What changed in this filing

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Item 1. Financial Statements

2023-08-21 compared with 2023-05-15 · 429 added, 266 removed, 582 unchanged (54% of the section changed)

1 unchanged sentence

INDEX TO FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets as of March 31, 2023 (unaudited) and December 31, 2022

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2023 and 2022 (unaudited)

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2023, and 2022 (unaudited)

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022 (unaudited)

Condensed Consolidated Balance Sheets as of June 30, 2023 (unaudited) and December 31, 2022

Condensed Consolidated Statements of Operations for the Three and Six Months Ended June, 2023 and 2022 (unaudited)

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2023, and 2022 (unaudited)

Condensed Consolidated Statements of Cash Flows for the Three and Six Months Ended June 30, 2023 and 2022 (unaudited)

Notes to the Condensed Consolidated Financial Statements (unaudited)

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and Subsidiaries

Condensed Consolidated Balance Sheets

Balance Sheets

Current Assets:

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Accounts payable

Cash overdraft

Customer deposits

Accrued expenses

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Preferred stock, $ 0.01 par value, 1,000,000 shares authorized, no shares issued and outstanding

Series A Preferred stock, $ 0.01 par value, 10,000 shares authorized, 1,021 shares issued and outstanding at March 31, 2023 and December 31, 2022

Common stock, $ 0.0001 par value, 50,000,000 shares authorized, 15,344,077 and 15,207,714 shares issued, 15,217,905 and 15,081,542 shares outstanding, at March 31, 2023 and December 31, 2022, respectively

Treasury stock, at cost, 126,172 shares at March 31, 2023 and December 31, 2022

Series A Preferred stock, $ 0.01 par value, 10,000 shares authorized, 1,021 and 4,633 shares issued and outstanding at December 31, 2022 and 2021, respectively

Common stock, $ 0.0001 par value, 50,000,000 shares authorized, 15,344,077 and 15,207,714 shares issued, 15,217,905 and 15,081,542 shares outstanding at June 30, 2023 and December 31, 2022, respectively

Treasury stock, 126,172 shares issued at June 30, 2023 and December 31, 2022

Additional paid-in capital

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( 33,394,233 )

Total stockholders’ equity of The OLB Group and Subsidiaries

Noncontrolling interest

Total Stockholders’ Equity

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

T he accompanying notes are

an integral part of these unaudited condensed consolidated financial statements.

T he accompanying notes are an integral part

of these unaudited consolidated financial statements.

The OLB Group, Inc.

and Subsidiaries

Condensed Consolidated Statements of Operations

Statements of Operations

For the Three Months Ended

For the Six Months Ended

Transaction and processing fees

Merchant equipment rental and sales

Revenue, net - cryptocurrency mining segment

Revenue, net - cryptocurrency mining

Other revenue from monthly recurring subscriptions

Digital product revenue

Total revenue

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Amortization and depreciation expense

Depreciation expense - bitcoin mining equipment

Depreciation expense – cryptocurrency mining

Salaries and wages

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( 3,033,870 )

( 3,286,729 )

Other income (expense):

Realized loss on sale of bitcoin

Total other (expense) income

Loss before income taxes

Realized gain (loss) on sale of cryptocurrency

Unrealized loss on investment

Total other income (expense)

Net Loss before income taxes

( 1,437,954 )

( 3,204,948 )

( 2,893,550 )

Income tax expense

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( 3,204,948 )

( 2,893,550 )

Net income attributed to noncontrolling interest

Net loss attributed to The OLB Group and Subsidiaries

( 1,437,954 )

( 3,203,223 )

( 2,893,550 )

Preferred dividends (related parties)

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$ ( 1,578,488 )

$ ( 3,264,823 )

$ ( 3,173,074 )

Net loss per common share, basic and diluted

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The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements.

of these unaudited consolidated financial statements.

