OLB GROUP, INC. 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission File Number: 000-52994 THE OLB GROUP, INC. (Exact name of registrant as specified in its charter) DELAWARE 13-4188568 (State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.) 200 Park Avenue , Suite 1700 , New York , NY 10166 (Address of principal executive offices) (Zip Code) (212) 278-0900 (Registrant’s telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, $0.0001 par value OLB The Nasdaq Capital Market Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☒ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ As of November 8, 2021, there were 10,772,393 shares of the issuer’s common stock issued and outstanding. THE OLB GROUP, INC. FORM 10-Q For the Quarterly Period Ended September 30, 2021 INDEX PART I Financial Information 1 Item 1. Financial Statements (unaudited) 1 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 17 Item 3. Quantitative and Qualitative Disclosures about Market Risk 22 Item 4. Controls and Procedures 22 PART II Other Information 23 Item 1. Legal Proceedings 23 Item 1A. Risk Factors 23 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 23 Item 3. Defaults Upon Senior Securities 23 Item 4. Mine Safety Disclosures 23 Item 5. Other Information 23 Item 6. Exhibits 23 Signatures 24 i PART I - FINANCIAL INFORMATION Item 1. Financial Statements INDEX TO FINANCIAL STATEMENTS Condensed Consolidated Balance Sheets as of September 30, 2021 (unaudited) and December 31, 2020 2 Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited) 3 Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2021, and 2020 (unaudited) 4 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020 (unaudited) 6 Notes to the Condensed Consolidated Financial Statements (unaudited) 7 1 The OLB Group, Inc. and Subsidiaries Condensed Consolidated Balance Sheets September 30, 2021 December 31, 2020 ASSETS (Unaudited) Current Assets: Cash $ 1,163,055 $ 3,824,491 Accounts receivable, net 372,873 355,994 Prepaid expenses 17,535 15,754 Other current assets 8,768 8,768 Total Current Assets 1,562,231 4,205,007 Other Assets: Property and equipment, net 5,979,999 19,807 Intangible assets, net 6,504,487 2,640,816 Goodwill 6,858,216 6,858,216 Operating lease right-of-use assets, net 204,152 269,508 Other long-term assets 451,874 384,148 TOTAL ASSETS $ 21,560,959 $ 14,377,502 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Accounts payable $ 508,594 $ 359,968 Accrued expenses 93,107 103,634 Operating lease liability – current portion 91,087 85,598 Note payable – current portion - 450,000 Total Current Liabilities 692,788 999,200 Long Term Liabilities: Notes payable, net of current portion 236,231 7,441,076 Operating lease liability – net of current portion 149,058 185,045 Total Liabilities 1,078,077 8,625,321 Commitments and contingencies (Note 10) Stockholders’ Equity: Preferred stock, ($ 0.01 par value, 50,000,000 shares authorized, no shares issued and outstanding at September 30, 2021 and December 31, 2020) - - Series A Preferred stock, ($ 0.01 par value, 10,000 shares authorized, 4,633 shares issued and outstanding at September 30, 2021 and December 31, 2020) 46 46 Common stock, $ 0.0001 par value; 200,000,000 shares authorized, 8,701,532 and 6,170,054 shares issued and outstanding, respectively 868 617 Additional paid-in capital 43,776,921 26,380,124 Accumulated deficit ( 23,294,953 ) ( 20,628,606 ) Total Stockholders’ Equity 20,482,882 5,752,181 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 21,560,959 $ 14,377,502 T he accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 2 The OLB Group, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited) For the Three Months Ended September 30, For the Nine Months Ended September 30, 2021 2020 2021 2020 Revenue: Transaction and processing fees $ 2,680,004 $ 2,128,771 $ 7,436,317 $ 6,297,146 Merchant equipment rental and sales 32,787 22,018 98,190 60,828 Other revenue from monthly recurring subscriptions 111,130 157,248 349,390 564,091 Total revenue 2,823,921 2,308,037 7,883,897 6,922,065 Operating expenses: Processing and servicing costs, excluding merchant portfolio amortization 2,223,720 1,486,257 5,869,739 4,501,274 Amortization expense 269,475 222,090 701,282 628,519 Salaries and wages 326,776 318,682 1,483,570 1,036,068 General and administrative expenses 904,314 706,430 2,378,951 1,602,685 Total operating expenses 3,724,285 2,733,459 10,433,542 7,768,546 Loss from operations ( 900,364 ) ( 425,422 ) ( 2,549,645 ) ( 846,481 ) Other Income (Expense): Interest expense - ( 199,891 ) ( 116,736 ) ( 629,446 ) Interest expense, related party - ( 33,320 ) - ( 235,951 ) Other income 10 1,275 34 1,904 Total other income (expense) 10 ( 231,936 ) ( 116,702 ) ( 863,493 ) Net Loss $ ( 900,354 ) $ ( 657,358 ) $ ( 2,666,347 ) $ ( 1,709,974 ) Net loss per share, basic and diluted $ ( 0.11 ) $ ( 0.11 ) $ ( 0.37 ) $ ( 0.31 ) Weighted average shares outstanding, basic and diluted 7,862,174 5,849,806 7,228,109 5,558,939 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 The OLB Group, Inc. and Subsidiaries Condensed Consolidated Statements of Stockholders’ Equity For the Three and Nine Months ended September 30, 2021 and 2020 (Unaudited) Preferred Stock Common Stock Additional Paid Accumulated Shares Amount Shares Amount In Capital Deficit Total Balance at January 1, 2021 4,633 $ 46 6,170,054 $ 617 $ 26,380,124 $ ( 20,628,606 ) $ 5,752,181 Stock based compensation - - - - 74,011 - 74,011 Common stock issued for the exercise of warrants - - 944,720 94 7,160,846 - 7,160,940 Net loss - - - - - ( 1,099,857 ) ( 1,099,857 ) Balance at March 31, 2021 4,633 46 7,114,774 711 33,614,981 ( 21,728,463 ) 11,887,275 Common stock issued for the exercise of options – related party - - 159,103 16 - - 16 Stock based compensation - - - - 79,477 - 79,477 Net loss ( 666,136 ) ( 666,136 ) Balance at June 30, 2021 4,633 $ 46 7,273,877 $ 727 $ 33,694,458 $ ( 22,394,599 ) $ 11,300,632 Common stock and warrants sold for cash - - 1,418,605 141 5,461,411 - 5,461,552 Warrants converted to common stock - - 9,050 - 41,623 - 41,623 Stock based compensation - - - - 79,477 - 79,477 Options issued for intangible assets - - - - 4,499,952 4,499,952 Net loss - - - - - ( 900,354 ) ( 900,354 ) Balance at September 30, 2021 4,633 $ 46 8,701,532 $ 868 $ 43,776,921 $ ( 23,294,953 ) $ 20,482,882 4 Preferred Stock Common Stock Additional Paid Accumulated Shares Amount Shares Amount In Capital Deficit Total Balance at January 1, 2020 - $ - 5,411,905 $ 541 $ 16,050,938 $ ( 18,851,879 ) $ ( 2,800,400 ) Stock based compensation - - - - 74,596 - 74,596 Net loss - - - - - ( 542,207 ) ( 542,207 ) Balance at March 31, 2020 - - 5,411,905 541 16,125,534 ( 19,394,086 ) ( 3,268,011 ) Stock based compensation - - - - 74,596 - 74,596 Net loss - - - - - ( 510,409 ) ( 510,409 ) Balance at June 30, 2020 - - 5,411,905 541 16,200,130 ( 19,904,495 ) ( 3,703,824 ) Stock based compensation - - - - 74,596 - 74,596 Conversion of debt – related party 4,633 46 - - 4,634,396 - 4,634,442 Common stock units sold for cash - - 700,000 70 4,578,853 - 4,578,923 Warrants sold for cash - - - - 155,380 - 155,380 Warrants converted to common stock - - 21,150 2 94,498 - 94,500 Common stock issued to directors - - 26,999 3 161,721 - 161,724 Warrants issued for services - - - - 363,958 - 363,958 Net loss - - - - - ( 657,358 ) ( 657,358 ) Balance at September 30, 2020 4,633 $ 46 6,160,054 $ 616 $ 26,263,532 $ ( 20,561,853 ) $ 5,702,341 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 The OLB Group, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) For the Nine Months Ended September 30, 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 2,666,347 ) $ ( 1,709,974 ) Adjustments to Reconcile Net Loss to Net Cash Used in Operations: Depreciation and amortization 744,389 616,813 Stock based compensation 232,965 223,788 Common stock issued for services – related party - 161,724 Operating lease expense 34,859 283 Changes in assets and liabilities: Accounts receivable, net ( 16,879 ) 59,330 Prepaid expenses and other current assets ( 1,765 ) 91,481 ) Other long-term assets ( 67,727 ) ( 67,628 ) Accounts payable 148,626 ( 134,272 ) Accrued expenses – related party - 235,952 Accrued expenses ( 10,527 ) 92,979 ) Deferred revenue - ( 99,594 ) Net Cash used in Operating Activities ( 1,602,406 ) ( 529,118 ) CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of intangible assets ( 65,000 ) ( 125,000 ) Purchase of property and equipment ( 6,003,300 ) - Net Cash used in Investing Activities ( 6,068,300 ) ( 125,000 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from note payable - 236,231 Payments on note payable ( 7,654,845 ) ( 1,370,155 ) Proceeds from exercise of warrants 7,202,563 94,500 Net proceeds from sale of common stock and warrants 5,461,552 4,942,881 Proceeds from sale of warrants - 155,380 Payment of offering costs - 210,305 Net Cash (used in) provided by Financing Activities 5,009,270 4,269,142 Net Change in Cash ( 2,661,436 ) 3,615,024 Cash – Beginning of Period 3,824,491 507,616 Cash – End of Period $ 1,163,055 $ 4,122,640 Cash Paid For: Interest $ 116,736 $ 636,861 Income taxes $ - $ - Supplemental Non-Cash Disclosure: Establish operating lease asset and related liability $ - $ 323,812 Stock options issued for intangible asset $ 4,499,952 $ - The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 6 The OLB Group, Inc. and Subsidiaries Notes to the Condensed Consolidated Financial Statements September 30, 2021 NOTE 1 – BACKGROUND Background The OLB Group, Inc. (“OLB” the “Company”) was incorporated in the State of Delaware on November 18, 2004 and provides services through its wholly-owned subsidiaries. The Company provides integrated financial and transaction processing services to businesses throughout the United States. Through its eVance Capital, Inc. subsidiary (“eVance”), the Company provides an integrated suite of third-party merchant payment processing services and related proprietary software enabling products that deliver credit and debit card-based internet payment processing solutions primarily to small and mid-sized merchants operating in physical “brick and mortar” business environments, on the internet and in retail settings requiring both wired and wireless mobile payment solutions. eVance operates as an independent sales organization (“ISO”) generating individual merchant processing contracts in exchange for future residual payments. As a wholesale ISO, eVance has a direct contractual relationship with the merchants and takes greater responsibility in the approval and monitoring of merchants than do retail ISOs and as a result, receives additional consideration for this service and risk. The Company’s Securus365, Inc. subsidiary operates as a retail ISO and receives residual income as commission for merchants it places with third party processors. CrowdPay.us, Inc. (“CrowdPay”) is a Crowdfunding platform used to facilitate a capital raise anywhere from $ 1,000,0000 -$ 50,000,000 of various types of securities under Regulation D, Regulation Crowdfunding, Regulation A and the Securities Act of 1933. To date, the activities of this subsidiary have been nominal. OmniSoft.io, Inc. (“OmniSoft”) operates a software platform for small merchants. The Omnicommerce applications work on an iPad, mobile device and the web and allows customers to sell a store’s products in a physical, retail setting. To date, the activities of this subsidiary have been nominal when compared to the overall business. On May 14, 2021, the Company formed OLBit, Inc., a wholly owned subsidiary (“OLBit”). The purpose of OLBit is to hold the Company’s assets and operate its business related to its emerging cryptocurrency-related lending and transactional business. On July 23, 2021, the Company formed DMINT, Inc., a wholly owned subsidiary (“DMINT”). The purpose of DMINT is to operate its business related to cryptocurrency mining. On July 28, 2021, the Company entered into an exclusive agreement with Cai Energy Blockchain, Inc. (“CAI”) whereby CAI provided the Company with an exclusive natural gas supply agreement (the “Services”). In exchange for the Services, the Company granted CAI options to purchase up to 767,918 shares of Common Stock, $ 0.0001 par value (with a fair value of approximately $ 4.5 million on the date of grant) at an exercise price of $ 0.0001 per share. The natural gas will be used in connection with the Company’s, newly launched, cryptocurrency mining business. The Company also provides ecommerce development and consulting services on a project-by-project basis. COVID-19 Impact On 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 has been working with merchants to address potential changes to the purchase patterns of consumers. In addition, it has been 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 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, continue to require wearing masks in the office and added sanitizing stations along with requiring frequent hand washing and work station cleaning. In addition, the Company has been encouraging its employees to get vaccinated, if possible. At September 30, 2021, most employees were no longer working remotely and had returned to the office. However, the Company continues to monitor and follow the advice of federal and state authorities. The Company has not seen a material impact on its business since states began to roll back restrictions on businesses in the United States. 7 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could 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. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, eVance, Securus, CrowdPay, Omnisoft. OLBit and DMINT. All significant intercompany transactions and balances have been eliminated. Reclassifications Certain reclassifications have been made to the prior period financial information to conform to the presentation used in the financial statements for the three and nine months ended September 30, 2021. Concentration of Credit Risk Financial instruments that potentially expose the Company to concentration of credit risk consist primarily of cash and accounts receivable. The Company’s cash is deposited with major financial institutions. At times, such deposits may be in excess of the Federal Deposit Insurance Corporation insurable amount (“FDIC”). As of September 30, 2021, the Company had $ 913,055 of cash above the FDIC’s $ 250,000 coverage limit. Net Loss per Share Basic net loss per share of common stock 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 dilutive potentially outstanding shares of common stock during the period. The weighted average number of common shares for the three and nine months ended September 30, 2021 and 2020 does not include warrants to acquire up to 3,778,533 and 3,353,698 shares of common stock, respectively, because of their anti-dilutive effect. The weighted average number of common shares for the three and nine months ended September 30, 2021 and 2020 does not include up to 11,112 and 172,437 options, respectively, to purchase common stock because of their anti-dilutive effect. 