OLB Group, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023, compared with FY2022. This annual filing reports full-year results, not standalone fourth-quarter results.
Business context
OLB provides merchant payment processing and related fintech services, alongside Bitcoin mining and digital-product sales. eVance’s payment processing remains the core business. In June 2023, OLB acquired an 80.01% interest in Cuentas SDI, which owns the Black011 platform and a network serving more than 31,000 convenience stores. The company says it is pursuing a spin-off of DMINT, its Bitcoin mining subsidiary.
Financial results and liquidity
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $30.57 million | $30.37 million |
| Operating loss | $23.48 million | $8.17 million |
| Net loss | $23.27 million | $7.79 million |
| Net loss per common share | $0.65 | $0.56 |
| Cash from operating activities | $2.05 million | Used $1.92 million |
| Cash at year-end | $179,006 | $434,026 |
- Revenue rose by $202,658 (about 0.7%). Transaction and processing fees fell $1.85 million; mining revenue fell $187,461; subscriptions declined $314,550. These decreases were offset by $2.53 million of digital-product revenue, reported for the first time in 2023.
- Processing and servicing costs declined 8.5% to $21.18 million. Revenue less these costs was approximately $9.39 million, or 30.7% of revenue, compared with approximately $7.22 million, or 23.8%, in 2022. This is a simple calculation, not a separately reported company margin.
- Operating expenses included $12.90 million of impairment charges, principally a $12.64 million write-down of the acquired FFS merchant portfolio, plus $259,931 for mining equipment. Professional fees increased to $2.34 million, with management citing FFS litigation and DMINT spin-off audit work. General and administrative expense rose to $7.08 million.
- Cash from operations was positive, but year-end cash was low. Investing activities used $2.08 million and financing activities used $221,829.
- Working capital was negative $5.41 million. Total liabilities were $7.38 million; notes payable totaled $407,858, including $258,819 due in 2024. Current liabilities also included a $2 million merchant-portfolio purchase obligation and $4.54 million in accounts payable and accrued expenses.
- Total assets fell to $19.73 million from $38.65 million, primarily reflecting the impairment write-down. Stockholders’ equity was $12.34 million.
Changes, outlook, and risks
- Management says available resources should fund planned expenditures for at least 12 months after filing, while acknowledging that additional capital may be needed and cannot be assured on acceptable terms. The company entered into a $15 million at-the-market equity agreement in February 2024; a prospectus supplement registered up to $3.9 million of shares. Issuances would dilute existing shareholders.
- OLB paused OLBit’s state money-transmission and New York BitLicense applications during 2023, with plans to restart in late 2024 or 2025. The company expects a DMINT spin-off within 12 months; timing and financing plans remain uncertain. DMINT had 400 miners online at year-end, and the Selmer facility is planned to accommodate up to 5,000 machines.
- Material contingencies include ongoing litigation with FFS over the $20 million acquired merchant portfolio and related claims against Clear Fork Bank. OLB has written off the portfolio asset but still reports the $2 million purchase installment obligation. DMINT also has a contractor dispute; the company recorded just over $315,000 in accounts payable related to the matter.
- Nasdaq had extended OLB’s deadline to regain minimum-bid-price compliance to May 13, 2024. The board proposed a 1-for-10 reverse split for shareholder approval; the filing provides no assurance that it would maintain a compliant share price.
- Management reported material weaknesses in financial reporting controls and concluded disclosure controls and internal control over financial reporting were not effective at year-end. The auditor issued an unqualified opinion on the financial statements but was not engaged to audit internal controls.
- Key risks include continued losses, low cash and a working-capital deficit, reliance on eVance, merchant attrition and processing competition, cybersecurity and payment-network compliance, cryptocurrency price and regulatory risks, litigation outcomes, and potential share dilution. Management issued no specific quantified operating guidance.
Important facts for investors to verify
- Cash runway and working-capital needs, including whether the ATM program has been used and the extent of any resulting dilution.
- Progress, expected costs, financing, and timing of the DMINT spin-off and the Selmer facility buildout.
- Status and potential financial exposure from FFS/Clear Fork Bank litigation and the DMINT contractor dispute.
- Performance and durability of Cuentas SDI’s digital-product revenue, and whether it generates cash or merchant-processing synergies.
- Steps taken to remediate the disclosed material weaknesses in financial reporting controls.
- Nasdaq listing compliance and the outcome and effects of the proposed reverse split.