The OLB Group, Inc.

and Subsidiaries

Condensed Consolidated Statements of Stockholders’

For the Three Months ended March 31, 2023 and

Consolidated Statements of Changes in Stockholders’

For the Three

and Six Months ended June 30, 2023 and 2022

Preferred Stock

Non-Controlling

Balance at December 31, 2022

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$ ( 33,394,233 )

Common stock issued to related parties for accrued liabilities

Common stock issued for director services

Preferred stock dividends

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( 36,009,638 )

Preferred stock dividends

Recognition of noncontrolling interest in acquisition

Balance at June 30, 2023

$ ( 109,988 )

$ ( 36,597,456 )

Preferred Stock

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( 27,062,560 )

Stock based compensation

Preferred stock dividends (Revised)

( 1,437,954 )

Balance at June 30, 2022 (Revised)

$ ( 28,500,514 )

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements.

of these unaudited consolidated financial statements.

The OLB Group, Inc.

and Subsidiaries

Condensed Consolidated Statements of Cash Flows

For the Three Months Ended March 31,

Statements of Cash Flows

For the Six Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

$ ( 2,615,405 )

$ ( 1,455,596 )

Adjustments to reconcile net loss to net cash provided by and used in operations:

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Operating lease expense, net of repayment

Loss on sale of bitcoin

Loss on sale of cryptocurrency

Changes in assets and liabilities:

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Accounts payable

Customer deposits

Other accrued liabilities

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Acquisition of property and equipment

Purchase of 80 .01% interest in Cuentas SDI, LLC

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Cash overdraft

Cash overdraft acquired in acquisition

Proceeds from note payable

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The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements.

of these unaudited consolidated financial statements.

The OLB Group, Inc.

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Notes to the Unaudited Consolidated Financial

March 31, 2023

June 30, 2023

NOTE 1 – BACKGROUND

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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 allow 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

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.

OmniSoft, Inc.

(“OmniSoft”) operates

a software platform for small merchants.

The Omnicommerce applications work on an iPad, mobile device and the web and allow 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.

On June 15, 2023, the Company entered into a Membership

Interest Purchase Agreement (the “Agreement”) with SDI Black 001, LLC (“Seller”) whereby it acquired 80.01 % of

the membership interests of Cuentas SDI, LLC, a Florida limited liability company (the “LLC”).

The LLC’s owns the platform

of Black011.com and the network serving over 31,000 convenience stores (“Bodegas”) in and around New York and New Jersey

(refer to Note 7).

The Company also provides ecommerce development

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Cryptocurrency Mining Business:

On July 23, 2021, the Company formed DMINT, Inc., a wholly-owned subsidiary

The purpose of DMINT is to operate its business related to Bitcoin mining (“Cryptocurrency 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

On July 28, 2021, the Company entered into an

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prior to opening the Selmer, Tennessee location.

On June 24, 2022 the Company formed DMint Real

Estate Holdings, Inc., a wholly-owned subsidiary of DMint.

The purpose of DMint Real Estate Holdings, Inc is to buy and hold real estate

related to DMint.

On June 24, 2022 the Company formed DMINT Real Estate Holdings, Inc.,

a wholly-owned subsidiary of DMINT.

The purpose of DMINT Real Estate Holdings, Inc is to buy and hold real estate related to DMINT.

On November 22, 2022, Mr.

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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.

By 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.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING

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all adjustments, consisting of normal recurring adjustments, which management believes are necessary to fairly present the financial position,

results of operations and cash flows of the Company as of and for the three month period ending March 31, 2023 and not necessarily indicative

results of operations and cash flows of the Company as of and for the six month period ending June 30, 2023 and not necessarily indicative

of the results to be expected for the full year ending December 31, 2023.

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Use of Estimates

The preparation of financial statements in conformity with U.S.

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

The preparation of financial statements in conformity

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 and stock-based compensation.

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 and stock-based compensation.

Principles of Consolidation

accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, eVance Inc,

eVance Capital Inc, Securus, CrowdPay, Omnisoft, OLBit, DMINT and DMint Real Estate Holdings.

All significant intercompany

transactions and balances have been eliminated.