8 Accounts Receivable Accounts receivable represent contractual residual payments due from the Company’s processing partners or other customers. Residual payments are determined based on transaction fees and revenues from the credit and debit card processing activity of merchants for which the Company’s processing partners pay the Company. Based on collection experience and periodic reviews of outstanding receivables, management considers all accounts receivable for our residual payments to be fully collectible and accordingly, no allowance for doubtful accounts is required; however, CrowdPay has a recorded an allowance of approximately $ 38,000 as of both September 30, 2021 and December 31, 2020. Reserve 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. 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 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. Revenue Recognition and Cost of Revenues The Company receives a percentage of recurring monthly transaction related fees comprised of credit and debit card fees charged to merchants, net of association fees, otherwise known as Interchange, as well as certain service charges and convenience fees, for payment processing services, including authorization, capture, clearing, settlement and information reporting of electronic transactions. Fees are calculated on either a percentage of the dollar volume of the transaction or a fixed fee or a hybrid of the two and are recognized at the time of the transaction. In the case of “wholesale” residual revenue in which the Company has a direct contractual relationship with the merchant, bears risk of chargebacks and performs underwriting on the merchants, the Company records the full discount charged to the merchant as revenue and the related interchange and other processing fees as expenses. In cases of residual revenue where the Company is not responsible for merchant underwriting and has no chargeback liability and has no or limited contractual relationship with the merchant, the Company records the amount it receives from the processor net of interchange and other processing fees as revenue. Disaggregation of Revenue The following table presents the Company’s revenue disaggregated by revenue source: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2021 2020 2021 2020 Revenue from contracts with customers: Wholesale contracts $ 2,053,772 $ 1,293,217 $ 5,504,044 $ 3,759,822 Retail contracts $ 417,158 $ 601,118 $ 1,288,111 $ 1,768,720 Other transaction and processing fees $ 352,991 $ 413,702 $ 1,091,742 $ 1,393,523 Total transactions and processing fees $ 2,823,921 $ 2,308,037 $ 7,883,897 $ 6,922,065 The Company recognizes revenue under ASC 606, “Revenue from Contracts with Customers” (“ASC 606”). The Company determines revenue recognition through the following steps: ● Identification of a contract with a customer; ● Identification of the performance obligations in the contract; ● Determination of the transaction price; ● Allocation of the transaction price to the performance obligations in the contract; and ● Recognition of revenue when or as the performance obligations are satisfied. 9 Revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Shipping and handling activities associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment activity and recognized as revenue at the point in time at which control of the goods transfers to the customer. As a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component if, at contract inception, the period between customer payment and the transfer of goods or services is expected to be one year or less. Transaction and processing fees Fees for the Company’s transaction and processing arrangements are typically billed and paid on a monthly basis. The Company receives a percentage of recurring monthly transaction related fees comprised of credit and debit card fees charged to merchants, net of association fees, otherwise known as Interchange, as well as certain service charges and convenience fees, for payment processing services, including authorization, capture, clearing, settlement and information reporting of electronic transactions. Fees are calculated on either a percentage of the dollar, volume of the transaction or a fixed fee or a hybrid of the two and are recognized at the time of the transaction. 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 of the performance obligation. The Company will recognize revenue on a monthly basis as the services are transferred to the customer in short daily increments that qualify for series guidance as the best measure of the transfer of control. In wholesale contracts, the Company recognizes transaction and processing fees on a gross basis as the Company is the principal in the merchant services. The Company has concluded it is the principal because it has a direct contractual relationship with the merchant, is primarily responsible for the delivery of services to the merchants, including performing underwriting, has discretion in setting prices, and bears risk of chargebacks and other merchant losses. The Company also has the unilateral ability to accept or reject a transaction based on criteria established by the Company. As the principal, the Company records the full discount charged to the merchant as revenue and the related interchange and other processing fees within cost of revenues. In retail contracts, the Company is not responsible for merchant underwriting, has no chargeback liability and has no or limited contractual relationship with the merchant. As such, the Company records the net amount it receives from the processor, after interchange and other interchange and other processing fees, as revenue. Merchant equipment sales and other The Company generates revenue through the sale and rental of merchant equipment. The Company satisfies its performance obligation upon delivery of equipment to merchants and recognizes revenue at a point in time. The Company allows for customer returns which are accounted for as variable consideration. The Company estimates these amounts based on historical experience and reduces revenue recognized. The Company invoices customers upon delivery of the equipment to merchants, and payments from such customers are due upon invoicing. The Company offers hardware installment sales to customers with terms ranging from three to forty-eight months. The Company allocates a portion of the consideration received from these arrangements to a financing component when it determines that a significant financing component exists. The financing component is subsequently recognized as financing revenue separate from hardware revenue, within subscription and services-based revenue, over the terms of the arrangement with the customer. Pursuant to practical expedients afforded under ASC 606, the Company does not recognize a financing component for hardware installment sales that have a term of one year or less. NOTE 3 – LIQUIDITY AND CAPITAL RESOURCES At September 30, 2021, the Company had cash of approximately $ 1.2 million and working capital of approximately $ 869,000 . As such, 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 these condensed consolidated financial statements are issued. 10 NOTE 4 – INTANGIBLE ASSETS Intangible assets, net, consist of the following as of: September 30, 2021 December 31, 2020 Merchant Portfolios $ 2,405,000 $ 2,340,000 Less Accumulated Amortization ( 1,471,895 ) ( 1,199,184 ) Net residual portfolios $ 933,105 $ 1,140,816 September 30, 2021 December 31, 2020 Trade name $ 2,500,000 $ 2,500,000 Less Accumulated Amortization ( 1,375,000 ) ( 1,000,000 ) Net trade name $ 1,125,000 $ 1,500,000 Total intangible assets, net $ 2,058,105 $ 2,640,816 September 30, 2021 December 31, 2020 Mineral rights for natural gas $ 4,499,952 $ - Less Accumulated Amortization ( 53,570 ) - Net mineral rights $ 4,446,382 $ - Total intangible assets, net $ 6,504,487 $ - Amortization expense for the three months ended September 30, 2021 and 2020 was $ 269,475 and $ 222,090 , respectively. Amortization expense for the nine months ended September 30, 2021 and 2020 was $ 701,280 and $ 628,519 , respectively. The Company’s merchant portfolios and tradename are being amortized over respective useful lives of 7 and 5 years. The following sets forth the estimated amortization expense related to amortizing intangible assets for the years ended December 31: 2021 (three months) $ 441,617 2022 1,506,465 2023 1,139,293 2024 955,707 2025 747,138 Thereafter 1,714,267 Total $ 6,504,487 The weighted average remaining useful life of amortizing intangible assets was 2.33 years at September 30, 2021. 