OLB GROUP, INC. 10-K

Item 8. Financial Statements and Supplementary Data INDEX TO FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB ID # 229 ) F-2 Consolidated Balance Sheets at December 31, 2022 and 2021 F-3 Consolidated Statements of Operations for the Years Ended December 31, 2022 and 2021 F-4 Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2022 and 2021 F-5 Consolidated Statements of Cash Flows for the Years Ended December 31, 2022 and 2021 F-6 Notes to the Consolidated Financial Statements F-7 F- 1 Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders The OLB Group, Inc. New York, New York Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of The OLB Group, Inc. (the “Company”) at December 31, 2022 and 2021, and the related consolidated statements operations, stockholders’ equity and cash flows for each of the two years in the periods ended December 31, 2022 and 2021, 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, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022 and 2021, in conformity with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 2, the accompanying consolidated financial statements at and for the year ended December 31, 2021 have been revised. Basis for Opinion 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 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 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 risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated 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 consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (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 matter 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 matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate. Continued from previous page Intangible Assets Impairment Assessments As described in Notes 2 and 4 to the consolidated financial statements, the Company has goodwill and intangible assets of $27.2 million at December 31, 2022. In most cases, no directly observable market inputs are available to measure the fair value to determine if the asset is impaired. Therefore, 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 management 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. In addition, the audit effort involved the use of professionals with specialized skill and knowledge. 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. Daszkal Bolton LLP We have served as the Company’s auditor since 2020 Boca Raton, Florida March 29, 2023 F- 2 The OLB Group, Inc. and Subsidiaries Consolidated Balance Sheets December 31, 2022 December 31, 2021 (Revised) ASSETS Current Assets: Cash $ 434,026 $ 3,470,339 Accounts receivable, net 1,083,169 670,822 Prepaid expenses 582,125 15,064 Other current assets 1,288,951 729,351 Total Current Assets 3,388,271 4,885,576 Other Assets: Property and equipment, net 7,325,212 8,967,096 Intangible assets, net 20,310,255 23,964,180 Goodwill 6,858,216 6,858,216 Operating lease right-of-use assets 268,948 402,538 Other long-term assets 502,917 451,885 Total Other Assets 35,265,548 40,643,915 TOTAL ASSETS $ 38,653,819 $ 45,529,491 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Accounts payable $ 513,266 $ 501,762 Accrued expenses 378,206 416,182 Preferred dividend payable (related parties) 294,384 824,674 Merchant portfolio purchase installment obligation 2,000,000 2,000,000 Operating lease liability – current portion 134,318 133,180 Note payable – current portion 298,053 — Total Current Liabilities 3,618,227 3,875,798 Long Term Liabilities: Notes payable, net of current portion 259,376 — Operating lease liability – net of current portion 138,439 273,166 Total Liabilities 4,016,042 4,148,964 Commitments and contingencies (Note 10) Stockholders’ Equity: Preferred stock, $ 0.0001 par value, 1,000,000 shares authorized — — Series A Preferred stock, $ 0.0001 par value, 10,000 shares authorized, 1,021 and 4,633 shares issued and outstanding at December 31, 2022 and 2021, respectively 10 46 Common stock, $ 0.0001 par value, 50,000,000 shares authorized, 15,207,714 and 11,984,396 shares issued, 15,081,542 and 11,984,396 shares outstanding at December 31, 2022 and 2021, respectively 1,508 1,197 Treasury stock, at cost ( 126,272 shares) ( 109,987 ) — Additional paid-in capital 68,140,480 66,986,248 Accumulated deficit ( 33,394,233 ) ( 25,606,964 ) Total Stockholders’ Equity 34,637,777 41,380,527 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 38,653,819 $ 45,529,491 T he accompanying notes are an integral part of these consolidated financial statements. F- 3 The OLB Group, Inc. and Subsidiaries Consolidated Statements of Operations For the Years Ended December 31, 2022 2021 Revenue: Transaction and processing fees $ 28,950,785 $ 15,810,626 Merchant equipment rental and sales 64,900 131,802 Revenue, net - cryptocurrency mining 726,179 304,004 Other revenue from monthly recurring subscriptions 627,115 464,327 Total revenue 30,368,979 16,710,759 Operating expenses: Processing and servicing costs, excluding merchant portfolio amortization 23,152,397 13,480,212 Amortization and depreciation expense 3,664,488 1,703,401 Depreciation expense - cryptocurrency mining 3,193,683 187,498 Salaries and wages 3,073,598 2,126,451 Professional fees 964,541 1,590,520 General and administrative expenses 4,490,731 2,387,416 Total operating expenses 38,539,438 21,475,498 Loss from operations ( 8,170,459 ) ( 4,764,739 ) Other income (expense): Interest expense — ( 116,737 ) Gain on forgiveness of debt — 236,231 Litigation expense — ( 333,158 ) Other income 383,190 45 Total other income (expense) 383,190 ( 213,619 ) Net Loss $ ( 7,787,269 ) $ ( 4,978,358 ) Less: Preferred dividends (related parties) ( 401,903 ) ( 555,960 ) Net loss to common shareholders ( 8,189,172 ) $ ( 5,534,318 ) Net loss per share, basic and diluted $ ( 0.56 ) $ ( 0.70 ) Weighted average shares outstanding, basic and diluted 14,678,990 7,918,263 The accompanying notes are an integral part of these consolidated financial statements. F- 4 The OLB Group, Inc. and Subsidiaries Consolidated Statements of Stockholders’ Equity For the Years ended December 