The accompanying consolidated financial statements include the accounts

of the Company and its wholly-owned subsidiaries, eVance Inc, eVance Capital Inc, Securus365, Inc., CrowdPay.us, Inc., OmniSoft, Inc.,

OLBit, Inc., DMINT, Inc., DMINT Real Estate Holdings.

The Company owns 80.01 % of Cuentas SDI, LLC, which has been included in the consolidated

financial statements and the Company has recorded a noncontrolling interest for

the 19.99 % interest that they do not own.

All significant intercompany transactions and

balances have been eliminated.

Revision for Correction of Immaterial Error

Subsequent to the initial issuance of the

Company’s March 31, 2022 financial statements, 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.

Subsequent to the initial issuance of the Company’s

March 31, 2022 financial statements, 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”)

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to the periods presented:

Statement of Operations

Three Months Ended March 31, 2022

Impact of correction of error - quarter

Impact of correction of error - year to date

As Previously

Quarter ended June 30, 2022

$ ( 1,437,954 )

$ ( 2,893,550 )

Preferred stock dividends

Net loss applicable to common shareholders

$ ( 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

1 unchanged sentence

Statement of Cash Flows

Three Months Ended March 31, 2022

Six Months Ended June 30, 2022

Supplemental non-cash disclosure:

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At times, such deposits may be in excess of the Federal Deposit Insurance Corporation insurable amount (“FDIC”).

As of March 31, 2023 and December 31, 2022, the Company had no cash in excess of the FDIC’s $ 250,000 coverage limit.

As of June 30, 2023 and December 31, 2022, the Company had no cash in excess of the FDIC’s $ 250,000 coverage limit.

Operating Segments

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decision–making group is composed of the chief executive officer and Vice President.

The Company has two operating segments as of

March 31, 2023 and December 31, 2022.

The Company has three operating segments as

of June 30, 2023, and two operating segments December 31, 2022.

See Note 14, “Segment Information”.

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of common stock during the period.

The weighted average number of common shares for the three months ended March 31, 2023 and 2022 does

not include warrants to acquire 8,563,127 and 8,563,127 shares of common stock, respectively, because of their anti-dilutive effect.

weighted average number of common shares for the three months ended March 31, 2023 and 2022, does not include 1,135,935 and 779,029 options,

respectively, to purchase common stock because of their anti-dilutive effect.

The weighted average number of common shares for the six months ended June 30, 2023 and 2022 does not

include warrants to acquire 8,563,127 and 8,563,127 shares of common stock, respectively, because of their anti-dilutive effect.

average number of common shares for the six months ended June 30, 2023 and 2022, does not include 1,252,460 and 774,586 options, respectively,

to purchase common stock because of their anti-dilutive effect.

Investments in Equity Securities

The Company accounts for its investments

under ASC 321, “Investments – Equity Securities,” which requires that investments in equity securities be measured at

fair value with changes in value recorded as unrealized gains and losses in current period operations.

Cryptocurrency

The Company obtains cryptocurrency through our

mining activities, which is accounted for in connection with our revenue recognition policy.

The cryptocurrency held is recorded as other

assets in the Consolidated Balance Sheets and is accounted for as indefinite-lived intangible assets initially measured at cost, in accordance

with ASC 350, Intangibles-Goodwill and Other (“ASC 350”).

The use of cryptocurrencies is accounted for in accordance

with the first in first out method of accounting.

We do not amortize our cryptocurrency but assess the value for impairment as further

discussed in our impairment policy.

Impairment of cryptocurrency assets is tested

annually or more frequently if events or circumstances change.

At June 30, 2023, the Company had 1.01 Bitcoin and the fair value

of the Company’s digital assets was $ 31,306 based on the price of Bitcoin being $ 30,996 .

Property and Equipment

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Expenditures for repairs and maintenance are expensed as incurred.

Intangible Assets

The Company accounts for its intangible assets

in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic

350-30, General Intangibles Other Than Goodwill .

ASC Subtopic 350-30, which requires assets to be measured based on the fair value

of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and, thus, more

reliably measurable.

