Item 9A. Controls and Procedures
Item 9A. Controls and Procedures.
Management’s Report Disclosure Controls
and Procedures
During the fourth quarter of the year ended December
31, 2022, 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 effective to ensure that information
required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, are 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.
Management’s Report on Internal Control
over Financial Reporting
Our management is responsible for establishing
and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed
to provide reasonable, but not absolute, assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
A material weakness is a deficiency, or a combination
of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement
of our annual or interim financial statements will not be prevented or detected on a timely basis.
Our management assessed the effectiveness of
the Company’s internal control over financial reporting at December 31, 2022, and this assessment identified no material weaknesses
in our internal control over financial reporting.
53
In making its assessment of internal control
over financial reporting, management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) in Internal Control—Integrated Framework (2013). Management has concluded that, at December 31, 2022, the Company’s
internal control over financial reporting were effective based on those criteria.
This annual report does not include an attestation
report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s
report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the SEC that permit
the Company to provide only management’s report in this annual report.
Inherent limitations on effectiveness of controls
Internal control over financial reporting has
inherent limitations, which include but is not limited to the use of independent professionals for advice and guidance, interpretation
of existing and/or changing rules and principles, segregation of management duties, scale of organization, and personnel factors. Internal
control over financial reporting is a process, which involves human diligence and compliance and is subject to lapses in judgment and
breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper
management override. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements
on a timely basis, however these inherent limitations are known features of the financial reporting process and it is possible to design
into the process safeguards to reduce, though not eliminate, this risk. Therefore, even those systems determined to be effective can
provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
Changes in Internal Control over Financial
Reporting
Although, 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, management continues to make improvements to internal controls as deemed necessary for changes within our
operations.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent
Inspections.
None.
54
Part III
Item 10. Directors, Executive Officers and
Corporate Governance
The following table sets forth the names, ages, and titles of our
executive officers and directors.
Name
Age
Position(s)
Ronny Yakov
64
Chief Executive Officer and Chairman of the Board of Directors
Rachel Boulds
53
Chief Financial Officer
Patrick Smith
50
Vice President, Finance
Ehud Ernst
63
Director and Chairman of the Audit Committee
Amir Sternhell
61
Director
Alina Dulimof
56
Director
Ronny Yakov is Chief
Executive Officer, Chairman of the Board of Directors, founder and majority shareholder of the Company. Mr. Yakov has over 25 years of
experience of concept-to-print, software and e-commerce marketing experience with Fortune 500 and 1,000 companies and a proven track
record of helping clients adapt their businesses to technological developments. In 1996, Mr. Yakov entered into the electronic mail-order
catalog business with Playboy Enterprises, creating and hosting two e-commerce sites: Critics’ Choice Video and Collectors’
Choice Music. As founder of the Company, Mr. Yakov has since developed a number of other branded e-commerce sites for clients, selling
a variety of products including sporting goods, chocolates and cosmetics, with which the company now partners to provide ongoing hosting
and maintenance. Other significant accomplishments of Mr. Yakov have included establishing an AT&T wholesale e-commerce platform
for 180,000 employees and working with high-profile clients such as Disney, Cisco Systems, Pfizer, Motorola, and Microsoft, among many
others. Mr. Yakov also developed and maintains a complex extranet/intranet infrastructure that allows Doremus, an Omnicom Communication
subsidiary, to provide its advertising services to 50 of the top financial institutions on a real-time basis.
Rachel Boulds is Chief
Financial Officer of the Company. Ms. Boulds currently works for the Company on a part-time basis (spending approximately 80% of her
time working for the Company) while also operating her sole accounting practice which she has led since 2009 and which provides all aspects
of consulting and accounting services to clients, including the preparation of full disclosure financial statements for public companies
to comply with GAAP and SEC requirements. Ms. Boulds also currently provides outsourced chief financial officer services for two other
companies. From August 2004 through July 2009, she was employed as a Senior Auditor for HJ & Associates, LLC, where she performed
audits and reviews of public and private companies, including the preparation of financial statements to comply with GAAP and SEC requirements.
From 2003 through 2004, Ms. Boulds was employed as a Senior Auditor at Mohler, Nixon and Williams. From September 2001 through July 2003,
Ms. Boulds worked as an ABAS Associate for PriceWaterhouseCoopers. From April 2000 through February 2001, Ms. Boulds was employed as
an e-commerce Accountant for the Walt Disney Group’s GO.com. Ms. Boulds earned a B.S. in Accounting from San Jose University in
2001 and is licensed as a CPA in the state of Utah.
Patrick Smith is Vice
President, Finance of the Company. Mr. Smith has over 20 years of finance, accounting and operational experience in the merchant services
industry. Mr. Smith joined eVance (Formerly Calpian Commerce) in 2014 as Director of Finance. Prior to eVance, Mr. Smith spent 2 years
as Director of Financial Planning and Analysis at Cynergy Data, an ISO with over 75,000 merchants. He worked with Pay by Touch, a biometric
payments start-up company based in San Francisco, and was part of the financial team that raised over $300M in its capital funding. From
1996 to 2004, Mr. Smith worked for Concord EFS, a large merchant acquirer. His titles at Concord included Internal Audit, Financial Analyst
and Vice President/Controller. While at Concord EFS, he was part of the diligence team that worked on several large acquisitions, including
those of Star and EPS Debit networks.