11 NOTE 5 – NOTE PAYABLE On April 8, 2018, eVance, Omnisoft, and CrowdPay, (collectively, the “Borrowers”), entered into a term loan of $12,500,000 with GACP (the “Term Loan”) which obligations are guaranteed by the Company (collectively with the Borrowers, the “Loan Parties”), under the Loan and Security Agreement (the “Credit Agreement”). On 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. In connection with the extinguishment of the obligations under the Credit Agreement, 40,000 warrants to purchase Common Stock were cancelled. On 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. The loan has been accounted for as long-term debt, which, if forgiven will result in a gain on forgiveness of debt in the period forgiveness is obtained. The bank that funded the loan has not yet started the process to have the loan forgiven. NOTE 6 – STOCK OPTIONS On January 1, 2021, 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. Yakov. 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 $0.001per share and expire in three years after each vest date. The aggregate fair value of the options totaled $ 32,793 based on the Black Scholes Merton pricing model using the following estimates: exercise price of $ 0.001 , 0.16 % risk free rate, 35.03 % 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 July 28, 2021, the Company entered into an exclusive agreement with Cai Energy Blockchain, Inc. (“CAI”) whereby CAI provided the Company with an exclusive natural gas supply agreement (the “Services”). In exchange for the Services, the Company granted CAI options to purchase up to 767,918 shares of Common Stock, $ 0.0001 par value (with a fair market value equal to $ 4.5 million on the date of grant) at an exercise price of $ 0.0001 per share. The aggregate fair value of the options totaled $ 4,499,952 based on the Black Scholes Merton pricing model using the following estimates: exercise price of $ 0.0001 , 1.26 % risk free rate, 143.3 % volatility and expected life of the options of 10 years. A summary of the status of the Company’s outstanding stock options and changes during the nine months ended September 30, 2021 is presented below: Stock Options Options Weighted Average Exercise Price Aggregate Intrinsic Value Options outstanding at January 1, 2020 278,506 $ 0.0001 - Granted 6,667 $ 0.001 - Exercised - $ - - Forfeited - $ - - Options outstanding December 31, 2020 285,173 $ 0.0001 $ 1,408,755 Granted 774,585 0.0001 - Exercised ( 159,103 ) $ - Expired ( 6,667 ) $ - Options outstanding September 30, 2021 893,988 $ 0.0001 $ Shares exercisable at September 30, 2021 772,361 $ 0.0001 $ 3,116,112 12 NOTE 7 – WARRANTS On 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. The 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”). The 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 The 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”). Each 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. If we 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. Each 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. Each 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. 13 The 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. Pursuant 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” registration rights with respect to the registration of the shares of common stock underlying the Representative’s Warrants and customary anti-dilution provisions. The aggregate fair value of the 35,000 warrants, totaled $ 363,958 based on the Black Scholes Merton pricing model using the following estimates: exercise price of $ 11.25 , 0.21 % risk free rate, 315.6 % volatility and expected life of the warrants of 6 years. The value of the warrants has been netted against the proceeds of the offering proceeds and accounted for in additional paid in capital. On August 18, 2021, the Company sold, in a registered direct offering, an aggregate of 1,418,605 shares of common stock and in a concurrent private placement, warrants to purchase up to 1,418,605 shares of common stock, at an aggregate purchase price of $ 4.30 per Share and associated Warrant. The Warrants will be exercisable six months from the date of issuance at an exercise price of $5.42 per share and will expire five and one-half years following the initial date of issuance. Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contract Term Outstanding, December 31, 2018 - $ - - Granted 40,000 $ 7.50 0.52 Outstanding, December 31, 2019 40,000 $ 7.50 0.52 Warrant A Granted (1) 2,639,848 $ 9.00 9.00 Expired - $ - - Warrant B Granted (2) 659,970 $ 4.50 4.50 Warrant B Exercised ( 21,150 ) $ 4.50 - Underwriter Warrant 35,000 $ 11.25 11.25 Underwriter Warrant Exercised - - - Outstanding, December 31, 2020 3,353,698 4.61 4.81 Cancelled ( 40,000 ) $ 7.50 - Underwriter Warrants 1,418,605 $ 5.42 5.5 Warrant A Exercised ( 647,200 ) $ 9.00 - Warrant B Exercised ( 306,570 ) $ 4.50 - Outstanding, September 30, 2021 3,778,533 $ 4.25 4.91 (1) Includes 210,000 Warrant A granted to Underwriters upon exercise of overallotment in connection with the Offering (2) Includes 525,000 Warrant B granted to Underwriters upon exercise of overallotment in connection with the Offering 14 NOTE 8 – OPERATING LEASE On June 24, 2020, eVance, Inc. (“eVance”) entered into a Lease Agreement (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 September 30, 2021 Asset Operating lease asset Right of use asset $ 204,152 Total lease asset $ 204,152 Liability Operating lease liability – current portion Current operating lease liability $ 91,087 Operating lease liability – noncurrent portion Long-term operating lease liability 149,058 Total lease liability $ 240,145 Lease obligations at September 30, 2021 consisted of the following: For the year ended December 31: 2021 – three months $ 24,785 2022 100,139 2023 127,207 Total payments $ 252,131 Amount representing interest $ ( 11,986 ) Lease obligation, net 240,145 Less current portion ( 91,087 ) Lease obligation – long term $ 149,058 Rent expense for the three months ended September 30, 2021 and 2020, was $ 24,909 and $ 26,848 , respectively. Rent expense for the nine months ended September 30, 2021 and 2020, was $ 74,726 and $ 83,300 , respectively. At September 30, 2021, the weighted average remaining lease term is 2.17 years and the weighted average discount rate is 5 %. NOTE 9 – PREFERRED STOCK Our certificate of incorporation authorizes the issuance of 50,000,000 shares of blank check preferred stock with such designation, rights and preferences as may be determined from time to time by our board of directors. No shares of preferred stock are currently issued or outstanding. Series A Preferred Stock On 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 share. Holders of Series A Preferred Stock are entitled to the following rights and preferences: Dividends The 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. 