OLB GROUP, INC. - 10-Q Summary (Period Ended June 30, 2010)
Business Context and Reporting Period
This is a quarterly report (Form 10-Q) for The OLB Group, Inc., a smaller reporting company incorporated in Delaware. The reporting period covers the six months ended June 30, 2010. The Company operates as an e-commerce service provider, offering resources and support services for online sellers, with a focus on products such as "ShopFast PC" and "ShopFast DSD."
Key Financial Metrics
| Metric | Six Months Ended June 30, 2010 | Six Months Ended June 30, 2009 |
|---|---|---|
| Net Revenues | $103,281 | $178,256 |
| Gross Profit | $20,118 | $69,946 |
| Operating Expenses | $231,457 | $197,843 |
| Net Loss | $(124,452) | $(132,515) |
| Cash (End of Period) | $43,096 | $702 |
| Total Assets | $698,111 | $5,520 (Dec 31, 2009) |
| Total Liabilities | $152,762 | $85,769 (Dec 31, 2009) |
| Working Capital | $(109,666) | Not explicitly stated |
Capital Structure: As of July 12, 2010, the Company had 87,071,456 shares of common stock outstanding. The Company holds 13,316,835 warrants exercisable at $0.40.
Material Changes vs. Prior Period
- Revenue Decline: Net revenues decreased by 42% ($74,975) compared to the prior six-month period. This was primarily due to a reduction in subscribers for health-related discount benefit plans.
- Gross Profit Compression: Gross profit fell 71% to $20,118, driven by lower subscriber numbers and increased software development expenses.
- Expense Increase: General and administrative expenses rose 56% to $93,957, largely attributed to travel and entertainment costs.
- Non-Operating Income: The Company recorded a one-time gain of $86,887 from the settlement of a lawsuit, which significantly reduced the net loss for the period.
- Asset Acquisition: The Company acquired intangible assets (customer data, trademarks, domain names) from Retailer Networks, Inc. (RNI) valued at $650,050, paid for via stock and warrants.
Outlook, Risks, and Management Commentary
Going Concern: The Company has incurred significant losses and holds a working capital deficit of approximately $109,666. Management states that these factors raise substantial doubt about the Company's ability to continue as a going concern. Financial statements do not include adjustments that might result from this uncertainty.
Liquidity and Financing: The Company raised $100,000 through the sale of common stock in the second quarter. Future operations depend on obtaining additional equity or debt financing. The primary historical source of funding has been loans from the CEO, who has no binding commitment to provide further financing.
Strategic Plan: Management plans to launch the marketing of the ShopFast PC software in the fourth quarter of 2010, including an infomercial and media campaign. The strategy relies on achieving a media spend return ratio of at least $1.50 in orders for every $1.00 spent.
Risks: Key risks include the inability to secure additional financing, the failure of new product launches to generate sufficient revenue, and the continued decline in existing subscriber bases.
Investor Verification Checklist
- Going Concern Status: Verify the Company's progress in securing the additional financing required to sustain operations beyond the current cash balance of $43,096.
- Revenue Sustainability: Assess the viability of the new ShopFast PC product launch and whether it can offset the 42% decline in legacy revenue streams.
- Intangible Asset Valuation: Review the utility and amortization schedule of the $650,050 in intangible assets acquired from RNI, which now comprise the majority of the Company's assets.
- Related Party Transactions: Monitor the reliance on the CEO for loans and the terms of the employment agreement (annual salary of $275,000) relative to current cash flow.
- Warrant Dilution: Note the 13.3 million outstanding warrants exercisable at $0.40, which is significantly higher than the recent stock issuance price of $0.028, creating potential future dilution.