31, 2022 and 2021 Preferred Stock Common Stock Additional Paid Common Stock to Treasury Accumulated Shares Amount Shares Amount In Capital Be Issued Stock Deficit Total Balance at December 31, 2020 4,633 $ 46 6,170,054 $ 617 $ 26,111,410 $ — $ — $ ( 20,628,606 ) $ 5,483,467 Stock based compensation — — — — 296,042 — — — 296,042 Common stock issued exercise of warrants – related party — — 159,103 16 — — — — 16 Options issued for intangible assets — — — 4,499,952 — — — 4,499,952 Common stock units issued for cash — — 3,387,696 339 28,379,312 — — — 28,379,650 Common stock issued for director services — — 35,639 3 165,006 — — — 165,009 Common stock issued for exercise of warrants — — 2,231,904 223 8,090,486 — — — 8,090,709 Preferred stock dividends (related parties) — — — — ( 555,960 ) — — — ( 555,960 ) Net loss — — — — — — — ( 4,978,358 ) ( 4,978,358 ) Balance at December 31, 2021 4,633 46 11,984,396 1,198 66,986,248 — — ( 25,606,964 ) 41,380,527 Stock based compensation — — — — 624,683 — — — 624,683 Common stock issued for common control acquisitions — — 1,318,408 132 ( 132 ) — — — — Common stock issued for exercise of warrants — — 1,400,000 140 ( 140 ) — — — — Repurchase of shares — — ( 126,172 ) — — ( 110,000 ) — ( 110,000 ) Conversion of preferred shares – related party ( 3,612 ) ( 36 ) 504,910 51 931,724 — — — 931,739 Preferred stock dividends (related parties) — — — — ( 401,903 ) — — — ( 401,903 ) Net loss — — — — — — — ( 7,787,269 ) ( 7,787,269 ) Balance at December 31, 2022 1,021 $ 10 15,081,542 $ 1,508 $ 68,140,480 $ 164,999 $ ( 110,000 ) $ ( 33,394,233 ) $ 34,637,777 The accompanying notes are an integral part of these consolidated financial statements. F- 5 The OLB Group, Inc. and Subsidiaries Consolidated Statements of Cash Flows For the Years Ended December 31, 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 7,787,269 ) $ ( 4,978,358 ) Adjustments to reconcile net loss to net cash used in operations: Non-cash mining revenue ( 726,179 ) ( 304,004 ) Depreciation and amortization 6,858,171 1,890,899 Stock based compensation 624,683 296,042 Common stock to be issued for services to Directors 164,999 165,009 Operating lease expense — 2,674 Gain on forgiveness of debt — ( 236,231 ) Changes in assets and liabilities: Accounts receivable 35,796 ( 314,828 ) Prepaid expenses and other current assets ( 848,625 ) ( 415,889 ) Other long-term assets ( 51,032 ) ( 67,738 ) Accounts payable 11,504 141,794 Other accrued liabilities ( 203,429 ) 312,548 Net cash (used in) operating activities ( 1,921,381 ) ( 3,508,082 ) CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property and equipment ( 1,562,361 ) ( 9,596,599 ) Acquisition of intangible assets — ( 16,065,001 ) Net cash used in investing activities ( 1,562,361 ) ( 25,661,600 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from note payable 875,000 — Payments on note payable ( 317,571 ) ( 7,654,845 ) Proceeds from exercise of warrants — 8,090,709 Proceeds from sale of common stock units — 28,379,650 Proceeds from exercise of options – related party — 16 Cash used for acquisition of treasury stock ( 110,000 ) — Net cash provided by financing activities 447,429 28,815,530 Net change in cash ( 3,036,313 ) ( 354,152 ) Cash – beginning of year 3,470,339 3,824,491 Cash – end of year $ 434,026 $ 3,470,339 Cash paid for: Interest $ — $ 116,736 Income taxes $ — $ — Supplemental non-cash disclosure: Establishment of ROU operating lease asset and related liability $ — $ 233,308 Merchant portfolio purchase installment obligation $ — 2,000,000 Options issued for acquisition of natural gas rights $ — $ 4,499,952 The accompanying notes are an integral part of these consolidated financial statements. F- 6 The OLB Group, Inc. and Subsidiaries Notes to the Consolidated Financial Statements December 31, 2022 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 and business segments. The Company generates its revenue through two business segments its Fintech Services and Cryptocurrency Mining Business segments. Fintech Services: The Company provides integrated financial and transaction processing services (“Fintech 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. (“Securus365”) 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 $ 1,000,000 -$ 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 lending and transactional business leveraging the Company’s Cryptocurrency Business and Fintech Services business. The Company also provides ecommerce development and consulting services on a project-by-project basis. Cryptocurrency Mining 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 Bitcoin mining (“Cryptocurrency Business”). 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 “CAI Options”). The natural gas was being used in connection with the Cryptocurrency Business prior to opening the Selmer, Tennessee location. On November 22, 2022, Mr. Ronny Yakov purchased the CAI Options, in a privately negotiated transaction, for $ 700,000 using his personal funds. 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 December 31, 2022, all 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. F- 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. Correction of Immaterial Error Subsequent to the initial issuance of the Company’s 2021 financial statements on March 28, 2022, management discovered it did not record the accrual for dividends on its Series A Preferred Stock. 