What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-05-20 compared with 2023-11-14 · 152 added, 153 removed, 87 unchanged (78% of the section changed)

34 unchanged sentences

We are a FinTech company that focuses on a suite

of products in the merchant services and payment facilitator verticals that seek to provide integrated business solutions to merchants

throughout the United States.

We seek to accomplish this by providing merchants with a wide range of products and services through

our various online platforms, including financial and transaction processing services.

We also have products that provide support for

crowdfunding and other capital raising initiatives.

We supplement our online platforms with certain hardware solutions that are integrated

with our online platforms.

Our business functions primarily through three wholly-owned subsidiaries, eVance, OmniSoft, and CrowdPay,

though substantially all of our revenue has been generated from our eVance business (we began generating revenue from our OmniSoft and

CrowdPay businesses in the second half of 2019).

We expect to build out our OmniSoft software business and to rely more on our payment

processing model for revenue so that we are not dependent on our revenue from our eVance business but there is no guarantee that we will

be able to do so.

of products in the merchant services marketplace that seeks to provide integrated business solutions to merchants throughout the United States.

We seek to accomplish this by providing merchants with a wide range of products and services through our various online platforms, including

financial and transaction processing services.

We also have products that provide support for crowdfunding and other capital raising initiatives.

We supplement our online platforms with certain hardware solutions that are integrated with our online platforms.

Our business functions

primarily through three wholly-owned subsidiaries, eVance, OmniSoft, and CrowdPay, though substantially all of our revenue has been

generated from our eVance business (we began generating revenue from our OmniSoft and CrowdPay businesses in the second half of 2019).

We expect to build out our OmniSoft software business and to rely more on individualized merchant services offerings for revenue so that

we are not dependent on our revenue from our eVance business but there is no guarantee that we will be able to do so.

With respect to our eVance business, our merchants

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This provides the merchant with an automated approval and ISOs will have the ability to see all their merchants and

their residuals as they load into the system.

their residuals as they load to the system.

On May 22, 2020, the Company purchased certain

7 unchanged sentences

The purpose of OLBit is to hold the Company’s assets and operate its business related

to its emerging lending and transactional business.

On July 23, 2021, we formed DMINT, Inc., a wholly-owned

subsidiary (“DMINT”) to operate in the cryptocurrency mining industry.

DMINT has initiated the first phase of the Bitcoin

mining operation by placing purchase orders for data centers and ASIC-based Antminer S19J Pro mining computers specifically configured

to mine Bitcoin.

The first lot of equipment is being used to establish a proof of concept before DMINT expands the number of computers

in operation.

As of September 30, 2023, DMint has purchased 1,000 computers, of which all computers

have been delivered with 250 online and mining for Bitcoin at the Company’s building in Selmer, Tennessee.

As configured,

it is expected that the computers purchased will have a combined computing power of approximately 100 petahash per second.

On November 24, 2021, we entered into an Asset

Purchase Agreement (the “Agreement”) dated as of November 15, 2021 with FFS Data Corporation (“Seller”) whereby

we acquired a portfolio of merchants utilizing financial transaction processing services (the “Acquired Merchant Portfolio”).

The purchase price was $20 million, with $16 million paid at closing, $2 million payable within six months after closing,

and a $2 million payment to be transferred to an escrow account, contingent upon an Attrition Adjustment, as described in the Agreement.

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 matter is currently in litigation.

to its emerging money transmission and transactional business.

On July 23, 2021, we formed DMINT, Inc., a wholly

owned subsidiary (“DMINT”) to operate in the Bitcoin mining industry, specifically the mining of Bitcoin.

DMINT initiated

the first phase of the Bitcoin mining operation by placing data centers and ASIC-based Antminer S19J Pro mining computers specifically

configured to mine Bitcoin in Pennsylvania.

As of December 31, 2022, DMINT had purchased 1,000 computers.

In February 2023, it re-deployed

all of the computers to its Selmer, Tennessee location.

At December 31, 2023, DMINT had mined 31.06 Bitcoin.

On January 3, 2022, the Company entered into a

share exchange agreement with all of the shareholders of Crowd Ignition, Inc.

(“Crowd Ignition”) whereby the Company purchased

100% of the equity of Crowd Ignition).

(“Crowd Ignition”) whereby the Company would

purchase 100% of the equity of Crowd Ignition in exchange for 1,318,408 shares of the common stock, par value $0.0001 of the Company (the

“CI Issued Shares”).

The value of the CI Issued Shares was, for purposes of the Agreement, based on the closing trading price

of the Company on October 1, 2021 (the date on which a third-party fairness opinion was issued), resulting in an aggregate purchase price

for Crowd Ignition of $5.3 million.

Crowd Ignition is a web-based crowdfunding software

Ronny Yakov, Chairman and CEO of the Company and John Herzog, a shareholder of the Company, owned 100% of the equity of Crowd

The software provides broker-dealer, merchant banks and law firms a platform to market crowdfunding offerings, collect payments

and issue securities.

The software has been developed in response to, and to comply with, recent changes in investment regulations including

Regulation D 506(b) and 506(v), Regulation A+ and Title III of the Jobs Act (Regulation CF), including raising the crowdfunding limit

from $1.07 million to $5.0 million.

Crowd Ignition is one of only about 50 companies registered with the SEC to provide the services permitted

under Regulation CF.

Ronny Yakov, Chairman and CEO of the Company and John Herzog, a significant shareholder of the Company, own 100% of the equity

of Crowd Ignition.

The software provides broker-dealer, merchant banks and law firms a platform to market crowdfunding offerings, collect

payments and issue securities.

The software has been developed in response to, and to comply with, recent changes in investment regulations

including Regulation D 506(b) and 506(v), Regulation A+ and Title III of the Jobs Act (Regulation CF), including raising the crowdfunding

limit from $1.07 million to $5.0 million.

Crowd Ignition is one of only about 50 companies registered with the SEC to provide the services

permitted under Regulation CF.

On June 15, 2023, the Company acquired 80.01%

11 unchanged sentences

of The OLB Group, Inc.

and its subsidiaries for the three and nine months ended September 30, 2023 and 2022.

Three Months Ended September 30, 2023

Compared to the Three Months Ended September 30, 2022

For the three months ended September 30, 2023,

we had total revenue of $9,694,440 compared to $6,246,551 of revenue for the three months ended September 30, 2022, an increase of $2,349,008

We earned $8,331,185 in transaction and processing fees, $21,160 in merchant equipment rental and sales, $147,068 in other revenue

from monthly recurring subscriptions, $95,667 of revenue from the Cryptocurrency Mining segment and $1,099,360 of revenue from the sale

of digital products.

For the three months ended September 30, 2022, we earned $5,982,177 in transaction

and its subsidiaries for the three months ended March 31, 2024 and 2023.

Three Months Ended March 31, 2024 Compared

to the Three Months Ended March 31, 2023

For the three months ended March 31, 2024, we

had total revenue of $3,496,182 compared to $6,622,589 of revenue for the three months ended March 31, 2023, a decrease of $3,126,407

For the three months ended March 31, 2024, we earned $2,288,209 in transaction and processing fees, $20,183 in merchant equipment

rental and sales, $108,868 in other revenue from monthly recurring subscriptions, $211,617 of revenue from the Bitcoin Mining segment

and $867,305 of revenue from the sale of digital products.

For the three months ended March 31, 2023, we earned $6,353,471 in transaction

and processing fees, $24,764 in merchant equipment rental and sales, $77,605 in other revenue from monthly recurring subscriptions and

$166,749 of other revenue from the Cryptocurrency Mining segment.

The increase in revenue was a result of the increase in the amount

of fees earned from a greater number of merchant processing transactions compared to the prior year and the addition of the digital product

Processing and servicing costs increased by $1,767,371 or 37.8%, from $4,679,192 in the prior period to $6,449,563.

Amortization and depreciation expense for the

three months ended September 30, 2023, was $899,831 compared to $892,788 for the three months ended September 30, 2022, an increase of

$7,043 or 0.8%, thus fairly consistent between periods.

We record amortization expense on our merchant portfolio, trademarks and natural

gas purchase rights.

Depreciation expense for our Cryptocurrency Mining segment for the three months ended September 30, 2023 was $910,743

compared to $799,716 for the three months ended September 30, 2022, an increase of $111,027 or 13.9% due to depreciating more bitcoin

mining equipment in the current period.

The decrease in revenue was a result of the loss of the CBD portfolio.

Processing and servicing costs decreased by $2,323,841 or 45.8%, from $5,077,434 in the prior period to $2,753,593.

Amortization expense for the three months ended March 31, 2024, was

$190,961 compared to $899,831 for the three months ended March 31, 2023 a decrease of $708,870 or 78.8%.

We record amortization expense

on our merchant portfolio, trademarks and natural gas purchase rights.

The decrease in the current period is due to the write off of the

CBD portfolio as of December 31, 2023, therefore no amortization was recorded for the asset during the three months ended March 31, 2024.

Depreciation expense for the three months ended March 31, 2024 was $749,520 compared to $799,717 for the three months ended March 31,

2023, a decrease of $50,197 or 6.3%.

Our depreciation expense decrease is due to adjustments made in 2023 to depreciating the mining equipment.

Salary and wage expense for the three months ended

September 30, 2023, was $687,456 compared to $649,012 for the three months ended September 30, 2022, an increase of $38,444 or 5.9%.

and wage expenses have increased due to an increase in salary and bonuses paid to our officers during the 2023 period.

fees for the three months ended September 30, 2023, were $707 900 compared to $174,472 for the three months ended September 30, 2022,

an increase of $533,424 or 305.7%.

Professional fees consist mainly of audit and legal fees.

The increase was due to increased litigation-related

legal expenses and auditor and legal expenses relating to the preparation of a spin-off of DMINT during the 2023 period.

and administrative expenses for the three months ended September 30, 2023, was $1,901,850 compared to $753,944 for the three months ended

September 30, 2022, an increase of $1,147,906 or 152.3%.

Some of our larger G&A expenses included insurance policy expense of $109,000

as a result of the cost to insure the cryptocurrency mining machines and the increase in the size of the Company’s business, bank

and credit card charges of $336,000, contracted services of $299,000 from $45,000 in the same period of 2022 and utilities of $228,00

from $175,000 in the same period of 2022.

For the three months ended September 30, 2023,

we had total other expense of $24,974 from an unrealized loss on investment, compared to total other expense of $9,989 for the three months

ended September 30, 2022.

the three months ended September 30, 2023, we had $83,112 of net loss attributed to the non-controlling interest of Cuentas SDI, LLC,

due to the acquisition of 80.01% interest of the entity during the quarter ended June 30, 2023.

net loss for the three months ended September 30, 2023, after the reduction for minority interest, was $1,801,738 compared to $1,712,562

for the three months ended September 30, 2023.

This was an increase in our net loss of $89,176 for the reasons discussed above.

Nine Months Ended September 30, 2023

Compared to the Nine Months Ended September 30, 2022

the nine months ended September 30, 2023, we had total revenue of $24,661,041 compared to $23,405,445 of revenue for the nine months

ended September 30, 2022, an increase of $230,329 or 1%.

We earned $22,439,904 in transaction and processing fees, $68,443 in merchant

equipment rental and sales, $295,941 in other revenue from monthly recurring subscriptions, $399,957 of other revenue from the Cryptocurrency

Mining segment and $1,456,796 of revenue from the sale of digital products during the nine months ended September 30, 2023, compared

to $22,209,575 in transaction and processing fees, $43,759 in merchant equipment rental and

sales, $518,556 in other revenue from monthly recurring subscriptions and $633,555 of other revenue from the Cryptocurrency Mining

segment during the nine months ended September 30, 2022 .

The increase in revenue was a result of the increase in the amount of

fees earned from a greater number of merchant processing transactions compared to the prior year and the addition of the digital product

Amortization and depreciation expense for the

nine months ended September 30, 2023, was $2,699,496 compared to $2,794,731 for the nine months ended September 30, 2022, a decrease of

$694,798 or 3.9% due to fully depreciating certain assets in the prior year.

We record amortization expense on our merchant portfolio,

trademarks and natural gas purchase rights.

Depreciation expense for our cryptocurrency mining segment was $2,510,176 in the current period

compared to $2,393,966 in the prior period, an increase of $116,210 or 4.9%, thus fairly consistent between periods.

Salary and wage expense for the nine months ended

September 30, 2023 was $2,070,288 compared to $1,805,785 for the nine months ended September 30, 2022 an increase of $264,503 or 14.6%.

Salary and wage expenses have increased due to an increase in salary and bonuses paid to our officers during the 2023 period.

fees for the nine months ended September 30, 2023 were $1,297,026 compared to $793,626 for the nine months ended September 30, 2022,

an increase of $503,400 or 63.4%.

Professional fees consist mainly of audit and legal fees.

The increase was due to increased litigation-related

legal expenses and auditor and legal fees related to the preparation of the spin-off of DMINT during the 2023 period.

and administrative expenses (“G&A”) for the nine months ended September 30, 2023 was $4,063,159 compared to $2,997,169

for the nine months ended September 30, 2022, an increase of $1,065,990 or 35.6%.

Some of our larger G&A expenses included insurance

policy expense of $333,400 as a result of the cost to insure the cryptocurrency mining machines and the increase in the size of the Company’s

business, travel of $130,000 from $250,000 in the same period of 2022, marketing and promotion of $88,000 from $180,000 in the same period

of 2022, contracted services of $624,000 from $511,000 in the same period of 2022, utilities of $510,00 from $406,000 in the same period

of 2022 and computer and internet expense of $670,000 from $515,000 in the same period of 2022.

For the nine months ended September 30, 2023,

we had total other expense of $196,025 compared to other income $383,190 for the nine months ended September 30, 2022.

In the current

period we had a loss of $279,242 from the sale of cryptocurrency, an unrealized loss on investment of $31,437, and other income of $114,654,

compared to other income of $383,190 for the nine months ended September 30, 2022.

In the prior period we recognized a gain of $383,190

from the reversal of a liability associated with a prior adverse judgement on appeal.

For the nine months ended September 30, 2023,

we had $81,387 of net loss attributed to the non-controlling interest of Cuentas SDI, LLC, due to the acquisition of 80.01% interest of

the entity during the quarter ended June 30, 2023.

Our net loss for the nine months ended September

30, 2023, after the reduction for minority interest, was $5,008,411 compared to $4,606,112 for the nine months ended September 30, 2022.

We had an increase in our net loss of $402,299 for the reasons discussed above.

March 31, 2024, was $1,016,338 compared to $823,140 for the three months ended March 31, 2023, an increase of $193,198 or 23.5%.

and wage expenses have increased due to an additional expense of $172,086 for option expense and $73,149 for Cuentas SDI, LLC and additional

Professional fees for the three months ended March

31, 2024, were $648,443 compared to $369,344 for the three months ended March 31, 2023, an increase of $279,099 or 75.6%.

fees consist mainly of audit and legal fees.

The increase was due to increased litigation-related legal expenses and auditor and legal

expenses relating to the preparation of a spin-off of DMINT during the 2024 period.

General and administrative expenses for the three months ended March

31, 2024, was $1,024,892 compared to $1,055,257 for the three months ended March 31, 2023, a decrease of $30,365 or 2.9%, an immaterial change

period over period.

For the three months ended March 31, 2024, we had total other income

of $486,947 from an unrealized gain on investment of $274,731, a $225,229 gain on the sale of bitcoin, and $13,013 of interest expense.

For the three months ended March 31, 2023, we had total other expense of $213,271 from a $327,925 loss on the sale of bitcoin offset by

other income of $114,654.

For the three months ended March 31, 2024, we

had $29,022 of net loss attributed to the non-controlling interest of Cuentas SDI, LLC, due to the acquisition of 80.01% interest of the

entity during the quarter ended June 30, 2023.

Our net loss for the three months ended March

31, 2024, after the reduction for minority interest, was $2,371,596 compared to $2,615,405 for the three months ended March 31, 2023.

This was a decrease in our net loss of $243,810 for the reasons discussed above.

Liquidity and Capital Resources

Changes in Cash Flows

For the nine months ended September 30, 2023,

we received $1,964,977 of cash from operating activities, which included our net loss of $5,089,798 plus our operating lease expense,

net of repayment of $8,444 offset by $5,209,669 for amortization and depreciation expense, $161,605 for stock-based compensation, $279,242

from the loss on sale of cryptocurrency and net changes in operating assets and liabilities of $1,412,703.

the nine months ended September 30, 2023, we used net cash of $231,590 in financing activities

as a result of a cash overdraft obtained in an acquisition of $8,050 and payments on a note

payable of $223,540 and used $2,079,630 in investing activities as a result of the acquisition

of property and equipment of $1,229,630 and the purchase of an 80.01% interest in Cuentas

SDI, LLC for $850,000.

For the three months ended March 31, 2024,

we used $424,700 of cash in operating activities, which included our net loss of $2,400,618 offset by $940,481 for amortization and

depreciation expense, $304,874 for stock-based compensation, $225,229 gain on sale of bitcoin, $274,731 gain on investment and net

changes in operating assets and liabilities of $1,230,523.

For the three months ended March 31, 2024, we received net cash of

$249,013 in financing activities as a result of receiving $182,150 from our CEO, $9,775 from the sale of common stock, $6,840 in proceeds

from exercise of options by related parties, and an increase in our cash overdraft of $91,020.

We made repayments on our note payable

Liquidity and Capital Resources

At September 30, 2023, the Company had cash of $87,783, $123,466 of

bitcoins and a working capital deficit of $2,329,626.

The Company has approximately $5,899,000 of outstanding liabilities.

The Company has reviewed its projected operating

cash flows for the remainder of 2023 and performed an overall analysis of market trends to determine whether or not it has sufficient

liquidity to continue as a going concern for a period of at least twelve months from the date of this Quarterly Report.

As a result of

(a) continued improving transaction volume trends and positive cash flow in the third quarter, and (b) an increase in revenues created

from the purchase of Cuentas SDI, LLC in June 2023, the Company believes it has and will continue to have sufficient liquidity in order

to sustain operations for at least the twelve months following the filing of this Quarterly Report.

At March 31, 2024, the Company had cash of $3,319

and negative working capital of $5,832,924.

On February 16, 2024, the Company entered into

an Equity Distribution Agreement (the “Agreement”) with Maxim Group LLC (“Maxim”) to create an at-the-market equity

Under the Agreement, the Company may offer and sell its common stock, par value $0.0001 per share, from time to time having an

aggregate offering amount of up to $15,000,000 (the “Shares”) during the term of the Agreement through Maxim, as sales agent

(the “ATM Offering”).

The Company has agreed to pay Maxim a commission equal to 3.0% of the gross sales price from the sales

of Shares pursuant to the Agreement.

In addition, the Company has agreed to reimburse Maxim for its costs and out-of-pocket expenses incurred

in connection with its services, including the fees and out-of-pocket expenses of its legal counsel.

As of March 31, 2024, the ATM Offering

has resulted in net proceeds of $9,775.

During the three months ended March 31, 2024,

Yakov made payments on behalf of the company in the amount of $182,150.

As of March 31, 2024, the Company owes Mr.

Yakov $194,828.

