Item 7. Management’s Discussion
and Analysis of Financial Condition and Results of Operation
The following discussion and analysis of our
consolidated financial condition and results of operations for years ended December 31, 2025 and 2024 should be read in conjunction
with the consolidated financial statements and notes related thereto included elsewhere in this Annual Report on Form 10-K.
48
Overview
We are primarily a FinTech company that focuses
on a suite 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.
With respect to our eVance business, our merchants
are currently processing over $100,000,000 in gross transactions monthly and average approximately 1,400,000 transactions a month. These
transactions come from a variety of sources including direct accounts and ISO channels. The accounts consist of businesses across the
United States with no concentration of industries or merchants.
We have integrated all the applications for OmniSoft
and the ShopFast Omnicommerce solution with the eVance mobile payment gateway, SecurePay.comTM. SecurePay.comTM,
is currently used by approximately 3,000 merchants processing over 32,000 transactions and approximately $9,000,000 of monthly gross
transactions (though our revenue from these transactions is limited). In July 2019, we launched a new merchant and ISO boarding system
that will be able to onboard merchants instantly. This provides the merchant with an automated approval and ISOs will have the ability
to see all their merchants and their residuals as they load to the system.
On May 14, 2021, the Company formed its wholly
owned subsidiary, OLBit. The purpose of OLBit is to hold the Company’s assets and operate its business related to its emerging money
transmission and transactional business.
On July 23, 2021, we formed our wholly owned subsidiary,
DMINT, to operate in the Bitcoin mining industry, specifically the mining of Bitcoin. DMINT initiated the first phase of its 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, 2025, DMINT has 1,000 computers and had 400 computers online and mining for Bitcoin. In February 2023, it re-deployed
all of the computers to its Selmer, Tennessee location. At December 31, 2025, DMINT had mined 60.01 Bitcoin. The Company is currently
in the process of spinning off DMINT into a stand-alone entity.
As stated above, we are currently in the process
of spinning off DMINT into a stand-alone entity. Our planned DMINT spin-off distribution (the “Spin-Off Distribution”) will
occur upon DMINT’s Form S-1 Registration Statement filing being declared effective by the Securities and Exchange Commission, and
the approval by the Nasdaq Capital Market (“NASDAQ”) of the listing of DMINT’s common shares on the NASDAQ. Following
the consummation of the Spin-Off Distribution, of which there is no guarantee, (i) DMINT will no longer be a wholly owned subsidiary
of the Company and will be a stand-alone entity, (ii) all of DMINT’s outstanding shares of common stock will be owned by the existing
stockholders of the Company, and (iii) DMINT Real Estate Holdings, Inc. (“DREH”) will remain a wholly owned subsidiary of
DMINT.
49
On June 15, 2023, the Company entered into a Membership
Interest Purchase Agreement with SDI Black 001, LLC (“Seller”) whereby the Company acquired from Seller 80.01% of the membership
interests of Moola Cloud, LLC, a Florida limited liability company (f/k/a Cuentas SDI, LLC) (the “LLC”). The LLC enables the
Company to focus on marketing to the underbanked communities utilizing the LLC’s debit and calling card platform’s ability
for users to reload cash to their account and provide instant access to digital products to their customers’ Mobile App and digital
wallet into its electronic portal. The Company markets to the LLC’s merchant network, which currently has approximately 31,600 locations
in the United States, the ability of having one POS system that allows the retail customer to purchase products using OLB’s payment
processing solutions along with the ability to reload payment cards and their mobile phone minutes. On May 20, 2024, the Company entered
into a second Membership Interest Purchase Agreement with the minority member of the LLC (the “Agreement”) whereby it acquired
the remaining 19.99% of the membership interests of the LLC for a purchase price of $215,500. As a result, effective May 20, 2024, the
Company owns 100% of the LLC. On August 14, 2024, the LLC changed its name to Moola Cloud, 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.
