Forward-Looking Statements

The information in this report contains forward-looking statements. All statements other than statements of historical fact made in this report are forward looking. In particular, the statements herein regarding industry prospects and future results of operations or financial position are forward-looking statements. These forward-looking statements can be identified by the use of words such as "believes," "estimates," "could," "possibly," "probably," anticipates," "projects," "expects," "may," "will," or "should" or other variations or similar words. No assurances can be given that the future results anticipated by the forward-looking statements will be achieved. Forward-looking statements reflect management's current expectations and are inherently uncertain. If underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, our actual results may differ significantly from management's expectations. These risks and uncertainties include those factors described in greater detail in the risk factors disclosed in our Form 10-K for the fiscal year ended December 31, 2020 filed with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those anticipated in these forward-looking statements. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q or, in the case of documents referred to or incorporated by reference, the date of those documents.

The following discussion and analysis should be read in conjunction with our unaudited financial statements, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management.

Company Overview and Description of Business

We were incorporated in the State of Delaware on November 18, 2004 for the purpose of merging with OLB.com. The merger was done for the purpose of changing our state of incorporation from New York to Delaware. In April 2018, we completed an acquisition of substantially all of the net assets of Excel and its subsidiaries Payprotec Oregon, LLC, Excel Business Solutions, Inc. and eVance Processing, Inc. (such assets are the foundation of our eVance business). In May 2018, we entered into share exchange agreements with Crowdpay and Omnisoft, affiliate companies of our company's majority stockholder, pursuant to which each of Crowdpay and Omnisoft became solely owned subsidiaries of our Company. Our Company's headquarters is located at 200 Park Avenue, Suite 1700, New York, NY 10166. Our telephone number is (212) 278-0900.

We are a FinTech company and PayFac that focuses on a suite of products in the merchant services and payment facilitator verticals 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 our PayFac 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.

With respect to our eVance business, our merchants are currently processing over $82,000,000 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.





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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 will provide 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 22, 2020, the Company purchased certain assets from POSaBIT Inc. ("POSaBIT"), including its contracts and arrangements with the Doublebeam merchant payment processing platform (the "POSaBIT Asset Acquisition"). The assets included, but were not limited to, software source codes, customer lists, customer contracts, hardware and website domains. The total purchase price was $215,000 (the "Purchase Price") following post-closing adjustments.

On May 14, 2021, the Company formed OLBit, Inc., a wholly owned subsidiary ("OLBit"). The purpose of OLBit is to hold the Company's assets and operate its business related to cryptocurrency-related lending and transactional business.

On July 23, 2021, the Company formed DMINT, Inc., a wholly owned subsidiary ("DMINT"). The purpose of DMINT is to operate its business related to cryptocurrency mining DMint has initiated the first phase of the cryptocurrency 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 will be used to establish a proof of concept before DMint expands the number of computers in operation. As configured, it is expected that the computers purchased will have a combined computing power of approximately 100 petahash per second. If the initial mining operation results are as anticipated, DMint plans to expand the number of mining computers every quarter, whereby it would potentially have the computing power of 500 petahash per second by the end of 2022.

The Company has also signed a non-binding letter of intent to acquire a portfolio of CBD and other merchants that will utilize the Company's SecurePay Payment Gateway to process payments. The group of merchants to be acquired have reported annual transaction volume of greater than $300 million. The transaction is anticipated to add an accomplished and experienced sales channel to the OLB team, enabling further penetration into this growing sector in the United States. The transaction is expected to close in the fourth quarter of 2021 however there can be no assurance that the company will close this acquisition.





Results of Operations


Management's discussion and analysis of financial condition and results of operations ("MD&A") includes a discussion of the consolidated results from operations of The OLB Group, Inc. and its subsidiaries for the three and six months ended June 30, 2021 and 2020.

Three Months Ended June 30, 2021 Compared to the Three Months Ended June 30, 2020

For the three months ended June 30, 2021, we had total revenue of $2,833,572 compared to $2,000,035 of revenue for the three months ended June 30, 2020, an increase of $833,537 or 41.7%. We earned $2,666,049 in transaction and processing fees, $46,896 in merchant equipment rental and sales and $120,627 in other revenue during the three months ended June 30, 2021, compared to $1,831,896 in transaction and processing fees, $18,548 in merchant equipment sales and $149,591 in other revenue during the three months ended June 30, 2020. The increase was a result of an increase in the amount of fees earned from merchant processing transactions and an increase in the number of rentals and sales of merchant equipment.

For the three months ended June 30, 2021, we had processing and servicing costs of $2,098,745 compared to $1,294,604 of processing and servicing costs for the three months ended June 30, 2020. Processing and servicing costs increased by $804,141 or 62.1%. The increase was a result of the increase in the number of transactions processed during the period. Visa and Mastercard quarterly charges were higher than was accrued during the period. This was due to an increase in processing. Also, revenue for software, DoubleBeam and the net merchant portfolio decreased. There are no expenses related to these items. A decrease in revenue related to these items does not directly correspond to a decrease in expense.