Under ASC Subtopic 350-30 any intangible asset with a useful life is required to be amortized over that life and

the useful life is to be evaluated every reporting period to determine whether events or circumstances warrant a revision to the remaining

period of amortization.

If the estimate of useful life is changed the remaining carrying amount of the intangible asset is amortized prospectively

over the revised remaining useful life.

Costs to renew or extend the term of an intangible assets are recognized as an expense when incurred.

Impairment of Long-Lived Assets

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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.

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

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 March 31, 2023 and December 31, 2022.

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 June 30, 2023 and December 31, 2022.

A summary of goodwill as of June 30, 2023, is as follows:

December 31, 2022

80.01 % acquisition of Cuentas SDI, LLC

June 30, 2023

Accounts Receivable

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

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 allowance of approximately $ 38,000 and $ 38,000 as of

March 31, 2023 and December 31, 2022, respectively.

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

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 allowance of approximately $ 38,000 and $ 38,000 as of June 30, 2023 and December 31, 2022, respectively.

Reserve for Chargeback Losses

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Other current assets comprised of the following:

Cryptocurrency at cost

Cryptocurrency

Investment in cryptocurrency-based fund

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For the Three Months Ended

Wholesale contracts

Retail contracts

Other transaction and processing fees and merchant equipment rental and sales

Cryptocurrency mining fees

For the Six Months Ended

Transaction and processing fees from wholesale contracts

Transaction and processing fees from retail contracts

Other transaction and processing fees, revenue from monthly recurring subscriptions, and merchant equipment rental and sales

Cryptocurrency mining revenues

Digital product revenue

Total revenue from contracts with customers

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

with Customers” (“ASC 606”).

The Company determines revenue recognition through the following steps:

The Company recognizes revenue under ASC 606,

“Revenue from Contracts with Customers” (“ASC 606”).

The Company determines revenue recognition through the following

Identification of a contract with a customer;

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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

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 from the fair value at contract inception or the time the Company has earned

the award from the pools.

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 from 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.

no significant financing component in these transactions.

Impairment of cryptocurrency assets is tested

annually or more frequently if events or circumstances change.

At March 31, 2023, the Company had 20.73 Bitcoin and the fair value

of the Company’s digital assets was $ 577,932 based on the price of Bitcoin being $ 27,879 .

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.

Digital product revenue

The Company generates revenue through electronic

distribution and sale of digital products that range from prepaid wireless SIM activation, international mobile recharge services and

international long distance phone service.

The Company generally obtains payment upfront and its performance obligation is to provide

products and/or calling services.

When products are provided at the point of sale, revenue is recognized immediately and at the

time of payment.

When a customer purchases a prepaid telecom product, such as a prepaid mobile phone plan, the revenue is initially

recorded as a customer deposit and revenue is recognized over the relevant performance period as customers utilize the prepaid telecom

As of June 30, 2023, customer deposits were $ 65,753 .

The Company determines whether an arrangement

contains a lease at the inception of the arrangement.

If a lease is determined to exist, the term of such lease is assessed based on the

date on which the underlying asset is made available for the Company’s use by the lessor.

The Company’s assessment of the

lease term reflects the non-cancelable term of the lease, inclusive of any rent-free periods and/or periods covered by early-termination

options which the Company is reasonably certain of not exercising, as well as periods covered by renewal options which the Company is

reasonably certain of exercising.

The Company also determines lease classification as either operating or finance at lease commencement,

which governs the pattern of expense recognition and the presentation reflected in the consolidated statements of operations over the

For leases with a term exceeding 12 months,

an operating lease liability is recorded on the Company’s consolidated balance sheet at lease commencement reflecting the present

value of its fixed minimum payment obligations over the lease term.

A corresponding operating lease right-of-use asset equal to the initial

lease liability is also recorded, adjusted for any prepaid rent and/or initial direct costs incurred in connection with execution of the

lease and reduced by any lease incentives received.

For purposes of measuring the present value of its fixed payment obligations for a

given lease, the Company uses its incremental borrowing rate, determined based on information available at lease commencement, as rates

implicit in its leasing arrangements are typically not readily determinable.