15 Conversion The 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. The holders 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. Voting Each 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’ meeting 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. Liquidation Preference Each share of Series A Preferred Stock will have a liquidation preference equal to the Stated Value plus any accrued but unpaid dividends thereon. 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 preference. NOTE 10 – COMMITMENTS AND CONTINGENCIES In the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. The Company records legal costs associated with loss contingencies as incurred and accrues for all probable and estimable settlements. On 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. The agreement provides for an annual salary of $ 375,000 , fringe benefits ($ 2,500 monthly automobile allowance, any benefit plans of the Company and 4 weeks paid vacation), an incentive bonus of $ 200,000 based on the achievement of certain performance criteria and an acquisition bonus equal to two ( 2 %) percent of the gross purchase price paid in connection therewith upon the closing of any acquisition directly or indirectly by the Company or its subsidiaries during the Employment Period of any company or business (including purchases of all or substantially all of the assets of any such entity) having then existing sales of not less than three million five hundred thousand dollars ($ 3,500,000 ). During the year ended December 31, 2020, Mr. Yakov was paid a $ 400,000 bonus ($ 200,000 per year for 2019 and 2020). NOTE 11 – SUBSEQUENT EVENTS On October 25, 2021, the Board of Directors of the Company approved entry by the Company into a share exchange agreement (“Agreement”) between the Company and all of the shareholders of Crowd Ignition, Inc. (“Crowd Ignition”) whereby the Company would purchase 100 % of the equity of Crowd Ignition in exchange for 1,318,408 shares of the common stock, par value $ 0.0001 of the Company (the “Shares”). The value of the Shares was, for purposes of the Agreement, based on the closing trading price of the Company on October 1, 2021 (the date on which a third-party fairness opinion was issued), resulting in an aggregate purchase price for Crowd Ignition of $ 5.3 million. On November 2, 2021, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with certain institutional accredited investors (the “Investors”) pursuant to which the Company issued and sold, in a private placement (the “Private Placement”), (i) 1,969,091 shares (the “Shares”) of its common stock, par value $0.0001 per share (the “Common Stock”),(ii) pre-funded warrants (the “Prefunded Warrants”) exercisable for a total of up to 2,576,364 shares of Common Stock (the “Prefunded Warrant Shares”) with an exercise price of $0.0001 per Prefunded Warrant Share, and (iii) warrants (the “Common Warrants”) exercisable for a total of 4,545,455 shares of Common Stock (the “Common Warrant Shares” and together with the Prefunded Warrant Shares, the “Warrant Shares”) with an exercise price of $6.50 per Common Warrant Share. The purchase price of each share of Common Stock and associated Common Warrant is $ 5.50 and the purchase price of each Prefunded Warrant and associated Common Warrant is $ 5.4999 . Subject to certain ownership limitations, the Common Warrants are immediately exercisable upon issuance and will expire on the five-year anniversary of the effective date of the initial registration statement filed with respect to the Common Shares. The Prefunded Warrants are immediately exercisable upon issuance and may be exercised at any time until all of the Prefunded Warrants are exercised in full. The Company received notice on October 11, 2021 that the $236,000 PPP Loan had been entirely forgiven. 16 Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements The information in this report contains forward-looking statements. All statements other than statements of historical fact made in this report are forward looking. In particular, the statements herein regarding industry prospects and future results of operations or financial position are forward-looking statements. These forward-looking statements can be identified by the use of words such as “believes,” “estimates,” “could,” “possibly,” “probably,” anticipates,” “projects,” “expects,” “may,” “will,” or “should” or other variations or similar words. No assurances can be given that the future results anticipated by the forward-looking statements will be achieved. Forward-looking statements reflect management’s current expectations and are inherently uncertain. If underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, our actual results may differ significantly from management’s expectations. These risks and uncertainties include those factors described in greater detail in the risk factors disclosed in our Form 10-K for the fiscal year ended December 31, 2020 filed with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those anticipated in these forward-looking statements. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q or, in the case of documents referred to or incorporated by reference, the date of those documents. The following discussion and analysis should be read in conjunction with our unaudited financial statements, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management. Company Overview and Description of Business We were incorporated in the State of Delaware on November 18, 2004 for the purpose of merging with OLB.com. The merger was done for the purpose of changing our state of incorporation from New York to Delaware. In April 2018, we completed an acquisition of substantially all of the net assets of Excel and its subsidiaries Payprotec Oregon, LLC, Excel Business Solutions, Inc. and eVance Processing, Inc. (such assets are the foundation of our eVance business). In May 2018, we entered into share exchange agreements with Crowdpay and Omnisoft, affiliate companies of our company’s majority stockholder, pursuant to which each of Crowdpay and Omnisoft became solely owned subsidiaries of our Company. Our Company’s headquarters is located at 200 Park Avenue, Suite 1700, New York, NY 10166. Our telephone number is (212) 278-0900. We are a FinTech company and PayFac that focuses on a suite of products in the merchant services and payment facilitator verticals that seeks to provide integrated business solutions to merchants throughout the United States. We seek to accomplish this by providing merchants with a wide range of products and services through our various online platforms, including financial and transaction processing services. We also have products that provide support for crowdfunding and other capital raising initiatives. We supplement our online platforms with certain hardware solutions that are integrated with our online platforms. Our business functions primarily through three wholly-owned subsidiaries, eVance, OmniSoft, and CrowdPay, though substantially all of our revenue has been generated from our eVance business (we began generating revenue from our OmniSoft and CrowdPay businesses in the second half of 2019). We expect to build out our OmniSoft software business and to rely more on our PayFac model for revenue so that we are not dependent on our revenue from our eVance business but there is no guarantee that we will be able to do so. 17 With respect to our eVance business, our merchants are currently processing over $82,000,000 in gross transactions monthly and average approximately 1,400,000 transactions a month. These transactions come from a variety of sources including direct accounts and ISO channels. The accounts consist of businesses across the United States with no concentration of industries or merchants. We have