55
Ehud Ernst is one
of our independent directors and Chairman of the Audit Committee of the Board of Directors. Since 2015, Mr. Ernst has been the chief
executive officer of HyperTail.es. From 2007 to 2017, Mr. Ernst founded and was the chief executive officer of Feelternet, a creative
digital agency, which served some of the largest brands in the Israeli market. From 2004 to 2007, Mr. Ernst served as division manager
at Data-Pro Proximity/BBDO, a large direct marketing and analytics agency in Israel. From 1985 to 1999, Mr. Ernst founded and was the
chief executive officer of Ernst Meron studios, one of the largest commercial photography production studio in Israel. Mr. Ernst also
co-founded Impressia.com, a marketing technology start-up venture enabling product displays at e-commerce stores. Mr. Ernst graduated
from ICP New York with a degree in Photography and Art.
Amir Sternhell is
one of our independent directors. Since 2016, Mr. Sternhell has served as chief strategy officer of Sertainty, a data optimization company.
Mr. Sternhell has 24 years of experience in the IT and Corporate Learning industries, including two-decades at .2013, where he was head
of a business intelligence unit representing Microstrategy, and, chief learning officer, representing Harvard Business Publishing. Mr.
Sternhell was the founder of the first Non-Profit Organization that assisted Israel’s Incubator System, in which he hand-held over
100 high-tech companies. Mr. Sternhell was the vice chairman of the American-Israel Chamber of Commerce and Industry, overseeing its
initiatives, and a recipient of its Business Leadership Award. Mr. Sternhell served in the Directorate of Military Intelligence for the
Israel Defense Forces, and was awarded the Most Outstanding Soldier of the Corp. in 1981. Mr. Sternhell holds an AB in Political Science
and Psychology from Tel Aviv University, an MIA in International Economics from Columbia University and an MBA from the ‘Grand
Ecole’ EDHEC ’92 specializing in IT and Management where he graduated first in his class.
Alina Dulimof is
one of our independent directors. She is currently Chief Operating Officer and Head of Investor Relations and Business Development
at Dorset Management LLC, a commodity trading hedge fund she co-founded. Since 2017, she has served as a managing director responsible
for business development with Park Avenue Securities (PAS), a wealth management advisory firm in New York. Prior to PAS, from 2012 to
2017, she was a partner with Nationwide Planning Associates and from 2007-2009, she was a VP, Private Banking at Merrill Lynch in New
York. She has passed the Series 7 (FINRA-General. Securities Representative exam) and Series 66 (NASAA_Uniform Combined State Law exam)
exams. From 1999 to 2007, Ms. Dulimoff was an Investment Manager with BrainHeart, a VC firm in Stockholm, where she was responsible for
investment decisions, while supporting the management teams of its portfolio companies. As an entrepreneur, Ms. Dulimof achieved successful
exits from 2 of her startups, prior to joining BrainHeart. For over 15 years she had managed, advised and invested in a wide range of
companies in Blockchain technology, Fintech, 5G, IoT, Cybersecurity, AI, Robotics, E-commerce, Creator economy, Mobile, OOH advertising
and Biotech, alongside entrepreneurs, venture capital and private equity firms. Prior to her investment management career, she was a
technology executive, starting at Ericsson in Stockholm, directly after her graduation with distinction with a degree in Nuclear Physics
from Bucharest University in 1988. At Ericsson, she held executive positions within diverse business areas, from research to product
development, marketing and strategic partnerships. During her tenure at Ericsson she earned an Executive MBA from Stockholm School of
Economics in 2001. She is a CFA charter holder.
None of our directors or
officers are related to each other. There are no arrangements or understandings with any of our principal stockholders, customers, suppliers,
or any other person, pursuant to which any of our directors or executive officers were appointed.
No officer or director has,
during the past five years, been involved in (a) any bankruptcy petition filed by or against any business of which such person was a
general partner or executive officer either at the time of the bankruptcy or within two years prior to that time, (b) any conviction
in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses), (c)
any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities
or (d) a finding by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission
to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
56
Director Independence
Our Board of Directors may
establish the authorized number of directors from time to time by resolution. Our Board of Directors is currently comprised of one member.
We have three (3) independent directors on the Board of Directors. The directors will be elected annually by our stockholders.
Because our common stock
is listed on the NASDAQ Capital Market, the listing rules of this stock exchange generally require that a majority of the members of
a listed company’s board of directors, and each member of a listed company’s audit, compensation and nominating and corporate
governance committees, be independent. Our Board of Directors has determined that Alina Dulimof, Ehud Ernst and Amir Sternhell do not
have any relationships that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director
and such directors are “independent” as that term is defined under the rules of the stock market.
Audit committee members must
also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act, subject to the transition rule that is applicable
to a newly public company. In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed
company may not, other than in his or her capacity as a member of the audit committee, the Board of Directors, or any other board committee
accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries;
or be an affiliated person of the listed company or any of its subsidiaries.
Role of the Board of Directors in Risk Oversight
The Board of Directors is
responsible for assessing the risks facing our company and considers risk in every business decision and as part of our business strategy.
The Board of Directors recognizes that it is neither possible nor prudent to eliminate all risk, and that strategic and appropriate risk-taking
is essential for us to compete in our industry and in the global market and to achieve our growth and profitability objectives. Effective
risk oversight, therefore, is an important priority of the Board of Directors.