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. In accordance with Staff Accounting Bulletin (“SAB”) No. 99, “Materiality,” and SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” the Company evaluated the error and determined that the related impact did not materially misstate previously issued consolidated financial statements. Although the Company concluded that the misstatement was not material to its previously issued consolidated financial statements, the Company has determined it is appropriate to adjust its previously issued consolidated financial statements to correct for the error in the context of comparative financial statements. The following are the relevant line items from the Company’s consolidated financial statements which illustrate the effect of the corrections to the periods presented: Balance sheet: As Previously December 31, 2021 Reported Adjustments As Revised Total assets $ 45,529,491 $ — $ 45,529,491 Preferred dividend payable — 824,674 824,674 Other 3,324,290 — 3,324,290 Total liabilities $ 3,324,290 $ 824,674 4,148,964 Additional paid-in capital 67,810,922 ( 824,674 ) 66,986,248 Others ( 25,605,721 ) ( 25,605,721 ) Total stockholders’ equity $ 42,205,201 $ ( 824,674 ) $ 41,380,527 Statement of operations As Previously Year ended December 31, 2021 Reported Adjustments As Revised Net Loss $ ( 4,978,358 ) $ — $ ( 4,978,358 ) Preferred stock dividends — ( 555,960 ) ( 555,960 ) Net loss allocable to common shareholders ( 4,978,358 ) ( 555,960 ) ( 5,534,318 ) Loss per share $ ( 0.63 ) $ ( 0.70 ) Weighted average common shares outstanding 7,918,263 7,918,263 F- 8 Reclassifications Certain reclassifications have been made to the prior year financial information to conform to the presentation used in the financial statements for year ended December 31, 2022. 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 December 31, 2022, the Company had no cash in excess of the FDIC’s $ 250,000 coverage limit. Operating Segments Operating segments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the Chief Operating Decision Maker (“CODM”), or decision maker group, in deciding how to allocate resources to an individual segment and in assessing performance. Our chief operating decision–making group is composed of the chief executive officer and Vice President. The Company has two operating segments as of December 31, 2022 and 2021. See Note 15, “Segment Information”. Stock-based compensation We account for equity-based transactions with employees and non-employees under the provisions of FASB ASC Topic 718, “Compensation – Stock Compensation” (Topic 718) , which establishes that equity-based payments to employees and non-employees are recorded at the grant date the fair value of the equity instruments the entity is obligated to issue when the employees and non-employees have rendered the requisite service and satisfied any other conditions necessary to earn the right to benefit from the instruments. Topic 718 also states that observable market prices of identical or similar equity or liability instruments in active markets are the best evidence of fair value and, if available, should be used as the basis for the measurement for equity and liability instruments awarded in these share-based payment transactions. However, if observable market prices of identical or similar equity or liability instruments are not available, the fair value shall be estimated by using a valuation technique or model that complies with the measurement objective, as described in FASB ASC Topic 718. 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 years ended December 31, 2022 and 2021 does not include warrants to acquire 8,563,127 and 9,963,127 shares of common stock, respectively, because of their anti-dilutive effect. The weighted average number of common shares for the year ended December 31, 2022 and 2021 does not include 2,362,321 and 772,362 options, respectively, to purchase common stock because of their anti-dilutive effect. Property and Equipment Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets, which range from three to seven years. Leasehold improvements are amortized over the lesser of the remaining term of the lease or the estimated useful life of the asset. Expenditures for repairs and maintenance are expensed as incurred. Impairment of Long-Lived Assets The Company periodically reviews the carrying value of its long-lived assets held and used at least annually or when events and circumstances warrant such a review. If significant events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable, the Company performs a test of recoverability by comparing the carrying value of the asset or asset group to its undiscounted expected future cash flows. Cash flow projections are sometimes based on a group of assets, rather than a single asset. If cash flows cannot be separately and independently identified for a single asset, the Company determines whether impairment has occurred for the group of assets for which it can identify the projected cash flows. If the carrying values are in excess of undiscounted expected future cash flows, it measures any impairment by comparing the fair value of the asset group to its carrying value. If the fair value of an asset or asset group is determined to be less than the carrying amount of the asset or asset group, impairment in the amount of the difference is recorded. Merchant Portfolios Merchant portfolios are valued at fair value of merchant customers on the date of acquisition and are amortized over their estimated useful lives ( 7 years). F- 9 Goodwill The Company accounts for business combinations under the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805, “Business Combinations,” where the total purchase price is allocated to the tangible and identified intangible assets acquired and liabilities assumed based on their estimated fair values. The purchase price is allocated using the information currently available, and may be adjusted, up to one year from acquisition date, after obtaining more information regarding, among other things, asset valuations, liabilities assumed and revisions to preliminary estimates. The purchase price in excess of the fair value of the tangible and identified intangible assets acquired less liabilities assumed is recognized as goodwill. The Company tests for indefinite lived intangibles and goodwill impairment in the fourth quarter of each year and whenever events or circumstances indicate that the carrying amount of the asset exceeds its fair value and may not be recoverable. In accordance 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 at December 31, 2022 and 2021. 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 $ 0 and $ 38,000 as of December 31, 2022 and 2021, respectively. 