integrated all the applications for OmniSoft and the ShopFast Omnicommerce solution with the eVance mobile payment gateway, SecurePay.comTM. SecurePay.comTM, is currently used by approximately 3,000 merchants processing over 32,000 transactions and approximately $9,000,000 of monthly gross transactions (though our revenue from these transactions is limited). In July 2019, we launched a new merchant and ISO boarding system that will be able to onboard merchants instantly. This will provide the merchant with an automated approval and ISOs will have the ability to see all their merchants and their residuals as they load to the system. On May 22, 2020, the Company purchased certain assets from POSaBIT Inc. (“POSaBIT”), including its contracts and arrangements with the Doublebeam merchant payment processing platform (the “POSaBIT Asset Acquisition”). The assets included, but were not limited to, software source codes, customer lists, customer contracts, hardware and website domains. The total purchase price was $215,000 (the “Purchase Price”) following post-closing adjustments. On May 14, 2021, the Company formed OLBit, Inc., a wholly owned subsidiary (“OLBit”). The purpose of OLBit is to hold the Company’s assets and operate its business related to cryptocurrency-related lending and transactional business. On July 2, 2021, the Company signed a non-binding letter of intent to acquire a portfolio of CBD and other merchants that will utilize the Company’s SecurePay Payment Gateway to process payments. The group of merchants to be acquired have reported annual transaction volume of greater than $300 million. The transaction is anticipated to add an accomplished and experienced sales channel to the OLB team, enabling further penetration into this growing sector in the United States. The transaction is expected to close in the fourth quarter of 2021 however there can be no assurance that the company will close this acquisition. On July 23, 2021, the Company formed DMINT, Inc., a wholly owned subsidiary (“DMINT”). The purpose of DMINT is to operate its business related to cryptocurrency mining DMint has initiated the first phase of the cryptocurrency mining operation by placing purchase orders for data centers and ASIC-based Antminer S19J Pro mining computers specifically configured to mine Bitcoin. The first lot of equipment will be used to establish a proof of concept before DMint expands the number of computers in operation. As configured, it is expected that the computers purchased will have a combined computing power of approximately 100 petahash per second. If the initial mining operation results are as anticipated, DMint plans to expand the number of mining computers every quarter, whereby it would potentially have the computing power of 500 petahash per second by the end of 2022. On October 25, 2021, the Board approved entry by the Company into a share exchange agreement (“Agreement”) between the Company and all of the shareholders of Crowd Ignition, Inc. (“Crowd Ignition”) whereby the Company would purchase 100% of the equity of Crowd Ignition in exchange for 1,318,408 shares of the common stock, par value $0.0001 of the Company (the “Shares”). The value of the Shares was, for purposes of the Agreement, based on the closing trading price of the Company on October 1, 2021 (the date on which a third-party fairness opinion was issued), resulting in an aggregate purchase price for Crowd Ignition of $5.3 million. Crowd Ignition is a web-based crowdfunding software system. Ronny Yakov, Chairman and CEO of the Company and John Herzog, a significant shareholder of the Company, own 100% of the equity of Crowd Ignition. The software provides broker-dealer, merchant banks and law firms a platform to market crowdfunding offerings, collect payments and issue securities. The software has been developed in response to, and to comply with, recent changes in investment regulations including Regulation D 506(b) and 506(v), Regulation A+ and Title III of the Jobs Act (Regulation CF), including raising the crowdfunding limit from $1.07 million to $5.0 million. Crowd Ignition is one of only about 50 companies registered with the U.S. Securities and Exchange Commission (“SEC”) to provide the services permitted under Reg CF. The transaction is expected to close by the end of November 2021, subject to execution of the Agreement and customary closing conditions. Results of Operations Management’s discussion and analysis of financial condition and results of operations (“MD&A”) includes a discussion of the consolidated results from operations of The OLB Group, Inc. and its subsidiaries for the three and nine months ended September 30, 2021 and 2020. 18 Three Months Ended September 30, 2021 Compared to the Three Months Ended September 30, 2020 For the three months ended September 30, 2021, we had total revenue of $2,823,921 compared to $2,308,037 of revenue for the three months ended September 30, 2020, an increase of $551,233 or 22.4%. We earned $2,680,004 in transaction and processing fees, $32,787 in merchant equipment rental and sales and $111,130 in other revenue during the three months ended September 30, 2021, compared to $2,128,771 in transaction and processing fees, $22,018 in merchant equipment sales and $157,248 in other revenue during the three months September 30, 2020. The increase in revenue was a result of an increase in the amount of fees earned from merchant processing transactions and an increase in the number of rentals and sales of merchant equipment. Processing and servicing costs increased by $737,463 or 49.6%. The increase was a result of the increase in the number of transactions processed during the period. Visa and Mastercard quarterly charges were higher than was accrued during the period. This was due to an increase in processing. Also, revenue for software, DoubleBeam and the net merchant portfolio decreased. There are no expenses related to these items. A decrease in revenue related to these items does not directly correspond to a decrease in expense. Amortization expense for the three months ended September 30, 2021 was $269,475 compared to $222,090 for the three months ended September 30, 2020, an increase of $47,385 or 21.3%. We recorded amortization expense on our merchant portfolio acquired in April 2018, trademarks and mineral rights acquired in August 2021. Our amortization expense increased in the current period due to the acquisition of mineral rights of natural gas. Salary and wage expense for the three months ended September 30, 2021 was $326,776 compared to $318,682 for the three months ended September 30, 2020, an increase of $8,094 or 2.5%. General and administrative expenses (“G&A”) for the three months ended September 30, 2021 was $904,314 compared to $706,430 for the three months ended September 30, 2020, an increase of $197,884 or 28%. In the current period, the increases were primarily due to increases of legal expenses of approximately $270,003 relating to ongoing litigation matters and legal advice relating to other Company business and was offset by a decrease of our auditor fees of approximately $74,940 and stock based compensation of $156,843. During 2021, the Company has expanded its public relations and marketing campaigns to increase visibility in the investor community and merchant marketplace. The Company has contracted with outside consultants to perform the investor relations and marketing work. It is anticipated that the Company will continue to use these services for the remainder of 2021 and into 2022. For the three months ended September 30, 2021, we incurred $0 of interest expense, compared to $233,211 for the three months ended September 30, 