The Company’s incremental borrowing rate reflects the

rate it would pay to borrow on a secured basis and incorporates the term and economic environment of the associated lease.

For the Company’s operating leases, fixed

lease payments are recognized as lease expense on a straight-line basis over the lease term.

For leases with a term of 12 months

or less, any fixed lease payments are recognized on a straight-line basis over the lease term and are not recognized on the Company’s

consolidated balance sheet as an accounting policy election.

Leases qualifying for the short-term lease exception were insignificant.

Variable lease costs are recognized as incurred and primarily consist of common area maintenance and utility charges not included in the

measurement of right of use assets and operating lease liabilities.

Recent Accounting Pronouncements

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.

NOTE 3 – LIQUIDITY AND CAPITAL RESOURCES

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 March 31, 2023, the Company had cash of approximately $ 65,000 , accounts receivable of approximately $ 1,624,000 and bitcoin valued

at $ 535,000 , and accounts payable, accrued expenses, and a cash overdraft of approximately $ 2,572,000 .

the Company has generated cash flows from issuances of equity and indebtedness.

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 June 30, 2023, the Company had cash of approximately $ 134,000 , accounts

receivable of approximately $ 1,879,000 and bitcoin valued at $ 28,000 , and accounts payable and accrued expenses of approximately $ 2,572,000 .

To date, the Company has generated cash flows from issuances of equity and indebtedness.

Management believes that its current available

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Net trade name

CBD Merchant Portfolio

Merchant Portfolio

Less accumulated amortization

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Less accumulated amortization

( 1,075,550 )

Net mineral rights

Total intangible assets, net

Amortization expense for the three months ended

March 31, 2023 and 2022 was $ 899,831 and $ 995,069 , respectively.

Amortization expense for the six months ended

June 30, 2023 and 2022 was $ 1,799,662 and $ 1,901,943 , respectively.

The Company’s merchant portfolios and tradename

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The weighted average remaining useful life of

amortizing intangible assets was 4.95 years at March 31, 2023.

amortizing intangible assets was 4.70 years at June 30, 2023.

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.

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.

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 is

computed using the straight-line method over the estimated useful lives of the various classes of assets.

Depreciation is computed using the straight-line method over the estimated useful lives of the various classes of assets.

Maintenance and repair expenses, as incurred,

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Depreciation expense

Depreciation expense for the three months ended

March 31, 2023 and 2022 was $ 799,719 and $ 895,277 , respectively.

Depreciation expense for the six months ended

June 30, 2023 and 2022 was $ 1,599,433 and $ 1,594,250 , respectively.

NOTE 6 – INVESTMENT IN EQUITY SECURITIES

The Company owns 165.27 units ( 1.01 %)

of Node Capital Token Opportunity Fund LP (the “Fund”) for which it paid an aggregate of $ 250,000 in August 2021.

The investment

is locked up for two years and a redemption can be made after the expiration of the lock up period with 90 days written notice.

may, at the discretion of the General Partner, compulsorily redeem all interests if the Net Asset Value of the Fund falls below $ 1,000,000 .

During the six months ended June 30, 2023, the Company recognized an unrealized loss of $ 6,490 .

NOTE 7 — BUSINESS COMBINATIONS

On June 15, 2023, the Company entered into a Membership

Interest Purchase Agreement (the “Agreement”) with SDI Black 001, LLC (“Seller”) whereby it acquired 80.01 % of

the membership interests of Cuentas SDI, LLC, a Florida limited liability company (the “LLC”) for a purchase price of $ 850,000 .

The Company accounted for the transaction as

a business combination under ASC 805 and as a result, allocated the fair value of the book value of identifiable assets acquired and

liabilities assumed as of the acquisition date as outlined in the table below.

Although the accounting is not yet complete, the results

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

of acquisition.

All amounts are considered provisional until a more thorough analysis of the acquisition can be completed.

