What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-03-30 compared with 2020-04-29 · 663 added, 839 removed, 426 unchanged (78% of the section changed)

2 unchanged sentences

31, 2020 and 2019 Consolidated Financial Statements

Report of Independent Registered

Public Accounting Firm

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31,

2019 and 2018

Consolidated Statements of Operations for the

Years Ended December 31, 2019 and 2018

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2020 and 2019

Consolidated Statements of Operations for the Years Ended December 31, 2020 and 2019

Consolidated Statements of Stockholders’

Deficit for the Years Ended December 31, 2020 and 2019

Consolidated Statements of Cash Flows for the

Years Ended December 31, 2019 and 2018

Consolidated Statements of Cash Flows for the Years Ended December 31, 2020 and 2019

Notes to the Consolidated Financial Statements

of Independent Registered Public Accounting Firm

the Shareholders and Board of Directors of

OLB Group, Inc.

on the Financial Statements

have audited the accompanying consolidated balance sheets of The OLB Group, Inc.

and Subsidiaries (the “Company”)

as of December 31, 2019 and 2018, and the related consolidated statements of operations, changes in stockholders’

and cash flows for each of the two years in the period ended December 31, 2019, and the related notes (collectively referred to

as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects,

the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for

each of the two years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the

United States of America.

financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's

financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight

Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits

to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not

for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to

error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

have served as the Company’s auditor since 2019.

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of

Excel Corporation

To the Board of Directors and Stockholders

The OLB Group, Inc.

New York, New York

Opinion on the Financial Statements

We have audited Excel Corporation’s

(the “Company”) consolidated statements of operations and cash flows for the period from January 1, 2018 to April 8,

2018, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion,

the consolidated financial statements present fairly, in all material respects, the consolidated results of its operations and

its cash flows for the period from January 1, 2018 to April 8, 2018, in conformity with accounting principles generally accepted

in the United States of America.

The Company’s Ability

to Continue as a Going Concern

The accompanying consolidated

financial statements have been prepared assuming that the Company will continue as a going concern.

The Company was also in

default of its debt covenants.

These conditions raise substantial doubt about the Company’s ability to continue as a going

The consolidated financial statements do not include any adjustments that may result from the outcome of this uncertainty.

We have audited the accompanying consolidated balance

sheet of The OLB Group, Inc.

(the “Company”) at December 31, 2020, and the related consolidated statements operations, stockholders’

equity and cash flows for the year ended December 31, 2020, and the related notes (collectively referred to as the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at December 31,

2020, and the results of its operations and its cash flows for the year ended December 31, 2020, in conformity with accounting principles

generally accepted in the United States of America.

Basis for Opinion

These consolidated financial

statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated

financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight

Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance

with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about

whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is

not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our

audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing

an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such

Our audit included performing

procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud,

and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial

We believe that our audit provides a reasonable basis for our opinion.

Emphasis of a Matter

As discussed in Notes 1 to

the consolidated financial statements the Company was in default on its note payable.

In 2018, the secured noteholder foreclosed

on the note and exercised its post-default remedies under the loan and security agreement by conducting a public auction of all

of the Company’s assets on April 9, 2018, in accordance with the UCC, at which time the Company ceased operations.

We have served as the Company's auditor since

/s/ Liggett & Webb P.A.

New York, New York

These consolidated financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are

required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and

regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards

of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated

financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we

engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding

of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s

internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material

misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as

evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for

Critical Audit Matter

The critical audit matter communicated below are matters

arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,

subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements,

taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit

matters or on the accounts or disclosures to which they relate.

Intangible Assets Impairment

As described in Notes 2 and

4 to the consolidated financial statements, the Company has goodwill and intangible assets of $9.5 million at December 31, 2020.

cases, no directly observable market inputs are available to measure the fair value to determine if the asset is impaired.

an estimate is derived indirectly and is based on net present value techniques utilizing post-tax cash flows and discount rates.

The estimates

that management used in calculating the net present values depend on assumptions specific to the nature of the service activities with

regard to the amount and timing of projected future cash flows;

long-term forecasts;

actions of competitors (competing services), future

tax and discount rates.

The principal considerations

for our determination that performing procedures relating to the intangible assets impairment assessment is a critical audit matter are

the significant judgment by management when developing the net present value of the intangible assets.

This in turn led to a high degree

of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related

to the amount and timing of projected future cash flows and the discount rate.

Addressing the matter involved

performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing management’s process for developing the fair value estimate;

evaluating the appropriateness of

the net present value techniques;

testing the completeness and accuracy of underlying data used in the model;

and evaluating the significant

assumptions used by management, including the amount and timing of projected future cash flows and the discount rate.

Evaluating management’s

assumptions related to the amount and timing of projected future cash flows and the discount rate involved evaluating whether the assumptions

used by management were reasonable considering the current and past performance of the intangible assets, the consistency with external

market and industry data, and whether these assumptions were consistent with evidence obtained in other areas of the audit.

/s/ Daszkal Bolton LLP

Daszkal Bolton LLP

We have served as the Company’s

auditor since 2020

Boca Raton, Florida

March 29, 2021

REPORT OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM

To the Shareholders and Board of Directors

The OLB Group, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheet of The OLB Group, Inc.

and Subsidiaries (the “Company”) as of December 31, 2019, and the related consolidated

statements of operations, changes in stockholders’

deficit and cash flows for the year then ended, and the related notes

(collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly,

in all material respects, the financial position of the Company as of December 31, 2019, and the results of its operations and

its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility

of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")

and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with

the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether

the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have,

nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit we are required

to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the

effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures

to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures

that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures

in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by

management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable

basis for our opinion.

/s/ Marcum llp

We served as the Company’s auditor from 2019 to 2020.

April 29, 2020

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and Subsidiaries

Consolidated Balance Sheets

As of December 31,

Balance Sheets

Current Assets:

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Deferred offering costs

Operating lease right-of-use asset

Other long-term assets

LIABILITIES AND STOCKHOLDERS’

EQUITY (DEFICIT)

Current Liabilities:

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Accrued expenses

Other accrued liabilities

Operating lease liability –

current portion

Deferred revenue

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Note payable –

related party - current portion

related parties –

current portion

Total Current Liabilities

Long Term Liabilities:

Note payable, net

Notes payable –

related parties

Note payable –

related party

Notes payable, net of current portion

Operating lease liability –

net of current portion

Total Liabilities

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Stockholders’

Equity (Deficit):

Preferred stock, $0.01 par value, 50,000,000 shares authorized, no shares issued and outstanding

Series A Preferred stock, $0.01 par value, 10,000 shares authorized, 4,633 and no shares issued and outstanding, respectively

Common stock, $0.0001 par value;

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Total Stockholders’

Equity (Deficit)

TOTAL LIABILITIES AND STOCKHOLDERS’

EQUITY (DEFICIT)

accompanying notes are an integral part of these consolidated financial statements.

The OLB Group, Inc.

OLB Group, Inc.

and Subsidiaries

Consolidated Statements of Operations

Statements of Operations

For the Years Ended

For the period ended April 8,

(Predecessor)

Transaction and processing fees

Merchant equipment sales and other

Other revenue

Merchant equipment rental and sales

Other revenue from monthly recurring subscriptions

Total revenue

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Salaries and wages

Outside commissions

General and administrative expenses

Total operating expenses

(Loss) income from operations

Loss from operations

Other Income (Expense):

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Interest expense, related party

Gain from settlement

Gain on settlement of payables

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Weighted average shares outstanding, basic and diluted

the consolidated results from operations of OLB, CrowdPay and Omnisoft from January 1, 2018 through December 31, 2018 and the

net assets acquired from GACP from April 9, 2018 through December 31, 2018.

accompanying notes are an integral part of these consolidated financial statements.

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and Subsidiaries

Consolidated Statements of Stockholders’

Years ended December 31, 2019 and 2018

Additional Paid

Balance at January 1, 2018

Statements of Stockholders’

Equity (Deficit)

the Years ended December 31, 2020 and 2019

Preferred Stock

Balance at December 31, 2018

$ (17,508,467 )

Common stock issued for services

Warrants issued as non-cash interest

$ (1,722,038 )

Stock based compensation

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Stock based compensation

Conversion of debt –

related party

Common stock units issued for cash

Warrants sold for cash

Common stock issued exercise of Warrants

Common stock issued for services –

related party

Balance at December 31, 2020

$ (20,628,606 )

$ (2,800,400 )

accompanying notes are an integral part of these consolidated financial statements.

The OLB Group, Inc.

OLB Group, Inc.

and Subsidiaries

Consolidated Statements of Cash Flows

Statements of Cash Flows

For the Years Ended

For the period ended April 8, 2018

(Predecessor)

CASH FLOWS FROM OPERATING ACTIVITIES:

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$ (1,343,412 )

Adjustments to Reconcile Net Loss to Net Cash Provided by (Used in) Operations:

Adjustments to Reconcile Net Loss to Net Cash Used in Operations:

Depreciation and amortization

Paid in kind interest

Stock based compensation

Non-cash interest expense

Gain on settlement of payables

Bad debt expense

Common stock issued for services –

related party

Operating lease expense

Changes in assets and liabilities:

Accounts receivable

Prepaid expenses

Other current assets

Prepaid expenses and other current assets

Other long-term assets

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Deferred revenue

Other long-term liabilities

Net Cash Provided by (Used in) Operating Activities

Net Cash (used in) provided by Operating Activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment

Proceeds from note receivable

Cash received in business combination

Net Cash provided by Investing Activities

Acquisition of intangible assets

Net Cash used in Investing Activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from notes payable –

related parties

Payment on notes payable –

related parties

related party

Proceeds from note payable

Payments on note payable

Proceeds from exercise of warrants

Proceeds from sale of common stock units

Proceeds from sale of warrants

Payment of deferred offering costs

Payment on notes payable

Net Cash provided by Financing Activities

Net Change in Cash

Beginning of Period

End of Period

Beginning of Year

Cash Paid For:

the consolidated results from operations of OLB, CrowdPay and Omnisoft from January 1, 2018 through December 31, 2018 and

the net assets acquired from GACP from April 9, 2018 through December 31, 2018.

allocation of the purchase price and the estimated fair market values of the assets acquired and liabilities assumed in the business

combination during the year ended December 31, 2018 further described in Note 1 are shown below:

Consideration

Consideration issued

Identified assets and liabilities

Accounts and other receivables

Note receivable

Prepaid expenses

Long-term assets

Property and equipment

Accounts payable

Accrued Expenses

Merchant portfolios

Total identified assets and liabilities

Excess purchase price allocated to goodwill

Supplemental non-cash disclosure:

Establishment of ROU operating lease asset and related liability

Conversion of debt –

related party

accompanying notes are an integral part of these consolidated financial statements.

