Welcome to the RYVYL second quarter earnings conference call. The earnings press release accompanying this conference call is issued at the close of the market today. The quarterly report, which includes the company's results of operations for the 3 months ended June 30, 2023 was filed with the SEC today. On our call today are RYVYL Chairman, Ben Errez; Interim Chief Financial Officer, Fredi Nisan; also Gene Jones who is the Interim Chief Financial Officer; Fredi Nisan is the Chief Executive Officer; and Chief Operating Officer, Min Wei. I'd like to remind everyone that statements made on today's call and webcast, including those regarding future financial results and industry prospects, are forward-looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the call. Please refer to the company's regulatory filings for a list of associated risks. The replay of this call and webcast will be available for the next 90 days on the company's website under the Events section. At this time, I'd like to turn the call over to Ben Errez, the company's Chairman. Ben, the floor is yours.

Thank you for joining us today. Today's call is entirely produced using AI in a continued push for efficiency and cost reduction for the company. I am proud to present our fiscal second quarter 2023 financial results, where we delivered record top-line revenue for the third consecutive quarter of $14.8 million, an increase of nearly 113% year-over-year. This reflects a 31% sequential increase from $11.3 million in the first quarter of 2023. Revenue was also above our Q2 target range of $12.5 million to $14 million. As I covered in past calls, our focus on improving processing efficiency, workforce, and technology is paying off as we continue to see our operating margins increase. We processed $678 million during the quarter, an increase of 20% from the first quarter of 2023 and above our target range of $580 million to $610 million. COO, Min Wei will break down the various processing channels performance later in the call, but needless to say, we are very pleased with steady processing volume growth in our improved margin profile. Now to move on to some of our key operating initiatives and the progress we've made recently. First is our planned spin-off of coyni. We initiated this process early in Q2 as part of a broad value creation strategy and ultimately believe this is the optimal way to drive growth and unlock its tremendous potential. While we have made great strides with our payment processing business, we believe the best path forward to create value for our shareholders is through the spin-off of coyni as a public company and establishing it as the premier electronic token solution in the market. During the quarter, we acquired a public shell company to transfer coyni assets to in order to facilitate the transaction, which our board of directors has approved. The name change process is underway and we expect to be finalized soon. Furthermore, we selected Simon and Edward as auditor of coyni given their familiarity with RYVYL technology, accounting processes, and personnel. Once complete, we can look toward the next phase of a public offering. We expect to be in the $40 million range along with a NASDAQ uplist and ultimately a board-approved special dividend for RYVYL shareholders. We'll provide more updates on this front as they come about, but expect to complete this by the end of the year. Turning now to our Banking-as-a-Service platform. We continue to gain momentum on this initiative in 2023 with several new partners and growing demand for the service after signing 6 global financial institutions. This is projected to process more than $100 million per month in transactions when fully ramped up. RYVYL's Banking-as-a-Service solution offers API integrations and foreign exchange capabilities in more than 40 different currencies with local settlements. The service authorizes transactions 24 hours per day on business days and enables payouts by way of approved methods such as real-time payment or direct deposits. In addition, the service allows for the ability to readily trace transactions and reduce fraud, all while maintaining strict compliance requirements. During the second quarter, we announced a strategic partnership with Intercash, a Europe-based global payment solutions provider. Through the collaboration, business customers can now offer co-branded debit and prepaid cards to untapped consumer markets, leveraging RYVYL's new Banking-as-a-Service platform as the infrastructure. White label cards can be issued as virtual or physical, allowing businesses enhanced flexibility. Intercash, which currently has over 1 million cards issued, has already initiated the first phase of the process by moving more than 50,000 cards to the RYVYL card program and plans to continue with the migration in phases based on card issuance. Our subsidiary, RYVYL EU, made noticeable strides in Q2, receiving approval from the European Payments Council to launch Single Euro Payments Area instant payments in Europe during the quarter. With this approval, RYVYL EU has enabled incoming and outgoing instant transfers via SEPA, an instant credit transfer scheme that encompasses over 2,000 payment service providers in the euro zone, a targeted business client space for RYVYL EU. This service capability allows clients to instantly send and receive payments from 36 SEPA countries, facilitating faster payment transfers and enhancing customer experience for our clients in the European markets. RYVYL EU also partnered with Visa to enable Visa Direct, a cutting-edge transfer solution as part of our business transformation of updating payments infrastructure. Doing so provides a superior banking-as-a-service offering and better serves our customers, retain their loyalty, and create new revenue streams. This collaboration in the Eastern European region will revolutionize the way funds are transferred between accounts, offering fast, convenient, and secure transactions. When the new Visa Direct capability is integrated into RYVYL's service offerings, our customers will have the opportunity to send money to authorized accounts in over 80 countries across multiple currencies through Visa's extensive network of local banking partners. By utilizing Visa Direct, our clients will experience the benefits of faster access to funds with money becoming available within minutes instead of days. By the end of the year, we expect to have a global payments platform integrated with SEPA and Visa Direct enabling local settlements in the key markets we serve. We believe Banking-as-a-Service is the future of global banking and we're excited to be an enabling service provider in the space that is rapidly emerging and reaching new customers every day. We also took meaningful steps to bolster our capital structure, announcing an exchange agreement with the holder of our $100 million convertible note financing. We completed the initial exchange, resulting in a $6 million debt reduction and an increase in shareholder equity and cash flow. The second exchange is also possible upon shareholder approval, which would further reduce our debt by $16.7 million for a total of $21 million debt reduction. This type of institutional level commitment is a major win for all RYVYL stakeholders and illustrates the conviction in our mission as a disruptive force in the digital payments landscape. Operationally, during the quarter, we welcomed Gene Jones as Interim Chief Financial Officer of the company. For over 35 years, Gene has served within various executive roles, including CFO, COO, Corporate Treasurer, and Controller for public, private equity, venture-funded, and startup companies. His strong leadership and expertise in financial and operational improvements have had an immediate positive impact on our company. As we stand today, the second quarter exceeded our expectations with record top-line results. And we saw positive momentum for our business transformation of updating payments infrastructure. Doing so provides a superior banking-as-a-service offering with partners at Visa, European Payments Council, and Intercash. We remain highly focused on executing towards this large opportunity ahead of us in the lucrative digital payments landscape. We are thrilled with the expansion and higher-margin acquiring processing volume, both internationally and domestically. coyni's spin-off strategy is moving forward and has taken meaningful steps towards completion. We remain confident we are on the path to creating significant long-term value for our shareholders. And now to discuss the details of our financial results, I'd like to turn the call over to our Interim Chief Financial Officer, Gene Jones. Gene, the floor is yours.