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. Other Current Assets Other current assets comprised of the following: December 31, 2022 December 31, 2021 Cryptocurrency at cost $ 1,030,183 $ 304,004 Investment in cryptocurrency-based fund 250,000 250,000 Other current assets 456,911 175,347 Total $ 1,737,094 $ 729,351 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. F- 10 Disaggregation of Revenue The following table presents the Company’s revenue disaggregated by revenue source: For the Years Ended December 31, 2022 2021 Revenue from contracts with customers: Wholesale contracts $ 26,424,478 $ 13,336,832 Retail contracts $ 1,646,663 $ 1,680,680 Other transaction and processing fees $ 1,571,659 $ 1,389,243 Cryptocurrency mining fees $ 726,179 $ 304,004 Total transactions and processing fees $ 30,368,979 $ 16,710,759 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. 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. F- 11 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. Bitcoin Mining The Company has entered into digital asset mining pools by executing contracts, as amended from time to time, with the mining pool operators to provide computing power to the mining pool. The contracts are terminable at any time by either party and the Company’s enforceable right to compensation only begins when the Company provides computing power to the mining pool operator. In exchange for providing computing power, the Company is entitled to a fractional share of the fixed Bitcoin award the mining pool operator receives (less digital asset transaction fees to the mining pool operator which are immaterial and are recorded as a deduction from revenue), for successfully adding a block to the Bitcoin blockchain. The Company’s fractional share is based on the proportion of computing power the Company contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm. Providing computing power to solve complex cryptographic algorithms in support of the Bitcoin blockchain (in a process known as “solving a block”) is an output of the Company’s ordinary activities. The provision of providing such computing power is the only performance obligation in the Company’s contracts with mining pool operators. The transaction consideration the Company receives, if any, is noncash consideration, which the Company measures at fair value on the date received, which is not materially different than the fair value at contract inception or the time the Company has earned the award from the pools. The consideration is all variable. Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the mining pool operator successfully places a block (by being the first to solve an algorithm) and the Company receives confirmation of the consideration it will receive, at which time revenue is recognized. There is no significant financing component in these transactions. Impairment of cryptocurrency assets is tested annual or more frequently if events or circumstances change. At December 31, 2022, the Company had 31.06 Bitcoin and the fair value of the Company’s digital assets was $ 515,710 based on the price of Bitcoin being $ 16,603.67 . On March 23, 2023, the Financial Accounting Standards Board issued an Exposure Draft “Intangibles – Goodwill and Other – Crypto Assets” (Subtopic 350-60), Accounting for and Disclosure of Crypto Assets. Under the provisions of this Exposure Draft, an entity would be required to present crypto assets separately from other intangible assets in the balance sheet, and measure crypto assets at fair value with changes recognized in net income each reporting period. Upon effectiveness, an entity would reflect a cumulative-effect adjustment to the opening balance of retained earnings. Issuance of the final Standard is subject to public comment and deliberations. Adoption of this Exposure Draft in its current form would result in a charge to retained earnings in the amount of approximately $ 514,500 . F- 12 NOTE 3 – LIQUIDITY AND CAPITAL RESOURCES The Company’s consolidated financial statements have been prepared in accordance with US GAAP, which assumes that the Company’s management will evaluate whether it will be able to meet its obligations and continue its operations in the normal course of business. At December 31, 2022, the Company had cash of approximately $ 434,000 , accounts receivable of approximately $ 1,083,000 and bitcoin at cost of $ 1,030,000 (with the fair value of approximately $ 515,710 based on the price of Bitcoin being $ 16,603.67 at December 31, 2022), and accounts payable and accrued expenses of approximately $ 1,020,000 . To date the Company has generated cash flows from issuances of equity and indebtedness. Management believes that its current available resources will be sufficient to fund the Company’s planned expenditures over the next 12 months. However, management recognizes that it may be required to obtain additional resources via issuances of indebtedness or equity to successfully execute its business plans. No assurances can be given that management will be successful in raising additional capital, if needed, or on acceptable terms. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company determine it shall be unable to continue as a going concern. NOTE 4 – INTANGIBLE ASSETS Intangible assets, net, consist of the following as of: December 31, 2022 December 31, 2021 Merchant Portfolios $ 2,405,000 $ 2,405,000 Less accumulated amortization ( 1,793,333 ) ( 1,562,798 ) Net residual portfolios $ 611,667 $ 842,202 December 31, 2022 December 31, 2021 Trade name $ 2,500,000 $ 2,500,000 Less accumulated amortization ( 2,000,000 ) ( 1,500,000 ) Net trade name $ 500,000 $ 1,000,000 December 31, 2022 December 31, 2021 Acquired Merchant Portfolio $ 18,000,000 $ 18,000,000 Less accumulated amortization ( 2,476,191 ) ( 190,476 ) Net trade name $ 15,523,809 $ 17,809,524 December 31, 2022 December 31, 2021 Exclusive agreement to purchase natural gas $ 4,499,952 $ 4,499,952 Less accumulated amortization ( 825,173 ) ( 187,498 ) Net mineral rights $ 3,674,779 $ 4,312,454 Total intangible assets, net $ 20,310,255 $ 23,964,180 Amortization expense for the years ended December 31, 2022 and 