The consolidated

income statement for the three and six months ended June 30, 2023, includes $ 357,436 of revenue and $ 348,812 of expenses of Cuentas SDI,

LLC from the date of acquisition (June 15, 2023) through June 30, 2023 for net income of $ 8,624 .

The excess of the purchase price over the estimated

fair values of the underlying identifiable assets acquired, liabilities assumed, and non-controlling interest was allocated to goodwill.

The provisional estimated fair value of the noncontrolling interest was based on the price the Company paid for their 80.01 % of their

controlling interest.

The goodwill represents expected synergies from the combined operations and the acquired base of current and prior

merchants to which we hope to sell our merchant services.

The allocation of the purchase price and the estimated fair market

values of the assets acquired , liabilities assumed, and noncontrolling interest are shown below:

Consideration

Consideration issued

Identified assets, liabilities, and noncontrolling interest

Property and equipment, net

Cash overdraft

Customer deposits

Accounts payable

Accrued Expenses

Noncontrolling interest

Total identified assets, liabilities, and noncontrolling interest

Excess purchase price allocated to goodwill

Proforma information representing the revenue

and earnings of the combined company as if the business combination had occurred on January 1, 2022 has not been supplied as of the date

of this filing, therefore we are unable to include those amounts here.

NOTE 8 – NOTE PAYABLE

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NOTE 9 – STOCK OPTIONS

On January 1, 2021, the Company granted stock

options to purchase 6,667 shares of common stock pursuant to the terms of the Company’s employment agreement with Mr.

On January 1, 2021, the Company granted

stock options to purchase 6,667 shares of common stock pursuant to the terms of the Company’s employment agreement

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 three years after each vest date.

The aggregate fair value of the options totaled

$ 32,793 based on the Black Scholes Merton pricing model using the following estimates:

exercise price of $ 0.001 , 0.16 % risk

free rate, 35.03 % volatility and expected life of the options of 3 years.

The fair value is being amortized over the applicable

vesting period and credited to additional paid-in capital.

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

The aggregate fair value

of the options totaled $ 32,793 based on the Black Scholes Merton, pricing model using the following estimates:

exercise price

of $ 0.001 , 0.16 % risk free rate, 35.03 % volatility and expected life of the options of 3 years.

The fair value

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

On July 28, 2021, the Company entered into an

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negotiated transaction, for $ 700,000 using his personal funds.

On December 23, 2022, the Company granted stock options to purchase 200,000 shares

of common stock pursuant to the terms of the Company’s employment agreement with Mr.

100,000 options are immediately

vested with an additional 50,000 vested on January 1, 2023, and the remaining 50,000 vesting on January 1, 2024.

The options have an exercise

price of $ 0.01 per share.

The aggregate fair value of the options totaled $ 188,287 based on the Black Scholes Merton pricing

model using the following estimates:

exercise price of $ 0.01 , 3.75 % risk free rate, 133.79 % volatility and expected life of

the options of 10 years.

The fair value of the options has been credited to additional paid in capital.

On December 23, 2022, the Company granted stock options to purchase 275,000 shares

of common stock pursuant to the terms of the Company’s employment agreement with Mr.

137,500 options are 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 $ 258,895 based on the Black Scholes Merton pricing

model using the following estimates:

exercise price of $ 0.01 , 3.75 % risk free rate, 133.79 % volatility and expected life of

the options of 10 years.

The fair value of the options has been credited to additional paid-in capital.

summary of the status of the Company’s outstanding stock options and changes during the year ended December 31, 2022

and the three months ended March 31, 2023 is presented below:

On December 23, 2022, the Company granted stock

options to purchase 200,000 shares of common stock pursuant to the terms of the Company’s employment agreement with Mr.

100,000 options are immediately vested with an additional 50,000 vested on January 1, 2023, and the remaining 50,000 vesting

on January 1, 2024.

The options have an exercise price of $ 0.01 per share.

The aggregate fair value of the options totaled $ 188,287 based

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

exercise price of $ 0.01 , 3.75 % risk free rate, 133.79 %

volatility and expected life of the options of 10 years.