Thank you, Ben. I'll be referring to adjusted EBITDA and other non-GAAP measures. For the calculation of adjusted EBITDA and other non-GAAP measures, please refer to our 10-Q filing, which will be available on the company website under SEC Filings. Our revenue increased by $7.9 million, or 113% to $14.8 million for the quarter ended June 30, 2023 from $6.9 million for the year earlier quarter. The increase was principally attributable to an increase in processing volume in the second quarter of 2023 compared to the year earlier quarter and an increase in revenues from our acquiring businesses, including ChargeSavvy, RYVYL EU, and American Samoa. North America Q2 revenue increased 86% from $5.9 million in Q2 2022 to $11 million for the quarter ended June 30, 2023. EU Q2 revenue is $3.8 million, increasing by 270% from $1 million for the year earlier quarter. Cost of revenue increased by $4.5 million, or 106% to $8.7 million for the quarter ended June 30, 2023 from $4.2 million for the year earlier quarter. Gross margins increased to 41% in the quarter ended June 30, 2023, compared to 39% in the year earlier quarter. Payment processing consists of various processing fees paid to gateways and commission payments to the independent sales organizations, or ISOs, responsible for establishing and maintaining merchant relationships, from which the processing transactions ensue. Cost of revenues increased chiefly due to increased volume, resulting in higher processing fees paid to gateways, commission payments to ISOs, and cost of revenue of acquired businesses in the U.S. and EU. Operating expenses increased by $0.2 million or 1.4% to $11.8 million for the quarter ended June 30, 2023 from $11.6 million for the year earlier quarter. The increase was due primarily to higher general, administrative, and professional fees for the quarter ended June 30, 2023, offset by decreases in advertising and marketing, stock-based compensation expense, and depreciation and amortization. The higher general and administrative expenses in the quarter ended June 30, 2023 are mainly attributable to non-recurring legal settlements and some ongoing matters and related legal fees, writing off some non-continuing legacy accounts and accounting fees related to the restatement of prior period financial statements. Other expense was $6.4 million for the quarter ended June 30, 2023, compared to other income of $20.1 million for the quarter ended June 30, 2022. The biggest portion of this change was in the highly volatile change in the fair value of derivative liability. That amount was a charge of $0.5 million for the quarter ended June 30, 2023, compared to a credit of $26.4 million in the year earlier quarter, a swing of nearly $27 million. Interest expense, including expense related to the accretion of debt discount related to the $100 million convertible note, decreased by $3 million from the year earlier quarter due primarily to a lower level of amount of debt outstanding. Additionally, we incurred a charge of $0.2 million in the quarter ended June 30, 2023 related to the conversion of debt, and we recognized the loss of $0.8 million in the year earlier quarter in connection with the settlement of debt. You may recall that we had a restatement of previously issued financial statements and so there are some carryover effects from that, including a $1.2 million charge in the second quarter. This was a challenging mission, but we believe we have substantially all the restatement effects behind us. However, if we exclude the effects of that highly volatile change in the fair value of our derivative liability and the non-recurring carryover effects of financial statement restatements. Other non-operating expenses increased by about $300,000 in the second quarter compared to the year earlier period. In summary, we recorded a net loss of $12 million in the second quarter. This compares to $12 million in net income in the year earlier period primarily due to $26.4 million income related to the change in the fair value of our derivative liability last year versus this year's change in fair value of derivative liability expense of $0.2 million. But there were also several non-recurring items in this year's quarter. Our second quarter 2023 adjusted EBITDA is a loss of $0.9 million compared to $3.1 million in the second quarter of last year. Non-recurring items totaled $5.5 million for the quarter and include legal settlements, legal matters and related fees, charge-offs of some non-continuing legacy accounts, and accounting fees related to the restatement of prior period financial statements. We ended the quarter with cash, cash equivalents, and restricted cash of $63.9 million with $13.2 million of that being unrestricted cash. I'll now turn the call over to Min Wei, our Chief Operating Officer to provide a review of business operations and our outlook.