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to the Consolidated Financial Statements

the Years Ended December 31, 2019 and 2018

BACKGROUND AND RECENT ACQUISITIONS

OLB Group, Inc.

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of various types of securities under Regulation D, Regulation Crowdfunding, Regulation A and the Securities Act of 1933.

the activities of this subsidiary have been insignificant.

(“OmniSoft”) operates a software platform for small merchants The Omnicommerce applications work on an iPad,

the activities of this subsidiary have been nominal.

(“OmniSoft”) operates a software platform for small merchants.

The Omnicommerce applications work on an iPad,

mobile device and the web and allows you to sell a store’s products in a physical, retail setting.

To date, the activities

of this subsidiary have been insignificant when compared to the overall business.

of this subsidiary have been nominal when compared to the overall business.

Company also provides ecommerce development and consulting services on a project by project basis.

April 9, 2018, Securus365, Inc., a Delaware corporation (“Securus”), eVance Capital, Inc., a Delaware corporation

(“eVance Capital”), and eVance Inc., a Delaware corporation (“eVance”, and collectively with Securus and

eVance Capital, the “Purchasers”), each of which Purchaser is a newly formed wholly-owned subsidiary of OLB, entered

into a Memorandum of Sale (the “Memorandum of Sale”) by and among the Purchasers and GACP Finance Co., LLC, a Delaware

limited liability company (“GACP”), in its capacity as administrative agent and collateral agent to certain secured

lenders of the Debtors (as defined below), pursuant to which the Purchasers acquired substantially all of the assets of the Debtors

(the “Asset Acquisition”) through a foreclosure sale arranged by GACP under the Uniform Commercial Code of the State

of New York (“UCC”) of the collateral of Excel Corporation (“Excel”) and its subsidiaries Payprotec Oregon,

LLC, Excel Business Solutions, Inc.

and eVance Processing, Inc.

(Excel and such subsidiaries, collectively, the “Debtors”)

under the Loan and Security Agreement, dated as of November 2, 2016, by and among GACP, the lenders thereunder and the Debtors

and related loan documents, as amended (the “Excel Loan and Security Agreement”).

exercised its post-default remedies and realized on the collateral securing the Debtors’

obligations under the Excel Loan

and Security Agreement by conducting a public auction of certain assets of the Debtors on April 9, 2018 in accordance with the

The Purchasers submitted the Memorandum of Sale at such auction, which constituted the Purchasers’

bid for substantially

all of the assets of the Debtors (“Acquired Assets”), which bid was accepted by GACP on April 9, 2018 in connection

with the simultaneous signing and closing (the “Closing”) of the transactions contemplated under the Memorandum of

Sale and the Credit Agreement (defined below).

consideration for the sale and transfer of the Acquired Assets at the Closing, the Purchasers assumed certain post-Closing obligations

under assigned contracts and issued GACP a note payable in the amount of $12,500,000, through the deemed simultaneous financing

of such purchase price to the Purchasers under the Credit Agreement.

to the Memorandum of Sale, the Purchasers purchased from GACP and accepted all of the Debtors’

right, title and interest

in and to the Acquired Assets “as is”, “where is”

and “with all faults”

and without any representations

or warranties, express or implied, of any nature whatsoever.

Any representations made by the parties in the Memorandum of Sale

did not survive the Closing, and there is no indemnification rights for either party’s breach.

Control Mergers

May 9, 2018, the Company entered into a share exchange agreement with CrowdPay for which the Company issued 2,916,667 shares of

common stock for all of the authorized stock of CrowdPay.

CrowdPay became a wholly owned subsidiary of OLB.

The Company’s

two majority stockholders were the two stockholders of CrowdPay and as a result this transaction was accounted for as a common

control merger.

May 9, 2018, the Company entered into a share exchange agreement with OmniSoft, Inc., a Delaware corporation for which the Company

issued 1,833,333 shares of common stock for all of the authorized stock of OmniSoft.

OmniSoft became a wholly owned subsidiary

The Company’s two majority stockholders were the two stockholders of OmniSoft and as a result this transaction was

accounted for as a common control merger.

November 12, 2019, the Company effected a one-for-thirty reverse stock split of its common stock (the “Reverse Split”).

All shares, options and warrants throughout these consolidated financial statements and Annual Report on Form 10-K have been retroactively

restated to reflect the Reverse Split.

January 30, 2020, the World Health Organization declared the COVID-19 (coronavirus) outbreak a “Public Health Emergency

of International Concern”

and on March 10, 2020, declared it to be a pandemic.

The virus and actions taken to mitigate its

spread have had and are expected to continue to have a broad adverse impact on the economies and financial markets of many countries,

including the geographical areas in which the Company operates.

In response to the pandemic, the Company is working with merchants

to address potential changes to the purchase patterns of consumers.

In addition, it is focusing on servicing merchants that sell

products with an extended delivery time frame, that have products that are paid for in advance, and that work in the catering,

ticketing, limo and travel related businesses which have been directly impacted by the social distancing requirement of the pandemic.

Further, for those of the Company’s employees that are able to perform their job remotely, the Company has implemented a

“remote work”

policy and provided employees with the technology necessary to continue to do their jobs from home and

for those employees that are unable to perform their job from a remote location, the Company has taken steps to ensure appropriate

distancing and added sanitizing stations along with requiring frequent hand washing and work station cleaning.

At December 31,

2020, most employees were no longer working remotely.

However, the Company continues to monitor and follow the advice of federal

and state authorities.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Presentation

Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United

States of America (“U.S.

Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted

in the United States of America (“U.S.

GAAP”).

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statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those

The Company’s accounting estimates include the collectability of receivables, useful lives of long-lived assets

and recoverability of those assets, valuation allowances for income taxes, stock-based compensation and estimates made for business

combinations.

Actual results could differ from

those estimates.

The Company’s accounting estimates include the collectability of receivables, useful lives of long lived

assets and recoverability of those assets, impairment in fair value of goodwill, valuation allowances for income taxes, stock

based compensation.

of Consolidation

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All significant intercompany transactions and balances have been eliminated.

Reclassifications

reclassifications have been made to the prior period financial information to conform to the presentation used in the financial

statements for the year ended December 31, 2020.

segments are defined as components of an enterprise about which separate financial information is available that is evaluated

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At times, such deposits may be in excess of the Federal

Deposit Insurance Corporation insurable amount.

Deposit Insurance Corporation insurable amount (“FDIC”).

As of December 31, 2020, the Company had $3,573,882 of cash

above the FDIC’s $250,000 coverage limit.

Loss per Share

net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding

during the period.

Diluted net loss per common share is computed by dividing net loss by the weighted average number of shares

of common stock and potentially outstanding shares of common stock during the period.

The weighted average number of common shares

for the year ended December 31, 2020 and 2019 does not include warrants to acquire 3,353,698 and 40,000 shares of common stock,

respectively, because of their anti-dilutive effect.

The weighted average number of common shares for the year ended December

31, 2019 and 2018 does not include 172,438 and 223,249 options, respectively, to purchase common stock because of their anti-dilutive

receivable represent contractual residual payments due from the Company’s processing partners or other customers.

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allowance for doubtful accounts is required;

however, CrowdPay has a recorded an allowance of $38,113 as of both December 31,

2019 and 2018, respectively.

however, CrowdPay has a recorded an allowance of approximately $38,000 as of both

December 31, 2020 and 2019, respectively.

for Chargeback Losses

Disputes between a cardholder and a merchant

periodically arise as a result of, among other things, cardholder dissatisfaction with merchandise quality or merchant services.

between a cardholder and a merchant periodically arise as a result of, among other things, cardholder dissatisfaction with merchandise

quality or merchant services.

Such disputes may not be resolved in the merchant’s favor.

In these cases, the transaction is “charged back”

to the merchant, which means the purchase price is refunded to the customer through the merchant’s bank and charged to the

If the merchant has inadequate funds, the Company must bear the credit risk for the full amount of the transaction.

The Company evaluates the risk for such transactions and estimates the potential loss for chargebacks based primarily on historical

experience and records a loss reserve accordingly.

For the years ended December 31, 2019 and 2018, we had losses related to chargebacks

of $111,482 and $0, respectively.

In these cases, the transaction

is “charged back”

to the merchant, which means the purchase price is refunded to the customer through the merchant’s

bank and charged to the merchant.

If the merchant has inadequate funds, the Company must bear the credit risk for the full amount

of the transaction.

The Company evaluates the risk for such transactions and estimates the potential loss for chargebacks based

primarily on historical experience and records a loss reserve accordingly.

For the years ended December 31, 2020 and 2019, we

had losses related to chargebacks of approximately $5,000 and $111,500, respectively.

and Equipment

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In accordance

with its policies, the Company performed a quantitative assessment of indefinite lived intangibles and goodwill and determined

there was no impairment as of at December 31, 2019 and 2018.

with ASU 2017-04, Intangibles - Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment ., the

Company performed a quantitative assessment of indefinite lived intangibles and goodwill and determined there was no impairment

as of at December 31, 2020 and 2019.

are accounted for using the acquisition method of accounting.

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which services are rendered.

Loss per Share

net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock

outstanding during the period.

Diluted net loss per common share is computed by dividing net loss by the weighted average

number of shares of common stock and potentially outstanding shares of common stock during the period.

The weighted average

number of common shares for the year ended December 31, 2019 and 2018 does not include warrants to acquire 40,000 shares of

common stock.

The weighted average number of common shares for the year ended December 31, 2019 and 2018 does not include

223,249 and 269,617 options, respectively, to purchase common stock because of their anti-dilutive effect.

Recognition and Cost of Revenues

to the adoption of ASC 606, in 2018 the Company will recognize revenue when it is realized or realizable and earned.

Company considers revenue realized or realizable and earned when all of the following criteria are met:

(i) persuasive evidence

of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales

price is fixed or determinable, and (iv) collectability is reasonably assured.

Company receives a percentage of recurring monthly transaction related fees comprised of credit and debit card fees charged to

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of interchange and other processing fees as revenue.

Company adopted ASU 2014-09, Revenue from Contracts with Customers , and its related amendments (collectively known

as “ASC 606”), effective January 1, 2019 using the modified retrospective transition approach applied to all contracts.

Therefore, the reported results for the years ended December 31, 2019 reflect the application of ASC 606.

were no cumulative impacts that were made.