2022 was $ 3,664,488 and $ 1,241,589 , respectively. The Company’s merchant portfolios and tradename are being amortized over respective useful lives of 7 and 5 years. The Company’s agreement to purchase natural gas is being amortized over the useful life of 10 years. F- 13 The following sets forth the estimated amortization expense related to amortizing intangible assets for the years ended December 31: 2023 $ 3,834,281 2024 3,320,234 2025 3,021,424 2026 3,021,424 2027 3,021,424 Thereafter 4,050,830 Total $ 20,269,617 The weighted average remaining useful life of amortizing intangible assets was 5.20 years at December 31, 2022. NOTE 5 – PROPERTY AND EQUIPMENT Long lived assets, including property and equipment assets to be held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Impairment losses are recognized if expected future cash flows of the related assets are less than their carrying values. Measurement of an impairment loss is based on the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell. Property and equipment are first recorded at cost. Depreciation and is computed using the straight-line method over the estimated useful lives of the various classes of assets. Maintenance and repair expenses, as incurred, are charged to expense. Betterments and renewals are capitalized in plant and equipment accounts. Cost and accumulated depreciation applicable to items replaced or retired are eliminated from the related accounts with any gain or loss on the disposition included as income. Assets stated at cost, less accumulated depreciation consisted of the following: December 31, 2022 December 31, 2021 Furniture and Fixtures $ 36,471 $ 36,471 Office Equipment 1,537,321 474,873 Computer Software 182,345 182,345 Leasehold Improvements 113,676 17,877 Bitcoin Mining Equipment 9,410,000 9,410,000 Plant and Machinery 409,296 — Total 11,689,109 10,121,566 Less accumulated depreciation ( 4,363,897 ) ( 1,154,470 ) Property and Equipment, net $ 7,325,212 $ 8,967,096 Depreciation expense Depreciation expense for the years ended December 31, 2022 and 2021 was $ 3,204,246 and $ 649,310 , respectively. F- 14 NOTE 6 – 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 received notice on October 11, 2021 that the $ 236,000 PPP Loan had been entirely forgiven resulting in the recognition of a gain on extinguishing of debt. On November 24, 2021, we entered into an Asset Purchase Agreement (the “Agreement”) dated as of November 15, 2021 with FFS Data Corporation (“Seller”) whereby we acquired a portfolio of merchants utilizing financial transaction processing services (the “Acquired Merchant Portfolio”). The purchase price was $ 20 million, with $ 16 million paid at closing, $ 2 million payable within six months after closing, and a $ 2 million payment to be transferred to an escrow account, contingent upon an Attrition Adjustment, as described in the Agreement. Company management has recognized a liability for the contingent payment amount. However, on July 18, 2022, the Company notified the Seller of certain breaches of contract relating to, among other things, representations made by Seller in the Agreement, for which it will seek a reduction or cancellation of the final payment and a potential reduction in the overall purchase price. The Company has filed a claim for breach of contract against Seller and Seller has filed a breach of contract counterclaim against the Company. The matter is currently in the early stages and no date for an arbitration or court hearing has been scheduled. On November 29, 2021, the Company entered into a Master Equipment Finance Agreement (the “MFA”) with VFS LLC (“VFS”) which would allow the Company to finance the purchase of certain equipment. The collateral and interest rate are determined at the time the Company borrows the funds. During the year ended December 31, 2022, the Company received, as an initial draw on the MFA, $875,000 from VFS (the “Equipment Loan”). The Equipment Loan is secured by Bitcoin mining computers being utilized by DMINT. The Equipment Loan requires monthly payments of $24,837.75 until the loan is repaid in full or it matures on November 29, 2024, requiring a full payment of all principal and accrued and unpaid interest. F- 15 NOTE 7 – 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 $ 0.001 per 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, 135.03 % volatility (expected volatility based on weighted-average historical volatility of the Company on the grant date) 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 “CAI Options”). 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 (expected volatility based on weighted-average historical volatility of the Company on the grant date) and expected life of the options of 10 years. On November 22, 2022, Mr. Ronny Yakov purchased the CAI Options, in a privately negotiated transaction, for $ 700,000 using his personal funds. In January 2022, the Company entered into new employment contracts with Mr. Yakov (CEO) and Mr. Smith (Vice President, Finance). Pursuant to the terms on the employment agreements they were entitled to stock options to purchase shares of common stock ( 200,000 – Mr. Yakov (similar amount granted annually during employment contract) and 275,000 – Mr. Smith (granted only in 2022)). The options had an exercise price of $ 0.001 per share. Options of Mr.Yakov vested during the year, and options of Mr. Smith vested equally over five years. However, as per 2020 Equity Incentive Plan then in force, only 178,162 stock options remained authorized for issue on that date. Therefore only 178,162 stock options were considered granted initially (the number has been allocated between Mr. Yakov and Mr. Smith pro rata). The aggregate fair value of the options totaled $ 368,627 based on the Black Scholes Merton pricing model using the following estimates: exercise price of $ 0.001 , 1.325 % risk free rate, 125.9 % volatility (expected volatility based on weighted-average historical volatility of the Company on the grant date) and expected life of the options of 4 years. On December 22, 2022 shareholders of the Company have approved Amended and Restate Equity Incentive Plan, increasing the number of stock options Company is allowed to use in stock-based compensation agreements with employees. Simultaneously, the Company modified the stock option agreements with Mr. Yakov and Mr. Smith as follows. Out of stock options to purchase 200,000 shares of common stock granted to Mr. Yakov, 100,000 options immediately vested with an additional 50,000 vested on January 1, 2023, and the remaining 50,000 vesting on January 1, 2024. Mr. Yakov is entitled to a similar grant annually during his employment period. The options have an exercise price of $ 0.01 per share. The aggregate fair value of the options totaled $ 1,217,264 based on the Black Scholes pricing model using the following estimates: exercise price of $ 0.01 , risk free rates ranging from 3.9 % to 4.6 %, 118 % volatility (expected volatility based on weighted-average historical volatility of the Company on the grant date) and expected life of the options of ranging from 1 to 3 years. Out of stock options to purchase 275,000 shares of common stock granted to Mr. Smith, 137,500 options immediately vested with an additional 68,750 vested on January 1, 2023, and the remaining 68,750 vesting on January 1, 2024. The options have an exercise price of $ 0.01 per share. The aggregate fair value of the options totaled $ 279,412 based on the Black Scholes pricing model using the the same estimates as stated above. Modification of option contracts with 2 officers of the Company in December 2022 resulted in total incremental compensation cost of $ 91,361 . A summary of the status of the Company’s outstanding stock options and changes during the year ended December 31, 2022 is presented below: Stock Options Options Weighted Average Exercise Price Aggregate Intrinsic Value Options outstanding on December 31, 2020 271,839 $ 0.0001 $ 1,408,755 Granted 774,585 $ 0.0001 4,538,991 Exercised - 159,103 $ 0.0001 ( 852,792 ) Expired — $ — — Options outstanding on December 31, 2021 887,321 $ 0.0001 $ 2,351,301 Granted 1,653,162 $ 0.0090 1,863,382 Exercised — $ — — Modified ( 178,162 ) $ 0.0010 ( 182,153 ) Expired — $ — — Options outstanding on December 31, 2022 2,362,321 $ 0.0064 1,966,901 Options exercisable on December 31, 2022 1,096,075 $ 0.0023 $ 917,027 Weighted-average grant-date fair value of options Those nonvested at the beginning of the 2022 year $ 4.79 Those nonvested at the end of the 2022 year $ 1.10 Those that during the 2022 year were: Granted (last year - $ 5.9 ) $ 1.27 Vested $ 1.85 Modified $ 2.07 Forfeited $ - Weighted-average remaining contractual term of options outstanding as at December 31, 2022 is 7.8 years. Weighted-average remaining contractual term of options exercisable as at December 31, 2022 is 8.1 years. Total compensation cost related to nonvested awards not yet recognized as of December 31, 2022 amounted to $ 1,335,923 . The weighted-average period over which it is expected to be recognized is 4.3 years. F- 16 NOTE 8 – WARRANTS 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. On November 2, 2021, the Company entered into a series of securities purchase agreements with certain institutional accredited investors pursuant to which the Company issued and sold, in a private placement (i) 1,969,091 shares of the Company’s Common Stock (ii) pre-funded 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 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. Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contract Term Outstanding, December 31, 2020 3,353,698 4.61 4.81 Cancelled ( 40,000 ) $ 7.50 - Underwriter Warrants 8,881,333 $ 3.62 - Warrant A Exercised ( 742,220 ) $ 9.00 - Warrant B Exercised ( 313,320 ) $ 4.50 - Underwriter Warrant Exercised ( 1,176,364 ) $ 0.0001 - Outstanding, December 31, 2021 9,963,127 $ 5.02 4.55 Underwriter Warrant Exercised ( 1,400,000 ) $ 0.0001 - Outstanding, December 31, 2022 8,563,127 $ 5.02 3.00 NOTE 9 – OPERATING LEASES 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. On January 11, 2022, DMINT entered into two leases (the “Leases”) in Bradford, Pennsylvania relating to a combined 10,000 square feet of property located at the Bradford Regional Airport Authority multi-tenant building in Lafayette Township. The Leases are each for a term of five years , ending on the later of the date of occupancy and November 10, 2026. The monthly base rent for “Cell 3”, comprising 4,000 square feet, is $ 1,667 per month. The monthly base rent for “Cell 4”, comprising 6,000 square feet, is $ 2,500 per month. The total rent for the entire lease term of the Leases is $ 250,00 and $ 8,768 is payable as a security deposit. Balance Sheet Classification December 31, 2022 Asset Operating lease asset Right of use asset $ 402,538 Total lease asset $ 402,538 Liability Operating lease liability – current portion Current operating lease liability $ 133,180 Operating lease liability – noncurrent portion Long-term operating lease liability 273,166 Total lease liability $ 406,346 F- 17 Lease obligations at December 31, 2022 consisted of the following: For the year ended December 31: 2022 $ 150,139 2023 144,393 2024 50,000 2025 50,000 2026 41,667 Total payments $ 436,199 Amount representing interest $ ( 29,853 ) Lease obligation, net 406,346 Less current portion ( 133,180 ) Lease obligation – long term $ 273,166 Rent expense for the years ended December 31, 2022 and 2021, was $ 171,723 and $ 106,201 , respectively. NOTE 10 – COMMON STOCK On August 18, 2021, the Company sold, in a registered direct offering, units comprised of 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, for total net proceeds of $ 6,100,000 . 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 common stock, along with warrants to purchase up to 7,121,819 shares of common stock, for total net proceeds of approximately $22,918,000. On January 2022, Armistice Capital, received 1,400,000 shares of common stock upon the exercise of 1,400,000 warrants at $0.0001. On July 12, 2022, the Board of the Company authorized a share repurchase program, pursuant to which the Company may repurchase up to 1 million shares of its outstanding shares of common stock. The Board authorized the Company to purchase its common stock from time to time on a discretionary basis through open market purchases, privately negotiated transactions or other means, including trading plans intended to qualify under Rule 10b5-1 of the Exchange Act, in accordance with applicable federal securities laws and other applicable legal requirements. The Company expects to fund these repurchases through existing cash balances. Decisions regarding the amount and the timing of purchases under the program will be influenced by the Company’s cash on hand, cash flows from operations, general market conditions and other factors. The Company is not obligated to acquire any particular amount of its common stock. This program has no set termination date and may be suspended or discontinued by the Board at any time. Refer to Note 12 for common stock issued to related parties. F- 18 NOTE 11 – PREFERRED STOCK Our certificate of incorporation, as amended, authorizes the issuance of 1,000,000 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. Series A Preferred Stock The Company may issue up to 10,000 shares of Series A Preferred Stock at a stated value (the “Stated Value”) of $1,000 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. Conversion The Series A Preferred Stock holders may convert, at their option, on or after the date on which the certain 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 of $ 9 . The holders of Series A Preferred Stock are permitted to convert their shares of Series A Preferred Stock into shares of common stock at such time as the Term Loan has already 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 has 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 has full voting rights and powers equal to the voting rights and powers of the holders of common stock, and is entitled, to notice of any stockholders’ meeting in accordance with the Company’s bylaws, and is 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. F- 19 NOTE 12 – RELATED PARTY TRANSACTIONS On November 19, 2021, the company granted 10,800 shares of common stock to Alina Dulimof, Director, for services. The shares were valued at $ 4.63 , the closing stock price on the date of grant, for total non-cash stock compensation expense of $ 50,004 . On November 19, 2021, the company granted 10,800 shares of common stock to Amir Sternhell, Director, for services. The shares were valued at $ 4.63 , the closing stock price on the date of grant, for total non-cash stock compensation expense of $ 50,004 . On November 19, 2021, the company granted 14,039 shares of common stock to Ehud Ernst, Director, for services. The shares were valued at $ 4.63 , the closing stock price on the date of grant, for total non-cash stock compensation expense of $ 65,001 . On January 3, 2022, the Company entered into a share exchange agreement with all of the shareholders of Crowd Ignition, Inc. (“Crowd Ignition”) whereby the Company purchased 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 “CI Issued Shares”). The value of the CI Issued 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. The purchase price was used solely to establish the agreed upon purchase price between the parties and not for accounting purposes. 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, collectively owned 100 % of the equity of Crowd Ignition. The acquisition of Crowd Ignition., 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 condensed consolidated financial statements at their respective carry-over basis; however, as of January 3, 2022, Crowd Ignition has no assets, liabilities or other operations. On December 14, 2022, Mr. Herzog converted 3,612 shares of Series A Preferred Stock together with $ 932,193 of accrued dividends into 504,910 shares of common stock. The Company is obliged to issue shares worth of $ 165,000 to Directors for their service during the year ended December 31, 2022 – a provision for this compensation has been accrued in the balance sheet as of December 31, 2022. Refer to Note 7 for options to purchase shares of common stock issued to the CEO and shareholder. F- 20 NOTE 13 – 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. NOTE 14 – INCOME TAX Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Net deferred tax assets consist of the following components as of December 31: 2022 2021 Deferred Tax Assets: NOL Carryover $ 5,913,700 $ 2,431,700 Allowance for Doubtful Accounts 10,300 10,300 Depreciation and amortization ( 927,730 ) 687,605 Less valuation allowance ( 4,986,270 ) ( 3,129,605 ) Net deferred tax assets $ — $ — The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pre-tax income from continuing operations for the period ended December 31, due to the following: 2022 2021 Book loss $ ( 1,635,000 ) $ ( 1,045,000 ) State taxes ( 467,000 ) ( 299,000 ) Meals and entertainment 2,200 1,800 Stock based compensation 168,400 124,500 Non deductible expenses 84,476 156,421 Other adjustments ( 9,741 ) ( 200,332 ) Valuation allowance 1,865,665 860,947 $ — $ — At December 31, 2022, the Company had operating loss carry forwards of approximately $21,900,00, $3,200,000 of which expire from 2021 – 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. F- 21 NOTE 15 - SEGMENTS The Company applies ASC 280, Segment Reporting , in determining its reportable segments. The Company has two reportable segments during 2021: Cryptocurrency Mining and Fintech Services. The guidance requires that segment disclosures present the measure(s) used by the Chief Operating Decision Maker (“CODM”) to decide how to allocate resources and for purposes of assessing such segments’ performance. The Company’s CODM is comprised of several members of its executive management team who use revenue and expenses of our two reporting segments to assess the performance of the business of our reportable operating segments. The following tables details revenue, operating expenses, and assets for the Company’s reportable segments for the year ended December 31, 2022 and 2021. For the Year ended December 31, 2022 For the Year ended December 