,792,184			566,195			1,452			1,792
Payroll and payroll taxes		2,383,397			559,201			2,714			2,384
Professional fees		1,504,561			457,752			1,803			1,505
Stock compensation for employees		166,800			797,613
Stock compensation for services		126,414			9,453,825
Stock compensation expense								193			293
Depreciation and amortization		454,341			6,009			620			454
Total operating expenses		8,506,796			12,518,701			8,793			8,507

Income (Loss) from operations		(6,175,100	)		(9,363,031	)

Loss from operations								(3,680	)		(7,077	)
Other income (expense):
Interest expense		(1,889,485	)		(594,258	)		(1,729	)		(3,830	)
Interest expense - debt discount		(5,520,822	)		(2,993,408	)		(2,622	)		(5,521	)
Loss on settlement of debt								-			(900	)
Changes in fair value of derivative liability		(7,700,000	)		-			168			(7,700	)
Merchant liability settlement		-			(364,124	)
Merchant fines and penalty income								-			45
Other income or expense		49,316			(14,611	)		(111	)		(4,364	)
Total other income (expense), net		(15,060,991	)		(3,966,401	)

Total other expense, net								(4,294	)		(22,270	)
Loss before provision for income taxes		(21,236,091	)		(13,329,432	)		(7,974	)		(29,347	)

Income tax provision		79,896			-			5			80

Net loss	$	(21,315,987	)	$	(13,329,432	)	$	(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	$	(0.51	)	$	(0.38	)	$	(0.15	)	$	(0.72	)

Weighted average number of common shares outstanding:
Basic and diluted		42,110,890			34,917,106			52,210,597			40,708,304

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

Table of Contents

~~GREENBOX POS~~RYVYL INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’EQUITY

(UNAUDITED)

(dollars in thousands)

Common Stock

Treasury Stock

Additional Paid-In

Accumulated

Total Stockholders' Equity

Shares

Amount

Issuable

Amount

Shares

At Cost

Capital

Deficit

(Deficit)

Balance at December 31, 2021
43,546,647 $ 42,831 - $ - (714,831 ) $ (4,933,816 ) $ 88,574,469 $ (38,178,061 ) $ 45,505,423

Common stock issued for services
30,508 31 8,905 8 - - 126,375 - 126,414

Common stock issued to shareholder
33,333 33 - - - - (33 ) - -

Common stock issued for stock options exercised
12,417 12 - - - - 5,203 - 5,215

Common stock contributed and cancelled from shareholder
(333,333 ) (333 ) - - - - 333 - -

Common stock issuable - Acquisition of Sky assets
- - 500,000 500 - - 2,109,500 - 2,110,000

Common stock shares contributed by shareholder
- - (500,000 ) (500 ) - - 500 - -

Common stock shares issuable to shareholder
- - 533,333 533 - - (533 ) - -

Treasury Stock
- - - - (683,755 ) (3,236,723 ) - - (3,236,723 )

Stock compensation expense
- - - - - - 166,800 - 166,800

Net loss
- - - - - - - (21,315,987 ) (21,315,987 )

Balance at March 31, 2022
43,289,572 $ 42,574 542,238 $ 541 (1,398,586 ) $ (8,170,539 ) $ 90,982,614 $ (59,494,048 ) $ 23,361,142

	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 Paid-In

Accumulated

Total Stockholders' Equity

Shares

Amount

To be Issued

Amount

Shares

At Cost

Capital

Deficit

(Deficit)

Balance at December 31, 2020
30,710,645 $ 30,711 - $ - $ 12,079,074 $ (11,724,549 ) $ 385,236

Common stock issued for exercise of warrant
1,777,778 1,778 - - 3,518,222 - 3,520,000

Common stock issued for conversion of convertible debt
1,944,444 1,944 - - 3,848,056 - 3,850,000

Common shares issued for restricted shares to executive
83,333 83 - - (83 ) - -

Common stock issued for services
783,859 784 - - 9,453,041 - 9,453,825

Common stock issued for interest for convertible debt
96,664 97 - - 594,258 - 594,355

Common stock issued for non-cash stock option exercise
39,332 39 - - (39 ) - -

Common stock issued for stock options exercised
5,500 6 - - 2,244 - 2,250

Issuances of common stock, net of issuance costs of $4,305,758
4,772,500 4,773 - - 45,800,718 - 45,805,491

Payment for previous common stock repurchased under treasury method
- - - - (4,194,000 ) - (4,194,000 )

Issuances of common stock from previous unregistered shares
703,276 703 - - (703 ) - -

Stock compensation expense
- - - - 797,613 - 797,613

Net loss
- - - - - (13,329,432 ) (13,329,432 )

Balance at March 31, 2021
40,917,331 $ 40,918 - $ - $ 71,898,401 $ (25,053,981 ) $ 46,885,338

	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

~~GREENBOX POS~~RYVYL INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

	*Three Months Ended March 31,*
	2022			2021			Three Months Ended March 31
							2023			2022
Cash flows from operating activities:							*(dollars in thousands)*
Net loss	$	(21,315,987	)	$	(13,329,432	)	$	(7,979	)	$	(29,427	)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation expense		454,341			6,010
Depreciation and amortization expense								620			454
Noncash lease expense		38,748			(1,135	)		913			-
Stock compensation expense		166,800			797,613			193			167
Common stocks issued for professional fees		126,414			9,453,825
Stock compensation issued for interest		-			594,355
Restricted stock issued for services								-			126
Interest expense - debt discount		5,520,822			2,993,408			2,622			4,262
Changes in fair value of derivative liability		7,700,000			-
Derivative expense (benefit)								(168	)		7,700
Changes in assets and liabilities:					-
Other receivable, net		13,077			-
Inventory		69,253			-
Accounts receivable								296			13
Prepaid and other current assets		(31,742	)		(2,382,623	)		5,741			(80	)
Cash due from gateways, net		(1,865,612	)		(4,544,760	)		119			(5,962	)
Other assets		18,286			-			(2,017	)		18
Accounts payable		198,100			(32,056	)		8,144			153
Other current liabilities		108,556			30,857			(915	)		110
Accrued interest		549,333			-			709			2,490
Payment processing liabilities, net		392,606			(4,844,841	)		8,101			5,507
Net cash provided by (used in) operating activities		(7,857,005	)		(11,258,779	)		16,379			(14,469	)

Cash flows from investing activities:
Purchases of property and equipment		(66,088	)		(11,108	)		(17	)		(66	)
Cash provided for Transact Europe Acquisition		(28,810,600	)		-
Cash provided for Sky asset acquisition		(16,000,000	)		-
Cash provided for Transact Europe Holdings OOD Acquisition								-			(28,811	)
Cash provided for Sky Financial & Intelligence asset acquisition								-			(16,000	)
Net cash used in investing activities		(44,876,688	)		(11,108	)		(17	)		(44,877	)
Cash flows from financing activities:
Treasury stock purchases								-			(3,540	)
Proceeds from stock option exercises								-			5
Borrowings (repayments) from convertible debt								-			(6,000	)
Net cash provided by financing activities								-			(9,535	)
Effect of exchange rate changes on cash								(58	)		-

Cash flows from financing activities:
Treasury stock repurchase		(3,236,723	)		-
Proceeds from stock option exercises		5,215			2,250
Repayments on convertible debt		(6,000,000	)		-
Proceeds from exercise of warrant		-			3,520,000
Repurchase of common stock from stockholder		-			(4,194,000	)
Proceeds from issuance of common stock		-			45,805,491
Net cash provided by (used in) financing activities		(9,231,508	)		45,133,741

Net increase in cash, cash equivalents, and restricted cash		(61,965,201	)		33,863,854
Net increase (decrease) in cash, cash equivalents, and restricted cash								16,304			(68,881	)

Cash, cash equivalents, and restricted cash – beginning of period		89,559,695			1,832,735			40,834			89,560

Cash, cash equivalents, and restricted cash – end of period	$	27,594,494		$	35,696,589		$	57,138		$	20,679

Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest	$	4,891,392		$	-		$	1,000		$	4,891
Income taxes	$	-		$	-			-			-


Non-cash financing and investing activities:
Convertible debt conversion to common stock	$	-		$	3,850,000
Interest accrual from convertible debt converted to common stock	$	-		$	58,050
Share issuable for assets purchased from Sky Financial	$	2,110,000		$	-
Common stock issued for acquisition of Sky Financial								-			2,110

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

Table of Contents

~~GREENBOX POS~~RYVYL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.	~~DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION~~Description of the Business and Basis of Presentation

Organization

~~GreenBox POS~~RYVYL Inc. is a financial technology company that develops, markets, and sells innovative blockchain-based payment solutions, which we believe offer significant improvements for the payment solutions marketplace. The Company’s core focus is to develop and monetize disruptive blockchain-based applications, integrated within an end-to-end suite of financial products, capable of supporting a multitude of industries. The Company’s proprietary, blockchain-based systems are designed to facilitate, record, and store a virtually limitless volume of tokenized assets, representing cash or data, on a secured, immutable blockchain-based ledger.

The Company was formerly known as ASAP Expo, Inc ("(“ASAP”), and was incorporated in the state of Nevada on April 10, 2007. On January 4, 2020, PubCo and GreenBox POS LLC, a Washington limited liability company ("(“PrivCo”), entered into an Asset Purchase Agreement (the ~~"Agreement”~~“Agreement”), to memorialize a verbal agreement (the ~~"Verbal~~“Verbal Agreement”) entered into on April 12, 2018, by and among PubCo (the Buyer) and PrivCo (the Seller). On April 12, 2018, pursuant to the Verbal Agreement, ~~PubCo~~the Company acquired PrivCo’s blockchain gateway and payment system business, point of sale system business, delivery business and kiosk business, bank and merchant accounts, as well as all intellectual property related thereto (the ~~"GreenBox~~“GreenBox Business”). As consideration for the GreenBox Business, on April 12, 2018, ~~PubCo~~the Company assumed PrivCo’s liabilities that had been incurred in the normal course of the GreenBox Business.

On May 3, 2018, ~~PubCo~~the Company formally changed its name to GreenBox ~~POS~~POS. LLC, then subsequently changed its name to GreenBox POS on December 13, 2018. On October 13, 2022, GreenBox POS changed its name to RYVYL Inc.

On May 21, 2021, the Company acquired all of the outstanding stock of Northeast Merchant Systems, Inc. ("(“Northeast”) in a transaction treated as a business combination. Northeast is a merchant services company providing merchant credit card processing through ~~their~~its own Bank Identification Number (BIN) with the acquiring bank Merrick. This involves inside operations for new merchants that include sales assistance and applications processing, underwriting, and onboarding; inside operations for existing merchants include risk monitoring and customer service. Outside operations include: equipment service or replacement; sales calls and applications, site inspections and identity verification; security verification; and on-site customer service and technical support.

On July 13, 2021 (the ~~"Closing~~“Closing Date”), ~~GreenBox POS~~the Company entered into and closed on a Membership Interest Purchase Agreement (the ~~"Purchase~~“Purchase Agreement”) with Charge Savvy LLC, an Illinois limited liability company ("(“Charge Savvy”), and Charge Savvy’s three members (collectively, the ~~"Sellers”~~“Sellers”). One of the Sellers, Ken Haller, was an employee of the Company on the Closing Date. As a result of the Purchase Agreement, the Company purchased all of Charge Savvy’s issued and outstanding membership interests from the Sellers and Charge Savvy became a wholly owned subsidiary of the Company. Although the Purchase Agreement is dated July ~~9th,~~9, 2021, it was entered into and closed on July ~~13th.The purchase price under the Purchase Agreement~~13, 2021. The consideration for the ~~all- stock~~all-stock transaction consisted of 1,000,000 shares of the Company’s common stock, par value $0.001 per share (the ~~"Common~~“Common Stock”) being issued and delivered to Sellers in proportion to the Sellers’ share of their membership interests in Charge Savvy. The share price at issuance was $12.14. Charge Savvy is a ~~global~~ Fintech company ~~that specializes on~~specializing in developing software and providing payment processing and ~~point of sale~~point-of-sale services to the merchant services industry. Charge Savvy also owns ~~an approximately~~a 64,000 square foot office building ~~located~~ in Chicago, Illinois, where it is headquartered.

On March 31, 2022, the Company closed a transaction to acquire a portfolio of merchant accounts from Sky Financial & Intelligence for $18.1 million. The Company paid $16.0 million in cash in March 2022 and issued 500,000 shares of restricted common stock for the transaction in May 2022.

On April 1, 2022, the Company completed the acquisition of Transact Europe Holdings OOD. Transact Europe EAD (TEU) is an EU regulated electronic money institution headquartered in Sofia Bulgaria. TEU is a Principal Level Member of Visa, a Worldwide Member of MasterCard, and a Principal Member of China UnionPay. In addition, TEU is part of the direct SEPA program. With a global footprint, proprietary payment gateway, and technology platforms, TEU offers a comprehensive portfolio of services and decades of industry experience. TEU provides complete payment solutions by offering acquiring, issuing of prepaid cards and agent banking, serving hundreds of clients. The Company paid ~~approximately~~ $28.8 million (€26.0 million) in total consideration for the purchase.

Please also refer to Note 15 entitled “Subsequent Events.”

Basis of Presentation and Consolidation

The accompanying interim consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. All intercompany transactions and balances have been eliminated in the accompanying consolidated financial statements.

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RYVYL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Unaudited Interim Financial Information

Certain information and footnote disclosures normally included in the Company’s annual audited financial statements and accompanying notes have been condensed or omitted in ~~these~~this accompanying interim consolidated financial statements and footnotes. Accordingly, the accompanying interim consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s ~~annual report~~Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

2.	~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~Summary of Significant Accounting Policies

The results of operations presented in this quarterly report on Form 10-Q are not necessarily indicative of the results of operations that may be expected for any future periods. In the opinion of management, these unaudited consolidated financial statements include all adjustments and accruals, consisting only of normal, recurring adjustments that are necessary for a fair statement of the results of all interim periods reported herein.