While the Board of Directors
oversees our risk management, management is responsible for day-to-day risk management processes. Our Board of Directors expects management
to consider risk and risk management in each business decision, to proactively develop and monitor risk management strategies and processes
for day-to-day activities and to effectively implement risk management strategies that are adopted by the Board of Directors. The Board
of Directors expects to review and adjust our risk management strategies at regular intervals or as needed.
Code of Business Conduct
Our Board of Directors has
adopted a code of business conduct and ethics, the “Code of Business Conduct,” to ensure that our business is conducted in
a consistently legal and ethical manner. Our policies and procedures cover all major areas of professional conduct, including employee
policies, conflicts of interest, protection of confidential information, and compliance with applicable laws and regulations. The Code
of Business Conduct is available at our website at http://www.olb.com/code-of-conduct/ . The reference to our website address in
this Annual Report does not include or incorporate by reference the information on our website into this Annual Report. We intend to
disclose future amendments to certain provisions of our code of conduct, or waivers of these provisions, on our website or in public
filings.
57
Board Committees
Our Board of Directors has
an Audit Committee, Compensation Committee and a Nominating and Corporate Committee.
Audit Committee
The Audit Committee consists
of Ehud Ernst, Alina Dulimof, and Amir Sternhell with Mr. Ernst serving as Chairman. The Audit Committee assists the Board of Directors
in discharging its responsibilities relating to the financial management of our Company and oversight of our accounting and financial
reporting, our independent registered public accounting firm and their audits, our internal financial controls and the continuous improvement
of our financial policies and practices. In addition, the Audit Committee is responsible for reviewing and discussing with management
our policies with respect to risk assessment and risk management. The responsibilities of the Audit Committee, as set forth in its charter,
includes:
● appointing, approving the compensation
of, and assessing the independence of our independent registered public accounting firm;
● pre-approving audit and permissible
non-audit services, and the terms of such services, to be provided by our independent registered public accounting firm;
● reviewing and discussing with
management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures;
● coordinating the oversight
and reviewing the adequacy of our internal control over financial reporting;
● establishing policies and procedures
for the receipt and retention of accounting-related complaints, whistleblowers, and concerns; and
● reviewing and approving any
related party transactions.
The composition of our Audit
Committee complies with all applicable requirements of the SEC and the listing requirements of the Nasdaq Capital Market. We intend to
comply with future requirements to the extent they become applicable to us.
Compensation Committee
The Compensation Committee
consists of Alina Dulimof, Ehud Ernst and Amir Sternhell with Mr. Ernst serving as Chairman. The Compensation Committee assists the Board
of Directors in setting and maintaining the Company’s compensation philosophy and in discharging its responsibilities relating
to executive and other human resources hiring, assessment and compensation, and succession planning. The responsibilities of the Compensation
Committee, as set forth in its charter, includes:
● reviewing and approving corporate
goals and objectives relevant to compensation of our chief executive officer;
● evaluating the performance
of our chief executive officer in light of such corporate goals and objectives and determining the compensation of our chief executive
officer;
● determining the compensation
of all our other officers and reviewing periodically the aggregate amount of compensation payable to such officers;
58
● overseeing and making recommendations
to the Board of Directors with respect to our incentive-based compensation and equity plans; and
● reviewing and making recommendations
to the Board of Directors with respect to director compensation.
Nominating and Corporate
Governance Committee
The Nominating and Corporate
Governance Committee consists of Alina Dulimof, Ehud Ernst and Amir Sternhell with Mr. Sternhell serving as Chairman. The responsibilities
of the Nominating and Corporate Governance Committee, as set forth in its charter, includes:
● making recommendations to the
Board of Directors regarding the size and composition of the Board of Directors;
● recommending qualified individuals
as nominees for election as directors;
● reviewing the appropriate skills
and characteristics required of director nominees;
● establishing and administering
a periodic assessment procedure relating to the performance of the Board of Directors as a whole and its individual members; and
● periodically reviewing the
corporate governance guidelines and supervising the management representative charged with implementing the Company’s corporate
governance procedures.
Compensation Committee Interlocks and Insider
Participation
None of the members of the
Compensation Committee is (or was at any time previously) an officer or employee. None of our executive officers serve or in the past
fiscal year has served as a member of the Board of Directors or Compensation Committee of any other entity that has one or more executive
officers serving as a member of our Board of Directors or expected to serve on the Compensation Committee.
Item 11. Executive Compensation
The table below summarizes
all compensation awarded to, earned by, or paid to each named executive officer for our last two completed fiscal years for all services
rendered to us.
Summary Compensation Table
Name and Principal Position
Year
Salary
($)
Bonus
($)
Stock
Awards
($) (4)
Option
Awards
($) (3)
Non-Equity
Incentive Plan
Compensation
($)
Nonqualified
Deferred
Compensation
Earnings
($)
All Other
Compensation
($)
(2)
Total
Ronny Yakov,
2022
$ 750,000
$ 300,000
$ 0
$ 1,217,264
$ 0
$ 0
$ 30,000
$ 1,297,264
CEO, Chairman
2021
$ 375,000
$ 400,000
$ 0
$ 57,533
$ 0
$ 0
$ 30,000
$ 862,533
Patrick Smith,
2022
$ 350,000
$ 150,000
$ 0
$ 279,412
$ 0
$ 0
$ 0
$ 779,412
Vice President
2021
$ 175,000
$ 90,000
$ 0
$ 238,506
$ 0
$ 0
$ 0
$ 503,506
Rachel Boulds,
2022
$ 36,000
$ 0
$ 0
$ 0
$ 0
$ 0
$ 0
$ 36,000
CFO
2021
$ 36,000
$ 0
$ 0
$ 0
$ 0
$ 0
$ 0
$ 36,000
(2)
Car allowance
(3)
Stock based compensation of options granted during the years ended
December 31, 2022 and 2021 (main part vests subsequently).