2020, a decrease of $233,211. The decrease in interest expense is due the conversion of all related party debt and the repayment of the Term Loan in March 2021. Our net loss for the three months ended September 30, 2021 was $900,351 compared to $657,358 for the three months ended September 30, 2020. We had an increase in our net loss of $242,993 for the reasons discussed above. Nine Months Ended September 30, 2021 Compared to the Nine Months Ended September 30, 2020 For the nine months ended September 30, 2021, we had total revenue of $7,883,897 compared to $6,922,065 of revenue for the nine months ended September 30, 2020, an increase of $1,139,171 or 18.1%. We earned $7,436,317 in transaction and processing fees, $98,190 in merchant equipment rental and sales and $349,390 in other revenue from monthly recurring subscriptions, during the nine months ended September 30, 2021, compared to having earned $6,297,146 in transaction and processing fees, $60,828 in merchant equipment rental and sales and $564,091 in other revenue from monthly recurring subscriptions in the same period in the prior period. The increase was a result of an increase in the amount of fees earned from merchant processing transactions and an increase in the number of rentals and sales of merchant equipment. For the nine months ended September 30, 2021, we had processing and servicing costs of $5,869,739_ compared to $4,501,274 of processing and servicing costs for the nine months ended September 30, 2020. Processing and servicing costs increased by $1,368,465 or 30.4% because of the increase in the number of transactions processed during the period. Amortization expense for the nine months ended September 30, 2021 was $701,282 compared to $628,519 for the nine months ended September 30, 2020, an increase of $72,763 or 11.5%. We recorded amortization expense on our merchant portfolio, trademarks and mineral rights. Our amortization expense increased in the current period due to the acquisition of mineral rights of natural gas. 19 Salary and wage expense for the nine months ended September 30, 2021 was $1,483,570 compared to $1,036,068 for the nine months ended September 30, 2020, an increase of $447,502 or 43.2%. Salary and wage expense increased in the current period due to bonuses paid to our CEO and President for the Company’s performance in 2020 and 2021. G&A expense for the nine months ended September 30, 2021 was $2,378,951 compared to $1,602,685 for the nine months ended September 30, 2020, an increase of $776,266 or 33.6%. In the current period, the increases were primarily due to increases of legal expenses of approximately $682,000 relating to ongoing litigation matters, legal costs relating to the prepayment of the Term Loan and attorney fees relating to other Company business. This increase was partially offset by a decrease in our audit fees of approximately $324,000 during the current period compared with the prior period. For the nine months ended September 30, 2021, we incurred $119,736 of interest expense, compared to $865,397 for the nine months ended September 30, 2020, a decrease of $748,661 or 198%. The decrease in interest expense is due to the conversion of all related party debt and the repayment of the Term Loan. We also recognized a loss of $4,499,952 for the fair value of warrants that were issued. Our net loss for the nine months ended September 30, 2021 was $2,666,347 compared to $1,709,974 for the nine months ended September 30, 2020. We had an increase in our net loss of $956,373 for the reasons discussed above. Liquidity and Capital Resources Trends and Uncertainties The Company’s future financial condition and results of operations may be adversely affected by the continued prolongation of the COVID-19 pandemic and any need to institute additional business capacity restrictions or temporary closures. The New York and Atlanta areas, which include the location of the Company’s corporate headquarters and its operations business, have experienced and continue to experience a significant impact of the COVID-19 pandemic in the U.S. The Company continues to follow the recommendations of local health authorities to minimize exposure risk for its employees and visitors. However, the scale and scope and duration of the ongoing pandemic remains unknown, and the ongoing business disruption and related financial impact cannot be reasonably estimated at this time as different states have different regulations relating to business capacity. While the Company has implemented specific business continuity plans to reduce the potential impact of the ongoing COVID-19 pandemic during 2021 and believe that its business being principally operated using digital platforms, in the long-term, will suffer minimal negative impact, there is no guarantee that the Company’s continuity plan will be successful, that the Company’s merchants will meet the number of forecasted transactions due to a change in consumer activity around point of sale purchasing resulting from the temporary closure of businesses. In 2020 and the first nine months of 2021, the Company continued to experience certain disruptions to its business and disruptions for the Company’s customers and merchants, along with closures, that may materially affect the number of transactions processed by the Company. Similarly, the COVID-19 pandemic could have a long-term impact on the Company’s customers and/or merchants during the remainder of 2021 which could reduce their demand for Company products, if pre-pandemic levels of purchasing activity does not resume. The extent to which the COVID-19 pandemic or any other health epidemic may continue to impact the Company’s results for 2021 and beyond will depend on future developments, which are highly uncertain and cannot be predicted, including the impact of vaccinations, the impact of the reopening of international travel and new information which may emerge concerning the severity of the economic impact of the response to the COVID-19 pandemic on the retail and service industries where the Company has many customers and merchants. Accordingly, the COVID-19 pandemic could continue to have a material adverse effect on the Company’s business, results of operations, financial condition and prospects during 2021 and beyond. Although the reopening of businesses did result in an increase in transactions using the Company’s products to pre-pandemic levels, there can be no assurance that the business will continue to see transaction volume at or above pre-pandemic levels. However, any prolonged impact of the pandemic on the Company’s other businesses is likely to have an immaterial or no impact. 