The Company recognizes revenue under ASC 606, “Revenue from Contracts with Customers”

Disaggregation

following table presents the Company’s revenue disaggregated by revenue source:

For the Years Ended

Revenue from contracts with customers:

Wholesale contracts

Retail contracts

Other transaction and processing fees

Total Revenue

Company recognizes revenue under ASC 606, “Revenue from Contracts with Customers”

(“ASC 606”).

The Company determines revenue recognition through the following steps:

determines revenue recognition through the following steps:

Identification of

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are recognized at the time of the transaction.

These merchant services represents a single performance obligation satisfied over

These merchant services represent a single performance obligation satisfied over

time and that the same measure of progress should be used to measure the Company’s progress toward complete satisfaction

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Due to the lack of historical data related to these services, customer activity and the associated billings

and refunds, $99,594 has been recorded as deferred revenue as of December 31, 2019.

the year ended December 31, 2019, $223,670 of revenue was recognized from performance obligations satisfied (or partially satisfied)

in previous periods in connection with a legal settlement.

Disaggregation

following table presents the Company's revenue disaggregated by revenue source

Revenue from contracts with customers:

Wholesale contracts

Retail contracts

Other transaction and processing fees

Total transaction and processing fees

taxes are provided for the tax effects of the transactions reported in the financial statements and consist of taxes currently

due plus deferred taxes related primarily to tax net operating loss carryforwards.

The deferred tax assets and liabilities represent

the future tax return consequences of these differences, which will either be taxable or deductible when assets and liabilities

are recovered or settled, as well as operating loss carryforwards.

Deferred tax assets and liabilities are measured using enacted

tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that

includes the enactment date.

A valuation allowance is established against deferred tax assets when in the judgment of management,

it is more likely than not that such deferred tax assets will not become available.

Because the judgment about the level of future

taxable income is dependent to a great extent on matters that may, at least in part, be beyond the Company’s control, it

is at least reasonably possible that management’s judgment about the need for a valuation allowance for deferred taxes could

change in the near term.

benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities.

The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon

A liability for “unrecognized tax benefits”

is recorded for any tax benefits claimed in the Company’s

tax returns that do not meet these recognition and measurement standards.

As of December 31, 2019 and 2018, no liability for unrecognized

tax benefits was required to be reported.

Value Measurements

value is defined 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 in an orderly transaction between market participants on

the measurement date.

ASC Topic No.

820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques

used to measure fair value into three broad levels, as described below:

1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

2 inputs are inputs other than quoted prices included in Level 1 that are observable, either directly or indirectly.

Level 2 inputs

include quoted prices for similar assets, quoted prices in markets that are not considered to be active, and observable inputs

other than quoted prices such as interest rates.

3 inputs are unobservable inputs.

following required disclosure of the estimated fair value of financial instruments has been determined by the Company using available

market information and appropriate valuation methodologies.

However, considerable judgment is required to interpret market data

to develop the estimates of fair value.

Accordingly, the use of different market assumptions and/or estimation methodologies may

have a material effect on the estimated fair value amounts.

methods and assumptions used to estimate the fair values of each class of financial instruments are as follows:

Accounts Receivable,

and Accounts Payable.

The items are generally short-term in nature, and accordingly, the carrying amounts reported on the consolidated

balance sheets are reasonable approximations of their fair values.

carrying amounts of Notes Payable approximate the fair value as the notes bear interest rates that are consistent with current

market rates.

evaluates events that have occurred after the balance sheet date and through the date the financial statements are issued.

upon the review, management did not identify any recognized or non-recognized subsequent events which would have required an adjustment

or disclosure in the financial statements, except as described in Note 16 Subsequent Events .

Accounting Standards

and refunds, $99,594 was recorded as deferred revenue as of December 31, 2019.

During the year ended December 31, 2020, the Company

determined it had sufficient information to determine Step 1 was achieved, and therefore recognized all revenue that was previously

As such, $99,594 of revenue recognized during the year ended December 31, 2020 pertained to services provided in the

prior period.

As of December 31, 2020, there was no revenue that required deferment.

During the year ended December 31, 2019,

$223,670 of revenue was recognized from performance obligations satisfied (or partially satisfied) in previous periods in connection

with a legal settlement.

Adopted Accounting Standards

February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) .

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of underlying asset not to recognize lease assets and lease liabilities.

This new guidance will be effective for annual reporting

periods beginning after December 15, 2020, including interim periods within those annual reporting periods, and early adoption

is permitted.

In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest

period presented using a modified retrospective approach.

The Company is currently in the process of evaluating the potential

effect that the adoption of this standard will have on its consolidated financial position and results of operations.

June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, and also issued subsequent amendments to the initial

guidance, ASU 2018-19, ASU 2019-04, ASU 2019-05, and ASU 2019-11 (collectively, Topic 326), to introduce a new impairment model

for recognizing credit losses on financial instruments based on an estimate of current expected credit losses (CECL).

326, an entity is required to estimate CECL on available-for-sale (AFS) debt securities only when the fair value is below the

amortized cost of the asset and is no longer based on an impairment being “other-than-temporary”.

Topic 326 also requires

the impairment calculation on an individual security level and requires an entity use present value of cash flows when estimating

The credit-related losses are required to be recognized through earnings and non-credit related losses are reported

in other comprehensive income.

In April 2019, the FASB further clarified the scope of Topic 326 and addressed issues related to

accrued interest receivable balances, recoveries, variable interest rates and prepayment.

The new guidance will require modified

retrospective application to all outstanding instruments, with a cumulative effect adjustment recorded to opening retained earnings

as of the beginning of the first period in which the guidance becomes effective.

The amendments in this Update for the Company

are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption

is permitted in any interim period after the issuance of this of this Update.

The Company is evaluating the impact of the adoption

of the new standard on its consolidated financial statement and disclosures.

Adopted Accounting Standards

May 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-09, Revenue from Contracts with Customers, to establish

ASC Topic 606, (ASC 606).

ASU 2014-09 supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition and

most industry-specific guidance throughout the Industry Topics of the Codification.

The core principle of the guidance is that

an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects

the consideration to which the entity expects to be entitled in exchange for those goods or services.

The guidance includes a

five-step framework that requires an entity to:

(i) identify the contract(s) with a customer, (ii) identify the performance obligations

in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations

in the contract, and (v) recognize revenue when the entity satisfies a performance obligation.

In addition, the standard requires

disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

Company has reviewed other recently issued accounting pronouncements and plans to adopt those that are applicable to it.

does not expect the adoption of any other pronouncements to have an impact on its results of operations or financial position.

The Company adopted the ASU effective January 1, 2020,

using the modified retrospective transition method.

Under this method, there was no cumulative impact adjustment necessary with

the adoption to our accumulated deficit on January 1, 2020.

Our consolidated financial statements for periods ending after January

1, 2020 are presented in accordance with the requirements of Topic 842, while comparative prior period amounts have not been adjusted

and continue to be reported in accordance with Topic 840.

November 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivative and Hedging (Topic

815), and Leases (Topic 842).

This new guidance became effective for us on January 1, 2020.

The adoption of this guidance

did not have a material impact on the Company’s consolidated financial statements.

January 1, 2020 the Company adopted ASU 2017-04, Intangibles - Goodwill and Other (Topic 350):

Simplifying the Test for

Goodwill Impairment .

The ASU eliminates Step 2 of the goodwill impairment test and the qualitative assessment for any reporting

unit with a zero or negative carrying amount.

The ASU also requires an entity to disclose the amount of goodwill allocated to

each reporting unit with a zero or negative carrying amount.

The adoption did not have an impact on the Company’s consolidated

financial statements.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2019,

the Company had cash of $507,616 and a working capital deficit of $1,382,325.

For the year ended December 31, 2019, the Company’s

net loss was $1,343,412.

As a result of the Company’s operating cash flows and working capital needs, which required it to

obtain loans from a related party, at December 31, 2019 the Company was not in compliance with certain financial covenants required

by the Credit Agreement.

Further, in connection

with the response to the COVID-19 pandemic in the United States, the Company has experienced certain disruptions to its business

and has observed disruptions for the Company’s customers and merchants which has resulted in a decline in transaction volume.

While the volume of processing transactions by merchants in March was relatively in-line with the Company’s expectations,

it is expected that the number of transactions and resulting revenue could be as much as 40% lower than March during the month

We estimate that the number of transactions will continue to decline, along with revenues, until the response to the

COVID-19 pandemic allows customers to make more point of purchase transactions for merchants and more merchants provide for additional

contactless and online purchase options.

Based on this, the Company expects an overall decrease in revenue and cash flows from

operations during the remainder of 2020 as compared to 2019.

As a result of these factors, the Company determined it was necessary

to take certain corporate actions in connection with its overall analysis to determine whether or not his has sufficient liquidity

to continue as a going concern for a period of at least twelve months from the date its financial statements were issued.

On April 24, 2020,

the Company entered into Amendment No.

4 to Loan and Security Agreement (“Amendment No.

4”) amending the Credit Agreement.

The purpose of Amendment No.

4 was to extend the Maturity Date of the indebtedness to April 9, 2022 and to waive any outstanding

events of default.

In consideration for the foregoing, the Credit Agreement was amended to include a new principal repayment schedule

under the note whereby the Company paid an amount equal to $125,000 upon execution of Amendment No.

4 and the Company agreed to

make a monthly payment of $25,000 per month, commencing May 1, 2020, and on the first business day of each calendar month thereafter

until the required balloon payment on April 9, 2022.

In the event that the Company does not make a monthly payment, Messrs.

and Herzog will have the ability to make an equity contribution to the Company for the sole purpose of paying the monthly payment

obligation of the Company under the Credit Agreement.

In addition, included in the working capital deficit described above as of

December 31, 2019 was accrued payroll, a note payable and other expenses due to the Company’s Chief Executive Officer, Mr.

Ronny Yakov, in the amount of $993,458, which he has agreed to defer receiving payment until December 31, 2022.

The Company also

believes that it has reduced operating expenses sufficiently during 2019 allowing it to maintain its ongoing operations despite

the anticipated decrease in revenues during 2020.

As such, the Company believes it will be able fund future liquidity and capital

requirements through cash flows generated from its operating activities for a period of at least twelve months from the date its

financial statements are issued.

As mentioned above,

in the event that the response to the pandemic results in a greater than anticipated reduction in processing transaction volume

or revenue or expenses are otherwise do not meet our expectations, the Company can further reduce or defer expenses.