Amortization expense for the three months ended June 30, 2021 was $215,903 compared to $203,215 for the three months ended June 30, 2020, an increase of $12,688 or 6.2%. We recorded amortization expense on our merchant portfolio and trademarks.

Salary and wage expense for the three months ended June 30, 2021 was $336,703 compared to $317,198 for the three months ended June 30, 2020, an increase of $19,505 or 6.1%. The increase was as a result of a change in the Company's payroll processing which resulted in an expense recognition earlier than the prior period.

General and administrative expenses ("G&A") for the three months ended June 30, 2021 was $848,368 compared to $380,888 for the three months ended June 30, 2020, an increase of $467,480 or 122.7%. In the current period, the increases were primarily due to increases of legal expenses of approximately $99,000 relating to ongoing litigation matters and legal advice relating to other Company business and an increase of our auditor fees of approximately $60,000, public relations and marketing expenses of approximately $160,000 and $82,000 of office expense. During 2021, the Company has expanded its public relations and marketing campaigns to increase visibility in the investor community and merchant marketplace. It has contracted with outside consultants to perform the investor relations and marketing work. It is anticipated that the Company will continue to use these services for the remainder of 2021.





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For the three months ended June 30, 2021, we incurred $0 of interest expense, compared to $314,745 for the three months ended June 30, 2020, a decrease of $314,745. The decrease in interest expense is due the conversion of all related party debt and the repayment of the Term Loan in March 2021.

Our net loss for the three months ended June 30, 2021 was $666,136 compared to $510,409 for the three months ended June 30, 2020. We had an increase in our net loss of $155,727 for the reasons discussed above.

Six Months Ended June 30, 2021 Compared to the Six Months Ended June 30, 2020

For the six months ended June 30, 2021, we had total revenue of $5,059,976 compared to $4,614,028 of revenue for the six months ended June 30, 2020, an increase of $587,938 or 14.1%. We earned $4,756,313 in transaction and processing fees, $65,403 in merchant equipment rental and sales and $238,260 in other revenue from monthly recurring subscriptions, during the six months ended June 30, 2021, compared to having earned $4,168,375 in transaction and processing fees, $38,810 in merchant equipment rental and sales and $406,843 in other revenue from monthly recurring subscriptions in the same period in the prior period. The increase was a result of an increase in the amount of fees earned from merchant processing transactions and an increase in the number of rentals and sales of merchant equipment.

For the six months ended June 30, 2021, we had processing and servicing costs of $3,646,019 compared to $3,015,017 of processing and servicing costs for the six months ended June 30, 2020. Processing and servicing costs increased by $631,002 or 20.93% because of the increase in the number of transactions processed during the period.

Amortization expense for the six months ended June 30, 2021 was $431,807 compared to $406,429 for the six months ended June 30, 2020, an increase of $25,378 or 6.2%. We recorded amortization expense on our merchant portfolio and trademarks.

Salary and wage expense for the six months ended June 30, 2021 was $1,156,794 compared to $717,386 for the six months ended June 30, 2020, an increase of $439,408 or 61.2%. Salary and wage expense increased in the current period due to bonuses paid to our CEO and President for the Company's performance in 2020 and 2021.

G&A expense for the six months ended June 30, 2021 was $1,474,637 compared to $896,255 for the six months ended June 30, 2020, an increase of $578,382 or 64.,5%. In the current period, the increases were primarily due to increases of legal expenses of approximately $245,000 relating to ongoing litigation matters, legal costs relating to the prepayment of the Term Loan and attorney fees relating to other Company business. This increase was partially offset by a decrease in our audit fees of approximately $56,000 during the current period compared with the prior period.

For the six months ended June 30, 2021, we incurred $116,736 of interest expense, compared to $621,196 for the six months ended June 30, 2020, a decrease of $504,460 or 432.1%. The decrease in interest expense is due to the conversion of all related party debt and the repayment of the Term Loan.

Our net loss for the six months ended June 30, 2021 was $1,765,993 compared to $1,052,616 for the six months ended June 30, 2020. We had an increase in our net loss of $713,377 for the reasons discussed above.

Liquidity and Capital Resources





Trends and Uncertainties


The Company's future financial condition and results of operations may be adversely affected by the continued prolongation of the COVID-19 pandemic and any need to institute additional business capacity restrictions or temporary closures.