Results of Operations
Year Ended December 31, 2025 Compared to
the Year Ended December 31, 2024
For the year ended December 31, 2025, we had total
revenue of $8,676,907 compared to $12,838,988 of revenue for the year ended December 31, 2024, a decrease of $4,162,081 or 32.4%. We earned
$7,936,768 in transaction and processing fees, $28,720 in merchant equipment sales, $210,256 of revenue from the Bitcoin Mining segment,
$302,241 in revenue from monthly recurring subscriptions and $198,922 of digital product revenue; compared to $9,684,152 in transaction
and processing fees, $75,575 in merchant equipment sales, $413,332 of revenue from the Bitcoin Mining segment, $521,268 in revenue from
monthly recurring subscriptions and $2,144,661 of digital product revenue. We had a decrease of revenue for our transaction and processing
fees of $1,747,384, a decrease in merchant equipment sales of $46,855, a decrease of $203,076 of bitcoin mining revenue, a decrease of
$219,027 from the monthly recurring subscriptions, and a decrease of $1,945,739 of digital product revenue. We had a decrease in revenue primarily due to a decrease in revenue
related to Moola Cloud, LLC, as the Company transitions to new vendors to obtain better pricing and is working to acquire new vendors
to replace others that have gone out of business. The majority of the transitions have been completed, and vendors will be in use
by Q1 2026.
50
For the year ended December 31, 2025, we had processing
and servicing costs of $7,528,415 compared to $10,669,238 of processing and servicing costs for the year ended December 31, 2024, a decrease
of $3,140,823 or 29.4%. Processing and servicing costs decreased in conjunction with the decreased revenue and merchant attrition.
Amortization expense for the year ended
December 31, 2025 was $0 compared to $533,805 for the year ended December 31, 2024. We recorded amortization expense on our merchant
portfolio, trademarks and natural gas purchase rights in 2024 and none in 2025. The decrease in the current period is due to
most of the assets being fully amortized in 2024.
Depreciation expense for our Bitcoin Mining Segment
was $507,393 for the year ended December 31, 2025 compared to $2,616,137 for the year ended December 31, 2024, a decrease of $2,108,744
or 80.6%. The decrease in the current period is due to assets being impaired in 2024.
Salary and wage expense for the year ended December
31, 2025 was $2,993,692 compared to $2,932,948 for the year ended December 31, 2024, an increase of only $60,744 or 2.1%.
Professional fees for the year ended December
31, 2025 were $935,076 compared to $1,939,542 for the year ended December 31, 2024, a decrease of $1,004,466 or 51.8%. Professional fees
consist mainly of audit and legal fees. The decrease in the current period is due to a decrease in legal fees as the Company’s legal
related activity for ongoing litigation was much less in the current year.
General and Administrative (“G&A”)
expense for the year ended December 31, 2025, was $1,877,693 compared to $2,861,300 for the year ended December 31, 2024, a decrease of
$983,607 or 34.4%. The decrease was mainly due to an approximately $324,000 decrease in bank fees. During the current year the Company
closed its risk portfolio account which resulting in a large decrease to the bank fees. We had a decrease of $116,000 for outside services
due to fewer service providers used for Dmint. We had a $112,000 decrease in compliance related fees. In the prior year we incurred fees
for money transition licenses for OLBit. We did not have these expenses in 2025. We had a $64,000 decrease in rent expense as a
result of the new lease in 2025 and we had a decrease of $230,000 in insurance expense due to the renewal of policies in the 2025.
For the year ended December 31, 2024, we had total
impairment expense of $2,962,469 related to DMINT’s exclusive agreement to purchase natural gas.
For the year ended December 31, 2025, we incurred
interest expense for related parties of $395,926 and other expense of $85,000. We also recognized a loss on the extinguishment of accounts
payable of $52,000 and a loss on conversion of accrued salaries and loans payable to related party of $175,763. For the year ended December
31, 2024, we recognized a realized gain from the sale of bitcoin of $222,751 and an realized gain on investment of $274,731. We also had
interest expense of $45,942.
Our net loss for year ended December 31, 2025,
was $5,874,051 compared to $11,224,911 for year ended December 31, 2024. We had a decrease in our net loss of $5,350,860 for the reasons
discussed above.
In addition, we recognized a $775,000 deemed dividend for preferred
stock and a $30,630 for preferred dividends for a net loss applicable to common shareholders of $6,679,681.
