The OLB Group, Inc. (OLB) Q3 2023 Earnings Report, Transcript and Summary

Hello, everyone, and thank you for having us presenting the third quarter of 2023. I'm going to start with the forward-looking statements. [Audio Gap] those are average transaction sales and number of transactions that we do. And today, we have over 10,200 merchants in all 50 states. We have 2,500 merchants on our Payment gateway and 130 different industry types selling in all 50 states.

This is just kind of a quick overview of the OLB Group. OLB itself is a diversified fintech and e-commerce merchant service provider in bitcoin and crypto mining company. That's the 2 main segments of the revenue of the company. Of that, though, 1 thing I would like to stress is 97% to 98% of our revenue still comes from payment processing. So that's the majority of where the company makes us money. DMint is the subsidiary that's the bitcoin mining piece, it's a bitcoin mining subsidiary that we have. It is also the 1 that we're looking to spin off. Again, just to kind of clarify the numbers that you saw on the first slide, the 1.3 billion, that's the number of transactions that we do from payment processing. Our 10,000 merchants on an annual basis do roughly around 1.3 billion annually on processing volume. As a diversified base, we don't have any industry -- much industries or states concentration. We're overall [indiscernible] 130 different MCC codes. And like I said, we were pretty much all over the place. We don't have any certain industry that we're dominating in. This is a quick look at the numbers. At $0.65, which is roughly to where we were today. The market cap of the company is right at $9.89 million. Shares outstanding around 15.3 million. The public float on that is 67%, and the insider ownership is around 33%. Just to kind of go through the investment highlights real quick. Again, we're diversified revenue from FinTech and Bitcoin mining. The 2023 year-to-date revenue was $24.7 million. That is actually when compared to $23.4 million for the same time last year, which is a 5.4% increase. So we actually have increased year-over-year. Still with our current market price, the market valuation is less than $10 million, which is a price to sales ratio of around 0.3. As we say every quarter, we have no debts. We're increasing revenues from organic growth, within acquisitions, new partnerships. We're still working to get a thousand miners up and running in the Selmer location. So once that's up and running, we should have around $300,000 monthly from that. The fintech and Bitcoin mining is projected to combine a run rate of around $30 million to $35 million for this year for the 2023 year. The DMint spin off is going to happen, and there will be a dividend to the shareholders here before the end of the year of 2023. That's if we get everything done correctly with the SEC, which we have filed with the SEC, and we're working on the comments.

So that's our core business. And in the core business, you can see omnisoft that is our application services that we provide. It's our own applications that have been traded and maintained by us. SecurePay is our payment gateway. And on the payment gateway, we said that we have 3,500 customers there. CrowdPay is our CrowdFunding platform that we provide different broker [indiscernible]. And Evance is underwriting, [indiscernible] monitoring, customer support and the sales force for the [indiscernible]. Just to point on the spin off of DMint. Separating the 2 companies would bring value to both entities. DMint has been valued at $29 million as a separate independent valuation advisers, value of the company. And as we stated earlier, the beginning of '24, it's going to be traded. I mean, we filed pretty much all the applications with the Security and Exchange. We applied to NASDAQ and got a symbol already.

This is a quick overview of what we have in Selmer, Tennessee. This is the DMint facility. It's a 15,000 square foot building that we purchased and we own on 4.7 acres of land. Phase 1 right now, there's -- as roughly we're finishing out the top 5 megawatts of power, which can power 1,000 ASIC miners. Phase 2, we're adding an additional 15 megawatts of power that will give us another 4,000 machines. So it says Phase III, but basically Phase III would be the -- basically when everything is done, we would have 20 megawatts of power there, powering 5,000 ASIC miners.

So basically, we are on Phase 1 and still about the completion of the electrical work. We have all the components in place and very much the time consuming to put all the electrical work together.

Go ahead, Ronny, I'm sorry.