59
Employment Agreements
On January 11, 2022, the
Company entered into a new employment agreement with Mr. Yakov (the “Yakov Agreement”) and a new employment agreement with
Mr. Smith (the “Smith Agreement”). The Yakov Agreement maintains Mr. Yakov’s role as the Company’s Chief Executive
Officer through December 31, 2027 and extended for one-year terms thereafter. The Smith Agreement maintains Mr. Smith’s role as
the Company’s Vice President, Finance unless terminated or upon his resignation.
The Yakov Agreement
increases Mr. Yakov’s base salary to $750,000 and he will continue to be eligible for insurance coverages and benefits
available to the Company’s employees pursuant to the terms of such plans. Mr. Yakov also received a $490,000 bonus for
acquisitions closed by the Company in 2020 and 2021 and he will be eligible to receive an acquisition bonus equal to two percent
(2%) of the gross purchase price paid in connection with a future acquisition. Mr. Yakov shall be eligible to receive an annual
bonus of Three Hundred Thousand Dollars ($300,000) based on performance criteria established by the Board. In addition, on an annual
basis, Mr. Yakov shall receive options to purchase up to 200,000 shares of common stock of the Company at an exercise price of
$0.001 per share (subsequently amended to $0.01 per share).
The Yakov Agreement also
states that, if Mr. Yakov’s employment is terminated without cause or he voluntarily terminates his employment for good reason,
he will continue to receive his base salary for the remainder of the term along with all earned bonuses. In the event the termination
is in connection with Mr. Yakov’s death, disability or bankruptcy of the Company, he will receive the pro rata amount of his base
salary through the termination date and all bonuses earned through the termination date.
The Smith Agreement
increases Mr. Smith’s base salary to $350,000 and he will continue to be eligible for insurance coverages and benefits
available to the Company’s employees pursuant to the terms of such plans. Mr. Smith shall be eligible to receive an annual
bonus of One Hundred Fifty Thousand Dollars ($150,000) based on performance criteria established by the Committee. In addition, Mr.
Smith shall receive options (the “Options”) to purchase up to 275,000 shares of common stock of the Company at an
exercise price of $0.001 per share (subsequently amended to $0.01 per share).
The Smith Agreement also
states that, if Mr. Smith’s employment is terminated without cause or he voluntarily terminates his employment for good reason,
he will continue to receive his base salary for the remainder of the term along with all earned bonuses. In the event the termination
is in connection with Mr. Smith’s death, disability or bankruptcy of the Company, he will receive the pro rata amount of his base
salary through the termination date and all bonuses earned through the termination date.
Outstanding Equity Awards at Fiscal Year-End
As of December 31, 2022,
the following equity awards were outstanding:
Per the terms of Mr. Smith’s
employment agreement, he was granted stock options to purchase up to 265,172 shares of common stock at an exercise price of $0.003 per
share. The grant vests at the rate of 1/5 beginning on each anniversary of the effective date of grant (April 10, 2018). The stock options
will cease vesting after the termination of Mr. Smith’s employment and any unvested options shall be forfeited upon the termination
of employment.
Per the terms of Mr. Yakov’s
employment agreement, effective on January 1, 2018, and on each anniversary thereafter during the term of his employment agreement, the
Company will grant to him options to purchase up to 6,667 shares of common stock with a per share exercise price equal $0.03 per share.
Each stock option shall become exercisable in increments of one-third upon each anniversary of the date on which it is granted.
On November 13, 2019, the
Company entered into an agreement with Mr. Smith and on November 25, 2019, the Company entered into an agreement Mr. Yakov, whereby the
Company and option holders each agreed that the exercise price pertaining to those options only would not be adjusted for the effects
of the Reverse Stock Split.
60
2020 Equity Incentive Plan
The Board of Directors have
adopted a 2020 Equity Incentive Plan (the “Plan”) for the Company and the holders of majority of our outstanding shares of
common stock have approved such plan. On December 22, 2022, the shareholders of the Company approved an amendment and restate of the
Plan to increase the number of our shares of Common Stock available for issuance under the 2020 Plan from 240,000 to 2,000,000 shares.
Grants of 715,000 options to purchase shares of common stock have been issued under the Plan as of December 31, 2022. In general, awards
under the Plan shall vest ratably over a period of three years (on the first, second and third anniversaries of the agreement) subject
to accelerated vesting upon a change of control of our company (although awards may be granted with different vesting terms). Further,
pursuant to the Yakov Agreement, on an annual basis until December 31, 2027, Mr. Yakov shall receive up to 200,000 options under the
Plan.
The purpose of our 2020 Equity
Incentive Plan is to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable,
to encourage a sense of proprietorship and to stimulate an active interest of such persons in our development and financial achievements.
The 2020 Equity Incentive Plan is administered by the Compensation Committee of our Board of Directors or by the full Board, which may
determine, among other things, the (a) terms and conditions of any option or stock purchase right granted, including the exercise price
and the vesting schedule, (b) persons who are to receive options and stock purchase rights and (c) the number of shares to be subject
to each option and stock purchase right. The Plan provides for the grant of (i) “incentive” options (qualified under section
422 of the Internal Revenue Code of 1986, as amended) to employees of our company and (ii) non-qualified options to directors and consultants
of our company.