Liquidity and Capital Resources
Changes in Cash Flows
Operating Activities
For the year ended December 31, 2025, we used
$1,330,383 of cash in operating activities, which included our net loss offset by $507,392 for depreciation expense, $800,040 for stock-based
compensation, loss on conversion related party debt of $175,763, Loss on settlement of accounts payable and debt of $52,000, other expense
of $25,250 and net changes in operating assets and liabilities of $2,983,365.
For the year ended December 31, 2024, we used
$2,600,036 of cash in operating activities, which included our net loss offset by $3,149,942 for amortization and depreciation expense,
$406,500 for stock-based compensation, impairment expense of $2,962,469, a realized gain of $222,751 from the sale of bitcoin and a realized
gain on investment of $274,731 and net changes in operating assets and liabilities of $2,598,309.
51
Investing Activities
For the year ended December 31, 2025, we had no
investing activities.
For the year ended December 31, 2024, we received
$332,893 of cash used for investing activities. We received $548,393 from the sale of investment and used $215,500 to purchase the
remaining 19.99% interest in the LLC.
Financing Activities
For the year ended December 31, 2025, we received
net cash of $1,318,724 from financing activities as a result of receiving $560,832 from our CEO and $887,786 from the sale of common
stock, and a decrease in our cash overdraft of $4,731. We made repayments on our note payable of $38,838 and to our CEO of $86,325.
For the year ended December 31, 2024, we received
net cash of $2,115,843 from financing activities as a result of receiving $1,191,282 from our CEO, $1,090,890 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 $31,750. We made repayments
on our note payable of $204,919.
Liquidity and Capital Resources
At December 31, 2025, the Company had cash of
$15,777 and negative working capital of $6,640,236.
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 program. 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 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 December 31, 2025, the ATM Offering has resulted
in net proceeds of $1,978,676.
During the twelve months ended December 31, 2025,
Mr. Yakov made payments on behalf of the Company in the amount of $560,832. As of December 31, 2025, the Company owes Mr. Yakov
$167,315.
On August 12, 2024, the Company entered into an
agreement with Yakov Holdings LLC, an entity controlled by Mr. Yakov (the “Yakov LLC”) whereby the Yakov LLC committed to
loan to the Company up to Five Million Dollars ($5,000,000) (the “Yakov LLC Loan”). The Yakov LLC Loan is revolving in nature,
allowing the Company to borrow, repay, and re-borrow amounts under the terms and conditions set forth herein, provided that the total
outstanding amount shall not exceed Five Million Dollars ($5,000,000). The interest rate of the Yakov LLC Loan is twelve percent (12%)
and it matures on March 31, 2026. In addition, the Yakov LLC Loan is secured by a first priority security interest for the benefit of
the Yakov LLC over all of the assets of the Company.
During the six months ended June 30, 2025, all
amounts owed to Mr. Yakov at that time were converted into shares of common stock.
The Company has reviewed its cash flow activity
during 2025 and projected cash flow forecast for 2026 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 Annual Report.
Based on projected cash to be used in operations to be offset by expected proceeds from capital raises, the ATM program and loan proceeds
from Ronny Yakov under the loan agreement, the Company believes it has sufficient liquidity in order to sustain operations for at least
the twelve months following the filing of this Annual Report. During the first quarter of 2026, the Company raised capital through a direct
offering and a PIPE. The total cash to the Company from these transactions totaled over $3.7M. The Company believes this is sufficient
to cover operations for the next 12 months. However, management recognizes that it may be required to obtain additional resources
to successfully execute its business plans. No assurances can be given that management will be successful in raising additional capital,
if needed, or on acceptable terms. Management believes that the Company’s existing cash resources, together with expected capital raises,
potential advances under the ATM program, related party financing, and other available funding sources, will be sufficient to support
operations through March 31, 2027.
Significant Accounting Policies
Refer to Note 2 of our consolidated financial
statements contained elsewhere in this Annual Report on Form 10-K for a summary of our significant accounting policies and recently adopting
and issued accounting standards.