Thank you, Gene. We will walk through our processing volumes for the verticals we serve and discuss our 2023 outlook. Please note that all the figures are exclusive of the Sky Financial portfolio. Our Q2 processing volume across all channels exceeded $678 million versus our published indication of $580 million to $610 million for the quarter. This is about 20% better than our Q1 2023 volume of $565 million and an increase of about 85% from our Q2 2022 volume, not including the Sky Financial volume. Our Q2 North America acquiring business volume was $146 million, which is 30% higher than the first quarter $112 million volume and is 77% higher than the same period 1 year earlier. Q2 ChargeSavvy processing was $53 million or about 19% lower than Q1 2023 processing volume. When compared to the $62 million volume in Q1 2022, it is a 15% decline. The year-over-year decline is due to reduced processing from select merchant base. For our FX and international payments portfolio, including the acquired Transact Europe business and our new banking-as-a-service offering, we processed $425 million in the second quarter compared to $344 million in business volume in Q1, an increase of over 23%. This is a 248% increase from Q2 of 2022. For an update on American Samoa, we are now servicing about 60% of the target merchants market for our plan. In Q2, our processing volume was about $31 million, or a 10% improvement from the prior quarter and our monthly volume is sustaining at about $10 million. With respect to coyni, as Ben spoke to earlier, we continue to work towards executing our spin-off plan. We just announced the release of the coyni mPOS app that enables simple setup of point-of-sales terminal using compatible smartphones and users for convenient contactless payments. Furthermore, we discussed our near-term focuses on rolling out the platform in the European market due to the U.S. regulatory environment and digital banking changes as well as the increasing demand in the European market. Our efforts to establish the European business are well underway. Now I'd like to turn to our outlook for the third quarter and the total year. With respect to the processing volume in Q3, we are targeting a range of $720 million to $800 million. For the total year of 2023, without the Sky Financial volume, we are estimating a range of $3 billion to $4 billion. Given the strength of our Q2 revenue of $14.8 million and continuing momentum, we are raising our Q3 revenue outlook to $16 million to $18 million, which would bring our total year revenue to exceed $60 million. With regard to adjusted pro forma EBITDA, our Q2 figure is a negative $0.9 million. This is lower than our targeted breakeven for the quarter, which is due to higher than planned expenses associated with card scheme fees and administrative expenses to regain compliance. We are adjusting our 2023 target for this year down from $4 million to a range of positive adjusted EBITDA of $2 million to $3 million and our projection for Q3 is $1 million to $2 million. Overall, we remain optimistic about our growth trajectory domestically in the U.S. and in the international markets. And as a result, expect to deliver great results. This concludes my remarks for the quarter. I'd like to now turn the call back over to Ben Errez, our Chairman to begin our Q&A.

Thank you, Min. Operator, please proceed with the Q&A.

Go ahead, sir.

Thank you, operator. All right, so before we take questions from the floor, we had a few questions submitted to us by email and we will address those prior to the continued conversation online. The first question is an update or pertains to an update on the matter of NASDAQ minimum compliance. And the update that we have for you all today is that the company has indeed regained compliance. We had a continued conversation with the hearing panel following that. And the company is going to stay on a 6-month watch list. We will prepare shortly a simple 8-K announcing that, and they are planning to continue and maintain compliance. Question number 2 pertains to an update on how things are progressing with the latest announcement on financial partnership, including Visa and SEPA integrations, and what are our expectations moving forward. We did discuss some of that on the call. Min, I will turn to you should you want to provide a further brief on that.

Thanks, Ben. I'd like to share exciting progress for both Visa Direct Program and the SEPA program. The SEPA program is already working with our current system. I mean the process is turned on and fully integrated with SEPA instance. We expect that to commence in the third quarter as a result of that, which you see further increased processing volume when it comes to banking as well as offering. We expect the Visa Direct Program and are working diligently with the visa program manager, and we target to go live with the initial list of countries in the third quarter. As we mentioned during the press release, the great potential of this Visa Direct program is when it's fully up and running, we will have access to local payouts to over 80 countries with a large range of different foreign currencies. So all in all, there is great momentum for our Banking-as-a-Service offering. As we mentioned also earlier during the earnings call, we have seen further increasing volume for Banking-as-a-Service portfolio. We have already been hitting north of $100 million in monthly volume, and when we compare it to the Q2 Banking-as-a-Service offering to the previous quarter, we have definitely seen double-digit growth. So good news across the board, and we expect to see Visa Direct and SEPA instant further help us.

Thank you, Min. The next question will be answered by CEO, Fredi Nisan. With PayPal launching Stablecoin and other digital currency projects in the works such as FedNow, what are your thoughts on the competitive landscape? What's the strategy there to stay in the hunt or ahead of the game? Fredi, go ahead.

