OLB GROUP, INC. - 10-Q Summary (Period Ended September 30, 2008)
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended September 30, 2008, and the nine-month period ended on that date. The OLB Group, Inc. is an e-commerce service provider developing software products, specifically "ShopFast PC" and "ShopFast DSD," designed to enable businesses to sell goods online. The company has generated no revenue from operations since its inception.
Key Financial Metrics
| Metric | Nine Months Ended Sep 30, 2008 | Three Months Ended Sep 30, 2008 | Balance Sheet (Sep 30, 2008) |
|---|---|---|---|
| Net Revenues | $0 | $0 | N/A |
| Net Loss | $(333,369) | $(85,903) | N/A |
| Operating Expenses | $328,137 | $84,159 | N/A |
| Cash and Cash Equivalents | N/A | N/A | $362 |
| Total Assets | N/A | N/A | $68,659 |
| Total Liabilities | N/A | N/A | $549,451 |
| Stockholders' Equity (Deficit) | N/A | N/A | $(480,792) |
| Working Capital Deficit | N/A | N/A | ~$(485,757) |
| Net Cash Used in Operating Activities | $(82,140) | N/A | N/A |
| Net Cash Provided by Financing Activities | $80,169 | N/A | N/A |
Material Changes vs. Prior Period
- Expense Reduction: General and administrative expenses decreased significantly by $1,024,581 (89%) for the nine months ended September 30, 2008, compared to the same period in 2007. This was primarily due to reduced professional fees and software development costs.
- Net Loss Improvement: The net loss decreased by $1,012,081 to $333,369 for the nine-month period compared to $1,345,450 in the prior year.
- Liquidity Deterioration: Cash on hand dropped from $2,333 at December 31, 2007, to $362 at September 30, 2008. The company reported a cash overdraft of $20.
- Debt and Liabilities: Current liabilities increased to $549,451 from $359,154. Notable increases include a new "Loan payable - officer" of $59,049 and "Accrued salary" of $137,500.
Outlook, Risks, and Management Commentary
- Going Concern: The filing explicitly states that the company's financial statements are prepared on a going concern basis, but substantial doubt exists regarding its ability to continue as a going concern due to significant losses and a working capital deficit. The independent auditor has issued a report expressing this doubt.
- Financing Needs: The company relies heavily on loans from its President and principal stockholder, Ronny Yakov. There is no binding commitment for future financing. Management is pursuing investment opportunities, but success is uncertain.
- Plan of Operation: The company plans to launch the marketing of the "ShopFast PC" software component by the end of Q4 2008, including the production of an infomercial. They intend to test the product with focus groups before a full-scale media campaign.
- Risks: If the company cannot obtain sufficient funds within the next twelve months, it may be forced to reduce its organization size or cease product development entirely.
Investor Verification Checklist
- Cash Runway: Verify the sufficiency of the remaining $362 cash balance against the stated need for additional financing to continue operations.
- Related Party Dependence: Confirm the terms and availability of future loans from the President, Ronny Yakov, given the company's reliance on this source.
- Product Viability: Assess the status of the "ShopFast PC" and "ShopFast DSD" software development and the timeline for generating actual revenue.
- Legal Obligations: Review the details of the "Judgment payable with accrued interest" ($179,554) and the "Accrued salary" ($137,500) to understand immediate liquidity pressures.
- Equity Dilution: Monitor potential future equity issuances, as the company has historically converted debt and accrued salaries into common stock.