More specifically,

the Company could (a) implement certain discretionary cost reduction initiatives relating to our spend on employee travel and entertainment,

consulting costs and marketing expenses, (b) negotiate additional deferred salary arrangements with Mr.

Yakov or other employees,

(c) furlough employees or reduce headcount, (d) negotiate extensions of payments of rent and utilities, or (e) enter in or to additional

short term loans with Mr.

Yakov whereby certain of our expenses as they come due continue to be paid by him and not immediately

reimbursed as a normal business expense.

In addition, on December 10, 2019, Mr.

John Herzog, a related party and significant stockholder,

provided a letter to the Company whereby he addressed his prior commitments to provide financial assistance to the Company and

agreed to assist with our ongoing working capital needs, upon request through the earlier of (a) the closing of a potential public

offering of the Company’s common stock and warrants or (b) November 2020 (other than our obligations to pay principal or

interest with respect to the Credit Agreement).

Other than with respect to our long-term debt, there are no other limitations or

restrictions to the amount of working capital funding that may be provided by Mr.

In the event that we deem it necessary

to request an advance from Mr.

Herzog, we expect to negotiate the terms of such advance at that time.

Herzog has committed

to not terminate this commitment during its term, but we do not believe that we have recourse in the event that such commitment

is terminated.

Finally, the Company

has applied for a Paycheck Protection Program loan for approximately $225,000 under the CARES Act and it is planning a public offering

of its Common Stock during 2020.

Although proceeds from either not assured, additional working capital would be available from

both initiatives if the Company were successful in obtaining capital from either source.

Additional Information Regarding Our

Credit Agreement

Although, following the execution of Amendment No.

in compliance, we have not complied with these obligations at certain times since the Credit Agreement was entered into and were

obligated to obtain certain waivers and modifications of these provisions to avoid an acceleration event under the Credit Agreement.

If we are not able to remain in compliance with these obligations, the creditor may accelerate the maturity of the loan or may

require us to adhere to stricter financial covenants in exchange for a waiver.

While we expect to comply with these financial

covenants, we cannot guarantee our ability to do so.

Although it has entered into Amendment No.

4 which extended the maturity

date, the Company is exploring refinancing solutions for more advantageous terms for its long-term debt either with new debtholders.

If the Company is unable to refinance its debt or is unable to satisfy its obligations as they become due, the Company may be

required to sell assets to repay all or part of the debt or replace the debt with less favorable terms.

respect to its senior debt, the Company is required to maintain the following financial covenants in order to avoid an event of

(1) a Fixed Charge Coverage Ratio not be less than 1.20:1.00, measured in each case on a trailing twelve month basis

and (2) net revenue of the Company shall not be less than $9,000,000 until June 30, 2021 and $10,000,000 from and after July 1,

2021, on a trailing twelve-month basis.

The Fixed Charge Coverage Ratio is defined as the ratio of (A) EBITDA for each fiscal

month minus unfinanced capital expenditures (but not less than zero) for such fiscal month to (B) the sum of (i) all principal

payments scheduled to be made during or with respect to such period, plus (ii) all interest expense for such period paid or required

to be paid in cash during such period, plus (iii) all federal, state, and local income taxes paid or required to be paid for such

period, plus (iv) all cash distributions, dividends, redemptions and other cash payments made or required to be made during such

period with respect to equity issued by the Company.

PROPERTY AND EQUIPMENT

and equipment are summarized as follows:

Furniture and Fixtures

Office Equipment

Leasehold improvements

Computer Software

Accumulated depreciation

Property and equipment, net

expense was $29,292 and $40,655 for the years ended December 31, 2019 and 2018, respectively.

As it pertains to the predecessor,

for the period from January 1, 2018 through April 8, 2018, depreciation expense was $18,486.

December 31, 2019, the Company had liabilities in excess of assets in the amount of approximately $2.8 million.

During 2020, the

Company incurred a net loss of approximately $1.8 million and consumed cash in operating activities of approximately $0.3 million.

During 2020, the Company received proceeds of approximately $4.9 million from the sale of common stock units, and extinguished

approximately $4.6 million of indebtedness from the conversion of related party debt.

December 31, 2020, the Company had cash of approximately $3.8 million and working capital of approximately $3.2 million.

the Company believes it has sufficient liquidity to fund its future operations and capital requirements for a period of at least

twelve months from the date its consolidated financial statements are issued.

INTANGIBLE ASSETS

assets consist of the following as of:

assets, net, consist of the following as of:

Merchant Portfolios

3 unchanged sentences

Net trade name

expense amounted to $812,857 and $541,904 for the years ended December 31, 2019 and 2018.

The predecessor’s amortization

expense for the period from January 1, 2018 to April 8, 2018 was $90,739.

expense for the years ended December 31, 2020 and 2019 was $844,423 and $812,857, respectively.

Company’s merchant portfolios and tradename are being amortized over respective useful lives of 7 and 5 years.

1 unchanged sentence

weighted average remaining useful life of amortizing intangible assets was 3.08 years at December 31, 2020.

BUSINESS COMBINATIONS

disclosed in Note 1, on April 9, 2018, the Company entered into a Memorandum of Sale by and among the Purchasers and GACP.

consideration for the sale and transfer of the Acquired Assets at the Closing, the Company assumed certain post-Closing obligations

under assigned contracts and issued GACP a note payable for $12,500,000, through the deemed simultaneous financing of such purchase

price to the Purchasers under the Credit Agreement.

Company accounted for the transaction as a business combination under ASC 805 and as a result, allocated the fair value of the

identifiable assets acquired and liabilities assumed as of the acquisition date as outlined in the table below.

The results of

operations of the business acquired by the Company have been included in the consolidated statements of operations since the date

of acquisition.

The excess of the purchase price over the estimated fair values of the underlying identifiable assets acquired

and liabilities assumed was allocated to goodwill.

The amount assigned to goodwill was deemed appropriate based on several factors,

(i) the multiple paid by market participants for businesses in the merchant card processing business;

(ii) levels of

eVance Payments, current and future projected cash flows;

and (iii) the Company’s strategic business plan.

Goodwill is expected

to be deductible for tax purposes.

allocation of the purchase price and the estimated fair market values of the assets acquired and liabilities assumed are shown

Consideration

Consideration issued

Identified assets and liabilities

Accounts and other receivables

Note receivable

Prepaid expenses

Long-term assets

Property and equipment

Accounts payable

Accrued Expenses

Merchant portfolios

Total identified assets and liabilities

Excess purchase price allocated to goodwill

pro forma results of operations for the years ended December 31, 2018, as if the Company and its subsidiaries had been combined

on January 1, 2018, follow.

The pro forma results include estimates and assumptions which management believes are reasonable.

The pro forma results do not include any anticipated cost savings or other effects of the planned integration of these entities,

and are not necessarily indicative of the results that would have occurred if the business combination had been in effect on the

date indicated, or which may result in the future.

The unaudited pro forma results of operations are as follows:

Operating loss

$ (1,290,262 )

Net loss per share –

basic and diluted

COMMON CONTROL MERGERS

May 9, 2018, the Company acquired 100% of Omnisoft in exchange for the issuance of 1,833,333 shares of common stock.

The acquisition

of Omnisoft, was determined to be a common control transaction as each Company has the same two shareholders with a majority ownership.

As a result, the assets and liabilities assumed were recorded on the Company’s consolidated financial statements at their

respective carry-over basis.

Under ASC 805, “Business Combinations,”

the Company recorded the common control merger

as of the earliest date presented in these consolidated financial statements, or January 1, 2018.

Accounts receivable

Accounts payable

Accrued expenses –

related party

Net liabilities assumed

May 9, 2018, the Company acquired 100% of Crowdpay in exchange for 2,916,667 shares of common stock.

The acquisition of Crowdpay

as a wholly owned subsidiary is considered a common control transaction as each Company has the same shareholder with a majority

As a result, the assets and liabilities assumed were recorded on the Company’s consolidated financial statements

at their respective carry-over basis.

Under ASC 805, “Business Combinations,”

the Company recorded the common control

merger as of the earliest date presented in these condensed consolidated financial statements, or January 1, 2018.

Accounts receivable

Other receivable –

related party

Accounts payable and accrued expenses

Accrued expenses –

related party

Net liabilities assumed

NOTES PAYABLE

order to finance the Asset Acquisition, GACP, as administrative agent and collateral agent (“Agent”), and as the initial

sole lender thereunder, provided a term loan of $12,500,000 (the “Term Loan”) to the Purchasers, Omnisoft, and CrowdPay,

each of Omnisoft and Crowdpay being affiliates of the Company’s majority stockholder (collectively, the “Borrowers”),

which obligations are guaranteed by the Company (collectively with the Borrowers, the “Loan Parties”), under the Loan

and Security Agreement (the “Credit Agreement”), dated as of April 9, 2018, by and among the Loan Parties, the lenders

from time to time party thereto as lenders (the “Lenders”) and the Agent.

The Term Loan matures in full on April

9, 2022, the third anniversary of the Closing.

$1,000,000 of the principal amount under the Term Loan must be repaid on or prior

to July 15, 2018, and an additional $2,000,000 in principal due on or prior to October 31, 2018 (in each case subject to earlier

repayment under certain circumstances, including if a Loan Party consummates an equity financing), $125,000 upon execution of

Amendment No.

4 and the Company agreed to make a monthly payment of $25,000 per month, commencing May 1, 2020 and on the first

business day of each calendar month thereafter, with the remaining principal due upon maturity.

The Term Loan can be prepaid without

penalty in part by the Loan Parties with ten days’

April 8, 2018, eVance, Omnisoft, and CrowdPay, (collectively, the “Borrowers”), entered into a term loan of $12,500,000

with GACP (the “Term Loan”) to the which obligations are guaranteed by the Company (collectively with the Borrowers,

the “Loan Parties”), under the Loan and Security Agreement (the “Credit Agreement”).

April 24, 2020, the Company entered into Amendment No.

4 to Loan and Security Agreement amending the Credit Agreement.

of Amendment No.

4 was to extend the Maturity Date of the indebtedness and to waive certain outstanding events of default.

Specifically,

the Maturity Date of the indebtedness was extended for one year to April 9, 2022.

The lenders also waived the Company’s

existing default under the Credit Agreement from the date the default occurred until the date of Amendment No.

These defaults

(i) failure to notify the Agent that one or more of the Loan Parties received proceeds from litigation above $99,999.99

and use the proceeds to make a prepayment of the Loans, (ii) one or more of the Loan Parties incurred indebtedness in an aggregate

amount of $386,467 during fiscal year 2019 as a result of not reimbursing business expenses paid by Mr.