In connection with the administration of our 2020
Equity Incentive Plan, our Compensation Committee:
● determines which employees
and other persons will be granted awards under our 2020 Equity Incentive Plan;
● grants the awards to those
selected to participate;
● determines the exercise price
for options; and
● prescribes any limitations,
restrictions and conditions upon any awards, including the vesting conditions of awards.
Any grant of awards to any
of directors under our 2020 Equity Incentive Plan must be approved by the Compensation Committee of our Board of Directors. In addition,
our Compensation Committee will: (i) interpret our 2020 Equity Incentive Plan; and (ii) make all other determinations and take all other
action that may be necessary or advisable to implement and administer our 2020 Equity Incentive Plan.
The 2020 Equity Incentive
Plan provides that in the event of a change of control, the Compensation Committee or our Board of Directors shall have the discretion
to determine whether and to what extent to accelerate the vesting, exercise or payment of an award.
In addition, our Board of
Directors may amend our 2020 Equity Incentive Plan at any time. However, without stockholder approval, our 2020 Equity Incentive Plan
may not be amended in a manner that would:
● increase the number of shares
that may be issued under our 2020 Equity Incentive Plan;
● materially modify the requirements
for eligibility for participation in our 2020 Equity Incentive Plan;
● materially increase the benefits
to participants provided by our 2020 Equity Incentive Plan; or
● otherwise disqualify our 2020
Equity Incentive Plan for coverage under Rule 16b-3 promulgated under the Exchange Act.
Awards previously granted
under our 2020 Equity Incentive Plan may not be impaired or affected by any amendment of our 2020 Equity Incentive Plan, without the
consent of the affected grantees.
61
Director Compensation
Our directors are entitled to the
following fixed compensation for their services as directors during the fiscal year ended December 31, 2022.
Name and Principal Position
Fees
Earned
or Paid
in Cash
($)
Stock
Awards
($) (4)
Option
Awards
($) (3)
Non-Equity
Incentive Plan
Compensation
($)
Nonqualified
Deferred
Compensation
Earnings
($)
All Other
Compensation
($)
(2)
Total
Alina Dulimof
$ 0
$ 50,000
$ 0
$ 0
$ 0
$ 0
$ 50,000
Ehud Erst
$ 0
$ 65,000
$ 0
$ 0
$ 0
$ 0
$ 65,000
Amir Sternhell
$ 0
$ 50,000
$ 0
$ 0
$ 0
$ 0
$ 50,000
Directors were reimbursed
for their reasonable out-of-pocket expenses incurred in connection with their duties. On an annual basis, each independent director will
earn compensation in the form of shares of our Common Stock with a fair market value equal to $50,000 as of the date of issuance and
they will be reimbursed for their reasonable out-of-pocket expenses incurred in connection with their duties. The Chairman of the Audit
Committee shall receive additional shares of Common Stock with a fair market value equal to $15,000 as of the date of issuance. All shares
of Common Stock shall be issued no later than January 31 of each year.
Item 12. Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth, as of March 28, 2023, information
regarding the beneficial ownership of each class of our voting securities by: (i) our officers and directors; (ii) all of our officers
and directors as a group; and (iii) each person known by us to beneficially own 5% or more of any class of our outstanding voting securities.
Generally, a person is deemed to be a “beneficial owner” of a security if that person has or shares the power to dispose or
to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which the person has
the right to acquire beneficial ownership within 60 days.
The address of each holder
listed below, except as otherwise indicated, is c/o The OLB Group, Inc., 1120 Avenue of the Americas, 4 th Floor, New York,
NY.
Name of Beneficial Owner
Shares of
Common
Stock Beneficially
Owned**
Percent
of
Common
Stock
Beneficially
Owned (1) **
Shares
of
Series A
Preferred
Stock
Beneficially
Owned (2) **
Percent of
Series A
Preferred
Stock
Beneficially
Owned**
Number of
Voting Shares
Beneficially
Owned**
Percent
of
Voting Shares
Beneficially
Owned (3) **
5% Beneficial Owners
John Herzog (4)
2,030,334
13.2 %
—
—
2,030,334
13.1 %
Armistice Capital (7)
1,137,601
7.4 %
—
—
1,137,601
7.4 %
Directors and Officers
Ronny Yakov
4,782,132 (5)
31.2 %
113,444
100 %
4,945,576 (5)
31.7 %
Rachel Boulds
833
*
—
—
833
*
Patrick Smith (6)
563,141
3.67 %
—
—
563,141
3.6 %
Alina Dulimof
52,131
*
—
—
52,132
*
Ehud Ernst
76,186
*
—
—
76,186
1.4
Amir Sternhell
60,445
*
—
—
60,455
1.1 %
All directors and executive officers as a group (6 persons)
5,534,879
36.1 %
113,444
-100 %
5,924,527
38.12 %
*
Less than 1%.
**
Under SEC rules, beneficial ownership includes shares over which the
individual or entity has voting or investment power and any shares which the individual or entity has the right to acquire within
sixty days.
62
(1)
Percentage ownership of common stock is based on 15,344,077shares of
our common stock plus 113,444 shares of common stock underlying Series A Preferred Stock outstanding on the Record Date for which
holders will exercise voting power on an as-converted basis.
(2)
The number of shares and percentage ownership of Series A Preferred
Stock is presented on an as-converted basis and is based on 1,021 shares of Series A Preferred Stock outstanding (which such shares
of Series A Preferred Stock are convertible into 113,444 shares of common stock accordance with the Certificate of Designations (as
hereinafter defined)). The holders of the Series A Preferred Stock have the right to vote their shares of Series A Preferred Stock
with the holders of common stock on an as-converted basis.
(3)
Percentage of voting stock is based on 15,344,077shares of our common
stock and 1,021 shares of Series A Preferred Stock (convertible into 113,444 shares of common stock) outstanding on March 28, 2023.
(4)
Includes 907,516 shares of common stock owned by Mr. Herzog and
28,524 shares of common stock held by John E Herzog TTEE John E Herzog REV Trust U/A/D 02/07/2014. John Herzog is the Chairman of
Herzog & Co. and the trustee of the trust. Includes shares of common stock underlying 802,875 Series A Warrants to purchase one
share of common stock each at a purchase price of $9.00 per share and 200,719 Series B Warrants to purchase one share of common
stock each at a purchase price of $4.50 per share, which warrants are exercisable within 60 days of this Annual Report. As reported
on Schedule 13G filed with the SEC on February 14, 2023.
(5)
Includes (i) 176,668 vested options, (ii) 113,444 shares of common
stock underlying Series A Preferred Stock, and (iii) shares of common stock underlying 227,003 Series A Warrants to purchase one
share of common stock each at a purchase price of $9.00 per share and 56,751 Series B Warrants to purchase one share of common stock
each at a purchase price of $4.50 per share, which warrants are exercisable within 60 days of this Annual Report.
(6)
Consists of 312,318 vested options.
(7)
As reported on Schedule 13G filed with the SEC on February 15, 2022.
Item 13. Certain Relationships and Related
Transactions, and Director Independence
We are a party to certain
related party transactions, as described below.
OmniSoft and CrowdPay
In accordance with the requirements
of the Term Loan, on May 9, 2018, we entered into separate share exchange agreements with the stockholders of OmniSoft (the “OmniSoft
Share Exchange Agreement”) and CrowdPay (the “CrowdPay Share Exchange Agreement” and together with the OmniSoft Share
Exchange Agreement, the “Share Exchange Agreements”). Pursuant to the terms of the OmniSoft Share Exchange Agreement, the
stockholders of OmniSoft (Ronny Yakov, our Chief Executive Officer and director, and Mr. Herzog, an affiliate of the Company) transferred
to us all of the issued and outstanding shares of OmniSoft common stock in exchange for an aggregate of 1,833,333 shares of our common
stock. Pursuant to the terms of the CrowdPay Share Exchange Agreement, the stockholders of CrowdPay (Mr. Yakov and Mr. Herzog) transferred
to us all of the issued and outstanding shares of CrowdPay common stock in exchange for an aggregate of 2,916,667 shares of the Company’s
common stock. The transactions contemplated by the Share Exchange Agreements closed on May 9, 2018. Mr. Yakov, our sole director, determined
the appropriate valuation of each of our common stock and the common stock of OmniSoft and CrowdPay in reliance upon, among other matters,
a third-party independent valuation report prepared by Corporate Valuation Advisors, Inc.
Ronny Yakov
On August 10, 2018, Ronny
Yakov, the Chief Executive Officer, Chairman and majority stockholder, loaned the Company $25,000, in order to pay for audit services.
The loan is unsecured, bears interest at 12% and is due on demand. Mr. Yakov loaned the Company an additional $361,467 to the Company
during the year ended December 31, 2019. The loans are unsecured, bear interest at 12% and are due on demand.
63
The accrued compensation
due to Mr. Yakov and the advances to be repaid to Mr. Yakov do not bear any interest or have any term.
On May 13, 2020, Mr. Yakov
agreed to convert $1,011,016 in principal amount of indebtedness and accrued interest, which includes deferred salary and unreimbursed
expenses (plus any additional accrued interest and other fees thereon that accrued), into shares of convertible Series A Preferred Stock
to be designated concurrently with the public offering. On July 24, 2020, the terms of such conversion were amended such that Mr. Yakov
agreed to convert an aggregate of $1,017,573 of deferred salary, indebtedness and accrued interest into Series A Preferred Stock and
conversion warrants, which Series A Preferred Stock and conversion warrants would be issued concurrently with the closing of the offering.
On July 24, 2020, the
terms of the agreement whereby Mr. Herzog agreed to convert, concurrently with the public offering of the Company’s securities,
$3,522,191 in principal amount of indebtedness (plus any additional accrued interest and other fees thereon that accrues prior to the
offering) into shares of convertible Series A Preferred were amended such that Mr. Herzog agreed to convert such an aggregate of
$3,582,355 of indebtedness and accrued interest into Series A Preferred Stock and Conversion Warrants, which Series A Preferred
Stock and Conversion Warrants would be issued concurrently with the closing of the public offering. On August 11, 2020, Mr. Herzog converted
$3,612,940 of indebtedness into 3,612 shares of Series A Preferred Stock (the terms of which are described below) and 802,875 Series
A Conversion Warrants with an exercise price of $9.00 and 200,719 Series B Conversion Warrants with an exercise price of $4.50.