Item 7A. Quantitative and Qualitative
Disclosures about Market Risk
We are a smaller reporting company as defined
by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
52
Item 8. Financial Statements and Supplementary Data
INDEX TO FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm (PCAOB ID # 587) F-2
Consolidated Balance Sheets at December 31, 2025 and 2024 F-3
Notes to the Consolidated Financial Statements F-7
F-1
www.rbsmllp.com
Report
of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of
OLB Group, Inc. and Subsidiaries
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated
balance sheet of OLB Group, Inc. and subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated
statements of operations, changes in stockholders’ equity and cash flows for each of the years in the two-year period ended December
31, 2025, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024,
and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2025, in conformity
with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the
responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial
statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding
of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess
the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides
a reasonable basis for our opinion.
/s/ RBSM LLP
We have served as the Company’s auditor since 2024.
Houston, TX
New York, NY Washington DC Mumbai & Pune, India
Boca Raton, FL
Houston, TX San Francisco, CA Las Vegas, NV Beijing,
China Athens, Greece
Member: ANTEA International with affiliated offices
worldwide
F-2
The OLB Group, Inc. and Subsidiaries
Consolidated Balance Sheets
ASSETS
Current Assets:
Other current assets 25,444 —
Other Assets:
Intangible assets, net — 3,724
Operating lease right-of-use assets — 140,218
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Preferred dividend payable (related party) — 543,509
Operating lease liability – current portion — 46,491
Long Term Liabilities:
Operating lease liability – net of current portion — 93,869
Commitments and contingencies (Note 14)
Stockholders’ Equity:
The accompanying notes are an integral part
of these consolidated financial statements.
F-3
The OLB Group, Inc. and Subsidiaries
Consolidated Statements of Operations
For the Years Ended December 31,
Revenue:
Other revenue from monthly recurring subscriptions 302,241 521,268
Operating expenses:
Other income (expense):
Realized gain on sale of bitcoin — 222,751
Realized gain on investment — 274,731
Loss on conversion of related party amounts (175,763 ) —
Loss on settlement of accounts payable and debt (52,000 ) —
Loss on settlement of lawsuit (85,000 ) —
Income tax expense — —
Preferred dividends (related party) (30,630 ) (124,903 )
Deemed dividend – preferred stock (775,000 ) —
Net loss per common share, basic and diluted $ (1.74 ) $ (6.10 )
Weighted average shares outstanding, basic and diluted 3,841,571 1,860,538
The accompanying notes are an integral part
of these consolidated financial statements.
F-4
The OLB Group, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders’
Equity
For the Years Ended December 31, 2025 and 2024
Shares Amount Shares Amount In Capital Stock Deficit Interest Total
Preferred stock dividends-related party — — — — (124,903 ) — — — (124,903 )
Shares issued for charitable contribution 2,500 — 4,725 — — 4,725
Adjustment for 10 for 1 reverse stock split — — (146 ) — — — — — —
Preferred stock dividends-related party — — — — (30,630 ) — — — (30,630 )
Preferred stock dividend contributed to capital — — — — 45,139 — — — 45,139
Deemed dividend – preferred stock — — — — 775,000 — (775,000 ) — —
The accompanying notes are an integral part
of these consolidated financial statements.
F-5
The OLB Group, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the Years Ended December 31,
CASH FLOWS FROM OPERATING ACTIVITIES:
Adjustments to reconcile net loss to net cash used in operations:
Common stock issued for services – related party 198,340 —
Operating lease expense, net of repayment (142 ) —
Common stock issued for services 466,200 —
Loss on conversion related party amounts 175,763 —
Loss on extinguishment of debt 52,000 —
Common stock issued for charitable contribution — 4,725
Operating lease expense, net of repayment — 142
Realized gain on investment — (274,731 )
Realized gain on sale of bitcoin — (222,751 )
Changes in assets and liabilities:
Other long-term assets 15,000 —
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of investment — 548,393
Purchase of 19.99% interest in Moola Cloud, LLC — (215,500 )
Net cash provided by investing activities — 332,893
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments to related party (86,325 ) —
Proceeds from exercise of options – related party — 6,840
Cash paid for:
Interest $ — $ —
Income taxes $ — $ —
Non-cash investing and financing transactions:
Common stock issued for accrued liabilities $ 748,000 $ 900,000
Preferred stock dividends $ — $ 124,903
Common stock issued for loans payable – related party $ 1,511,152 $ —
Common stock issued for accrued salary – related party $ 2,022,917 $ —
Preferred stock dividends $ 30,630 $ —
Common stock issued for interest – related party $ 331,019 $ —
Common stock payable for payment of accrued dividends $ 529,000 $ —
Common stock issued for services – related party $ 198,340 $ —
Common stock issued for conversion of preferred $ 10 $ —
Common stock issued for prepaid $ 162,766 $ —
The accompanying notes are an integral part
of these consolidated financial statements.