The amount is non-interest bearing and due on demand.

The Company has reviewed its cash flow activity during 2023 and the

first quarter ended March 31, 2024 and projected cash flow forecast for the remainder of 2024.

At March 31, 2024, the Company had cash

of approximately $3,300, accounts receivable of approximately $207,000, invested funds of approximately $548,000 and bitcoin valued at

The Company has performed an overall analysis of market trends to determine whether or not it has sufficient liquidity to continue

as a going concern for a period of at least twelve months from the date of this Annual Report.

Management believes that its current available

resources, along with funds to be received from the ATM Offering, creates sufficient liquidity in order to sustain operations for at least

the twelve months following the filing of this Quarterly Report.

Critical Accounting Policies

2 unchanged sentences

Subsequent Events

On April 8, 2024, the Company entered into Amendment

1 (the “Amendment”) to the Employment Agreement with Mr.

Yakov (the “Yakov Agreement”).

The Amendment corrected

a ministerial error in the terms relating to the exercise price of stock options awarded and automobile allowance for Mr.

The Amendment

affirmed that the exercise price of stock options issued under the Agreement (the “Stock Options”) shall have a per share

exercise price equal to One Cent ($0.01) and expire ten years after the date of grant.

Each Stock Option granted shall become exercisable

50% upon the grant date, then 25% upon each of the second and third anniversary of the date on which it is granted.

the notices provision of the Yakov Agreement was amended to the reflect the current business address of the Company.

On April 26, 2024, the Company filed with the

Delaware Secretary of State a Certificate of Amendment to Certificate of Incorporation (the “Certificate of Amendment”) which

became effective on April 26, 2024 to effect a one-for-ten (1:10) reverse stock split (the “Reverse Stock Split”) of the shares

of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) The Reverse Stock Split was approved

by the Company’s stockholders at a special meeting on April 26, 2024.

As a result of the Reverse Stock Split, every

ten (10) shares of issued and outstanding Common Stock will be automatically combined into one (1) issued and outstanding share of Common

Stock, without any change in the par value per share.

No fractional shares were issued as a result of the Reverse Stock Split and any

fractional shares resulting from the reverse stock split were rounded down to the nearest number of whole shares so that we will issue

cash in lieu of any fractional shares that such stockholder would have received as a result of the Reverse Stock Split.

Following the

Reverse Stock Split, the number of shares of Common Stock outstanding was reduced from 18,103,462 shares to 1,810,346 shares.

The shares of Common Stock underlying the Company’s outstanding stock options and warrants will be similarly adjusted along with

corresponding adjustments to their exercise prices.

The number of authorized shares of Common Stock under the Certificate of Incorporation

will remain unchanged at 50,000,000 shares.

On May 20, 2024, the Company entered into a Membership Interest Purchase

Agreement (the “Agreement”) dated as of May 20, 2024 with Cuentas, Inc.

(“Seller”) whereby it acquired 19.99%

of the membership interests of Cuentas SDI, LLC, a Florida limited liability company (the “LLC”) for a purchase price of $215,500.00.

As a result, effective May 20, 2024 the Company owns 100% of the LLC.

The Agreement contains a restrictive covenant

whereby for a period of three (3) years from the Closing, none of Seller, including its any of its principals, executives, officers, directors,

managers, employees, salespersons, or entities in which such principal has any interest, will directly or indirectly (i) induce, attempt

to induce, interfere with, disrupt or attempt to disrupt any past, present or prospective business relationship, solicit, market to, endeavor

to obtain as a customer, or contract with any Merchant in order to provide services to such Merchant in competition with the Company;

or (ii) solicit or interfere with, disrupt or attempt to disrupt any past, present or prospective business relationship, contractual or

otherwise any person or entity that is a party to any contract assigned to the Company to terminate its contractual or business relationship

with the Company.

QUANTITATIVE AND QUALITATIVE DISCLOSURES

3 unchanged sentences

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 2. Management’s Discussion and Analysis