20 Changes in Cash Flows For the nine months ended September 30, 2021, $1,602,406 of cash was used by operating activities, which included our net loss, offset by $744,389 for amortization and depreciation expense, $232,965 for stock-based compensation $34,859 of operating lease expense and net changes in operating assets and liabilities of $51,728. For the nine months ended September 30, 2021 and 2020, we used $6,068,300 and $125,000 for investment activities. During the current year we purchased $93,300 of office equipment and $5,910,000 of mining equipment for our DMINT subsidiary. For the nine months ended September 30, 2021, we received net cash of $5,009,270 in financing activities. $7,654,845 was repaid on our loan to GACP. We received a total of $7,160,940 from the exercise of warrants issued in the Offering, $16 from the exercise of options and we netted $5,461,552 of cash from the sale of common stock and warrants. Liquidity and Capital Resources At September 30, 2021, the Company had cash of $1,163,055 and working capital of $869,443. For the three and nine months ended September 30, 2021, the Company’s net loss was $900,354 and $2.666,347, respectively. At September 30, 2021, the Company had approximately $838,000 of outstanding liabilities. On August 11, 2020, the Company closed an offering of its securities (the “Offering”) for gross proceeds of $6.45 million. The Company sold 700,000 units consisting of (a) one share of our common stock; (b) two Series A Warrants, and (c) one-half of one Series B warrant. In addition, the underwriter fully exercised its option to purchase 210,000 Series A warrants and 52,500 Series B warrants. On March 2, 2021, the Company utilizing a portion of funds received upon the exercise of outstanding warrants, paid approximately $7.7 million to the Agent under the Credit Agreement (the “Prepayment”). This Prepayment resulted in the discharge in full of all of the obligations under the Credit Agreement. In connection with the extinguishment of the obligations under the Credit Agreement, 40,000 warrants to purchase Common Stock were cancelled. On August 18, 2021, the Company sold, in a registered direct offering, an aggregate of 1,418,605 shares of common stock and in a concurrent private placement, warrants to purchase up to 1,418,605 shares of Common Stock, at an aggregate purchase price of $4.30 per Share and associated Warrant. The Warrants will be exercisable six months from the date of issuance at an exercise price of $5.42 per share and will expire five and one-half years following the initial date of issuance. As a result of the transactions, the Company received gross proceeds of approximately $6.1 million and net proceeds of $[ ] million On November 2, 2021, the Company sold, in a private placement (the “Private Placement”), (i) 1,969,091 shares (the “Shares”) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), (ii) pre-funded warrants (the “Prefunded Warrants”) exercisable for a total of 2,576,364 shares of Common Stock (the “Prefunded Warrant Shares”) with an exercise price of $0.0001 per Prefunded Warrant Share, and (iii) warrants (the “Common Warrants”) exercisable for a total of 4,545,455 shares of Common Stock (the “Common Warrant Shares” and together with the Prefunded Warrant Shares, the “Warrant Shares”) with an exercise price of $6.50 per Common Warrant Share. The Private Placement closed on November 5, 2021. The purchase price of each share of Common Stock and associated Common Warrant was $5.50 and the purchase price of each Prefunded Warrant and associated Common Warrant was $5.4999. Subject to certain ownership limitations, the Common Warrants are immediately exercisable upon issuance and will expire on the five year anniversary of the effective date of the initial registration statement filed under the Registration Rights Agreement (as defined below). The Prefunded Warrants are immediately exercisable upon issuance and may be exercised at any time until all of the Prefunded Warrants are exercised in full. From the Private Placement, the Company received gross proceeds of approximately $25 million and net proceeds of $22.9 million. In addition, the Company has received a Paycheck Protection Program loan under the CARES Act for approximately $236,000 (the “PPP Loan”). The Paycheck Protection Program provides that the use of PPP Loan proceeds was 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 received notice on October 11, 2021 that the PPP Loan had been entirely forgiven. The Company has reviewed projected operating cash flows for 2021 and an overall analysis of market trends to determine whether or not it has sufficient liquidity to continue as a going concern for a period of at least twelve months from the date of this Quarterly Report. As a result of the improved transaction volume trends the Company experienced in the nine month period ended September 30, 2021, as well as the funds received from the capital raises discussed above, including those received following the nine month period ended September 30, 2021, the Company believes it has sufficient liquidity in order to sustain operations for at least of the following twelve months. 21 The Company has plans to grow its cryptocurrency business by purchasing more mining computers and contracting with parties to establish a cryptocurrency lending, wallet and exchange platform as a new product offering to merchants and other customers. It also plans to increase its customer base through acquisitions. In addition, the Company plans to expand its payment processing business with the CBD merchant acquisitions and expand its crowd funding platform with the acquisition of Crowd Ignition. In order for the Company to execute all of its future plans to do business in the cryptocurrency marketplace and to make acquisitions, it may be necessary to obtain additional capital. This can be done by the sale of equity or debt securities or obtaining a loan. There can however be no assurances that the company will be able to raise additional funds to expand its cryptocurrency business or any of the acquired businesses. Critical Accounting Policies Refer to our Form 10-K for the year ended December 31, 2020, for a full discussion of our critical accounting policies. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item. ITEM 4. CONTROLS AND PROCEDURES During the quarter ended September 30, 2021, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were ineffective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the required time periods specified in the Commission’s rules and forms and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Our principal executive officer and principal financial officer, do not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. To address the material weaknesses, we performed additional analysis and other post-closing procedures in an effort to ensure our financial statements included in this annual report have been prepared in accordance with generally accepted accounting principles. In addition, we engaged accounting consultants to assist in the preparation of our financial statements. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented. Changes in Internal Control over Financial Reporting There have been no changes in our internal controls over financial reporting that occurred during the quarter ended September 30, 2021, that have materially or are reasonably likely to materially affect, our internal controls over financial reporting. 22 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS There are no claims, actions, suits, proceedings, or investigations that are currently pending or, to the Company’s knowledge, threatened by or against the Company or respecting its operations or assets, or by or against any of the Company’s officers, directors, or affiliates. ITEM 1A. RISK FACTORS We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS Exhibit Number Exhibit Description 31.1 Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith) 31.2 Certification of Chief Financial Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith) 32 Certification of Chief Executive Officer and Chief Financial Officer, pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002. (filed herewith) 101.INS Inline XBRL Instance Document. 101.SCH Inline XBRL Taxonomy Extension Schema Document. 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). 23 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: November 12, 2021 By: /s/ Ronny Yakov Name: Ronny Yakov Title: Chief Executive Officer (Principal Executive Officer) Date: November 12 , 2021 By: /s/ Rachel Boulds Name: Rachel Boulds Title: Chief Financial Officer (Principal Financial and Accounting Officer) 24