F-6
The OLB Group, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
December 31, 2025
NOTE 1 – BACKGROUND
Background
The OLB Group, Inc. (“OLB”, the “Company”)
was incorporated in the State of Delaware on November 18, 2004 and provides services through its wholly-owned subsidiaries and business
segments. The Company generates its revenue through two business segments its Fintech Services and Bitcoin Mining Business segments.
Fintech Services:
The Company provides integrated financial and
transaction processing services (“Fintech Services”) to businesses throughout the United States. Through its eVance, Inc.
subsidiary (“eVance”), the Company provides an integrated suite of third-party merchant payment processing services and related
proprietary software enabling products that deliver credit and debit card-based internet payment processing solutions primarily to small
and mid-sized merchants operating in physical “brick and mortar” business environments, on the internet and in retail settings
requiring both wired and wireless mobile payment solutions. eVance operates as an independent sales organization (“ISO”) generating
individual merchant processing contracts in exchange for future residual payments. As a wholesale ISO, eVance has a direct contractual
relationship with the merchants and takes greater responsibility in the approval and monitoring of merchants than do retail ISOs and as
a result, receives additional consideration for this service and risk. The Company’s Securus365, Inc. (“Securus365”)
subsidiary operates as a retail ISO and receives residual income as commission for merchants it places with third party processors. The
Company’s eVance Capital, Inc subsidiary provides lending services to merchants processing with eVance, Inc.
CrowdPay.us, Inc. (“CrowdPay”) is
a Crowdfunding platform used to facilitate a capital raise anywhere from $1,000,000 -$50,000,000 of various types of securities
under Regulation D, Regulation Crowdfunding, Regulation A and the Securities Act of 1933. To date, the activities of this subsidiary have
been nominal.
OmniSoft, 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 its wholly
owned subsidiary, OLBit, Inc. (“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 Bitcoin Business and Fintech Services business.
To date, the activities of this subsidiary have been nominal.
On June 15, 2023, the Company entered into a Membership
Interest Purchase Agreement (the “Agreement”) with SDI Black 001, LLC (“Seller”) whereby the Company acquired
80.01% of the membership interests of Cuentas SDI, LLC, a Florida limited liability company (the “LLC”). The LLC owns the
platform of Seller and the network serving over 31,000 bodega convenience stores in and around New York and New Jersey.
On May 20, 2024, the Company entered into a Membership
Interest Purchase Agreement (the “Agreement”) dated as of May 20, 2024 with the minority member of the LLC whereby it acquired
the remaining 19.99% of the membership interests of the LLC for a purchase price of $215,500. As a result, effective May 20, 2024, the
Company owns 100% of LLC.
The Company also provides e-commerce development
and consulting services on a project-by-project basis.
Bitcoin Mining Business:
On July 23, 2021, the Company formed its wholly
owned subsidiary, DMINT, Inc., (“DMINT”). The purpose of DMINT is to operate its business related to Bitcoin mining (“Bitcoin
Business”).
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. Currently, its only asset is the building and property located in Selmer, Tennessee where all of the mining computers
are located.
F-7
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation
The Company’s consolidated financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Use of Estimates
The preparation of financial statements in conformity
with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The Company’s accounting estimates include the collectability
of receivables, useful lives of long-lived assets and recoverability of those assets, impairment in fair value of goodwill, valuation
allowances for income taxes and stock-based compensation.
Principles of Consolidation
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., and DMINT Real Estate Holdings. The Company owns 100% of Cuentas SDI, LLC, which has been
included in the consolidated financial statements.
All significant intercompany transactions and
balances have been eliminated.
Fair Value of Financial Instruments
The fair value is an exit price representing the
amount that would be received to sell an asset or required to transfer a liability in an orderly transaction between market participants.
As such, fair value of a financial instrument is a market-based measurement that should be determined based on the assumptions that market
participants would use in pricing an asset or a liability.
The carrying amounts of the Company’s financial
assets and liabilities, including cash, accounts receivable, prepaid expenses, other receivables, other current assets, accounts payable,
accrued expenses, related party payable and note payable, approximate their fair values because of the short maturity of these instruments.
The fair value of options and warrants is estimated using the Black-Scholes option pricing model or other appropriate valuation techniques.
Key assumptions include expected volatility, risk-free interest rate, expected term, and dividend yield. These inputs are based on observable
market data where available (Level 2) or, when necessary, management’s estimates (Level 3). Fair value measurements are reassessed
at each reporting date, and any changes are reflected in the financial statements.
A three-tier fair value hierarchy is established
as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value.
Concentration of Credit Risk
Financial instruments that potentially expose
the Company to concentration of credit risk consist primarily of cash and accounts receivable. The Company’s cash is deposited with
major financial institutions. At times, such deposits may be in excess of the Federal Deposit Insurance Corporation insurable amount (“FDIC”).
As of December 31, 2025 and 2024, the Company had no cash in excess of the FDIC’s $250,000 coverage limit.
F-8
Operating Segments
Operating segments are defined as components of
an entity for which discrete financial information is available that is regularly reviewed by the Chief Operating Decision Maker (“CODM”),
or decision maker group, in deciding how to allocate resources to an individual segment and in assessing performance. Our chief operating
decision–making group is composed of the Chief Executive Officer and Vice President. The Company has two operating segments as of
December 31, 2025 and 2024. (see Note 16).
Stock-based Compensation
We account for equity-based transactions with
employees and non-employees under the provisions Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) of ASC Topic 718, “Compensation – Stock Compensation” (“Topic 718”), which
establishes that equity-based payments to employees and non-employees are recorded at the grant date the fair value of the equity instruments
the entity is obligated to issue when the employees and non-employees have rendered the requisite service and satisfied any other conditions
necessary to earn the right to benefit from the instruments. Topic 718 also states that observable market prices of identical or similar
equity or liability instruments in active markets are the best evidence of fair value and, if available, should be used as the basis for
the measurement for equity and liability instruments awarded in these share-based payment transactions. However, if observable market
prices of identical or similar equity or liability instruments are not available, the fair value shall be estimated by using a valuation
technique or model that complies with the measurement objective, as described in Topic 718.
Net Loss per Share
Basic net loss per share of common stock is computed
by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per common
share is computed by dividing net loss by the weighted average number of shares of common stock and dilutive potentially outstanding shares
of common stock during the period. The weighted average number of common shares for the years ended December 31, 2025 and 2024 does not
include warrants to acquire 596,405 and 856,313, respectively, shares of common stock because of their anti-dilutive effect. The weighted
average number of common shares for years ended December 31, 2025 and 2024, does not include 20,000 and 20,000 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.
Bitcoin
The Company obtains bitcoin through its mining
activities, which is accounted for in connection with our revenue recognition policy. The bitcoin 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 bitcoin is accounted for in accordance
with the first in first out method of accounting. We do not amortize our bitcoin but assess the value for impairment as further discussed
in our impairment policy.
At December 31, 2025 and 2024, the carrying value
of the Company’s bitcoin was $7 and $0, respectively. As of December 31, 2025, the Company had 0.0001 bitcoin on hand which had
a fair value of $6.61 based on the price of bitcoin of approximately $87,509. For the years ended December 31, 2025 and 2024, we recorded
a realized gain on our bitcoin transactions of $0 and $222,751, respectively.
Property and Equipment
Property and equipment is stated at cost and
depreciated using the straight-line method over the estimated useful lives of the assets. Depreciation is calculated once the asset
has been received and is ready for its intended use, using half of the monthly depreciation in the first month and half of the
monthly depreciation in the last month. Cost and accumulated depreciation applicable to items replaced or retired are eliminated
from the related accounts with any gain or loss on the disposition included in the statement of operations. Expenditures for repairs
and maintenance are expensed as incurred.
F-9
The Company capitalizes all capital assets utilizing
the following criteria:
● All land acquisitions;.
● All buildings/facilities acquisitions and new construction;
● Facility renovation and improvement projects costing more than $100,000;
● Land improvement and infrastructure projects costing more than $100,000,
● Computer equipment costing more than $5,000; and
The estimated useful lives for all the Company’s
property and equipment are as follows:
Item Useful Life
Computer equipment 3 years
Software 10 years
Office furniture 5 Years
Buildings and improvements 30 years
Intangible Assets
The Company accounts for its intangible assets
in accordance with FASB 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
In accordance with ASC 360-10, Impairment Testing
of Long-Lived Assets Held and Used, the Company periodically reviews the carrying value of its long-lived assets held and used at
least annually or when events and circumstances warrant such a review. If significant events or changes in circumstances indicate that
the carrying value of an asset or asset group may not be recoverable, the Company performs a test of recoverability by comparing the carrying
value of the asset or asset group to its undiscounted expected future cash flows. Cash flow projections are sometimes based on a group
of assets, rather than a single asset. If cash flows cannot be separately and independently identified for a single asset, the Company
determines whether impairment has occurred for the group of assets for which it can identify the projected cash flows. If the carrying
values are in excess of undiscounted expected future cash flows, it measures any impairment by comparing the fair value of the asset group
to its carrying value. If the fair value of an asset or asset group is determined to be less than the carrying amount of the asset or
asset group, impairment in the amount of the difference is recorded.
During the year ended December 31, 2024, it was
determined that the Company’s mining equipment and intangible assets were impaired per our analysis completed in accordance with
ASC 360-10, and the balance was written down to fair value. As a result, the Company recognized impairment expense of $2,962,469 for the
year ended December 31, 2024.
F-10
Goodwill
The Company accounts for business combinations
under the acquisition method of accounting in accordance with 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. The goodwill is related to the Fintech reporting unit of OLB Group, Inc. All of its subsidiaries except
DMint, Inc. are included in the Fintech Reporting Unit. DMint is a separate reporting unit and is engaged in Bitcoin mining activities.
In accordance with ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,
the Company performed a quantitative assessment of goodwill and determined there was no impairment at December 31, 2025.
A summary of goodwill as of December 31, 2025,
is as follows:
Accounts Receivable
Accounts receivable represent contractual residual
payments due from the Company’s processing partners or other customers. Residual payments are determined based on transaction fees
and revenues from the credit and debit card processing activity of merchants for which the Company’s processing partners pay the
Company. Based on collection experience and periodic reviews of outstanding receivables, we have recorded an allowance balance of $207,850
and $207,850 as of December 31, 2025 and 2024, respectively. This balance represents an amount related to the ongoing lawsuit with FFS.
December 31, 2025, the loan is not considered in default.
Reserve for Chargeback Losses
Disputes between a cardholder and a merchant periodically
arise as a result of, among other things, cardholder dissatisfaction with merchandise quality or merchant services. Such disputes may
not be resolved in the merchant’s favor. In these cases, the transaction is “charged back” to the merchant, which means
the purchase price is refunded to the customer through the merchant’s bank and charged to the merchant. If the merchant has inadequate
funds, the Company must bear the credit risk for the full amount of the transaction. The Company evaluates the risk for such transactions
and estimates the potential loss for chargebacks based primarily on historical experience and records a loss reserve accordingly. During
the years ended December 31, 2025 and 2024 chargebacks have reduced recorded revenue amounts and no reserve for loss has been recorded
as of December 31, 2025 and 2024.
Revenue Recognition
The following table presents the Company’s
revenue disaggregated by revenue source:
For the Years Ended December 31,
Other revenue from monthly recurring subscriptions 302,241 521,268
F-11
The Company recognizes revenue under ASC 606,
“Revenue from Contracts with Customers” (“ASC 606”). The Company determines revenue recognition through the following
steps:
● Identification of a contract with a customer;
● Identification of the performance obligations in the contract;
● Determination of the transaction price;
● Recognition of revenue when or as the performance obligations are satisfied.
Revenue is recognized when control of the promised
goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange
for those goods or services. Shipping and handling activities associated with outbound freight after control over a product has transferred
to a customer are accounted for as a fulfillment activity and recognized as revenue at the point in time at which control of the goods
transfers to the customer. As a practical expedient, the Company does not adjust the transaction price for the effects of a significant
financing component if, at contract inception, the period between customer payment and the transfer of goods or services is expected to
be one year or less.
Transaction and processing fees
Fees for the Company’s transaction and processing
arrangements are typically billed and paid on a monthly basis. The Company receives a percentage of recurring monthly transaction related
fees comprised of credit and debit card fees charged to merchants, net of association fees, otherwise known as Interchange, as well as
certain service charges and convenience fees, for payment processing services, including authorization, capture, clearing, settlement
and information reporting of electronic transactions. Fees are calculated on either a percentage of the dollar, volume of the transaction
or a fixed fee or a hybrid of the two and are recognized at the time of the transaction. These merchant services represent a single performance
obligation satisfied over time and that the same measure of progress should be used to measure the Company’s progress toward complete
satisfaction of the performance obligation. The Company recognizes revenue on a monthly basis as the services are transferred to the customer
in short daily increments that qualify for series guidance as the best measure of the transfer of control.
In wholesale contracts, the Company recognizes
transaction and processing fees on a gross basis as the Company is the principal in the merchant services. The Company has concluded it
is the principal because it has a direct contractual relationship with the merchant, is primarily responsible for the delivery of services
to the merchants, including performing underwriting, has discretion in setting prices, and bears risk of chargebacks and other merchant
losses. The Company also has the unilateral ability to accept or reject a transaction based on criteria established by the Company. As
the principal, the Company records the full discount charged to the merchant as revenue and the related interchange and other processing
fees within cost of revenues.
In retail contracts, the Company is not responsible
for merchant underwriting, has no chargeback liability and has no or limited contractual relationship with the merchant. As such, the
Company records the net amount it receives from the processor, after interchange and other interchange and other processing fees, as revenue.
F-12
Merchant equipment rental and sales
The Company generates revenue through the sale
and rental of merchant equipment. Revenue is recognized when billed. The Company satisfies its performance obligation upon delivery of
equipment to merchants and recognizes revenue at a point in time. The Company allows for customer returns which are accounted for as variable
consideration. The Company estimates these amounts based on historical experience and reduces revenue recognized. The Company invoices
customers upon delivery of the equipment to merchants, and payments from such customers are due upon invoicing. The Company offers hardware
installment sales to customers with terms ranging from three to forty-eight months. The Company allocates a portion of the consideration
received from these arrangements to a financing component when it determines that a significant financing component exists. The financing
component is subsequently recognized as financing revenue separate from hardware revenue, within subscription and services-based revenue,
over the terms of the arrangement with the customer. Pursuant to practical expedients afforded under ASC 606, the Company does not recognize
a financing component for hardware installment sales that have a term of one year or less.
Monthly recurring subscriptions
The Company
generates recurring revenue through monthly subscriptions for software services. This service is provided based on an agreement
with the customer regarding software services. Performance obligations are promises in a contract to a customer. In
the subscription model, each billing period represents a performance obligation. The transaction price is the amount of consideration
the Company expects to receive in exchange for transferring goods or services. For recurring revenue, this is the subscription
fee. The Company allocates to the performance obligated based on the selling price for the subscription. If the criteria for
recognizing revenue over time are met, revenue is recognized over the period of performance. For subscription and recurring
fee, this means recognizing revenue each billing period.
Cryptocurrency mining:
The Company entered into contracts with digital
asset mining pool operators to provide the service of performing hash computations for the mining pool operator. The
contracts are continuously renewable and are terminable at any time by either party and the Company’s enforceable right to compensation
only begins when the Company provides computing power to the mining pool operator. In exchange for providing computing power, the Company
is entitled to a fractional share of Bitcoin. The Company’s fractional share is based on the proportion of computing power the Company
contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current
algorithm. Hashrate is the measure of the computational power per second used when mining.
Providing
computing power in Bitcoin transaction verification services is an output of the Company’s ordinary activities. The provision of
computing power is the only performance obligation in the Company’s contracts with third party pool operators. The transaction consideration