Use of Estimates

The preparation of financial statements in conformity with ~~the~~ GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could ~~materially~~ differ from those estimates.

Reclassifications

Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations or cash flows.

Cash, Cash Equivalents and Restricted Cash

The Company’s cash, cash equivalents and restricted cash represents the following:

● Cash and cash equivalents consist of cash on hand, cash on deposit with banks, and highly liquid debt investments with a maturity of three months or less when purchased.

● Restricted cash – The Company’s technology enables transactional blockchain ledger to instantly reflect all transactions details. The final cash settlement of each transaction is subject to the gateway policies. This final disposition takes days to weeks to complete in accordance with these policies. Each policy is an integral part of the transactional contracts between the Company, its Independent Sales Organizations (ISOs), its agents, and the merchant clients. While the ledger reflects a held balance for the merchant, in reserve or payment in arears, the Company holds funds in a trust account as cash deemed restricted. The Company’s records reflect such restricted cash as a restricted cash and trust accounts, and the balances due to merchants and ISOs as settlement liabilities.

Cash Due from Gateways and Payment Processing Liabilities

The Company’s primary source of revenues isconsists of payment processing services for its merchant clients. When ~~such~~a merchant makes a sale, the process of receiving the payment card information, engaging the banks for transferring the proceeds to the merchant’s account via digital gateways, and recording the transaction on a blockchain ledger are the activities for which the Company ~~gets to collect~~collects fees.

In ~~2022~~the first quarter of 2023 and ~~2021~~the year ended December 31, 2022, the Company utilized several gateways. The gateways have strict guidelines pertaining to scheduling of the release of funds to merchants based on several criteria, such as, among other things, return and chargeback history, associated ~~risk~~risks for ~~the~~ specific business ~~vertical,~~verticals, and average transaction ~~amount and so on. In order to~~amounts. To mitigate processing risks, these policies determine reserve requirements and ~~payment in arrears strategy.~~payment-in-arrears strategies. While reserve and ~~payment in arrears~~payment-in-arrears restrictions are in effect for a merchant payout, the Company records ~~gateway debt~~receivables from the gateways against these amounts until released.

~~Therefore, the total~~ Cash due from gateways onbalances presented in the ~~unaudited~~accompanying consolidated balance sheets ~~represents~~represent the amount ~~owed~~due to the Company for ~~processing.~~transactions processed wherein the funds have not been distributed.

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RYVYL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Research and Development Costs

Research and development costs, which are expensed as incurred, are primarily comprised of costs and expenses for salaries and benefits ~~for~~of research and development personnel, outsourced contract services, and supplies and ~~materials costs.~~materials.

Revenue Recognition

Revenue is recognized upon transfer of control of promised goods or services to the Company’s customers or when the Company satisfies any performance obligations under contract. The amount of revenue ~~reflects the~~represents consideration the Company expects to be entitled to in exchange for the respective goods or services provided. ~~Further, under~~Under Accounting Standards Codification 606, “Revenue from Contracts with Customers”, (“ASC 606”), contract assets or contract liabilities that arise from past performance but require a further performance before the obligation can be fully satisfied must be identified and recorded on the balance sheet until respective settlements have been met.

The Company’s primary revenue source is generated from payment processing services. Payment processing services revenue is based on a percentage of each transaction’s value and/or upon fixed amounts specified per each transaction or service and is recognized as such transactions or services are performed, at a point in time.

~~Table of Contents~~

Accounts Receivable and Allowance for Credit Losses

The Company maintains an allowance for credit losses for estimated losses from the inability of gateways to make required payments. The allowance for credit losses is evaluated periodically based on the aging of accounts receivable, the operational relationship with gateways and their payment history, historical charge-off experience and other assumptions, such as current assessment of economic conditions.

Prepaid Expenses

Prepaid expenses primarily consist of deposits made with credit card companies under Transact Europe Holdings OOD and the prepayment associated with other acquisitions.

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed primarily using the straight-line method over the estimated useful lives of the assets, which range from three to eight years. Leasehold improvements are amortized over the shorter of the useful life of the related assets or the lease term. Expenditures for repairs and maintenance are charged to expense as incurred. For assets sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any related gain or loss is recognized in the period the transaction occurs.

Fair Value of Financial Instruments

The Company assesses the fair value of financial instruments based on the provisions of ASC 820, Fair Value ~~Measurement~~Measurementss.. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability between market participants on the measurement date. ASC 820 also establishes a hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

~~The standard~~ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1- Quoted prices in active markets for identical assets or liabilities.

Level 2- Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3- Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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RYVYL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The ~~Company did not have any Level 1 and Level 2~~following table describes the valuation techniques used to calculate the fair value ~~measurement.~~for assets in Level 3. The ~~Company had~~significant unobservable input used in the ~~following Level 3~~ fair value ~~measurement:~~measurement of the Company’s identifiable intangible assets is the discount rate. The change in this input could result in a change of fair value measurement (dollars in thousands):

	Fair Value at March 31, 2022		Fair Value at
			March 31, 2023
Customer Relationship	$	25,196,976

Customer relationships			$	4,407
Business intellectual properties	$	2,611,088		1,748
Derivative Liability	26,435,000			87

Fair Value at
December 31, 2021

Customer Relationship
$ 5,820,195
Business Technology/IP
$ 2,611,088
Derivative liability
$ 18,735,000

	Fair Value at
	December 31, 2022

Customer relationships	$	4,857
Business intellectual properties		1,882
Derivative liability		255

Goodwill and Other Intangible Assets

The Company accounts for acquisitions of businesses in accordance with the acquisition ~~method.~~method of accounting which requires assets and liabilities to be recognized at their fair values on the acquisition date. Goodwill represents the excess of the purchase price of acquired businesses over the fair value of the identifiable assets acquired and liabilities assumed. Acquisition costs are expensed as incurred.

Goodwill and other intangible assets acquired in a business combination determined to have an indefinite useful life are generally not amortized, but instead are tested for impairment at least annually and more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value.

Other intangible assets with estimable useful lives are amortized over their respective estimated useful lives to their estimated residual values.

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever management believes that events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. To the extent that the carrying value is determined to be unrecoverable, an impairment loss is recognized through a charge to expense. As of ~~March~~December 31, 2022, other than a charge off of the entire consideration paid in connection with the contracted acquisition of the Sky Financial portfolio, the Company ~~does not believe that impairment indicators are present, and accordingly, based on this assessment, no further~~performed an impairment analysis ~~was performed.~~on the other acquired goodwill and other long-lived assets and concluded that their values are supportable and recoverable.

~~Table of Contents~~

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred income taxes are recognized for temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, net of operating loss carry forwards and credits, by applying enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is not more likely than not that some portion or all of the deferred tax assets will not be realized. Judgment is required in determining and evaluating income tax provisions and valuation allowances for deferred income tax assets. We recognize an income tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position.

Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. As of March 31, 2023, and December 31, 2022, we have ~~no material unrecognized~~valuation allowances which serve to reduce net deferred tax ~~benefits, and we expect no material unrecognized tax benefits for the next 12 months.~~assets.

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RYVYL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Earnings Per Share

~~Earnings Per Share~~

~~A basic~~Basic earnings per share is computed by dividing net income to common stockholders by the weighted average number of shares outstanding for the ~~year.~~periods presented. Dilutive earnings per share ~~include~~includes the effect of any potentially dilutive debt or equity under the treasury stock method, if including such instruments is dilutive. The Company’s diluted ~~earnings/~~loss per share is the same as the basic ~~earnings/~~loss per share for the ~~three months~~years ended December 31, 2022, and three-month periods ended March 31, 2023, and 2022, ~~and 2021, as~~since there are no potential shares outstanding ~~other than options~~ that would have a dilutive effect.

~~Recently Adopted Accounting Updates~~Leases

~~In November 2021,~~On February 25, 2016, the FASB issued ~~ASU 2021-10 “Government Assistance~~Accounting Standards Update No. 2016-02, Leases (Topic ~~832): Disclosures~~842), to increase transparency and comparability among organizations by ~~Business Entities about Government Assistance,” which created FASB ASC Topic 832, Government Assistance (ASC 832). ASC 832 requires business entities to disclose~~recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about ~~certain government assistance they receive. The Company adopted this standard on January 1, 2022~~leasing transactions. ASC 842 requires that lessees recognize right of use assets and ~~determined there was no material impact~~lease liabilities calculated based on the ~~Company's condensed consolidated financial statements.~~net present value of lease payments for all lease agreements with terms that are greater than twelve months.

~~Recent~~ASC 842 distinguishes leases as either a finance lease or an operating lease that affects how the leases are measured and presented in the statements of operations and statements of changes in cash flows. ASC 842 supersedes nearly all existing lease accounting guidance under GAAP issued by the Financial Accounting ~~Pronouncements Not Yet Adopted~~Standards Board (“FASB”) including ASC Topic 840, Leases.

~~In October 2021, the FASB issued ASU 2021-08, "~~~~Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers~~~~," which requires contract~~For operating leases, we calculated right of use assets and ~~contract~~lease liabilities ~~acquired in a business combination to be recognized and measured by the acquirer~~based on the ~~acquisition~~net present value of the remaining lease payments as of the adoption date ~~in accordance with ASC 606, "~~~~Revenue from Contracts with Customers~~,"using our incremental borrowing rate as ~~if the acquirer had originated the contracts. ASU 2021-08 is effective for fiscal years and interim reporting periods within those fiscal years beginning after December 15, 2022.~~ of that date.

Segment Reporting

The Company has organized its operations into two segments: North America and International. These segments reflect the way management evaluates its business performance and manages its operations.

Our chief operating decision maker is ~~currently evaluating~~our chief executive officer. Management has determined that the ~~effect, if any,~~operational data used by our chief operating decision maker is that of the ~~adoption~~two reportable segments. Management bases strategic goals and decisions on these segments.

Management evaluates the performance of ~~this guidance will have~~its segments and allocates resources based on ~~our financial condition, results of operations, cash flows~~operating income or (loss) as compared to prior periods and ~~disclosures.~~current performance levels.

Recent Accounting Standard Adopted

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses”. The standard, including subsequently issued amendments (ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-10 and ASU 2019-11), requires a financial asset measured at amortized cost basis, such as accounts receivable and certain other financial assets, to be presented at the net amount expected to be collected based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. In November 2019, the FASB issued ASU No. 2019-10 to postpone the effective date of ASU No. 2016-13 for public business entities eligible to be smaller reporting companies defined by the SEC to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company has adopted this accounting standard, effective January 1, 2023. Management assessed the adoption of this standard on the effective date and concluded that the adoption did not have a material effect on our consolidated financial condition, results of operations, and cash flows during the period ended March 31, 2023.

Recent Accounting Standards and Guidance Not Adopted

In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, “Revenue from Contracts with Customers,” as if the acquirer had originated the contracts. ASU 2021-08 is effective for fiscal years and interim reporting periods within those fiscal years beginning after December 15, 2022. The Company has not acquired any businesses during the effective period and, accordingly, is currently evaluating the effect, if any, the adoption of this guidance will have on our financial condition, results of operations, cash flows and disclosures.

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RYVYL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The FASB issued ASU 2020-06 (“Update”) to simplify the accounting for convertible instruments by eliminating large sections of the existing guidance in this area. It also eliminates several triggers for derivative accounting, including a requirement to settle certain contracts by delivering registered shares. These changes are intended to make GAAP easier to apply and, therefore, reduce the frequency of errors in this part of the literature. Early adoption is permitted for fiscal years beginning after December 15, 2020. For SEC filers, excluding smaller reporting companies, this Update is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, this Update is effective for fiscal years beginning after December 15, 2023, including interim periods therein. The Company is evaluating the impact of this guidance on its consolidated financial statements.

3.	~~COVID-19 UPDATE~~Restatements of Previously-Issued Consolidated Financial Statements

During the preparation of its 2022 Annual Report on Form 10-K, the Company determined that it had not appropriately accounted for certain historical transactions under US GAAP. In accordance with Staff Accounting Bulletin (“SAB”) 99, Materiality, and SAB 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, the Company evaluated the materiality of the errors from qualitative and quantitative perspectives, individually and in aggregate, and concluded that the errors were material to the Consolidated Statements of Operations for the quarters ending March 31, 2021, June 30, 2021, September 30, 2021, March 31, 2022, June 30, 2022, and September 30, 2022, and for the annual period ending December ~~2019, a novel strain~~31, 2021. Based on this evaluation, on January 13, 2023, the Audit Committee, with the concurrence of coronavirus (“COVID-19”) was identified and the disease has since spread across the world. In March 2020, the World Health Organization declared COVID-19 a pandemic. The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains, and created significant volatility and disruption in the financial and capital markets. The full extent to which the COVID-19 outbreak will impactmanagement, concluded that the Company’s ~~business, results~~previously issued consolidated financial statements for the aforementioned periods would need to be restated and could no longer be relied upon. The Company has restated the impacted financial statements for each of ~~operations, financial condition~~these periods and ~~cash flows will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning COVID-19 and~~presented the actions to contain or treat its impact and the economic impact and the economic impact on local, regional, national and international markets. As the COVID-19 pandemic continues, the Company’s results of operations, financial condition and cash flows may be materially adversely affected, particularly if the pandemic persists for a significant period of time.

~~On March 27, 2020~~, ~~the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law. The Act includes provisions relating to refundable payroll tax credits, deferment~~effects of the employer portion of certain payroll taxes, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. These provisions are not expected to have a material effectrestatement adjustments in its 2022 Annual Report on ~~the Company’s unaudited consolidated financial statements.~~

~~Table of Contents~~

On April 29, 2020, the Company entered into a loan agreement with Preferred Bank under Paycheck Protection Program administered by SBA in the amount of $272,713. Under this loan program, the loan may be forgiven if utilized for specific purpose specified under the CARES Act and PPP guideline. The loan bears interest of 1.00% per annum and maturesForm 10-K, filed on April ~~29, 2022.The loan was forgiven on November 8, 2021.~~17, 2023.