The fair value of the options has been credited to additional paid

On December 23, 2022, the Company granted stock

options to purchase 275,000 shares of common stock pursuant to the terms of the Company’s employment agreement with Mr.

137,500 options are 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 $ 258,895 based

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

exercise price of $ 0.01 , 3.75 % risk free rate, 133.79 %

volatility and expected life of the options of 10 years.

The fair value of the options has been credited to additional paid-in

A summary of the status of the Company’s

outstanding stock options and changes during the year ended December 31, 2022 and the six months ended June 30, 2023 is presented below:

Stock Options

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Options outstanding December 31, 2022

Options outstanding March 31, 2023

Shares exercisable at March 31, 2023

During the three months ended March 31, 2023 and 2022 the Company

recognized $ 132,788 and $ 70,833 , respectively, in stock based compensation related to the above mentioned options.

Options outstanding June 30, 2023

Shares exercisable at June 30, 2023

During the six months ended June 30, 2023 and 2022 the Company recognized

$ 132,788 and $ 142,526 , respectively, in stock based compensation related to the above mentioned options.

NOTE 10 – 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 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

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the Prefunded Warrant Shares, the “Warrant Shares” ) with an exercise price of $ 6.50 per Common Warrant Share.

Outstanding, December 31, 2020

Underwriter Warrants

Warrant A Exercised

Warrant B Exercised

Underwriter Warrant Exercised

( 1,176,364 )

A summary of the status of the Company’s outstanding warrants

and changes during the year ended December 31, 2022 and the six months ended June 30, 2023 is presented below:

Outstanding, December 31, 2021

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Outstanding, December 31, 2022

Outstanding, March 31, 2023

Warrants Exercised

Outstanding, June 30, 2023

NOTE 11 – OPERATING LEASES

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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.

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

The monthly base rent for “Cell 3”, comprising 4,000 square feet, is $ 1,667 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.

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.

On March 29, 2023, DMINT entered into a Surrender

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Total lease liability

Lease expense for the three months ended March

Lease expense for the three months ended June

30, 2023, was $ 25,534 , which consisted of amortization expense of $ 24,792 and interest expense of $ 742 .

The cash paid under operating

lease during the three months ended March 31, 2023, was $ 42,408 .

At March 31, 2023, there is one lease remaining that will terminate in

November 2023, unless renewed.

Lease expense for the three months ended March 31, 2022, was $ 42,409 , which consisted of amortization expense

of $ 39,112 and interest expense of $ 3,297 .

Lease expense for the six months

ended June 30, 2023, was $ 67,742 , which consisted of amortization expense of $ 65,950 and interest expense of $ 1,792 .

The cash paid under

operating leases during the six months ended June 30, 2023, was $ 72,090 .

Lease expense for the three months ended June 30, 2022, was $ 52,572 ,

which consisted of amortization expense of $ 48,633 and interest expense of $ 3,939 .

Lease expense for the six months ended June 30, 2022,

was $ 94,984 , which consisted of amortization expense of $ 86,693 and interest expense of $ 8,291 .

At June 30, 2023, there is one lease remaining

that will terminate in November 2023, unless renewed, which the Company will make payments of approximately $ 34,800 for, recording interest

of approximately $ 350 .

The weighted average discount rate used was 5 %.

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value (the “Stated Value”) of $ 1,000 per share.

As of March 31, 2023 and December 31, 2022 there were 1,021 shares of

As of June 30, 2023 and December 31, 2022 there were 1,021 shares of

Series A Preferred Stock issued and outstanding.

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Directors of the Company.

The Series A Preferred Stock holders may convert, at their option,

on or after the date on which the Term Loan is repaid in full, each share of Series A Preferred Stock (along with accrued but unpaid dividends

thereon) into such number of shares of common stock as determined by dividing the Stated Value by the conversion price.

The conversion

price for the Series A Preferred Stock will be equal to the offering price per Unit in this offering and will be subject to adjustment

for splits and the like.