On July 24, 2020, the
terms of the agreement whereby Mr. Yakov agreed to convert, concurrently with the public offering of the Company’s securities,
$1,017,753 in principal amount of indebtedness and accrued interest, which includes deferred salary and unreimbursed expenses (plus any
additional accrued interest and other fees thereon that accrues prior to the offering), into shares of convertible Series A Preferred
Stock to be designated concurrently with the offering such conversion were amended such that Mr. Yakov agreed to convert an aggregate
of $1,017,573 of accrued salary, indebtedness and accrued interest into Series A Preferred Stock and conversion warrants, which Series
A Preferred Stock and conversion warrants would be issued concurrently with the closing of the offering. On August 11, 2020, Mr.
Yakov converted $1,021,512 of indebtedness into 1,021 shares of Series A Preferred Stock (the terms of which are described in Note 10
below) and 227,003 Series A Conversion Warrants with an exercise price of $9.00 and 56,751 Series B Conversion Warrants with an exercise
price of $4.50.
On January 3, 2022, the Company
entered into a share exchange agreement with Mr. Yakov and Mr. Herzog who represented 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 transaction, 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.
Statement of Policy
All future transactions between
us and our officers, directors or five percent stockholders, and respective affiliates will be on terms no less favorable than could
be obtained from unaffiliated third parties and will be approved by a majority of our independent directors who do not have an interest
in the transactions and who had access, at our expense, to our legal counsel or independent legal counsel.
To the best of our knowledge,
during the past three fiscal years, other than as set forth above, there were no material transactions, or series of similar transactions,
or any currently proposed transactions, or series of similar transactions, to which we were or are to be a party, in which the amount
involved exceeds $120,000, and in which any director or executive officer, or any security holder who is known by us to own of record
or beneficially more than 5% of any class of our common stock, or any member of the immediate family of any of the foregoing persons,
has an interest (other than compensation to our officers and directors in the ordinary course of business).
64
Item 14. Principal Accountant Fees and Services
Below is the aggregate amount
of fees billed for professional services rendered by our principal accountants with respect to our last two fiscal years.
2022
2021
Audit fees – Services provided by Daszkal Bolton LLP
$ 100,000
$ 100,000
Audit fees – Services provided by Marcum LLP
$ -
$ 26,265
Audit related fees
$ -
$ -
Tax fees
$ -
$ -
All other fees
$ -
$ -
Total
$ 100,000
$ 126,265
All of the professional services
rendered by principal accountants for the audit of our annual financial statements that are normally provided by the accountant in connection
with statutory and regulatory filings or engagements for last two fiscal years were approved by our board of directors.
Audit Fees
Consist of fees billed for
professional services rendered for the audit of our financial statements and review of interim consolidated financial statements included
in quarterly reports and services that are normally provided by the principal accountants in connection with statutory and regulatory
filings or engagements.
Audit Related Fees
Consist of fees billed for
assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements
and are not reported under “Audit Fees”.
Tax Fees
Consist of fees billed for
professional services for tax compliance, tax advice and tax planning. These services include preparation of federal and state income
tax returns for the year ended December 31, 2022.
All Other Fees
Consist of fees for product
and services other than the services reported above.
Policy for Approval of Audit and Permitted
Non-Audit Services
The Audit Committee charter
provides that the Audit Committee will pre-approve audit services and non-audit services to be provided by our independent auditors before
the accountant is engaged to render these services. The Audit Committee may consult with management in the decision-making process, but
may not delegate this authority to management. The Audit Committee may delegate its authority to pre-approve services to one or more
committee members, provided that the designees present the pre-approvals to the full committee at the next committee meeting.
65
PART IV
Item 15. Exhibits
Exhibit Number
Description
2.1
Memorandum of Sale, dated as of April 9, 2018, by and among eVance, Inc., eVance Capital, Inc., Securus365, Inc. and GACP (1)
3.1
Certificate of Incorporation, as amended (*)
3.2
Amended and Restated Bylaws of the Company (13)
3.3
Certificate of Designations, Preferences and Rights of Series A Preferred Stock (13)
4.1
Warrant, dated April 9, 2018, issued by the Company to GACP (1)
4.2
Representative’s Warrant (13)
4.3
Series A Warrant Agency Agreement (including the terms of the Series A Warrant) (13)
4.4
Series B Warrant Agency Agreement (including the terms of the Series B Warrant) (13)
4.5
Description of Registered Securities (*)
10.1
Loan and Security Agreement, dated as of April 9, 2018, by and among GACP, the lenders from time to time party thereto, the Company, as parent guarantor, and the Borrowers (1)
10.2
Amendment No. 1 to Loan and Security Agreement, dated as of July 30, 2018, by and among GACP Finance Co., LLC, as administrative agent and collateral agent, the lenders party thereto, Securus365, Inc., eVance, Inc., eVance Capital, Inc., OMNISOFT, Inc., and CrowdPay.us, Inc., as borrowers, and the Company, as parent guarantor (3)