4.	~~ACQUISITIONS~~Acquisitions

On April 1, 2022, the Company acquired Transact Europe Holdings for ~~approximately~~ $28.8 million (€26.0 million) in cash. Transact Europe EAD (TEU), an EU regulated electronic money institution headquartered in Sofia, Bulgaria, ~~boasts~~offers an array of licenses such as principal level membership of Visa, worldwide membership of MasterCard, and principal membership of China UnionPay. TEU is also part of the direct SEPA (Single Euro Payments Area), a payment system enabling cashless payments across continental Europe. The Company paid ~~approximately~~ $28.8 million as of March 31, 2022, ~~but~~and the transaction closed on April 1, 2022. As a result, the consolidated financial statements as of and for the three months ended March 31, 2022, does not include financial statements of TEU. The $28.8 million paid as of March 31, 2022, is included as prepaid and other current assets in the balance sheets.

The following summarizes the estimated fair values of the net assets acquired which is recorded as of April 1, ~~2022:~~2022 (dollars in thousands):

Tangible assets (liabilities):
Net assets and liabilities	$	7,465,907	$	7,339


Intangible assets:
Customer relationships		1,266,781		1,267
Goodwill		20,077,912		20,205
		21,344,693		21,472

Total net assets acquired	$	28,810,600	$	28,811

On March 31, 2022, the Company ~~acquired~~contracted to acquire a portfolio of merchant accounts from Sky Financial & Intelligence for ~~$18,110,000.~~$18.1 million. The Company paid ~~$16,000,000 of~~$16.0 million in cash in March 2022 ~~and is scheduled to issue~~issued 500,000 shares of restricted common stock for the transaction on May 12, 2022. The entire amount tendered in ~~May~~both cash and stock was recorded as a Customer Relationships asset.

However, as of March 31, 2023 and December 31, 2022, the Company had not received delivery of the acquired merchant list and the associated ISO management portal access and as a result the Company charged off the entire purchase price in 2022. Also, during 2022, the Company suspended its reporting of revenue from the Sky Financial portfolio.

The ~~following summarizes~~Company is vigorously pursuing its entitlements under the ~~estimated fair values of the net assets acquired:~~purchase agreement.

Intangible assets:

Customer relationships
$ 18,110,000

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RYVYL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

5.	~~SETTLEMENT PROCESSING~~Settlement Processing

The Company’s proprietary blockchain-based technology serves as the settlement engine for all transactions within the Company’s ecosystem. The blockchain ledger provides a robust and secure platform to log immense volumes of immutable transactional records in real time. ~~Generally speaking,~~In summary, blockchain is a distributed ledger that uses digitally encrypted keys to verify, secure and record details of each transaction conducted within an ecosystem. Unlike general blockchain-based systems, ~~GreenBox~~The Company uses proprietary, private ledger technology to verify every transaction conducted within the ~~GreenBox~~Company ecosystem. The verification of transaction data comes from trusted partners, all of whom have been extensively vetted by us. ~~GreenBox~~The Company facilitates all financial elements of our closed-loop ecosystem, and we act as the administrator for all related accounts. Using our TrustGateway technology, we seek authorization and settlement for each transaction from Gateways to the issuing bank responsible for the credit/debit card used in the transaction. When the Gateway settles the transaction, our TrustGateway technology composes a chain of blockchain instructions to our ledger manager system.

When consumers use ~~credit/~~credit or debit cards to pay for transactions with merchants who use our ecosystem, the transaction starts with the consumer purchasing tokens from us. The issuance of tokens is accomplished when we load a virtual wallet with a token, which then transfers credits to the merchant’s wallet on a dollar-for-dollar basis, after which the merchant releases its goods or services to the consumer. These transfers take place instantaneously and seamlessly, allowing the transaction experience to seem like any other ordinary ~~credit/~~credit or debit card transaction to the consumer and merchant. While our blockchain ledger records transaction details instantaneously, the final cash settlement of each transaction can take days to weeks, depending upon contract terms between us and the gateways we use, between us and our ISOs, and between us and/or our ISOs and merchants who use our services. In the case where we have received transaction funds, but not yet paid a merchant or an ISO, we hold funds in either a trust account or as cash deemed restricted within our operating accounts. We record the total of such funds as Cash ~~due from gateways,~~Due From Gateways, net – a Current Asset. Of these funds, we record the ~~sum~~ balance due to Merchants and ISOs as Payment ~~processing liabilities,~~Processing Liabilities, net – a Current Liability.

~~Table of Contents~~

6.	~~PROPERTY AND EQUIPMENT~~Property and Equipment

Property and equipment consisted of the ~~following:~~following as of March 31, 2023, and December 31, 2022:

	March 31, 2022			December 31, 2021			March 31, 2023			December 31, 2022
Buildings, machinery and equipment	$	1,310,554		$	1,301,405
							*(dollars in thousands)*
Buildings, machinery and equipment (1)							$	1,360		$	1,360
Computers		171,025			122,284			243			231
Furniture and fixtures		110,440			102,243			153			149
Improvements		140,300			140,300			164			164
Kiosks		6,472			6,472
Vehicles		9,812			9,812
Land		75,000			75,000
Vehicles, machinery and equipment								15			15
Total property and equipment		1,823,603			1,757,516			1,936			1,920
Less: accumulated depreciation		(115,409	)		(82,632	)		(260	)		(224	)
Net property and equipment	$	1,708,194		$	1,674,884		$	1,676		$	1,696

On March 28, 2023, Charge Savvy executed an agreement to sell and subsequently leaseback its property located in South Chicago Heights, Illinois (the “Property”), owned by its subsidiary, Charge Savvy LLC (“CS”). The sales price is updated to $2.5 million with an anticipated closing by July 3, 2023 with a 30-day buyer’s option to extend. The initial term of the leaseback is five (5) years, with an option to terminate early without penalty after conclusion of the second year.

Depreciation expense was ~~$32,777~~$36,640 and ~~$6,009~~$32,377 for the ~~three months~~three-month periods ended March 31, ~~2022~~2023, and ~~2021,~~2022, respectively.

7.	~~GOODWILL~~

The Company tests goodwill during the fourth quarter of each year or more often if events or circumstances indicate there may be impairment. The Company only has one reporting unit. The Company performs its analysis in accordance with the provisions of FASB ASC Topic 350, Intangibles—Goodwill and Other (ASC 350). This guidance provides the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If, based on a review of qualitative factors, it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company performs a goodwill impairment test by comparing the carrying value of its reporting unit to its fair value. The Company determines the estimated fair value of the reporting unit using a discounted cash flow analysis. The fair value of the reporting unit is the implied fair value of goodwill. In the event the reporting unit's carrying value exceeds its fair value, an impairment loss will be recognized. An impairment loss is measured by the difference between the carrying value of the reporting unit and its fair value.

~~As of March 31, 2022, goodwill assets consisted of the following:~~

March 31, 2022

December 31, 2021

Acquisition of Northeast
$ 2,293,474 $ 2,293,474
Acquisition of ChargeSavvy
3,754,560 3,754,560

Total goodwill
$ 6,048,034 $ 6,048,034

8.	~~INTANGIBLE ASSETS~~

~~As of March 31, 2022 intangible assets consists of the following:~~

As of March 31, 2022

As of December 31, 2021

Intangible Assets

Amortization Period

Cost

Accumulated Amortization

Net

Cost

Accumulated Amortization

Net

Customer relationships

3 to 5 years
$ 23,930,195 $ (882,250
)
$ 23,047,945 $ 5,820,195 $ (591,239
)
$ 5,228,956
Business technology/IP

5 years
2,611,088 (391,662
)
2,219,426 2,611,088 (261,109
)
2,349,979

Total intangible assets
$ 26,541,283 $ (1,273,912
)
$ 25,267,371 $ 8,431,283 $ (852,348
)
$ 7,578,935

~~Amortization expense was $421,564 and $6,009 for the three months ended March 31, 2022 and 2021, respectively.~~

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~~Estimated amortization expense for each of the years ending December 31 is as follows:~~

Year

Amount

2022 (remainder)
$ 5,792,192
2023
7,722,924
2024
7,722,924
2025
3,195,423
2026
833,908
Total
$ 25,267,371

9.	~~LONG-TERM DEBTS~~

~~Long-term debt consisted of the following:~~

As of March 31, 2022

As of December 31, 2021

$149,900 Economic Injury Disaster Loan (EIDL), interest rate of 3.75%, due June 1, 2050
$ 149,900 $ 149,900
$500,000 EIDL, interest rate of 3.75%, due May 8, 2050
500,000 500,000

Total long-term debts
649,900 649,900
Less: current portion
- -

Net long-term debts
$ 649,900 $ 649,900

~~SBA CARES Act Loans - $649,900~~

On June 9, 2020, the Company entered into a 30 year loan agreement with the SBA under the CARES Act in the amount of $149,900. The loan bears interest at 3.75% per annum and requires monthly principal and interest payments of $731 beginning June 9, 2021. Both the Chief Executive Officer and Chairman of the Company signed personal guarantees under this loan.

On May 8, 2020, Charge Savvy executed the standard loan documents required for securing a loan (the “EIDL Loan”) from the SBA under its Economic Injury Disaster Loan (“EIDL”) assistance program in light of the impact of the COVID-19 pandemic on the TNB’s business. As of December 31, 2020, the loan payable, Emergency Injury Disaster Loan noted above is not in default.

Pursuant to that certain Loan Authorization and Agreement (the “SBA Loan Agreement”), Charge Savvy borrowed an aggregate principal amount of the EIDL Loan of $150,000, with proceeds to be used for working capital purposes. Interest accrues at the rate of 3.75% per annum and will accrue only on funds actually advanced from the date of each advance. Installment payments, including principal and interest, are due monthly beginning May 8, 2021 (twelve months from the date of the SBA Loan) in the amount of $731. The balance of principal and interest is payable thirty years from the date of the SBA Loan. In connection therewith, the Company also received a $10,000 grant, which does not have to be repaid. During the year ended December 31, 2020, $10,000 was recorded in Economy injury disaster loan (EIDL) grant income in the Statements of Operations. On Aug 24, 2021, Charge Savvy was granted an increase in loan principal in the amount of $350,000 on identical terms.

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In connection therewith, Charge Savvy executed (i) loans for the benefit of the SBA (the “SBA Loan”), which contains customary events of default and (ii) Security Agreements, granting the SBA a security interest in all tangible and intangible personal property of Charge Savvy, which also contains customary events of default (the “SBA Security Agreement”).RYVYL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~10.~~7.

~~CONVERTIBLE DEBT~~Goodwill

~~On November 3, 2021, the Company entered into convertible debt with~~Goodwill assets consisted of the following, ~~terms:~~as of March 31, 2023, and December 31, 2022 (dollars in thousands):

●

March 31, 2023

December 31, 2022

Acquisition of Northeast
$ 2,793 $ 2,793
Acquisition of Charge Savvy
3,755 3,755
Acquisition of Transact Europe
20,205 20,205

Total goodwill
$ 26,753 $ 26,753

~~Face value of the convertible debt of $100,000,000~~

●8.

~~Original issuance cost of 16% of the face value of the debt which amounted to $16,000,000~~

●

Interest at the rate of 8% per annum payable in cash quarterly in arrears on the first trading day of each calendar quarter on the outstanding balance. The interest rate of the Notes will automatically increase to 15% per annum upon the occurrence and continuance of an event of default.

●

~~Maturity date of November 2023.~~

●

~~Certain conversion features.~~Intangible Assets

~~Convertible debt~~Intangible assets consisted of the ~~following:~~following, as of March 31, 2023, and December 31, 2022 (dollars in thousands):

As of March 31, 2022

As of December 31, 2021

Convertible debt balance
$ 94,000,000 $ 100,000,000

Debt discount:

Derivative liability
(21,580,000
)
(21,580,000
)
Original issue discount of 16%
(16,000,000
)
(16,000,000
)
Placement fees and issuance costs
(7,200,000
)
(7,200,000
)
Total debt discount
(44,780,000
)
(44,780,000
)
Accumulated accretion
8,956,000 3,435,178
Net debt discount after accretion
(35,824,000
)
(41,344,822
)

Convertible debt balance, net of debt discount
$ 58,176,000 $ 58,655,178

		As of March 31, 2023							As of December 31, 2022
Intangible Assets	Amortization Period	Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net
Customer relationships - Northeast and Charge Savvy	5 years	$	5,820	$	(2,046	)	$	3,774	$	5,820	$	(1,755	)	$	4,065
Customer relationships - Transact Europe	3 years		1,267		(634	)		633		1,267		(475	)		792
Business technology/IP	5 years		2,675		(927	)		1,748		2,675		(793	)		1,882

Total intangible assets		$	9,762	$	(3,606	)	$	6,156	$	9,762	$	(3,023	)	$	6,739

~~The Company recorded accretion~~Amortization expense ~~as interest expense in the amount of $5,520,822~~was $0.6 million and $0$0.4 million for the three months ended March 31, 2023 and 2022, ~~and 2021,~~ respectively. ~~The Company incurred interest~~

Amortization expense for each of ~~$1,889,485 and $0 for~~ the ~~three months ended~~years ending December 31 is as follows (dollars in thousands):

Year	Amount
2023 (remainder)	$	1,749
2024		1,857
2025		1,699
2026		847
2027		4
Total	$	6,156

9. Long-Term Debt

Long-term debt consisted of the following, as of March 31, 2023, and December 31, 2022 ~~and 2021, respectively.~~(dollars in thousands):

	As of March 31, 2023			As of December 31, 2022
$100,000,000 8% Senior convertible note due November 3, 2024	$	63,723		$	61,101
$149,900 Economic Injury Disaster Loan (EIDL), interest rate of 3.75%, due June 1, 2050		149			149
$500,000 EIDL, interest rate of 3.75%, due May 8, 2050		496			499

Total debt		64,368			61,749

Less: current portion		(15	)		(14	)

Net long-term debt	$	64,353		$	61,735

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RYVYL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Senior Convertible Notes

Balance, December 31, 2020	$	-
Convertible debentures issued		100,000
Derivative liability		(21,580	)
Original Issue Discount of 16%		(16,000	)
Placement fees and issuance costs		(7,200	)
Amortization of debt discount		3,435
Balance, December 31, 2021		58,655
Repayments		(14,550	)
Amortization of debt discount		16,996
Balance, December 31, 2022		61,101
Amortization of debt discount		2,622
Balance, March 31, 2023	$	63,723

Derivative liability

The Notes contain embedded derivatives representing the conversion features, redemption rights, and certain events of default. The Company determined that these embedded ~~derivative~~derivatives required bifurcation and separate valuation.

The Company utilizes a binomial lattice model to value its bifurcated derivatives included in the Notes. ASC 815 does not permit an issuer to account separately for individual derivative terms and features embedded in hybrid financial instruments that require bifurcation and liability classification as derivative financial instruments. Rather, such terms and features must be combined together, and ~~fair valued~~fair-valued as a single, compound embedded derivative. The Company selected a binomial lattice model to value the compound embedded derivative because it believes this technique is reflective of all significant assumptions that market participants would likely consider in negotiating the transfer of the Notes. Such assumptions include, among other inputs, stock price volatility, risk-free rates, credit risk assumptions, early redemption and conversion assumptions, and the potential for future adjustment of the conversion price due to triggering events. Additionally, there are other embedded features of the Notes requiring bifurcation, other than the conversion features, which had no value at December 31, ~~2021~~2020 due to management’s estimates of the likelihood of certain events, but that may have value in the future should those estimates change.

~~Table~~

The following is a rollforward of ~~Contents~~

~~A continuity of~~the derivative liability for the ~~three months~~year ended December 31, 2022, and the three-month period ended March 31, ~~2022 is summarized as follows:~~2023 (dollars in thousands):

Total

Balance, December 31, 2021
$ 18,735,000
Change in fair value
7,700,000

Balance, March 31, 2022
$ 26,435,000

Balance, December 1, 2020	$	-
Derivative liability on convertible debentures		21,580
Change in fair value 2021		(2,845	)
Balance, December 31, 2021		18,735
Change in fair value 2022		(18,480	)
Balance, December 31, 2022		255
Change in fair value Q1 2023 (placeholder)		(168	)
Balance, March 31, 2023	$	87

The Company sold and issued, in a registered direct offering, an 8% senior convertible note due November 3, 2023, and subsequently extended to November 5, 2024, in the aggregate original principal amount of $100 million (the “Note”). The Note had an original issue discount of sixteen percent (16%) resulting in gross proceeds of $84 million. The Note was sold pursuant to the terms of a Securities Purchase Agreement, dated November 2, 2021 (the “SPA”), between The Company and the investor in the Note (the “Investor”).

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RYVYL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Note was issued on November 8, 2021, pursuant to an indenture dated November 2, 2021, between the Company and Wilmington Savings Fund Society, FSB, as trustee (the “Base Indenture”), as supplemented by a first supplemental indenture thereto, dated November 2, 2021, relating to the Notes (the “First Supplemental Indenture” and, the Base Indenture as supplemented by the First Supplemental Indenture, the “First Indenture”). The terms of the Note include those provided in the First Indenture and those made part of the First Indenture by reference to the Trust Indenture Act.

Ranking

The Note is the senior unsecured obligations of the Company and not the financial obligations of our subsidiaries. Until such date as the principal amount of the Note is $5 million or less, all payments due under the Note will be senior to all other indebtedness of the Company and/or any of our subsidiaries.

Maturity Date

Unless earlier converted, or redeemed, the Note, as amended, will mature on November ~~3, 2023,~~5, 2024, the ~~second~~third anniversary of their issuance date, which we refer to herein as the “Maturity Date”, subject to the right of the investors to extend the date:

~~(i)~~ if an event of default under the Note has occurred and is continuing (or any event shall have occurred and be continuing that with the passage of time and the failure to cure would result in an event of default under the Note) and

ii.

(ii) for a period of 20 business days after the consummation of a fundamental transaction if certain events occur.

We are required to pay, on the Maturity Date, all outstanding principal, accrued and unpaid interest and accrued and unpaid late charges on such principal and interest, if any.

Interest

The Note bears interest at the rate of 8% per annum, and (a) shall commence accruing on the date of issuance, (b) shall be computed on the basis of a 360-day year and twelve 30-day months and (c) shall be payable in cash quarterly in arrears on the first trading day of each calendar quarter or otherwise in accordance with the terms of the Note. If a holder elects to convert or redeem all or any portion of a Note prior to the Maturity Date, all accrued and unpaid interest on the amount being converted or redeemed will also be payable. If we elect to redeem all or any portion of a Note prior to the Maturity Date, all accrued and unpaid interest on the amount being redeemed will also be payable. The interest rate of the Note will automatically increase to 15% per annum upon the occurrence and continuance of an event of default (See ~~“-- Events~~“Events of Default” below).

Late Charges

We are required to pay a late charge of 15% on any amount of principal or other amounts that are not paid when due.

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Conversion

Fixed Conversions at Option of Holder

The holder of the Note may convert all, or any part, of the outstanding principal and interest of the Note, at any time at such holder’s option, into shares of our common stock at an initial fixed conversion price, which is subject to:

●i.

proportional adjustment upon the occurrence of any stock split, stock dividend, stock combination and/or similar transactions; and

●ii.

full-ratchet adjustment in connection a subsequent offering at a per share price less than the fixed conversion price then in effect.

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RYVYL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On January 28, 2022, we and the Investor, entered into an Agreement and Waiver (the “Waiver”) with regard to the Note that has the following major provisions:

the Investor agreed to extend the “90 Day Eligibility Date” from February 3, 2022 to May 2, 2022 such that the Investor can no longer, if the closing price of the stock is less than $5.50, convert up to $30 million of the Note into shares of the Company’s common stock (with the conversion price being the lower of (i) the then in effect conversion price and (ii) the greater of (x) the Note’s $1.67 floor price or (y) 98% of the market price on the conversion date) (the “Alternate Optional Conversion Price”) prior to May 2, 2022;

allows us to acquire, for cancellation, $6 million in in aggregate principal amount of the Note for a purchase price of $6.9 million such that the new principal amount of the Note is $94 million;

lowers the initial fixed conversion price of the Note from $15 to $12; and

if the trading volume of our common stock on any individual trading day is over $5 million (the “Alternate Conversion Company Waiver Measuring Date”), allows the Investor an opportunity to convert up to $5 million of the Note into shares of our common stock from the Alternate Conversion Company Waiver Measuring Date through and including 7:00 PM ET on the immediately following trading day. The conversion price would be the lower of (i) the then in effect conversion price and (ii) the greater of (x) the Note’s $1.67 floor price or (y) 98% of the market price on the conversion date.

The Company paid the investor $6.0 million, ~~on January 31, 2022.~~$5.0 million and $3.6 million in principal in the first three quarters of 2022, respectively, consisting of $12.2 million in cash and $2.4 million in interest, consisting of shares of company stock.

The foregoing description of the Waiver does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Waiver, ~~a copy of which is attached hereto as Exhibit 10.1,~~executed on January 28, 2022, and ~~incorporated herein by reference.~~reported on Form 8-K on January 31, 2022.

~~1-Year~~1- Year Alternate Optional Conversion

At any time following the first anniversary of the issuance date of the Note, but only if the closing bid price of our common stock on the immediately prior trading day is less than $6.50, each holder of the Note shall have the option to convert, at such holder’s option, pro rata, up to $30 million of the principal amount of the Note (in $250,000 increments) at the Alternate Optional Conversion Price.

Alternate Event of Default Optional Conversion

If an event of default has occurred under the Note, each holder may alternatively elect to convert the Note (subject to an additional 15% redemption premium) at the “Alternate Event of Default Conversion Price” equal to the lesser of:

●

~~the fixed conversion price then in effect; and~~

The fixed conversion price then in effect; and the greater of:

●i.

the floor price; and

●ii.

80% of the lowest volume weighted average price of our common stock during the five trading days immediately prior to such conversion.

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Beneficial Ownership Limitation

The Note may not be converted and shares of common stock may not be issued under the Note if, after giving effect to the conversion or issuance, the applicable holder of the Note (together with its affiliates, if any) would beneficially own in excess of 4.99% of the Company’s outstanding shares of common stock, which is referred to herein as the “Note Blocker”. The Note Blocker may be raised or lowered to any other percentage not in excess of 9.99% at the option of the applicable holder of Notes, except that any raise will only be effective upon 61-days’ prior notice to us.

~~Clarification to First Quarter Adjustment to Fixed Conversion Price~~

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RYVYL, INC.

~~The Company wishes to clarify the possible first quarter adjustment to the Note’s initial fixed conversion price (which was originally $15 and is now, pursuant to the Waiver, $12).~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

If, during the fiscal quarter ending March 31, 2022, the Company (i) fails to process at least $750 million in transaction volume or (ii) has revenue that is less than $12 million, and, if the Note’s fixed conversion price then in effect is greater than the greater of (x) the Note’s $1.67 floor price floor and (y) 140% of the market price as of April 1, 2022 (the "Adjustment Measuring Price”) then, on April 1, 2022, the fixed conversion price will automatically adjust to the Adjustment Measuring Price.

Change of Control Redemption Right

In connection with a change of control of the Company, each holder may require us to redeem in cash all, or any portion, of the Notes at a 15% redemption premium to the greater of the face value, the equity value of our common stock underlying the Notes and the equity value of the change of control consideration payable to the holder of our common stock underlying the Notes.

The equity value of our common stock underlying the Notes is calculated using the greatest closing sale price of our common stock during the period immediately preceding the consummation or the public announcement of the change of control and ending the date the holder gives notice of such redemption.

The equity value of the change of control consideration payable to the holder of our common stock underlying the Notes is calculated using the aggregate cash consideration per share of our common stock to be paid to the holders of our common stock upon the change of control.

Events of Default

Under the terms of the first supplemental indenture, the events of default contained in the base indenture shall not apply to the Notes. Rather, the Notes contain standard and customary events of default including but not limited: (i) the suspension from trading or the failure to list our common stock within certain time periods; (ii) failure to make payments when due under the Notes; and (iii) bankruptcy or insolvency of the Company.

If an event of default occurs, each holder may require us to redeem all or any portion of the Notes (including all accrued and unpaid interest and late charges thereon), in cash, at a 15% redemption premium to the greater of the face value and the equity value of our common stock underlying the ~~Notes~~Notes.

The equity value of our common stock underlying the Notes is calculated using the greatest closing sale price of our common stock on any trading day immediately preceding such event of default and the date we make the entire payment required.

Company Optional Redemption Rights

At any time, if no event of default exits, we may redeem all, but not less than all, the Notes outstanding in cash all, or any portion, of the Notes at a 5% redemption premium to the greater of the face value and the equity value of our common stock underlying the Notes.

The equity value of the Company’s common stock underlying the Notes is calculated using the greatest closing sale price of our common stock on any trading day during the period commencing on the date immediately preceding such date we notify the applicable holder of such redemption election and the date we make the entire payment required.

The foregoing description of the Note does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Note, a copy of which is ~~attached~~included hereto as Exhibit ~~4.1,~~4.3 and incorporated herein by reference.

SBA CARES Act Loans - $649,900

On June 9, 2020, the Company entered into a 30-year loan agreement with the SBA under the CARES Act in the amount of $149,900. The loan bears interest at 3.75% per annum and requires monthly principal and interest payments of $731 beginning June 9, 2021. Both the Chief Executive Officer and Chairman of the Company signed personal guarantees under this loan.

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~~11.~~

RYVYL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

10. Stock Option Awards

~~STOCK OPTION AWARDS~~

The following table represents the employee stock option activity during the three months ended March 31, ~~2022~~2023 and ~~2021.~~2022.

	Shares			Weighted Average Exercise Price		Aggregate Intrinsic Value					Weighted Average		Aggregate
								Shares			Exercise Price		Intrinsic Value
Outstanding at December 31, 2020		477,430		$	3.53
Granted		-			-
Exercised		(68,725	)		0.07
Forfeited or Expired		(363	)		1.01
Outstanding at March 31, 2021		409,675		$	0.67	$	5,041,689
Exercisable at March 31, 2021		399,531		$	0.67	$	4,917,988
Vested and Expected to Vest at March 31, 2021		409,675		$	0.67	$	5,041,689

Outstanding at December 31, 2021		391,562		$	5.08				391,562		$	5.08
Granted		-			-				-			-
Exercised		(13,019	)		0.42				(13,019	)		0.42
Forfeited or Expired		(322	)		12.10
Forfeited or expired									(322	)		12.10
Outstanding at March 31, 2022		378,221		$	5.21	$	-		378,221		$	5.21	$	-
Exercisable at March 31, 2022		378,221		$	5.21	$	-		378,221		$	5.21	$	-
Vested and Expected to Vest at March 31, 2022		378,221		$	5.21	$	-		378,221		$	5.21	$	-

Outstanding at December 31, 2022									319,627		$	4.29
Granted									-			-
Exercised									-			-
Forfeited or expired									-			-
Outstanding at March 31, 2023									319,627		$	4.29	$	-
Exercisable at March 31, 2023									319,627		$	4.29	$	-
Vested and Expected to Vest at March 31, 2023									319,627		$	4.29	$	-

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based upon the Company’s closing stock price of ~~$12.98~~$0.41 and ~~$4.35~~$4.22 as of March 31, ~~2021~~2023, and 2022, respectively, which would have been received by the option holders had all option holders exercised their options as of that date. As of March 31, ~~2022,~~2023, there was no unrecognized compensation cost related to non-vested stock options.