31, 2021 Reportable segment revenue: Revenue, net - cryptocurrency mining $ 726,179 $ 304,004 Fintech services revenue 29,642,800 16,406,755 Total segment and consolidated revenue $ 30,368,979 $ 16,710,759 Operating Expenses Cryptocurrency mining ( 3,193,683 ) ( 187,498 ) Fintech services ( 26,857,523 ) ( 15,183,613 ) Segment profit 317,773 1,339,648 General and administrative expenses ( 8,715,769 ) ( 6,104,387 ) Loss from operations $ ( 8,397,996 ) $ ( 4,764,739 ) December 31, 2022 December 31, 2021 Total Assets: Cryptocurrency mining $ 9,376,078 $ 9,749,652 Fintech services 29,237,103 33,779,839 $ 38,613,181 $ 43,529,491 NOTE 16 – Quarterly Data - Unaudited Revised Interim Financial Information The following tables represent amounts previously reported and revised as a result of the error associated with the accounting for our Series A Preferred Stock. See Note 2 for additional information. As Previously March 31, 2022 Reported Adjustments As Revised Total assets $ 44,949,908 $ — $ 44,949,908 Preferred dividend payable — 963,664 963,664 Other 4,129,470 — 4,129,470 Total liabilities $ 4,129,470 $ 963,664 $ 5,093,134 Additional paid-in capital 67,881,483 ( 963,664 ) 66,917,819 Others ( 27,061,045 ) — ( 27,061,045 ) Total shareholders’ deficit $ 40,820,438 $ ( 963,664 ) $ 39,856,774 F- 22 As Previously June 30, 2022 Reported Adjustments As Revised Total assets $ 43,218,537 $ — $ 43,218,537 Preferred dividend payable — 1,102,654 1,102,654 Other 3,764,360 — 3,764,360 Total liabilities $ 3,764,360 $ 1,102,654 $ 4,867,014 Additional paid-in capital 67,953,176 ( 1,102,654 ) 66,850,522 Others ( 28,498,999 ) — ( 28,498,999 ) Total shareholders’ deficit $ 39,454,177 $ ( 1,102,654 ) $ 38,351,523 As Previously September 30, 2022 Reported Adjustments As Revised Total assets $ 41,177,888 $ — $ 41,177,888 Preferred dividend payable — 1,241,644 1,241,644 Other 3,365,580 — 3,365,580 Total liabilities $ 3,365,580 $ 1,241,644 $ 4,607,224 Additional paid-in capital 68,023,869 1,241,644 69,265,513 Others ( 30,211,561 ) — ( 30,211,561 ) Total shareholders’ deficit $ 37,812,308 $ 1,241,644 $ 39,053,952 F- 23 As Previously Quarter ended March 31, 2022 Reported Adjustments As Revised Net Loss $ ( 1,455,596 ) $ — $ ( 1,455,596 ) Preferred stock dividends — ( 138,990 ) ( 138,990 ) Net loss allocable to common shareholders $ ( 1,455,596 ) $ ( 138,990 ) ( 1,594,586 ) Loss per share $ ( 0.10 ) $ ( 0.11 ) Weighted average common shares outstanding 14,510,703 14,510,703 Impact of correction of error - quarter Impact of correction of error - year to date As Previously As Previously Quarter ended June 30, 2022 Reported Adjustments As Revised Reported Adjustments As Revised Net Loss $ ( 1,437,954 ) $ — $ ( 1,437,954 ) $ ( 2,893,550 ) — $ ( 2,893,550 ) Preferred stock dividends — ( 138,990 ) ( 138,990 ) — $ ( 277,980 ) ( 277,980 ) Net loss allocable to common shareholders $ ( 1,437,954 ) $ ( 138,990 ) $ ( 1,576,944 ) $ ( 2,893,550 ) $ ( 277,980 ) $ ( 3,171,530 ) Loss per share $ ( 0.10 ) $ ( 0.11 ) $ ( 0.20 ) $ ( 0.22 ) Weighted average common shares outstanding 14,702,804 14,702,804 14,607,209 14,607,209 Impact of correction of error - quarter Impact of correction of error - year to date As Previously As Previously Quarter ended September 30, 2022 Reported Adjustments As Revised Reported Adjustments As Revised Net Loss $ ( 1,712,562 ) $ — $ ( 1,712,562 ) $ ( 4,606,112 ) — $ ( 4,606,112 ) Preferred stock dividends — ( 138,990 ) ( 138,990 ) — $ ( 416,970 ) ( 416,970 ) Net loss allocable to common shareholders $ ( 1,712,562 ) $ ( 138,990 ) $ ( 1,851,552 ) $ ( 4,606,112 ) $ ( 416,970 ) $ ( 5,023,082 ) Loss per share $ ( 0.12 ) $ ( 0.13 ) $ ( 0.31 ) $ ( 0.34 ) Weighted average common shares outstanding 14,702,804 14,702,804 14,639,523 14,607,209 NOTE 17 – SUBSEQUENT EVENTS On February 14, 2023, a shareholder reported to the Company that is had incurred short swing profits of $ 114,654.46 in connection with a series of purchases and sales of the Company’s stock on the open market. The shareholder disgorged such short-swing profits to the Company on February 28, 2023. On March 29, 2023, DMINT entered into a Surrender and Release Agreement with Bradford Regional Airport Authority relating to the property in Bradford, Pennsylvania whereby DMINT agreed to pay $ 50,000 in exchange for an early termination of the Leases. March 31, 2023 is the final day DMINT occupied the property and all mining computers have been moved to the Selmer, Tennessee location. F- 24 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure On March 13, 2023, The OLB Group, Inc. (the “Company”) was informed by Daszkal Bolton LLP (“Daszkal”), the Company’s independent registered public accounting firm, that it had completed a business combination agreement with CohnReznick LLP. As a result of this transaction Daszkal will resign as the Company’s independent registered public accounting firm following its filing of the Annual Report on Form 10-K for the year ended December 31, 2022 with the Securities and Exchange Commission. Daszkal’s reports on the Company’ financial statements for the past two years did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting principles. During the years ended December 31, 2021, and 2020, and the subsequent interim periods through November 14, 2022, there were (i) no disagreements (as described in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between OLB and Daszkal on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to Daszkal’s satisfaction, would have caused Daszkal to make reference thereto in its reports on the financial statements for such years; and (ii) no “reportable events” within the meaning of Item 304(a)(1)(v) of Regulation S-K, except that Daszkal advised the Company of material weaknesses in its internal control over financial reporting as of December 31, 2021 and 2020. On March 28, 2023, the Company approved the engagement of MAC Accounting Group, LLP (“MAC”) as the Company’s new independent registered public accounting firm, effective following the Company’s filing of its Annual Report on Form 10-K for the fiscal year ended December 31, 2022.