The New York and Atlanta areas, which include the location of the Company's corporate headquarters and its operations business, have experienced and continue to experience a significant impact of the COVID-19 pandemic in the U.S. The Company continues to follow the recommendations of local health authorities to minimize exposure risk for its employees and visitors. However, the scale and scope and duration of the ongoing pandemic remains unknown, and the ongoing business disruption and related financial impact cannot be reasonably estimated at this time as different states have different regulations relating to business capacity. While the Company has implemented specific business continuity plans to reduce the potential impact of the ongoing COVID-19 pandemic during 2021 and believe that its business being principally operated using digital platforms, in the long-term, will suffer minimal negative impact, there is no guarantee that the Company's continuity plan will be successful, that the Company's merchants will meet the number of forecasted transactions due to a change in consumer activity around point of sale purchasing resulting from the temporary closure of businesses.





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In 2020 and the first six months of 2021, the Company continued to experience certain disruptions to its business and disruptions for the Company's customers and merchants, along with closures, that may materially affect the number of transactions processed by the Company. Similarly, the COVID-19 pandemic could have a long-term impact on the Company's customers and/or merchants during the second six months of 2021 which could reduce their demand for Company products, if pre-pandemic levels of purchasing activity does not resume. The extent to which the COVID-19 pandemic or any other health epidemic may impact the Company's results for 2021 and beyond will depend on future developments, which are highly uncertain and cannot be predicted, including the impact of vaccinations, the impact of the reopening of international travel and new information which may emerge concerning the severity of the economic impact of the response to the COVID-19 pandemic on the retail and service industries where the Company has many customers and merchants. Accordingly, the COVID-19 pandemic could continue to have a material adverse effect on the Company's business, results of operations, financial condition and prospects during 2021 and beyond. Although the reopening of businesses did result in an increase in transactions using the Company's products to pre-pandemic levels, there can be no assurance that the business will continue to see transaction valume at or above pre-pandemic levels.





Changes in Cash Flows



For the six months ended June 30, 2021, $1,279,545 of cash was used by operating activities, which included our net loss, offset by $373,850 for amortization and depreciation expense, $153,488 for stock-based compensation $60,458 of operating lease expense and net changes in operating assets and liabilities of $101,348.

For the six months ended June 30, 2021 and 2020, we used $0 and $125,000 for investment activities.

For the six months ended June 30, 2021, we used net cash of $493,889 in financing activities. $7,654,845 was repaid on our loan to GACP. We received a total of $7,160,940 from the exercise of warrants issued in the Offering and $16 from the exercise of options.

Liquidity and Capital Resources

At June 30, 2021, the Company had cash of $2,051,057 and working capital of $1,924,373. For the three and six months ended June 30, 2021, the Company's net loss was $666,136 and $1,765,993, respectively.

On August 11, 2020, the Company closed an offering of its securities (the "Offering") for gross proceeds of $6.45 million. The Company sold 700,000 units consisting of (a) one share of our common stock; (b) two Series A Warrants, and (c) one-half of one Series B warrant. In addition, the underwriter fully exercised its option to purchase 210,000 Series A warrants and 52,500 Series B warrants.

On March 2, 2021, the Company utilizing a portion of funds received upon the exercise of outstanding warrants, paid approximately $7.7 million to the Agent under the Credit Agreement (the "Prepayment"). This Prepayment resulted in the discharge in full of all of the obligations under the Credit Agreement. In connection with the extinguishment of the obligations under the Credit Agreement, 40,000 warrants to purchase Common Stock were cancelled.

At June 30, 2021, the Company had approximately $967,000 of outstanding liabilities.

In addition, the Company has received a Paycheck Protection Program loan under the CARES Act for approximately $236,000 (the "PPP Loan"). The Paycheck Protection Program provides that the use of PPP Loan proceeds was limited to certain qualifying expenses and may be partially or wholly forgiven in accordance with the requirements set forth in the CARES Act. The Company believes it has used the PPP Loan for permitted uses whereby it will be forgiven in full, although no assurance can be given that the Company will obtain forgiveness of all or any portion of amounts due under the PPP Loan.





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The Company has reviewed projected operating cash flows for 2021 and 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 the improved transaction volume trends the Company experienced in the six month period ended June 30, 2021, as well as the funds received from the capital raises discussed above, the Company believes it has sufficient liquidity in order to sustain operations for at least of the following twelve months.

The Company has plans to grow its cryptocurrency business by purchasing more mining computers and contracting with parties to establish a cryptocurrency lending, wallet and exchange platform as a new product offering to merchants and other customers. It also plans to increase its customer base through acquisitions. In order for the Company to execute all of its future plans to do business in the cryptocurrency marketplace and to make acquisitions, it will be necessary to obtain additional capital. This can be done by the sale of equity or debt securities or obtaining a loan. There can however be no assurances that the company will be able to raise additional funds to expand its crypto currency business.





Critical Accounting Policies



Refer to our Form 10-K for the year ended December 31, 2020, for a full discussion of our critical accounting policies.

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