The Company adopted the 2021 Restricted Stock Plan (“2021 Plan”) in November 2021, which provides for the grant of restricted stock awards and performance stock awards to executive officers, non-employee directors and other key employees of the Company. The 2021 Plan provides for up to ~~5.0 million~~5,000,000 shares of common stock. ~~the 2020 Plan generally have a term of five years and generally vest and become exercisable at various times from the option grant dates.~~ These ~~award~~awards will have such vesting or other provisions as may be established by the Board of Directors at the time of each award.

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RYVYL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table represents the restricted stock award activity during the three months ended March 31, ~~2022~~2023 and ~~2021.~~2022.

	Non-vested Restricted Stock Awards			Weighted Average Grant Date Fair Value

Non-vested at January 1, 2021		-		$	-
Granted		-			-
Vested		-			-
Forfeited		-			-
Non-vested at March 31, 2021		-		$	-
							Non-vested Restricted Stock Awards			Weighted Average Grant Date Fair Value
Non-vested at January 1, 2022		-		$	-			-
Granted		39,413			3.24			39,413		$	3.24
Vested		(39,413	)		(3.24	)		(39,413	)		(3.24	)
Forfeited		-			-			-			-
Non-vested at March 31, 2022		-		$	-			-			-

Non-vested at January 1, 2023								667,277		$	1.20
Granted								13,907		$	0.63
Vested								(315,816	)		(1.29	)
Forfeited								-			0
Non-vested at March 31, 2023								365,368		$	1.02

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Total stock-based compensation expense recognized for the Company’s 2021 Plan was $126,414 and $0 for the three months ended March 31, ~~2022~~2023, and ~~2021,~~2022, respectively.

~~12.~~

~~COMMON STOCK~~

GreenBox POS LLC (“PrivCo”), a privately held company owned by Ben Errez, Chairman and Executive Vice President of the Company, and Fredi Nisan, Chief Executive of the Company and a member of its Board of Directors, owns approximately 20,455,875 shares of the Company’s common stock. In November 2021, pursuant to a verbal agreement, PrivCo pledged to the Company 1,000,000 shares of common stock in exchange of $5.59 million (based on the $5.59 closing price of the common stock on November 24, 2021) held in a trust account, classified as current assets. The purpose of the 1,000,000 common share pledge is to allow the Company, if necessary, to cancel up to 1 million of PrivCo’s shares and issue them to new shareholders without increasing the Company’s shares outstanding. As shares get cancelled and issued to new shareholders, the Company would release the $5.59 per share value from the trust account to PrivCo. As part of the verbal agreement, the parties agreed that any shares cancelled and issued out of these 1 million shares will need to be later re-issued to PrivCo PrivCo will need to return the $5.59 per share amount paid to it. In February 2022, the Company cancelled 33,333 of PrivCo’s shares and issued them to a shareholder and the Company is expected to cancel 500,000 of PrivCo’s shares and issue them to Sky Financial & Intelligence in May 2022. As a result, the Company recorded 533,333 shares to be issued to PrivCo as of March 31, 2022. PrivCo received $186,331 as of March 31, 2022 (for the cancellation of 33,333 shares) and will receive a further $2.795 million when the 500,000 shares are cancelled.

~~13.~~

~~LEASES~~

For operating leases, we calculated right of use assets and lease liabilities based on the present value of the remaining lease payments as of the date of adoption using the incremental borrowing rate, in accordance with ASC 842, Leases.11. Leases

~~The~~On March 23, 2023, the Company ~~leases office space at three locations in California, Florida and Massachusetts. The Company had operating~~executed a lease ~~expense of $159,422 and $33,104~~agreement with for the ~~three months ended March~~Company headquarters office commencing July 1, 2023 and terminating on December 31, ~~2022~~2028 with certain contingencies. The leased property is to provide for the continued operations and ~~2021, respectively.~~

Future minimum lease payments for all leases as of March 31, 2022 are as follows:

Year

Amount

2022 (Remainder)
$ 500,323
2023
463,532
2024
234,354
2025
241,373
2026
248,605
Thereafter
42,464
Total lease payments
1,730,651
Less: present value adjustment
(289,303 )
Present value of total lease liabilities
1,441,348
Less: current lease liabilities
(549,668 )
Long-term lease liabilities
$ 891,680

~~Operating lease liabilities are based on~~room for growth at its current location after the ~~net present value~~expiry of its existing sublease with the ~~remaining lease payments over~~sublandlord. The starting monthly rent is $45,593 in July 2023 for the remaining lease term. In determining the present value of lease payments, the Company used its incremental borrowing rate based on the information available at the lease commencement date. As of March 31, 2022, the weighted average remaining lease term is 3.7 years and the weighted average discount rate used to determine the operating lease liabilities is 10.0%.Phase 1 premises.

~~14.~~

~~RELATED PARTY TRANSACTIONS~~

● ~~Kenneth Haller and the Haller Companies~~12. Related Party Transactions

Kenneth Haller (“Haller”) became the Company’s Senior Vice President of Payment Systems in November 2018. The Company began working indirectly with Haller earlier in 2018, both individually and through our relationship with MTrac Tech Corporation (“MTrac”), which ~~in turn~~ has business relationships with Haller. Haller brings considerable advantages to the Company’s platform development and business development efforts and capabilities, including transactional business relations and a large network of agents (the “Haller Network”). The Haller Network is an amalgamation of the collective networks of Haller and two companies owned or majority-owned by Haller, which are or have been Sky Financial & Intelligence, LLC (“Sky”), and Charge Savvy, LLC (collectively, the “Haller Companies”), each of which has formalized business relationships with the Company, as well as with some of the Company’s partners, which the Company believes allows the Company to maximize and diversity the Company’s market penetration capabilities. Haller, through Sky, owns controlling interests in Charge Savvy, LLC with whom the Company does business through their respective business relationship with MTrac.

~~Table of Contents~~

The following are certain transactions between the Company and the Haller Companies:

Sky Financial & Intelligence, LLC – Haller owns 100% of Sky Financial & Intelligence LLC (“Sky”), a Wyoming limited liability company, and serves as its sole Managing Member. Sky is a strategic merchant services company that focuses on high-risk merchants and international credit card processing solutions. In 2018, Sky was using GreenBox’s QuickCard payment system as its main payment processing infrastructure, through Sky’s relationship with MTrac. It was through this successful relationship, that we came to know Haller and the Haller Network. Realizing that the Haller Network and Haller’s unique skill set was highly complementary to our business objectives, we commenced discussions to retain Haller through his consulting firm, Sky, for a senior role, directly responsible for growing GreenBox’s operations. Subsequently, in November 2018, Haller was appointed as our Senior Vice President of Payment Systems, for a monthly consulting fee of $10,000, paid to Sky (“Haller Consulting Fee”). The Company did not pay any commissions to the related parties mentioned above for the years ended December 31, 2022, and 2021. Mr. Haller left the Company in March 2022.

~~The Company recognized net revenue~~

Table of approximately $685,000 from outside third-party merchants through independent sales organization (ISO), Sky, for the three months ended March 31, 2022. The Company had accounts receivables of $6,540,027 from outside third-party merchants through Sky. Net revenue through Sky for the three months ended March 31, 2021 was approximately $2,591,000.

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RYVYL, INC.

On March 31, 2022, the Company acquired a portfolio of merchant accounts from Sky Financial & Intelligence for $18,110,000. The Company paid $16,000,000 of cash in March 2022 and is scheduled to issue 500,000 shares of restricted common stock for the transaction in May 2022.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Charge Savvy, LLC – Sky owns 68.4% of Charge Savvy, LLC (“Charge Savvy”), an Illinois limited liability company. Haller serves as one of three Managing Members of Charge Savvy, along with Higher Ground Capital, LLC (owns 14%), and Jeff Nickel (owns 17.4%). As a result of the Purchase Agreement, the Company purchased all of Charge Savvy’s issued and outstanding membership interests and Charge Savvy became a wholly owned subsidiary of the Company. The purchase price under the Purchase Agreement for the all-stock transaction consisted of 1,000,000 shares of Common Stock being issued and delivered to the Sellers in proportion to the Sellers’ share of their membership interests in Charge Savvy. The share price at issuance was $12.14.

PrivCo

The Company repurchased, in two separate repurchase transactions each consisting of 1 million shares of common stock, an aggregate of 2 million shares owned by PrivCo (an entity controlled by Messrs. Errez and Nisan). In October 2022, the Board unanimously ratified these two repurchase transactions between the Company and PrivCo. The Company repurchased 1,000,000 shares for a price per share of $5.59 (for total proceeds to PrivCo of $5.6 million) (the “First Repurchase”) and 1,000,000 shares for a price per share of $0.82 (for total proceeds to PrivCo of $820,000) (the “Second Repurchase”). The First Repurchase was based on the closing price of the common stock on November 24, 2021, and took place over a number of months starting in February 2022 and ending in October 2022. The Second Repurchase was based on the closing price of the common stock on July 29, 2022, and took place in October 2022. The purpose of each of these transactions was to allow the Company to issue shares to new shareholders without increasing the Company’s shares outstanding.

Family Relationships

The Company employs two of our CEO’s brothers, Dan and Liron Nusonivich, who are paid approximately $200,000 and $110,000 per year, respectively. There are no family relationships between any of the other directors or executive officers and any other employees or directors or executive officers.

The Company did not pay any commissions to the related parties mentioned above for the ~~three months~~three-month period ended March 31, 2023, March 31, 2022, ~~and 2021.~~or the year ended December 31, 2022.

~~15.~~

13. Commitments and Contingencies

~~COMMITMENTS AND CONTINGENCIES~~

~~Legal Proceedings~~From time-to-time, the Company is involved in a number of legal proceedings. The Company records a liability for those legal proceedings when it determines it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. The Company also discloses when it is reasonably possible that a material loss may be incurred however, the amount cannot be reasonably estimated. From time to time, the Company may enter into discussions regarding settlement of these matters, and may enter into settlement agreements, if it believes settlement is in the best interest of the Company and its shareholders.

The following is a summary of our current outstanding litigation. Note that references to GreenBox POS are for historical purposes. GreenBox POS changed its name to RYVYL Inc. on October 13, 2022.

●

Corporate Performance Consulting, LLC (CPC) v. GreenBox POS – On April 7, 2021, CPC filed a complaint against GreenBox POS in San Diego Superior Court. Plaintiff CPC alleges breach of contract, breach of implied covenant of good faith and fair dealing, goods and services rendered, negligent misrepresentation, violation of CA Business and Professions Code Section 17200, and unjust enrichment. The crux of CPC’s claim is that GreenBox POS failed to compensate for certain consulting and corporate advisory services. GreenBox POS believes the claims are without merit and intends to defend itself vigorously. On June 17, 2021, GreenBox POS filed a Cross-Complaint for breach of contract, breach of implied covenant of good faith and fair dealing, negligent misrepresentation, unjust enrichment, and rescission. The parties ~~are now in~~attended mediation on December 15, 2022, and subsequently entered into a confidential settlement agreement. The parties have executed a request for dismissal with prejudice to be filed with the ~~discovery phase.~~Court.

●

GreenBox POS v. A.M.P of Florida, Inc. (AMP) – On March 9, 2021, GreenBox POS (mistakenly identified as "GreenBox POS, LLC”) filed suit against AMP in U.S.D.C for the middle district of Florida alleging breach of oral contract, conversion, and civil theft. GreenBox filed suit in order to recover processed funds unlawfully withheld by AMP. The parties amicably resolved all differences and filed a Joint Stipulation of Voluntary Dismissal with Prejudice on January 31, 2022.

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RYVYL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

●

The Good People Farms, LLC (TGPF) - TGPF initiated an arbitration in AAA on or about April 20, 2020 against GreenBox ~~POS,~~POS., Fredi Nisan, Ben Errez, MTrac Tech., Vanessa Luna, and Jason LeBlanc. The matter was placed in abeyance for some time. On January 15, 2021 GreenBox POS filed a ~~counterclaim~~counter-claim for fraud - intentional misrepresentation, breach of contract, breach of covenant of good faith and fair dealing, violation of California Business and Professions Code Section 17200, and accounting. The arbitration was stayed pending further proceedings in the separate but related action filed by MTrac and Ms. Luna in San Diego Superior Court. The arbitration ~~has now commenced again~~re-commenced upon the state court's January 14, 2022 order denying MTrac's and Ms. Luna's motion for summary judgment and granting of ~~TGPF 's~~The Good People Farm's motion to compel arbitration as to MTrac only. TGPF ~~intends to submit~~submitted a new ~~complaint on or around May 23, 2022.~~statement of claim of June 21, 2022; the individual named as respondents in the original arbitration demand have been removed. The parties attended binding arbitration from April 18 to 21, 2023, and are awaiting the decision of the arbitration panel.

●

Pure Health, et al. v. Worldpay LLC et al - On February 18, 2022 forty-three online marketer Plaintiffs filed suit in the Court of Common Pleas, Hamilton County, Ohio against Worldpay LLC (formerly Vantiv LLC), Fifth Third Bank, ChargeSavvy LLC, a wholly owned subsidiary of GreenBox POS, GreenBox POS, and John Does 1 (Defendants) through 10, alleging breach of contract, breach of implied covenant of good faith and fair dealing, conversion, and money had and received (constructive trust). Defendant ~~GreenBox POS~~RYVYL Inc. believes that Plaintiffs’ claims against it are without merit and plans to pursue all judicial remedies necessary to resolve this matter. The parties have settled the matter and executed a request for dismissal with prejudice to be filed with the Court. On April 27, 2022, Paul Levine (“Levine”), former Chief Executive Officer of Coyni, Inc., wholly-owned subsidiary of GreenBox POS, filed a charge with The Occupational Safety and Health Administration (“OSHA”) against respondents Coyni and GreenBox POS. Levine alleges retaliation in violation of the Sarbanes-Oxley Act of 2022, as amended, 18 U.S.C. §1514A (“SOX”). The OSHA claim was withdrawn on or around April 3, 2023.