Yakov in the ordinary

course, which indebtedness is not permitted under Section 5.23(f) of the Credit Agreement (“

Debt Default ”)

and (iii) Lender had not received financial statements and covenant compliance certificate of the Company as parent guarantor

and the Borrowers for the fiscal year ended December 31, 2019 within 90-days of such fiscal year end as required by Section 5.15(a)

of the Credit Agreement.

In addition, Amendment No.

4 provides the Company with a limited waiver permitting the Company to incur

government funded indebtedness from the United States CARES Act loan programs.

Further, the financial covenants were amended whereby

Consolidated Net Revenue for any rolling 12-month period shall not be less than $9,000,000 until June 30, 2021 and $10,000,000

from and after July 1, 2021.

Further, Amendment No.

4 requires that the Company pay 100% of the proceeds from any favorable judgments

from ongoing litigation and 20% of the net proceeds from any future equity offering completed by the Company to reduce the principal

of the Term Loan and such payment was made following the closing of the Offering.

Term Loan matures in full on April 9, 2022, the third anniversary of the Closing.

$1,000,000 of the principal amount under the

Term Loan was repaid on to July 31, 2018, and an additional $2,000,000 in principal was paid on November 14, 2018.

Additionally,

the Company paid $125,000 of the Term Loan upon execution of Amendment No.

4 in April 2020 and the Company agreed to make a monthly

payment of $25,000 per month, commencing May 1, 2020 and on the first business day of each calendar month thereafter, with the

remaining principal due upon maturity.

The Term Loan can be prepaid without penalty in part by the Loan Parties with ten

prior written notice to the Agent, and in full within thirty days’

prior written notice.

The Term Loan is subject to an interest rate of 9.0% per annum, payable monthly in arrears.

The Term Loan is subject

to an interest rate of 9.0% per annum, payable monthly in arrears.

obligations of the Loan Parties under the Credit Agreement are secured by all of their respective assets and the Loan Parties

7 unchanged sentences

Each Loan Party is jointly and severally liable for the obligations under the Credit

July 30, 2018, the Company entered into Amendment No.

1 to the Loan and Security Agreement (the “Amendment”) amending

that certain Loan and Security Agreement, dated as of April 9, 2018 (the “Original Credit Agreement,”

GACP Finance Co., LLC, as administrative agent and collateral agent, the lenders party thereto, Securus365, Inc., eVance, Inc.,

eVance Capital, Inc., Omnisoft and CrowdPay as borrowers, and the Company, as parent guarantor.

Pursuant to the Amendment, among

other things, the lenders (i) waived the Company’s existing defaults under the Original Credit Agreement for its failure

to make payment of $1,000,000 (the “initial payment”) under the Original Credit Agreement on or prior to July 15,

2018 and to deliver to the lenders unaudited monthly financial statements and compliance certificates of the Company, (ii) extended

the date on which the initial payment was required to be made to July 30, 2018 and extended the date on which the Company is required

to provide audited financial statements for the fiscal years ended December 31, 2017 and 2018, (iii) permitted the Company to

enter into a subordinated loan arrangement for the Note concurrently with the Amendment such that the Company could make the initial

payment under the terms of the Amendment and Original Credit Agreement, and permitted the Note to be repaid either from the sale

of the Note Collateral Shares or at any time after the second payment under the Amendment and Original Credit Agreement.

borrowed $1,000,000 from a related party (Note 11) in order to make its first scheduled payment.

November 14, 2018, the $2,000,000 second payment due under the Original Credit Agreement that was due by October 31, 2018 was

The Company borrowed $2,000,000 from a related party (Note 10) in order to make its second scheduled payment.

February 5, 2019, the Company entered into Amendment No.

3 to Loan and Security Agreement (the “Amendment No.

amending the Original Credit Agreement as the same was amended by the Amendment (the “Original Credit Agreement,”

and as amended, by the Amendment and Amendment No.

3 the “Credit Agreement”), by and among GACP Finance Co., LLC,

as administrative agent and collateral agent, the lenders party thereto, Securus365, Inc., eVance, Inc., eVance Capital, Inc.,

Omnisoft and CrowdPay, as borrowers, and the Company, as parent guarantor.

Pursuant to the Amendment No.

3, among other things,

the lenders waived the Company’s existing default under the Original Credit Agreement for its failure to comply with certain

financial covenants set forth in the Original Credit Agreement and the parties amended the terms of the financial covenants that

the Company must comply with.

The Company is required to maintain a Fixed Charge Coverage Ratio of (x) not less than 1.10:1.00

and (y) on or after the end of the first full fiscal month ended January 31, 2020, the Fixed Charge Coverage Ratio shall not be

less than 1.20:1.00, measured in each case on a trailing twelve month and Consolidated Net Revenue shall not be less than $10,000,000.

April 24, 2020, the Company entered into Amendment No.

following the execution of Amendment No.

4, we are in compliance, we have been out of compliance at certain times with these obligations

since the Credit Agreement was entered into, including at June 30, 2020, and were obligated to obtain certain waivers and modifications

of these provisions to avoid an acceleration event under the Credit Agreement.

Total interest expense for the GACP loan incurred

during the years ended December 31, 2020 and 2019 was $807,982 and $866,875, respectively.

Accrued interest as of December 31,

2020 and 2019 was $59,325 and $73,625, respectively.

5 to Loan and Security Agreement

October 23, 2020, the Company entered into Amendment No.

5 to Loan and Security Agreement (“Amendment No.

5”) amending

the Credit Agreement.

the Loan and Security Agreement (as amended by Amendment No.

1 to Loan and Security Agreement dated July 30, 2018, Amendment

3 to Loan and Security Agreement dated February 5, 2019, Amendment No.

4 to Loan and Security Agreement dated April 24,

2020, the “Credit Agreement”), dated as of April 9, 2018, by and among the Company’s subsidiaries Securus365,

Inc., eVance Capital, Inc., and eVance Inc., (the “Purchasers”) and GACP Finance Co., LLC, a Delaware limited liability

company (“GACP”), as administrative agent and collateral agent (“Agent”), and as the initial sole lender

The purpose of Amendment No.

4 was to extend the Maturity Date of our indebtedness and to waive certain

outstanding events of default.

Specifically, the Maturity Date of our indebtedness was extended for one year to April 9, 2022.

The lenders also waived the Company’s existing default under the Original Credit Agreement from the date the default occurred

until the date of Amendment No.

These defaults were:

(i) failure to to notify the Agent that one or more of the Loan Parties

received proceeds from litigation above $99,999.99 and use the proceeds to make a prepayment of the Loans), (ii) one or more of

the Loan Parties incurred indebtedness in an aggregate amount of $386,467 during fiscal year 2019 as a result of not reimbursing

business expenses paid by Mr.

Yakov in the ordinary course, which indebtedness is not permitted under Section 5.23(f) of the Credit

Agreement (“

Debt Default ”) and (iii) Lender has not received financial statements and covenant compliance certificate

of the Company as parent guarantor and the Borrowers for the fiscal year ended December 31, 2019 within 90-days of such fiscal

year end as required by Section 5.15(a) of the Credit Agreement.

In addition, Amendment No.

4 provides the Company with a limited

waiver permitting the Company to incur government funded indebtedness from the United States CARES Act loan programs.

the financial covenants were amended whereby Consolidated Net Revenue for any rolling 12 month period shall not be less than $9,000,000

until June 30, 2021 and $10,000,000 from and after July 1, 2021.

following the execution of Amendment No.

4, we are in compliance, we have not complied with these obligations at certain times

since the Credit Agreement was entered into and were obligated to obtain certain waivers and modifications of these provisions

to avoid an acceleration event under the Credit Agreement.

If we are not able to remain in compliance with these obligations,

the creditor may accelerate the maturity of the loan or may require us to adhere to stricter financial covenants in exchange for

While we expect to comply with these financial covenants, we cannot guarantee our ability to do so.

Although it has

entered into Amendment No.

4 which extended the maturity date, the Company is exploring refinancing solutions for more advantageous

terms for its long-term debt either with new debtholders.

If the Company is unable to refinance its debt or is unable to satisfy

its obligations as they become due, the Company may be required to sell assets to repay all or part of the debt or replace the

debt with less favorable terms.

Total interest expense for the GACP loan incurred during the year ended December 31, 2019 was

$866,875, $73,625 of which is accrued as of December 31, 2019.

Total interest expense incurred during the year ended December

31, 2018 was $791,625, $73,625 of which was accrued as of December 31, 2018.

to and as additional consideration for the Term Loan under the Credit Agreement, on April 9, 2018 the Pursuant to and as additional

consideration for the Term Loan under the Credit Agreement, on April 9, 2018 the Company issued to GACP a Warrant to purchase

40,000 shares of common stock of the Company at an exercise price of $7.50 per share, subject to adjustment as set forth in the

The Warrant is exercisable by GACP at any time from the Issuance Date until the later of (i) the third (3 rd )

anniversary of the Issuance Date and (ii) the date on which all obligations under the Credit Agreement have been satisfied in

The Warrant may be redeemed for $0.003 per Warrant Share, at the sole discretion of the Company, at any time after the six

(6) month anniversary of the Issuance Date if the closing sales price of the Company’s common stock equals or exceeds $150.00

per share on each of the 20 trading days within any 30 day trading day period ending on the third (3 rd ) trading day

prior to the date on which the Company provides a notice of redemption.

GACP has certain piggy-back registration rights as set

forth in the Warrant with respect to the Warrant Shares to be issued upon exercise of the Warrant.

After the six (6) month anniversary

of the Issuance Date, GACP can exercise the Warrant using a “cashless exercise”

feature to the extent that GACP exercises

the Warrant for a number of Warrant Shares in excess of the number Warrant Shares that have been registered for resale under U.S.

securities laws.

additional consideration for the Term Loan under the Credit Agreement, on April 9, 2018 the Company also entered into a letter

agreement (the “Additional Warrants Agreement”) with GACP, pursuant to which the Company agreed that if the Company

at any time after the Closing and prior to the satisfaction of all outstanding obligations under the Credit Agreement requests

for GACP to provide debt financing for the acquisition of a company or operating business by the Company or its subsidiaries,

and GACP or its affiliates provide all of the debt financing for such acquisition, the Company will issue to GACP a warrant to

purchase 6,667 shares of the Company’s common stock (an “Additional Warrant”) upon the closing of such debt-financing,

with such Additional Warrant in substantially the same form as the Warrant, up to a total of four (4) Additional Warrants for

four debt-financed acquisitions under the Additional Warrants Agreement.

The exercise price of the Additional Warrants, if issued,

will be $9.00 per share for the first Additional Warrant, $10.50 per share for the second Additional Warrant, $12.00 per share

for the third Additional Warrant and $13.50 per share for the fourth Additional Warrant, with the number of shares and exercise

price subject to adjustment as set forth in the Additional Warrants Agreement and the Additional Warrant.

warrants have an exercise price of $7.50 and expire in three years.

The aggregate fair value of the warrants, which was charged

to interest expense, totaled $7,660 based on the Black Scholes Merton pricing model using the following estimates:

exercise price

of $7.50, 2.28% risk free rate, 114.11% volatility and expected life of the warrants of 3 years.

summary of the status of the Company’s outstanding stock warrants and changes during the year is presented below:

Average Remaining

Contractual Life

Exercise Price

aggregate intrinsic value represents the total pretax intrinsic value, based on warrants with an exercise price less than the

Company’s stock price as of December 31, 2019, which would have been received by the warrant holder had the warrant holder

exercised their warrants as of that date.

5 was to remove the financial covenant whereby the Company’s was required to have

a Fixed Charge Coverage Ratio not be less than 1.20:1.00, measured in each case on a trailing twelve-month basis.

consideration for the removal of the financial covenant requirement, the Credit Agreement was amended to include a requirement

that the Company maintain a cash balance in its controlled operating bank account of not less than $1,000,000.

Further, the repayment

schedule under the note was amended whereby the Company paid an amount equal to $450,000 upon execution of Amendment No.

May 6, 2020, the Company received a Paycheck Protection Program loan under the CARES Act for $236,231 (the “PPP Loan”).

The PPP Loan matures on May 7, 2022 and bears interest at 1% per annum.

Monthly amortized principal and interest

payments are deferred for 6 months after the date of the agreement.

The Paycheck Protection Program provides that the use of PPP Loan proceeds

were limited to certain qualifying expenses and may be partially or wholly forgiven in accordance with the requirements set forth

in the CARES Act.

The Company believes it has used the PPP Loan for permitted uses, although no assurance can be

given that the Company will obtain forgiveness of all or any portion of amounts due under the PPP Loan.

been accounted for as long-term debt, which, if forgiven will result in a gain on forgiveness of debt in the period forgiveness

STOCK OPTIONS

April 10, 2018, the Company entered into an employment agreement with its VP of Finance pursuant to which he was granted 265,172

common stock options.

The grant shall vest at the rate of 1/5 beginning on each anniversary of the effective date of grant.

options have an exercise price of $0.003 and expire in three years after each vest date.

The aggregate fair value of the options

totalled $1,192,535 based on the Black Scholes Merton pricing model using the following estimates:

exercise price of $0.003, 2.43%

risk free rate, 123.7% volatility and expected life of the options of 5 years.

The fair value is being amortized over the applicable

vesting period and credited to additional paid in capital.

January 1, 2018, pursuant to the terms on the employment agreement with Mr.

Yakov he was granted 6,667 common stock options.

grant shall vest at the rate of 1/3 beginning on each anniversary of the effective date of grant.

The options have an exercise

price of $0.03 and expire in three years after each vest date.

The aggregate fair value of the options totalled $39,812 based

on the Black Scholes Merton pricing model using the following estimates:

exercise price of $0.03, 2.13% risk free rate, 123.7%

volatility and expected life of the options of 3 years.

The fair value is being amortized over the applicable vesting period and

credited to additional paid in capital.

January 1, 2019, pursuant to the terms on the employment agreement with Mr.

On January 1, 2019, pursuant to the terms

on the employment agreement with Mr.

Yakov he was granted 6,667 common stock options.

grant shall vest at the rate of 1/3 beginning on each anniversary of the effective date of grant.

The options have an exercise

price of $0.03 and expire in three years after each vest date.

The aggregate fair value of the options totalled $39,814 based

on the Black Scholes Merton pricing model using the following estimates:

exercise price of $0.03, 2.47% risk free rate, 104.8%

volatility and expected life of the options of 3 years.

The fair value is being amortized over the applicable vesting period and

credited to additional paid in capital.

The grant shall vest at the rate of 1/3 beginning

on each anniversary of the effective date of grant.

The options have an exercise price of $0.03 and expire in three years after

each vest date.

The aggregate fair value of the options totaled $39,814 based on the Black Scholes Merton pricing model using the

following estimates:

exercise price of $0.03, 2.47% risk free rate, 104.8% volatility and expected life of the options of 3 years.

The fair value is being amortized over the applicable vesting period and credited to additional paid in capital.

On November 13, 2019, the Company entered

into an agreement with the above holder of 265,172 common stock options and on November 25, 2019, the Company entered into an

agreement with the holder of 13,334 common stock options, whereby the Company and option holders each agreed that the exercise

price pertaining to those options would not be adjusted for the effects of the Reverse Stock Split.

As are result, the exercise

price of $0.003 associated with the options granted to the VP of Finance was modified to be $0.0001, and the exercise price of

$0.03 associated with the options granted to Mr.

into an agreement with the above holder of 265,172 common stock options and on November 25, 2019, the Company entered into an agreement

with the holder of 13,334 common stock options, whereby the Company and option holders each agreed that the exercise price pertaining

to those options would not be adjusted for the effects of the Reverse Stock Split.

As are result, the exercise price of $0.03 associated

with the options granted to the VP of Finance was modified to be $0.0001, and the exercise price of $0.03 associated with the options

granted to Mr.

Yakov was modified to be $0.001.

The Company evaluated the impact of the option

modification and concluded that there was no material impact to the consolidated financial statements.

For the year ended

December 31, 2019

The Company evaluated the impact of the option modification and concluded that

there was no material impact to the consolidated financial statements.

January 1, 2020, the Company granted stock options to purchase 6,667 shares of common stock pursuant to the terms on the Company’s

employment agreement with Mr.

The grant shall vest at the rate of 1/3 beginning on each anniversary of the effective date

The options have an exercise price of $0.001 and expire in three years after each vest date.

The aggregate fair value

of the options totaled $99,994 based on the Black Scholes Merton pricing model using the following estimates:

exercise price of

$0.001, 1.63% risk free rate, 95.3% volatility and expected life of the options of 3 years.

The fair value is being amortized

over the applicable vesting period and credited to additional paid in capital.

summary of the status of the Company’s outstanding stock options and changes during the year ended December 31, 2020 is

presented below:

Stock Options

2 unchanged sentences

Options outstanding at January 1, 2019

Options outstanding at January 1, 2020

Options outstanding December 31, 2020

Shares exercisable at December 31, 2020

August 6, 2020, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Aegis Capital

Corp., acting as representative of the underwriters (“Aegis”), pursuant to which the Company agreed to sell to the

underwriters in a firm commitment underwritten public offering (the “Offering”) an aggregate of 700,000 units (the

“Units”), with each Unit consisting of:

(a) one share of our common stock;

(b) two Series A warrants (the “Series

A Warrants”), with each Series A Warrant entitling the holder thereof to purchase one share of our common stock at an exercise

price equal to $9.00 per share, exercisable until the fifth anniversary of the issuance date, subject to their earlier redemption

as described therein;

and (c) one-half of one Series B warrant (the “Series B Warrants,”

and together with the Series

A Warrants, the “Warrants”), with each whole Series B Warrant entitling the holder thereof to purchase one share of

common stock at an exercise price equal to $4.50 per share, exercisable until the fifth anniversary of the issuance date and subject

to their earlier redemption as described therein.

The Company also granted the underwriters a 45-day option to purchase up to

an additional 105,000 shares of common stock, and/or an additional 210,000 Class A Warrants to purchase shares of common stock

and/or an additional 52,500 Class B Warrants to purchase shares of common stock as may be necessary to cover over-allotments in

connection with the Offering.

The Offering, including the exercise in full of the over-allotment option for the Warrants, closed

on August 11, 2020.

Units and the securities underlying the Units were offered by the Company pursuant to a registration statement on Form S-1, as

amended (File No.

333-232368), filed with the Securities and Exchange Commission (the “Commission”), which was declared

effective by the Commission on August 6, 2020 (the “Registration Statement”).

net proceeds to the Company from the Offering, after deducting the underwriting discount, the underwriters’

fees and expenses

and the Company’s Offering expenses, was approximately $4.9 million.

The Company utilized $1,120,155 of the net proceeds

to repay a portion of the Company’s long-term indebtedness (the “Term Loan”) and anticipates using the remainder

of the net proceeds from the Offering to invest in or acquire companies or technologies that are synergistic with or complimentary

to our business, expand and market our current products and for working capital and other general corporate purposes (including

payment of outstanding accounts payable).

Warrants were issued in registered form under separate warrant agent agreements (each a “Warrant Agent Agreement”)

between us and our warrant agent, Transfer Online, Inc.

(the “Warrant Agent”).

Series A Warrant entitles the registered holder to purchase one share of our common stock at a price equal to $9.00 per share,

subject to adjustment as discussed below, terminating at 5:00 p.m., New York City time, on the fifth (5th) anniversary of the

date of issuance.

No fractional warrants will be issued and only whole warrants are exercisable.

The exercise price and number

of shares of common stock issuable upon exercise of the Series A Warrants may be adjusted in certain circumstances, including

in the event of a stock dividend, extraordinary dividend on or recapitalization, reorganization, merger or consolidation.

fail to maintain a current prospectus or prospectus relating to the common stock issuable upon the exercise of the Series A Warrants,

such holders may exercise their Series A warrants on a “cashless”

basis pursuant to a formula set forth in the terms

of the Series A Warrants.

whole Series B Warrant entitles the holder thereof to purchase one share of our common stock at an exercise price of $4.50 per

share, subject to adjustment as discussed below, terminating at 5:00 p.m., New York City time, on the fifth (5th) anniversary

of the date of issuance.

No fractional warrants will be issued and only whole warrants are exercisable.

The exercise price and

number of shares of common stock issuable upon exercise of a whole Series B Warrant may be adjusted in certain circumstances,

including in the event of a stock dividend, extraordinary dividend on or recapitalization, reorganization, merger or consolidation.

If we fail to maintain a current prospectus or prospectus relating to the common stock issuable upon the exercise of the Series

B Warrants, such holders may exercise their Series B warrants on a “cashless”

basis pursuant to a formula set forth

in the terms of the Series B Warrants.

holder of the Warrants will be subject to a requirement that they will not have the right to exercise the Warrants to the extent

that, after giving effect to such exercise, such holder (together with its affiliates) would beneficially own in excess of 4.99%

(subject to increase to 9.99%) of the shares of our common stock outstanding immediately after giving effect to such exercise.