Our cost to produce a bitcoin would be around $9,500. And as everybody can see, lately, prices are going up.

The 1 thing I'd like to stress too, is this is actually a picture of inside the facility we have in Selmer, Tennessee. These are all machines. That's our building. So we have the machines there in place and ready to go. We do have a small number of [indiscernible] running right now, but all of them are ready to go once the power is completed. This is just a quick overview of the companies that will go into the next slide. I just want to just kind of show how it goes from the power source to the mining to the Bitcoin network. This is an overview of how the electricity works. And basically, it shows that our cost is around $0.0489 a megawatt hour, so which is very good, and we're locked into that for 5 years. This is for the DMint spin-off update. As we've stated before, we've completed the '21, '22 stand-alone audit. We've also done the 2023 Q1, Q2 and Q3. We filed the S-1 with the SEC, and we're addressing the SEC comments now. Once everything is done, the dividends -- with the share, the dividend to the shareholders. Once it's actually spun off and complete the shareholders will receive an appropriate share of DMint's compared to the OLB shares.

Well, the Black011 acquisition that we did in June. We are extremely excited about this acquisition. We are already implementing certain marketing initiatives. Since we are the owners of Black011.com and the owners of Black Wireless, we are turning to brand's strong initiatives to the underbanked community. We plan to issue prepaid cards to underbanked society beginning of next year. And adding additional offers to the card itself that would save cost to an individual that is subscribing for this card. The point of sale that's our core business, and we plan to implement those things. Like we said earlier, we believe that would increase the revenues with something that we have already. The actions and connections into those Bodegas. And these additional products that we're offering into the locations today. One of them is also the OMNY card. The OMNY card itself, we believe it's going to be a big sell and good entry into additional locations. OMNY card is pretty much universal, pretty much any transportation can be useful this card as well.

On this, let's just go over some of the numbers for the Q3 financials. You can see our revenue for Q3 was $9.69 million. The $9.69 million was compared to $6.22 million for the same -- same time period for 2022, which shows we had an increase in revenue of 55%. And 1 thing I'd like to talk about that, too, though, is the majority of that increase came from our transaction processing. In Q3 of this year, we did $8.3 million in processing. Last year at the same time we did $5.89 million. So that is a 39% increase in the processing area of the company, which is the transaction -- the payments processing. We had a net loss this quarter of $1.8 million. Again, the majority of the reason we had the net loss is due to all the depreciation and amortization we have on the books. That's why you've seen adjusted EBITDA of $60,000, which wasn't a lot, but we did have adjusted EBITDA of $6,000 and we have a positive cash flow. To recap the Q3 numbers, right now, we're on a run rate of around $31 million. That doesn't -- not including the Bitcoin mining. Total assets right now around $35.9 million. And again, we'd like to stress that we do not have any debt. The current valuation is about 0.3 on sales -- price to sales ratio. The DMint stock dividend here just some of the highlights. The DMint stock dividend, we filed the S-1 and we're in the process of working with the SEC on the comments to get that up listed. We're going to have a new innovation for revenue growth and expansion in the OLB footprint. It will be locations that was running something out with Bodegas. We are going to actually start really ramping up and having people on the street and actually start ramping up the -- those cells that goes in the next thing. When you are [indiscernible] about building in-house sales force and telemarketing. And we're adding insiders mining positions to the stock. We look forward to buying the stock ourselves running ourselves.

I mean I think with this, we will conclude the presentation. And we see a few questions online. Let me see. What is the plan to purchase or acquire miners, debt financing or equity raise? We did not decide yet. It really depends after we spin off the -- that's going to happen probably after we spin off the entire DMint operation as a standalone company. And it really depends on the market condition, if we'll do the best choice as all the shareholders if it's good to do some sort of debt financing or acquire or get something in place. How many Bodegas has the company onboarded since the acquisition? We have today, we're adding also 1,800 locations in this phase. And at this point, we are expanding it with the additional services that we have. Estimated cost of electricity for the bitcoin mining and this...

I can answer that one, Ronny. The reason we're showing a different price of $8,000 to $9,500 on what it costs to mine 1 Bitcoin has more miners run and to think of the Bitcoin network catch rate, which is the worldwide catch rate is that goes up, that increases our cost. So that's not something that we can control ourselves. That's just part of the Bitcoin network and how it works. Our electricity has stayed the same. So our electricity is not going to change. But we actually to show a conservative number of the Bitcoin revenue, we are adding in that Bitcoin network catch rate for our revenue.

Next question is, you guys have repeatedly mentioned building up sales force to sell to 10,000 Bodegas. We never mentioned to 10,000 Bodegas. We mentioned we're starting with the first 1,000, and we are already providing services and we are running that. If DMint is valued $29 million to $28 million alone. What do you expect is the fair value of OLB alone? I mean the OLB value itself, it should be anywhere between onetime revenues to 4x revenues. That is kind of the common things that was in the industry before that. So we expect once there is a separation, both the companies are going to get the fair value of that as a stand-alone company. Will the 1,000 miners still be by end of the year? We're trying and we're pushing for this, and we'll do our best to bring them as soon as possible. What is the plan to growth funding ventures? And we will be constantly approach. We're going to announce very soon for a growth funding company that is a startup. That has already revenues of $7 million that we're going to bring on board. We're trying to stay away from 0 start-ups with no revenues that are looking for growth funding. The reason to that is they don't get to the finish line and end up creating expenses for us. If there's any more questions, we're happy to answer.

What are [indiscernible] across and say our insiders restricted from buying? Right now, we are -- we're in our own blackout period, and it will end I think we've got certain amount of days after we release earnings. So right now, we're still locked up.

So definitely, we have intentions to buy [indiscernible] myself.

Correct.

We see if we have any more questions. How much time does the company have to get back into the compliance of NASDAQ? We just got a letter yesterday that they're allowing us another 6 months to being compliant in this case. What is your confidence that -- level of confidence that the DMint will be complete by end of January? At this point, I mean, everything is based on the comments that we're going to get from the SEC. And we are [indiscernible] and basically typically it is anywhere between 3 to 4 rounds of comments. We just got the first one. What is the cash on hand? Patrick, you want to answer that?

Cash on hand as of today is around $1.2 million.

We are expecting also increasing revenues by beginning of the year from Bodegas as well. Any updates on the baseball teams? Yes. I mean baseball teams, everything is up and running as the season itself. Yes, that definitely would be -- I mean, that is another [indiscernible] for us. I mean we saw that all the applications from scratch a couple of years ago, and now it's a successful product.

One thing here I'd add about that, Ronny, the baseball stadiums, they're not just really considered baseball stadiums, it's more of event venues. So they do more than just baseball, it's also concerts and things of that nature.

There's another question. Would you think that to do a buyback on [indiscernible] seems like include [indiscernible], given the valuation? I don't think it works like this that you can take that to buy shares. I don't think anyone will give us that. So we will buy shares with our own source of money. Will DMint share price be hurt if the spinoff happens before, 1,000 miners? I don't think it would have hurt. It would be better if the 1,000 miners are running because this valuation of $29 million, it's not just about 1,000 miners running. It's also about all the assets and the properties that we have. So it's a long run. It's not about machines running between now and beginning of next year. Is there any EBITDA guidance for 2024?

I don't -- EBITDA guidance. I just want to think is we don't want to give that right now because I don't know exactly when DMint is going to split off, which will affect the EBITDA. So we don't know exactly what time that is going to happen. So we don't -- at this time we're not giving guidance on that.

I would like to thank everyone for taking the time. And I will conclude. You'll be able to see this Powerpoint presentation online from tomorrow. And thank you, everyone, and a happy Thanksgiving.

Thanks. Have a great day. Thank you for your time.