●

On November 8, 2022, RYVYL Inc. filed a complaint against its former COO, Luna Consultant Group, LLC and John Does 1 through 50 in San Diego Superior Court. RYVYL is alleging misappropriation of trade secrets, breach of fiduciary duty, and conversion among other causes of action. The parties are currently in the discovery phase.

●

On November 10, 2022, Vanessa Luna, former COO of RYVYL Inc., filed a complaint against RYVYL and Fredi Nisan. Luna alleges breach of contract, unjust enrichment, promissory estoppel, harassment, retaliation and wrongful termination, and fraud among other claims. Luna is seeking damages including compensatory damages, unpaid wages (past and future), loss of wages and benefits (past and future), expectation damages, and other damages to be proven at trial. The Company denies all allegations. Investigation is ongoing. As the Company cannot predict the outcome of the matter the probability of an outcome cannot be determined. The Company intends to vigorously defend against all claims. The parties are currently in the discovery phase.

●

On December 12, 2022, Jacqueline Dollar (aka Jacqueline Reynolds), former CMO of RYVYL Inc. filed a complaint against RYVYL Inc. fka Greenbox POS, Inc., Fredi Nisan, and DOES 1-20 alleging sex discrimination in violation of FEHA, failure to prevent discrimination in violation of FEHA, IIED, NIED, and negligent supervision/negligent retention. Ms. Dollar is seeking an unspecified amount of damages related to, among other things, payment of past and future lost wages, stock issuances, bonuses and benefits, compensatory damages, and general, economic, non-economic, and special damages. As the Company cannot predict the outcome of the matter the probability of an outcome cannot be determined. The Company intends to vigorously defend against all claims.

●

On February 1, 2023, a purported class action lawsuit titled Cullen V. RYVYL Inc. fka Greenbox POS, Inc., et al., Case No. 3:23-cv-00185-GPC-AGS, was filed in the United States District Court for the Southern District of California against the company and certain of our current and former directors and officers (the “Defendants”). The complaint was filed on behalf of persons who purchased or otherwise acquired the Company’s publicly traded securities between January 29, 2021 and January 20, 2023, (the “Class Action”). The complaint generally alleges that the Defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making false and misleading statements regarding the Company’s financial performance and prospects. The action includes claims for damages, including interest, and an award of reasonable costs and attorneys’ fees and expert fees to the putative class. As the Company cannot predict the outcome of the matter the probability of an outcome cannot be determined. The Company intends to vigorously defend against all claims.

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RYVYL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

This is a summary of our current commitments with respect to pending acquisitions:

~~16.~~

~~SUBSEQUENT EVENTS~~●

In November 2021, the Company executed a term sheet to acquire certain ACH business of Merchant Payment Solutions LLC. Upon execution of the term sheet, the Company made a refundable earnest money deposit in the amount of $725,000 (the “Deposit”) toward the total purchase price. After conducting due diligence, the Company elected to terminate the term sheet on April 21, 2023, and has requested a refund of the Deposit in full.

●

On July 27, 2022, the Company signed a letter of intent to acquire Fundstr UAB for their foreign exchange conversion and international payment capabilities and made a deposit payment of 685,000 euros. As of December 31, 2022, and as of April 17, 2023, the company is conducting acquisition due diligence to meet corporate governance requirements.

Sale and Leaseback Agreement

On March 28, 2023, the Company’s subsidiary, Charge Savvy, executed an agreement to sell and subsequently leaseback its property located in South Chicago Heights, Illinois (the “Property”), owned by its subsidiary, Charge Savvy LLC (“CS”). The sales price is updated to $2.5 million with an anticipated closing by July 3, 2023 with a 30-day buyer’s option to extend. The initial term of the leaseback is five (5) years, with an option to terminate early without penalty after conclusion of the second year.

14. Subsequent Events

The Company follows the guidance in FASB ASC Topic 855, Subsequent Events (“ASC 855”), which provides guidance to establish general standards of accounting for and disclosures of events that occur after the balance sheet date but before the consolidated financial statements are issued or are available to be issued. ASC 855 sets forth (i) the period after the balance sheet date during which management of a reporting entity evaluates events or transactions that may occur for potential recognition or disclosure in the consolidated financial statements, (ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its consolidated financial statements, and (iii) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. Accordingly, the Company did not have any subsequent events that require disclosure other than the following:

●

On June 30, 2022, RYVYL (EU) EAD entered into a purchase agreement to acquire Roark Holdings, Ltd, a United Kingdom based licensed payment institution, in an all-cash transaction for 1,000,000 pounds, of which 675,000 pounds were paid to the seller and the remaining amount will be due at the change of control. The purchase price was increased to 1,106,000 pounds to provide for the seller’s operating expenses prior to the change of control. Roark Holdings T/A Paysos.com is a respected UK payment institution which allows the licensor to process debit and credit card payments, in addition to local payments within the UK. The Company submitted a request for change of control with the UK Financial Conduct Authority (FCA) but chose to withdraw the change of control application due to unforeseen complication on the part of the Roark Holdings, Ltd in March 2023. The FCA has granted the Company a relief period until December 31, 2023 to maintain compliance status. The Company expects to retrieve the payment already made to the seller and will seek other means to comply with the UK processing regulations.

●

OnRYVYL entered into a Securities Purchase Agreement, dated as of April ~~1, 2022,~~6, 2023 (the “Agreement”) with Ang Woon Han, pursuant to which, among other things, the Company ~~completed the acquisition~~purchased 98 million shares of ~~Transact Europe Holdings OOD. Transact Europe EAD (TEU) is~~restricted common stock of Logicquest Technology, Inc., a Nevada corporation (“Logicquest”) representing ownership of 97.7% of Logicquest, 48 shares of Series C Convertible Non-Redeemable Preferred Stock of Logicquest and 10 shares of Series D Convertible Non-Redeemable Preferred Stock of Logicquest, in exchange for an ~~EU regulated electronic money institution headquartered in Sofia Bulgaria. TEU~~aggregate purchase price of $225,000. Logicquest is a ~~Principal Level Member of Visa, a Worldwide Member of MasterCard, and a Principal Member of China UnionPay. In addition, TEU is part~~shell company (as defined in Rule 12b-2 of the ~~direct SEPA program. With a global footprint, proprietary payment gateway~~Securities Exchange Act of 1934, as amended (the “Exchange Act”)) quoted on the OTC Pink Open Market under the symbol “LOGQ” and ~~technology platforms, TEU offers a comprehensive portfolio of services,~~is required to file reports and ~~decades of industry experience. TEU provides complete payment solutions by offering acquiring, issuing of prepaid cards~~other information with the Securities and ~~agent banking, serving hundreds of clients. The Company paid €26.0 million in total consideration for~~Exchange Commission (the “SEC”) pursuant to the ~~purchase.~~Exchange Act.

The Company is developing plans to merge the assets of Coyni, Inc., a wholly-owned subsidiary of the Company (“Coyni”), and Logicquest, prior to a spin-off. The details of the business combination are being finalized and will be subject to corporate governance. There can be no assurance as to the timing or whether the Company will be able to consummate the spin-off of Logicquest. Since the timing or completion of the transaction is uncertain, the Company’s investment in Coyni has not been reclassified as assets held for sale, in accordance with ASC Topic 205.

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RYVYL, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

●

~~On May 1, 2022,~~

The Company has engaged Kingswood, a division of Kingswood Capital Partners, LLC (“Kingswood”) as the non-exclusive placement agent pursuant to an Engagement Agreement dated as of April 21, 2023, to advise the Company ~~cancelled 1,898,586 common shares. Of this amount, 1,098,586 treasury shares related~~in connection with an offering on a reasonable best-efforts basis of Logicquest as a separate publicly traded company (the “Offering”). The Offering is subject to ~~share repurchases were cancelled. Another 500,000 shares that were cancelled were owned by GreenBox POS LLC and were cancelled to enable the Company to issue them Sky Financial as part~~completion of the ~~asset purchase consideration. As a result, GreenBox POS LLC received $2.795~~intended transfer of Coyni assets to Logicquest and the anticipated spin-off, subject to market conditions. The Company expects to raise approximately $40 million ~~out~~in the Offering based on the valuation of Coyni’s assets and liabilities of approximately $200 million. The Company has not obtained an independent third-party valuation of Coyni. The Company is evaluating additional details regarding the ~~trust account. See Note 12~~spin-off of the Notes to the Unaudited Condensed Consolidated Financial Statements. The other 300,000 shares that were cancelled were treasury shares had been owned by GreenBox POS LLC who agreed to cancel them in December 2020. The actual share cancellation took place in May 2022.Logicquest, and will provide further information when available.

15. Segment Reporting

The Company has organized its operations into two segments: North America, and International. These segments reflect the way the Company evaluates its business performance and manages its operations.

Our chief operating decision maker is our chief executive officer. Management determined the operational data used by the chief operating decision maker is that of the two reportable segments. Management bases strategic goals and decisions on these segments and the data presented below is used to measure financial results.

Management evaluates the performance of its segments and allocates resources to them based on operating income or (loss) as compared to prior periods and current performance levels. The reportable segment operational data is presented in the tables below (dollars in thousands):

	Three Months Ended March 31,
	2023		2022
Revenue
North America	$	8,804	$	4,210
International		2,487		-
	$	11,291	$	4,210

	As of March 31, 2023		As of December 31, 2022
Long-lived assets, net
North America	$	5,472	$	5,893
International		684		846
	$	6,156	$	6,739

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

~~Disclaimer Regarding Forward Looking Statements~~CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain information included in this Quarterly Report on Form 10-Q, 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, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or 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.

You should not place undue reliance on forward looking statements. The cautionary statements set forth in this Quarterly Report on Form 10-Q identify important matters or factors which you should consider in evaluating our forward-looking statements. These matters or factors include, among other things:

	●	Our ability to effectively execute our business plan;

	●	Our ability to manage our expansion, growth and operating expenses both domestically and internationally;

	●	Our ability to comply with new regulations and compliance requirements that affect our business;

	●	Our ability to evaluate and measure our business, prospects and performance metrics;

	●	Our ability to compete and succeed in an evolving industry;

	●	Our ability to respond and adapt to rapid changes in technology;

	●	Risks in connection with completed or potential acquisitions, post-acquisition integrations, dispositions and other strategic growth opportunities and initiatives;

	●	Risks related to shareholders experiencing significant dilution if the 8% senior convertible note due in 2024 in the principal amount of $85.5 million in the event the 8% senior convertible note is repaid in stock;

	●	Various risks related to health epidemics, pandemics and similar outbreaks, such as the coronavirus disease 2019 ("COVID-19”) pandemic, which may have material adverse effects on our business, financial position, results of operations and/or cash flows;

	●	Risks related to the blockchain and cryptocurrency industry or changes in the regulatory environment and turmoil in the banking sector with respect to digital asset management; and

	●	Risks related to our dependence on our proprietary technology which we may not be able to protect.

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 the Company (such as in our other filings with the Securities and Exchange Commission (the “SEC”) or in our press releases) for other factors that may cause actual results to differ materially from those projected by the Company. For additional information regarding risk factors that could affect the Company’s results, see “Risk Factors” beginning on page 13 of the Annual Report on Form 10-K filed on April 17, 2023, and as may be included from time-to-time in our reports filed with the SEC.

The Company intends the forward-looking statements to speak only as of the time of such statements and does not undertake or plan to update or revise such forward-looking statements as more information becomes available or to reflect changes in expectations, assumptions or results. The Company can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of, or any material adverse change in, one or more of the risk factors or risks and uncertainties referred to in this Quarterly Report on Form 10-Q, could materially and adversely affect our results of operations, financial condition, and liquidity, and our future performance.

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In this Quarterly Report on Form 10-Q, unless the context otherwise requires, all references to “the Company,” “we,” “our”, “us” and “PubCo” refer to RYVYL Inc (formerly known as GreenBox POS Inc.), a Nevada corporation.

Unless the context otherwise requires, all references to “PrivCo” or the “Private Company” refer to GreenBox POS LLC, a limited liability company, formed in the state of Washington.

Our Management’s Discussion and Analysis or Plan 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 Securities and Exchange Commission.

Although the forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

Overview – Organization and Name Changes

~~Organization~~

~~GreenBox POS~~RYVYL Inc. is a financial technology company that develops, markets, and sells innovative blockchain-based payment solutions, which we believe offer significant improvements for the payment solutions marketplace. The Company’s core focus is to develop and monetize disruptive blockchain-based applications, integrated within an end-to-end suite of financial products, capable of supporting a multitude of industries. The Company’s proprietary, blockchain-based systems are designed to facilitate, record and store a virtually limitless volume of tokenized assets, representing cash or data, on a secured, immutable blockchain-based ledger.

The Company was formerly known as ASAP Expo, Inc (“ASAP”), and was incorporated in the state of Nevada on April 10, 2007. On January 4, 2020, PubCo and GreenBox POS LLC, a Washington limited liability company ("(“PrivCo”), entered into an Asset Purchase Agreement (the ~~"Agreement”~~“Agreement”), to memorialize a verbal agreement (the “Verbal Agreement”) entered into on April 12, 2018, by and among PubCo (the Buyer) and PrivCo (the Seller). On April 12, 2018, pursuant to the Verbal Agreement, ~~PubCo~~the Company acquired PrivCo’s blockchain gateway and payment system business, point of sale system business, delivery business and kiosk business, bank and merchant accounts, as well as all intellectual property related thereto (the ~~"GreenBox~~“GreenBox Business”). As consideration for the GreenBox Business, on April 12, 2018, ~~PubCo~~the Company assumed PrivCo’s liabilities that had been incurred in the normal course of the GreenBox Business.

On May 3, 2018, ~~PubCo~~the Company formally changed its name to GreenBox POS LLC, then subsequently changed its name to GreenBox POS on December 13, 2018. On October 13, 2022, GreenBox POS changes its name to RYVYL Inc.