Thank you, Ben. From PayPal announcing the stablecoin, I think this is great news for everybody, especially when we see big companies like PayPal joining the crypto and the stablecoin technology space and offering. I think from regulation it will help as well because we have a big company like PayPal pushing an agenda so we will have everybody in the space. From FedNow and how all of that interacts with the stablecoin, I think we need to understand that FedNow is just local payment, just like ACH, and it will not help with transferring money on a global scale. So the stablecoin is a little bit different, but from a competitive landscape, we see it as a good thing because we can later on maybe interact with PayPal. We're talking about global payment movement, so PayPal is a big player, and I think it will help us and our business. But I want to mention as well that PayPal is in the low-risk space, and they don't touch the medium to high-risk. So I think we have a great opportunity with our technology and our offering; it's something that PayPal not necessarily can offer to their client. So I see a great opportunity for all of us in that space, and again, it's just the beginning of it. So I'm very excited.

Thanks, Fredi. I'll take the next question, a subject that is very close to my heart. Can you clarify as much as possible as to the timeline of the coyni spin-off and the related dividend? I very much like the dividend idea for all shareholders, and we are diligently pursuing that opportunity and pushing it forward as quickly as we can. As it stands right now, we have acquired the launch vehicles for the coyni spin-off. We have filed articles of merger with the state of Nevada and have those approved. And we have filed for a name change and a ticker change appropriately for coyni with FINRA and are awaiting that confirmation. We suspect that that will happen fairly shortly. With that on hand, we will go ahead and file the registration statement for the shares that are going to be used for the dividends. We anticipate that registration statement to be considered and approved by the SEC in a fairly short timeline, perhaps 30 to 60 days. Following that, we will announce the date of record for the dividend and take steps towards distributing that dividend. As we said on the call, we anticipate that to be completed by the end of the year. I will also take the next question. Does the company have any updates on pursuing the entitlements under the Sky Financial purchase agreement? So a very quick update on that. We are pursuing that option for us on the legal front. We're still looking through different strategies to maximize recovery under that liability. And as it stands right now, we don't have any further substantive updates to share with everybody, but we will obviously share alternate information as that comes about. Here's the next question. Can you talk about the strategy to scale up into a larger or bigger economy or is that the focus on maximizing opportunity in smaller economies and face less competition such as Bulgaria or Samoa, etc. Min, I'll hand you the baton to take a crack at that first.

That's a great question. In terms of our growth strategy, we've been very selective. Instead of distinguishing between larger and smaller economies, we prefer to concentrate on specific verticals and regions. For instance, in the U.S., our block processing volumes are growing significantly. We have seen more than 15% to 20% growth from Q1 to Q2 and expect to maintain double-digit growth in the U.S. market by concentrating on our targeted verticals. Additionally, we are exploring new verticals and regions where competition is lower and where we anticipate higher profit margins. Our plan to introduce coyni in the European market will focus on specific medium to high-risk, high-return verticals. We are in the process of establishing the necessary business entities and will roll out the product platform in the European market in the second half of the year. In the U.S., we are also making progress in rolling out our coyni services for e-commerce and other wallet programs. Overall, we focus on select verticals and business portfolios that promise good profit margins, which allows us to deliver better returns for our shareholders.

Thanks, Min. The next question will go to Fredi. Can you elaborate on the mPOS capabilities and how that's being marketed? Any estimate impact on financials and timing that you can provide. This follows a PR that we just released about this new product of ours. Fredi, go ahead.

Thank you, Ben. The mPOS is an extension to coyni. We developed this product for internal understanding of what are the challenges that exist today in the market when you run a payment company. One of the biggest challenges is the hardware, the terminals, and the time to deployment. The challenges when they arrive, set up. All of that time-consuming tasks are related to an older technology that relates to merchant services called the POS, the actual terminal. So we developed a new technology that allows you to turn any phone into that terminal as long as you accept coyni and you're part of the coyni merchant program. That allows you to go live from the moment you get approved very quickly. You don't have to wait for the device to be shipped to you. You don't have to do downloads. You don't have to set it up, and we can deploy it globally with the same exact app. So it does not require certain certification in different countries. This reduces operational costs, deployment costs, and other support that need to be in place within a company like a payment processing firm. In the end, the benefits are simple: faster deployment, global deployment, and help reduce costs for our merchants, meaning they don't need to purchase a terminal. Lastly, this helps to reduce fraud and chargebacks, allowing us better visibility into transactions and giving us the ability to enter new verticals that may be considered riskier. All of this together will allow us to increase volume and profitability for the company on both sides of the operation and front of the commission.