Warrants are callable in the event that the last sales price of our common stock for any twenty (20) consecutive trading day period

on or after the date of issuance (the “Measurement Period”) exceeds $9.00.

The Company may, within ten (10) trading

days of the end of such Measurement Period, call for the redemption of all or any portion of the outstanding and unexercised Warrants

for consideration equal to the Black Scholes Value (as defined therein) of the remaining unexercised portion of the Warrants called

for redemption on such date.

to the Underwriting Agreement, the Company issued to Aegis a warrant (the “Representative’s Warrants”) to purchase

35,000 shares of common stock.

The Representative’s Warrants will be exercisable at a per share exercise price equal to

$11.25 and is exercisable at any time and from time to time, in whole or in part, during the four-year period commencing twelve

months from the effective date of the Registration Statement.

The Representative’s Warrants also provide for one demand

registration right of the shares underlying the Representative’s Warrants, and unlimited “piggyback”

rights with respect to the registration of the shares of common stock underlying the Representative’s Warrants and customary

anti-dilution provisions.

aggregate fair value of the 35,000 warrants, totaled $363,958 based on the Black Scholes Merton pricing model using the following

exercise price of $11.25, 0.21% risk free rate, 315.6% volatility and expected life of the warrants of 6 years.

value of the warrants has been netted against the proceeds of the offering proceeds and accounted for in additional paid in capital.

Pursuant to and as additional consideration

for the Term Loan under the Credit Agreement, on April 9, 2018 the Company issued to GACP a Warrant to purchase 40,000 shares of

common stock of the Company The warrants have an exercise price of $7.50 and expire in three years.

The aggregate fair value of

the warrants, which was charged to interest expense, totaled $7,660 based on the Black Scholes Merton pricing model using the following

exercise price of $7.50, 2.28% risk free rate, 114.11% volatility and expected life of the warrants of 3 years.

Number of Warrants

Weighted Average

Exercise Price

Weighted Average Remaining Contract Term

Outstanding, December 31, 2018

Outstanding, December 31, 2019

Warrant A Granted (1)

Warrant B Granted (2)

Warrant B Exercised

Underwriter Warrant

Underwriter Warrant Exercised

Outstanding, December 31, 2020

Includes 210,000

Warrant A granted to Underwriters upon exercise of overallotment in connection with the Offering

Includes 52,5000

Warrant B granted to Underwriters upon exercise of overallotment in connection with the Offering

RELATED PARTY TRANSACTIONS

March 12, 2018, the Company received $30,000 from Mr.

The advance was used for operating expenses, was unsecured,

non interest bearing and due on demand.

This was repaid in full on April 19, 2018.

July 30, 2018, pursuant to the terms of the Amendment (Note 8), the Company issued to Mr.

John Herzog, a significant stockholder

of the Company a subordinated promissory note in the principal amount of $1,000,000 (the “Note”) for cash proceeds

of $1,000,000.

The Note initially matured on March 31, 2019 (though the Company had the right to prepay the Note, in whole or

in part, at any time prior to maturity) and bears interest at a rate of 12% per annum, compounding annually.

The Note is subordinated

to the Credit Agreement.

July 30, 2018, pursuant to the terms of the Amendment, the Company issued to Mr.

John Herzog, a significant stockholder of the

Company a subordinated promissory note in the principal amount of $1,000,000 (the “Note”) for cash proceeds of $1,000,000.

The Note initially matured on March 31, 2019 (though the Company had the right to prepay the Note, in whole or in part, at any

time prior to maturity) and bears interest at a rate of 12% per annum, compounding annually.

The Note is subordinated to the Credit

The Company used the proceeds received to make the initial payment under the Credit Agreement.

14 unchanged sentences

interest expense on the loans from Mr.

Herzog for the years ended December 31, 2019 and 2018, was $360,000 and $82,849, respectively.

Total accrued interest December 31, 2019 and 2018 is $402,849 and $52,849, respectively.

of December 31, 2019 and 2018, the Company has total accrued compensation due to Mr.

Yakov of $568,027 and $568,292, respectively,

and advances to be repaid to Mr.

Yakov of $17,684 and $17,684, respectively.

August 10, 2018, Ronny Yakov, the CEO, loaned the Company $25,000, for working capital purposes.

Yakov loaned the Company

an additional $361,467 to the Company during the year ended December 31, 2019.

The loans are unsecured, bear interest at 12% and

are due on demand.

As of December 31, 2019 and 2018 there is $22,279 and $1,184 of interest accrued, respectively, on these loans.

Interest expense for the years ended December 31, 2019 and 2018 was $21,096 and $1,553, respectively.

Herzog for the years ended December 31, 2020 was $33,321 and $360,000, respectively.

accrued interest as of December 31, 2020 and December 31, 2019 was $0 and $402,849, respectively.

May 13, 2020, Mr.

Herzog agreed to convert, concurrently with the public offering of the Company’s securities,

$3,522,191 in principal amount of indebtedness (plus any additional accrued interest and other fees thereon that accrues prior

to the offering) into shares of convertible Series A Preferred Stock to be designated concurrently with the offering.

2020, the terms of such conversion were amended such that Mr.

Herzog agreed to convert such an aggregate of $3,582,355 of

indebtedness and accrued interest into Series A Preferred Stock and warrants to purchase common stock at an exercise price determined

by the public offering (“Conversion Warrants”), which Series A Preferred Stock and conversion warrants would

be issued concurrently with the closing of the public offering.

The Company has determined Mr.

Herzog’s debt is being extinguished

in order to protect his equity investment in the Company.

Herzog is considered a principal owner with 10.3% of voting interests

of the Company prior a conversion.

The Company believes the equity investment in the Company is significant and indicates that

Herzog entered into the exchange to protect his equity investment.

In accordance with ASC 470-50-40-2, an extinguishment transaction

between related entities may be capital transactions.

If the extinguishment accounting is applied, any gain or loss that results

should be reflected in equity.

As a result, we believe the extinguishment did not and will not have any impact to the Company’s

future financial statements.

of December 31, 2019, the Company had total accrued compensation due, and advances to be repaid, to Mr.

Yakov in the amounts of

$568,027 and $17,684, respectively.

No similar amounts were owed to Mr.

Yakov at December 31, 2020.

Yakov, CEO has loaned funds to the

Company for working capital purposes.

As of December 31, 2019 the balance on these loans was $386,467.

The loans were unsecured,

bear interest at 12% and were due on demand.

As of December 31, 2019 there was $22,279 of interest accrued on these loans.

loan amounts were owed to Mr.

Yakov at or during the year ended December 31, 2020.

expense for the years ended December 31, 2020 and 2019 was $23,125 and $21,096, respectively.

May 13, 2020, Mr.

Yakov agreed to convert, concurrently with the public offering of the Company’s securities,

$1,011,016 in principal amount of indebtedness and accrued interest, which includes deferred salary and unreimbursed expenses,

most of which was outstanding for more than one year, (plus any additional accrued interest and other fees thereon that accrues

prior to the offering), into shares of convertible Series A Preferred Stock to be designated concurrently with the offering.

July 24, 2020, the terms of such conversion were amended such that Mr.

Yakov agreed to convert an aggregate of $1,017,573

of accrued salary, indebtedness and accrued interest into Series A Preferred Stock and Conversion Warrants, which Series A Preferred

Stock and conversion warrants were issued concurrently with the closing of the offering.

In accordance with ASC 470-50-40-2,

an extinguishment transaction between related entities may be a capital transaction.

As the extinguishment accounting is applied,

any gain or loss that results will be reflected in equity.

July 24, 2020, the terms of the agreement whereby Mr.

Herzog agreed to convert, concurrently with the public offering of

the Company’s securities, $3,522,191 in principal amount of indebtedness (plus any additional accrued interest and other

fees thereon that accrues prior to the offering) into shares of convertible Series A Preferred were amended such that Mr.

agreed to convert such an aggregate of $3,582,355 of indebtedness and accrued interest into Series A Preferred Stock and Conversion

Warrants, which Series A Preferred Stock and Conversion Warrants would be issued concurrently with the closing of the public

On August 11, 2020, Mr.

Herzog converted $3,612,940 of indebtedness into 3,612 shares of Series A Preferred Stock (the

terms of which are described below) and 802,875 Series A Conversion Warrants with an exercise price of $9.00 and 200,719 Series

B Conversion Warrants with an exercise price of $4.50.

July 24, 2020, the terms of the agreement whereby Mr.

Yakov agreed to convert, concurrently with the public offering of the

Company’s securities, $1,017,753 in principal amount of indebtedness and accrued interest, which includes deferred salary

and unreimbursed expenses (plus any additional accrued interest and other fees thereon that accrues prior to the offering), into

shares of convertible Series A Preferred Stock to be designated concurrently with the offering such conversion were amended such

Yakov agreed to convert an aggregate of $1,017,573 of accrued salary, indebtedness and accrued interest into Series

A Preferred Stock and conversion warrants, which Series A Preferred Stock and conversion warrants would be issued concurrently

with the closing of the offering.

On August 11, 2020, Mr.

Yakov converted $1,021,512 of indebtedness into 1,021 shares of

Series A Preferred Stock (the terms of which are described in Note 10 below) and 227,003 Series A Conversion Warrants with an

exercise price of $9.00 and 56,751 Series B Conversion Warrants with an exercise price of $4.50.

OPERATING LEASE

June 24, 2020, eVance, Inc.

(“eVance”), a Delaware corporation and an indirect, wholly owned subsidiary of The

OLB Group, Inc.

(the “Company”), entered into a Lease Agreement dated June 24, 2020 (the “Lease”)

with Pergament Lodi, LLC (the “Lessor”) relating to approximately 4,277 square feet of property located at 960 Northpoint

Parkway, Alpharetta, Georgia, Suite 400.

The term of the Lease is for thirty-nine (39) months commencing September 1, 2020.

The monthly base rent is $8,019 for the first twelve (12) months increasing thereafter to $8,768.

The total rent for the entire

lease term is $315,044 and $8,768 is payable as a security deposit.

The first three months of rent will be abated so long

as eVance is not in default of any portion of the Lease.

Balance Sheet Classification

Operating lease asset

Right of use asset

Total lease asset

Operating lease liability –

current portion

Current operating lease liability

Operating lease liability –

noncurrent portion

Long-term operating lease liability

Total lease liability

obligations at December 31, 2020 consisted of the following:

For the year ended December 31 :

Total payments

Amount representing interest

Lease obligation, net

Less current portion

Lease obligation –

expense for the year ended December 31, 2020 was $91,052 and $97,488, respectively.