On March 31, 2022, the Company contracted to acquire a portfolio of merchant accounts from Sky Financial & Intelligence for $18.1 million. The Company paid $16.0 million in cash in March 2022 issued 500,000 shares of restricted common stock for the transaction on May 12, 2022. The entire amount tendered in both cash and stock was recorded as a Customer Relationships asset.

However, as of December 31, 2022, the Company had not received the delivery of the acquired merchant list and the associated ISO management portal access and as a result the Company charged off the entire purchase price in 2022. Also, during 2022, the Company suspended its reporting of revenue from the Sky Financial portfolio.

On April 1, 2022, the Company completed the acquisition of Transact Europe Holdings OOD. Transact Europe EAD (TEU) is an EU regulated electronic money institution headquartered in Sofia Bulgaria. TEU is a Principal Level Member of Visa, a Worldwide Member of MasterCard, and a Principal Member of China UnionPay. In addition, TEU is part of the direct SEPA program. With a global footprint, proprietary payment gateway, and technology platforms, TEU offers a comprehensive portfolio of services and decades of industry experience. TEU provides complete payment solutions by offering acquiring, issuing of prepaid cards and agent banking, serving hundreds of clients. The Company paid approximately $28.8 million (€26.0 million) in total consideration for the purchase.

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~~Management~~Management's Discussion and Analysis

~~RESULTS OF OPERATIONS~~ of Financial Condition and Results of Operations

Three Months Ended March 31, ~~2022~~2023 (Unaudited) Compared to Three Months March 31, ~~2021~~2022 (Unaudited):

Three Months Ended March 31,

2022

2021

Change

% of

% of

Amount

Revenue

Amount

Revenue

Amount

%

Net revenue
$ 4,895,526 100.0
%
$ 4,749,441 100.0
%
$ 146,085 3.1
%
Cost of revenue
2,563,830 52.4
%
1,593,771 33.6
%
970,059 60.9
%
Gross profit
2,331,696 47.6
%
3,155,670 66.4
%
(823,974
)
-26.1
%

Operating expenses:

Advertising and marketing
140,966 2.9
%
24,725 0.5
%
116,241 470.1
%
Research and development
1,938,133 39.6
%
653,381 13.8
%
1,284,752 196.6
%
General and administrative
1,792,184 36.6
%
566,195 11.9
%
1,225,989 216.5
%
Payroll and payroll taxes
2,383,397 48.7
%
559,201 11.8
%
1,824,196 326.2
%
Professional fees
1,504,561 30.7
%
457,752 9.6
%
1,046,809 228.7
%
Stock compensation for employees
166,800 3.4
%
797,613 16.8
%
(630,813
)
n/a
Stock compensation for services
126,414 2.6
%
9,453,825 199.1
%
(9,327,411
)
n/a
Depreciation and amortization
454,341 9.3
%
6,009 0.1
%
448,332 7461.0
%
Total operating expenses
8,506,796 173.8
%
12,518,701 263.6
%
(4,011,905
)
-32.0
%

Income (Loss) from operations
(6,175,100
)
-126.1
%
(9,363,031
)
-197.1
%
3,187,931 -34.0
%

Other Income (Expense):

Interest expense
(1,889,485
)
-38.6
%
(594,258
)
-12.5
%
(1,295,227
)
218.0
%
Interest expense - debt discount
(5,520,822
)
-112.8
%
(2,993,408
)
-63.0
%
(2,527,414
)
84.4
%
Changes in fair value of derivative liability
(7,700,000
)
-157.3
%
- 0.0
%
(7,700,000
)
n/a
Merchant liability settlement
- 0.0
%
(364,124
)
-7.7
%
364,124 n/a
Other income or expense
49,316 1.0
%
(14,611
)
-0.3
%
63,927 -437.5
%
Total other income (expense)
(15,060,991
)
-307.6
%
(3,966,401
)
-83.5
%
(11,094,590
)
279.7
%

Income (Loss) before provision for income taxes
(21,236,091
)
-433.8
%
(13,329,432
)
-280.7
%
(7,906,659
)
59.3
%

Provision for income taxes
79,896 1.6
%
- 0.0
%
79,896 0.0
%

Net income (loss)
$ (21,315,987
)
-435.4
%
$ (13,329,432
)
-280.7
%
$ (7,986,555
)
59.9
%

~~Table of Contents~~

	Three Months Ended March 31,
	2023						2022						Change
	Amount			% of Revenue			Amount (as restated)			% of Revenue			Amount			Percent
	(dollars in millions)
Revenue	$	11.3			100	%	$	4.2			100	%	$	7.1			169	%
Cost of revenue		6.2			55	%		2.8			67	%		3.4			121	%
Gross profit		5.1			45	%		1.4			33	%		3.7			264	%
Operating expenses:
Research and development		1.9			17	%		1.9			45	%		-			0	%
General and administrative		1.5			13	%		1.8			43	%		(0.3	)		-17	%
Payroll and payroll taxes		2.7			24	%		2.4			57	%		0.3			13	%
Professional fees		1.8			16	%		1.5			36	%		0.3			20	%
Other		0.9			8	%		0.9			21	%		-			0	%
Total operating expenses		8.8			78	%		8.5			202	%		0.3			4	%
Income (Loss) from operations		(3.7	)		(33%	)		(7.1	)		-169	%		3.4			-48	%
Other income (expense):
Interest expense		(1.7	)		(15%	)		(3.8	)		-90	%		2.1			-55	%
Interest expense - debt discount		(2.6	)		(23%	)		(5.5	)		-131	%		2.9			-53	%
Loss on settlement of debt		-			-			(0.9	)		-21	%		0.9			NM
Changes in fair value of derivative liability		0.2			2	%		(7.7	)		-183	%		7.9			NM
Other income or expense		(0.2	)		(2%	)		-			0	%		(0.2	)		NM
Total other income (expense), net		(4.3	)		(38%	)		(22.3	)		NM			18.0			NM
Net loss	$	(8.0	)		(71%	)	$	(29.3	)		NM		$	21.3			NM

~~Gross~~ NM – not meaningful

Revenue

~~Gross revenue~~Revenue increased by ~~$146,085,~~$7.1 million, or ~~3.1%~~169%, to ~~$4,895,526~~$11.3 million for the three months ended March 31, ~~2022,~~2023, from ~~$4,749,441~~$4.2 million for the three months ended March 31, ~~2021.~~2022. The change in net revenue ~~reflected~~was primarily attributable to an increase in processing volume in the ~~following:~~three months ended March 31, 2023 compared to the three months ended March 31, 2022, and an increase in revenues from our acquired businesses including Charge Savvy, RYVYL EU and American Samoa.

●

~~Continued work on technology launch of new platforms in late 2020 which was fully effective in the three months ended September 30, 2021.~~

●

~~Increase in processing volume in the three months ended March 31, 2022 compared to the three months ended March 31, 2021.~~

Cost of Revenue

Cost of revenue increased by ~~$970,059,~~$3.4 million, or ~~60.9%~~121%, to ~~$2,563,830~~$6.2 million for the three months ended March 31, ~~2022,~~2023, from ~~$1,593,771~~$2.8 million for the three months ended March 31, ~~2021.~~2022. Payment processing consists of various processing fees paid to Gateways, as well as commission payments to the Independent Sales Organizations (“ISO”) responsible for establishing and maintaining merchant relationships, from which the processing transactions ensue. Cost of revenues increased due primarily to increased volume, resulting in higher processing fees paid to Gateways, commission payments to ISOs, and cost of revenue of acquired businesses in the ~~following:~~US and EU.

●

~~Increased volume, resulting in higher processing fees paid to Gateways and commission payments to ISOs. The gross margin decreased due to increase in fees in ISO.~~

Operating Expenses

Operating expenses ~~decreased~~increased by ~~$4,011,905,~~$0.3 million, or ~~32.0%~~3.4%, to ~~$8,506,796~~$8.8 million for the three months ended March 31, ~~2022,~~2023, from ~~$12,518,701~~$8.5 million for the three months ended March 31, ~~2021.~~2022. The ~~decrease~~increase was due primarily to ~~lower stock compensation expense~~higher payroll and payroll tax expenses and external professional expenses for legal and accounting services for the financial restatement and ~~employees~~2022 annual reporting plus legal proceedings for the three months ended March 31, ~~2022,~~2023, offset by ~~increases~~decreases in ~~research and development,~~ general and administrative, ~~payroll~~advertising and ~~payroll taxes and professional fees as we continue to add staff and infrastructure related to our growth and being a publicly traded company.~~marketing, stock-based compensation expenses.

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Other Income (Expense)

Other expense ~~increased~~decreased by ~~$11,094,590,~~$18.0 million, or ~~279.7%~~81.0%, to ~~($15,060,991)~~$4.3 million for the three months ended March 31, ~~2022,~~2023, from ~~($3,966,401)~~$22.3 million for the three months ended March 31, ~~2021. Interest expense increased significantly~~2022. Changes in the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 due to the $100,000,000 convertible note issued in November 2021. Amortization of the discount, fees and the fair value of the derivative liability associated with the note were also contributing factors. Furthermore, the Company changes in fair value of derivative liability ~~expense~~amounted to a charge of ~~$7,700,000~~$7.7 million for the three months ended March 31, 2022 and ~~none~~a credit of $168,000 in the ~~previous year same quarter.~~three months ended March 31, 2023. Interest expense decreased by $5.0 million, primarily related to the $100 million convertible note issued in November 2021. Additionally, we incurred a charge of $4.1 million in the three months ended March 31, 2022, related to a loss on a partial extinguishment and conversion of debt.

Provision for Income Taxes

We estimate our annual effective income tax rate to be ~~22%~~(0.06)% for calendar ~~2022,~~2023, which is different from the U.S. federal statutory rate, primarily due to ~~a significant amount~~its full valuation position. The Company recorded approximately $5,000 and $1,000 of ~~non-deductible stock compensation. The effective~~ tax ~~rate~~expense as of ~~22%~~March 31, 2023 and 2021, respectively. As of March 31, 2023, we have no material unrecognized tax benefits. And we expect no material unrecognized tax benefits for the ~~first quarter of calendar 2022 was different from the estimate annual effective tax rate of 22%.~~next 12 months.

~~LIQUIDITY AND CAPITAL RESOURCES~~Adjusted EBITDA

Adjusted EBITDA is a non-GAAP measure that represents our net loss before interest expense, amortization of debt discount, income tax expense, depreciation and amortization, stock-based compensation expense, acquisition-related expense and legal costs and settlement fees incurred in connection with non-ordinary course litigation and other disputes.

We exclude these items in calculating Adjusted EBITDA because we believe that the exclusion of these items will provide for more meaningful information about our financial performance, and do not consider the excluded items to be part of our ongoing results of operations.

Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under GAAP. Some of these limitations are: (a) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; (b) Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; (c) Adjusted EBITDA does not reflect the potentially dilutive impact of equity-based compensation; (d) Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; and (e) other companies, including companies in our industry, may calculate Adjusted EBITDA or similarly titled measures differently, which reduces its usefulness as a comparative measure.

Because of these and other limitations, you should consider Adjusted EBITDA alongside our other GAAP-based financial performance measures, net income (loss) and our other GAAP financial results. The following table presents a reconciliation of Adjusted EBITDA from net loss, the most directly comparable GAAP measure, for the periods indicated:

	Three Month Periods Ended March 31,
	2023			2022
	*(dollars in thousands)*
Net loss	$	(7,979	)	$	(29,427	)
Interest expense, excluding amortization of debt discount		1,729			3,830
Amortization of debt discount		2,622			5,521
Income tax (benefit) expense		5			80
Depreciation and amortization		620			454
EBITDA		(3,003	)		(19,542	)
Other non-cash adjustments:
Changes in fair value of derivative liability		(168	)		7,700
Stock compensation expense		193			293
Adjusted EBITDA	$	(2,978	)	$	(11,549	)

Loss from operations	$	(3,680	)	$	(7,077	)

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Non-GAAP Measures

GAAP requires that operating expenses include the amortization of acquired intangible assets, which principally include acquired customer relationships and developed technology. We exclude amortization of intangibles from Adjusted EBITDA because we do not consider amortization expense when we evaluate our ongoing business operations, nor do we factor amortization expense into our evaluation of potential acquisitions, or our measurement of the performance of those acquisitions. We believe that the exclusion of amortization expense enables the comparison of our performance to other companies in our industry as other companies may be more or less acquisitive than us and therefore, amortization expense may vary significantly by company based on their acquisition history. Although we exclude amortization of acquired intangible assets from Adjusted EBITDA, management believes that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation.

We record depreciation primarily for investments in property and equipment. We exclude depreciation in calculating Adjusted EBITDA because we do not consider depreciation when we evaluate our ongoing business operations.

We exclude stock-based compensation expense and other forms of equity incentives primarily awarded to employees because they are non-cash charges that we do not consider when assessing the operating performance of our business. Additionally, the determination of stock-based compensation expense can be calculated using various methodologies and is dependent upon subjective assumptions and other factors that vary on a company-by-company basis. Therefore, we believe that excluding stock-based compensation expense from Adjusted EBITDA improves the comparability of our results to the results of other companies in our industry.

Included in operating expenses are incremental costs directly related to business and asset acquisitions as well as changes in the fair value of contingent consideration liabilities, when applicable. We exclude acquisition-related expense from Adjusted EBITDA because we believe that the exclusion of this expense allows us to better provide meaningful information about our operating performance, facilitates comparisons to our historical operating results, improves the comparability of our results to the results of other companies in our industry, and ultimately, we believe helps investors better understand the acquisition-related expense and the effects of the transaction on our results of operations.

We exclude non-ordinary course litigation expense because we do not consider legal costs and settlement fees incurred in litigation and litigation-related matters of non-ordinary course lawsuits and other disputes to be indicative of our core operating performance. We do not adjust for ordinary course legal expenses.