Thanks, Fredi. Operator Drew, please proceed with the Q&A and to the rest of the conversation.

And we have a question from Kevin Dede with H.C. Wainwright.

This is Michael Donovan calling on behalf of Kevin Dede. So in your press release, you state that you expect to have a full global payment platform covering over 100 local currencies and local settlements. I want to clarify, is this going to be using Visa's network or will coyni also be handling multiple currencies as well?

Min, I'll have you take that as part of your conversation.

No problem. That's a very fair question. When we refer to the potential, obviously in the context of the press release, we refer to the Visa Direct program. It is a very impressive coverage Visa offers outside of the conventional SWIFT transfer. It's going to be faster and cheaper for our business and consumer customers. But that's not to say that we don't process and interface with conventional programs. We do have full capability working with SWIFT, working with SEPA we talked about earlier, as well as Visa Direct. In terms of coyni, yes, it is our plan. As I mentioned earlier, we have the coyni rollout plan that covers both the U.S. market, as well as pushing the business processing capability for the European market. We fully expect with integrated banking solutions with the coyni platform, we have the capability of handling multi-currency in an expedited processing way for our customers.

For coyni's Mobile Point of Sale app, which specific geographical regions are you targeting initially? Have you received any feedback from the merchants yet? I know it's been only a few days, but could you provide a bit more detail on that? That would be appreciated.

Thanks Michael for that question. We are going back to Fredi.

My apologies guys, but for some reason, I can hear only a couple of sentences. So Ben if you don't mind, repeat the question.

Michael, you can go ahead.

Certainly. Thanks, Fredi. So for coyni's Mobile Point of Sale app, are there specific geographical regions that you're targeting in the beginning? And also, I know it's only been a few days, but have you received feedback from merchants already?

Thank you for repeating the question. At the moment, we are focusing on the U.S. We do have a couple of merchants that already approached us and want to start utilizing that in a very specific vertical that we are comfortable with as well. But the next goal is as we are deploying coyni in Europe, you will see deployment there in a few verticals that we believe we can be very successful, but at the moment we start with the U.S.

And for the regulatory landscape in the U.S., I know Min touched upon this a bit, but how are things changing in the U.S.? What's your take on the stable regulatory bill that's going through the House right now?

So that's an interesting topic. And Michael, you and Kevin have been persistent on that front much more than what we see centrally from the government and from the Federal Reserve. The FedNow initiative declared the pilot program back in 2020. At the time, 1% of all financial institutions around the country, and there are about 10,000 of those, were signed up to participate in this pilot program, so about 100. Back in April of this year, the certification program was announced for FedNow. The certificates were awarded in July of this year. Out of the 100-or-so participants, only 41 as of now are certified. A big portion of those are not standard financial institutions; they are more service providers. The government includes itself as one of those successful completions for this course. The harsh reality is that this landscape is very challenging in the U.S. The world is not waiting for us to figure it out. This is part of the reason why the coyni spin-off is primarily targeting operations in Europe, where the landscape is maybe a lot more competitive, but a lot more finite. The regulators have already established the playing field; everybody understands it, banks are participating in very large companies and penetration is sort of defined. So I guess this is a longer answer to a short question, but I think it gives you a little bit of a flavor of where we're going with all of this.

I would like to go back to Ben Errez for closing remarks.

So I'd like to thank everyone for participating in this conversation and signing up to listen to our quarterly results. As we stated in the beginning of the conversation, the entire remark sections were produced using AI, which I think very effectively and we will continue to use this technology moving forward. Looking forward to our next call with you all. The shareholder meeting is coming up at the end of October. And hopefully at that point, we will have further clarity on the dividend outlay for everybody. With this, I thank you all and we'll see you next time.

This concludes today's conference call. Thank you. You may now disconnect.