December 31, 2020, the weighted average remaining lease term is 2.92 years and the weighted average discount rate is 5%.

PREFERRED STOCK

3 unchanged sentences

issued or outstanding.

Accordingly, our board of directors is empowered, without stockholder approval, to issue preferred stock

with dividend, liquidation, redemption, voting or other rights which could adversely affect the voting power or other rights of

the holders of common stock.

We may issue some or all of the preferred stock to effect a business transaction.

In addition, the

preferred stock could be utilized as a method of discouraging, delaying or preventing a change in control of us.

April 12, 2018, the Company issued 833 shares of common stock for services previously rendered for total non-cash expense of $3,750.

A Preferred Stock

August 7, 2020, we filed a Certificate of Designations, Preferences and Rights of Series A Preferred Stock (the “Certificate

of Designations”) with the Secretary of State of Delaware.

The Certificate of Designations will provide that the Company

may issue up to 10,000 shares of Series A Preferred Stock at a stated value (the “Stated Value”) of $1,000.00 per

Holders of Series A Preferred Stock are entitled to the following rights and preferences:

Series A Preferred Stockholders are entitled to receive cash dividends at a rate per share (as a percentage of the Stated Value

per share) of 12% per annum.

Dividends accrue quarterly.

Dividends are to be paid to the holders from funds legally available

for payment and as approved for payment by the Board of Directors of the Company.

Series A Preferred Stock holders may convert, at their option, on or after the date on which the Term Loan is repaid in full,

each share of Series A Preferred Stock (along with accrued but unpaid dividends thereon) into such number of shares of common

stock as determined by dividing the Stated Value by the conversion price.

The conversion price for the Series A Preferred Stock

will be equal to the offering price per Unit in this offering and will be subject to adjustment for splits and the like.

of Series A Preferred Stock will only be permitted to convert their shares of Series A Preferred Stock into shares of common stock

at such time as the Term Loan has been repaid in full and there is no further outstanding obligations regarding such indebtedness.

holder of a share of Series A Preferred Stock will have the right to vote its shares of Series A Preferred Stock with the common

stock on an as-converted basis, and with respect to such votes, such holder shall have full voting rights and powers equal to

the voting rights and powers of the holders of common stock, and shall be entitled, to notice of any stockholders’

in accordance with the Company’s bylaws, and shall be entitled to vote, together with holders of common stock, with respect

to any question upon which holders of common stock have the right to vote.

Fractional votes shall not be permitted, and such shares

shall be rounded up.

share of Series A Preferred Stock will have a liquidation preference equal to the Stated Value plus any accrued but unpaid dividends

In the event of a liquidation, dissolution or winding up of the Company (which includes any merger, reorganization, sale

of assets in which control of the Company is transferred or event which results in all or substantially all of the Company’s

assets being transferred), the holders of Series A Preferred Stock shall be entitled to receive out of the assets of the Company,

before any payment is made to the holders of the Company’s common stock and either in preference to or pari pasu

with the holders of any other series of preferred stock that may be issued in the future, a per share amount equal to the liquidation

COMMITMENTS AND CONTINGENCIES

3 unchanged sentences

and estimable settlements.

October 20, 2017, the Company entered into a new employment agreement with its founder and president for 7 years effective January

October 20, 2017, the Company entered into a 7-year term employment agreement with its founder and president, effective January

1, 2018 through December 31, 2024.

5 unchanged sentences

existing sales of not less than three million five hundred thousand dollars ($3,500,000).

As of December 31, 2019, no bonuses

have been earned, paid or accrued.

During the year ended December 31, 2020,

Yakov was paid a $400,000 bonus ($200,000 per year for 2019 and 2020).

On December 11, 2019, the Company

entered into a settlement agreement to resolve disputes in ongoing litigation it initiated, relating to a residual payments owed

pertaining to a portfolio of merchants acquired by the Company when it acquired Payprotec Oregon, LLC (the “Portfolio”),

whereby it received the sum of $734,250.

entered into a settlement agreement to resolve disputes in ongoing litigation it initiated, relating to a portfolio of merchants

acquired by the Company when it acquired Payprotec Oregon, LLC (the “Portfolio”), whereby it received the sum of $734,250.

The Company recorded $172,390 of the settlement to a gain in other income.

portion of the settlement pertaining to services provided prior to the acquisition of the portfolio on April 9, 2018.

The remaining

$561,860 has been recognized in revenue for the year ended December 31, 2019, of which $223,670 pertains to performance obligations

satisfied in the prior year.

Company leases its Georgia office facilities under an operating lease which initial term expired in November 2019.

has continued to lease the location on a month-to-month basis.

Monthly lease payments are $9,046.

This was the portion of the settlement allocated to

the period prior to April 9, 2018.

The remaining $561,860 has been recognized in revenue for the year ended December 31, 2019,

out of which $223,670 are performance obligations relating to the prior year.

taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating

5 unchanged sentences

tax assets will not be realized.

income tax provision (benefit) consist of the following:

For the Years Ended

State and local:

deferred tax assets consist of the following components as of December 31:

11 unchanged sentences

Meals and entertainment

Stock options

Other nondeductible expenses

Stock based compensation

Other adjustments

Adjustment to deferred tax assets

Adjustment to deferred tax asset

Valuation allowance

At December 31, 2019, the Company had

operating loss carry forwards of approximately $4,429,000, $3,417,085 of which expire from 2021 –

2027, and no expiration

on the remaining amount.

In accordance with Section 382 of the Internal Revenue code, the usage of the Company’s net operating

loss carryforwards may be limited in the event of a change in ownership.

A full Section 382 analysis has not been prepared and

NOLs could be subject to limitation under Section 382.

December 31, 2020, the Company had operating loss carry forwards of approximately $6,630,000, $3,415,000 of which expire from

2040, and no expiration on the remaining amount.

In accordance with Section 382 of the Internal Revenue code, the

usage of the Company’s net operating loss carryforwards may be limited in the event of a change in ownership.

A full Section

382 analysis has not been prepared and NOLs could be subject to limitation under Section 382.

Company’s policy is to record interest and penalties on uncertain tax positions as a component of income tax expense.

8 unchanged sentences

SUBSEQUENT EVENTS

to the terms on the employment agreement with Mr.

Yakov, he was granted 6,667 common stock options on January 1, 2020.

January 30, 2020, the World Health Organization declared the COVID-19 (coronavirus) outbreak a "Public Health Emergency of

International Concern"

and on March 10, 2020, declared it to be a pandemic.

The virus and actions taken to mitigate its spread

have had and are expected to continue to have a broad adverse impact on the economies and financial markets of many countries,

including the geographical areas in which the Company operates.

In response to the pandemic, the Company is working with merchants

to address potential changes to the purchase patterns of consumers.

In addition, it is focusing on servicing merchants that sell

products with an extended delivery time frame, that have products that are paid for in advance, and that work in the catering,

ticketing, limo and travel related businesses which have been directly impacted by the social distancing requirement of the pandemic.

Further, for those of the Company’s employees that are able to perform their job remotely, the Company has implemented a

“remote work”

policy and provided employees with the technology necessary to do continue to do their jobs from home

and for those employees that are unable to perform their job from a remote location, the Company has taken steps to ensure appropriate

distancing and added sanitizing stations along with requiring frequent hand washing and work station cleaning.

it is unknown how long these conditions will last and what the complete financial impact it will have on the Company, the financial

services and payment technology industries in which we operate depend heavily upon the overall level of consumer, business and

government spending.

A sustained deterioration in general economic conditions resulting in less consumer, business and government

spending may adversely affect our financial performance by reducing the number or average purchase amount of transactions we process.

If our customers make fewer sales of products and services using electronic payments, or consumers spend less money through electronic

payments, whether due to the outbreak of the COVID-19 virus, change of consumer behavior or otherwise, we will have fewer transactions

to process at lower dollar amounts, resulting in lower revenue making it reasonably possible that we are financially vulnerable

to the effects of the pandemic.

4 to Loan and Security Agreement]

April 24, 2020, the Company entered into Amendment No.

4 to Loan and Security Agreement (“Amendment No.

4”) amending

the Credit Agreement.

The purpose of Amendment No.

4 was to extend the Maturity Date of our indebtedness and to waive certain

outstanding events of default.

Specifically, the Maturity Date of our indebtedness was extended for one year to April 9, 2022.

The lenders also waived the Company’s existing default under the Original Credit Agreement for its (i) failure to (x) to

notify the Agent that one or more of the Loan Parties received Extraordinary Receipts above $99,999.99 (as such term is specifically

defined in the Credit Agreement, but which include proceeds from litigation or insurance claims) and (y) to deliver a reinvestment

notice in respect of such Extraordinary Receipts and/or to make the required prepayment of the Loans from such Extraordinary Receipts,

in each case, as required by Section 1.08(e) of the Credit Agreement, (ii) one or more of the Loan Parties incurred indebtedness

in an aggregate amount of approximately $386,467 during fiscal year 2019 as a result of not reimbursing business expenses paid

Yakov in the ordinary course, which indebtedness is not permitted under Section 5.23(f) of the Credit Agreement (“

Default ”) and (iii) Lender has not received financial statements and other information of the Company as parent guarantor

and the Borrowers for the fiscal year ended December 31, 2019 within 90-days of such fiscal year end as required by Section 5.15(a)

of the Credit Agreement.

In addition, Amendment No.

4 provides the Company with a limited waiver permitting the Company to incur

government funded indebtedness from the United States CARES Act loan programs.

Further, the financial covenants were amended whereby

Consolidated Net Revenue shall not be less than (x) until June 30, 2021 $9,000,000 and (y) from and after July 1, 2021, $10,000,000,

on a trailing twelve-months basis.

In consideration for the

foregoing, the Credit Agreement was amended to include a new repayment schedule under the note whereby the Company paid an amount

equal to $125,000 upon execution of Amendment No.

4 and the Company agreed to make a monthly payment of $25,000 per month, commencing

May 1, 2020 and on the first business day of each calendar month thereafter.

In the event that the Company does not make a monthly

payment, Messrs.

Yakov and Herzog will have the ability to make an equity contribution to the Company for the sole purpose of

paying the monthly payment obligation of the Company under the Credit Agreement.

In addition, the Company is required to pay to

Lenders 100% of the proceeds from any favorable judgments from ongoing litigation and 20% of the net proceeds from any future

equity offering completed by the Company.

March 2, 2021, the Company transferred cash in the amount of $7,712,256.28 to the Agent under the Credit Agreement (the “Prepayment”).

The Prepayment facilitated the discharge in full of all of the obligations under the Credit Agreement.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data