10.3
Amendment No. 3 to Loan and Security Agreement, dated as of February 5, 2019, by and among GACP Finance Co., LLC, as administrative agent and collateral agent, the lenders party thereto, Securus365, Inc., eVance, Inc., eVance Capital, Inc., OMNISOFT, Inc., and CrowdPay.us, Inc., as borrowers, and the Company, as parent guarantor (4)
10.4
Agreement Regarding Additional Warrants, dated April 9, 2018, by and between the Company and GACP (1)
10.5
Share Exchange Agreement, dated May 9, 2018, by and between The OLB Group, Inc. and the stockholders of CrowdPay.US, Inc. (2)
10.6
Share Exchange Agreement, dated May 9, 2018, by and between The OLB Group, Inc. and the stockholders of OmniSoft, Inc. (2)
10.7
Subordinated Promissory Note, dated July 30, 2018, by and between the Company and John Herzog (3)
10.8
Amendment No. 1 to Subordinated Promissory Note, dated as of November 14, 2019, by and between the Company and John Herzog (4)
10.9
Amendment No. 2 to Subordinated Promissory Note, dated June 25, 2019, by and between the Company and John Herzog (5)
10.10
Employment Agreement with Ronny Yakov (5)
10.11
Employment Agreement with Patrick Smith (5)
10.12
Commitment Letter from John Herzog dated December 10, 2019 (6)
10.13
Amendment No. 4 to Loan and Security Agreement, dated as of April 24, 2020, by and among GACP Finance Co., LLC, as administrative agent and collateral agent, the lenders party thereto, Securus365, Inc., eVance, Inc., eVance Capital, Inc., OMNISOFT, Inc., and CrowdPay.us, Inc., as borrowers, and the Company, as parent guarantor (7)
10.14
Debt Conversion Agreement, dated as of May 13, 2020 by and between the Company and. John Herzog (8)
10.15
Debt Conversion Agreement, dated as of May 13, 2020 by and between the Company and. Ronny Yakov (8)
10.16
First Amended and Restated Debt Conversion Agreement, dated as of July 24, 2020, by and between the Company and Ronny Yakov (11)
10.17
First Amended and Restated Debt Conversion Agreement, dated as of July 24, 2020, by and between the Company and John Herzog (11)
10.18
Form of 2020 Equity Incentive Plan (9)
10.19
Lease Agreement dated June 24, 2020 between Pergament Lodi, LLC and Evance, Inc. (10)
10.20
Underwriting Agreement with Aegis Capital Corp. dated August 6, 2020. (13)
10.24
Asset Purchase Agreement dated November 24, 2021 by and between the Company and FFS Data Corporation (14) .
10.25
Share Exchange Agreement dated January 3, 2022 between the Company and all of the shareholders of Crowd Ignition, Inc. (15)
10.26
Lease Agreement dated November 10, 2021 between The Bradford Regional Airport Authority and DMINT, Inc. related to “Cell 3” (4,000 square feet) (16) .
10.27
Lease Agreement dated November 10, 2021 between The Bradford Regional Airport Authority and DMINT, Inc. related to “Cell 4” (6,000 square feet) (16) .
10.28
Services Agreement between Executive Workspace LLC d/b/a Elevated NY and The OLB Group, Inc. (17)
10.29
Contract for Sale of Realty between Madison Haywood Developmental Services, Inc. and DMINT Real Estate Holdings, Inc. (17)
10.30
SURRENDER AND RELEASE AGREEMENT (this “Agreement”) dated as of March 29, 2023 (the “Effective Date”) is made by and between THE BRADFORD REGIONAL AIRPORT AUTHORITY and DMINT, Inc. (*)
10.31
Letter of Resignation dated March 13, 2023 from Daszkal Bolton LLP (*).
66
Exhibit
Number
Description
31.1
Certification of Chief Executive Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (*)
31.2
Certification of Chief Financial Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (*)
32.1
Certification of Chief Executive Officer and
Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(*)
101.INS*
Inline XBRL Instance Document.
101.SCH*
Inline XBRL Taxonomy Extension Schema Document.
101.CAL*
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*
Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*
Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
* Filed herewith
(1)
Incorporated by reference to Current Report on Form 8-K filed April
13, 2018.
(2)
Incorporated by reference to Form 8-K filed May 15, 2018.
(3)
Incorporated by reference to Form 8-K filed August 3, 2018.
(4)
Incorporated by reference to Form 8-K filed March 12, 2019.
(5)
Previously filed with Form S-1 on June 26, 2019.
(6)
Previously filed with Form S-1 on January 17, 2019.
(7)
Previously filed with Form 10-K on April 29, 2020.
(8)
Previously filed with Form S-1 on May 20, 2020.
(9)
Previously filed with Form S-1 on June 8, 2020.
(10)
Incorporated by reference to Form 8-K filed July 2, 2020.
(11)
Previously filed with Form S-1 on July 27, 2020.
(12)
Previously filed with Form S-1 on July 31, 2020.
(13)
Previously file with Form 8-K filed August 12, 2020.
(14)
Incorporated by reference to Form 8-K filed November 30, 2021.
(15)
Incorporated by reference to Form 8-K filed January 5, 2022.
(16)
Incorporated by reference to Form 8-K filed January 11, 2022.
(17)
Incorporated by reference to Form 8-K filed August 16, 2022.
Item 16. Form 10-K Summary
None.
67
SIGNATURES
In accordance with Section
13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
The OLB Group, Inc.
Date: March 30, 2023
BY:
/s/ Ronny Yakov
Ronny Yakov
Chief Executive Officer
BY:
/s/ Rachel Boulds
Rachel Boulds
Chief Financial Officer
In accordance with the Exchange
Act, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Ronny Yakov
Chief Executive Officer and Chairman
March 30, 2023
Ronny Yakov
/s/Ehud Ernst
Director and Chairman of the Audit Committee
March 30, 2023
Ehud Ernst
/s/ Amir Sternhell
Director
March 30, 2023
Amir Sternhell
/s/ Alina Dulimof
Director
March 30, 2023
Alina Dulimof
68