Adjusted EBITDA is a key measure that our management uses to understand and evaluate our core operating performance and trends to generate future operating plans, to make strategic decisions regarding the allocation of capital, and to make investments in initiatives that are focused on cultivating new markets for our solutions. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA facilitates comparisons of our operating performance on a period-to-period basis and, in the case of exclusion of acquisition-related adjustments and certain historical legal expenses, excludes items that we do not consider to be indicative of our core operating performance. Adjusted EBITDA is not a measure calculated in accordance with GAAP and should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

Liquidity and Capital Resources

Our primary sources of liquidity have historically been derived from raising capital by issuing debt or common stock. Our cash flow from operations is not yet able to cover our cash needs. We believe our current cash balances will be sufficient to cover our operating needs for the next twelve months. Our $94 million convertible note matures in November ~~2023.~~2024. There are covenants associated with the note that accelerates the conversion of tranches of the note should certain targets be met.

We may, in the future, seek to raise additional capital to fund growth, operations and other business activities, but such additional capital may not be available to us on acceptable terms, on a timely basis, or at all.

2530

Table of Contents

The following table summarizes our cash flows from operating, investing and financing activities (unaudited):

Three Months Ended March 31,

2022

2021

Net cash provided by (used in) operating activities
$ (7,857,005
)
$ (11,258,779
)
Net cash provided by (used in) investing activities
(44,876,688
)
(11,108
)
Net cash provided by (used in) financing activities
(9,231,508
)
45,133,741
Net increase (decrease) in cash, cash equivalents, and restricted cash
$ (61,965,201
)
$ 33,863,854

	Three Months Ended March 31,
	2023			2022 (as restated)
	*(dollars in thousands)*
Cash provided by (used in) operating activities	$	16,379		$	(14,469	)
Cash provided by (used in) investing activities		(17	)		(44,877	)
Cash provided by (used in) financing activities		-			(9,535	)
Effect of exchange rate changes on cash		(58	)		-
Net increase (decrease) in cash, cash equivalents, and restricted cash	$	16,304		$	(68,881	)

Operating Activities –For the three months ended March 30, ~~2022~~2023 and ~~2021,~~2022, net cash ~~used in~~provided by (used in) operating activities was ~~($7,857,005)~~$16.4 million and ($~~11,258,779),~~ 14.5) million,respectively. The cash used in operating activities was primarily due to net loss and timing of settlement of assets and liabilities including stock compensation expenses.

Investing Activities– Net cash used in investing activities in the period ended March 31, 2022 primarily consisted of the acquisition of Transact Euro and Sky ~~Financials for~~Financials. Investing activities in the ~~three months~~period ended March 31, ~~2022.~~2023 were negligible.

Financing Activities– Net cash ~~provided by financing activities primarily consisted of proceeds from the Offering of $45,805,491 for the three months ended March 31, 2021 and net cash~~ used in by financing activities primarily consisted of repurchases of common stock under treasury method of ~~$3,236,723~~$3.5 million and repayment of convertible debt of $6,000,000 for the three months ended March 31, 2022. There were no financing activities in the period ended March 31, 2023.

~~CRITICAL ACCOUNTING ESTIMATES~~Critical Accounting Estimates

Management strives to report our financial results in a clear and understandable manner, although in some cases accounting and disclosure rules and principles are complex and require us to use technical terminology. In preparing the Company's Consolidated Financial Statements, we follow accounting principles generally accepted in the U.S. These principles require us to make certain estimates and apply judgments that affect our financial position and results of operations as reflected in our financial statements. These judgments and estimates are based on past events and expectations of future outcomes. The amounts of assets and liabilities reported on our balance sheet and the amounts of revenues and expenses reported for each of our fiscal periods are affected by estimates and assumptions, which are used for, but not limited to among other things, the accounting for revenue recognition, stock-based compensation and the valuation of deferred taxes. Actual results may differ from our estimates. Management continually reviews our accounting policies including how they are applied and how they are reported and disclosed in our financial statements. Below is a summary of our critical accounting estimates and how they are applied in preparation of the financial statements.

Revenue Recognition

Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers outlines the basic criteria that must be met to recognize revenue and provide guidance for presentation of revenue and for disclosure related to revenue recognition policies.

The Company recognizes revenue when 1) it is realized or realizable and earned, 2) there is persuasive evidence of an arrangement, 3) delivery and performance has occurred, 4) there is a fixed or determinable sales price, and 5) collection is reasonably assured.

The Company generates revenue from payment processing services, licensing fees and equipment sales.

●

Payment processing revenue is based on a percentage of each transaction’s value and/or upon fixed amounts specified per each transaction or service and is recognized as such transactions or services are performed.

●

Licensing revenue is paid in advance and is recorded as unearned income, which is amortized over the period of the licensing agreement.

●

Equipment sales revenue is generated from the sale of POS products, which is recognized when goods are shipped. Revenue recognized from the sale of equipment was not material.

Table of Contents

Cash Due from Gateways and Payment Processing Liabilities

The Company’s primary source of revenues ~~continues to be~~consists of payment processing services for its merchant clients. When ~~such~~a merchant makes a sale, the process of receiving the payment card information, engaging the banks for transferring the proceeds to the merchant’s account via digital gateways, and recording the transaction on a blockchain ledger are the activities for which the Company ~~gets to collect~~collects fees.

In ~~2022~~2023 and ~~2021~~2022 the Company utilized several gateways. The gateways have strict guidelines pertaining to scheduling of the release of funds to merchants based on several criteria, such as, among other things, return and chargeback history, associated ~~risk~~risks for ~~the~~ specific business ~~vertical,~~verticals, and average transaction ~~amount and so on. In order to~~amounts. To mitigate processing risks, these policies determine reserve requirements and ~~payment in arear strategy.~~payment-in-arrears strategies. While reserve and ~~payment in arrears~~payment-in-arrears restrictions are in effect for a merchant payout, the Company records gateway debt against these amounts until released.

~~Therefore, the total gateway~~Cash due from gateways balances ~~reflected~~presented in the ~~Company’s books~~accompanying consolidated balance sheets represent ~~the amount owed~~amounts due to the Company for ~~processing – these are funds from~~ transactions processed ~~and~~wherein the funds have not ~~yet~~been distributed.

~~Table of Contents~~

ITEM 4. CONTROLS AND PROCEDURES

Our management has evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this ~~Quarterly Report on Form 10-Q.~~report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer has concluded that, as of ~~March~~December 31, 2022, our disclosure controls and procedures were not effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC and (ii) accumulated and communicated to our management, including our principal executive and principal accounting officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

~~There were no changes~~In connection the financial statement restatements as discussed elsewhere in ~~our~~this report, the Company has reassessed its conclusions regarding the effectiveness of the Company’s internal control over financial reporting as of March 31, 2023, and December 31, 2022, and has determined that one or more material weaknesses exist in the Company’s internal control including a material weakness related to accounting for certain complex business transactions. The Company has engaged, as of August 2022, third party technical accounting experts to support proper accounting for complex accounting transactions. As a result of the material weakness, the Company’s management concluded its disclosure controls and procedures were not effective as of March 31, 2023, December 31, 2022, and September 30, June 30, and March 31, 2022.

CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING

The Company has implemented enhanced reconciliation reviews and reporting of its payment processing activities including gross volumes, fees assessment and return items in 2022 because of the restatement efforts. There have been no other material changes in our internal controls over financial reporting (as ~~such term is~~ defined in Rules 13a-15(f) and 15d-15(f) under the Exchange ~~Act)~~Act or in other factors that ~~occurred during the three months ended March 31, 2022, that have~~ materially affected or are reasonably likely to materially affect our internal ~~control~~controls and procedures over financial ~~reporting.~~

reporting during the first quarter of the year ending December 31, 2023.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information called for by this item is incorporated herein by reference to Note 1513 Commitments and Contingencies under the heading “Legal Proceedings” included in Part I, Item 1, Financial Statements (unaudited) — Notes to Unaudited Condensed Consolidated Financial Statements.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~Share Repurchases~~None.

On January 6, 2022, GreenBox POS (the “Company”) announced that the Company’s Board of Directors approved an increase of $10,000,000 in its share repurchase program (the “Share Repurchase Program”), providing for the repurchase of a portion of the Company’s outstanding common stock for up to $15,000,000. From May 13, 2021 to March 31, 2022, the Company has repurchased a total of 1,098,586 shares at an aggregate cost of $7,936,785.

Under the Share Repurchase Program, the Company is authorized to repurchase shares through open market purchases, privately-negotiated transactions, accelerated share repurchases or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The repurchases have no time limit and may be suspended or discontinued completely at any time. The specific timing and amount of repurchases will vary based on available capital resources and other financial and operational performance, market conditions, securities law limitations, and other factors. The repurchases will be made using the Company’s cash on hand and cash from operations.

~~The Company made the following purchases of its equity securities in the three months ended March 31, 2022. No shares were purchased in February and March 2022.~~

Period

Total Number of Shares Purchased

Average Price Paid per Share

Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs

Approximate Dollar Value of Shares the Many Yet Be Purchased Under the Program

January 2022 683,755 $ 4.39 1,098,586 $ 7,063,785

Total
683,755 1,098,586 $ 7,063,785

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

~~Table of Contents~~

ITEM 6. EXHIBITS

4.1	Form of 8% Senior Convertible Note Due 2023 (incorporated by reference to Exhibit 4.3 to the Current Report on Form 8-K filed by the Company on November 3, 2021)
10.1	Agreement and Waiver, dated January 28, 2022, between ~~GreenBox POS~~RYVYL, INC. and the Investor (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Company on January 31, 2022)
10.2	Amendment Agreement No. 1 to Share Purchase Agreement by and between ~~GreenBox POS,~~RYVYL, INC., and certain individuals named therein, made as of March 24, 2021 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Company on March 31, 2022)
10.3	Asset Purchase Agreement, signed March 31, 2022, between ~~GreenBox POS~~RYVYL, INC. and Sky Financial and Intelligence, LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Company on April 6, 2022)
31.1	Certification by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).
31.2	Certification by the Principal Financial Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).
32.1*	Certification by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification by the Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.

2933

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	~~GREENBOX POS~~ ~~(Registrant)~~RYVYL, INC.
	(Registrant)

Date: May ~~16, 2022~~22, 2023	By:	/s/ Fredi Nisan
		Fredi Nisan
		Chief Executive Officer (Principal Executive Officer)




Date: May ~~16, 2022~~22, 2023	By:	/s/ ~~Benjamin Chung~~Mary Lay Hoitt
		~~Benjamin Chung~~Mary Lay Hoitt
		Interim Chief Financial Officer ~~(Principal Financial Officer)~~

3034

	Common Stock												Treasury Stock						Additional Paid-In			Accumulated			Total Stockholders' Equity
	Shares			Amount			Issuable			Amount			Shares			At Cost			Capital			Deficit			(Deficit)

Balance at December 31, 2021		43,546,647		$	42,831			-		$	-			(714,831	)	$	(4,933,816	)	$	88,574,469		$	(38,178,061	)	$	45,505,423

Common stock issued for services		30,508			31			8,905			8			-			-			126,375			-			126,414

Common stock issued to shareholder		33,333			33			-			-			-			-			(33	)		-			-

Common stock issued for stock options exercised		12,417			12			-			-			-			-			5,203			-			5,215

Common stock contributed and cancelled from shareholder		(333,333	)		(333	)		-			-			-			-			333			-			-

Common stock issuable - Acquisition of Sky assets		-			-			500,000			500			-			-			2,109,500			-			2,110,000

Common stock shares contributed by shareholder		-			-			(500,000	)		(500	)		-			-			500			-			-

Common stock shares issuable to shareholder		-			-			533,333			533			-			-			(533	)		-			-

Treasury Stock		-			-			-			-			(683,755	)		(3,236,723	)		-			-			(3,236,723	)

Stock compensation expense		-			-			-			-			-			-			166,800			-			166,800

Net loss		-			-			-			-			-			-			-			(21,315,987	)		(21,315,987	)

Balance at March 31, 2022		43,289,572		$	42,574			542,238		$	541			(1,398,586	)	$	(8,170,539	)	$	90,982,614		$	(59,494,048	)	$	23,361,142

	Fair Value at December 31, 2021

Customer Relationship	$	5,820,195
Business Technology/IP	$	2,611,088
Derivative liability	$	18,735,000

	March 31, 2022		December 31, 2021
Acquisition of Northeast	$	2,293,474	$	2,293,474
Acquisition of ChargeSavvy		3,754,560		3,754,560

Total goodwill	$	6,048,034	$	6,048,034

		As of March 31, 2022							As of December 31, 2021
Intangible Assets	Amortization Period	Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net

Customer relationships	3 to 5 years	$	23,930,195	$	(882,250	)	$	23,047,945	$	5,820,195	$	(591,239	)	$	5,228,956
Business technology/IP	5 years		2,611,088		(391,662	)		2,219,426		2,611,088		(261,109	)		2,349,979

Total intangible assets		$	26,541,283	$	(1,273,912	)	$	25,267,371	$	8,431,283	$	(852,348	)	$	7,578,935

Year	Amount
2022 (remainder)	$	5,792,192
2023		7,722,924
2024		7,722,924
2025		3,195,423
2026		833,908
Total	$	25,267,371

	As of March 31, 2022			As of December 31, 2021

Convertible debt balance	$	94,000,000		$	100,000,000

Debt discount:
Derivative liability		(21,580,000	)		(21,580,000	)
Original issue discount of 16%		(16,000,000	)		(16,000,000	)
Placement fees and issuance costs		(7,200,000	)		(7,200,000	)
Total debt discount		(44,780,000	)		(44,780,000	)
Accumulated accretion		8,956,000			3,435,178
Net debt discount after accretion		(35,824,000	)		(41,344,822	)

Convertible debt balance, net of debt discount	$	58,176,000		$	58,655,178

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares the Many Yet Be Purchased Under the Program

January 2022		683,755	$	4.39		1,098,586	$	7,063,785

Total		683,755				1,098,586	$	7,063,785