The holders of Series A Preferred Stock will only be permitted to convert their shares of Series A Preferred

Stock into shares of common stock at such time as the Term Loan has been repaid in full and there are no further outstanding obligations

regarding such indebtedness.

The Series A Preferred Stock holders may convert,

at their option, on or after the date on which the Term Loan is repaid in full, each share of Series A Preferred Stock (along with accrued

but unpaid dividends thereon) into such number of shares of common stock as determined by dividing the Stated Value by the conversion

The conversion price for the Series A Preferred Stock will be equal to the offering price per Unit in this offering and will be

subject to adjustment for splits and the like.

The holders of Series A Preferred Stock will only be permitted to convert their shares

of Series A Preferred Stock into shares of common stock at such time as the Term Loan has been repaid in full and there are no further

outstanding obligations regarding such indebtedness.

Each holder of a share of Series A Preferred Stock

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The shares were issued on February 15, 2023 resulting in a reduction

of the accrued liability and an increase to common stock and additional paid-in capital during the three months ended March 31, 2023.

of the accrued liability and an increase to common stock and additional paid-in capital during the six months ended June 30, 2023.

On December 31, 2022, the Company granted 41,322

5 unchanged sentences

The shares were issued on February 15, 2023 resulting in a reduction

of the accrued liability and an increase to common stock and additional paid-in capital during the three months ended March 31, 2023.

of the accrued liability and an increase to common stock and additional paid-in capital during the six months ended June 30, 2023.

On December 31, 2022, the Company granted 53,719

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The shares were issued on February 15, 2023 resulting in a reduction

of the accrued liability and an increase to common stock and additional paid-in capital during the three months ended March 31, 2023.

February 14, 2023, a shareholder reported to the Company that they had incurred short swing profits of $ 114,654 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.

During the three months ended March 31, 2023,

the Company accrued $ 30,630 for dividends on the Series A preferred stock held by Mr, Yakov.

As of March 31, 2023, total accrued dividends

of the accrued liability and an increase to common stock and additional paid-in capital during the six months ended June 30, 2023.

On February 14, 2023, a shareholder reported to

the Company that they had incurred short swing profits of $ 114,654 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.

During the six months ended June 30, 2023, the

Company accrued $ 61,600 for dividends on the Series A preferred stock held by Mr, Yakov.

As of June 30, 2023, total accrued dividends

on the Series A preferred stock due to Mr, Yakov is $ 355,984 .

Refer to Note 7

for options to purchase shares of common stock issued to related parties.

Refer to Note 7 for options to purchase shares

of common stock issued to related parties.

NOTE 15 – COMMITMENTS AND CONTINGENCIES

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associated with loss contingencies as incurred and accrues for all probable and estimable settlements.

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 in the Cannabidiol (or “CBD”) industry, along

with other merchants utilizing financial transaction processing services (the “Acquired Merchant Portfolio”).

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 of $2,000,000.

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 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 in the Cannabidiol industry, along with other 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 of $2,000,000.

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 discovery, which is to be completed by the end of October and no date for

an arbitration or court hearing has been scheduled.

NOTE 16 – SEGMENTS

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of our reportable operating segments.

The following tables detail revenue, operating expenses, and assets

for the Company’s reportable segments for the three months ended March 31, 2023 and 2022.

For the Three

The following tables detail revenue, operating

expenses, and assets for the Company’s reportable segments for the three months ended June 30, 2023 and 2022.

For the Three Months ended

For the Six Months ended

Reportable segment revenue:

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( 1,688,665 )

( 2,849,951 )

( 2,335,963 )

Fintech services

1 unchanged sentence

( 6,672,141 )

( 10,471,837 )

( 12,930,278 )

General and administrative expenses

( 1,892,680 )

( 2,552,302 )

( 4,678,683 )

( 5,179,382 )

Total operating expenses

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( 10,203,557 )

( 18,000,471 )

( 20,445,623 )

Total other (expense) income

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$ ( 1,437,954 )

$ ( 3,204,948 )

$ ( 2,893,550 )

Total Assets:

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements